AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 1997
REGISTRATION NO. 333-29495
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CREDIT CARD RECEIVABLES FUNDING CORPORATION
(Originator of the Trust described herein)
(Exact name of registrant as specified in its charter)
BANKBOSTON CREDIT CARD MASTER TRUST
(Issuer with respect to the Certificates)
DELAWARE 04-3375894
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
CREDIT CARD RECEIVABLES FUNDING CORPORATION
157 MAIN STREET
NASHUA, NEW HAMPSHIRE 03060
(603) 594-1802
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
------------------
GARY A. SPIESS, ESQ. JANICE B. LIVA, ESQ.
GENERAL COUNSEL AND CLERK ASSISTANT GENERAL COUNSEL AND
BANKBOSTON CORPORATION ASSISTANT CLERK
100 FEDERAL STREET BANKBOSTON CORPORATION
BOSTON, MASSACHUSETTS 02110 100 FEDERAL STREET
(617) 434-2870 BOSTON, MASSACHUSETTS 02110
(617) 434-8630
(Name, address, including zip code, and telephone number,
including area code, of agents for service)
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COPIES TO:
ANDREW M. FAULKNER, ESQ. EDWARD M. DESEAR, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP ORRICK, HERRINGTON & SUTCLIFFE LLP
919 THIRD AVENUE 666 FIFTH AVENUE
NEW YORK, NEW YORK 10022-9931 NEW YORK, NEW YORK 10103
(212) 735-2853 (212) 506-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective as determined
by market conditions.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_| _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==========================================================================================
TITLE OF EACH CLASS AMOUNT TO PROPOSED PROPOSED AMOUNT OF
OF BE REGISTERED MAXIMUM MAXIMUM REGISTRATION FEE
SECURITIES TO BE OFFERING OFFERING
REGISTERED PRICE PRICE (1)
PER UNIT (1)
- ------------------------------------------------------------------------------------------
Asset Backed
<S> <C> <C> <C> <C>
Certificate........ $1,000,000 100% $1,000,000 $303.03(2)
==========================================================================================
</TABLE>
(1) Estimated solely for purpose of calculating the registration fee.
(2) $303.03 of which was previously paid in connection with the original
filing of the Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
============================================================================
The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 22, 1997
- ----------------------------------------------------------------------------
P R O S P E C T U S
- ----------------------------------------------------------------------------
BANKBOSTON CREDIT CARD MASTER TRUST
ASSET BACKED CERTIFICATES
CREDIT CARD RECEIVABLES FUNDING CORPORATION
TRANSFEROR
BANKBOSTON (NH), NATIONAL ASSOCIATION
SERVICER
---------------
Credit Card Receivables Funding Corporation ("CCRFC"), as transferor
(in such capacity, the "Transferor"), may sell from time to time up to $
aggregate initial offering price of one or more series (each, a "Series")
of asset backed certificates (the " Certificates") evidencing undivided
interests in certain assets of the BankBoston Credit Card Master Trust (the
"Trust"), to be created pursuant to a pooling and servicing agreement (the
"Pooling and Servicing Agreement") among the Transferor, BankBoston (NH),
National Association (the "Bank"), as servicer (in such capacity, the "
Servicer"), and The Bank of New York, as trustee (the "Trustee"). The
property of the Trust will include, among other things, the receivables
(the "Receivables") that are generated from time to time in a portfolio of
consumer revolving credit card accounts (the " Accounts"), collections
thereon, funds on deposit in certain accounts of the Trust, any
Participation Interests (as defined herein) included in the Trust,
collections thereon and any Credit Enhancement (as defined herein) with
respect to any particular Series or Class as more fully described herein
and, with respect to a Series offered hereby, in the related Prospectus
Supplement (as defined below). The Receivables in the Accounts are sold to
CCRFC and then transferred by CCRFC to the Trust as more fully described
herein.
Certificates will be sold from time to time under this Prospectus on
terms determined for each Series at the time of the sale and described in
the related prospectus supplement (each, a " Prospectus Supplement"). Each
Series will consist of one or more classes of Certificates (each, a
"Class"). Each Certificate will represent an undivided interest in certain
assets of the Trust and the interest of the holders of each Class or Series
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. A Series offered hereby (or
any Class within such Series) may be entitled to the benefits of a cash
collateral account or guaranty, spread account, yield supplement account,
collateral interest, letter of credit, surety bond, insurance policy or
other form of credit enhancement as specified in the Prospectus Supplement
relating to such Series. In addition, any Series offered hereby may include
one or more Classes which are subordinated in right and priority of payment
to one or more other Classes of such 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 categories by at least one nationally recognized statistical rating
organization.
POTENTIAL INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH IN "RISK
FACTORS" COMMENCING ON PAGE 17 HEREIN.
---------------
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO
NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE TRANSFEROR, THE SERVICER
OR ANY AFFILIATE OF EITHER OF THEM. A CERTIFICATE IS NOT A DEPOSIT AND
NEITHER THE CERTIFICATES NOR THE UNDERLYING ACCOUNTS OR RECEIVABLES ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
Certificates may be sold by the Transferor 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 Transferor 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 Transferor associated with the issuance and distribution of
such Certificates. See "Plan of Distribution."
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF CERTIFICATES
OF ANY SERIES UNLESS ACCOMPANIED BY THE RELATED PROSPECTUS SUPPLEMENT.
---------------
THE DATE OF THIS PROSPECTUS IS AUGUST __, 1997
TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT................................................. 5
REPORTS TO CERTIFICATEHOLDERS......................................... 5
AVAILABLE INFORMATION................................................. 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................... 5
PROSPECTUS SUMMARY.................................................... 7
RISK FACTORS.......................................................... 23
USE OF PROCEEDS....................................................... 31
THE TRUST............................................................. 31
CREDIT CARD ACTIVITIES................................................ 32
General......................................................... 32
Business Strategy............................................... 33
Processing and Servicing of Credit Card Accounts................ 33
Account Origination............................................. 33
Underwriting Procedures......................................... 34
Additional Accounts............................................. 35
Billing and Payments............................................ 35
Interchange..................................................... 36
Collection of Delinquent Accounts............................... 36
Recoveries...................................................... 37
Fraud Prevention................................................ 37
THE BANK.............................................................. 37
CREDIT CARD RECEIVABLES FUNDING CORPORATION........................... 37
THE ACCOUNTS.......................................................... 38
DESCRIPTION OF THE CERTIFICATES....................................... 39
General......................................................... 39
Book-Entry Registration......................................... 39
Definitive Certificates......................................... 42
Interest........................................................ 42
Principal....................................................... 43
Pay Out Events and Reinvestment Events.......................... 44
Servicing Compensation and Payment of Expenses.................. 45
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENT.................... 46
Conveyance of Receivables....................................... 46
Representations and Warranties.................................. 47
The Transferor Certificates..................................... 49
Additions of Accounts or Participation Interests................ 49
Removal of Accounts............................................. 50
Discount Option................................................. 50
Yield Supplement Account........................................ 51
Premium Option.................................................. 51
Indemnification................................................. 52
Collection and Other Servicing Procedures....................... 52
New Issuances................................................... 53
Collection Account.............................................. 54
Allocations..................................................... 55
Groups of Series................................................ 56
Reallocations Among Certificates of Different Series within a
Reallocation Group........................................ 56
Sharing of Excess Finance Charge Collections Among Excess
Allocation Series......................................... 58
Shared Principal Collections.................................... 58
Paired Series................................................... 59
Special Funding Account......................................... 59
Funding Period; Pre-Funding Account............................. 59
Defaulted Receivables; Rebates and Fraudulent Charges........... 60
Credit Enhancement.............................................. 60
Interest Rate Swaps and Related Caps, Floors and Collars........ 63
Servicer Covenants.............................................. 63
Certain Matters Regarding the Servicer.......................... 63
Servicer Default................................................ 64
Evidence as to Compliance....................................... 65
Amendments...................................................... 65
List of Certificateholders...................................... 66
The Trustee..................................................... 66
DESCRIPTION OF THE PURCHASE AGREEMENTS................................ 66
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES.............................. 68
Transfer of Receivables......................................... 68
Certain Matters Relating to Insolvency.......................... 68
Consumer Protection Laws........................................ 71
Proposed Legislation............................................ 71
U.S. FEDERAL INCOME TAX CONSEQUENCES.................................. 71
General......................................................... 71
Characterization of the Certificates as Indebtedness............ 72
Taxation of Interest Income of Certificateholders............... 72
Sale of a Certificate........................................... 73
Tax Characterization of the Trust............................... 74
FASIT Legislation............................................... 75
Foreign Investors............................................... 75
STATE AND LOCAL TAXATION.............................................. 76
ERISA CONSIDERATIONS.................................................. 77
PLAN OF DISTRIBUTION.................................................. 79
LEGAL MATTERS......................................................... 80
INDEX OF DEFINED TERMS................................................ 81
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to any Series will, among other
things, set forth with respect to such Series: (a) the initial aggregate
principal amount of each Class of such Series; (b) the rate of interest on
each Certificate (the "Certificate Rate") (or method of determining the
Certificate Rate) of each such Class; (c) the expected date or dates on
which the Invested Amount with respect to each such Class will have been
paid to the holders of the Certificates of such Class
("Certificateholders"); (d) the extent to which any Class within a Series
is subordinated to any other Class of such Series or any other Series; (e)
the Distribution Dates for the respective Classes; (f) relevant financial
information with respect to the Receivables; (g) additional information
with respect to any Series Enhancement relating to such Series; and (h) the
plan of distribution of such Series.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates (as defined herein) are
issued, monthly and annual unaudited reports, containing information
concerning the Trust and prepared by the Servicer, will be sent on behalf
of the Trust to Cede & Co. ("Cede"), as nominee of The Depository Trust
Company ("DTC") and registered holder of the Certificates pursuant to the
Pooling and Servicing Agreement. Such reports will be made available by DTC
and its participants to the Certificateholders in accordance with the
rules, regulations and procedures creating and affecting DTC. See
"Description of the Pooling and Servicing Agreement -- Evidence as to
Compliance." Such reports will not constitute financial statements prepared
in accordance with generally accepted accounting principles. The Pooling
and Servicing Agreement does not require the sending of, and the Transferor
does not intend to send, any of its financial reports to the
Certificateholders or to the owners of beneficial interests in the
Certificates (" Certificate Owners").
AVAILABLE INFORMATION
The Transferor, as originator of the Trust, has filed a Registration
Statement under the Securities Act of 1933, as amended (the "Securities
Act"), with the Securities and Exchange Commission (the "Commission") with
respect to the Certificates offered pursuant to this Prospectus. For
further information, reference is made to the Registration Statement and
amendments thereof and exhibits thereto, which are available for inspection
without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
Seven World Trade Center, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of the
Registration Statement and amendments thereof and exhibits thereto may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Servicer
will file with the Commission such periodic reports, if any, 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. In addition, the Commission maintains a public
access site on the Internet through the World Wide Web at which site
reports, proxy and information statements and other information regarding
registrants, including all electronic filings, may be viewed. The Internet
address of the Commission's World Wide Web site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer, on behalf of
the Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the termination
of the offering of the Certificates offered hereby shall be deemed to be
incorporated by reference into this Prospectus and to be part hereof. Any
statement contained herein or in a document deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained in any other
subsequently filed document which also 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 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). Written requests
for such copies should be directed to BankBoston (NH), National
Association, 157 Main Street, Nashua, New Hampshire, 03060; Attention:
President. Telephone requests for such copies should be directed to (603)
594-1802.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to
the detailed information appearing elsewhere in this Prospectus and in any
accompanying Prospectus Supplement. Reference is made to the Index of
Defined Terms beginning on page 75 herein for the location herein of the
definitions of certain capitalized terms used herein. Unless the context
requires otherwise, certain capitalized terms, when used herein and in any
accompanying Prospectus Supplement, relate only to the particular Series
being offered by such Prospectus Supplement.
Issuer........................ BankBoston Credit Card Master Trust
(the "Trust"). The Trust, as a master
trust, is expected to issue series of
Certificates (each, a "Series") from
time to time. See "The Trust."
Servicer...................... BankBoston (NH), National Association,
a national banking association organized
under the laws of the United States (the
"Bank"), as servicer (in such capacity,
the "Servicer"). 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, in which
event the Trustee or, so long as it
meets certain eligibility standards set
forth in the Pooling and Servicing
Agreement, a third-party servicer may
be appointed as successor servicer (the
Bank, or any such successor servicer, is
referred to herein as the "Servicer").
In addition, in connection with any sale
of the Accounts by the Bank to [New
Bank] and subject to satisfaction of the
Rating Agency Condition, the Bank may
resign as Servicer and [New Bank] may be
appointed as successor Servicer. The
Bank is permitted to delegate certain of
its duties as Servicer to any of its
affiliates or, subject to certain
conditions, to third party service
providers, but any such delegation will
not relieve the Servicer of its
liability and responsibility with
respect to such duties under the Pooling
and Servicing Agreement or any
Supplement. The Bank has delegated
substantially all of its servicing
duties to First Data Resources, Inc.
("FDR") and First Annapolis Marketing
Information Services Inc. ("FAMIS"). See
"Description of the Certificates--
Servicing Compensation and Payment of
Expenses."
Trustee....................... The Bank of New York (the "Trustee"), a
New York banking corporation.
Account Owners................ On the date of issuance of the first
Series of Certificates (the "Initial
Series Closing Date"), Bank of Boston
Connecticut ("BKB CT"), a state
chartered bank organized under the laws
of the State of Connecticut, will sell
to the Bank all of the Accounts owned by
it together with the related
Receivables. After giving effect to such
sale to the Bank, the Bank will be the
Account Owner with respect to all of the
Receivables sold to the Transferor on
the Initial Series Closing Date. The
Bank may subsequently sell the Accounts
to [Name of New Bank], a state chartered
bank to be organized under the laws of
the State of ________. Upon giving
effect to any such sale, the [New Bank]
will be the Account Owner with respect
to the Receivables sold to the
Transferor by the Bank and the Bank will
cease to be an Account Owner. See
"Description of the Purchase
Agreements." Upon any sale of the
Accounts by the Bank to [New Bank],
such assumed obligations include
the obligation to repurchase Receivables
upon a breach of certain representations
and warranties, [New Bank], as assignee
of the Bank, will expressly assume all
of the rights and obligations of the Bank
with respect to the Receivables under the
Pooling and Servicing Agreement and the
Purchase Agreement between the Bank and
the Transferor. For convenience, these
rights and obligations of the Bank and
[New Bank], as assignee of the Bank upon
the consummation of any such sale, are,
unless otherwise indicated, referred to
herein as rights and obligations of the
Bank and all references herein to the Bank
in its capacity as an Account Owner
and as Servicer include [New Bank].
Transferor.................... Credit Card Receivables Funding
Corporation ("CCRFC"), a Delaware
corporation and a special purpose wholly
owned subsidiary of the BankBoston
Corporation, as transferor (in such
capacity, the "Transferor").
Trust Assets.................. The assets of the Trust (the "Trust
Assets") include the receivables
("Receivables") arising under certain
VISA(R) and MasterCard(R)* revolving
credit card accounts (the "Accounts"),
and the proceeds thereof, including
recoveries on charged-off Receivables,
proceeds of credit insurance policies
relating to the Receivables and may
include the right to receive Interchange
(as defined herein), if any, allocable to
the Certificates, funds on deposit in
certain accounts of the Trust for the
benefit of Certificateholders,
Participation Interests (as defined
herein), if any, and any Credit
Enhancement (as defined herein) issued
with respect to a particular Series (the
drawing on or payment of any Series
Enhancement for the benefit of a Series
or Class of Certificateholders will not
be available to the Certificateholders
of any other Series or Class). "
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.
"Series Enhancement" means, with respect
to any Series or Class of Certificates,
any Credit Enhancement (as defined
herein), interest rate swap agreement,
interest rate cap agreement or other
similar arrangement for the benefit of
Certificateholders of such Series or
Class. The subordination of any Series
or Class of Certificates to another
Series or Class of Certificates shall be
deemed to be a Series Enhancement.
"Participation Interests" means
participations representing undivided
interests in a pool of assets primarily
consisting of revolving credit card
receivables, charge card receivables and
other self-liquidating financial assets.
See "Description of the Pooling and
Servicing Agreement-- Additions of
Accounts or Participation Interests."
To the extent provided in any Supplement
(as defined herein), or in an amendment
to the Pooling and Servicing Agreement,
all or a portion of the Receivables or
Participation Interests conveyed to the
Trust and all collections received with
respect thereto may be allocated to one
or more Series or groups of Series (each
a "Group") as long as the Rating Agency
Condition (as defined herein) 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 have an Adverse
Effect (as defined herein).
The Certificates.............. The Certificates will be issued in Series,
each of which will consist of one or
more Classes. The specific terms of a
Series or Class will be established as
described herein under "Description of
the Pooling and Servicing Agreement--
New Issuances." However, while the
specific terms of any Series or Class
offered hereby will be described in the
related Prospectus Supplement, the terms
of such Series or Class will not be
subject to prior review by, or consent
of, the holders of the Certificates of
any previously issued Series.
The Certificates of a Series offered
hereby will generally be available for
purchase in minimum denominations of
$1,000 and in integral multiples
thereof, and will only be available in
book-entry form except in certain
limited circumstances as described
herein under "Description of the
Certificates-- Definitive Certificates."
Interests in the Trust Assets will be
allocated among (a) the
Certificateholders, including Credit
Enhancers (as defined herein) holding
uncertificated subordinated interests
(each, an "Enhancement Invested
Amount"), of a particular Series (the
"Certificateholders' Interest"), (b) the
Certificateholders (including such
holders of Enhancement Invested Amounts)
of other Series, if any, and (c) the
interest of the Transferor and its
permitted transferees (the "
Transferor's Interest"), as described
below. The Invested Amount of a Series
offered hereby will, except as otherwise
provided herein and except with respect
to Certificates with a variable
principal amount, remain fixed at the
aggregate initial principal amount of
the Certificates of such Series. The
Certificateholders' Interest of a Series
will include the right to receive (but
only to the extent needed to make
required payments under the Pooling and
Servicing Agreement, including the
related Supplement, and subject to any
reallocation of such amounts if the
related Supplement so provides) varying
percentages of collections of Finance
Charge Receivables and Principal
Receivables and will be allocated a
varying percentage of the Receivables in
Defaulted Accounts with respect to each
calendar month (each, a "Monthly
Period"). See "Description of the
Certificates-- Interest" and
"--Principal." If the Certificates of a
Series offered hereby include more than
one Class of Certificates, the
collections allocable to the Invested
Amount of such Series may be further
allocated among each Class in such
Series as described in the related
Prospectus Supplement.
The Transferor's
Interest...................... The Transferor's Interest at any time
represents the right to the Trust Assets
in excess of the Certificateholders'
Interest and Enhancement Invested
Amounts of all Series then outstanding.
The principal amount of the Transferor's
Interest (the "Transferor Amount") will
fluctuate as the amount of the Principal
Receivables held by the Trust changes
from time to time. In addition, the
Transferor intends to cause the issuance
of Series from time to time and any such
issuance will have the effect of
decreasing the Transferor Amount to the
extent of the initial Invested Amount of
such Series. See "Risk Factors--
Issuance of New Series."
The level of the "Required Transferor
Amount," which equals the sum of the
Series Required Transferor Amounts for
each outstanding Series, is intended to
enable the Transferor's Interest to
absorb fluctuations in the amount of
Principal Receivables held by the Trust
from time to time (due to, among other
things, seasonal purchase and payment
habits of cardholders or adjustments in
the amount of Principal Receivables
because of rebates, refunds, fraudulent
charges or otherwise). See "Risk
Factors-- Generation of Additional
Receivables; Dependency on Cardholder
Repayments" and "Description of the
Pooling and Servicing Agreement--
Defaulted Receivables; Rebates and
Fraudulent Charges."
Issuance of New Series........ The Pooling and Servicing Agreement
authorizes the Trustee to issue three
types of certificates: (a) one or more
Series of Certificates, (b) a
certificate evidencing the Transferor's
Interest in the Trust retained by the
Transferor (the "Transferor
Certificate"), which Transferor
Certificate will be held by the
Transferor, and (c) certificates ("
Supplemental Certificates") held by
transferees of a portion of the
Transferor Certificate. The Transferor
Certificate and any Supplemental
Certificates are collectively referred
to as the "Transferor Certificates." See
"Description of the Pooling and
Servicing Agreement -- The Transferor
Certificates." The Pooling and Servicing
Agreement provides that, pursuant to any
one or more supplements to the Pooling
and Servicing Agreement (each, a
"Supplement"), the Transferor may cause
the Trustee without the consent of the
Certificateholders to issue one or more
new Series and accordingly cause a
reduction in the Transferor's Interest
represented by the Transferor
Certificates. There can be no assurance
that the terms of any Series might not
have an impact on the timing or amount
of payments received by a
Certificateholder of another Series.
Under the Pooling and Servicing
Agreement, the Transferor may define,
with respect to any Series, the
Principal Terms of such Series. See
"Description of the Pooling and
Servicing Agreement -- New Issuances."
The Transferor may offer any Series to
the public or other investors under a
disclosure document (a "Disclosure
Document"), which will consist of a
Prospectus Supplement in the case of a
Series offered hereby, in transactions
either registered under the Securities
Act or exempt from registration
thereunder, directly or through one or
more underwriters or placement agents,
in fixed-price offerings or in
negotiated transactions or otherwise.
See "Plan of Distribution."
A new Series may be issued only upon
satisfaction of the conditions described
herein under "Description of the Pooling
and Servicing Agreement-- New Issuances"
including, among others, that (a) such
issuance will satisfy the Rating Agency
Condition (as defined herein) and (b)
the Transferor shall have delivered to
the Trustee and certain providers of
Series Enhancement a certificate of an
authorized officer to the effect that,
in the reasonable belief of the
Transferor, such issuance will not,
based on the facts known to such
representative at the time of such
certification, have an Adverse Effect.
The Accounts.................. The Accounts generally consist of VISA
and MasterCard consumer revolving credit
card accounts originated or purchased by
an Account Owner and designated from
time to time by the Transferor (or an
affiliate thereof), that, in each case,
meet the criteria provided in the
Pooling and Servicing Agreement for an
Eligible Account (as defined herein),
but do not include any Removed Accounts
(as defined herein). The Accounts are
not being sold or transferred to the
Trust and will continue to be controlled
and held by the applicable Account Owner
unless transferred as described herein.
See "Credit Card Activities" and
"Description of the Purchase
Agreements."
Each of the Account Owners will enter
into separate receivables purchase
agreements (each, a "Purchase
Agreement") with the Transferor. On the
Initial Series Closing Date, BKB CT will
sell to the Bank all of its right, title
and interest in the Accounts owned by it
and the related Receivables. After
giving effect to such sale, BKB CT will
cease to have any interest in such
Accounts and the Bank will be the
Account Owner with respect to such
Accounts. Pursuant to the Purchase
Agreement between the Transferor and the
Bank and the Purchase Agreement be-
tween the Transferor and the [New Bank],
the applicable Account Owner will sell
to the Transferor all of its right,
title and interest in and to the
Receivables arising in the applicable
Accounts, in the case of the Bank,
arising after the Initial Series Closing
Date and in the case of the New Bank,
from and after the date on which the New
Bank begins to originate Accounts.
Pursuant to each Purchase Agreement, the
applicable Account Owner from time to
time sells to the Transferor all of its
right, title and interest in the
Receivables arising in the Accounts
owned by such Account Owner whether such
Receivables are then existing or
thereafter created and such Account
Owner is obligated to sell to the
Transferor the Receivables arising in
Additional Accounts (as defined herein)
from time to time. In addition, each
Account Owner has assigned to the
Transferor its rights to Recoveries and
Interchange allocable to the Receivables
or its approximate equivalent in the
form of Discount Option Receivables (as
defined herein) allocable to the
Receivables. See "Description of the
Purchase Agreements." The Transferor may
in the future enter into similar
agreements with additional Account
Owners. The Transferor in turn, from
time to time, transfers such
Receivables, including the right to
Recoveries and Interchange, to the Trust
pursuant to the Pooling and Servicing
Agreement.
The Transferor conveyed to the Trust
Receivables existing on __________, 1997
(the "Initial Cut-Off Date") in certain
VISA and MasterCard consumer revolving
credit card accounts (the " Initial
Accounts") that met the criteria
provided in the Pooling and Servicing
Agreement for an Eligible Account as of
the Initial Cut-Off Date and will convey
Receivables arising in the Initial
Accounts from time to time thereafter
until the termination of the Trust. The
Initial Accounts were either originated
by BKB CT and sold to the Bank on the
Initial Series Closing Date, or were
originated by the Bank. In addition,
pursuant to the Pooling and Servicing
Agreement, the Transferor expects
(subject to certain limitations and
conditions), and in some circumstances
will be obligated, to have Additional
Accounts designated, the Receivables of
which will be included in the Trust or,
in lieu thereof or in addition thereto,
to include Participation Interests in
the Trust. Additional Accounts include
New Accounts (as defined herein) and
Aggregate Addition Accounts (as defined
herein). The Transferor will convey to
the Trust all Receivables in Additional
Accounts, whether such Receivables are
then existing or thereafter created. The
addition to the Trust of Receivables in
Aggregate Addition Accounts or
Participation Interests will be subject
to certain conditions, including, among
others, that (a) unless such addition is
a required addition or a designation of
New Accounts, such addition will satisfy
the Rating Agency Condition and (b) the
Transferor shall have delivered to the
Trustee a certificate of an authorized
officer to the effect that, in the
reasonable belief of the Transferor,
such addition will not have an Adverse
Effect. The Transferor will also have
the right, in certain circumstances, to
remove from the Trust all Receivables of
certain designated Accounts (the
"Removed Accounts"). See "Description of
the Pooling and Servicing Agreement--
Additions of Accounts or Participation
Interests ;" "--Removal of Accounts" and
"Risk Factors-- Addition of Trust
Assets."
- --------------
* VISA and MasterCard are registered trademarks of VISA USA, Inc. ("VISA")
and MasterCard International Incorporated ("MasterCard"), respectively.
The Receivables............... The Receivables include (a) periodic
finance charges, cash advance fees, late
charges, annual membership fees,
returned check fees, over-the-limit fees
and other miscellaneous fees and the
interest portion of any Participation
Interests as determined pursuant to the
applicable Supplement (the "Finance
Charge Receivables"), and (b) amounts
charged by cardholders for merchandise
and services, amounts advanced to
cardholders as cash advances and the
principal portion of any Participation
Interests as determined pursuant to the
applicable Supplement (the "Principal
Receivables"). Recoveries attributed to
charged-off Receivables (the "
Recoveries") up to the amount of
Defaulted Receivables in any Monthly
Period will be treated as collections of
Principal Receivables. The excess, if
any, of Recoveries over Defaulted
Receivables will be treated as
collections of Finance Charge
Receivables. In addition, certain
Interchange or its equivalent in the
form of Discount Option Receivables
attributed to cardholder charges for
merchandise and services in the Accounts
will be treated as collections of
Finance Charge Receivables. See "Credit
Card Activities-- Interchange."
All new Receivables arising in the
Accounts during the term of the Trust
will automatically be sold by the
Account Owner to the Transferor and then
transferred by the Transferor to the
Trust. Accordingly, the amount of
Receivables will fluctuate from day to
day as new Receivables are generated and
as existing Receivables are collected,
charged-off as uncollectible or
otherwise adjusted.
If so specified in the related
Prospectus Supplement the Servicer will
establish and maintain a Yield
Supplement Account for the benefit of
the Certificateholders of such Series.
Amounts on deposit in the Yield
Supplement Account for any Series
(together with investment earnings
thereon) will be released and deposited
into the Collection Account in the
amounts and at the times specified in
the Prospectus Supplement for such
Series. Each such deposit into the
Collection Account will be treated as
collections of Finance Charge
Receivables allocable to the
Certificates of the related Series . The
Yield Supplement Account for any Series
will be funded with proceeds from the
offering of the related Investor
Certificates.
Clearance and
Settlement.................... Unless otherwise specified in the related
Prospectus Supplement, the Certificates
will be available for purchase in
minimum denominations of $1,000 and
integral multiples thereof in book-
entry form only. Certificateholders may
elect to hold their Certificates through
any of DTC (in the United States) or
Cedel Bank, societe anonyme ("Cedel") or
the Euroclear System ("Euroclear") (in
Europe). See "Description of the
Certificates-- Book-Entry Registration."
Interest...................... Interest will accrue on the Invested
Amount or outstanding principal amount
of the Certificates of a Series or Class
offered hereby at the per annum rate
either specified in or determined in the
manner specified in the related
Prospectus Supplement. Except as
otherwise provided herein, collections
of Finance Charge Receivables and
certain other amounts allocable to the
Invested Amount of a Series offered
hereby will generally be used to make
interest payments to Certificateholders
of such Series on each Interest Payment
Date with respect thereto; provided that
if an Early Amortization Period
commences with respect to such Series,
thereafter interest will be distributed
to such Certificateholders monthly on
each Special Payment Date (defined
herein). If the Interest Payment Dates
for a Series or Class occur less
frequently than monthly, such
collections or other amounts (or the
portion thereof allocable to such Class)
will be deposited in one or more trust
accounts (each, an "Interest Funding
Account") and used to make interest
payments to Certificateholders of such
Series or Class on the following
Interest Payment Date with respect
thereto. If a Series has more than one
Class of Certificates, each such Class
may have a separate Interest Funding
Account. See "Description of the
Certificates-- Interest."
Principal..................... The principal of the Certificates of each
Series offered hereby will be scheduled
to be paid either (a) in full on an
expected date specified in the related
Prospectus Supplement (the " Expected
Final Payment Date"), in which case such
Series will have a Controlled
Accumulation Period as described below
under "--Controlled Accumulation
Period," or (b) in installments
commencing on a date specified in the
related Prospectus Supplement (the "
Principal Commencement Date"), in which
case such Series will have a Controlled
Amortization Period as described below
under "--Controlled Amortization
Period." If a Series has more than one
Class of Certificates, each Class may
have a different method of paying
principal, Expected Final Payment Date
or Principal Commencement Date. The
payment of principal with respect to the
Certificates of a Series or Class may
commence earlier than the applicable
Expected Final Payment Date or Principal
Commencement Date, and the final
principal payment with respect to the
Certificates of a Series or Class may be
made later than the applicable Expected
Final Payment Date or other expected
date, if a Pay Out Event occurs with
respect to such Series or Class or under
certain other circumstances described
herein. See "Risk Factors-- Generation
of Additional Receivables; Dependency on
Cardholder Repayments" for a description
of factors that may affect the timing of
principal payments on Certificates. See
"Description of the Certificates--
Principal."
Revolving Period.............. The Certificates of each Series offered
hereby will have a revolving period (the
"Revolving Period") that will commence on
the date of issuance of the related Series
(the "Series Closing Date") or on a date
prior thereto specified in the related
Supplement and, for a Series offered
hereby, the related Prospectus Supplement
(the "Series Cut-Off Date") and continue
until the earlier of (a) the commencement
of the Early Amortization Period or Early
Accumulation Period with respect to such
Series and (b) the date specified in the
related Prospectus Supplement as the end
of the Revolving Period with respect to
such Series. If the related Prospectus
Supplement provides that a Series is a
Principal Sharing Series (as defined
herein), during the Revolving Period with
respect to such Series, collections of
Principal Receivables and certain other
amounts otherwise allocable to the
Certificateholders' Interest of such
Series will be treated as Shared Principal
Collections and will be distributed to, or
for the benefit of, the Certificateholders
of other Principal Sharing Series or the
holders of the Transferor Certificates or
deposited into the Special Funding
Account, as more fully described in the
related Prospectus Supplement. If the
related Prospectus Supplement provides
that a Series is not a Principal Sharing
Series, during the Revolving Period with
respect to such Series, collections of
Principal Receivables and certain other
amounts otherwise allocable to the
Certificateholders' Interest of such
Series will be paid to the holders of the
Transferor Certificates or deposited into
the Special Funding Account, as more
fully described in the related Prospectus
Supplement. See "Description of the
Certificates-- Principal," and "--Pay Out
Events and Reinvestment Events" for a
discussion of the events that might lead
to the termination of the Revolving Period
with respect to a Series prior to its
scheduled date.
Controlled Accumulation
Period........................ If the related Prospectus Supplement so
specifies, unless an Early Amortization
Period or, if so specified in the related
Prospectus Supplement, an Early
Accumulation Period commences with respect
to a Series offered hereby, the
Certificates of such Series will have a
scheduled accumulation period (the "
Controlled Accumulation Period") that will
commence at the close of business on the
date or dates specified in or determined
as specified in such Prospectus Supplement
and continue until the earliest of (a) the
commencement of the Early Amortization
Period or, if so specified in the related
Prospectus Supplement, an Early
Accumulation Period with respect to such
Series, (b) payment in full of the
Invested Amount, including the Enhancement
Invested Amount, if any, of the
Certificates of such Series, and (c) the
series termination date with respect to
such Series (the "Series Termination
Date"). The Controlled Accumulation
Period may be postponed under the
conditions set forth in "Description of
the Certificates-- Principal." During the
Controlled Accumulation Period with
respect to a Series, collections of
Principal Receivables and, if so specified
in the related Prospectus Supplement,
certain other amounts allocable to the
Certificateholders' Interest of such
Series (including Shared Principal
Collections (as defined herein), if any,
allocable to such Series) will be
deposited on each Distribution Date in a
trust account established for the benefit
of the Certificateholders of such Series
(each, a "Principal Funding Account") and
used to make principal distributions to
the Certificateholders of such Series or
any Class thereof when due. The amount to
be deposited in the Principal Funding
Account (the "Controlled Deposit Amount")
for any Series offered hereby on any
Distribution Date may, but will not
necessarily, be limited to an amount equal
to an amount specified in or determined as
specified in the related Prospectus
Supplement (the "Controlled Accumulation
Amount") plus any existing deficit
controlled accumulation amount arising
from prior Distribution Dates. If the
Prospectus Supplement for a Series so
specifies, the amount to be deposited in
the Principal Funding Account on a
Distribution Date may be a variable
amount. If a Series has more than one
Class of Certificates, each Class may have
a separate Principal Funding Account and
Controlled Accumulation Amount and the
Controlled Accumulation Period with
respect to each Class may commence on
different dates. In addition, the related
Prospectus Supplement may describe certain
priorities among such Classes with respect
to deposits of principal into such
Principal Funding Accounts.
Early Accumulation
Period........................ If so specified and under the conditions
set forth in the Prospectus Supplement
relating to a Series having a Controlled
Accumulation Period, during the period
from the day on which a Reinvestment
Event (as defined herein) has occurred,
until the earliest of (a) the
commencement of the Early Amortization
Period (if any), (b) payment in full of
the Invested Amount, including the
Enhancement Invested Amount, if any, of
the Certificates of such Series, and (c)
the Series Termination Date with respect
to such Series (the "Early Accumulation
Period"), collections of Principal
Receivables and, if so specified in the
related Prospectus Supplement, certain
other amounts allocable to the
Certificateholders' Interest of such
Series (including Shared Principal
Collections, if any, allocable to such
Series) will be deposited on each
Distribution 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 Expected Final
Payment Date. The amount to be deposited
in the Principal Funding Account during
the Early Accumulation Period will not
be limited to any Controlled Deposit
Amount. See "Description of the
Certificates -- Pay Out Events and
Reinvestment Events" for a discussion of
the events which might lead to
commencement of an Early Accumulation
Period.
Controlled Amortization
Period........................ If the related Prospectus Supplement so
specifies, unless an Early Amortization
Period commences with respect to a Series
offered hereby, the Certificates of such
Series will have an amortization period
(the "Controlled Amortization Period")
that will commence at the close of
business on the date specified in such
Prospectus Supplement and continue until
the earliest of (a) the commencement of
the Early Amortization Period with respect
to such Series, (b) payment in full of the
Invested Amount, including the Enhancement
Invested Amount, if any, of the
Certificates of such Series and (c) the
Series Termination Date with respect to
such Series. During the Controlled
Amortization Period with respect to a
Series, collections of Principal
Receivables and certain other amounts
allocable to the Certificateholders'
Interest of such Series (including Shared
Principal Collections, if any, allocable
to such Series) will be used on each
Distribution Date to make principal
distributions to Certificateholders of
such Series or any Class thereof then
scheduled to receive such distributions.
The amount to be distributed to
Certificateholders of any Series offered
hereby on any Distribution Date may, but
will not necessarily, be limited to an
amount (the "Controlled Distribution
Amount") equal to an amount (the
"Controlled Amortization Amount")
specified in the related Prospectus
Supplement plus any existing deficit
controlled amortization amount arising
from prior Distribution Dates. If a
Series has more than one Class of
Certificates, each Class may have a
different Controlled Amortization Amount.
In addition, the related Prospectus
Supplement may describe certain priorities
among such Classes with respect to such
distributions.
Early Amortization
Period........................ During the period from the day on which
a Pay Out Event has occurred with
respect to a Series to the date on which
the Invested Amount, including the
Enhancement Invested Amount, if any, of
the Certificates of such Series has been
paid in full or the related Series
Termination Date has occurred (the "
Early Amortization Period"), collections
of Principal Receivables and certain
other amounts allocable to the
Certificateholders' Interest of such
Series (including Shared Principal
Collections, if any, allocable to such
Series) will be distributed as principal
payments to the Certificateholders of
such Series monthly on each Distribution
Date beginning with the first Special
Payment Date with respect to such
Series. During the Early Amortization
Period with respect to a Series,
distributions of principal to
Certificateholders will not be subject
to any Controlled Deposit Amount or
Controlled Distribution Amount. In
addition, upon the commencement of the
Early Amortization Period with respect
to a Series, any funds on deposit in a
Principal Funding Account with respect
to such Series will be paid to the
Certificateholders of the relevant Class
or Series on the first Special Payment
Date with respect to such Series. See
"Description of the Certificates-- Pay
Out Events and Reinvestment Events" for
a discussion of the events that might
lead to the commencement of the Early
Amortization Period with respect to a
Series.
Allocations Among Series...... Pursuant to the Pooling and Servicing
Agreement, during each Monthly Period,
the Servicer is required to first
allocate to each Series collections of
Principal Receivables and Finance Charge
Receivables and the Defaulted
Receivables with respect to such Monthly
Period based on the Series Allocation
Percentage (as defined herein). See
"Description of the Pooling and
Servicing Agreement-- 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 holders of the
Transferor Certificates pursuant to the
terms of the related Supplement.
Sharing of Excess Finance
Charge Collections Among
Excess Allocation Series...... If the Prospectus Supplement for a Series
so provides, any Series may be
designated as a Series that shares with
other Series similarly designated,
subject to certain limitations, certain
Excess Finance Charge Collections (as
defined herein) allocable to any such
Series (an "Excess Allocation Series").
Subject to certain limitations described
under "Description of the Pooling and
Servicing Agreement-- Sharing of Excess
Finance Charge Collections Among Excess
Allocation Series," collections of
Finance Charge Receivables and certain
other amounts allocable to the
Certificateholders' Interest of any
Series that is designated as an Excess
Allocation Series in excess of the
amounts necessary to make required
payments with respect to such Series
(including payments to the provider of
any related Series Enhancement) will be
applied to cover shortfalls with respect
to amounts payable from collections of
Finance Charge Receivables allocable to
any other Series designated as an Excess
Allocation Series, in each case pro rata
based upon the amount of the shortfall
with respect to amounts payable from
Collections of Finance Charge
Receivables, if any, with respect to
each other Excess Allocation Series. See
"Description of the Pooling and
Servicing Agreement-- Sharing of Excess
Finance Charge Collections Among Excess
Allocation Series."
Shared Principal
Collections................... If the Prospectus Supplement for a Series
so provides, any Series may be
designated as a Series that shares with
other Series similarly designated,
subject to certain limitations, certain
excess collections of Principal
Receivables and certain other amounts
allocable to the Certificateholders'
Interest of such Series (a "Principal
Sharing Series"). To the extent that
collections of Principal Receivables and
certain other amounts that are allocated
to the Certificateholders' Interest of
any Principal Sharing Series are not
needed to make payments to the
Certificateholders of such Series or
required to be deposited in a Principal
Funding Account for such Series, such
collections may be applied to cover
principal payments due to or for the
benefit of Certificateholders of another
Principal Sharing Series. Any such
reallocation will not result in a
reduction in the Invested Amount of the
Series to which such collections were
initially allocated. See "Description of
the Pooling and Servicing Agreement--
Shared Principal Collections."
Reallocations Among Series
in a Reallocation Group....... If so provided in the related Prospectus
Supplement, the Certificates of a Series
may be included in a Group that will be
subject to reallocations of collections
of Finance Charge Receivables and other
amounts or obligations 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 Group.
Consequently, the issuance of new Series
in such 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
Group. See "Risk Factors-- Issuance of
New Series."
Paired Series................. If so provided in the related Prospectus
Supplement, a Series of Certificates may
be issued (a "Paired Series") that is
paired with one or more other Series or
a portion of one or more other Series
previously issued by the Trust (a "Prior
Series"). A Paired Series may be issued
at or after the commencement of a
Controlled Accumulation Period or
Controlled Amortization Period for a
Prior Series. As the Invested Amount of
the Prior Series having a Paired Series
is reduced, the Invested Amount of the
Paired Series will increase by an equal
amount. Upon payment in full of such
Prior Series, the Invested Amount of the
Paired Series will be equal to the
amount of the Invested Amount paid to
Certificateholders of such Prior Series.
If a Pay Out Event or Reinvestment Event
occurs with respect to the Prior Series
having a Paired Series or with respect
to the Paired Series when such Prior
Series is in a Controlled Amortization
Period or Controlled Accumulation
Period, the percentage specified in the
applicable Prospectus Supplement for the
allocation of collections of Principal
Receivables to the Certificateholders'
Interest of such Prior Series (the "
Principal Allocation Percentage") and
the Series Allocation Percentage for the
Prior Series and the Principal
Allocation Percentage and the Series
Allocation Percentage for the Paired
Series will be reset as specified in the
related Prospectus Supplement and the
Controlled Amortization Period,
Controlled Accumulation Period, Early
Amortization Period or Early
Accumulation Period for such Prior
Series could be lengthened.
Special Funding Account....... If on any date the Transferor Amount is
less than or equal to the Required
Transferor Amount, the Servicer shall
not distribute to the holders of the
Transferor Certificates any collections
of Principal Receivables that otherwise
would be distributed to the holders of
the Transferor Certificates, but shall
deposit such funds in the Special
Funding Account.
Funds on deposit in the Special Funding
Account will be withdrawn and paid to
the holders of the Transferor
Certificates on any Distribution Date to
the extent that, after giving effect to
such payment, the Transferor Amount
exceeds the Required Transferor Amount
on such date; provided, however, that if
a Controlled Accumulation Period, Early
Accumulation Period, Controlled
Amortization Period or Early
Amortization Period commences with
respect to any Series, any funds on
deposit in the Special Funding Account
will be released and treated as
collections of Principal Receivables to
the extent needed to cover principal
payments due to or for the benefit of
such Series. See "Description of the
Pooling and Servicing Agreement--
Special Funding Account."
Funding Period; Pre-Funding
Account The Prospectus Supplement relating to a
Series of Certificates may specify that
for a period beginning on the Series
Closing Date and ending on a specified
date before the commencement of a
Controlled Amortization Period or
Controlled Accumulation Period with
respect to such Series (the " Funding
Period"), the aggregate amount of
Principal Receivables in the Trust
allocable to such Series may be less
than the aggregate principal amount of
the Certificates of such Series and an
amount equal to 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 Invested
Amounts of other Series issued by the
Trust. The related Prospectus Supplement
will specify the initial Invested Amount
on the Series Closing Date with respect
to such Series, the aggregate principal
amount of the Certificates of such
Series (the " Full Invested Amount") and
the date by which the Invested Amount is
expected to equal the Full Invested
Amount. The Invested Amount will
increase as Principal Receivables are
delivered to the Trust or as the
Invested Amounts of other Series of the
Trust are reduced. The Invested Amount
may also decrease due to the occurrence
of a Pay Out Event as specified in the
related Prospectus Supplement. See "Risk
Factors -- Pre-Funding Account."
During the Funding Period, funds on
deposit in the Pre-Funding Account for a
Series of Certificates will be withdrawn
and paid to the Transferor to the extent
of any increases in the Invested Amount.
In the event that the Invested Amount
does not for any reason equal the Full
Invested Amount 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 a manner and at such time
as set forth in the related Prospectus
Supplement.
If so specified in the related
Prospectus Supplement, funds in the
Pre-Funding Account with respect to any
Series will be invested by the Trustee
in Eligible Investments or will be
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............ The credit enhancement (the "Credit
Enhancement") with respect to a Series
offered hereby may include a letter of
credit, a cash collateral account or
guaranty, spread account, yield
supplement account, a collateral
interest, a surety bond, an insurance
policy, guaranteed rate agreement,
maturity liquidity facility, tax
protection agreement or any other form
of credit enhancement described in the
related Prospectus Supplement. Credit
Enhancement may also be provided to a
Class or Classes of a Series or to a
Series by subordination provisions which
require that distributions of principal
or interest be made with respect to the
Certificates of such Class or Classes or
such Series before distributions are
made to one or more other Classes of
such Series or to another Series (if the
Supplement for such Series so provides).
The type, characteristics and amount of
the Credit Enhancement with respect to
any Series will be determined based on
several factors, including the
characteristics of the Receivables and
Accounts underlying or comprising the
Trust Assets as of the Series Closing
Date with respect thereto, and will be
established on the basis of requirements
of each applicable Rating Agency. The
terms of the Credit Enhancement with
respect to any Series offered hereby
will be described in the related
Prospectus Supplement. If so specified
in the Prospectus Supplement for a
Series, the level of Credit Enhancement
for such Series may be reduced if such
reduction satisfies the Rating Agency
Condition. See "Description of the
Pooling and Servicing Agreement-- Credit
Enhancement" and "Risk Factors-- Limited
Nature of Rating."
Servicing..................... The Bank, in its capacity as Servicer
under the Pooling and Servicing
Agreement, is the initial Servicer for
the Trust. The Servicer is responsible
for servicing, managing and making
collections on the Receivables. The "
Distribution Date" for a Series will be
the day occurring in each month (or, if
such day is not a business day, the next
business day) or such other date
specified in the Supplement for a
Series. The "Transfer Date" for a Series
will be the business day preceding each
Distribution Date or such other date
specified in the Supplement for a
Series. On the earlier of (a) the second
business day following the Date of
Processing and (b) the day on which the
Servicer deposits any collections into
the Collection Account, subject to
certain exceptions described herein, the
Servicer will pay to the holders of the
Transferor Certificates their allocable
portion of any collections then held by
the Servicer. The "Date of Processing"
is the business day on which a record of
any transaction is first recorded
pursuant to the Servicer's data
processing procedures. The "
Determination Date" for a Series will be
the third business day preceding the
Distribution Date in each Monthly
Period, or such other date specified in
the Supplement for a Series. On each
Determination Date, the Servicer will
calculate the amounts to be allocated to
the Certificateholders of each Class or
Series and the holders of the Transferor
Certificates as described herein in
respect of collections of Receivables
received with respect to the preceding
Monthly Period.
Income Tax Withholding........ Interest on the Certificates will be
subject to United States withholding tax
and backup withholding unless the holder
complies with applicable IRS
identification requirements.
Tax Status.................... Except to the extent otherwise specified
in the related Prospectus Supplement, it
is anticipated that special tax counsel
will be of the opinion that the
Certificates of each Class offered
hereby of each Series will be
characterized as indebtedness for
Federal income tax purposes. Except to
the extent otherwise specified in the
related Prospectus Supplement, the
Certificate Owners will agree to treat
the Certificates offered hereby 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.......... See "ERISA Considerations" herein and
"Summary of Series Terms-- ERISA
Considerations" in the applicable
Prospectus Supplement.
Certificate Rating............ It will be a condition to the issuance of
each Series of Certificates or Class
thereof offered pursuant to this
Prospectus and the related Prospectus
Supplement that they be rated in one of
the four highest applicable rating
categories by at least one nationally
recognized statistical rating
organization selected by the Transferor,
as specified in the applicable
Supplement (each rating agency rating
any Series, a "Rating Agency"). The
rating or ratings applicable to the
Certificates of each such Series or
Class thereof will be set forth in the
related Prospectus Supplement. A
security rating should be evaluated
independently of similar ratings of
different types of securities. 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 Agency. Each rating
should be evaluated independently of any
other rating. See "Risk Factors --
Limited Nature of 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.
RISK FACTORS
Investors should consider the following risk factors in connection
with the purchase of the Certificates.
Limited Liquidity. It is anticipated that, to the extent permitted,
the underwriters of 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 can be no assurance that a secondary
market will develop or, if a secondary market does develop, that it will
provide Certificateholders of any Series offered hereby with liquidity of
investment or that it will continue for the life of such Certificates.
Limited Operating History. BKB CT and the Bank began originating and
servicing credit card accounts in September 1995 and April 1997,
respectively. Each of the Bank and BKB CT thus has limited underwriting and
servicing experience, and limited delinquency, default and loss experience
with respect to the Accounts.
Limited History of Trust and Transferor. The Transferor was formed in
June 1997, and the Trust will be formed on the Initial Series Closing Date.
The Transferor and the Trust will have no substantial assets other than
their respective interests in the Receivables and the proceeds thereof as
described herein.
Limited History of Portfolio. The Trust's assets will consist
primarily of Receivables generated from Accounts originated since September
1995. Approximately 24% of the Receivables in the Trust Portfolio have been
originated within the last twelve months. As a result, the current
portfolio history may not be indicative of the portfolio performance as the
Receivables and Accounts mature.
Non-Recourse to the Bank, BKB CT, [New Bank], BankBoston Corporation,
Transferor or Affiliates Thereof. No Certificateholder will have recourse
for payment of its Certificates to any assets of the Bank, BKB CT, [New
Bank], BankBoston Corporation, the Transferor (other than the Transferor
Certificate, to the extent described herein), or any affiliates thereof.
Consequently, Certificateholders must rely solely upon payments on the
Receivables for the payment of principal of and interest on the
Certificates. Furthermore, under the Pooling and Servicing Agreement, the
Certificateholders have an interest in the Receivables and collections
thereon only to the extent of the Certificateholders' Interest and, to the
limited extent described herein, the Transferor's Interest. Should the
Certificates not be paid in full on a timely basis, Certificateholders may
not look to any assets of any of the Bank, BKB CT, [New Bank], BankBoston
Corporation, the Transferor (other than the Transferor Certificate, to the
extent described herein), or any affiliates thereof to satisfy their
claims.
Characteristics as a Sale; Insolvency and Receivership Risks. Each
Account Owner represents and warrants in the applicable Purchase Agreement
that the transfer of all Receivables pursuant thereto to the Transferor is
a valid sale and assignment of such Receivables from such party to the
Transferor. In addition, each Account Owner and the Transferor have agreed
that if, notwithstanding their intent, the respective sales of Receivables
to the Transferor are not treated as sales, the Purchase Agreements will be
deemed to create a security interest in the Receivables. In a receivership
or conservatorship of an Account Owner, if the conveyance of the
Receivables is not treated as a sale, but is deemed to create a security
interest in the Receivables, the Transferor's interest in the Receivables
may be subject to tax or other governmental liens relating to the
applicable Account Owner arising before the subject Receivables came into
existence and to certain administrative expenses of the receivership,
conservatorship or bankruptcy proceeding. The Account Owners have taken or
will take certain actions required to perfect the Transferor's interest in
the Receivables.
A conservator or receiver would have the power under the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") to
repudiate contracts of, and to request a stay of up to 90 days of any
judicial action or proceeding involving, an Account Owner. However,
notwithstanding the insolvency of, or the appointment of a receiver or
conservator for, an Account Owner, subject to certain qualifications, a
valid perfected security interest of the Transferor in the Receivables
should be enforceable (to the extent of the Transferor's "actual direct
compensatory damages" (as described below)) and payments to the Transferor
with respect to the Receivables (up to the amount of such damages) should
not be subject to an automatic stay of payment or to recovery by such a
conservator or receiver. If, however, the conservator or receiver were to
assert that the security interest was unperfected or unenforceable, or were
to require the Transferor to establish its right to those payments by
submitting to and completing the administrative claims procedure
established under FIRREA, or the conservator or receiver were to request a
stay of proceedings with respect to an Account Owner as provided under
FIRREA, delays in payments to the Trust and on the Certificates and
possible reductions in the amount of those payments could occur. In the
event of a repudiation of obligations by a conservator or receiver, FIRREA
provides that a claim for the repudiated obligation is limited to "actual
direct compensatory damages" determined as of the date of the appointment
of the conservator or receiver (which in most cases are expected to include
the outstanding principal on the Certificates plus interest accrued thereon
to the date of payment). The Federal Deposit Insurance Corporation ("FDIC")
has not adopted a formal policy statement on payment of principal and
interest on collateralized borrowings of banks that are repudiated. The
Transferor believes that the general practice of the FDIC in such
circumstances is to permit the collateral to be applied to pay the
principal owed plus interest at the contract rate up to the date of
payment, together with the costs of liquidation of the collateral if
provided for in the contract. In one case involving the repudiation by the
Resolution Trust Corporation (the "RTC") of certain secured zero-coupon
bonds issued by a savings association, a United States federal district
court held that "actual direct compensatory damage" in the case of a
marketable security meant the value of the repudiated bonds as of the date
of repudiation. If that court's view were applied to determine the
Transferor's "actual direct compensatory damages" in the event a
conservator or receiver of an Account Owner repudiated the applicable
Purchase Agreement, the amount paid to Certificateholders could, depending
upon circumstances existing on the date of the repudiation, be less than
the principal of the Certificates and the interest accrued thereon to the
date of payment. See "Certain Legal Aspects of the Receivables -- Certain
Matters Relating to Insolvency." In addition, in the event of a Servicer
Default, if a conservator or receiver is appointed for the Servicer, and no
Servicer Default other than such conservatorship or receivership exists,
the conservator or receiver may have the power to prevent either the
Trustee or the majority of the Certificateholders from effecting a transfer
of servicing to a successor Servicer.
Although the Pooling and Servicing Agreement provides that the
Transferor will transfer all of its right, title, and interest in and to
the Receivables to the Trust, a court could treat such transactions as an
assignment of collateral as security for the benefit of holders of
Certificates issued by the Trust. It is possible that the risk of such
treatment may be increased by the retention by the Transferor of the
Transferor Certificate and any other Class of Certificates that may be
issued and retained by the Transferor. The Transferor represents and
warrants in the Pooling and Servicing Agreement that the transfer of the
Receivables to the Trust is either a valid transfer and assignment of the
Receivables to the Trust or the grant to the Trust of a security interest
in the Receivables. The Transferor has taken and will take certain actions
required to perfect the Trust's interest in the Receivables and warrants
that if the transfer to the Trust is deemed to be a grant to the Trust of a
security interest in the Receivables, the Trustee will have a first
priority perfected security interest therein, subject only to tax or
government lien or other nonconsensual liens. If the transfer of the
Receivables to the Trust is deemed to create a security interest therein
under the Uniform Commercial Code "UCC", a tax or government lien or other
nonconsensual lien on property of the Transferor arising before Receivables
come into existence may have priority over the Trust's interest in such
Receivables. In the event of the insolvency of the Transferor, certain
administrative expenses may also have priority over the Trust's interest in
such Receivables. See "Certain Legal Aspects of the Receivables -- Transfer
of Receivables."
To the extent that the Transferor is deemed to have granted a
security interest in the Receivables to the Trust and such security
interest was validly perfected before any insolvency of the Transferor and
was not granted or taken in contemplation of insolvency or with the intent
to hinder, delay, or defraud the Transferor or its creditors, such security
interest should not be subject to avoidance in the event of insolvency or
receivership of the Transferor, and payments to the Trust with respect to
the Receivables should not be subject to recovery by a bankruptcy trustee
or receiver of the Transferor. If, however, such a bankruptcy trustee or
receiver were to assert a contrary position, delays in payments on the
Certificates and possible reductions in the amount of those payments could
occur.
In the event of a Servicer Default relating to the bankruptcy or
insolvency of the Servicer, and no Servicer Default other than such
bankruptcy or insolvency-related Servicer Default exists, the bankruptcy
trustee, conservator or receiver may have the power to prevent either the
Trustee or the Certificateholders from appointing a successor Servicer. If
the Transferor consents or fails to object to the appointment of a
bankruptcy trustee or conservator, receiver or liquidator in any
bankruptcy, insolvency or similar proceedings of or relating to the
Transferor, or the commencement of an action for the appointment of a
bankruptcy trustee or conservator, receiver or liquidator in any insolvency
or similar proceedings, or for the winding-up, insolvency, bankruptcy,
reorganization, conservatorship, receivership or liquidation of the
Transferor's affairs, or notwithstanding an objection by the Transferor any
such action remains undischarged or unstayed for a period of 60 days; or
the Transferor admits in writing its inability to pay its debts generally
as they become due, files, or consents or fails to object (or objects
without dismissal of any such filing within 60 days of such filing) to
the filing of, a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization, receivership or conservatorship statute,
makes an assignment for the benefit of its creditors or voluntarily
suspends payment of its obligations (any such event being an " Insolvency
Event"), new Principal Receivables would not be transferred by the
Transferor to the Trust. In the event of an Insolvency Event, the Trustee
would sell the Receivables (unless Holders (as defined herein) of
Certificates evidencing undivided interests aggregating more than 50% of
the aggregate unpaid principal amount of each Series (or with respect to
any Series with two or more Classes, 50% of the unpaid principal amount of
each Class) and certain other persons specified in the Supplement for a
Series instruct otherwise and provided that a trustee for the Transferor
does not order a sale despite such instructions not to sell), thereby
causing early termination of the Trust. The entire proceeds of such sale or
liquidation will be treated as collections of Receivables and allocated
accordingly among Series. Upon the occurrence of a Pay Out Event, if a
trustee, receiver or conservator is appointed for the Transferor and no Pay
Out Event other than such insolvency of the Transferor exists, the trustee
may have the power to prevent the early sale, liquidation or disposition of
the Receivables and the commencement of the Early Amortization Period or
Early Accumulation Period and may be able to require that new Principal
Receivables be transferred to the Trust. In addition, the trustee, receiver
or conservator for the Transferor may have the power to cause early sale of
the Receivables and the early payment of the Certificates or to prohibit
the continued transfer of Receivables to the Trust. See "Certain Legal
Aspects of the Receivables -- Certain Matters Relating to Insolvency."
While the Bank is the Servicer, cash collections held by the Bank
may, subject to certain conditions, be commingled and used for the benefit
of the Bank prior to each Transfer Date and, in the event of the insolvency
, receivership or conservatorship of the Bank or, in certain circumstances,
the lapse of certain time periods, the Trust may not have a perfected
security interest in such collections and accordingly, be entitled to such
collections. The Bank will be allowed to make monthly rather than daily
deposits of collections to the Collection Account if either (i) the Bank
obtains a commercial paper rating of at least A-1 and P-1 (or its
equivalent) by the applicable Rating Agency or (ii) or the Bank makes other
arrangements that satisfy the Rating Agency Condition. Unless otherwise
provided in the related Prospectus Supplement, if either of the foregoing
conditions are not satisfied, then the Bank will, within five business
days, commence the deposit of collections directly into the Collection
Account within two business days of the Date of Processing.
Consumer Protection Laws. The Accounts and Receivables are subject to
numerous Federal and state consumer protection laws which impose
requirements on the solicitation, making, enforcement and collection of
consumer loans. Such laws, as well as any new laws or rulings which may be
adopted (including, but not limited to, federal or state interest rate caps
on credit cards), may adversely affect the Servicer's ability to collect on
the Receivables or maintain the required level of periodic finance charges,
annual membership fees and other fees. In addition, failure by the Servicer
to comply with such requirements could adversely affect the Servicer's
ability to enforce the Accounts or Receivables.
Pursuant to the Pooling and Servicing Agreement, the Transferor makes
certain representations and warranties relating to the validity and
enforceability of the Accounts and the Receivables and pursuant to the
applicable Purchase Agreement the Account Owners make similar
representations and warranties with respect to the Receivables. However, it
is not anticipated that the Trustee will make any examination of the
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 not complied with and such noncompliance
continues beyond the applicable cure period, is that the Receivables
affected thereby will be reassigned to the Transferor (for reassignment, in
turn, to the applicable Account Owners pursuant to the Purchase Agreement
between such Account Owner and the Transferor) or assigned to the Servicer,
as the case may be. In addition, in the event of the breach of certain
representations and warranties, the Transferor may be obligated to accept
the reassignment of the entire Trust Portfolio. The proceeds of any such
reassignment will be deposited in the Collection Account and treated as
collections of Principal Receivables. If the proceeds from such
reassignment and any amounts on deposit in the Collection Account, the
Reserve Account and any amounts available from any Credit Enhancement are
not sufficient to pay any Certificates in full, the amount of principal
returned to Certificateholders will be reduced and some or all of the
Certificateholders will incur a loss. In addition, because the proceeds of
any such reassignment will be distributed to Certificateholders as
principal prior to the scheduled date of such repayment, Certificateholders
would not receive the benefit of the interest rate on the Certificates
specified in the applicable Prospectus Supplement for the period of time
originally expected on the amount of such early repayment, and accordingly,
Certificateholders will bear the reinvestment risk resulting from faster
payment of principal of the Certificates. There can be no assurance that a
Certificateholder would be able to reinvest such early repayment amount at
a similar rate of return. See "Description of the Pooling and Servicing
Agreement -- Representations and Warranties" and "-- Servicer Covenants"
and "Certain Legal Aspects of the Receivables -- Consumer Protection Laws."
Application of federal and state bankruptcy and debtor relief laws
would affect the interests of Certificateholders in the Receivables if such
laws result in any Receivables being written off as uncollectible when
there are no funds available pursuant to any applicable Credit Enhancement
or other sources. See "Description of the Pooling and Servicing Agreement
- -- Defaulted Receivables; Rebates and Fraudulent Charges."
Proposed Legislation -- Limitation on Finance Charges. Congress and
the states may enact new laws and amendments to existing laws to regulate
further the credit card industry or to reduce finance charges or other fees
or charges applicable to credit card accounts. The potential effect of any
such legislation could be to reduce the yield on the Accounts. If such
yield is reduced, a Pay Out Event or Reinvestment Event could occur, and
the Early Amortization Period or Early Accumulation Period would commence.
See "Description of the Certificates -- Pay Out Events and Reinvestment
Events."
Generation of Additional Receivables; Dependency on Cardholder
Repayments. The Receivables may be paid at any time and there is no
assurance that there will be additional Receivables created in the
Accounts, that Receivables will be added to the Trust from Additional
Accounts designated to the Trust, or that any particular pattern of
cardholder repayments will occur. The commencement and continuation of a
Controlled Amortization Period or a Controlled Accumulation Period will be
dependent upon the continued generation of new Receivables to be conveyed
to the Trust. A significant decline in the amount of Receivables generated
could result in the occurrence of a Pay Out Event or Reinvestment Event and
the commencement of the Early Amortization Period or the Early Accumulation
Period. The full payment of the Invested Amount of a Series or Class is
dependent on cardholder repayments and will not be made if such repayment
amounts are insufficient to pay such Series or Class its Invested Amount in
full by the Series Termination Date. The Pooling and Servicing Agreement
provides that the Transferor will be required, and the Purchase Agreement
provides that Account Owners will be required (subject to certain
conditions), to designate Additional Accounts, the Receivables of which
will be added to the Trust in the event that the amount of the Principal
Receivables is not maintained at the Required Minimum Principal Balance or
if the Transferor Amount is less than the Required Transferor Amount. If
Additional Accounts are not designated by the Transferor and the Account
Owners when required, a Pay Out Event or Reinvestment Event may occur and
result in the commencement of an Early Amortization Period or Early
Accumulation Period. In addition, a decrease in the effective yield on the
Receivables due to, among other things, a change in the annual percentage
rates applicable to the Accounts, an increase in the level of delinquencies
or an increase in convenience use (i.e., where cardholders pay their
Receivables early and thus avoid all finance charges on purchases) could
cause the commencement of an Early Amortization Period or Early
Accumulation Period as well as result in decreased protection to
Certificateholders against defaults under the Accounts.
Social, Legal,Technological, Economic and Other Factors. Changes in
card use and payment patterns by cardholders result from a variety of
social, legal, technological and economic factors. Social factors include
potential changes in consumers' attitudes towards financing purchases with
debt. Legal factors include changes in the laws affecting creditor's
rights. Technological factors include new methods of payment, such as debit
cards, electronic billing and payment services and personal computer
banking services. Economic factors include the rate of inflation,
unemployment levels, tax law changes, bankruptcy levels and relative
interest rates. The use of incentive programs (e.g., gift awards for card
usage) may also affect card use. The Transferor and the Bank are unable to
determine and have no basis to predict whether or to what extent legal,
economic or social factors will affect card use or repayment patterns. See
"The Accounts."
Competition in the Credit Card Industry. The credit card industry is
highly competitive and operates in a legal and regulatory environment
increasingly focused on the cost of services charged for credit cards. As
new credit card issuers seek to enter the market and issuers seek to expand
their market share, there is increased use of advertising, target marketing
and pricing competition. Congress and the states may enact new laws and
amendments to existing laws to regulate further the credit card industry or
to reduce finance charges or other fees or charges applicable to credit
card accounts. In addition, certain credit card issuers assess annual
percentage rates or other fees or charges at rates lower than the rate
currently being assessed on most of the Accounts. If cardholders choose to
utilize competing sources of credit, the rate at which new Receivables are
generated in the Accounts may be reduced and certain purchase and payment
patterns with respect to Receivables may be affected. The Trust will be
dependent upon the continued ability of the Account Owners to generate new
Receivables. If the rate at which new Receivables are generated declines
significantly and the Account Owners do not designate Additional Accounts,
a Pay Out Event or Reinvestment Event could occur, in which event an Early
Amortization Period or Early Accumulation Period would commence.
In September 1994, the United States Court of Appeals for the Tenth
Circuit reversed a 1992 Utah federal court decision that the VISA
association violated antitrust laws when it denied membership in VISA to a
subsidiary of Sears Roebuck & Co., on the basis that another former Sears
subsidiary at the time was the issuer of the Discover credit card, a
competitor of the VISA credit card. In June 1995, the United States Supreme
Court declined to review the decision of the court of appeals. MasterCard
has settled a similar lawsuit. This settlement by MasterCard or a similar
lawsuit against VISA could result in increased competition among issuers of
VISA and MasterCard credit cards and thereby have adverse consequences for
members of the MasterCard and VISA associations, such as the Account
Owners.
Ability of Account Owners to Change Terms of the Accounts; Decrease
in Finance Charges. Pursuant to the Pooling and Servicing Agreement, the
Transferor is not transferring to the Trust the Accounts but only the
Receivables arising in the Accounts. As owner of the Accounts, the Account
Owners have the right to determine the annual percentage rates and the fees
which are applicable from time to time to the Accounts, to alter the
Minimum Monthly Payment required under the Accounts and to change various
other terms with respect to the Accounts. A decrease in the annual
percentage rates or a reduction in fees would decrease the effective yield
on the Accounts and could result in the occurrence of a Pay Out Event or
Reinvestment Event and the commencement of an Early Amortization Period or
Early Accumulation Period. An alteration of payment terms may result in
fewer payments on Receivables being made in any month. Under the applicable
Purchase Agreement, each Account Owner agrees that, unless required by law
or unless it deems it necessary to maintain on a competitive basis its
credit card business or a program operated by such credit card business
based on a good faith assessment by it of the nature of the competition
with respect to the credit card business or such program, it will not take
any action which would have the effect of reducing the Portfolio Yield (as
defined herein) to a level that could reasonably be expected to cause any
Series to experience a Pay Out Event or Reinvestment Event based on the
insufficiency of the Series Adjusted Portfolio Yield or any similar test or
take any action that would have the effect of reducing the Portfolio Yield
to less than the highest Average Rate (as defined herein) for any Group.
"Portfolio Yield" means, with respect to the Trust as a whole and, with
respect to any Monthly Period, the annualized percentage equivalent of a
fraction (a) the numerator of which is the aggregate of the sum of the
Series Allocable Finance Charge Collections (as defined herein) for all
Series during the immediately preceding Monthly Period calculated on a cash
basis after subtracting therefrom the Series Allocable Defaulted Amount (as
defined herein) for all Series for such Monthly Period and (b) the
denominator of which is the total amount of Principal Receivables as of the
last day of such immediately preceding Monthly Period. Unless otherwise
provided in the Prospectus Supplement with respect to any Series, "Average
Rate" means, with respect to any Group, the percentage equivalent of a
decimal equal to the sum of the amounts for each outstanding Series (or
each Class within a Series consisting of more than one Class) within such
Group obtained by multiplying (a) the certificate rate for such Series or
Class (adjusted to take into account any payments made pursuant to any
interest rate agreements) and (b) a fraction, the numerator of which is the
aggregate unpaid principal amount of the Certificates of such Series or
Class and the denominator of which is the aggregate unpaid principal amount
of all Certificates within such Group. In addition, each Account Owner also
agrees that, unless required by law and except as provided above, such
Account Owner will take no action with respect to the applicable credit
card agreements or the applicable credit card guidelines that, at the time
of such action, such Account Owner reasonably believes will have a material
adverse effect on the Transferor or the Certificateholders. In servicing
the Accounts, each of the Servicer and any successor servicer will be
required to exercise the same care and apply the same policies that it
exercises in handling similar matters for its own or other comparable
accounts. Except as specified above, there are no restrictions specified in
the Purchase Agreement on the ability of an Account Owner to change the
terms of its Accounts.
There can be no assurances that changes in applicable law, changes in
the marketplace or prudent business practice might not result in a
determination by an Account Owner to decrease customer finance charges or
otherwise take actions which would change other Account terms. Under
certain circumstances, the Transferor will have the right and may be
required from time to time to require an Account Owner to designate
Receivables from time to time existing in Additional Accounts or
Participation Interests for inclusion in the Trust. However, such
Additional Accounts or Participation Interests may not be of the same
credit quality or have the same characteristics as the Accounts, the
Receivables of which have been conveyed to the Trust. See "Description of
the Pooling and Servicing Agreement -- Additions of Accounts or
Participation Interests."
Pre-Funding Account. With respect to any Series having a Pre-Funding
Account, in the event 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. 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 interest rate on
the Certificates specified in the applicable Prospectus Supplement for the
period of time originally expected on the amount of such early repayment
and, accordingly, Certificateholders will bear the reinvestment risk
resulting from faster payment of principal of the Certificates. There can
be no assurance that a Certificateholder would be able to reinvest such
early repayment amount at a similar return.
Basis Risk. The Accounts generally have finance charges set at a
variable rate above the prime rate or other specified index. Any Class of
Certificates offered hereby may bear interest at a floating rate based on a
different floating rate index. If there is a decline in the Prime Rate or
such other specified index, the amount of collections of Finance Charge
Receivables on the Accounts may be reduced, whereas the amounts payable as
interest with respect to the Certificates and other amounts required to be
funded out of collections of Finance Charge Receivables may not be
similarly reduced.
Risks of Swaps. 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. 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 (as defined herein) 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 (as defined herein). 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. See "Description of the Pooling and
Servicing Agreement -- Interest Rate Swaps and Related Caps, Floors and
Collars."
Limited Nature of 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 Pooling and Servicing Agreement and the related Supplement
and will be based primarily on the value of the Receivables in the Trust
and the availability of any Credit Enhancement with respect to such Series
or Class. Any such rating will therefore generally address credit risk and
will not, unless otherwise specified in the related Prospectus Supplement
with respect to any Class or Series offered hereby, address the likelihood
that the principal of, or interest on, any Certificates of such Class or
Series will be prepaid, paid on a scheduled date or paid on any particular
date before the applicable Series Termination Date. In addition, any such
rating will not address the possibility of the occurrence of a Pay Out
Event or Reinvestment Event with respect to such Class or Series or the
possibility of the imposition of United States withholding tax with respect
to non-U.S. Certificateholders. Further, the available amount of any Credit
Enhancement with respect to any such Series or Class will be limited and
will be subject to reduction from time to time as described in the related
Prospectus Supplement. In addition, the rating of any Series or Class may
be dependent upon the rating of any provider of Series Enhancement for such
Series or Class. The rating of the Certificates of a Class or Series will
not be a recommendation to purchase, hold or sell such Certificates, and
such rating will not comment as to the marketability of such Certificates,
any market price or suitability for a particular investor. There is no
assurance that any rating will remain for any given period of time or that
any rating will not be lowered or withdrawn entirely by a Rating Agency if
in such Rating Agency's judgment circumstances so warrant.
Issuance of New Series. The Trust, as a master trust, is expected to
issue new Series from time to time. While the terms of any Series will be
specified in a Supplement, the provisions of a Supplement and, therefore,
the terms of any new Series, will not be subject to the prior review or
consent of holders of the Certificates of any previously issued Series.
Such terms may include methods for determining applicable investor
percentages and allocating collections, provisions creating different or
additional security or other Series Enhancements, provisions subordinating
such Series to other Series or subordinating other Series (if the
Supplement relating to such Series so permits) to such Series, and any
other amendment or supplement to the Pooling and Servicing Agreement which
is made applicable only to such Series. The obligation of the Trustee to
issue any new Series is subject to the following conditions, among others:
(a) such issuance will not result in any Rating Agency reducing or
withdrawing its then existing rating of the Certificates of any outstanding
Series or Class with respect to which it is a Rating Agency (the
notification in writing by each Rating Agency to the Transferor, the
Servicer and the Trustee that any action will not result in such a
reduction or withdrawal is referred to herein as the "Rating Agency
Condition") and (b) the Transferor shall have delivered to the Trustee a
certificate of an authorized officer to the effect that, in the reasonable
belief of the Transferor, such issuance will not (i) result in the
occurrence of a Pay Out Event or Reinvestment Event or (ii) materially
adversely affect the timing or amount of payments to Certificateholders of
any Series or Class (any of the conditions referred to in the preceding
clauses (i) and (ii) are referred to herein as an " Adverse Effect"). There
can be no assurance, however, that the issuance of any other Series,
including any Series issued from time to time hereafter, might not have an
impact on the timing or amount of payments received by a Certificateholder.
In addition, the Supplements relating to Series which are part of a Group
as described herein may provide that collections of Receivables allocable
to such Series will be reallocated among all Series in the Group.
Consequently, the issuance of new Series in a Group may have the effect of
reducing the amount of collections of Receivables which are reallocated to
the Certificates of existing Series in such Group. For example, in a
Reallocation Group, which will provide for the reallocation of collections
of Finance Charge Receivables allocable to a Series among all Series in
such Group, an additional Series which is issued with a larger claim with
respect to monthly interest than that of previously issued Series in such
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 Group.
Furthermore, there can be no assurance that, for any Series in a Group, the
Trust will issue any other Series in such Group. Accordingly, the
anticipated benefits of sharing or reallocation collections of Receivables
may not be realized. See "Description of the Pooling and Servicing
Agreement -- New Issuances" and "-- Groups of Series."
Addition of Trust Assets. The Transferor may from time to time
designate Participation Interests to be conveyed to the Trust or may
designate Additional Accounts, the Receivables in which will be conveyed to
the Trust. In addition, under certain circumstances, the Transferor will be
obligated to designate Aggregate Addition Accounts or, at the Transferor's
option, Participation Interests for inclusion in the Trust. "Aggregate
Addition Accounts" means revolving credit card accounts established
pursuant to a credit card agreement between an Account Owner and the person
or persons obligated to make payments thereunder, excluding any merchant,
which is designated by the Transferor to be included as an Account.
Aggregate Addition Accounts may be subject to different eligibility
criteria than the Initial Accounts and may include accounts originated
using criteria different from those which were applied to the Initial
Accounts, because such accounts were originated at a later date or were
part of a portfolio of credit card accounts which were not part of the
Initial Accounts or which were acquired from another credit card issuer.
Moreover, Aggregate Addition Accounts may not be accounts of the same type
previously included in the Trust. Consequently, there can be no assurance
that such Aggregate Addition Accounts will be of the same credit quality as
the Accounts, the Receivables of which were initially included in the
Trust. In addition, such Aggregate Addition Accounts may consist of credit
card accounts which have different terms than the Accounts, the Receivables
of which are now included in the Trust, including lower periodic finance
charges, which may have the effect of reducing the average yield on the
portfolio of Accounts. The designation of Aggregate Addition Accounts will
be subject to the satisfaction of certain conditions, including that (a)
such addition will satisfy the Rating Agency Condition and (b) the
Transferor shall have delivered to the Trustee a certificate of an
authorized officer to the effect that, in the reasonable belief of the
Transferor, such addition will not have an Adverse Effect. The Transferor
expects to convey from time to time to the Trust the Receivables arising in
certain Aggregate Addition Accounts in accordance with the provisions of
the Pooling and Servicing Agreement.
After obtaining the consent of each Rating Agency, the Transferor may
also, from time to time, at its sole discretion, designate newly originated
Eligible Accounts to be included as Accounts ("New Accounts") subject to
the limitations and conditions specified in this paragraph. For purposes of
the definition of New Accounts, Eligible Accounts will be deemed to include
only types of revolving credit card accounts which are included as Initial
Accounts or which have previously been included in any Aggregate Addition
if the assignment related to such Aggregate Addition provides that such
type of revolving credit card account is permitted to be designated as a
New Account. Until such time as each applicable Rating Agency otherwise
consents, the number of New Accounts may be subject to certain
restrictions. To the extent New Accounts are designated for inclusion in
the Trust, the Transferor will deliver to the Trustee, at least
semiannually, an opinion of counsel with respect to the New Accounts
included as Accounts confirming the validity and perfection of each
transfer of such New Accounts. If such opinion of counsel with respect to
any New Accounts is not so received, all Receivables arising in the New
Accounts to which such failure relates will be removed from the Trust. The
Transferor will designate New Accounts subject to the following conditions,
among others: (a) the New Accounts will all be Eligible Accounts; (b) such
conveyance will not result in the occurrence of a Pay Out Event or
Reinvestment Event; and (c) such conveyance will not have been made in
contemplation of an insolvency event with respect to the Transferor or any
Account Owner. New Accounts and Aggregate Addition Accounts are
collectively referred to herein as "Additional Accounts."
Any Participation Interests to be included as Trust Assets or any
Eligible Accounts, other than New Accounts, to be included as Accounts
after the Initial Cut-Off Date, are collectively referred to herein as an
"Aggregate Addition." "Eligible Account" means a revolving credit card
account owned by an Account Owner and its successors and permitted assigns
which, as of the respective date of designation, (a) is a revolving credit
card account in existence and maintained by an Account Owner or such
successors or assignees, (b) is payable in United States dollars, (c) has a
cardholder whose address is in the United States or its territories or
possessions or a military address, (d) except as provided below has a
cardholder who has not been identified by the Servicer in its computer
files as being involved in any voluntary or involuntary bankruptcy
proceeding, (e) has not been identified as an account with respect to which
the related card has been lost or stolen, (f) has not been sold or pledged
to any other party except for any other Account Owner that has entered into
a receivables purchase agreement, (g) does not have receivables which have
been sold or pledged by an Account Owner to any other party other than the
Transferor, (h) except as provided below, does not have receivables that
are Defaulted Receivables, (i) does not have any receivables that have been
identified by the Servicer or the related cardholder as having been
incurred as a result of fraudulent use of any related credit card, (j) was
created in accordance with the credit card guidelines of the applicable
Account Owner, and (k) with respect to Additional Accounts, certain other
accounts which shall have satisfied the Rating Agency Condition. Accounts
which relate to bankrupt obligors or certain charged-off receivables may be
designated as Accounts provided that the amount of Principal Receivables in
any such Account is deemed to be zero for purposes of all allocations under
the Pooling and Servicing Agreement. See "Description of the Pooling and
Servicing Agreement -- Addition of Accounts or Participation Interests."
Allocations. To the extent provided in any Supplement, or any
amendment to the Pooling and Servicing Agreement, portions of the
Receivables or Participation Interests conveyed to the Trust and all
collections received with respect thereto may be allocated to one or more
Series or Groups 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 have an Adverse
Effect.
USE OF PROCEEDS
Unless otherwise specified in the related Prospectus Supplement, the
net proceeds from the sale of the Certificates of any Series offered
hereby, before the deduction of expenses, will be paid to the Transferor.
Unless otherwise specified in the related Prospectus Supplement, the
Transferor will use such proceeds to pay the Account Owners the purchase
price of the Receivables.
THE TRUST
The Trust will be formed pursuant to the Pooling and Servicing
Agreement. The Trust does not and will not engage in any business activity
other than acquiring and holding the Receivables and the other assets of
the Trust and proceeds therefrom, issuing Certificates, the Transferor
Certificate and any Supplemental Certificate and making payments thereon
and on any Series Enhancements and related activities. As a consequence,
the Trust does not and is not expected to have any source of capital other
than the Trust Assets. The Trust is administered in accordance with the
laws of the State of Delaware.
The Transferor conveyed to the Trust, without recourse, its interests
in all Receivables existing in the Initial Accounts at the close of
business on the Initial Cut-Off Date, and will convey to the Trust, without
recourse, its interest in all Receivables arising under such Accounts
thereafter, in exchange for the net cash proceeds from the sale of one or
more Series of Certificates plus the Transferor Certificate representing
the Transferor's Interest. In addition, the Transferor may convey from time
to time to the Trust, without recourse, except as provided in the Pooling
and Servicing Agreement, its interests in all Receivables existing in
certain Additional Accounts and Participation Interests, if any, at the
close of business on each applicable date of designation thereof. The Trust
Assets consist of the Receivables arising under certain VISA(R) and
MasterCard(R) revolving credit card accounts (the "Accounts"), and the
proceeds thereof, including recoveries on charged-off Receivables, proceeds
of credit insurance policies relating to the Receivables and may include
the right to receive Interchange, if any, allocable to the Certificates,
funds on deposit in certain accounts of the Trust for the benefit of
Certificateholders, Participation Interests, if any, and any Credit
Enhancement issued with respect to a particular Series (the drawing on or
payment of any Series Enhancement for the benefit of a Series or Class of
Certificateholders will not be available to the Certificateholders of any
other Series or Class) . Pursuant to the Purchase Agreement, the Transferor
has the right (subject to certain limitations and conditions) and in some
circumstances under the Pooling and Servicing Agreement is obligated, to
require each Account Owner to designate from time to time Additional
Accounts to be included as Accounts and the Transferor will convey to the
Trust, pursuant to the Pooling and Servicing Agreement, its interests in
all Receivables of such Additional Accounts or Participation Interests.
Under the Pooling and Servicing Agreement, the Transferor may convey
Participation Interests to the Trust. See "Description of the Pooling and
Servicing Agreement -- Additions of Accounts or Participation Interests."
In addition, the Transferor may, but is not obligated to, designate from
time to time Participation Interests or Receivables from Accounts to be
removed from the Trust. See "Description of the Pooling and Servicing
Agreement -- Removal of Accounts."
CREDIT CARD ACTIVITIES
GENERAL
Pursuant to the Purchase Agreements, the Account Owners sold to the
Transferor, and the Transferor in turn transferred to the Trust pursuant to
the Pooling and Servicing Agreement, its respective ownership interest in
the Receivables which have or will be generated from transactions made and
cash advances obtained by holders of the Accounts originated and purchased
by the Account Owners .
The Receivables to be conveyed to the Trust pursuant to the Pooling
and Servicing Agreement have been or will be generated from transactions
made by holders of certain credit card accounts (the "Trust Portfolio")
that have been selected from the total portfolio of VISA and MasterCard
accounts serviced by the Bank (the "Bank Portfolio") on the basis of
criteria set forth in the Pooling and Servicing Agreement. The Receivables
also will include all fees billed to the Accounts. The accounts were
generated under the VISA and MasterCard associations of which the Bank is a
member. The Accounts and Receivables are primarily serviced by First Data
Resources, Inc. ("FDR") and First Annapolis Marketing Information Services
Inc. ("FAMIS").
The Bank Portfolio includes VISA Classic and MasterCard standard
accounts, which are standard accounts, and VISA Gold and Gold MasterCard
accounts, which are premium accounts. Premium accounts are generally
subject to stricter underwriting criteria than standard accounts, including
higher income requirements. Premium accounts generally have higher credit
limits and provide cardholders with services not available to standard
accounts. The Bank applies the same finance charges to its premium and
standard accounts. More than three-quarters of the accounts in the Bank
Portfolio are assessed an annual membership fee, although the Bank has
waived the annual membership fee for certain premium and standard accounts.
For accounts with an annual membership fee, premium accounts are assessed a
higher fee than standard accounts.
Cardholders may use their VISA and MasterCard credit cards for three
types of transactions: credit card purchases, cash advances and convenience
checks issued by the Bank. Cardholders obtain cash advances when they use
their VISA or MasterCard credit card to obtain cash from a financial
institution or via an automated teller machine. Cardholders may also
effect balance consolidations by transferring their balances from credit
card accounts at other financial institutions to their credit card account
at the Bank. The balances so transferred are then consolidated with the
account at the Bank. Balance consolidations, which are treated by the Bank
in the same manner as purchases, may be done by cardholders either at the
time an account is originated or anytime thereafter. Cardholders also
receive and may utilize special convenience checks issued by the Bank.
Convenience checks may be used by cardholders to draw against their VISA
and MasterCard credit card accounts at any time. The Bank treats such draws
in the same manner as cash advances. All amounts due with respect to
purchases, cash advances and convenience checks will be included in the
Receivables.
Each cardholder is subject to an agreement with the Bank governing
the terms and conditions of the related VISA or MasterCard credit card
account. Pursuant to each such agreement, except as described herein, the
Bank reserves the right, subject to advance notice to the cardholder as may
be required by law, to add to, delete or change the terms and conditions of
its VISA or MasterCard credit card accounts at any time, including
increasing or decreasing periodic finance charges, fees, other charges or
minimum monthly payment requirements.
BUSINESS STRATEGY
The Bank designs and markets its credit card program based on an
empirical analysis of the credit card business at the level of the
individual cardholder. The Bank collects information about its competitors,
the consumer credit market, and current as well as historical behavior of
individual customers and prospects from both internal and external sources.
Factors considered by the Bank include credit scores, balance amounts,
purchase types and amounts, finance charges paid and other indicia of
cardholder behavior over time.
PROCESSING AND SERVICING OF CREDIT CARD ACCOUNTS
The Bank has delegated both the credit card processing and account
servicing functions to FDR, a subsidiary of First Data Corp. ("FDC"),
which performs such functions for the Bank under an eight-year,
automatically renewable contract entered into in June 1995. FDR facilities
currently located in Omaha, Nebraska, Tulsa, Oklahoma and Atlanta,
Georgia are utilized to clear transactions through the VISA and MasterCard
systems, post transactions to cardholder accounts, create billing
statements and provide credit processing, operational support (including
customer service) and perform collections activity on delinquent accounts
according to the policies and procedures prescribed by the Bank.
Transactions creating the Receivables flow through both the VISA and
MasterCard systems and the FDR processing system. If FDR should fail to
perform its functions or become insolvent, or should either the VISA or
MasterCard system materially curtail its activities, or should the Bank
cease to be a member of either VISA or MasterCard associations for any
reason, a Pay Out Event could occur and delays in payments on the
Receivables and possible reductions in the dollar amounts thereof could
also occur.
The Bank also has delegated the database management functions, data
mining activities, predictive model creating and daily oversight of FDC and
FDR activities to FAMIS, a wholly owned subsidiary of First Annapolis
Consulting Inc. The Bank entered into a six-year contract with FAMIS in
June 1995 to perform these services.
ACCOUNT ORIGINATION
BKB CT and the Bank began originating credit card accounts in
September 1995 and April 1997, respectively. The Bank's credit card
business has generally focused on relationship customers of the Bank in
Massachusetts, Rhode Island, northern Connecticut and southern New
Hampshire, while BKB CT has generally focused, on a national basis, on
creditworthy consumers who utilize credit cards to borrow. On the Initial
Series Closing Date, BKB CT will sell all of its Accounts to the Bank. The
VISA and MasterCard credit card accounts originated by the Bank as well as
those acquired by the Bank from BKB CT were principally generated through
(i) direct mail solicitations of individuals residing in the United States
who have been prescreened at credit bureaus on the basis of criteria
furnished by the Bank; (ii) direct mail solicitations of individuals
residing in the United States without prescreening; and (iii) applicant
initiated requests made at the Bank's branch offices or by telephone or via
written letter. The Bank applies the same credit criteria without
distinction among the foregoing sources of applications, as described below
in "-- Underwriting Procedures." In addition, the Bank purchased a credit
card portfolio consisting of approximately 324,000 accounts with
outstanding principal receivables of approximately $311 million in July
1996 from BayBank, N.A. and may purchase additional credit card portfolios
in the future.
UNDERWRITING PROCEDURES
The Bank reviews all applications for accounts for completeness and
creditworthiness based on credit underwriting criteria established by the
Bank. The Bank uses credit reports issued by independent credit reporting
agencies and, in the event of any discrepancies between the application and
the credit report and in certain other circumstances, the Bank may verify
certain information regarding applicants.
The primary new account source for the Bank is prescreened direct
mail solicitation of qualified prospective cardholders. Underwriting
criteria established by the Bank are utilized at the credit bureaus to
generate a list of qualifying prospective cardholders. The Bank also
obtains credit scores using scoring models licensed by the credit bureaus
from Fair Isaac & Company ("FICO"), which specializes in developing credit
scoring models. The credit scoring models used by the Bank are intended to
provide a general indication, based on the information available, of the
applicant's willingness and ability to repay the applicant's obligations.
Credit scoring evaluates a potential cardholder's credit profile and
certain of the information provided by the applicant in the credit
application in order to statistically quantify credit risk. Models for
credit scoring are developed by using statistics to evaluate common
characteristics and their correlation with credit risk. From time to time,
the credit scoring models used by the Bank are reviewed and are
periodically updated to reflect more current statistical data.
The Bank also uses information obtained from various third-party
sources and its own internal database and then applies its various
predictive models to the list of potential cardholders supplied by the
credit bureaus to determine the most creditworthy and more profitable
prospects to solicit by mail. Potential cardholders who receive direct mail
solicitations are required to complete and return an acceptance
certificate. The information supplied by the potential cardholder on the
acceptance certificate is used by the Bank to verify the potential
cardholder's credit information. As part of the verification process the
Bank reviews a new credit bureau report and credit score which are updated
based on the information supplied by the applicant and established lending
criteria. Credit lines are established after this verification process has
been completed and are commensurate with the new cardholder's updated
credit profile, credit score and income.
Non-prescreened applicants for credit cards are reviewed for
completeness and accuracy. The Bank credit scores all non-prescreened
applicants utilizing a FICO supplied credit scorecard. Applicants who score
above or below pre-set thresholds are accepted or rejected accordingly.
Applicants whose credit score lies between these preset thresholds are
reviewed manually by a credit analyst who will make the determination as to
the applicant's creditworthiness. Credit analysts have the ability to
override decisions made by the scorecard upon receipt of additional
information from the applicant. Credit lines are assigned based upon the
cardholder's credit score, income and credit profile.
The Bank generally issues credit cards that expire two years after
issuance and reissues credit cards with two-year expiration dates, so long
as the payment history of the cardholder satisfies certain criteria.
ADDITIONAL ACCOUNTS
Receivables from Additional Accounts, if needed, will be added to the
Trust from accounts originated or acquired by the Account Owners through
pre-approved applications and other sources, as described above. See "Risk
Factors -- Addition of Trust Assets."
BILLING AND PAYMENTS
The VISA and MasterCard credit card accounts of the Bank are
currently grouped into twenty-one billing cycles (each, a " Billing Cycle")
ending on various days throughout each month. Each Billing Cycle has its
own monthly billing date, at which time the activity in the related
accounts during the month ending on such billing date is processed and
mailed to cardholders. A monthly billing statement is sent by FDR to each
cardholder with a debit or credit balance of at least one dollar at the end
of the Billing Cycle or when a finance charge has been imposed.
Generally, each month, cardholders must make at least a minimum
payment equal to the sum of (i) the greater of 2.5% of the new balance of
purchases and $10, or if the new balance of purchases is less than $10, the
amount of the new balance of purchases, (ii) the greater of 2.5% of the new
balance of cash advances and $10, or if the new balance of cash advances is
less than $10, the amount of the new balance of cash advances, (iii) any
past due amount from prior months, and (iv) at the option of the Bank, the
excess of the unpaid balance for an account over the assigned credit limit
(the "Minimum Monthly Payment"). Outstanding account balances of less than
$10 are due in full.
The Bank may, in unusual circumstances, at its option, allow
individual cardholders or groups of cardholders to skip their Minimum
Monthly Payments for one or more months. Finance charges in connection with
such skipped payments continue to accrue, and the amount of the next
Minimum Monthly Payment is determined as described above, based on the
account balance at the end of the next Billing Cycle. The effect of skipped
payments is to increase the amount of Finance Charge Receivables and to
decrease the rate of payments of Principal Receivables during the Billing
Cycles for which the offers apply.
The Monthly periodic finance charges are calculated for both cash
advances and purchases by multiplying the applicable monthly periodic rate
by the average daily cash advance balance or average daily purchase
balance, respectively. Monthly periodic finance charges are calculated on
cash advances and purchases (including certain fees and unpaid finance
charges) from the date of the transaction or the first day of the Billing
Cycle in which the transaction is posted to the account (whichever is
later). Monthly periodic finance charges are not assessed in most
circumstances on purchases if the purchases new balance shown in the
billing statement is paid by the next statement closing date, or if the
purchases previous balance is zero. The next statement closing date is on
average 25-28 days after the billing date. The average annual percentage
rates for purchases and cash advances are variable rates. The current
annual percentage rate for purchases is a variable rate based on The Wall
Street Journal prime rate plus a spread generally ranging from 3.75% to
7.90%. The current annual percentage rate for cash advances is a variable
rate based on The Wall Street Journal prime rate plus a spread generally
ranging from 5.75% to 9.90%.
For accounts with an annual membership fee, generally the annual
membership fee is $18.00 for standard accounts and $28.00 for premium
accounts. The annual membership fee is non-refundable, except that such fee
need not be paid if the cardholder closes the account within 30 days of the
mailing of the billing statement on which such customer is billed for such
fee. The Bank may waive the annual membership fee, or a portion thereof, at
its discretion, in connection with solicitations for new accounts, or when the
Bank determines a waiver to be necessary to operate its credit card business
on a competitive basis. In addition to the annual membership fee, the Bank may
charge accounts certain other fees including: (i) a late fee, generally in the
amount of $18.50 with respect to any monthly payment if the required minimum
monthly payment is not received by the payment due date shown on the monthly
billing statement; (ii) a cash advance fee of 2.5% of the amount of the
advance subject to a minimum fee of $3.50 per transaction, (iii) a returned
check charge, generally in the amount of $18.50 and (iv) an over-the-limit
fee, generally in the amount of $18.50 with respect to any account more than a
specified amount over its credit limit at the time the monthly billing
statement is created.
Payments by cardholders to the Bank are processed and applied first to
any billed fees and other amounts not subject to finance charges, next to
billed and unpaid finance charges and then to billed and unpaid transactions
in the order determined by the Bank. Any excess is applied to unbilled
transactions in the order determined by the Bank and then to unbilled finance
charges. There can be no assurance that monthly periodic finance charges,
fees, and other charges imposed by the Bank will remain at current levels in
the future.
INTERCHANGE
Members participating in the VISA and MasterCard associations receive
certain fees ("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 merchandise
and services is passed from banks which clear the transactions for
merchants to credit card-issuing banks. Interchange ranges from
approximately 1% to 2% of the transaction amount, although VISA and
MasterCard associations may from time to time change the amount of
Interchange reimbursed to banks issuing their credit cards. Interchange
will be allocated to the Trust on the basis of the percentage equivalent of
the ratio which the amount of cardholder sales charges in the Accounts
bears to the total amount of cardholder sales charges for all accounts in
the Account Owner's entire portfolio. This percentage is an estimate of the
actual Interchange and may be greater or less than the actual amount of
the Interchange relating to the Accounts from time to time. Unless
otherwise stated in the related Prospectus Supplement, Interchange will be
included in collections of Finance Charge Receivables for purposes of
calculating the Portfolio Yield for a Series.
COLLECTION OF DELINQUENT ACCOUNTS
The Bank generally considers an account delinquent if a minimum
payment due thereunder is not received by the Bank by the time the
cardholder's next billing statement is generated, which is generally within
five days after the due date printed in the previous statement. Delinquent
accounts are routed to the pre-collections system at FDC where they are
prioritized and early stage collection efforts are initiated. These early
efforts include the printing of the overdue amount on the next billing
statement and either a telephone call or letter requesting payment of the
past due amount. In the event these early stage collection efforts are
ineffective, contact by telephone and/or mail is escalated and efforts to
collect past due amounts are made more frequently subject to all applicable
legal requirements.
In general, an account is restricted and charging privileges are
suspended when the account becomes fifteen (15) to thirty (30) days past
due, or when a cardholder exceeds the account's credit limit within pre-set
parameters. At sixty (60) days past due, no additional extensions of credit
will be authorized for any reason. At its sole discretion, the Bank may
enter into agreements with delinquent cardholders to extend or otherwise
change an account's payment schedule. A delinquent account may be re-aged
once in any twelve (12) month period if the delinquent cardholder makes a
payment equal to three minimum payments over a ninety (90) day period.
The current policy of the Bank is to charge-off as uncollectible any
account which is six (6) billing cycles past due (i.e., 180 days
delinquent). However, if the Bank receives notice that a cardholder has
filed for bankruptcy then the account is charged-off as soon as is
practicable but generally no later than 25 days after receipt of such
notice. The Bank's credit evaluation, servicing and charge-off policies and
collection practices may change over time in accordance with the business
judgment of the Bank, applicable law, guidelines established by applicable
regulatory authorities and market conditions.
RECOVERIES
The Transferor and the Servicer will be required, pursuant to the
terms of the Pooling and Servicing Agreement, to transfer to the Trust all
amounts received by the Servicer (net of out-of-pocket costs of
collections), including insurance proceeds, with respect to Defaulted
Receivables, including amounts received by the Transferor or the Servicer
from the purchaser or transferee with respect to the sale or other
disposition of Defaulted Receivables ("Recoveries"). In the event of any
such sale or other disposition of Receivables, Recoveries will not include
amounts received by the purchaser or transferee of such Receivables but
will be limited to amounts received by the Transferor or the Servicer from
the purchaser or transferee. Collections of Recoveries will be treated as
collections of Principal Receivables; provided, however, that to the extent
the aggregate amount of Recoveries received with respect to any monthly
period exceeds the aggregate amount of Principal Receivables (other than
Ineligible Receivables) on the day such Receivables became Defaulted
Receivables for each day in such monthly period, the amount of such excess
will be treated as collections of Finance Charge Receivables.
The Bank utilizes FDR's facilities to administer the recovery of
defaulted receivables. The Bank prioritizes defaulted receivables according
to the likelihood of successful recovery and then selects a collection
method based on the information supplied by FDC. Included among the
collection methods utilized by the Bank are primary and secondary
third-party collection agencies, which are retained to recover the
defaulted receivables. As compensation for their services, the collection
agencies receive a percentage of the amounts they collect.
FRAUD PREVENTION
The Bank reviews all applications for potential fraud by comparing
the information on the credit card application against the information
supplied by the credit bureaus. In addition, all applications are checked
against information supplied by the Issuers Clearinghouse, a national fraud
database maintained jointly by VISA and MasterCard. Once an account is
approved, transactions are monitored by FDR which scores each transaction
based upon its likelihood of being fraudulent. Potential fraudulent
activity is researched by investigators and, dependent upon their findings,
accounts may be blocked or closed.
THE BANK
BankBoston (NH), National Association is a national banking
association organized under the laws of the United States. Its principal
executive office is located at 157 Main Street, Nashua, New Hampshire
03060, and its telephone number is (603) 594-1802. The Servicer is a wholly
owned subsidiary of BankBoston Corporation. The Prospectus Supplement for
each Series will provide additional information relating to the Servicer.
CREDIT CARD RECEIVABLES FUNDING CORPORATION
CCRFC was incorporated under the laws of the State of Delaware on
June 4, 1997 and is a special purpose wholly owned subsidiary of BankBoston
Corporation. Its principal office is currently located at 157 Main Street,
Nashua, New Hampshire 03060, and its telephone number is (603) 594-1802.
The Transferor was organized for the limited purposes of facilitating the
type of transactions described herein, purchasing, holding, owning and
selling receivables, and any activities incidental to and necessary or
convenient for the accomplishment of such purposes. Neither the Bank nor
the Transferor's board of directors intends to change the business purpose
of the Transferor.
THE ACCOUNTS
The Receivables arise in certain credit card accounts that have been
selected from the total portfolio of MasterCard and VISA accounts serviced
by the Bank on the basis of criteria set forth in the Pooling and Servicing
Agreement. An account in the Bank Portfolio must be an Eligible Account to
be included in the Trust Portfolio. The Trust Portfolio represents
approximately 63% of the Eligible Accounts in the Bank Portfolio.
Pursuant to the Purchase Agreements and the Pooling and Servicing
Agreement, the Transferor has the right or is obligated (subject to certain
limitations and conditions) to require and the Account Owners are obligated
(subject to certain limitations and conditions) to designate, from time to
time, additional qualifying VISA and MasterCard consumer revolving credit
card accounts to be included as Accounts and to convey to the Transferor
for ultimate conveyance to the Trust all Receivables of such Additional
Accounts, whether such Receivables are then existing or thereafter created.
Those Accounts must meet the eligibility criteria set forth in the Pooling
and Servicing Agreement as of the date the Bank designates such Accounts as
Additional Accounts. The Account Owners will convey the Receivables then
existing or thereafter created under such Additional Accounts to the
Transferor which in turn will convey such Receivables to the Trust. Under
the Pooling and Servicing Agreement, the Transferor also has the right to
convey Participation Interests to the Trust subject to the conditions
described in the Pooling and Servicing Agreement. See "Description of the
Pooling and Servicing Agreement -- Additions of Accounts or Participation
Interests."
As of each date with respect to which Additional Accounts are
designated, each applicable Account Owner will represent and warrant to the
Transferor that the Receivables generated under the Additional Accounts
meet the eligibility requirements set forth in the applicable Purchase
Agreement and the Transferor will represent and warrant to the Trust that
such Receivables or Participation Interests, if any, meet the eligibility
requirements set forth in the Pooling and Servicing Agreement. See
"Description of the Pooling and Servicing Agreement -- Conveyance of
Receivables." Because the Initial Accounts were designated as of the
Initial Cut-Off Date and subsequent Aggregate Addition Accounts may be
designated from time to time, there can be no assurance that all of such
Accounts will continue to meet the eligibility requirements as of any
Series Closing Date. In the Pooling and Servicing Agreement the
Transferor is required to make certain representations and warranties with
respect to the Accounts and the Receivables as of each Series Closing Date
(or as of the related addition date with respect to Additional Accounts).
In the event of a breach of any such representation or warranty by the
Transferor, the Transferor may be required to accept reassignment of the
related Receivables and, to the extent such breach relates to an Account,
such Account will no longer be included as an Account. See "Description of
the Pooling and Servicing Agreement -- Representations and Warranties."
Subject to certain limitations and restrictions, the Transferor may
also designate certain Accounts or Participation Interests, if any, for
removal from the Trust, in which case such Participation Interests or the
Receivables of the Removed Accounts will be reassigned to the Transferor.
Throughout the term of the Trust, the Receivables in the Trust will consist
of Receivables generated under the Accounts, Participation Interests, if
any, and the Receivables generated under Additional Accounts, but will not
include the Receivables generated under Removed Accounts or removed
Participation Interests.
The Prospectus Supplement relating to a Series will provide certain
information about the Trust Portfolio as of the date specified. Such
information will include the amount of Principal Receivables, the amount of
Finance Charge Receivables, the range of principal balances of the Accounts
and the average thereof, the range of credit lines of the Accounts and the
average thereof, the range of ages of the Accounts and the average thereof,
information with respect to the geographic distribution of the Accounts,
the types of Accounts and delinquency statistics relating to the Accounts.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and the related Supplement substantially in the forms filed as
exhibits to the Registration Statement of which this Prospectus is a part.
The following summary describes certain terms of the Pooling and Servicing
Agreement and the related Supplement and is qualified in its entirety by
reference to the Pooling and Servicing Agreement and the related
Supplement.
The Certificates will evidence undivided beneficial interests in the
Trust Assets allocated to such Certificates, representing the right to
receive from such Trust Assets funds up to (but not in excess of) the
amounts required to make payments of interest and principal in the manner
described below.
The Certificates will initially be represented by one or more
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. Unless otherwise stated in the related
Prospectus Supplement, the Certificates will be available for purchase in
minimum denominations of $1,000 and integral multiples thereof in
book-entry form only. The Transferor has been informed by DTC that DTC's
nominee will be Cede & Co. ("Cede"). Accordingly, Cede is expected to be
the holder of record of the Certificates. Except under the limited
circumstances described herein, no Certificateholder will be entitled to
receive a Certificate in fully registered, certificated form ("Definitive
Certificates") representing such person's interest in the Certificates.
Unless and until Definitive Certificates are issued under the limited
circumstances described herein, all references herein to actions by
Certificateholders shall refer to actions taken by DTC upon instructions
from its Participants (as defined herein), and all references herein to
distributions, notices, reports and statements to Certificateholders shall
refer to distributions, notices, reports and statements to Cede, as the
registered holder of the Certificates, for distribution to the beneficial
owners of the Certificates in accordance with DTC procedures. See "--
Book-Entry Registration" and "-- Definitive Certificates."
Payments of interest and principal will be made on each related
Interest Payment Date to the Certificateholders in whose names the
Certificates were registered on the last day of the calendar month
preceding such Interest Payment Date, unless otherwise specified in the
related Prospectus Supplement (each, a "Record Date").
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement,
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 which are participants in such
systems.
Cede, as nominee for DTC, will hold the global Certificate or
Certificates. Cedel and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective Depositaries (as defined
herein) which in turn will hold such positions in customers' securities
accounts in the Depositaries' names on the books of DTC. Citibank, N.A.
will act as depositary for Cedel and Morgan Guaranty Trust Company of New
York will act as depositary for Euroclear (in such capacities, the
"Depositaries").
DTC is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act.
DTC was created to hold securities for its participating organizations
("Participants") and facilitate the settlement of securities transactions
between Participants through electronic book-entry changes in accounts of
its Participants, thereby eliminating the need for physical movement of
certificates. Participants include underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system also is
available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("Indirect Participants").
Transfers between Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants (as defined herein) and
Euroclear Participants (as defined herein) will occur in accordance with
their respective 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 systems by its Depositary. 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 received in
Cedel or Euroclear as a result of a transaction with a Participant will be
made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be
reported to the relevant Euroclear or Cedel Participants 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
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.
Certificateholders that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Certificates may do so only through Participants and Indirect
Participants. In addition, Certificateholders will receive all
distributions of principal and interest on the Certificates from the
Trustee through DTC and its Participants. Under a book-entry format,
Certificateholders will receive payments after the related Distribution
Date, as the case may be, because, while payments are required to be
forwarded to Cede, as nominee for DTC, on each such date, DTC will forward
such payments to its Participants, which thereafter will be required to
forward them to Indirect Participants or holders of beneficial interests in
the Certificates. It is anticipated that the only "Certificateholder" will
be Cede, as nominee of DTC, and that holders of beneficial interests in the
Certificates will not be recognized by the Trustee as Certificateholders
under the Pooling and Servicing Agreement. Holders of beneficial interests
in the Certificates will only be permitted to exercise the rights of
Certificateholders under the Pooling and Servicing Agreement indirectly
through DTC and its Participants who in turn will exercise their rights
through DTC. The Trustee, the Transferor, the Servicer and any paying
agent, transfer agent or registrar may treat the registered holder in whose
name any Certificate is registered (expected to be Cede) as the absolute
owner thereof (whether or not such Certificate shall be overdue and
notwithstanding any notice of ownership or writing thereon or any notice to
the contrary) for the purpose of making payment and for all other purposes.
Under the rules, regulations and procedures creating and affecting
DTC and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Certificates and
is required to receive and transmit distributions of principal of and
interest on the Certificates. Participants and Indirect Participants with
which holders of beneficial interests in the Certificates have accounts
similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of these respective holders.
Because DTC can only act on behalf of Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of
holders of beneficial interests in the Certificates to pledge Certificates
to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such Certificates, may be limited due
to the lack of a Definitive Certificate for such Certificates.
DTC has advised the Transferor that it will take any action permitted
to be taken by a Certificateholder under the Pooling and Servicing
Agreement and the related Supplement only at the direction of one or more
Participants to whose account with DTC the Certificates are credited.
Additionally, DTC has advised the Transferor that it may take actions with
respect to the Certificateholders' Interest that conflict with other of its
actions with respect thereto.
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 36 currencies, including United States dollars. Cedel
provides to Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Cedel interfaces
with domestic markets in several countries. As a professional depository,
Cedel is subject to regulation by the Luxembourg Monetary Institute. Cedel
Participants are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. 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.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers
of securities and cash. Transactions may now be settled in any of 34
currencies, including United States dollars. Euroclear includes various
other services, including securities lending and borrowing and interfaces
with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear
is operated by the Brussels, Belgium office of Morgan Guaranty Trust
Company of New York (the "Euroclear Operator"), under contract with
Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the "
Cooperative"). All operations are conducted by the Euroclear Operator, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The Cooperative
establishes policy for Euroclear on behalf of Euroclear Participants.
Euroclear Participants include banks (including central banks),
underwriters, securities brokers and dealers and other professional
financial intermediaries. Indirect access to Euroclear is also available to
other firms that clear through or 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 and
applicable Belgian law (collectively, the "Euroclear Provisions"). The
Euroclear Provisions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear, and receipts
of payments with respect to securities in Euroclear. All securities in
Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Euroclear Provisions 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 --
Foreign Investors." Cedel or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a Certificateholder
under the Pooling and Servicing Agreement and the related Supplement 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
Unless otherwise specified in the related Prospectus Supplement, the
Certificates of each Series will be issued as Definitive Certificates in
fully registered certificated form to Certificate Owners or their nominees
rather than to DTC or its nominee, only if (i) the Transferor advises the
Trustee 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, elects to
terminate the book-entry system through DTC or (iii) after the occurrence
of a Servicer Default, Certificate Owners evidencing not less than 50% of
the aggregate unpaid principal amount of the Certificates, advise the
Trustee and DTC through Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the
best interests of the Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC
of the definitive certificates representing the Certificates and
instructions for reregistration, the Trustee will issue the Certificates in
the form of Definitive Certificates, and thereafter the Trustee will
recognize the holders of such Definitive Certificates as Certificateholders
under the Pooling and Servicing Agreement and the related Supplement
("Holders").
Distribution of principal and interest on the Certificates will be
made by the Trustee directly to Holders in accordance with the procedures
set forth herein and in the Pooling and Servicing Agreement and the related
Prospectus Supplement. Interest payments and principal payments will be
made to Holders in whose names the Definitive Certificates were registered
at the close of business on the related Record Date. Distributions will be
made by check mailed to the address of such Holder as it appears on the
register maintained by the Trustee. The final payment on any Certificate
(whether Definitive Certificates or Certificates registered in the name of
Cede), however, will be made only upon presentation and surrender of such
Certificate on the final payment date at such office or agency as is
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 the final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the transfer agent and registrar, which will initially be the
Trustee. No service charge will be imposed for any registration of transfer
or exchange, but the transfer agent and registrar may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith.
INTEREST
Interest will accrue on the Certificates of a Series or Class offered
hereby at the per annum rate either specified in or determined in the
manner specified in the related Prospectus Supplement. Except as otherwise
provided herein, collections of Finance Charge Receivables and certain
other amounts allocable to the Certificateholders' Interest of a Series or
Class offered hereby will generally be used to make interest payments to
Certificateholders of such Series or Class on each Interest Payment Date
specified in the related Prospectus Supplement; provided that after the
commencement of an Early Amortization Period with respect to such Series,
interest will be distributed to such Certificateholders monthly on each
Special Payment Date. If the Interest Payment Dates for a Series or Class
occur less frequently than monthly, such collections or other amounts (or
the portion thereof allocable to such Class) will be deposited in one or
more Interest Funding Accounts and used to make interest payments to
Certificateholders of such Series or Class on the following Interest
Payment Date. If a Series has more than one Class of Certificates, each
such Class may have a separate Interest Funding Account. Funds on deposit
in an Interest Funding Account will be invested in Eligible Investments.
Any earnings (net of losses and investment expenses) on funds in an
Interest Funding Account will be paid to, or at the direction of, the
Transferor except as otherwise specified in any Supplement. Interest with
respect to the Certificates of each Series offered hereby will accrue and
be calculated on the basis described in the related Prospectus Supplement.
PRINCIPAL
The Certificates of each Series will have a Revolving Period during
which collections of Principal Receivables and certain other amounts
otherwise allocable to the Invested Amount of such Series will, (x) if such
Series is a Principal Sharing Series, be treated as Shared Principal
Collections and will be distributed to, or for the benefit of, the
Certificateholders of other Series in such Group or, if not required for
such purpose, the holders of the Transferor Certificates or deposited into
the Special Funding Account or (y) if such Series is not a Principal
Sharing Series, paid to the holders of the Transferor Certificates or
deposited into the Special Funding Account, as more fully described in the
related Prospectus Supplement. Unless an Early Amortization Period or Early
Accumulation Period commences with respect to a Series, following the
Revolving Period with respect to such Series, such Series will have either
a Controlled Accumulation Period or a Controlled Amortization Period.
During the Controlled Accumulation Period, if any, with respect to a
Series, collections of Principal Receivables and certain other amounts
allocable to the Certificateholders' Interest of such Series (including
Shared Principal Collections, if any, allocable to such Series) will be
deposited on each Distribution Date in a Principal Funding Account and used
to make principal distributions to the Certificateholders of such Series or
any Class thereof when due. If so specified in the related Prospectus
Supplement, the amount to be deposited in a Principal Funding Account for
any Series offered hereby on any Distribution Date may, but will not
necessarily, be limited to an amount equal to a Controlled Accumulation
Amount specified in such Prospectus Supplement plus any existing deficit
controlled accumulation amount arising from prior Distribution Dates. If
the Prospectus Supplement for a Series so specifies, the amount to be
deposited in the Principal Funding Account on a Distribution Date may be a
variable amount. If a Series has more than one Class of Certificates, each
Class may have a separate Principal Funding Account and Controlled
Accumulation Amount and the Controlled Accumulation Period with respect to
each class may commence on different dates. In addition, the related
Prospectus Supplement may describe certain priorities among such Classes
with respect to deposits of principal into such Principal Funding Accounts.
Subject to certain conditions including those set forth below, upon
written notice to the Trustee, the Servicer may elect to postpone the
commencement of the Accumulation Period with respect to a Series, and to
extend the length of the Revolving Period of such Series. The Servicer may
make such election only if the Accumulation Period Length (determined as
described below) is less than the number of months specified in the
Prospectus Supplement for such Series. On each Determination Date, until
the Accumulation Period begins, the Servicer will determine the "
Accumulation Period Length," which is the number of months expected to be
required to fully fund the Principal Funding Account no later than the
Scheduled Payment Date for such Series, based on (a) the expected monthly
collections of Principal Receivables expected to be distributable to the
Certificateholders of all Series (unless such Series is not a Principal
Sharing Series), assuming a principal payment rate no greater than the
lowest monthly principal payment rate on the Receivables for the preceding
twelve months and (b) the amount of principal expected to be distributable
to Certificateholders of Series (which may exclude certain other Series)
which are not expected to be in their Revolving Periods during the
Accumulation Period of the Series in respect of which the Accumulation
Period Length is being determined. If the Accumulation Period Length is
less than the number of months specified in the Prospectus Supplement for
such Series, the Servicer may, at its option, postpone the commencement of
the Accumulation Period such that the number of months included in the
Accumulation Period will be equal to or exceed the Accumulation Period
Length. The effect of the foregoing calculation is to permit the reduction
of the length of the Accumulation Period of a Series based on the Invested
Amounts of certain other Series which are scheduled to be in their
Revolving Periods during the Accumulation Period for such Series and on
increases in the principal payment rate occurring after the Series Closing
Date for such Series . The length of the Accumulation Period for any Series
will not be less than one month. If the Accumulation Period of a Series is
postponed in accordance with the foregoing, and if a Pay Out Event occurs
after the date originally scheduled as the commencement of the Accumulation
Period, it is probable that Certificateholders would receive some of their
principal later than if the Accumulation Period had not been so postponed.
During the Controlled Amortization Period, if any, with respect to a
Series, collections of Principal Receivables and certain other amounts
allocable to the Certificateholders' Interest of such Series (including
Shared Principal Collections, if any, allocable to such Series) will be
used on each Distribution Date to make principal distributions to any Class
of Certificateholders then scheduled to receive such distributions. If so
specified in the related Prospectus Supplement, the amount to be
distributed to Certificateholders of any Series offered hereby on any
Distribution Date may, but will not necessarily, be limited to an amount
equal to the Controlled Amortization Amount specified in such Prospectus
Supplement plus any existing deficit controlled amortization amount arising
from prior Distribution Dates. If a Series has more than one Class of
Certificates, each Class may have a different Controlled Amortization
Amount. In addition, the related Prospectus Supplement may describe certain
priorities among such Classes with respect to such distributions.
During the Early Accumulation Period, if any, with respect to a
Series, collections of Principal Receivables and certain other amounts
allocable to the Certificateholders' Interest of such Series (including
Shared Principal Collections, if any, allocated to such Series) will be
deposited on each Distribution Date in a Principal Funding Account and used
to make distributions of principal to the Certificateholders of such Series
or Class on the Expected Final Payment Date. The amount to be deposited in
the Principal Funding Account will not be limited to any Controlled Deposit
Amount.
During the Early Amortization Period with respect to a Series,
collections of Principal Receivables and certain other amounts allocable to
the Certificateholders' Interest of such Series (including Shared Principal
Collections, if any, allocable to such Series) will be distributed as
principal payments to the applicable Certificateholders monthly on each
Distribution Date beginning with the first Special Payment Date. During the
Early Amortization Period with respect to a Series, distributions of
principal to Certificateholders of such Series will not be subject to any
Controlled Deposit Amount or Controlled Distribution Amount. In addition,
upon the commencement of the Early Amortization Period, any funds on
deposit in a Principal Funding Account with respect to such Series will be
paid to the Certificateholders of the relevant Class or Series on the first
Special Payment Date.
Funds on deposit in any Principal Funding Account established with
respect to a Class or Series offered hereby will be invested in Eligible
Investments and may be subject to a guarantee or guaranteed investment
contract or a deposit account or other mechanism 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 Class of Certificates offered hereby
at the end of a Controlled Accumulation Period or Early Accumulation Period
with respect thereto, such Class may be subject to a maturity liquidity
facility or a deposit account or other similar mechanism specified in the
relevant Prospectus Supplement.
PAY OUT EVENTS AND REINVESTMENT EVENTS
The Revolving Period with respect to a Series will continue through
the date specified in the applicable Prospectus Supplement and the
Controlled Amortization Period or Controlled Accumulation Period will begin
at such time, unless a Pay Out Event or Reinvestment Event occurs. The
Early Amortization Period with respect to such Series will commence when a
Pay Out Event occurs or is deemed to occur and the Early Accumulation
Period will occur when a Reinvestment Event occurs or is deemed to occur. A
"Pay Out Event" will occur with respect to all Series upon the occurrence
of an Insolvency Event with respect to the Transferor. The Early
Amortization Period with respect to a Series will commence on the day on
which a Pay Out Event occurs or is deemed to occur with respect thereto. If
an Early Amortization Period commences, monthly distributions of principal
to the Certificateholders of such Series will begin on the Distribution
Date in the Monthly Period following the Monthly Period in which such Pay
Out Event occurs (such Distribution Date and each following Distribution
Date with respect to such Series, a "Special Payment Date"). Any amounts on
deposit in a Principal Funding Account or an Interest Funding Account with
respect to such Series at such time will be distributed on such first
Special Payment Date to the Certificateholders of such Series. If, because
of the occurrence of a Pay Out Event, the Early Amortization Period begins
earlier than the scheduled commencement of a Controlled Amortization Period
or prior to an Expected Final Payment Date, Certificateholders will begin
receiving distributions of principal earlier than they otherwise would have
and such distributions will not be subject to the Controlled Deposit Amount
or the Controlled Distribution Amount. As a result, the average life of the
Certificates may be reduced or increased. If a Series has more than one
Class of Certificates, each Class may have different Pay Out Events which,
in the case of any Series of Certificates offered hereby, will be described
in the related Prospectus Supplement.
A particular Series may have no Pay Out Events or only limited Pay
Out Events, but may have in lieu thereof specified events ("Reinvestment
Events") that end the reinvestment of the Trust in new Receivables and
apply available collections of Principal Receivables to the purchase of
Eligible Investments. A Reinvestment Event may include all or some of the
events that constitute Pay Out Events for other Series. The Early
Accumulation Period with respect to a Series will commence on the day on
which a Reinvestment Event occurs or is deemed to occur with respect
thereto. If a Series has more than one Class of Certificates, each Class
may have different Reinvestment Events (or may have only Pay Out Events)
which, in the case of any Series of Certificates offered hereby, will be
described in the related Prospectus Supplement.
In addition to the consequences of a Pay Out Event or Reinvestment
Event discussed above, if an Insolvency Event shall occur, immediately on
the day of such event the Transferor will cease to transfer Principal
Receivables to the Trust and promptly give notice to the Trustee of such
event. Under the terms of the Pooling and Servicing Agreement, as soon as
possible but in any event within 15 days, the Trustee will publish a notice
of the occurrence of the Insolvency Event stating that the Trustee intends
to sell, dispose of, or otherwise liquidate the Receivables in a
commercially reasonable manner unless instructions otherwise are received
within a specified period from Certificateholders holding Certificates
evidencing more than 50% of the Invested Amount of each Series of
Certificates issued and outstanding (or, with respect to any Series with
two or more Classes, 50% of the Invested Amount of each Class) and each
Enhancement Invested Amount and possibly the vote of other persons
specified in the Supplement for a Series and, for a Series offered hereby,
the related Prospectus Supplement to the effect that such
Certificateholders disapprove of the liquidation of Receivables and wish to
continue having Principal Receivables transferred to the Trust as before
such Insolvency Event. 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 on the
Receivables and applied as provided above and in each Prospectus
Supplement.
If the only Pay Out Event or Reinvestment Event to occur with respect
to any Series is the bankruptcy of the Transferor, the Trustee may not be
permitted to suspend transfers of Receivables to the Trust, and the
instructions to sell the Receivables may not be given effect.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and
reimbursement for its expenses is a monthly servicing fee (the " Servicing
Fee"). The Servicing Fee will be allocated among the Transferor's Interest
(the "Transferor Servicing Fee"), and Certificateholders of each Series.
The portion of the Servicing Fee allocable to each Series of Certificates
on any Distribution Date (the "Monthly Servicing Fee") will generally be
equal to one-twelfth of the product of (a) the applicable servicing fee
percentage with respect to such Series and (b) the Invested Amount (as it
may be adjusted in accordance with the related Supplement) of such Series
with respect to the related Monthly Period. A portion of the Monthly
Servicing Fee with respect to a particular Series may be payable from
Interchange allocated to such Series as specified in the related Supplement
and, for a Series offered hereby, the related Prospectus Supplement. For
any Monthly Period, the portion of the Monthly Servicing Fee payable from
Interchange with respect to any Series will be an amount equal to the
portion of collections of Finance Charge Receivables allocated to the
Certificateholders' Interest of such Series with respect to such Monthly
Period that is attributable to Interchange (the "Servicer Interchange");
provided, however, that Servicer Interchange for a Monthly Period may not
exceed one-twelfth of the product of (i) the Series Adjusted Invested
Amount, as of the last day of such Monthly Period and (ii) a percentage
specified in the Prospectus Supplement for such Series . In the case of any
insufficiency of Servicer Interchange with respect to any Monthly Period, a
portion of the Monthly Servicing Fee with respect to such Monthly Period
will not be paid to the extent of such insufficiency and in no event shall
the Trust, the Trustee or the Certificateholders be liable for the share of
the Servicing Fee to be paid out of Servicer Interchange.
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,
paying agent, transfer agent and registrar and independent accountants and
other fees which are not expressly stated in the Pooling and Servicing
Agreement to be payable by the Trust or the Transferor other than Federal ,
state and local income and franchise taxes, if any, of the Trust.
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENT
CONVEYANCE OF RECEIVABLES
On the Initial Series Closing Date, BKB CT will sell and assign to
the Transferor for assignment to the Trust all of its interest in all
Receivables in the Accounts existing as of the Initial Cut-Off Date. BKB CT
will then sell and assign to the Bank all of its right, title and interest
in all of such Accounts. On the Initial Series Closing Date, the Bank will
sell and assign to the Transferor for assignment to the Trust all of its
interests in all Receivables then existing and thereafter created under the
Accounts, all Recoveries and Interchange allocable to the Trust, and the
proceeds of all of the foregoing. The Account Owners may also sell and
assign from time to time to the Transferor for conveyance to the Trust
Receivables in designated Additional Accounts, and the Transferor may from
time to time sell and assign to the Trust its interest in Participation
Interests, all Recoveries and Interchange allocable to the Trust and the
proceeds of all of the foregoing.
On each Series Closing Date, the Trustee will authenticate and
deliver one or more certificates representing the Series or Class of
Certificates, in each case against payment to the Transferor of the net
proceeds of the sale of the Certificates. In the case of the Initial Series
Closing Date, the Trustee will deliver to the Transferor the Transferor
Certificate, representing the Transferor's Interest.
In connection with the transfer of the Receivables to the Trust, each
Account Owner will indicate in its computer records that the Receivables
have been conveyed from such Account Owner to the Transferor and the
Transferor will indicate in its records that the Receivables have been
conveyed from the Transferor to the Trust. In addition, the Transferor will
provide or cause to be provided to the Trustee a computer file or a
microfiche list containing a true and complete list showing for each
Account, as of the applicable date of designation, (i) its account number,
(ii) the aggregate amount outstanding in such Account and (iii) except in
the case of New Accounts, the aggregate amount of Principal Receivables in
such Account. The Transferor will retain and will not deliver to the
Trustee any other records or agreements relating to the Accounts or the
Receivables. Except as set forth above, the records and agreements relating
to the Accounts and the Receivables will not be segregated from those
relating to other credit card accounts and receivables, and the physical
documentation relating to the Accounts or Receivables will not be stamped
or marked to reflect the transfer of Receivables to the Transferor or the
Trust. The Transferor will file UCC financing statements with respect to
the transfer of the Receivables from the Transferor to the Trust meeting
the requirements of applicable state law. See "Risk Factors" and "Certain
Legal Aspects of the Receivables."
As described below under "-- Additions of Accounts or Participation
Interests," the Transferor has the right (subject to certain limitations
and conditions), and in some circumstances is obligated, to require each
Account Owner to designate from time to time Additional Accounts to be
included as Accounts and to convey to the Transferor (for conveyance by the
Transferor to the Trust) all Receivables in such Additional Accounts,
whether such Receivables are then existing or thereafter created. Each such
Additional Account must be an Eligible Account. In respect of any
designation of Additional Accounts, the Transferor will follow the
procedures set forth in the preceding paragraph, except the list will show
information for such Additional Accounts as of the date such Additional
Accounts are identified and selected. Aggregate Addition Accounts will be
selected by the Transferor in a manner which it reasonably believes will
not be materially adverse to the Certificateholders. The Transferor has the
right (subject to certain conditions described below under "-- Additions of
Accounts or Participation Interests") to convey Participation Interests to
the Trust. In addition, the Transferor may (under certain circumstances and
subject to certain limitations and conditions) remove the Participation
Interests and the Receivables in certain Accounts as described below under
"-- Removal of Accounts."
REPRESENTATIONS AND WARRANTIES
The Transferor makes representations and warranties to the Trust in
the Pooling and Servicing Agreement relating to the Accounts and the
Receivables as of each Series Closing Date (or as of the related addition
date with respect to Additional Accounts) to the effect, among other
things, that as of each applicable date of designation, (a) each Account
was an Eligible Account, (b) each of the Receivables then existing in the
Initial Accounts or in the Additional Accounts, as applicable, is an
Eligible Receivable and (c) thereafter, on the date of creation of any new
Receivable, such Receivable is an Eligible Receivable. If the Transferor
breaches any representation and warranty described in this paragraph in any
material respect and such breach remains uncured for 60 days, or such
longer period as may be agreed to by the Trustee and the Servicer, after
the earlier to occur of the discovery of such breach by the Transferor or
receipt of written notice of such breach by the Transferor and such breach
has a material adverse effect on the Certificateholders' Interest in such
Receivable, all Receivables with respect to the Account affected
("Ineligible Receivables") will be reassigned to the Transferor on the
terms and conditions set forth below and such Account shall no longer be
included as an Account.
"Eligible Receivable" means each receivable, or interest therein as
contemplated by each Purchase Agreement, (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 related Account
Owner at the time of the creation of such Receivable and which was created
pursuant to a credit card agreement which complies in all material respects
with all requirements of law applicable to the related Account Owner at the
time of the creation of such receivable and the requirements of law
applicable to any subsequent Account Owner with respect to such Receivable,
(c) with respect to which all material consents, licenses, approvals or
authorizations of, or registrations or declarations with, any governmental
authority required to be obtained, effected or given in connection with the
creation of such Receivable or the execution, delivery, creation and
performance by the applicable Account Owner of the related credit card
agreements pursuant to which such Receivable was created have been duly
obtained or given and are in full force and effect, (d) as to which at the
time of its transfer to the Trust, the Transferor or the Trust will have
good and marketable title, free and clear of all liens, encumbrances,
charges and security interests (other than any lien for municipal or other
local taxes if such taxes are not then due and payable or if the Transferor
is then contesting the validity thereof in good faith by appropriate
proceedings and has set aside on its books adequate reserves with respect
thereto), (e) which is the legal, valid and binding payment obligation of
the related cardholder enforceable against such cardholder in accordance
with its terms, subject to certain bankruptcy or insolvency related
exceptions, (f) which is not at the time of its transfer to the Trust
subject to any right of rescission, setoff, counterclaim or defense
(including the defense of usury), other than certain bankruptcy and
insolvency related defenses, and (g) which constitutes either an "account"
or a "general intangible" under the applicable UCC as then in effect.
An Ineligible Receivable will be reassigned to the Transferor on or
before the end of the Monthly Period in which such reassignment obligation
arises by the Transferor directing the Servicer to deduct the portion of
such Ineligible Receivable which is a Principal Receivable from the
aggregate amount of the Principal Receivables used to calculate the
Transferor Amount. In the event that the exclusion of the principal portion
of an Ineligible Receivable from the calculation of the Transferor Amount
would cause the Transferor Amount to be less than the Required Transferor
Amount, on the Distribution Date following the Monthly Period in which such
reassignment obligation arises the Transferor will make a deposit into the
Special Funding Account in immediately available funds in an amount equal
to the amount by which the Transferor Amount would be reduced below the
Required Transferor Amount. The reassignment of any Ineligible Receivable
to the Transferor, and the obligation of the Transferor to make any
deposits into the Special Funding Account as described in this paragraph,
is the sole remedy respecting any breach of the representations and
warranties described in the preceding paragraph with respect to such
Receivable available to the Certificateholders or the Trustee on behalf of
Certificateholders. Each of the Bank and [New Bank] will agree, in its
respective Purchase Agreement, to repurchase from the Transferor any
Ineligible Receivables which shall arise in Accounts owned by the Bank or
[New Bank], as applicable, and which shall be reassigned to the Transferor
and to provide the Transferor any amounts necessary to enable the
Transferor to make the deposit referred to above. Such obligations of the
Bank will include an obligation to accept assignment of any Ineligible
Receivables sold by BKB CT to the Transferor on the Initial Series Closing
Date which arose in the Accounts sold by BKB CT to the Bank. The term
"Transferor Amount" means at any time of determination, an amount equal to
the sum of (i) total aggregate amount of Principal Receivables in the Trust
and (ii) the amount on deposit in the Special Funding Account at such time
minus the aggregate Invested Amounts for all outstanding Series at such
time.
The Transferor also makes representations and warranties to the Trust
to the effect, among other things, that as of each Series Closing Date it
is a corporation validly existing under the laws of the State of Delaware,
it has the authority to consummate the transactions contemplated by the
Pooling and Servicing Agreement and each Supplement and will further
represent to the Trust on each Series Closing Date and, with respect to the
Additional Accounts, as of each addition date (a) the Pooling and Servicing
Agreement and each Supplement constitutes a valid, binding and enforceable
agreement of the Transferor and (b) the Pooling and Servicing Agreement and
each Supplement constitutes either a valid sale, transfer and assignment to
the Trust of all right, title and interest of the Transferor in the
Receivables, whether then existing or thereafter created and the proceeds
thereof (including proceeds in any of the accounts established for the
benefit of the Certificateholders) and in Recoveries and Interchange
allocable to the Trust or the grant of a first priority perfected security
interest under the applicable UCC in such Receivables and the proceeds
thereof (including proceeds in any of the accounts established for the
benefit of the Certificateholders) and in Recoveries and Interchange
allocable to the Trust, which is effective as to each Receivable then
existing on such date. In the event of a material breach of any of the
representations and warranties described in this paragraph that has a
material adverse effect on the Certificateholders' Interest in the
Receivables or the availability of the proceeds thereof to the Trust (which
determination will be made without regard to whether funds are then
available pursuant to any Series Enhancement), either the Trustee or
Certificateholders holding Certificates evidencing not less than 50% of the
aggregate unpaid principal amount of all outstanding Certificates, by
written notice to the Transferor and the Servicer (and to the Trustee if
given by the Certificateholders), may direct the Transferor to accept the
reassignment of the Receivables in the Trust within 60 days of such notice,
or within such longer period specified in such notice. The Transferor will
be obligated to accept the reassignment of such Receivables on the
Distribution Date following the Monthly Period in which such reassignment
obligation arises. Such reassignment will not be required to be made,
however, if at the end of such applicable period, the representations and
warranties shall then be true and correct in all material respects and any
material adverse effect caused by such breach shall have been cured. The
price for such reassignment will be an amount equal to the sum of the
amounts specified therefor with respect to each Series in the related
Supplement. The payment of such reassignment price in immediately available
funds, will be considered a payment in full of the Certificateholders'
Interest and such funds will be distributed upon presentation and surrender
of the Certificates. If the Trustee or Certificateholders give a notice as
provided above, the obligation of the Transferor to make any such deposit
will constitute the sole remedy respecting a breach of the representations
and warranties available to Certificateholders or the Trustee on behalf of
Certificateholders. Under their respective Purchase Agreement, the Bank and
[New Bank] will repurchase from the Transferor Receivables purchased by the
Transferor in accordance with this paragraph if the Bank or [New Bank], as
applicable, breaches certain of its similar representations and warranties
under their respective Purchase Agreement. See "Description of the Purchase
Agreements -- Representations and Warranties."
It is not required or anticipated that the Trustee will make any
initial or periodic general examination of the Receivables or any records
relating to the Receivables for the purpose of establishing the presence or
absence of defects, compliance with each of the Account Owners' and the
Transferor's representations and warranties or for any other purpose. In
addition, it is not anticipated or required that the Trustee will make any
initial or periodic general examination of the Servicer for the purpose of
establishing the compliance by the Servicer with its representations or
warranties or the performance by the Servicer of its obligations under the
Pooling and Servicing Agreement, any Supplement or for any other purpose.
The Servicer, however, will deliver to the Trustee on or before March 31 of
each calendar year an opinion of counsel with respect to the validity of
the interest of the Trust in and to the Receivables and certain other
components of the Trust.
THE TRANSFEROR CERTIFICATES
The Pooling and Servicing Agreement provides that the Transferor may
exchange a portion of the Transferor Certificate for one or more additional
certificates (each, a "Supplemental Certificate") for transfer or
assignment to a person designated by the Transferor upon the execution and
delivery of a supplement to the Pooling and Servicing Agreement (which
supplement shall be subject to the amendment section of the Pooling and
Servicing Agreement to the extent that it amends any of the terms of the
Pooling and Servicing Agreement; see "-- Amendments"); provided, that (a)
the Rating Agency Condition is satisfied for such exchange, (b) such
exchange will not result in any Adverse Effect and the Transferor shall
have delivered to the Trustee an officer's certificate to the effect that
the Transferor reasonably believes that such exchange will not, based on
the facts known to such officer at the time of such certification, have an
Adverse Effect, (c) the Transferor shall have delivered to the Trustee a
Tax Opinion (as defined herein) with respect to such exchange and (d) the
aggregate amount of Principal Receivables in the Trust as of the date of
such exchange will be greater than the Required Minimum Principal Balance
as of such date. Any subsequent transfer or assignment of a Supplemental
Certificate by a person other than the Transferor will be subject to the
condition set forth in clause (c) above.
ADDITIONS OF ACCOUNTS OR PARTICIPATION INTERESTS
The Transferor has the right under the Purchase Agreements to require
each Account Owner to designate from time to time Additional Accounts to be
included as Accounts. Each Account Owner will convey to the Transferor,
which in turn will convey to the Trust, its interest in all Receivables
arising from the Additional Accounts conveyed by such Account Owner,
whether such Receivables are then existing or thereafter created, subject
to the following conditions, among others: (i) each such Additional Account
must be an Eligible Account; and (ii) except for the addition of New
Accounts (a) the selection of the Aggregate Addition Accounts is done in a
manner which it reasonably believes will not result in an Adverse Effect;
and (b) except for the addition of New Accounts, the Rating Agency
Condition shall have been satisfied. "Adverse Effect" means any action that
will result in the occurrence of a Pay Out Event or Reinvestment Event or
materially adversely affect the amount or timing of distributions to the
Certificateholders of any Series or Class. The Transferor will be obligated
to require each Account Owner to designate Additional Accounts (to the
extent available) if (a) the aggregate amount of Principal Receivables in
the Trust on the last business day of any calendar month is less than the
Required Minimum Principal Balance as of such last day or (b) the
Transferor Amount on the last business day of any calendar month is less
than the Required Transferor Amount as of such last day. In lieu of adding
Additional Accounts, the Transferor may convey Participation Interests to
the Trust. Participation Interests may, for example, include rights in
transferors' interests in, or certain credit card backed securities issued
by, other trusts which have as their primary assets revolving credit card
receivables originated or purchased by the Bank or another Account Owner.
To the extent required pursuant to the Securities Act, any Participation
Interests transferred to the Trust will either have been registered under
the Securities Act or will have been entitled to an exemption from the
registration requirements of the Securities Act and will not be a
restricted security. There currently are no such Participation Interests
held by the Trust, and Participation Interests may be added to the Trust
only if the Rating Agency condition has been satisfied, such addition will
not result in an Adverse Effect and such addition will not cause an
Insolvency Event to occur. "Required Minimum Principal Balance" as of any
date of determination means the sum of the Series Invested Amounts for all
outstanding Series minus the amount on deposit in the Special Funding
Account. The "Series Invested Amount" for a Series will be the amount set
forth in the related Supplement and, for each Series offered hereby, in the
related Prospectus Supplement for such Series, but will generally equal the
initial Invested Amount for a Series.
Each Additional Account must be an Eligible Account at the time of
its designation. However, since Additional Accounts or Participation
Interests created after the Initial Cut-Off Date may not have been a part
of the portfolio of accounts of the Account Owners as of the Initial
Cut-Off Date, they may not be of the same credit quality as the Initial
Accounts because such Additional Accounts or Participation Interests may
have been originated at a later date using credit criteria different from
those which were applied to the Initial Accounts or may have been acquired
from another credit card issuer or entity who had different credit
criteria. Consequently, the performance of such Additional Accounts or
Participation Interests may be better or worse than the performance of the
Initial Accounts.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in the next succeeding sentence,
the Transferor may on any day of any Monthly Period, but shall not be
obligated to, acquire all Receivables and proceeds thereof with respect to
Removed Accounts and Participation Interests. The Transferor is permitted
to designate and require reassignment to it of the Receivables from Removed
Accounts and Participation Interests only upon satisfaction of the
following conditions: (i) the Transferor shall have delivered to the
Trustee a computer file or microfiche list containing a true and complete
list of all Removed Accounts, such Accounts to be identified by, among
other things, account number and their aggregate amount of Principal
Receivables; (ii) the Transferor shall have delivered an officer's
certificate to the Trustee to the effect that (a) either (x) no selection
procedure reasonably believed by the Transferor to be materially adverse to
the interests of the Certificateholders or the Transferor was utilized in
removing the Removed Accounts from among any pool of Accounts of a similar
type or (y) a random selection procedure was used by the Transferor in
selecting the accounts to be removed and (b) in the reasonable belief of
Transferor such removal will not have an Adverse Effect; and (iii) the
Transferor shall have delivered prior written notice of the removal to each
Rating Agency, the Trustee and the Servicer and prior to the date on which
such Receivables are to be removed the Rating Agency Condition shall have
been satisfied with respect to such removal. The foregoing conditions may
be amended with the consent of each Rating Agency but without the consent
of Certificateholders if such amendment is required to comply with any
accounting or regulatory restrictions to which the Trust, the Transferor or
any Account Owner may become subject.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that the Transferor may
at any time and from time to time, but without any obligation to do so,
designate a specified fixed or variable percentage based on a formula (the
"Discount Percentage") of the amount of Receivables arising in all or any
specified portion of the Accounts on and after the date such designation
becomes effective that otherwise would have been treated as Principal
Receivables to be treated as Finance Charge Receivables (the " Discount
Option Receivables"). Although there can be no assurance that the
Transferor will do so, such designation may occur because the Transferor
determines that the exercise of the discount option is needed to provide a
sufficient yield on the Receivables to cover interest and other amounts due
and payable from collections of Finance Charge Receivables or to avoid the
occurrence of a Pay Out Event or Reinvestment Event relating to the
reduction of the average yield on the portfolio of Accounts in the Trust,
if the related Supplement provides for such a Pay Out Event or Reinvestment
Event. After any such designation, pursuant to the Pooling and Servicing
Agreement, the Transferor may, without notice to or consent of the
Certificateholders, from time to time reduce or withdraw the Discount
Percentage; provided, however, that such reduction or withdrawal will occur
only if the Transferor delivers to the Trustee and, in connection with
certain Series, providers of Series Enhancement a certificate of an
authorized representative to the effect that, in the reasonable belief of
the Transferor, such reduction or withdrawal would not have adverse
regulatory or other accounting implications for the Transferor. The
Transferor must provide 30 days' prior written notice to the Servicer, the
Trustee, each Rating Agency and, in connection with certain Series,
providers of Series Enhancement of any such designation or reduction or
withdrawal, and such designation or reduction or withdrawal will become
effective on the date specified therein only if (a) the Transferor has
delivered to the Trustee and any such providers of Series Enhancement a
certificate of an authorized representative to the effect that, based on
the facts known to such representative at the time, the Transferor
reasonably believes that such designation or reduction or withdrawal will
not at the time of its occurrence cause a Pay Out Event or Reinvestment
Event or an event that, with notice or the lapse of time or both, would
constitute a Pay Out Event or Reinvestment Event, to occur with respect to
any Series and (b) the Transferor has received written notice from each
Rating Agency that such designation or reduction or withdrawal will satisfy
the Rating Agency Condition. On the Date of Processing of any collections
on or after the date the exercise of the discount option takes effect, the
product of (i) a fraction the numerator of which is the amount of Discount
Option Receivables and the denominator of which is the amount of all of the
Principal Receivables (including Discount Option Receivables) at the end of
the prior Monthly Period and (ii) collections of Receivables that arise in
the Accounts on such day on or after the date such option is exercised that
otherwise would be Principal Receivables will be deemed collections of
Finance Charge Receivables and will be applied accordingly, unless
otherwise provided in the related Prospectus Supplement. Any such
designation would result in an increase in the amount of collections of
Finance Charge Receivables, a reduction in the balance of Principal
Receivables and a reduction in the Transferor Amount.
YIELD SUPPLEMENT ACCOUNT
If so specified in the Prospectus Supplement for any Series the
Servicer will establish and maintain an account in the name of the Trustee,
on behalf of the Trust, with an Eligible Institution for the benefit of the
Certificateholders of such Series. Amounts on deposit in the Yield
Supplement Account (together with investment earnings thereon) will be
released and deposited into the Collection Account in the amounts and at
the times specified in the Prospectus Supplement for such Series. Each such
deposit into the Collection Account will be treated as collections of
Finance Charge Receivables allocable to the Certificates of the related
Series. The Yield Supplement Account for any Series will be funded with
proceeds from the offering of the related Investor Certificates.
PREMIUM OPTION
The Pooling and Servicing Agreement provides that the Transferor may
at any time and from time to time, but without any obligation to do so,
designate a specified fixed or variable percentage based on a formula as
specified in the related Prospectus Supplement (the "Premium Percentage")
of the amount of Receivables arising in all or any specified portion of the
Accounts on and after the date such designation becomes effective that
otherwise would have been treated as Finance Charge Receivables to be
treated as Principal Receivables (the "Premium Option Receivables"). After
any such designation, pursuant to the Pooling and Servicing Agreement, the
Transferor may, without notice to or consent of the Certificateholders,
from time to time reduce or withdraw the Premium Percentage; provided,
however, that such reduction or withdrawal will occur only if the
Transferor delivers to the Trustee and, in connection with certain Series,
providers of Series Enhancement a certificate of an authorized
representative to the effect that, in the reasonable belief of the
Transferor, such reduction or withdrawal would not have adverse regulatory
or other accounting implications for the Transferor. The Transferor must
provide 30 days' prior written notice to the Servicer, the Trustee, each
Rating Agency and any such provider of Series Enhancement of any such
designation or reduction or withdrawal, and such designation or reduction
or withdrawal will become effective on the date specified therein only if
(a) the Transferor has delivered to the Trustee and any such providers of
Series Enhancement a certificate of an authorized representative to the
effect that, based on the facts known to such representative at the time,
the Transferor reasonably believes that such designation or reduction or
withdrawal will not at the time of its occurrence cause a Pay Out Event or
Reinvestment Event or an event that, with notice or the lapse of time or
both, would constitute a Pay Out Event or Reinvestment Event, to occur with
respect to any Series and (b) the Transferor has received written notice
from each Rating Agency that such designation or reduction or withdrawal
will satisfy the Rating Agency Condition. On the Date of Processing of any
collections on or after the date the exercise of the premium option takes
effect, the product of (i) a fraction the numerator of which is the amount
of Premium Option Receivables and the denominator of which is the amount of
all of the Finance Charge Receivables (including Premium Option
Receivables) at the end of the prior Monthly Period and (ii) collections of
Receivables that arise in the Accounts on such day on or after the date
such option is exercised that otherwise would be Finance Charge Receivables
will be deemed collections of Principal Receivables and will be applied
accordingly, unless otherwise provided in the related Prospectus
Supplement. Any such designation would result in an increase in the amount
of collections of Principal Receivables and a lower portfolio yield with
respect to collections of Finance Charge Receivables than would otherwise
occur. The Transferor might exercise this option because an increase in the
amount of collections of Principal Receivables could result in a faster
repayment of principal to Certificateholders during an Amortization Period
or accumulation of principal during an Accumulation Period.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the Servicer will
indemnify the Trust and the Trustee from and against any loss, liability,
expense, damage or injury suffered or sustained arising out of certain of
the Servicer's actions or omissions with respect to the Trust pursuant to
the Pooling and Servicing Agreement.
Under the Pooling and Servicing Agreement, CCRFC, in its capacity as
a Transferor, has agreed to be liable directly to an injured party for the
entire amount of any liabilities of the Trust (other than those incurred by
a Certificateholder in the capacity of an investor in the Certificates of
any Series) arising out of or based on the arrangement created by the
Pooling and Servicing Agreement or the actions of the Servicer taken
pursuant thereto as though the Pooling and Servicing Agreement created a
partnership under the New York Uniform Partnership Act in which the
Transferor was a general partner.
Except as provided in the preceding two paragraphs, the Pooling and
Servicing Agreement provides that neither the Transferor nor the Servicer
nor any of their respective directors, officers, employees or agents will
be under any other liability to the Trust, the Trustee, the
Certificateholders, any Credit Enhancer or any other person for any action
taken, or for refraining from taking any action, in good faith pursuant to
the Pooling and Servicing Agreement. However, neither the Transferor nor
the Servicer 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
their duties or by reason of reckless disregard of their obligations and
duties thereunder.
In addition, the Pooling and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its servicing responsibilities
under the Pooling and Servicing Agreement. The Servicer may, in its sole
discretion, undertake any such legal action which it may deem necessary or
desirable for the benefit of Certificateholders with respect to the Pooling
and Servicing Agreement and the rights and duties of the parties thereto
and the interests of the Certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer is
responsible for servicing, collecting, enforcing and administering the
Receivables in accordance with customary and usual procedures for servicing
credit card receivables, but in any event at least comparable with the
policies and procedures and the degree of skill and care applied or
exercised with respect to any other credit card receivables it, or its
affiliates, service.
Pursuant to the Purchase Agreements, except as otherwise required by
any requirement of law or as is deemed by the applicable Account Owner (or
any successor to such Account Owner under such agreement) to be necessary
in order for it to maintain its credit card business or a program operated
by such credit card business on a competitive basis based on a good faith
assessment by it of the nature of the competition in the credit card
business or such program, an Account Owner will not take any action that
will have the effect of reducing the Portfolio Yield to a level that could
reasonably be expected to cause any Series to experience a Pay Out Event or
Reinvestment Event based on the insufficiency of the Series Adjusted
Portfolio Yield or take any action that would have the effect of reducing
the Portfolio Yield to less than the highest Average Rate for any Group.
The related Account Owner also covenants that unless required by law and
except as provided above, such Account Owner will take no action with
respect to the applicable credit card agreements or the applicable credit
card guidelines that, at the time of such action, such Account Owner
reasonably believes will have a material adverse effect on the Transferor
or the Certificateholders.
Servicing activities to be performed by the Servicer include
collecting and recording payments, communicating with cardholders,
investigating payment delinquencies, evaluating the increase of credit
limits and the issuance of credit cards, providing billing and tax records
to cardholders and maintaining internal records with respect to each
Account. Managerial and custodial services performed by the Servicer on
behalf of the Trust include providing assistance in any inspections of the
documents and records relating to the Accounts and Receivables by the
Trustee pursuant to the Pooling and Servicing Agreement, maintaining the
agreements, documents and files relating to the Accounts and Receivables as
custodian for the Trust and providing related data processing and reporting
services for Certificateholders and on behalf of the Trustee.
The Pooling and Servicing Agreement provides that the Servicer may
delegate its duties under that agreement to any entity that agrees to
conduct such duties in accordance with the Pooling and Servicing Agreement
and the credit card guidelines. Notwithstanding any such delegation the
Servicer will continue to be liable for all of its obligations under the
Pooling and Servicing Agreement.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that, pursuant to any
one or more Supplements, the Transferor may direct the Trustee to
authenticate from time to time new Series subject to the conditions
described below (each such issuance, a "New Issuance"). Each New Issuance
will have the effect of decreasing the Transferor Amount to the extent of
the initial Invested Amount of such new Series. Under the Pooling and
Servicing Agreement, the Transferor may designate, with respect to any
newly issued Series: (a) its name or designation; (b) its initial principal
amount (or method for calculating such amount) and its invested amount in
the Trust (the "Invested Amount"), which is generally based on the
aggregate amount of Principal Receivables in the Trust allocated to such
Series, and its Series Invested Amount; (c) its certificate rate (or
formula for the determination thereof); (d) the interest payment date or
dates (each, an "Interest Payment Date") and the date or dates from which
interest shall accrue; (e) the method for allocating collections to
Certificateholders of such Series; (f) any bank accounts to be used by such
Series and the terms governing the operation of any such bank accounts; (g)
the percentage used to calculate the Monthly Servicing Fees; (h) the
provider and terms of any form of Series Enhancement with respect thereto;
(i) the terms on which the Certificates of such Series may be repurchased;
(j) the Series Termination Date; (k) the number of Classes of Certificates
of such Series, and if such Series consists of more than one Class, the
rights and priorities of each such Class; (l) the extent to which the
Certificates of such Series will be issuable in temporary or permanent
global form (and, in such case, the depositary for such global certificate
or certificates, the terms and conditions, if any, upon which such global
certificate or certificates may be exchanged, in whole or in part, for
definitive certificates, and the manner in which any interest payable on
such global certificate or certificates will be paid); (m) whether the
Certificates of such Series may be issued in bearer form and any
limitations imposed thereon; (n) the priority of such Series with respect
to any other Series; (o) the Group, if any, in which such Series will be
included; and (p) any other relevant terms (all such terms, the "Principal
Terms" of such Series). None of the Transferor, the Servicer, the Trustee
or the Trust is required or intends to obtain the consent of any
Certificateholder of any outstanding Series to issue any additional Series.
The Transferor may offer any Series to the public under a Prospectus
Supplement or other Disclosure Document in transactions either registered
under the Securities Act or exempt from registration thereunder, directly,
through one or more underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or otherwise. See "Plan of
Distribution." Any such Series may be issued in fully registered or
book-entry form in minimum denominations determined by the Transferor. The
Transferor intends to offer, from time to time, additional Series.
The Pooling and Servicing Agreement provides that the Transferor may
designate Principal Terms such that each Series has a Controlled
Accumulation Period or a Controlled Amortization Period that may have a
different length and begin on a different date than such periods for any
other Series. Further, one or more Series may be in their Controlled
Accumulation Period or Controlled Amortization Period while other Series
are not. Moreover, each Series may have the benefits of Series Enhancement
issued by enhancement providers different from the providers of Series
Enhancement with respect to any other Series. Under the Pooling and
Servicing Agreement, the Trustee shall hold any such Series Enhancement
only on behalf of the Certificateholders of the Series to which such Series
Enhancement relates. With respect to each such Series Enhancement, the
Transferor may deliver a different form of Series Enhancement agreement.
The Transferor also has the option under the Pooling and Servicing
Agreement to vary among Series the terms upon which a Series may be
repurchased by the Transferor. There is no limit to the number of New
Issuances the Transferor may cause under the Pooling and Servicing
Agreement. The Trust will terminate only as provided in the Pooling and
Servicing Agreement. There can be no assurance that the terms of any Series
might not have an impact on the timing and amount of payments received by a
Certificateholder of another Series.
Under the Pooling and Servicing Agreement and pursuant to a
Supplement, a New Issuance may only occur upon the satisfaction of certain
conditions provided in the Pooling and Servicing Agreement. The obligation
of the Trustee to authenticate the Certificates of such new Series and to
execute and deliver the related Supplement is subject to the satisfaction
of the following conditions: (a) on or before the fifth day immediately
preceding the date upon which the New Issuance is to occur, the Transferor
shall have given the Trustee, the Servicer and each Rating Agency written
notice of such New Issuance and the date upon which the New Issuance is to
occur; (b) the Transferor shall have delivered to the Trustee the related
Supplement, in form satisfactory to the Trustee, executed by each party to
the Pooling and Servicing Agreement other than the Trustee; (c) the
Transferor shall have delivered to the Trustee any related Series
Enhancement agreement executed by each of the parties to such agreement;
(d) the Trustee shall have received confirmation from each Rating Agency
that such New Issuance will satisfy the Rating Agency Condition; (e) the
Transferor shall have delivered to the Trustee and certain providers of
Series Enhancement a certificate of an authorized officer, dated the date
upon which the New Issuance is to occur, to the effect that the Transferor
reasonably believes that such issuance will not, based on the facts known
to such representative at the time of such certification, have an Adverse
Effect; (f) the Transferor shall have delivered to the Trustee, each Rating
Agency and certain providers of Series Enhancement an opinion of counsel
acceptable to the Trustee that for Federal income tax purposes: (i)
following such New Issuance the Trust will not be deemed to be an
association (or publicly traded partnership) taxable as a corporation; (ii)
such New 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; (iii) such New
Issuance will not cause or constitute an event in which gain or loss would
be recognized by any Certificateholders; and (iv) except as is otherwise
provided in a Supplement with respect to any Series or Class thereof, the
Certificates of such Series or the specified Classes thereof will be
properly characterized as debt (an opinion of counsel to the effect
referred to in clauses (i), (ii) (iii) with respect to any action is
referred to herein as a "Tax Opinion"); (g) the aggregate amount of
Principal Receivables plus the principal amount of any Participation
Interest shall be greater than the Required Minimum Principal Balance as of
the date upon which the New Issuance is to occur after giving effect to
such issuance; and (h) any other conditions specified in any Supplement.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and issue to the Transferor the Certificates of such new Series
for execution and redelivery to the Trustee for authentication.
COLLECTION ACCOUNT
The Servicer has established and maintains, or has caused to be
established and maintains, for the benefit of the Certificateholders in the
name of the Trustee, on behalf of the Trust, an account (the "Collection
Account") with an Eligible Institution. "Eligible Institution" means any
depository institution (which may be 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 rating acceptable to each Rating Agency or a
long-term unsecured debt rating acceptable to each Rating Agency, except
that no such rating will be required of an institution which maintains a
trust fund in a fully segregated trust account with the corporate trust
department of such institution as long as such institution maintains the
credit rating of the applicable Rating Agency in one of its generic credit
rating categories which signifies investment grade and is a member of the
FDIC. Notwithstanding the preceding sentence, any institution the
appointment of which satisfies the Rating Agency Condition will be an
Eligible Institution. Funds in the Collection Account generally will be
invested in (i) obligations issued or fully guaranteed by the United States
of America or any instrumentality or agency thereof when such obligations
are backed by the full faith and credit of the United States of America,
(ii) demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies incorporated under the laws of
the United States of America or any state thereof 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 short-term debt
rating of such depository institution or trust company shall be in the
highest rating category of the applicable Rating Agency, (iii) commercial
paper or other short-term obligations having, at the time of the Trust's
investment or a contractual commitment to invest, a rating in the highest
rating category of the applicable Rating Agency, (iv) demand deposits, time
deposits or certificates of deposit which are fully insured by the FDIC
having, at the time of the Trust's investment therein, a rating in the
highest rating category of the applicable Rating Agency, (v) bankers'
acceptances issued by any depository institution or trust company described
in (ii) above, (vi) money market funds having, at the time of the Trust's
investment therein, a rating in the highest rating category of the
applicable Rating Agency, (vii) time deposits, other than as referred to in
(iv) above, with an entity, the commercial paper of such entity having a
credit rating in the highest rating category of the applicable Rating
Agency, (viii) certain repurchase agreements meeting the requirements set
forth in the Pooling and Servicing Agreement, and (ix) any other investment
if the Rating Agency Condition has been satisfied (collectively, "Eligible
Investments"). Any earnings (net of losses and investment expenses) on
funds in the Collection Account will be paid to the Transferor. The
Servicer has the revocable power to withdraw funds from the Collection
Account and to instruct the Trustee to make withdrawals and payments from
the Collection Account for the purpose of carrying out its duties under the
Pooling and Servicing Agreement and any Supplement.
ALLOCATIONS
Pursuant to the Pooling and Servicing Agreement, during each Monthly
Period the Servicer will allocate to each outstanding Series its Series
Allocable Finance Charge Collections, Series Allocable Principal
Collections and Series Allocable Defaulted Amount.
"Series Adjusted Invested Amount" means, with respect to any Series
and for any Monthly Period, the Series Invested Amount for such Series for
such Monthly Period, less the excess, if any, of the cumulative amount
(calculated in accordance with the terms of the related Supplement and,
with respect to any Series offered hereby, the related Prospectus
Supplement) of investor charge-offs allocable to the Invested Amount for
such Series as of the last day of the immediately preceding Monthly Period
over the aggregate reimbursement of such investor charge-offs as of such
last day, or such lesser amount as may be provided in the Supplement for
such Series and, with respect to any Series offered hereby, the related
Prospectus Supplement.
"Series Allocable Finance Charge Collections," "Series Allocable
Principal Collections" and "Series Allocable Defaulted Amount" mean, with
respect to any Series and for any Monthly Period, the product of (a) the
Series Allocation Percentage and (b) the amount of collections of Finance
Charge Receivables deposited in the Collection Account, the amount of
collections of Principal Receivables deposited in the Collection Account
and the amount of all Defaulted Amounts with respect to such Monthly
Period, respectively.
"Series Allocation Percentage" means, with respect to any Series and
for any Monthly Period, the percentage equivalent of a fraction, the
numerator of which is the Series Adjusted Invested Amount as of the last
day of the immediately preceding Monthly Period plus the Series Required
Transferor Amount as of the last day of the immediately preceding Monthly
Period and the denominator of which is the Trust Adjusted Invested Amount
plus the sum of all Series Required Transferor Amounts as of such last day.
"Series Required Transferor Amount" means for any Series an amount
specified in the Supplement for such Series and, for any Series offered
hereby, the related Prospectus Supplement.
"Trust Adjusted Invested Amount" means, with respect to any Monthly
Period, the sum of the Series Adjusted Invested Amounts (as adjusted in any
Supplement) for all outstanding Series.
The Servicer will then allocate amounts initially allocated to a
particular Series between the Certificateholders' Interest and the
Transferor's Interest for such Monthly Period as follows:
(a) the Series Allocable Finance Charge Collections and the Series
Allocable Defaulted Amount will at all times be allocated to the
Invested Amount of a Series based on the Floating Allocation Percentage
of such Series; and
(b) the Series Allocable Principal Collections will at all times be
allocated to the Invested Amount of such Series based on the Principal
Allocation Percentage of such Series.
The "Floating Allocation Percentage" and the "Principal Allocation
Percentage" with respect to any Series will be determined as set forth in
the related Supplement and, with respect to each Series offered hereby, in
the related Prospectus Supplement. Amounts not allocated to the Invested
Amount of any Series as described above will be allocated to the
Transferor's Interest.
GROUPS OF SERIES
If so specified in the related Prospectus Supplement, the
Certificates of a Series may be included in a Reallocation Group, which is
a Group of Series subject to reallocations of collections of Finance Charge
Receivables and other amounts or obligations among Series in such Group in
the manner described below under "-- Reallocations Among Certificates of
Different Series within 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 Group. Consequently, the issuance of new Series in such 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 Group. See "Risk Factors -- Issuance of New Series." The Prospectus
Supplement with respect to a Series offered hereby will specify whether
such Series will be included in a Reallocation Group or another type of
Group, whether any previously issued Series have been included in such a
Group and whether any such Series or any previously issued Series may be
removed from such a Group.
REALLOCATIONS AMONG CERTIFICATES OF 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 Group Investor
Finance Charge Collections (as defined below) for a particular Reallocation
Group and on the following Distribution Date will allocate such amount
among the Certificateholders' Interest (including any Enhancement Invested
Amount) for all Series in such Group in the following priority:
(i) Group Investor Monthly Interest (as defined below);
(ii) Group Investor Default Amounts (as defined below);
(iii) Group Investor Monthly Fees (as defined below);
(iv) Group Investor Additional Amounts (as defined below); and
(v) the balance pro rata among each Series in such Group based
on the current Invested Amount of each such Series.
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 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 Group will share such amount
pro rata, and any Series in such 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 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 Certificateholders' 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 Additional Amounts" means for any Distribution Date
the sum of the amounts determined with respect to each Series in such Group
equal to (a) an amount equal to the amount by which the Invested Amount of
any Class of Certificates or any Enhancement Invested Amounts have been
reduced as a result of investor charge-offs, subordination of principal
collections and funding the investor default amount for any other Class of
Certificates or Enhancement Invested Amounts of such Series and (b) if the
related Supplement so provides, the amount of interest at the applicable
certificate rate that has accrued on the amount described in the preceding
clause (a).
"Group Investor Default Amount" means for any Distribution Date the
sum of the amounts determined with respect to each Series in such Group
equal to the product of the Series Allocable Defaulted Amount for such
Distribution Date and the applicable Floating Allocation Percentage for
such Distribution Date.
"Group Investor Finance Charge Collections" means for any
Distribution Date the aggregate amount of Investor Finance Charge
Collections for such Distribution Date for all Series in such Group.
"Group Investor Monthly Fees" means for any Distribution Date the
Monthly Servicing Fee for each Series in such Group, any Series Enhancement
fees and any other similar fees which are paid out of Reallocated Investor
Finance Charge Collections for such Series pursuant to the applicable
Supplement.
"Group Investor Monthly Interest" means for any Distribution Date the
sum of the aggregate amount of monthly interest, including overdue monthly
interest and interest on such overdue monthly interest, if applicable, for
all Series in such Group for such Distribution Date.
Finance Charge Receivables may be allocated and reallocated among
Series in a Group as described below.
Step 1 - total collections of Finance Charge Receivables are
allocated among Series based on the Series Allocation Percentage for each
Series. The amounts allocated to each Series pursuant to this Step 1 are
referred to as "Series Allocable Finance Charge Collections." See "--
Allocations" above.
Step 2 - the amount of collections of Finance Charge Receivables
allocable to the Invested Amount (including any Enhancement Invested
Amount) of a Series (the "Investor Finance Charge Collections") is
determined by multiplying Series Allocable Finance Charge Collections for
each Series by the applicable Floating Allocation Percentages. See "--
Allocations" above.
Step 3 - Investor Finance Charge Collections for all Series in a
particular Reallocation Group (or Group Investor Finance Charge
Collections) are pooled for reallocation to each such Series.
Step 4 - Group Investor Finance Charge Collections are reallocated to
each Series in such Group based on the Series' respective claim with
respect to interest payable on the Certificates or Enhancement Invested
Amount (if any) of such Series, the Defaulted Amount allocable to the
Certificateholders' Interest of such Series and the Monthly Servicing Fee
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
Invested Amounts.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS AMONG EXCESS ALLOCATION SERIES
Any Series offered hereby may be designated as an Excess Allocation
Series (including a Series in a Reallocation Group or other type of Group).
Collections of Finance Charge Receivables and certain other amounts
allocable to the Certificateholders' Interest of any Excess Allocation
Series in excess of the amounts necessary to make required payments with
respect to such Series (including payments to the provider of any related
Series Enhancement) that are payable out of collections of Finance Charge
Receivables (any such excess, the "Excess Finance Charge Collections") may
be applied to cover any shortfalls with respect to amounts payable from
collections of Finance Charge Receivables allocable to any other Excess
Allocation Series, pro rata based upon the amount of the shortfall with
respect to amounts payable from collections of Finance Charge Receivables,
if any, with respect to each other Excess Allocation Series; provided,
however, that the sharing of Excess Finance Charge Collections among Excess
Allocation Series will cease if the Transferor shall deliver to the Trustee
a certificate of an authorized representative to the effect that, in the
reasonable belief of the Transferor, the continued sharing of Excess
Finance Charge Collections among Excess Allocation Series would have
adverse regulatory implications with respect to the Transferor or any
Account Owner. Following the delivery by the Transferor of any such
certificate to the Trustee there will not be any further sharing of Excess
Finance Charge Collections among such Series in any such Group. In all
cases, any Excess Finance Charge Collections remaining after covering
shortfalls with respect to all outstanding Excess Allocation Series will be
paid to the holders of the Transferor Certificates. 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, (c) any
agreement relating to any Series Enhancement will not be amended in such a
manner as to increase payments to the providers of Series Enhancement and
thereby decrease the amount of Excess Finance Charge Collections available
from such Series or (d) the Transferor will not at any time deliver a
certificate as described above. While the Transferor believes that, based
upon applicable rules and regulations as currently in effect, the sharing
of Excess Finance Charge Collections among Excess Allocation Series will
not have adverse regulatory implications for it or any Account Owner, there
can be no assurance that this will continue to be true in the future.
SHARED PRINCIPAL COLLECTIONS
If the Prospectus Supplement for the related Series provides that
such Series is a Principal Sharing Series, collections of Principal
Receivables for any Monthly Period allocated to the Certificateholders'
Interest of any such Series will first be used to cover certain amounts
described in the related Prospectus Supplement (including any required
deposits into a Principal Funding Account or required distributions to
Certificateholders of such Series in respect of principal). The Servicer
will determine the amount of collections of Principal Receivables for any
Monthly Period (plus certain other amounts described in the related
Prospectus Supplement) allocated to such Series remaining after covering
such required deposits and distributions and any similar amount remaining
for any other Principal Sharing Series (collectively, "Shared Principal
Collections"). The Servicer will allocate the Shared Principal Collections
to cover any principal distributions to Certificateholders and deposits to
Principal Funding Accounts for any Principal Sharing Series that are either
scheduled or permitted and that have not been covered out of collections of
Principal Receivables and certain other amounts allocable to the
Certificateholders' Interest of such Series (collectively, "Principal
Shortfalls"). If Principal Shortfalls exceed Shared Principal Collections
for any Monthly Period, Shared Principal Collections will be allocated pro
rata among the applicable Series based on the respective Principal
Shortfalls of such Series. To the extent that Shared Principal Collections
exceed Principal Shortfalls, the balance will be allocated to the holders
of the Transferor Certificates, provided that (a) such Shared Principal
Collections will be distributed to the holders of the Transferor
Certificates only to the extent that the Transferor Amount is greater than
the Required Transferor Amount and (b) in certain circumstances described
below under "-- Special Funding Account," such Shared Principal Collections
will be deposited in the Special Funding Account. Any such reallocation of
collections of Principal Receivables will not result in a reduction in the
Invested Amount of the Series to which such collections were initially
allocated. There can be no assurance that there will be any Shared
Principal Collections with respect to any Monthly Period or that any Series
will be designated as Principal Sharing Series.
PAIRED SERIES
If so provided in the related Supplement, a Prior Series may be
paired with a Paired Series issued by the Trust at or after the
commencement of the Controlled Amortization Period or Controlled
Accumulation Period for such Prior Series. As the Invested Amount of the
Prior Series is reduced, the Invested Amount in the Trust of the Paired
Series will increase by an equal amount. Upon payment in full of the Prior
Series, the Invested Amount of such Paired Series will be equal to the
Invested Amount paid to Certificateholders of such Prior Series. If a Pay
Out Event or Reinvestment Event occurs with respect to the Prior Series or
with respect to the Paired Series when the Prior Series is in a Controlled
Amortization Period or Controlled Accumulation Period, the Series
Allocation Percentage and the Principal Allocation Percentage for the Prior
Series and the Series Allocation Percentage and the Principal Allocation
Percentage for the Paired Series will be reset as provided in the related
Prospectus Supplement and the Controlled Amortization Period, Controlled
Accumulation Period, Early Amortization Period or Early Accumulation Period
for such Series could be lengthened.
SPECIAL FUNDING ACCOUNT
If, on any date, the Transferor Amount is less than or equal to the
Required Transferor Amount, the Servicer shall not distribute to the
holders of the Transferor Certificates any collections of Principal
Receivables allocable to a Series or a Group that otherwise would be
distributed to such holders, but shall deposit such funds in an account
with an Eligible Institution established and maintained by the Servicer for
the benefit of the Certificateholders of each Series, in the name of the
Trustee, on behalf of the Trust, and bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders of each Series (the " Special Funding Account"). Funds
on deposit in the Special Funding Account will be withdrawn and paid to the
holders of the Transferor Certificates on any Distribution Date to the
extent that, after giving effect to such payment, the Transferor Amount
exceeds the Required Transferor Amount on such date; provided, however,
that if a Controlled Accumulation Period, Early Accumulation Period,
Controlled Amortization Period or Early Amortization Period commences with
respect to any Series, any funds on deposit in the Special Funding Account
will be released from the Special Funding Account, deposited in the
Collection Account and treated as collections of Principal Receivables to
the extent needed to make principal payments due to or for the benefit of
the Certificateholders of such Series.
Funds on deposit in the Special Funding Account will be invested by
the Trustee, at the direction of the Servicer, in Eligible Investments. Any
earnings (net of losses and investment expenses) earned on amounts on
deposit in the Special Funding Account during any Monthly Period will be
withdrawn from the Special Funding Account and treated as collections of
Finance Charge Receivables with respect to such Monthly Period.
FUNDING PERIOD; PRE-FUNDING ACCOUNT
For any Series of Certificates, the related Prospectus Supplement may
specify that during a Funding Period, 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 Invested Amounts of other Series
issued by the Trust. The related Prospectus Supplement will specify the
initial Invested Amount with respect to such Series, the Full Invested
Amount and the date by which the Invested Amount is expected to equal the
Full Invested Amount. The Invested Amount will increase as Receivables are
delivered to the Trust or as the Invested Amounts of other Series of the
Trust are reduced. The Invested Amount may also decrease due to the
occurrence of a Pay Out Event with respect to such Series as provided in
the related Prospectus Supplement.
During the Funding Period, funds on deposit in the Pre-Funding
Account for a Series of Certificates will be withdrawn and paid to the
Transferor to the extent of any increases in the Invested Amount. If the
Invested Amount does not for any reason equal the Full Invested Amount 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 in the
Pre-Funding Account will be invested by the Trustee in Eligible Investments
or 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 Collection Account for distribution in respect of interest on the
Certificates of the related Series in the manner specified in the related
Prospectus Supplement.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
"Defaulted Receivables" for any Monthly Period are Principal
Receivables that were charged-off as uncollectible in such Monthly Period.
The "Defaulted Amount" for any Monthly Period will be an amount (not less
than zero) equal to (a) the excess, if any, of the amount of Defaulted
Receivables for such Monthly Period over the Recoveries for such Monthly
Period, minus (b) the amount of any Defaulted Receivables the assignment or
reassignment of which the Transferor or the Servicer becomes obligated to
accept during such Monthly Period (unless an event relating to bankruptcy,
receivership or insolvency has occurred with respect to the Transferor or
the Servicer, in which event the amount of such Defaulted Receivables will
not be added to the sum so subtracted). Receivables in any Account will be
charged-off as uncollectible in accordance with the credit card guidelines
and the Servicer's customary and usual policies and procedures for
servicing revolving credit card and other revolving credit account
receivables comparable to the Receivables. The current policy of the
Account Owners is to charge-off the receivables in an account when that
account becomes 181 days delinquent (or sooner in the event of receipt of
notice of death or bankruptcy of the cardholder), but such policy may
change in the future to conform with regulatory requirements and applicable
law.
If the Servicer adjusts downward the amount of any Principal
Receivable (other than Ineligible Receivables that have been, or are to be,
reassigned to the Transferor) because of a rebate, refund, counterclaim,
defense, error, fraudulent charge or counterfeit charge to a cardholder, or
such Principal Receivable was created in respect of merchandise that was
refused or returned by a cardholder or if the Servicer otherwise adjusts
downward the amount of any Principal Receivable without receiving
collections therefor or charging off such amount as uncollectible, the
amount of the Principal Receivables in the Trust with respect to the
Monthly Period in which such adjustment takes place will be reduced by the
amount of the adjustment. Furthermore, in the event that the exclusion of
any such Receivables would cause the Transferor Amount at such time to be
less than the Required Transferor Amount, the Transferor will be required
to pay an amount equal to such deficiency into the Special Funding Account.
CREDIT ENHANCEMENT
General. For any Series, Credit Enhancement may be provided with
respect to one or more Classes thereof. Credit Enhancement with respect to
one or more Classes of a Series offered hereby may include a letter of
credit, a cash collateral account or guaranty, a spread account, a yield
supplement account, a collateral interest, a surety bond, an insurance
policy or any other form of credit enhancement described in the related
Prospectus Supplement, or any combination of the foregoing. Credit
Enhancement may also be provided to a Class or Classes of a Series or to a
Series by subordination provisions which require distributions of principal
or interest be made with respect to the Certificates of such Class or
Classes or such Series before distributions are made to one or more Classes
of such Series or to another Series (if the Supplement for such Series so
provides). If so specified in the related Prospectus Supplement, any form
of Credit Enhancement may be available to more than one Class or Series to
the extent described therein.
The presence of Credit Enhancement with respect to a Class is
intended to enhance the likelihood of receipt by Certificateholders of such
Class of the full amount of principal and interest with respect thereto and
to decrease the likelihood that such Certificateholders will experience
losses. However, unless otherwise specified in the related Prospectus
Supplement, the Credit Enhancement, if any, with respect thereto will not
provide protection against all risks of loss and will not guarantee
repayment of the entire principal balance of the Certificates and interest
thereon. If losses occur that exceed the amount covered by the Credit
Enhancement or that are not covered by the Credit Enhancement,
Certificateholders will bear their allocable share of such losses. In
addition, if specific Credit Enhancement is provided for the benefit of
more than one Class or Series, Certificateholders of any such Class or
Series will be subject to the risk that such Credit Enhancement will be
exhausted by the claims of Certificateholders of other Classes or Series.
If Credit Enhancement is provided with respect to a Series offered
hereby, 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 provisions of any agreement relating to such Credit Enhancement material
to the Certificateholders of such Series. Additionally, in certain cases, the
related Prospectus Supplement may set forth certain information with respect
to the provider of any third-party Credit Enhancement (the "Credit Enhancer"),
including (i) a brief description of its principal business activities, (ii)
its principal place of business, place of incorporation or the jurisdiction
under which it is chartered or licensed to do business, (iii) if applicable,
the identity of regulatory agencies that exercise primary jurisdiction over
the conduct of its business and (iv) its total assets, and its stockholders'
or policyholders' surplus, if applicable, as of a date specified in the
Prospectus Supplement. If so described in the related Prospectus Supplement,
Credit Enhancement with respect to a Series offered hereby may be available to
pay principal of the Certificates of such Series following the occurrence of
certain Pay Out Events or Reinvestment Events with respect to such Series. In
such event, the Credit Enhancer will have an interest in certain cash flows in
respect of the Receivables to the extent described in such Prospectus
Supplement (an "Enhancement Invested Amount") and may be entitled to the
benefit of the Trustee's security interest in the Receivables, in each case
subordinated to the interest of the Certificateholders of such Series.
Subordination. If so specified in the related Prospectus Supplement,
one or more Classes of a Series offered hereby may be subordinated to one
or more other Classes of such Series or a Series may be subordinated to
another Series. If so specified in the related Prospectus Supplement, the
rights of the holders of the subordinated Certificates to receive
distributions of principal or interest on any payment date will be
subordinated to such rights of the holders of the Certificates that are
senior to such subordinated Certificates to the extent set forth in the
related Prospectus Supplement. 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 or of the subordinated
Certificates of another 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
Certificates that are senior to such subordinated Certificates. The amount
of subordination will decrease whenever amounts otherwise payable to the
holders of subordinated Certificates are paid to the holders of the
Certificates that are senior to such subordinated Certificates.
Letter of Credit. If so specified in the related Prospectus
Supplement, a letter of credit with respect to a Series or Class of
Certificates offered hereby may be issued by a bank or financial
institution specified in the related Prospectus Supplement (the "L/C
Issuer"). Subject to the terms and conditions specified in the related
Prospectus Supplement, the L/C Issuer will be obligated to honor drawings
under a letter of credit in an aggregate dollar amount (which may be fixed
or may be reduced as described in the related Prospectus Supplement), net
of unreimbursed payments thereunder, equal to the amount described in the
related Prospectus Supplement. The amount available under a letter of
credit will be reduced to the extent of the unreimbursed payments
thereunder.
Cash Collateral Account. If so 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 Eligible 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.
Reserve Account. If so specified in the related Prospectus
Supplement, support for a Series or one or more Classes thereof will be
provided by the establishment of a reserve account (the "Reserve Account").
The Reserve Account may be funded, to the extent provided in the related
Prospectus Supplement, by an initial cash deposit, the retention of certain
periodic distributions of principal or interest otherwise payable to one or
more Classes of Certificates, including the subordinated Certificates, or
both, or the provision of a letter of credit, guarantee insurance policy
other form of credit or any combination thereof. The Reserve Account will
be established to assure the subsequent distribution of principal or
interest on the Certificates of such Series or Class thereof in the manner
provided in the related Prospectus Supplement.
Yield Supplement Account. If so specified in the related Prospectus
Supplement the Servicer will establish and maintain a Yield Supplement
Account for the benefit of the Certificateholders of such Series. Amounts
on deposit in the Yield Supplement Account (together with investment
earnings thereon) will be released and deposited into the Collection
Account in the amounts and at the times specified in the Prospectus
Supplement for such Series. Each such deposit into the Collection Account
will be treated as collections of Finance Charge Receivables allocable to
the Certificates of the related Series. The Yield Supplement Account for
any Series will be funded with the proceeds from offering of the related
Investor Certificates.
Collateral Interest. If so specified in the related Prospectus
Supplement, support for a Series of Certificates or one or more Classes
thereof may be provided initially by an uncertificated, subordinated
interest in the Trust (the " Collateral Interest") in an amount initially
equal to a percentage of the Certificates of such Series specified in the
Prospectus Supplement. References to Enhancement Invested Amounts herein
include Collateral Interests, if any.
Surety Bond or Insurance Policy. If so specified in the related
Prospectus Supplement, insurance with respect to a Series or Class of
Certificates offered hereby may 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 so specified in the related Prospectus Supplement, a surety bond
may be purchased for the benefit of the holders of any Series or Class of
Certificates offered hereby 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 so specified in the related Prospectus Supplement,
support for a Series or one or more Classes of a Series offered hereby may
be provided by the periodic deposit of certain available excess cash flow
from the Trust Assets into a spread account intended to assure the
subsequent distributions of interest and principal on the Certificates of
such Class or Series in the manner specified in the related Prospectus
Supplement.
INTEREST RATE SWAPS AND RELATED CAPS, FLOORS AND COLLARS
The Trustee on behalf of the Trust may enter into interest rate swaps
and related caps, floors and collars 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
referenced 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.
SERVICER COVENANTS
In the Pooling and Servicing Agreement, the Servicer has agreed as to
each Receivable and related Account that it will: (a) duly fulfill all
obligations on its part to be fulfilled under or in connection with the
Receivables or the related Accounts, and will maintain in effect all
qualifications required and comply in all material respects with all
requirements of law in order to service the Receivables and Accounts, the
failure to maintain or comply with which would have a material adverse
effect on the Certificateholders; (b) not permit any rescission or
cancellation of the Receivables except as ordered by a court of competent
jurisdiction or other governmental authority; (c) do nothing to impair the
rights of the Certificateholders in the Receivables or the related
Accounts; and (d) not reschedule, revise or defer payments due on the
Receivables except in accordance with its guidelines for servicing
receivables.
Under the terms of the Pooling and Servicing Agreement, all
Receivables in an Account will be assigned and transferred to the Servicer
and such Account will no longer be included as an Account if the Servicer
discovers, or receives written notice from the Trustee, that any covenant
of the Servicer set forth above has not been complied with in all material
respects and such noncompliance has not been cured within 60 days (or such
longer period as may be agreed to by the Trustee and the Transferor)
thereafter and has a material adverse effect on the Certificateholders'
Interest in such Receivables. Such assignment and transfer will be made
when the Servicer deposits an amount equal to the amount of such
Receivables in the Collection Account on the business day preceding the
Distribution Date following the Monthly Period during which such obligation
arises. This transfer and assignment to the Servicer constitutes the sole
remedy available to the Certificateholders if such covenant or warranty of
the Servicer is not satisfied and the Trust's interest in any such assigned
Receivables will be automatically assigned to the Servicer.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement except (i) upon determination that the
performance of such duties is no longer permissible under applicable law or
(ii) if such obligations and duties are assumed by any entity that has
satisfied the Rating Agency Condition. No such resignation will become
effective until the Trustee or a successor to the Servicer has assumed the
Servicer's responsibilities and obligations under the Pooling and Servicing
Agreement. Notwithstanding the foregoing, the Bank may assign part or all
of its obligations and duties as Servicer under the Pooling and Servicing
Agreement to an affiliate of the Bank as long as the Bank shall have
fully guaranteed the performance of such obligations and duties under the
Pooling and Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
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, will be the successor to the
Transferor or the Servicer, as the case may be, under the Pooling and
Servicing Agreement.
SERVICER DEFAULT
In the event of any Servicer Default (as defined below), either the
Trustee or Certificateholders holding Certificates evidencing more than 50%
of the aggregate unpaid principal amount of all Certificates, by written
notice to the Servicer (and to the Trustee if given by the
Certificateholders) (a "Termination Notice"), may terminate all of the
rights and obligations of the Servicer, as Servicer, under the Pooling and
Servicing Agreement and in and to the Receivables and the proceeds thereof
and the Trustee will appoint a new Servicer (a "Service Transfer"). The
rights and interest of the Transferor under the Pooling and Servicing
Agreement in the Transferor's Interest will not be affected by any
Termination Notice or Service Transfer. If within 60 days of receipt of a
Termination Notice the Trustee does not receive any bids from eligible
servicers to act as successor Servicer and receives an officer's
certificate from the Transferor to the effect that the Servicer cannot in
good faith cure the Servicer Default which gave rise to the Termination
Notice, the Trustee shall grant a right of first refusal to the Transferor
which would permit the Transferor at its option to purchase the
Certificateholders' Interest on the Distribution Date in the next calendar
month. The purchase price for the Certificateholders' Interest shall be
equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related Supplement, and for any Certificates
offered hereby, in the Prospectus Supplement.
The Trustee will as promptly as possible, after the giving of a
Termination Notice, appoint a successor Servicer and if no successor
Servicer has been appointed by the Trustee and has accepted such
appointment by the time the Servicer ceases to act as Servicer, all rights,
authority, power and obligations of the Servicer under the Pooling and
Servicing Agreement will be vested in the Trustee. Prior to any Service
Transfer, the Trustee will seek to obtain bids from potential servicers
meeting certain eligibility requirements set forth in the Pooling and
Servicing Agreement to serve as a successor Servicer for servicing
compensation not in excess of the Servicing Fee plus any amounts payable to
the Transferor pursuant to the Pooling and Servicing Agreement.
A "Servicer Default" 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 any payment, transfer
or deposit, on the date the Servicer is required to do so under the
Pooling and Servicing Agreement or any Supplement, which is not cured
within a five business day grace period;
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the
Servicer in the Pooling and Servicing Agreement or any Supplement
which has an Adverse Effect and which continues unremedied for a
period of 60 days after written notice, or the Servicer assigns its
duties under the Pooling and Servicing Agreement, except as
specifically permitted thereunder;
(c) any representation, warranty or certification made by the
Servicer in the Pooling and Servicing Agreement, in any Supplement or
in any certificate delivered pursuant to the Pooling and Servicing
Agreement or any Supplement proves to have been incorrect in any
material respect when made, which has an Adverse Effect on the rights
of the Certificateholders of any Series, and which Adverse Effect
continues for a period of 60 days after written notice; or
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of ten business days after
the applicable grace period or referred to under clauses (b) or (c) for a
period of 60 business days after the applicable grace period, 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 Pooling and Servicing Agreement and the
Servicer must provide the Trustee, the Transferor and any provider of
Series Enhancement prompt notice of such failure or delay by it, together
with a description of its efforts to so perform its obligations.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before March
31 of each calendar year, the Servicer will cause a firm of nationally
recognized independent public accountants (who may also render other
services to the Servicer or the Transferor and any affiliates thereof) to
furnish a report to the effect that such firm has applied certain
procedures agreed upon with the Servicer and examined certain documents and
records relating to the servicing of the Accounts and that, on the basis of
such agreed-upon procedures, nothing has come to the attention of such firm
that caused them to believe that such servicing was not conducted in
compliance with the Pooling and Servicing Agreement and applicable
provisions of each Supplement 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. Such report will set forth the agreed-upon
procedures performed.
The Pooling and Servicing Agreement provides for delivery to the
Trustee on or before March 31 of each calendar year of a statement signed
by an officer of the Servicer to the effect that the Servicer has, or has
caused to be, fully performed its obligations in all material respects
under the Pooling and Servicing 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.
Copies of all statements, certificates and reports furnished to the
Trustee may be obtained by a request in writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement and any Supplement may be amended
from time to time (including in connection with the issuance of a
Supplemental Certificate, addition of a Participation Interest, allocation
of assets in the Trust to a Series or Group, or to change the definition of
Monthly Period, Determination Date or Distribution Date) by the Servicer,
the Transferor and the Trustee, and without the consent of the
Certificateholders of any Series, provided that (i) an opinion of counsel
for the Transferor is addressed and delivered to the Trustee to the effect
that the conditions precedent to any such amendment have been satisfied,
(ii) the Transferor shall have delivered to the Trustee a certificate of an
officer of the Transferor to the effect that the Transferor reasonably
believes that such amendment will not have an Adverse Effect and (iii) the
Rating Agency Condition shall have been satisfied with respect thereto.
The Pooling and Servicing Agreement or any Supplement may be amended
by the Transferor, the Servicer and the Trustee with the consent of the
Certificateholders evidencing not less than 66 2/3% of the aggregate unpaid
principal amount of the Certificates of all affected Series for which the
Transferor has not delivered an officer's certificate stating that there
will be no Adverse Effect, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling
and Servicing Agreement or any Supplement or of modifying in any manner the
rights of Certificateholders. No such amendment, however, may (a) reduce in
any manner the amount of, or delay the timing of, deposits or distributions
on any Certificate without the consent of each Certificateholder, (b) (i)
change the definition or the manner of calculating the Certificateholders'
Interest or the Invested Amount or (ii) reduce the aforesaid percentage of
the aggregate unpaid principal amount of the Certificates the holders of
which are required to consent to any such amendment, in each case without
the consent of each Certificateholder or (c) adversely affect the rating of
any Series or Class by a Rating Agency without the consent of the holders
of Certificates of such Series or Class evidencing not less than 66 2/3% of
the aggregate unpaid principal amount of the Certificates of such Series or
Class. Promptly following the execution of any amendment to the Pooling and
Servicing Agreement (other than an amendment described in the preceding
paragraph), the Trustee will furnish written notice of the substance of
such amendment to each Certificateholder. Notwithstanding the foregoing,
any Supplement executed in connection with the issuance of one or more new
Series of Certificates will not be considered an amendment to the Pooling
and Servicing Agreement.
LIST OF CERTIFICATEHOLDERS
Upon written request of any Holder or group of Holders of
Certificates of any Series or of all outstanding Series of record holding
Certificates evidencing not less than 10% of the aggregate unpaid principal
amount of the Certificates of such Series or all Series, as applicable, the
Trustee will afford such Holder or Holders of Certificates access during
business hours to the current list of Certificateholders of such Series or
of all outstanding Series, as the case may be, for purposes of
communicating with other Holders of Certificates with respect to their
rights under the Pooling and Servicing Agreement. See "Description of the
Certificates -- Book-Entry Registration" and "-- Definitive Certificates."
The Pooling and Servicing Agreement does not provide for any annual
or other meetings of Certificateholders.
THE TRUSTEE
The Bank of New York will act as trustee under the Pooling and
Servicing Agreement. The corporate trust office of The Bank of New York is
located at 101 Barclay Street, New York, New York 10286. The Transferor and
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 or the Transferor may hold Certificates in their
own names; however, any Certificates so held shall not be entitled to
participate in any decisions made or instructions given to the Trustee by
the Certificateholders as a group. 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 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.
DESCRIPTION OF THE PURCHASE AGREEMENTS
Sale of Receivables. On the Initial Series Closing Date, BKB CT will
sell all of the Accounts owned by it, together with the related
Receivables, to the Bank. After giving effect to such sale, BKB CT will
cease to have any interest in such Accounts or the related Receivables and
the Bank will be the Account Owner with respect to such Accounts. Subsequent
to the Initial Series Closing Date, the Bank may sell the Accounts to
[New Bank], a state chartered bank to be organized under the laws of the
State of [______]. Upon giving effect to any such sale, [New Bank] will be
the Account Owner with respect to the Receivables sold to the Transferor by
the Bank and the Bank will cease to be an Account Owner. Upon any sale of
the Accounts by the Bank to [New Bank], [New Bank], as assignee of the Bank,
will expressly assume all of the rights and obligations of the Bank with
respect to the Receivables under the Pooling and Servicing Agreement and
the Purchase Agreement between the Bank and the Transferor. For convenience,
these rights and obligations of the Bank and [New Bank], as assignee of
the Bank upon the consummation of any such sale, are, unless otherwise
indicated, referred to herein as rights and obligations of the Bank and
all references herein to the Bank in its capacity as an Account Owner and
as Servicer are references to [New Bank] following the consummation of
any such sale. Pursuant to the Purchase Agreement to be entered into between
the Bank and the Transferor and the Purchase Agreement between [New Bank] and
the Transferor, each such Account Owner sells to the Transferor all its right,
title and interest in and to (i) all of the Receivables in the Accounts
owned by such Account Owner and all of the Receivables created in such
Accounts following the Initial Series Closing Date in the case of the Bank
and upon origination of Accounts by [New Bank] and (ii) the Receivables in
each Additional Account owned by such Account Owner designated from time to
time for inclusion as an Account as of the date of such designation,
whether such Receivables shall then be existing or shall thereafter be
created.
In connection with such sale of the Receivables to the Transferor,
each Account Owner will indicate in its computer records that the
Receivables have been sold to CCRFC by such Account Owner and CCRFC will
indicate in its files that such Receivables will be sold or transferred by
it to the Trust. In addition, each Account Owner will provide or cause to
be provided to the Transferor a computer file or a microfiche list
containing a true and complete list showing each Account owned by such
Account Owner, identified by account number and by total outstanding
balance of the related Receivables on the applicable Series date of
designation or addition date for Additional Accounts, as the case may be.
The records and agreements relating to the Accounts and Receivables may not
be segregated by the Account Owners from other documents and agreements
relating to other credit card accounts and receivables and may not be
stamped or marked to reflect the sale or transfer of the Receivables to the
Transferor, but the records of the Account Owners will be marked to
evidence such sale or transfer. Each Account Owner as debtor/seller will
file UCC financing statements meeting the requirements of applicable state
law in each of the jurisdictions in which the books and records relating to
the Accounts owned by such Account Owner are maintained with respect to the
Receivables. See "Risk Factors -- Characteristics as a Sale; Insolvency and
Receivership Risks" and "Certain Legal Aspects of the Receivables."
Pursuant to the Purchase Agreements, the Transferor will, subject to
certain conditions, if the Transferor is required to cause the Account
Owners to designate Additional Accounts under the Pooling and Servicing
Agreement, designate Additional Accounts to be included as Accounts under
the Purchase Agreement. See "Description of the Pooling and Servicing
Agreement -- Additions of Accounts or Participation Interests."
Representations and Warranties. In its respective Purchase Agreement,
each Account Owner represents and warrants to the Transferor to the effect
that, among other things, (a) as of the date of the Purchase Agreement and
as of each date of designation of Additional Accounts under the Purchase
Agreement, it is duly organized and in good standing and that it has the
authority to consummate the transactions contemplated by the Purchase
Agreement, (b) as of the Initial Cut-Off Date and as of each date of
designation of Additional Accounts under the Purchase Agreement, each
Additional Account will be an Eligible Account and (c) as of the Initial
Cut-Off Date and as of each date of designation of Additional Accounts
under the Purchase Agreement, each Receivable generated thereunder is, on
such date of designation, an Eligible Receivable. In the event of a breach
of any representation and warranty set forth in the Purchase Agreement
which results in the requirement that the Transferor accept retransfer of
an Ineligible Receivable, then the applicable Account Owner shall
repurchase such Ineligible Receivable under the Pooling and Servicing
Agreement from the Transferor on the date of such retransfer. The purchase
price for such Ineligible Receivables shall be the principal amount thereof
plus applicable finance charges. The Bank shall be obligated to effect any
such repurchase with respect to the Receivables sold by BKB CT to the Bank
and then sold by the Bank to Transferor on the Initial Series Closing Date.
Following a sale of the Accounts by the Bank to the [New Bank], the [New
Bank] will assume such obligation of the Bank with respect to the
Receivables sold to the Transferor by the Bank.
Each Account Owner also represents and warrants to the Transferor
that, among other things, as of the date of the Purchase Agreement and as
of each date of designation of Additional Accounts under the applicable
Purchase Agreement (a) the Purchase Agreement constitutes a valid and
binding obligation of the applicable Account Owner and (b) the Purchase
Agreement constitutes a valid sale to the Transferor of all right, title
and interest of such Account Owner in and to the Receivables then existing
and, with respect to the Bank and [New Bank] only, thereafter created in
the Accounts owned by such Account Owner and in the proceeds thereof. If
the breach of any of the representations and warranties described in this
paragraph results in the obligation of the Transferor under the Pooling and
Servicing Agreement to accept retransfer of the Receivables, the applicable
Account Owners will repurchase the Receivables retransferred to the
Transferor for an amount of cash at least equal to the amount of cash the
Transferor is required to deposit under the Pooling and Servicing Agreement
in connection with such retransfer. The Bank shall be obligated to effect
any such repurchase with respect to the Receivables sold by BKB CT to the
Bank and then sold by the Bank to Transferor on the Initial Series Closing
Date. Following a sale of the Accounts by the Bank to the [New Bank], the
[New Bank] will assume such obligation of the Bank with respect to the
Receivables sold to the Transferor by the Bank.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
Under the Purchase Agreements, the Account Owners sell the
Receivables to the Transferor and the Transferor, in turn, transfers the
Receivables to the Trust. Each Account Owner and the Transferor represents
and warrants that its respective transfers constitute valid sales and
assignments of all of its respective right, title and interest in and to
the Receivables. The Transferor also represents and warrants that, if the
transfer of Receivables by the Transferor to the Trust is deemed to create
a security interest under the UCC, there exists a valid, subsisting and
enforceable first priority perfected security interest in the Receivables
in existence at the time of the formation of the Trust or at the date of
designation of any Additional Accounts, as the case may be, in favor of the
Trust and a valid, subsisting and enforceable first priority perfected
security interest in the Receivables created thereafter in favor of the
Trust on and after their creation, in each case until termination of the
Trust. For a discussion of the Trust's rights arising from these
representations and warranties not being satisfied, see "Description of the
Pooling and Servicing Agreement -- Representations and Warranties."
Each Account Owner and the Transferor represents that the Receivables
are "accounts" or "general intangibles" for purposes of the UCC. Both the
sale of accounts and the transfer of accounts as security for an obligation
are treated under Article 9 of the UCC as creating a security interest
therein and are subject to its provisions and the filing of an appropriate
financing statement or statements is required to perfect the interest of
the Trust in the Receivables. If a transfer of general intangibles is
deemed to create a security interest rather than a sale, Article 9 of the
UCC applies and filing an appropriate financing statement or statements is
also required in order to perfect the security interest of the Trust.
Financing statements covering the Receivables will be filed under the UCC
to protect the Transferor and the Trust if any of the transfers by an
Account Owner or the Transferor is deemed to be subject to the UCC. If a
transfer of general intangibles is deemed to be a sale, then the UCC is not
applicable and no further action under the UCC is required to protect the
Trust's interest from third parties.
There are certain limited circumstances under the UCC in which prior
or subsequent transferees of Receivables coming into existence after the
Initial Series Closing Date could have an interest in such Receivables with
priority over the Trust's interest. A tax or other government lien or other
nonconsensual lien on property of the Transferor or an Account Owner
arising prior to the time a Receivable comes into existence may also have
priority over the interest of the Trust in such Receivable. Furthermore, if
the FDIC were appointed as a conservator or receiver of an Account Owner,
the conservator's or receiver's administrative expenses may also have
priority over the interest of the Trust in such related Receivables. Under
the Purchase Agreement, however, each Account Owner warrants that it has
transferred the Receivables to the Transferor free and clear of the lien of
any third party. In addition, each Account Owner covenants that it will not
sell, pledge, assign, transfer or grant any lien on any Receivable (or any
interest therein) other than to the Transferor.
CERTAIN MATTERS RELATING TO INSOLVENCY
The Transferor will not engage in any activities except purchasing
accounts receivable from the Account Owners, forming trusts, transferring
such accounts receivable to such trusts, issuing notes or certificates and
engaging in activities incident to, or necessary or convenient to
accomplish, the foregoing. The Transferor has no intention of filing a
voluntary petition under the United States Bankruptcy Code or any similar
applicable state law so long as the Transferor is solvent and does not
reasonably foresee becoming insolvent.
Each Account Owner has represented and warranted to the Transferor
that the transfer of Receivables pursuant to its respective Purchase
Agreement is a valid sale of the Receivables by such Account Owner to the
Transferor. In addition, each Account Owner and the Transferor have treated
and will treat the transaction described in the Purchase Agreements as
sales of the Receivables to the Transferor and each Account Owner has taken
or will take all actions that are required under the UCC to perfect the
Transferor's ownership interest in the Receivables. However, in the event
of an insolvency, receivership or conservatorship of an Account Owner it is
possible that a receiver or conservator could attempt to recharacterize the
transaction between such Account Owner and the Transferor as a pledge of
the Receivables rather than a true sale. The Federal Deposit Insurance Act
(" FDIA"), as amended by FIRREA, which became effective August 9, 1989,
sets forth certain powers that the FDIC could exercise if it were appointed
as conservator or receiver of an Account Owner. Among other things, the
FDIA grants such a conservator or receiver the power to repudiate contracts
of, and to request a stay of up to 90 days of any judicial action or
proceeding involving, an Account Owner.
To the extent that (i) an Account Owner granted a security interest
in the Receivables to the Transferor, (ii) the interest was validly
perfected before such Account Owner's insolvency, (iii) the interest was
not taken or granted in contemplation of such Account Owner's insolvency or
with the intent to hinder, delay or defraud such Account Owner or its
creditors, (iv) the applicable Purchase Agreement is continuously a record
of such Account Owner, and (v) the applicable Purchase Agreement represents
a bona fide and arm's length transaction undertaken for adequate
consideration in the ordinary course of business, such valid perfected
security interest of the Transferor should be enforceable (to the extent of
the Transferor's "actual direct compensatory damages") notwithstanding the
insolvency of, or the appointment of a receiver or conservator for, such
Account Owner and payments to the Trust with respect to the Receivables (up
to the amount of such damages) should not be subject to an automatic stay
of payment or to recovery by the FDIC as conservator or receiver of such
Account Owner. If, however, the FDIC were to require the Transferor to
establish its right to those payments by submitting to and completing the
administrative claims procedure established under FIRREA, or the
conservator or receiver were to request a stay of proceedings with respect
to such Account Owner as provided under FIRREA, delays in payments on the
Certificates and possible reductions in the amount of those payments could
occur. The FDIA does not define the term "actual direct compensatory
damages." On April 10, 1990, the RTC, formerly a sister agency of the FDIC,
adopted a statement of policy (the "RTC Policy Statement") with respect to
the payment of interest on collateralized borrowings. The RTC Policy
Statement states that interest on such borrowings will be payable at the
contract rate up to the date of the redemption or payment by the
conservator, receiver, or the trustee of an amount equal to the principal
owed plus the contract rate of interest up to the date of such payment or
redemption, plus any expenses of liquidation if provided for in the
contract, to the extent secured by the collateral. In a 1993 case involving
zero-coupon bonds, however, a federal district court held that the RTC was
instead obligated to pay bondholders the fair market value of repudiated
bonds as of the date of repudiation. The FDIC itself has not adopted a
policy statement on payment of principal and interest on collateralized
borrowings.
In addition, in the event of an insolvency, receivership or
conservatorship of an Account Owner and a creditor or conservator of the
Bank were to request a court to order that the Bank should be substantively
consolidated with the Transferor, delays in payments on the Certificates
and possible reductions in such payments could result.
The Transferor will take all actions that are required under the UCC
to perfect the Trust's interest in the Receivables and the Transferor has
warranted to the Trust that the Trust will have a first priority security
interest therein and, with certain exceptions, in the proceeds thereof.
Nevertheless, a tax or government lien or other nonconsensual lien on
property of the Transferor arising prior to the time a Receivable is
conveyed to the Trust may have priority over the interest of the Trust in
such Receivable. The Transferor has been structured such that (i) the
voluntary or involuntary application for relief under the Bankruptcy Code
or similar applicable state laws, and (ii) the substantive consolidation of
the Transferor and the Bank are unlikely. The Transferor is a separate,
special purpose subsidiary, the certificate of incorporation of which
provides that it shall not file a voluntary petition for relief under the
Bankruptcy Code without the unanimous affirmative vote of all of its
directors. Pursuant to the Pooling and Servicing Agreement, the Trustee
covenants that it will not at any time institute against the Transferor any
bankruptcy, reorganization or other proceedings under any Federal or state
bankruptcy or similar law. In addition, certain other steps will be taken
to avoid the Transferor's becoming a debtor in a bankruptcy case.
Notwithstanding such steps, if the Transferor were to become a debtor in a
bankruptcy case, and a bankruptcy trustee for the Transferor or a creditor
of the Transferor or the Transferor itself were to take the position that
the transfer of the Receivables from the Transferor to the Trust should be
recharacterized as a pledge of such Receivables, then delays in payments on
the Certificates and possible reductions in the amount of such payments
could result.
Upon the appointment of a bankruptcy trustee, receiver or conservator
or upon the commencement of a bankruptcy, receivership, conservatorship or
similar proceeding with respect to CCRFC, the Servicer will promptly give
notice thereof to the Trustee and a Pay Out Event or Reinvestment Event may
occur with respect to a Series (or all of the Series). Pursuant to the
Pooling and Servicing Agreement, newly created Receivables will not be
transferred to the Trust on and after any such appointment or voluntary
liquidation. In the event of an Insolvency Event, the Trustee will proceed
to sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and on commercially reasonable terms, unless
within a specified period of time Certificateholders representing undivided
interests aggregating more than 50% of the Invested Amount of each Series
of Certificates issued and outstanding (or, with respect to any Series with
two or more Classes, 50% of the Invested Amount of each Class) and possibly
certain other persons specified in the Supplement for a Series instruct
otherwise (assuming that the bankruptcy trustee, conservator or receiver
does not order such a sale despite such instructions). The proceeds from
the sale of the Receivables would be treated as collections of the
Receivables and deposited into the Collection Account and after
distribution of such amounts the Trust will terminate. This procedure could
be delayed, as described above. In addition, upon the occurrence of a Pay
Out Event or Reinvestment Event, if a trustee in bankruptcy, a conservator
or receiver is appointed for the Transferor and no Pay Out Event or
Reinvestment Event other than such conservatorship or receivership or
bankruptcy or insolvency of the Transferor exists, the bankruptcy trustee,
conservator or receiver may have the power to prevent the early sale,
liquidation or disposition of the Receivables and the commencement of the
Early Amortization Period or Early Accumulation Period and may be able to
require that new Principal Receivables be transferred to the Trust. In
addition, the trustee, receiver or conservator for the Transferor may have
the power to cause early sale of the Receivables and the early payment of
the Certificates or to prohibit the continued transfer of Receivables to
the Trust. See "Description of the Certificates -- Pay Out Events and
Reinvestment Events."
While the Bank is the Servicer, cash collections held by the Bank
may, subject to certain conditions, be commingled and used for the benefit
of the Bank prior to each Distribution Date and, in the event of the
insolvency, receivership or conservatorship of the Bank or, in certain
circumstances, the lapse of certain time periods, the Trust may not have a
perfected security interest in such collections and accordingly, be
entitled to such collections. The Bank will be allowed to make monthly
rather than daily deposits of collections to the Collection Account if (i)
either the Bank obtains a commercial paper rating of at least A-1 and P-1
(or its equivalent) by the applicable Rating Agency or (ii) the Bank makes
other arrangements that satisfy the Rating Agency Condition. Unless
otherwise provided in the related Prospectus Supplement, if either of the
foregoing conditions are not satisfied, then the Bank will, within five
business days, commence the deposit of collections directly into the
Collection Account within two business days of the Date of Processing.
In the event of a Servicer Default relating to the bankruptcy or
insolvency of the Servicer, and no Servicer Default other than such
bankruptcy or insolvency related Servicer Default exists, the bankruptcy
trustee, conservator or receiver may have the power to prevent either the
Trustee or the Certificateholders from appointing a successor Servicer. See
"Description of the Pooling and Servicing Agreement -- Servicer Default."
CONSUMER PROTECTION LAWS
The relationship of the cardholder and credit card issuer is
extensively regulated by Federal and state consumer protection laws. With
respect to credit cards issued by the Account Owners, the most significant
federal laws include the Federal Truth-in-Lending, Equal Credit
Opportunity, Fair Credit Billing, Equal Credit Opportunity, Electronic
Funds Transfer, Fair Credit Reporting and Fair Debt Collection Practices
Acts. These statutes impose various disclosure requirements either before
or when an Account is opened, or both, and at the end of monthly billing
cycles, and, in addition, limit cardholder liability for unauthorized use,
prohibit certain discriminatory practices in extending credit, and regulate
practices followed in collections. In addition, cardholders are entitled
under these laws to have payments and credits applied to the credit card
account promptly and to request prompt resolution of billing errors.
Congress and the states may enact new laws and amendments to existing laws
to regulate further the credit card industry. The Trust may be liable for
certain violations of consumer protection laws that apply to the
Receivables, either as assignee from the Transferor (as the applicable
Account Owner's assignee) with respect to obligations arising before
transfer of the Receivables to the Trust or as the party directly
responsible for obligations arising after the transfer. In addition, a
cardholder may be entitled to assert such violations by way of set-off
against the obligation to pay the amount of Receivables owing. All
Receivables that were not created in compliance in all material respects
with the requirements of such laws (if such noncompliance has a material
adverse effect on the Certificateholders' interest therein) will be
reassigned to the Transferor and ultimately back to the Account Owners. The
Servicer has also agreed in the Pooling and Servicing Agreement to
indemnify the Trust, among other things, for any liability arising from
such violations. For a discussion of the Trust's rights if the Receivables
were not created in compliance in all material respects with applicable
laws, see "Description of the Pooling and Servicing Agreement --
Representations and Warranties."
Application of federal and state bankruptcy and debtor relief laws
would affect the interests of the Certificateholders if such laws result in
any Receivables being charged off as uncollectible. See "Description of the
Pooling and Servicing Agreement -- Defaulted Receivables; Rebates and
Fraudulent Charges."
PROPOSED LEGISLATION
Congress and the states may enact new laws and amendments to existing
laws to regulate further the credit card industry or to reduce finance
charges or other fees or charges applicable to credit card accounts. The
potential effect of any such legislation could be to reduce the yield on
the Accounts. If such yield is reduced, a Pay Out Event or Reinvestment
Event could occur, and the Early Amortization Period or Early Accumulation
Period would commence. See "Description of the Certificates -- Pay Out
Events and Reinvestment Events."
U.S. FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion, summarizing certain 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. 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 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). 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
Unless otherwise specified in the related Prospectus Supplement,
special tax counsel to the Transferor ("Special Tax Counsel") specified in
such Prospectus Supplement will, upon issuance of a Series of Certificates,
issue an opinion to the Transferor based on the assumptions and
qualifications set forth in the opinion that the Certificates of such
Series that are offered pursuant to a Prospectus Supplement (the "Offered
Certificates;" and for purposes of this section "U.S. Federal Income Tax
Consequences" the term "Certificate Owner" refers to a holder of a
beneficial interest in an Offered Certificate) will be treated as
indebtedness for Federal income tax purposes. 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 Pooling and Servicing Agreement its
intent that for Federal, state and local 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
Pooling and Servicing 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. Unless otherwise set forth in a Prospectus
Supplement, it is expected that, as set forth in its opinion, Special Tax
Counsel will 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. Unless otherwise specified
in a Prospectus Supplement, it is expected that Special Tax Counsel will
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, it is expected that, unless otherwise specified
in a Prospectus Supplement, Special Tax Counsel will issue an opinion to
the Transferor that the Offered Certificates will constitute indebtedness
for Federal income tax purposes, and accordingly, interest thereon 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
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.
While it is not anticipated that the Offered Certificates will be
issued at a greater than de minimis discount, under applicable Treasury
regulations (the "Regulations") the Offered Certificates may nevertheless
be deemed to have been issued with original issue discount ("OID"). This
could be the case, for example, if interest payments for a Series are not
treated as "qualified stated interest" because the IRS determines that (i)
no reasonable legal remedies exist to compel timely payment and (ii) the
Offered Certificates do not have terms and conditions that make the
likelihood of late payment (other than a late payment that occurs within
a reasonable grace period) or nonpayment a remote contingency. The
Regulations provide that, for purposes of the foregoing test, the
possibility of nonpayment due to default, insolvency, or similar
circumstances, is ignored. Although this does not directly apply
to the Offered Certificates (because they have no actual default
provisions) the Transferor intends to take the position that, because
nonpayment can occur only as a result of events beyond its control
(principally, loss rates and payment delays on the Receivables
substantially in excess of those anticipated), nonpayment is a remote
contingency. Based on the foregoing, and on the fact that generally
interest will accrue on the Offered Certificates at a "qualified floating
rate," the Transferor intends to take the position that interest payments
on the Offered Certificates constitute qualified stated interest. If,
however, interest payments for a Series were not classified as "qualified
stated interest," all of the taxable income to be recognized with respect
to the Offered Certificates would be includible in income as OID but would
not be includible again when the interest is actually received.
If the Offered Certificates are in fact issued at a greater than de
minimis discount or are treated as having been issued with OID under the
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. 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 (a "Prepayable 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 advisor regarding the impact to it of the OID rules if the Offered
Certificates are issued with OID. Under the 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 holding requirement for preferential capital gain treatment, any
such gain or loss generally will be such capital gain, provided that
the Offered Certificate was held as a capital asset and provided, further,
that if the rules applicable to Prepayable Instruments apply, any OID not
previously accrued will be treated as ordinary income. The maximum ordinary
income rate for individuals, estates, and trusts exceeds the maximum
such capital gains rate for such taxpayers. In addition, capital
losses generally may be used only to offset capital gains.
TAX CHARACTERIZATION OF THE TRUST
The Pooling and Servicing 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
partnership in which the Transferor and certain classes of
Certificateholders are partners, and which has issued debt represented by
other Classes of Certificates (including, unless otherwise specified in a
Supplement, the Offered Certificates). In connection with the issuance of
Certificates of any Series, Special Tax Counsel will render an opinion to
the Transferor, 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 characterized for Federal income
tax purposes as an association (or publicly traded partnership) taxable as
a corporation.
The opinion of Special Tax Counsel with respect to Offered
Certificates and the Trust 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 Transferor 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 Pooling and Servicing Agreement, an
interest in the Trust is issued or sold that is intended to be classified
as an interest in a partnership).
If the Trust were treated in whole or in part as a partnership in
which some or all Certificate Owners of one or more Series were partners,
that partnership could be classified as a publicly traded partnership
taxable as a corporation. A partnership will be classified as a publicly
traded partnership taxable as a corporation if equity interests therein are
traded on an "established securities market," or are "readily tradeable" on
a "secondary market" or its "substantial equivalent" unless certain
exceptions apply. One such exception would apply if the Trust is not
engaged in a "financial business" and 90% or more of its income consists of
interest and certain other types of passive income. Because Treasury
regulations do not clarify the meaning of a "financial business" for this
purpose, it is unclear whether this exception applies. The Transferor
intends to take measures designed to reduce the risk that the Trust could
be classified as a publicly traded partnership taxable as a corporation by
reason of trading of interests in the Trust other than the Offered
Certificates and other certificates with respect to which an opinion is
rendered that such certificates constitute debt for Federal income tax
purposes. Although the Transferor expects that such measures would be
successful, there can be no absolute assurance that the Trust could not
become a publicly traded partnership, because certain of the actions
necessary to comply with such exceptions are not fully within the control
of the Transferor.
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 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, 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) might, under certain circumstances, constitute
"unrelated business taxable income" which generally would be taxable to the
holder under the Code. Partnership characterization also may have adverse
state and local income or franchise tax consequences for a Certificate
Owner.
If it were determined that a transaction created an entity classified
as an association or 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.
FASIT
Certain provisions of the Code provide for the creation of a
new type of entity for federal income tax purposes, the "financial asset
securitization investment trust" ("FASIT"). However, these provisions are
not effective until September 1, 1997, and many (which have not yet been
issued) technical issues concerning FASITs must be addressed by Treasury
regulations. Although transition rules permit an entity in existence on
August 31, 1997, to elect FASIT status, at the present time it is not
clear how outstanding interests of such an entity would be treated
subsequent to such an election. The Pooling and Servicing Agreement may
be amended in accordance with the provisions thereof to provide that
the Transferor may cause a FASIT election to be made for the Trust if
the Transferor delivers to the Trustee an opinion of counsel to the
effect that, for Federal income tax purposes, (i) the issuance of FASIT
regular interests 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, (ii) following such
issuance the Trust will not be deemed to be an association (or publicly
traded partnership) taxable as a corporation and (iii) such issuance will
not cause or constitute an event in which gain or loss would be recognized
by any Certificateholder or the Trust.
FOREIGN INVESTORS
As set forth above, it is expected that 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, (iii) an estate the
income of which is includible in gross income for U.S. Federal income tax
purposes, regardless of its source or (iv) a trust the income of which is
includible in gross income for U.S. Federal income tax purposes, regardless
of its source or, for tax years beginning after December 31, 1996 (and, if
a trustee so elects, for tax years ending after August 20, 1996), a trust
if a U.S. court is able to exercise primary supervision over the
administration of such trust and one or more U.S. fiduciaries have the
authority to control all substantial decisions of such trust.
Interest, including OID, paid to a Foreign Investor will be subject
to U.S. withholding taxes at a rate of 30% unless (x) the income is
"effectively connected" with the conduct by such Foreign Investor of a
trade or business in the United States evidenced by IRS Form 4224, signed
by the Certificate Owner or such owner's agent, claiming exemption from
withholding of tax on income effectively connected with the conduct of a
trade or business in the United States; (y) 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 (z) 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, in addition (i) the non-U.S. Certificate Owner does not
actually or constructively own 10 percent or more of the total combined
voting power of all classes of stock of the Transferor entitled to vote (or
of a profits or capital interest of the Trust if characterized as a
partnership), (ii) the non-U.S. Certificate Owner is not a controlled
foreign corporation that is related to the Transferor (or a trust treated
as a partnership) through stock ownership, (iii) the non-U.S. Certificate
Owner is not a bank receiving interest described in Code Section
881(c)(3)(A), (iv) such interest is not contingent interest described in
Code Section 871(h)(4), and (v) the non-U.S. Certificate Owner does not
bear certain relationships to any holder of the Exchangeable Transferor
Certificate other than the Transferor or any holder of the Certificates of
any Series not properly characterized as debt. Applicable identification
requirements generally will be satisfied if there is delivered to a
securities clearing organization (i) 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 (x), (y) or (z) the appropriate form will be effective provided
that (a) the applicable form is delivered pursuant to applicable procedures
and is properly transmitted to the United States entity otherwise required
to withhold tax and (b) none of the entities receiving the form has actual
knowledge that the Certificate Owner is a U.S. person.
Recently proposed Treasury regulations (the "Proposed Regulations")
could affect the procedures to be followed by a Foreign Investor in
complying with United States Federal withholding, backup withholding and
information reporting rules. The Proposed Regulations are not currently
effective but, if finalized in their current form, would be effective for
payments made after December 31, 1997. Prospective investors are urged to
consult their tax advisors regarding the effect, if any, of the Proposed
Regulations on the purchase, ownership, and disposition of the Offered
Certificates.
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 second preceding
paragraph are satisfied.
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. Federal 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 or 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 the Employee Retirement Income Security Act of 1974,
as amended ("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 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. Assuming that interests in
Certificates of a Series are equity interests in the Trust, 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 of the issuer and of one another
at the conclusion of the 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 Benefit Plan as part of an offering of securities to the
public pursuant to an effective registration statement under the Securities
Act and the class of securities of which such security is a part is
registered under the Exchange Act within 120 days (or such later time as
may be allowed by the Commission) after the end of the fiscal year of the
issuer during which the offering of such securities to the public occurred.
In addition, the Final Regulation provides that if a Benefit Plan
invests in an "equity interest" of an entity that is neither a
"publicly-offered security" nor a security issued by an investment company
registered under the Investment Company Act of 1940, as amended, the
Benefit Plan's assets include both the equity interest and an undivided
interest in each of the entity's underlying assets, unless it is
established that equity participation by "benefit plan investors" is not
"significant" or that another exception applies. Under the Final
Regulation, equity participation in an entity by "benefit plan investors"
is "significant" on any date if, immediately after the most recent
acquisition of any equity interest in the entity (other than a
publicly-offered class of equity), 25% or more of the value of any class of
equity interests in the entity (other than a publicly-offered class) is
held by "benefit plan investors." For purposes of this determination, the
value of equity interests held by a person (other than a benefit plan
investor) that has discretionary authority or control with respect to the
assets of the entity or that provides investment advice for a fee with
respect to such assets (or any affiliate of such person) is disregarded.
The term "benefit plan investor" is defined in the Final Regulation as (a)
any employee benefit plan (as defined in Section 3(3) of ERISA), whether or
not it is subject to the provisions of Title I of ERISA, (b) any plan
described in Section 4975(e)(1) of the Code and (c) any entity whose
underlying assets include plan assets by reason of any such plan's
investment in the entity.
It is anticipated that interests in the Certificates of a Series will
meet the criteria of publicly-offered securities as set forth above. The
underwriters expect (although no assurances can be given) that interests in
certain Classes of Certificates of each Series, as specified in the related
Prospectus Supplement, will be held by at least 100 independent investors
at the conclusion of the offering for such Series; there are no
restrictions imposed on the transfer of interests in the Certificates of
such Classes of such Series; and interests in the Certificates of such
Classes of such Series will be sold as part of an offering pursuant to an
effective registration statement under the Securities Act and then 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 investment by benefit plan
investors is or becomes significant so that 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. In addition, the Transferor 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 Section 4975 of the Code unless such investment
is subject to a statutory or administrative exemption. 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 plan could constitute a prohibited transaction. 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), 91-38 (Class Exemption for Certain Transactions Involving Bank
Collective Investment Funds), 90-1 (Class Exemption for Certain
Transactions Involving Insurance Company Pooled Separate Accounts), 95-60
(Class Exemption for Certain Transactions Involving Insurance Company
General Accounts) and 96-23 (Class Exemption for Plan Asset Transactions
Determined by In-House Asset Managers). There is no assurance that 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.
In particular, insurance companies considering the purchase of
interests in Certificates of any Series should consult their own employee
benefits counsel 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. 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 of the transactions that could occur as the result of the acquisition
and holding of interests in 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 and PTE 95-60 or any other exemption may have an impact with
respect to their purchase of the Certificates of any Series.
In addition, insurance companies considering the purchase of
Certificates using assets of a general account should consult their own
employee benefits counsel or other appropriate counsel with respect to the
effect of the Small Business Job Protection Act of 1996 which added a new
Section 401(c) to ERISA relating to the status of the assets of insurance
company general accounts under ERISA and Section 4975 of the Code. Pursuant
to Section 401(c), the DOL is required to issue final regulations (the "
General Account Regulations") not later than December 31, 1997 with respect
to insurance policies issued on or before December 31, 1998 that are
supported by an insurer's general account. The General Account Regulations
are intended to provide guidance on which assets held by the insurer
constitute "plan assets" for purposes of the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code. Section 401(c) also
provides that, except in the case of avoidance of the General Account
Regulations and actions brought by the Secretary of Labor relating to
certain breaches of fiduciary duties that also constitute breaches of state
or Federal criminal law, until the date that is 18 months after the General
Account Regulations become final, no liability under the fiduciary
responsibility and prohibited transaction provisions of ERISA and Section
4975 may result on the basis of a claim that the assets of the general
account of an insurance company constitute the plan assets of any Benefit
Plan. The plan asset status of insurance company separate accounts is
unaffected by new Section 401(c) of ERISA, and separate account assets
continue to be treated as the plan assets of any Benefit Plan invested in a
separate account.
PLAN OF DISTRIBUTION
The Transferor may sell Certificates (a) through underwriters or
dealers, (b) directly to one or more purchasers, or (c) through agents. The
related Prospectus Supplement will set forth the terms of the offering of
any Certificates offered hereby, including, without limitation, the 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 public
offering price and any discounts or concessions allowed or reallowed or
paid to dealers.
If underwriters are used in a sale of any Certificates of a Series
offered hereby, such Certificates will be acquired by the underwriters for
their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices to be determined at the time of sale or at the
time of commitment therefor. Such Certificates may be offered to the public
either through underwriting syndicates represented by managing underwriters
or by underwriters without a syndicate. Unless otherwise set forth in the
related Prospectus Supplement, the obligations of the underwriters to
purchase such Certificates will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all of such Certificates
if any of such Certificates are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Certificates may also be sold directly by the Transferor or through
agents designated by the Transferor from time to time. Any agent involved
in the offer or sale of Certificates will be named, and any commissions
payable by the Transferor to such agent will be set forth, in the related
Prospectus Supplement. Unless otherwise indicated in the related Prospectus
Supplement, any such agent will act on a best efforts basis for the period
of its appointment.
Any underwriters, agents or dealers participating in the distribution
of Certificates may be deemed to be underwriters, and any discounts or
commissions received by them on the sale or resale of Certificates may be
deemed to be underwriting discounts and commissions, under the Securities
Act. Agents and underwriters may be entitled under agreements entered into
with the Transferor and [the Bank] to indemnification by the Transferor and
[the Bank] against certain civil liabilities, including liabilities under
the Securities Act, or to contribution with respect to payments that the
agents or underwriters may be required to make in respect thereof. Agents
and underwriters may be affiliates or customers of, engage in transactions
with, or perform services for, the Transferor and [the Bank] or their
affiliates in the ordinary course of business.
LEGAL MATTERS
Certain legal matters and Federal income tax matters relating to the
issuance of the Certificates will be passed upon for the Transferor and the
Trust by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
Certain legal matters will be passed upon for the Underwriters by the
counsel named in the Prospectus Supplement.
INDEX OF DEFINED TERMS
Terms Page(s)
Account Owners.......................................................7
Accounts ..................................................i, 8, 32
Accumulation Period Length..........................................43
Additional Accounts.................................................31
Adverse Effect..................................................30, 49
Aggregate Addition..................................................31
Aggregate Addition Accounts.........................................30
Average Rate........................................................28
Bank ......................................................i, 7
Bank Portfolio......................................................32
Benefit Plans.......................................................77
Billing Cycle.......................................................35
BKB CT .........................................................7
Cash Collateral Account.............................................62
Cash Collateral Guaranty............................................62
CCRFC ......................................................i, 8
Cede .....................................................5, 39
Cedel ........................................................13
Cedel Participants..................................................41
Certificate Owner...................................................72
Certificate Owners...................................................5
Certificate Rate.....................................................5
Certificateholders...................................................5
Certificateholders' Interest.........................................9
Certificates.........................................................i
Class .........................................................i
Code ........................................................71
Collateral Interest.................................................62
Collection Account..................................................54
Commission .........................................................5
Controlled Accumulation Amount......................................16
Controlled Accumulation Period......................................15
Controlled Amortization Amount......................................17
Controlled Amortization Period......................................16
Controlled Deposit Amount...........................................16
Controlled Distribution Amount......................................17
Cooperative ........................................................41
Credit Enhancement..................................................21
Credit Enhancer.....................................................61
Date of Processing..................................................22
Defaulted Amount....................................................60
Defaulted Receivables...............................................60
Definitive Certificates.............................................39
Depositaries........................................................39
Depository ........................................................39
Determination Date..................................................22
Disclosure Document.................................................11
Discount Option Receivables.........................................50
Discount Percentage.................................................50
Distribution Date...................................................21
DOL ........................................................77
DTC .........................................................5
Early Accumulation Period...........................................16
Early Amortization Period...........................................17
Eligible Account....................................................31
Eligible Institution................................................54
Eligible Investments................................................55
Eligible Receivable.................................................47
Enhancement Invested Amount......................................9, 61
ERISA ........................................................77
Euroclear ........................................................13
Euroclear Operator..................................................41
Euroclear Participants..............................................41
Euroclear Provisions................................................41
Excess Allocation Series............................................18
Excess Finance Charge Collections...................................58
Exchange Act.........................................................5
Expected Final Payment Date.........................................14
FAMIS .....................................................7, 32
FASIT ........................................................75
FDC ........................................................33
FDIA ........................................................69
FDIC ........................................................24
FDR .....................................................7, 32
FICO ........................................................34
Final Regulation....................................................77
Finance Charge Receivables..........................................13
FIRREA ........................................................23
Floating Allocation Percentage......................................56
Foreign Investors...................................................75
Full Invested Amount................................................20
Funding Period......................................................20
General Account Regulations.........................................79
Group .........................................................9
Group Investor Additional Amounts...................................57
Group Investor Default Amount.......................................57
Group Investor Finance Charge Collections...........................57
Group Investor Monthly Fees.........................................57
Group Investor Monthly Interest.....................................57
Holders ........................................................42
Indirect Participants...............................................40
Ineligible Receivables..............................................47
Initial Accounts....................................................12
Initial Cut-Off Date................................................12
Initial Series Closing Date..........................................7
Insolvency Event....................................................25
Interchange .....................................................8, 36
Interest Funding Account............................................14
Interest Payment Date...............................................53
Invested Amount.....................................................53
Investor Finance Charge Collections.................................57
IRA ........................................................77
IRS ........................................................72
John Hancock........................................................78
L/C Issuer ........................................................61
LIBOR ........................................................63
MasterCard .........................................................8
Minimum Monthly Payment.............................................35
Monthly Period.......................................................9
Monthly Servicing Fee...............................................45
New Accounts........................................................30
New Issuance........................................................53
Offered Certificates................................................72
OID ........................................................72
Paired Series.......................................................19
Participants........................................................39
Participation Interests..............................................8
Pay Out Event.......................................................44
Pooling and Servicing Agreement......................................i
Portfolio Yield.....................................................27
Pre-Funding Account.................................................20
Pre-Funding Amount..................................................20
Premium Option Receivables..........................................51
Premium Percentage..................................................51
Prepayable Instrument...............................................73
Principal Allocation Percentage.................................19, 56
Principal Commencement Date.........................................14
Principal Funding Account...........................................16
Principal Receivables...............................................13
Principal Sharing Series............................................18
Principal Shortfalls................................................58
Principal Terms.....................................................53
Prior Series........................................................19
Proposed Regulations................................................76
Prospectus Supplement................................................i
PTE ........................................................78
Purchase Agreement..................................................11
Rating Agency.......................................................22
Rating Agency Condition.............................................30
Reallocated Investor Finance Charge Collections.....................57
Reallocation Group..................................................19
Receivables ......................................................i, 8
Record Date ........................................................39
Recoveries ....................................................13, 37
Regulations ........................................................72
Reinvestment Events.................................................45
Removed Accounts....................................................12
Required Minimum Principal Balance..................................50
Required Transferor Amount..........................................10
Revolving Period....................................................14
RTC ........................................................24
RTC Policy Statement................................................69
Securities Act.......................................................5
Series ......................................................i, 7
Series Adjusted Invested Amount.....................................55
Series Allocable Defaulted Amount...................................55
Series Allocable Finance Charge Collections.....................55, 57
Series Allocable Principal Collections..............................55
Series Allocation Percentage........................................55
Series Closing Date.................................................14
Series Cut-Off Date.................................................15
Series Enhancement...................................................8
Series Invested Amount..............................................50
Series Required Transferor Amount...................................56
Series Termination Date.............................................15
Service Transfer....................................................64
Servicer ......................................................i, 7
Servicer Default....................................................64
Servicer Interchange................................................46
Servicing Fee....................................................7, 45
Shared Principal Collections........................................58
Special Funding Account.............................................59
Special Payment Date................................................45
Special Tax Counsel.................................................72
Supplement ........................................................10
Supplemental Certificate............................................49
Supplemental Certificates...........................................10
Swaps ........................................................63
Tax Opinion ........................................................54
Termination Notice..................................................64
Transfer Date.......................................................21
Transferor ......................................................i, 8
Transferor Amount...............................................10, 48
Transferor Certificate..............................................10
Transferor Certificates.............................................10
Transferor Servicing Fee............................................45
Transferor's Interest................................................9
Trust ......................................................i, 7
Trust Adjusted Invested Amount......................................56
Trust Assets.........................................................8
Trust Portfolio.....................................................32
Trustee ......................................................i, 7
UCC ........................................................24
VISA .........................................................8
Yield Supplement Account............................................13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee....................................... $303.03
Printing and Engraving................................. *
Trustee's Fees......................................... *
Legal Fees and Expenses................................ *
Accountant's Fees and Expenses......................... *
Rating Agency Fees..................................... *
Miscellaneous Fees..................................... *
-------
Total................................................. *
=======
* To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article IX of the Registrant's Certificate of Incorporation ("Article
IX") provides that no person shall be personally liable to the Registrant
or its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that the foregoing does not eliminate or limit
the liability of a director (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware or any successor provision or (iv) for any
transaction from which the director derived an improper personal benefit.
Article IX also provides that, if the General Corporation Law of the State
of Delaware is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Transferor shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law of the State of Delaware,
as so amended from time to time. The right of indemnification provided in
Article IX is not exclusive of any other rights to which any person seeking
indemnification may otherwise be entitled, and will be applicable to
matters otherwise within its scope whether or not such matters arose or
arise before or after the adoption of Article IX. Without limiting the
generality or the effect of the foregoing, the Registrant may adopt
by-laws, or enter into one or more agreements with any person, which
provide for indemnification greater or different than that provided in
Article IX. No repeal or modification of Article IX by the stockholders of
the Registrant may adversely affect any right or protection of a director
of the Registrant existing by virtue of Article IX at the time of such
repeal or modification.
Section 145 of the Delaware General Corporation Law provides
generally and in pertinent part that a Delaware corporation may indemnify
its directors and officers against expenses, judgments, fines and
settlements actually and reasonably incurred by them in connection with any
civil, criminal, administrative, or investigative suit or action, except
actions by or in the right of the corporation if, in connection with the
matters in issue, they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation,
and in connection with any criminal suit or proceeding, if in connection
with the matters in issue, they had no reasonable cause to believe their
conduct was unlawful. Section 145 further provides that in connection with
the defense or settlement of any action by or in the right of the
corporation, a Delaware corporation may indemnify its directors and
officers against any expenses actually and reasonably incurred by them if,
in connection with the matters in issue, they acted in good faith in a
manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification may be made
with respect to any claim, issue or matter as to which such person has been
adjudged liable to the corporation unless the Court of Chancery or the
court in which such action or suit is brought approves such
indemnification. Section 145 further permits a Delaware corporation to
grant its directors and officers additional rights of indemnification
through bylaw provisions and otherwise, and to purchase indemnity insurance
on behalf of its directors and officers.
Section 102(b)(7) of the Delaware General Corporation Law provides
that a Delaware corporation may eliminate or limit the personal liability
of a director to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as director, provided that such corporation
shall not eliminate or limit the liability of a director: (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) under ss. 174
of the Delaware General Corporation Law; or (iv) for any transaction from
which the director derived an improper personal benefit.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
1.1 Form of Underwriting Agreement.
4.1 Form of Pooling and Servicing Agreement and related agreements as
exhibits thereto, dated as of _________ __, 1997 among the Bank, the
Trustee and the Transferor.
4.2 Form of Series 1997-1 Supplement, dated as of _________ __, 1997
among the Bank, the Trustee and the Transferor.
4.3 Form of Receivables Purchase Agreement, dated as of _________ __, 1997
between the Bank and the Transferor.
4.4 Form of Prospectus Supplement.
5.1 Form of opinion of Skadden, Arps, Slate, Meagher & Flom LLP with
respect to legality.
8.1 Form of opinion of Skadden, Arps, Slate, Meagher & Flom LLP
with respect to tax matters.
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in its
opinion, filed as Exhibit 5.1).
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in its
opinions filed as Exhibit 8.1).
24 Power of Attorney.**
--------------------
**Previously filed.
(b) Financial Statements
All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes as follows:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that (a)(i) and (a)(ii) will not
apply if the information required to be included in a post-effective
amendment by those sub-paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this registration
statement.
(ii) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(iii) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(iv) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Boston, Commonwealth of Massachusetts, on August 22, 1997.
CREDIT CARD RECEIVABLES FUNDING CORPORATION
(Registrant)
By___________________*______________________
Name: Jeff H. Slawsky
Title: President
Pursuant to the Requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
CREDIT CARD RECEIVABLES FUNDING CORPORATION
SIGNATURE TITLE
__________*_____________
<S> <C> <C>
Kathleen M. McGillycuddy Chairman August 22 , 1997
(Principal Executive
Officer) and Director
__________*_____________
Jeff H. Slawsky President and Director August 22 , 1997
__________*_____________
Rhanna Kidwell Secretary and Treasurer August 22, 1997
(Principal Financial
Officer Principal
Accounting Officer)
__________*_____________
William M. Parent Director August 22 , 1997
</TABLE>
The undersigned, by signing his name hereto, does sign and execute
this Amendment No. 2 to the Registration Statement pursuant to the Power of
Attorney executed by the above named officers and directors.
By /s/ Rhanna Kidwell
-------------------------------
Name: Rhanna Kidwell
Attorney-in-Fact
EXHIBIT INDEX
Exhibit No. Description
1.1 Form of Underwriting Agreement.
4.1 Form of Pooling and Servicing Agreement and related
agreements as exhibits thereto, dated as of _________ __,
1997 among the Bank, the Trustee and the Transferor.
4.2 Form of Series 1997-1 Supplement, dated as of _________ __,
1997 among the Bank, the Trustee and the Transferor.
4.3 Form of Receivables Purchase Agreement, dated as
of ______ __, 1997 between the Bank and the Transferor.
4.4 Form of Prospectus Supplement.
5.1 Form of opinion of Skadden, Arps, Slate, Meagher & Flom LLP
with respect to legality.
8.1 Form of opinion of Skadden, Arps, Slate, Meagher & Flom LLP
with respect to tax matters.
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included
in its opinion filed as Exhibit 5.1).
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included
in its opinion filed as Exhibit 8.1).
24 Power of Attorney .**
--------------------
** Previously filed.
BANKBOSTON CREDIT CARD MASTER TRUST
CREDIT CARD RECEIVABLES FUNDING CORPORATION
(Transferor)
BANKBOSTON (NH), NATIONAL ASSOCIATION
(Servicer)
UNDERWRITING AGREEMENT
(Standard Terms)
________, 1997
Merrill Lynch & Co.
As Representative of the Several Underwriters
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, NY 10281
Ladies and Gentlemen:
Credit Card Receivables Funding Corporation, a
Delaware corporation (the "Company"), proposes to cause
the BankBoston Credit Card Master Trust (the "Trust") to
issue the Asset Backed Certificates designated in the
applicable Terms Agreement (as hereinafter defined) (the
"Certificates"). The Certificates will be issued pursu-
ant to a Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") among the Company, as Transfer-
or, BankBoston (NH), National Association (the "Bank"),
as Servicer (the "Servicer"), and The Bank of New York,
as trustee (the "Trustee"), as supplemented by the
Series Supplement having the date stated in the applica-
ble Terms Agreement, between the Company, as Transferor,
the Bank, as Servicer and the Trustee (the "Supplement").
The assets of the Trust will include, among other things,
Receivables (as defined herein) transferred to the Compa-
ny and subsequently transferred by the Company to the
Trust pursuant to the Pooling and Servicing Agreement.
The Series of Certificates designated in the applicable
Terms Agreement among the Company, the Bank and the
Representative of the several Underwriters will be sold
in a public offering through the underwriters listed on
Schedule I to the applicable Terms Agreement, one or more
of which may act as representative of such underwriters
(any underwriter through which Certificates are sold
shall be referred to herein as an "Underwriter" or,
collectively, all such Underwriters may be referred to as
the "Underwriter"; any representatives thereof may be
referred to herein as a "Representative"). Certificates
of any Series sold to the Underwriters shall be sold
pursuant to a Terms Agreement by and among the Company,
the Bank and the Underwriter, a form of which is attached
hereto as Exhibit A (a "Terms Agreement"), which incor-
porates by reference this Underwriting Agreement (the
"Agreement"). Any Series of Certificates sold pursuant
to any Terms Agreement may include the benefits of a
letter of credit, cash collateral guaranty or account,
collateral interest, surety bond, insurance policy,
spread account, reserve account, yield supplement account
or other similar arrangement for the benefit of the
Certificateholders of such Series ("Credit Enhancement").
With respect to any such Credit Enhancement, the Bank may
enter into an agreement (the "Credit Enhancement Agree-
ment") by and between the Bank and the provider of the
Credit Enhancement (the "Credit Enhancement Provider").
The term "applicable Terms Agreement" means the Terms
Agreement executed in connection with the sale to the
Underwriter of a Series of Certificates. Each Certifi-
cate will represent a specified percentage undivided
interest in the Trust. The assets of the Trust include,
among other things, certain amounts due on a portfolio of
MasterCard and VISA revolving credit card accounts of
the Bank (the "Receivables"), and the benefit of the
Credit Enhancement, if any. To the extent not defined
herein, capitalized terms used herein have the meanings
assigned to such terms in the Pooling and Servicing
Agreement. Unless otherwise stated herein or in the
applicable Terms Agreement, as the context otherwise
requires or if such term is otherwise defined in the
Pooling and Servicing Agreement, each capitalized term
used or defined herein or in the applicable Terms Agree-
ment shall relate only to the Series of Certificates
designated in the applicable Terms Agreement and no other
Series of Asset Backed Certificates issued by the Trust.
Whenever the Company determines to make an offering
of Certificates, the Company and the Bank will enter into
a Terms Agreement providing for the sale of the applica-
ble Certificates to, and the purchase and offering there-
of by, the Underwriters. The Terms Agreement relating to
the Certificates shall specify the type of Certificates
to be issued, the names of the Underwriters participating
in such offering (subject to substitution as provided in
Section 10 hereof), the number of Certificates which each
such Underwriter severally agrees to purchase, the price
at which the Certificates are to be purchased by the
Underwriters from the Company, the initial public offer-
ing price, the time and place of delivery and payment and
other specific terms. The Terms Agreement may take the
form of an exchange of any standard form of written
telecommunication between you and the Company. Each
offering of Certificates will be governed by this Agree-
ment, as supplemented by the applicable Terms Agreement,
and this Agreement and such Terms Agreement shall inure
to the benefit of and be binding upon the Company, the
Bank and each Underwriter participating in the offering
of such Certificates.
Section 1. Representations and Warranties. (a)
The Company and the Bank, each only as to itself, repre-
sents and warrants to and agrees with the Underwriters
that:
(i) The Company has prepared and filed with
the Securities and Exchange Commission (the "Commis-
sion") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (col-
lectively, the "1933 Act"), a registration statement
on Form S-3 (having the registration number stated
in the applicable Terms Agreement), including a form
of prospectus, relating to the Certificates. Such
registration statement, as amended at the time it
was declared effective by the Commission, including
all material incorporated by reference therein, and
all information contained in any Additional Regis-
tration Statement (as defined herein) and deemed to
be part of such registration statement as of the
time such Additional Registration Statement (if any)
was declared effective by the Commission pursuant to
the General Instructions of the Form on which it was
filed and including all information (if any) deemed
to be a part of such registration statement as of
the time it was declared effective by the Commission
pursuant to Rule 430A(b) ("Rule 430A(b)") under the
1933 Act (such registration statement, the "Initial
Registration Statement") has been declared effective
by the Commission. If any post-effective amendment
has been filed with respect to the Initial Registra-
tion Statement, prior to the execution and delivery
of the applicable Terms Agreement, the most recent
such amendment has been declared effective by the
Commission. If (i) an additional registration
statement, including the contents of the Initial
Registration Statement incorporated by reference
therein and including all information (if any)
deemed to be a part of such additional registration
statement pursuant to Rule 430A(b) (the "Additional
Registration Statement") relating to the Certifi-
cates has been filed with the Commission pursuant to
Rule 462(b) ("Rule 462(b)") under the 1933 Act and,
if so filed, has become effective upon filing pursu-
ant to Rule 462(b), then the Certificates have been
duly registered under the 1933 Act pursuant to the
Initial Registration Statement and such Additional
Registration Statement or (ii) an Additional Regis-
tration Statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become
effective upon filing pursuant to Rule 462(b), then
upon such filing the Certificates will have been
duly registered under the 1933 Act pursuant to the
Initial Registration Statement and such Additional
Registration Statement. If the Company does not
propose to amend the Initial Registration Statement
or, if an Additional Registration Statement has been
filed and the Company does not propose to amend it
and if any post-effective amendment to either such
registration statement has been filed with the
Commission prior to the execution and delivery of
the applicable Terms Agreement, the most recent
amendment (if any) to each such registration state-
ment has been declared effective by the Commission
or has become effective upon filing pursuant to Rule
462(c) under the 1933 Act or, in the case of any
Additional Registration Statement, Rule 462(b). The
Initial Registration Statement and any Additional
Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and
individually as a "Registration Statement." Copies
of the Registration Statements, together with any
post-effective amendments, have been furnished to
the Underwriters. The Bank proposes to file with
the Commission pursuant to Rule 424 ("Rule 424")
under the 1933 Act a supplement (the "Prospectus
Supplement") to the form of prospectus included in a
Registration Statement (such prospectus, in the form
it appears in a Registration Statement or in the
form most recently revised and filed with the Com-
mission pursuant to Rule 424 is hereinafter referred
to as the "Basic Prospectus") relating to the Cer-
tificates and the plan of distribution thereof. The
Basic Prospectus and the Prospectus Supplement,
together with any amendment thereof or supplement
thereto, is hereinafter referred to as the "Final
Prospectus." Except to the extent that the Repre-
sentative shall agree to a modification, the Final
Prospectus shall be in all substantial respects in
the form furnished to the Underwriters prior to the
execution of the relevant Terms Agreement, or to the
extent not completed at such time, shall contain
only such material changes as the Company has ad-
vised the Representative, prior to such time, will
be included therein. Any preliminary form of the
Prospectus Supplement which has heretofore been
filed pursuant to Rule 424 is hereinafter called a
"Preliminary Final Prospectus;"
(ii) The Initial Registration Statement, in-
cluding such amendments thereto as may have been
required on the date of the applicable Terms Agree-
ment, and the Additional Registration Statement (if
any), relating to the Certificates, have been filed
with the Commission and such Initial Registration
Statement as amended, and the Additional Registra-
tion Statement (if any), have become effective. No
stop order suspending the effectiveness of the
Initial Registration Statement or the Additional
Registration Statement (if any) has been issued and
no proceeding for that purpose has been instituted
or, to the knowledge of the Bank, threatened by the
Commission;
(iii) The Initial Registration Statement
conforms, and any amendments or supplements thereto
and the Final Prospectus will conform, in all mate-
rial respects to the requirements of the 1933 Act,
and do not and will not, as of the applicable effec-
tive date as to the Initial Registration Statement
and any amendment thereto, as of the applicable
filing date as to the Final Prospectus and any
supplement thereto, and as of the Closing Date,
contain an untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary to make the statements therein
not misleading, and the Additional Registration
Statement (if any) and the Initial Registration
Statement conform, in all material respects, to the
requirements of the 1933 Act, and do not and will
not, as of the applicable effective date as to the
Additional Registration Statement, contain an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not mis-
leading; provided, however, that this representation
and warranty shall apply only during the period that
a prospectus relating to the Certificates is re-
quired to be delivered under the 1933 Act by dealers
in connection with the initial public offering of
such Certificates (such period being hereinafter
sometimes referred to as the "prospectus delivery
period"); provided, further, that this representa-
tion and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity
with information furnished in writing to the Company
or the Bank by or on behalf of an Underwriter spe-
cifically for use in connection with the preparation
of a Registration Statement and the Final Prospec-
tus;
(iv) The Company is a corporation duly orga-
nized, validly existing and in good standing under
the laws of the State of Delaware, with corporate
power and authority under such laws to own, lease
and operate its properties and conduct its business
as described in the Final Prospectus, and is duly
qualified as a foreign corporation and duly autho-
rized to transact business and is in good standing
under the laws of each jurisdiction in which it owns
or leases property of a nature, or transacts busi-
ness of a type, that would make such qualification
necessary, except to the extent that the failure to
so qualify or be in good standing would not have a
material adverse effect on the condition (financial
or otherwise), results of operations, business or
prospects of the Company;
(v) The Bank is a national banking association
duly organized, validly existing and in good stand-
ing under the laws of the United States, with corpo-
rate power and authority under such laws to own,
lease and operate its properties and conduct its
business as described in the Final Prospectus, and
is duly qualified as a foreign corporation and duly
authorized to transact business and is in good
standing under the laws of each jurisdiction in
which it owns or leases property of a nature, or
transacts business of a type, that would make such
qualification necessary, except to the extent that
the failure to so qualify or be in good standing
would not have a material adverse effect on the
condition (financial or otherwise), results of
operations, business or prospects of the Bank;
(vi) This Agreement has been duly authorized,
executed and delivered by the Company or the Bank,
as applicable; and upon execution and delivery of
each Terms Agreement by the Company or the Bank, as
applicable, such Terms Agreement shall have been
duly authorized, executed and delivered by the
Company or the Bank;
(vii) As of the Closing Date (as defined in
Section 2(a)), the representations and warranties of
the Company, as Transferor, or the Bank, as
Servicer, as applicable, in the Pooling and Servic-
ing Agreement and the Supplement will be true and
correct in all material respects;
(viii) The Pooling and Servicing Agreement
is not required to be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Inden-
ture Act"), and the Trust is not required to be
registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act");
(ix) The Certificates have been duly autho-
rized, and, when issued and delivered pursuant to
the Pooling and Servicing Agreement and the Supple-
ment, duly authenticated by the Trustee and paid for
by the Underwriters in accordance with the terms of
this Agreement and the applicable Terms Agreement,
will be duly and validly executed, issued and deliv-
ered and entitled to the benefits provided by the
Pooling and Servicing Agreement and the Supplement;
each of the Pooling and Servicing Agreement and the
Supplement have been duly authorized by each of the
Company and the Bank and, when executed and deliv-
ered by the Company, as Transferor, and the Bank, as
Servicer, each of the Pooling and Servicing Agree-
ment and the Supplement will (assuming due execution
and delivery by the Trustee) constitute a valid and
binding agreement of the Company or the Bank, as
applicable; the Certificates, the Pooling and Ser-
vicing Agreement and the Supplement conform to the
descriptions thereof in the Final Prospectus in all
material respects; and, if applicable, when executed
by the Company, as Transferor, the Credit Enhance-
ment Agreement will (assuming due execution and
delivery by the Trustee and Credit Enhancement
Provider) constitute a valid and binding agreement
of the Company;
(x) Each authorization, approval, consent or
license of any government, governmental instrumen-
tality or court, domestic or foreign (other than
under the 1933 Act and the securities or blue sky
laws of the various states), which is required for
(A) the valid authorization, issuance, sale and
delivery of the Certificates or (B) the execution,
delivery or performance of this Agreement, the
applicable Terms Agreement, the Pooling and Servic-
ing Agreement, the Supplement, or the Credit En-
hancement Agreement by the Company or the Bank, as
applicable, has been received;
(xi) No consent, approval, authorization or
order of, or filing with, any court or governmental
agency or body is required to be obtained or made by
the Company or the Bank, as applicable, for the
consummation of the transactions contemplated by
this Agreement, the applicable Terms Agreement, the
Pooling and Servicing Agreement or the Supplement,
except such as have been obtained and made under the
1933 Act, such as may be required under state secu-
rities laws and the filing of any financing state-
ments required to perfect the Trust's interest in
the Receivables;
(xii) Neither the Company nor the Bank is
in default in the performance or observance of any
obligation, agreement, covenant or condition con-
tained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instru-
ment to which it is a party or by which it may be
bound or to which any of its properties may be
subject, except for such defaults that would not
have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs
or business prospects of the Company or the Bank, as
applicable. The execution and delivery of this
Agreement, the applicable Terms Agreement, the
Pooling and Servicing Agreement, the Supplement and
the Credit Enhancement Agreement by the Company or
the Bank, as applicable, the issuance and delivery
of the Certificates, the consummation by the Company
or the Bank, as applicable, of the transactions
contemplated in this Agreement, the applicable Terms
Agreement, the Pooling and Servicing Agreement, the
Supplement and the Registration Statement, and
compliance by each of the Company and the Bank with
the terms of this Agreement, the applicable Terms
Agreement, the Pooling and Servicing Agreement, the
Supplement and the Credit Enhancement Agreement have
been duly authorized by all necessary corporate
action on the part of the Company or the Bank, as
applicable, and do not and will not result in any
violation of the charter or by-laws of the Company
or the Bank, as applicable, and do not and will not
conflict with, or result in a breach of any of the
terms or provisions of, or constitute a default
under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or
assets of the Company or the Bank, as applicable,
under (A) any indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to
which the Company or the Bank, as applicable, is a
party or by which it may be bound or to which any of
its properties may be subject or (B) any existing
applicable law, rule, regulation, judgment, order or
decree of any government, governmental instrumental-
ity or court, domestic or foreign, having jurisdic-
tion over the Company or the Bank, as applicable, or
any of their respective properties except for such
conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse
effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of
the Company or the Bank, as applicable;
(xiii) Except as disclosed in the Final
Prospectus, there is no action, suit or proceeding
before or by any government, governmental instrumen-
tality or court, domestic or foreign, now pending
or, to the knowledge of Company or the Bank, as
applicable, threatened against or affecting the
Company or the Bank, as applicable, that is required
to be disclosed in the Final Prospectus or that, in
the final outcome, could, in the judgment of the
Company or the Bank, as applicable, result in any
material adverse change in the condition (financial
or otherwise), earnings, business affairs or busi-
ness prospects of the Company or the Bank, as appli-
cable, or that could materially and adversely affect
the properties or assets of the Company or the Bank,
as applicable, or that could adversely affect the
consummation of the transactions contemplated in
this Agreement; the aggregate liability or loss, if
any, resulting from the final outcome of all pending
legal or governmental proceedings to which the
Company or the Bank, as applicable, is a party or
which affect any of its respective properties that
are not described in the Final Prospectus, including
ordinary routine litigation incidental to its busi-
ness, would not have a material adverse effect on
the condition (financial or otherwise), earnings,
business affairs or business prospects of the Compa-
ny or the Bank, as applicable; and
(xiv) None of the Bank, the Company or any
of their respective affiliates does business with
the government of Cuba or with any person or affili-
ate located in Cuba within the meaning of Section
517.075, Florida Statutes.
(b) Any certificate signed by any duly authorized
officer of the Company or the Bank and delivered to you
or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company or the Bank,
as applicable, to each Underwriter as to the matters
covered thereby.
Section 2. Purchase and Sale. (a) The several
commitments of the Underwriters to purchase Certificates
pursuant to any Terms Agreement shall be deemed to have
been made on the basis of the representations and warran-
ties herein contained and shall be subject to the terms
and conditions herein set forth. It is understood that
the several Underwriters propose to offer the Certifi-
cates for sale to the public, which may include selected
dealers, as set forth in the Final Prospectus.
Unless otherwise provided in the applicable
Terms Agreement, payment for Certificates shall be made
to the Company or to its order by wire transfer of same
day funds at the offices of Skadden, Arps, Slate, Meagher
& Flom LLP in New York, New York at 10:00 A.M., New York
City time, on the Closing Date (as hereinafter defined)
specified in the Terms Agreement, or at such other time
on the same or such other date as the Representative and
the Bank may agree upon. The time and date of such
payment for the Certificates as specified in the applica-
ble Terms Agreement are referred to herein as the "Clos-
ing Date." As used herein, the term "Business Day" means
any day other than a day on which banks are permitted or
required to be closed in New York City.
Unless otherwise provided in the applicable
Terms Agreement, payment for the Certificates shall be
made against delivery to the Representative for the
respective accounts of the several Underwriters of the
Certificates registered in the name of Cede & Co. as
nominee of The Depository Trust Company and in such
denominations as the Representative shall request in
writing not later than two full Business Days prior to
the Closing Date. The Company shall make the Certifi-
cates available for inspection by the Representatives in
New York, New York not later than one full Business Day
prior to the Closing Date.
Section 3. Certain Covenants of the Company. The
Company covenants with each Underwriter as follows:
(a) If reasonably requested by you in connection
with the offering of the Certificates, the Company will
prepare a preliminary prospectus supplement containing
such information concerning the Certificates as you and
the Company deem appropriate, and immediately following
the execution of the Terms Agreement, the Company will
prepare a Prospectus Supplement that complies with the
1933 Act and that sets forth the number or principal
amount of Certificates covered thereby, the names of the
Underwriters participating in the offering and the number
or principal amount of Certificates which each Underwrit-
er severally has agreed to purchase, the name of each
Underwriter, if any, acting as representative in connec-
tion with the offering, the price at which the Certifi-
cates are to be purchased by the Underwriters from the
Company, the initial public offering price, the selling
concession and reallowance, if any, and such other infor-
mation concerning the Certificates as you and the Company
deem appropriate in connection with the offering of the
Certificates. The Company will promptly transmit copies
of the Prospectus Supplement to the Commission for filing
pursuant to Rule 424 under the 1933 Act and will furnish
to the Underwriters named therein as many copies of any
preliminary prospectus supplement, the Basic Prospectus
and the Prospectus Supplement as you shall reasonably
request. In addition, to the extent that any Underwriter
(i) has provided to the Company Collateral Term Sheets or
Series Term Sheets (each as defined below) that such
Underwriter has provided to a prospective investor, the
Company will file such Collateral Term Sheets or Series
Term Sheets as an exhibit to a report on Form 8-K within
two Business Days of its receipt thereof, or (ii) has
provided to the Company Structural Term Sheets or Compu-
tational Materials (each as defined below) that such
Underwriter has provided to a prospective investor, the
Company will file or cause to be filed with the Commis-
sion a report on Form 8-K containing such Structural Term
Sheet and Computational Materials, as soon as reasonably
practicable after the date of this Agreement, but in any
event, not later than the date on which the Final Pro-
spectus is filed with the Commission pursuant to Rule
424.
(b) If at any time when the Final Prospectus is
required by the 1933 Act to be delivered in connection
with sales of the Certificates any event shall occur or
condition exist as a result of which it is necessary, in
the opinion of counsel for the Underwriters or counsel
for the Company, to amend the Registration Statement or
amend or supplement the Final Prospectus in order that
the Final Prospectus will not include an untrue statement
of a material fact or omit to state a material fact
necessary in order to make the statements therein not
misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall
be necessary, in the opinion of either such counsel, at
any such time to amend any Registration Statement or
amend or supplement the Final Prospectus in order to
comply with the requirements of the 1933 Act, the Company
will promptly prepare and file with the Commission,
subject to Section 3(d), such amendment or supplement as
may be necessary to correct such untrue statement or
omission or to make the Registration Statement or the
Final Prospectus comply with such requirements.
(c) During the period when the Final Prospectus is
required by the 1933 Act to be delivered in connection
with sales of the Certificates or during the entire
period that any Class of Certificates is outstanding
which were expected to be publicly-offered securities for
purposes of ERISA, the Company will, subject to Section
3(d), file promptly all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15(d)
of the 1934 Act.
(d) During the period between the date of the
applicable Terms Agreement and the Closing Date, the
Company will inform you of its intention to file any
amendment to any Registration Statement, any supplement
to the Final Prospectus or any document that would as a
result thereof be incorporated by reference in the Final
Prospectus, will furnish you with copies of any such
amendment, supplement or other document and will not file
any such amendment, supplement or other document in a
form to which you or your counsel shall reasonably ob-
ject.
(e) During the period when the Final Prospectus is
required by the 1933 Act to be delivered in connection
with the sales of the Certificates, the Company will
notify you immediately, and confirm the notice in writ-
ing, (i) of the effectiveness of any amendment to any
Registration Statement, (ii) of the mailing or the deliv-
ery to the Commission for filing of any supplement to the
Final Prospectus or any document that would as a result
thereof be incorporated by reference in the Final Pro-
spectus, (iii) of the receipt of any comments from the
Commission with respect to any Registration Statement or
the Prospectus, (iv) of any request by the Commission for
any amendment to any Registration Statement or any sup-
plement to the Final Prospectus or for additional infor-
mation relating thereto or to any document incorporated
by reference in the Final Prospectus and (v) of the
issuance by the Commission of any stop order suspending
any effectiveness of any Registration Statement, of the
suspension of the qualification of the Certificates for
offering or sale in any jurisdiction, or of the institu-
tion or threatening of any proceeding for any of such
purposes. The Company will use every reasonable effort
to prevent the issuance of any such stop order or of any
order suspending such qualification and, if any such
order is issued, to obtain the lifting thereof at the
earliest possible moment.
(f) The Company will furnish to the Representative,
without charge, two copies of each Registration Statement
as originally filed and of all amendments thereto, wheth-
er filed before or after the Registration Statement
becomes effective, copies of all exhibits and documents
filed therewith and copies of all consents and certifi-
cates of experts as you may reasonably request, and has
furnished or will furnish to you, for each other Under-
writer, one copy of each Registration Statement as origi-
nally filed and of each amendment thereto.
(g) The Company will cause the Trust to make gener-
ally available to Certificateholders and to the Represen-
tative as soon as practicable an earnings statement
covering a period of at least twelve months beginning
with the first fiscal quarter of the Trust occurring
after the effective date of the Initial Registration
Statement (or, if later, the effective date of the Addi-
tional Registration Statement), which shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158
of the Commission promulgated thereunder.
(h) The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Certif-
icates for offering and sale under the applicable securi-
ties laws of such states and other jurisdictions as you
may designate and to maintain such qualifications in
effect for a period of not less than one year from the
effective date of the Terms Agreement applicable to such
Certificates; provided, however, that the Company shall
not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it
is not otherwise so subject. The Company will file such
statements and reports as may be required by the laws of
each jurisdiction in which the Certificates have been
qualified as provided above.
(i) To the extent, if any, that the rating provided
with respect to the Certificates by the rating agency or
agencies that initially rate the Certificates is condi-
tional upon the furnishing of documents or the taking of
any other actions by the Company, the Company shall
furnish such documents and take any such other actions.
(j) For a period from the date of this Agreement
until the retirement of the Certificates, or until such
time as the Underwriters shall cease to maintain a sec-
ondary market in the Certificates, whichever first oc-
curs, the Company will deliver to the Underwriters (i)
the annual Servicer's Certificate, (ii) the annual inde-
pendent certified public accountants' reports furnished
to the Trustee, (iii) all documents required to be dis-
tributed to Certificateholders of the Trust and (iv) all
documents filed with the Commission pursuant to the
Exchange Act or any order of the Commission thereunder,
in each case as provided to the Trustee or filed with the
Commission, as soon as such statements and reports are
furnished to the Trustee or filed or, if an affiliate of
the Company is not the Servicer, as soon thereafter as
practicable.
(k) Between the date of the applicable Terms Agree-
ment and the Closing Date or such other date as is set
forth in such Terms Agreement, the Company will not,
without your prior written consent, directly or indirect-
ly, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, the Certificates set forth
in such Terms Agreement, other than as set forth in such
Terms Agreement.
Section 4. Payment of Expenses; Reimbursement.
The Company and the Bank jointly and severally covenant
and agree with the Underwriters that they will:
(a) Pay and bear all costs and expenses inci-
dent to the performance of its obligations under
this Agreement and any applicable Terms Agreement,
including (i) the preparation, printing and filing
of each Registration Statement (including financial
statements and exhibits), as originally filed and as
amended, any preliminary prospectus supplements and
the Final Prospectus and any amendments or supple-
ments thereto, and the cost of furnishing copies
thereof to the Underwriters, (ii) the preparation,
printing and distribution of this Agreement, the
Terms Agreement, the Pooling and Servicing Agree-
ment, the Supplement and the Credit Enhancement
Agreement, if any, (iii) the issuance and delivery
of the Certificates to the Underwriters, (iv) the
fees and disbursements of the Company's counsel and
accountants, (v) the qualification of the Certifi-
cates under the applicable securities laws in accor-
dance with Section 3(i) including filing fees and
reasonable fees and disbursements of counsel for the
Underwriters in connection therewith and in connec-
tion with any blue sky survey, (vi) any fees charged
by rating agencies for rating any of the Certifi-
cates and (vii) the fees and expenses incurred in
connection with the listing of the applicable Cer-
tificates on one or more domestic or foreign stock
exchanges.
(b) Pay or cause to be paid all expenses
incident to the performance of its obligations under
this Agreement, including without limitation: (i)
expenses of preparing, printing and reproducing each
Registration Statement, the Preliminary Final Pro-
spectus, the Final Prospectus, this Agreement, the
applicable Terms Agreement, the Pooling and Servic-
ing Agreement, the Supplement, the Credit Enhance-
ment Agreement and the Certificates, (ii) the cost
of delivering the Certificates to the Underwriters,
(iii) any fees charged by investment rating agencies
for the rating of such Certificates, and (iv) the
reasonable expenses and costs (not to exceed the
amount specified in the applicable Terms Agreement)
incurred in connection with "blue sky" qualification
of the Certificates for sale in those states desig-
nated by the Underwriters and the printing of memo-
randa relating thereto (it being understood that,
except as specified in this Section 4 and in Sec-
tions 7 and 8 hereof, the Underwriters will pay all
their own costs and expenses, including the cost of
printing any Agreement among Underwriters, the fees
of counsel to any Underwriter, transfer taxes on
resale of any Certificates by them and advertising
expenses connected with any offers that they may
make).
(c) Reimburse the Underwriters named in the
applicable Terms Agreement for all of their out-of-
pocket expenses, including the reasonable fees and
disbursements of counsel for such Underwriters, if
such Terms Agreement is terminated by you in accor-
dance with the provisions of Section 6 hereof.
Notwithstanding the foregoing, the Underwriters
may agree to reimburse the Company and the Bank for
certain expenses incurred in connection with the issuance
and distribution of the Certificates of any series if so
specified in the applicable Terms Agreement.
Section 5. Representations and Warranties of
the Underwriters. Each Underwriter severally represents,
warrants, covenants and agrees with each of the Company
and the Bank that:
(a) It either (A) has not provided any po-
tential investor with a Collateral Term Sheet (that
is required to be filed with the Commission within
two business days of first use under the Terms of
the Public Securities Association Letter as de-
scribed below), or (B) has, substantially contempo-
raneously with its first delivery of such Collateral
Term Sheet to a potential investor, delivered such
Collateral Term Sheet to the Company, which Collat-
eral Term Sheet, if any, is attached to this Agree-
ment as Exhibit B.
(b) It either (A) has not provided any po-
tential investor with a Structural Term Sheet or
Computational Materials, or (B) has provided any
such Structural Term Sheet or Computational Materi-
als to the Company, which Structural Term Sheets and
Computational Materials, if any, are attached to
this Agreement as Exhibit C.
(c) It either (A) has not provided any po-
tential investor with a Series Term Sheet or (B) has
provided any Series Term Sheet to the Company, which
Series Term Sheets, if any, are attached to this
Agreement as Exhibit D.
(d) Each Collateral Term Sheet bears a leg-
end indicating that the information contained there-
in will be superseded by the description of the
collateral contained in the Prospectus Supplement
and, except in the case of the initial Collateral
Term Sheet, that such information supersedes the
information in all prior Collateral Term Sheets.
(e) Each Structural Term Sheet and Series
Term Sheet and all Computational Materials bear a
legend substantially as follows (or in such other
form as may be agreed prior to the date of this
Agreement):
This information does not constitute ei-
ther an offer to sell or a solicitation of
an offer to buy any of the securities
referred to herein. Information contained
herein is confidential and provided for
information only, does not purport to be
complete and should not be relied upon in
connection with any decision to purchase
the securities. This information super-
sedes any prior versions hereof and will
be deemed to be superseded by any subse-
quent versions including, with respect to
any description of the securities or the
underlying assets, the information con-
tained in the final Prospectus and accom-
panying Prospectus Supplement. Offers to
sell and solicitations of offers to buy
the securities are made only by the final
Prospectus and the related Prospectus
Supplement.
(f) It (at its own expense) agrees to pro-
vide to the Company any accountants' letters ob-
tained relating to the Collateral Term Sheets,
Structural Term Sheets and Computational Materials,
which accountants' letters shall be addressed to the
Company.
(g) It has not, and will not, without the
prior written consent of the Company, provide any
Collateral Term Sheets, Structural Term Sheets,
Series Term Sheets or Computational Materials to any
investor after the date of this Agreement.
(h) It has only issued or passed on and
shall only issue or pass on in the United Kingdom
any document received by it in connection with the
issue of the Certificates to a person who is of a
kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertise-
ments)(Exemptions) Order 1996 or who is a person to
whom the document may otherwise lawfully be issued
or passed on, it has complied and shall comply with
all applicable provisions of the Financial Services
Act 1986 of Great Britain with respect to anything
done by it in relation to the Certificates in, from
or otherwise involving the United Kingdom and if
that Underwriter is an authorized person under the
Financial Services Act 1986, it has only promoted
and shall only promote (as that term is defined in
Regulation 1.02 of the Financial Services (Promotion
of Unregulated Schemes) Regulations 1991) to any
person in the United Kingdom the scheme described in
the Prospectus if that person is of a kind described
either in Section 76(2) of the Financial Services
Act 1986 or in Regulation 1.04 of the Financial
Services (Promotion of Unregulated Schemes) Regula-
tions 1991.
For purposes of this Agreement, "Collateral
Term Sheets" and "Structural Term Sheets" shall have the
respective meanings assigned to them in the February 13,
1995 letter of Cleary, Gottlieb, Steen & Hamilton on
behalf of the Public Securities Association (which let-
ter, and the SEC staff's response thereto, were publicly
available February 17, 1995). The term "Collateral Term
Sheet" as used herein includes any subsequent Collateral
Term Sheet that reflects a substantive change in the
information presented. "Computational Materials" has the
meaning assigned to it in the May 17, 1994 letter of
Brown & Wood on behalf of Kidder, Peabody & Co., Inc.
(which letter, and the SEC staff's response thereto, were
publicly available May 20, 1994). "Series Term Sheet"
has the meaning assigned to it in the April 4, 1996
letter of Latham & Watkins on behalf of Greenwood Trust
Company (which letter, and the SEC staff's response
thereto, were publicly available April 5, 1996).
Section 6. Conditions of Underwriters' Obligations.
Except as otherwise provided in the Terms Agreement, the
obligations of the Underwriters to purchase and pay for
the Certificates pursuant to any such Terms Agreement are
subject to the accuracy of the representations and war-
ranties of the Company and the Bank contained herein at
and as of the date hereof, the date of the Terms Agree-
ment, and the Closing Date or contained in certificates
of any officer of the Company or the Bank delivered
pursuant to the provisions hereof, to the performance by
the Company and the Bank of its obligations hereunder,
and the following further conditions:
(a) At the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall
have been issued under the 1933 Act and no proceedings
for that purpose shall have been instituted or shall be
pending or, to your knowledge or the knowledge of the
Company or the Bank, shall be contemplated by the Commis-
sion, and any request on the part of the Commission for
additional information shall have been complied with to
the reasonable satisfaction of counsel for the Underwrit-
ers.
(b) At the applicable Closing Date, you shall have
received a signed opinion of _________________, General
Counsel for each of the Company and the Bank, dated as of
the Closing Date, together with signed or reproduced
copies of such opinion for each of the other Underwrit-
ers, in form and substance satisfactory to you or your
counsel,with respect to general corporate matters.
(c) The Underwriters shall have received from
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Company and the Bank, one or more opinions, in form and
substance satisfactory to the Underwriter's counsel, each
dated the applicable Closing Date, with respect to the
validity of the Certificates, the Initial Registration
Statement, the Additional Registration Statement (if
any), the Final Prospectus, certain matters of the Uni-
form Commercial Code, as adopted in the State of Dela-
ware, and such other related matters as the Underwriters
may reasonably require, and the Company and the Bank
shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass on
such matters.
(d) At the applicable Closing Date, you shall have
received the favorable opinion of Orrick, Herrington &
Sutcliffe LLP, counsel for the Underwriters, dated as of
the applicable Closing Date, together with signed or
reproduced copies of such opinion for each of the other
Underwriters, the Certificates, this Agreement, the
Registration Statement, the Final Prospectus, the Pooling
and Servicing Agreement, the Supplement and such other
related matters as you may require. In giving such
opinion, such counsel may rely, as to all matters gov-
erned by the laws of jurisdictions other than the law of
the State of New York, the General Corporation Law of the
State of Delaware and the federal law of the United
States, upon the opinions of counsel satisfactory you.
Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent
they deem proper, upon certificates of officers of the
Company and certificates of public officials.
(e) At the applicable Closing Date, you shall
have received the favorable opinion of Emmett, Marvin &
Martin, LLP, counsel for the Trustee, dated as of the
applicable Closing Date, together with signed or repro-
duced copies of such opinion for each of the other Under-
writers with respect to such matters as you may require.
(f) At the applicable Closing Date there shall not
have been, since the date of the applicable Terms Agree-
ment or since the respective dates as of which informa-
tion is given in the Registration Statement, any material
adverse change in the condition (financial or otherwise)
or in the earnings, business affairs or business pros-
pects of the Company or the Bank, whether or not arising
in the ordinary course of business, and you shall have
received separate certificates of an authorized officer
of the Company and the Bank, dated as of such Closing
Date, to the effect that (i) there has been no such
material adverse change, (ii) the representations and
warranties of the Company or the Bank, as applicable,
contained in Section 1 hereof are true and correct in all
material respects with the same force and effect as
though expressly made at and as of such Closing Date,
(iii) the Company or the Bank, as applicable, has com-
plied in all material respects with all agreements and
satisfied in all material respects, all conditions on its
part to be complied with or satisfied at or prior to such
Closing Date, and (iv) to the best knowledge of such
person, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings
for that purpose have been initiated or threatened by the
Commission.
(g) At the date of the applicable Terms Agreement
and at the Closing Date, Coopers & Lybrand L.L.P. (or
such other independent public accountants as shall be
named in the applicable Terms Agreement), certified
independent public accountants for the Company and the
Bank, shall have furnished to the Underwriters a letter
or letters, dated respectively as of the date of the
applicable Terms Agreement and as of the Closing Date
confirming that they are certified independent public
accountants within the meaning of the 1933 Act and the
Exchange Act, and the respective applicable published
rules and regulations thereunder and substantially in the
form heretofore agreed and otherwise in form and in
substance satisfactory to the Representative and counsel
for the Underwriters.
(h) Subsequent to the date of the Terms Agreement
relating to such Certificates neither (i) the United
States shall have become engaged in the outbreak or
escalation of hostilities involving the United States or
there has been a declaration by the United States of a
national emergency or a declaration of war, (ii) a bank-
ing moratorium shall have been declared by either Federal
or New York State authorities, nor (iii) trading in any
securities of the Company, the Bank or the BankBoston
Corporation shall have been suspended or materially
limited by the Commission or the New York Stock Exchange,
or if trading generally on the New York Sock Exchange
shall have been suspended or materially limited, or
minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices shall have been
required, by such exchange or by order of the Commission
or by any other governmental authority.
(i) The Underwriters shall receive evidence
satisfactory to them that, on or before the Closing Date,
UCC-1 financing statements have been or are being filed
in the office of the Secretary of State of the State of
Delaware, reflecting the interest of the Trustee in the
Receivables and the proceeds thereof.
(j) The Underwriters shall have received evidence
satisfactory to them that the Certificates shall be rated
in accordance with the applicable Terms Agreements by the
Rating Agency and there shall not have occurred a down-
grading in the rating assigned to the Certificates or any
other securities issued by the Company or the Bank by any
"nationally recognized statistical rating agency", as
that term is defined by the Commission for purposes of
Rule 436(g)(2) under the 1933 Act, and no such organiza-
tion shall have publicly announced that it has under
surveillance or review its rating of the Certificates or
any of such other securities.
If any condition specified in this Section shall not
have been fulfilled when and as required to be fulfilled,
the applicable Terms Agreement may be terminated by you
by notice to the Company at any time on or prior to the
applicable Closing Date, and such termination shall be
without liability of any party to any other party except
as provided in Section 4 hereof. Notwithstanding any
such termination, the provisions of Sections 7, 8 and 9
shall remain in effect.
Section 7. Indemnification. (a) The Company and
the Bank agree to jointly and severally indemnify and
hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Sec-
tion 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred,
arising out of an untrue statement or alleged untrue
statement of a material fact contained in any Regis-
tration Statement as originally filed (or any amend-
ment thereto), and all documents incorporated there-
in by reference, or the omission or alleged omission
therefrom of a material fact required to be stated
therein or necessary to make the statements therein
not misleading or arising out of an untrue statement
or alleged untrue statement of a material fact
contained in any preliminary prospectus, or any
preliminary prospectus supplement, or the Final
Prospectus (or any amendment of supplement thereto)
or the omission or alleged omission therefrom of a
material fact necessary in order to make the state-
ments therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in set-
tlement of any litigation, or investigation or
proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if
such settlement is effected with the written consent
of the Company or the Bank; and
(iii) against any and all expense whatsoever,
as incurred (including reasonable fees and disburse-
ments of counsel chosen by you), reasonably incurred
in investigating, preparing or defending against any
litigation, or investigation or proceeding by any
governmental agency or body, commenced or threat-
ened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any
such expense is not paid under subparagraph (i) or
(ii) above;
provided, however, that (i) this indemnity agreement does
not apply to any loss, liability, claim, damage or ex-
pense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information
furnished to the Company or the Bank by any Underwriter
through you expressly for use in any Registration State-
ment as originally filed (or any amendment thereto) or
any preliminary prospectus, or any preliminary prospectus
supplement, or the Final Prospectus (or any amendment or
supplement thereto) and (ii) such indemnity with respect
to any Preliminary Prospectus shall not inure to the
benefit of the Underwriter (or any person controlling any
of the Underwriters) from whom the person asserting any
such loss, claim, damage or liability purchased the
Certificates which are the subject thereof if such person
did not receive a copy of the Final Prospectus (or the
Final Prospectus as supplemented) at or prior to the
confirmation of the sale of such Certificates to such
person in any case where such delivery is required by the
1933 Act and the untrue statement or omission of a mate-
rial fact contained in such Preliminary Prospectus was
corrected in the Final Prospectus (or the Final Prospec-
tus as supplemented). This indemnity agreement will be
in addition to any liability which the Company and Bank
may otherwise have.
(b) Each Underwriter severally agrees to indemnify
and hold harmless the Company and the Bank, their respec-
tive directors, each officer of the Company who signed
the Registration Statement, and each person, if any, who
controls the Company or the Bank within the meaning of
Section 15 of the 1933 Act, against any and all loss,
liability, claim, damage and expense described in the
indemnity contained in Section 7(a), as incurred, but
only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the
Registration Statement as originally filed (or any amend-
ment thereto) or any preliminary prospectus, or any
preliminary prospectus supplement or the Final Prospectus
(or any amendment or supplement thereto) in reliance upon
and in conformity with written information furnished to
the Company or the Bank by such Underwriter through you
expressly for use in any Registration Statement as origi-
nally filed (or any amendment thereto) or any preliminary
prospectus, or any preliminary prospectus supplement or
the Final Prospectus (or any amendment or supplement
thereto). This indemnity agreement will be in addition
to any liability which the Underwriter may otherwise have
had.
(c) Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of
which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result there-
of and in any event shall not relieve it from any liabil-
ity which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may partici-
pate at its own expense in the defense of any such ac-
tion; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemni-
fied party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition
to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action
or but similar or related actions in the same jurisdic-
tion arising out of the same general allegations or
circumstances.
Section 8. Contribution. In order to provide for
just and equitable contribution in circumstances under
which the indemnity provided for in Section 7 is for any
reason held to be unenforceable by the indemnified par-
ties although applicable in accordance with its terms,
the Company and the Bank on the one hand and the Under-
writers on the other shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the
nature contemplated by such indemnity agreement incurred
by the Company and the Bank on the one hand and one or
more of the Underwriters on the other, as incurred, in
such proportions that (a) the Underwriters are responsi-
ble for that portion represented by the percentage that
results from dividing the underwriting discount by the
net proceeds of the offering (before deducting expenses)
received by the Company and (b) the Company and the Bank
are responsible for the balance; provided, however, that
(i) in no case shall any Underwriter be liable or respon-
sible for any amount in excess of the underwriting dis-
count applicable to the Certificates purchased by such
Underwriter hereunder and under the applicable Terms
Agreement and (ii) no person guilty of fraudulent misrep-
resentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresen-
tation. The Company, the Bank and the Underwriters each
agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per
capita allocation. For purposes of this Section, each
person, if any, who controls an Underwriter within the
meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as such Underwriter, and each
director of the Company or of the Bank, each officer of
the Company who signed the Registration Statement, and
each person, if any, who controls the Company or the Bank
within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as the Company and
the Bank, respectively.
Section 9. Representations, Warranties and Agree-
ments to Survive Delivery. The representations, warran-
ties, indemnities, agreements and other statements of the
Company, the Bank, the Underwriters and their respective
officers set forth in or made pursuant to this Agreement
and any Terms Agreement shall remain operative and in
full force and effect regardless of any investigation
made by or on behalf of the Company, the Bank or any
Underwriter or controlling person and shall survive
delivery of any payment for the Certificates. The provi-
sions of Sections 4, 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
Section 10. Default by One or More of the Under-
writers. If one or more of the Underwriters participat-
ing in an offering of Certificates shall fail at the
applicable Closing Date to purchase the Certificates
which it or they are obligated to purchase hereunder and
under the applicable Terms Agreement (the "Default Secu-
rities"), you shall have the right, within 36 hours
thereafter, to purchase all, but not less than all, of
the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth; if however, you
have not completed such arrangements within such 36-hour
period, then:
(a) if the number of Defaulted Securities does
not exceed 10% of the number of Certificates to be
purchased pursuant to such Terms Agreement, the
nondefaulting Underwriters named in such Terms
Agreement shall be obligated to purchase the full
amount thereof in the proportions that their respec-
tive underwriting obligations bear to the underwrit-
ing obligations of all nondefaulting Underwriters,
or
(b) if the number of Defaulted Securities
exceeds 10% of the Certificates to be purchased
pursuant to such Terms Agreement, the applicable
Terms Agreement shall terminate without liability on
the part of any nondefaulting Underwriter.
No action taken pursuant to this Section shall
relieve any defaulting Underwriter from liability in
respect of its default under this Agreement and the
applicable Terms Agreement.
In the event of any such default that does not
result in the termination of the applicable Terms Agree-
ment, either you or the Company shall have the right to
postpone the applicable Closing Date for a period not
exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the
term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
Section 11. Notices. All notices and other commu-
nications under this Agreement and any Terms Agreement
shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters
shall be directed to you at World Financial Center, North
Tower, New York, NY 10281, or in respect of any Terms
Agreement, to such other person and place as may be
specified therein; notices to the Company shall be di-
rected to it at Credit Card Receivables Funding Corpora-
tion, 157 Main Street, Nashua, New Hampshire 03060,
attention of ________________; and notices to the Bank
shall be directed to [BankBoston (NH), National Associa-
tion, 157 Main Street, Nashua, New Hampshire 03060,
attention of ____________________.]
Section 12. Parties. This Agreement herein set
forth and any Terms Agreement is made solely for the
benefit of any Underwriter which becomes a party to a
Terms Agreement, the Company, the Bank and, to the extent
expressed, any person controlling the Company, the Bank
or any such Underwriter, and the directors of the Compa-
ny, its officers who have signed the Registration State-
ment, and their respective executors, administrators,
successors and assigns and, subject to the provisions of
Section 10, no other person shall acquire or have any
right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser,
as such purchaser, from any Underwriter of the Certifi-
cates. All of the obligations of any Underwriters here-
under and under any Terms Agreement are several and not
joint.
Section 13. Governing Law and Time. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CONFLICTS OF LAW PROVISIONS THEREOF. SPECIFIED TIMES OF
DAY REFER TO NEW YORK CITY TIME.
Section 14. Counterparts. This Agreement may be
executed in one or more counterparts and when a counter-
part has been executed by each party, all such counter-
parts taken together shall constitute one and the same
agreement.
If the foregoing is in accordance with your under-
standing of our agreement, please sign and return to us a
counterpart hereof, whereupon this instrument will become
a binding agreement between the Company and each Under-
writer in accordance with its terms.
Very truly yours,
CREDIT CARD RECEIVABLES FUNDING
CORPORATION
By:________________________
Name:
Title:
BANKBOSTON (NH), NATIONAL
ASSOCIATION
By:________________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: ________________________________
Name:
Title:
Exhibit A
BANKBOSTON CREDIT CARD MASTER TRUST
[Title of Securities]
TERMS AGREEMENT
Dated: , 199_
To: Credit Card Receivables Funding Corporation
157 Main Street
Nashua, New Hampshire 03060
BankBoston (NH), National Association
157 Main Street
Nashua, New Hampshire 03060
Re: Underwriting Agreement dated
Ladies and Gentlemen:
We (the "Representative[s]") understand that Credit
Card Receivable Funding Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell $______ of
Certificates to be issued by BankBoston Credit Card Master
Trust. This Agreement is the Terms Agreement referred to in
the underwriting agreement dated___________, 199_ (the
"Underwriting Agreement"). Subject to the terms and condi-
tions set forth herein or incorporated by reference herein,
the Underwriters named below (the "Underwriters") offer to
purchase, severally and not jointly, the respective Certifi-
cates.
Underwriters:
The Underwriters named on Schedule I attached hereto
are the "Underwriters" for the purpose of this Agreement and
for the purposes of the above referenced Underwriting Agree-
ment as such Underwriting Agreement is incorporated herein
and made a part hereof.
Terms of the Certificates:
Initial In- Interest Rate
Class vested Amount or Formula Price to Public (1)
Class _ $___________ ____% _________%
Class _ $ __________ ____% _________%
(1) Plus accrued interest at the applicable rate from
____________.
Distribution Dates: the __th calendar day of each Month,
commencing _______, ____.
Certificate Ratings:
Class _: ___ by Standard & Poor's
___ by Moody's
Class _: _ by Standard & Poor's
_ by Moody's
Credit Enhancement Provider:
Trustee: The Bank of New York
Pooling and Servicing Agreement: Dated __________, ____,
among Credit Card Receivables Funding Corporation, as Trans-
feror, BankBoston (NH), National Association,as Servicer,
and [_________], as Trustee, on behalf of the Certificate-
holders of Bank Boston Credit Card Master Trust
Supplement: Series ______ Supplement, dated ______, ____,
among Credit Card Receivables Financing Corporation, as
Transferor, BankBoston (NH), National Association, as
Servicer, and [________], as Trustee, on behalf of the
Series _______ Certificateholders
Purchase Price:
The purchase price payable by the Underwriters for
the Certificates covered by this Agreement will be the
following percentage of the principal amounts to be issued:
Per Class A Certificate: __________%
Per Class B Certificate: __________%
Registration Statement: Registration No. 333-29495
Underwriting Commissions, Concessions and Discounts:
The Underwriters' discounts and commissions, the
concessions that the Underwriters may allow to certain
dealers, and the discounts that such dealers may reallow to
certain other dealers, each expressed as a percentage of the
principal amount of the Class _ and Class _ Certificates,
shall be as follows:
Underwriting
Discounts Selling
Class and Concessions Concessions Reallowance
Class _ _____% _____% _____%
Class _ _____% _____% _____%
Closing Date: ______, ____, 10:00 a.m., New York Time
Location of Closing: Skadden, Arps, Slate, Meagher & Flom
LLP, 919 Third Avenue, New York, New York 10022
Payment for the Certificates: Wire transfer of same day
funds
Blue Sky Fees: Up to $
Opinion Modifications:
Other securities being offered concurrently: .
Currency:
Redemption provisions:
Listing requirement: [None] [NYSE] [BSE] [Luxembourg]
Reimbursement of expenses:
Other terms and conditions:
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SAID STATE.
If the foregoing is in accordance with your understand-
ing of the agreement among the Underwriters and the Company,
please sign and return to the undersigned a counterpart
hereof, whereupon this instrument, along with all counter-
parts and together with the Underwriting Agreement, shall be
a binding agreement among the Underwriters named herein, the
Bank and the Company in accordance with its terms and the
terms of the Underwriting Agreement.
Very truly yours,
[Representatives[s]]
By: ________________
Acting on behalf of themselves
and the other named Underwrit-
ers
Confirmed and accepted as of
the date first above written:
CREDIT CARD RECEIVABLES FUNDING CORPORATION
By: ______________________
Name and Title:
BANKBOSTON (NH), NATIONAL ASSOCIATION
By: ______________________
Name and Title:
SCHEDULE I
UNDERWRITERS
$___________ Principal Amount of Class _ ____% Asset Backed
Certificates, Series ______
Underwriters Principal Amount
_____________
Total $
$__________ Principal Amount of Class _ ____% Asset Backed
Certificates, Series ______
Underwriters Principal Amount
_____________________ $__________
===================================================================
CREDIT CARD RECEIVABLES FUNDING CORPORATION
TRANSFEROR,
BANKBOSTON (NH), NATIONAL ASSOCIATION
SERVICER,
AND
THE BANK OF NEW YORK
TRUSTEE
[BANKBOSTON CREDIT] CARD MASTER TRUST
POOLING AND SERVICING AGREEMENT
DATED AS OF _________, 1997
===================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . 24
ARTICLE II
CONVEYANCE OF RECEIVABLES
. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.1 Conveyance of Receivables . . . . . . . 26
Section 2.2 Acceptance by Trustee . . . . . . . . . 27
Section 2.3 Representations and Warranties of the
Transferor . . . . . . . . . . . . . 28
Section 2.4 Representations and Warranties of the
Transferor Relating to the Agreement
and Any Supplement and the
Receivables. . . . . . . . . . . . . 29
Section 2.5 Reassignment of Ineligible Receivables 31
Section 2.6 Reassignment of Certificateholders'
Interest in Trust Portfolio . . . . . 32
Section 2.7 Covenants of the Transferor . . . . . . 33
Section 2.8 Covenants of the Transferor with Respect
to Receivables Purchase Agreement . . 36
Section 2.9 Addition of Accounts . . . . . . . . . 36
Section 2.10 Removal of Accounts and Participation
Interests . . . . . . . . . . . . . . 40
Section 2.11 Account Allocations . . . . . . . . . . 41
Section 2.12 Discount Option . . . . . . . . . . . . 42
Section 2.13 Premium Option . . . . . . . . . . . . 43
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.1 Acceptance of Appointment and
Other Matters Relating to
the Servicer . . . . . . . . . . . . 44
Section 3.2 Servicing Compensation . . . . . . . . 45
Section 3.3 Representations, Warranties and
Covenants of the Servicer . . . . . . 46
Section 3.4 Reports and Records for the Trustee . . 49
Section 3.5 Annual Certificate of Servicer . . . . 49
Section 3.6 Annual Servicing Report of Independent
Public Accountants; Copies of Reports
Available . . . . . . . . . . . . . . 49
Section 3.7 Tax Treatment . . . . . . . . . . . . . 50
Section 3.8 Notices to the Bank . . . . . . . . . . 50
Section 3.9 Adjustments . . . . . . . . . . . . . . 50
Section 3.10 Reports to the Commission . . . . . . . 51
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.1 Rights of Certificateholders . . . . . 52
Section 4.2 Establishment of Collection Account and
Special Funding Account . . . . . . . 52
Section 4.3 Collections and Allocations . . . . . 55
Section 4.4 Shared Principal Collections . . . . . 55
Section 4.5 Additional Withdrawals from the
Collection Account . . . . . . . . . 56
Section 4.6 Allocation of Trust Assets to Series
or Groups . . . . . . . . . . . . . . 56
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VI
THE CERTIFICATES
. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.1 The Certificates . . . . . . . . . . . 59
Section 6.2 Authentication of Certificates . . . . 59
Section 6.3 New Issuances . . . . . . . . . . . . . 60
Section 6.4. Registration of Transfer and Exchange
of Certificates . . . . . . . . . . . 61
Section 6.5 Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . 64
Section 6.6 Persons Deemed Owners . . . . . . . . . 64
Section 6.7 Appointment of Paying Agent . . . . . . 65
Section 6.8 Access to List of Registered
Certificateholders' Names and
Addresses . . . . . . . . . . . . . . 66
Section 6.9 Authenticating Agent . . . . . . . . . 66
Section 6.10 Book-Entry Certificates . . . . . . . . 67
Section 6.11 Notices to Clearing Agency . . . . . . 68
Section 6.12 Definitive Certificates . . . . . . . . 68
Section 6.13 Global Certificate; Exchange Date . . . 69
Section 6.14 Meetings of Certificateholders . . . . 70
Section 6.15 Uncertificated Classes . . . . . . . . 72
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 7.1 Liability of the Transferor . . . . . . 73
Section 7.2 Merger or Consolidation of, or
Assumption of the Obligations of,
the Transferor . . . . . . . . . . . 73
Section 7.3 Limitations on Liability of the
Transferor . . . . . . . . . . . . . 74
Section 7.4 Transferor Authorized to
execute Registration Statements
and Reports on Behalf of the Trust. . 74
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
. . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 8.1 Liability of the Servicer . . . . . . . 75
Section 8.2 Merger or Consolidation of,
or Assumption of the Obligations of,
the Servicer . . . . . . . . . . . . 75
Section 8.3 Limitation on Liability of the Servicer
and Others . . . . . . . . . . . . . 76
Section 8.4 Servicer Indemnification of the
Trust and the Trustee . . . . . . . . 76
Section 8.5 Resignation of the Servicer . . . . . . 76
Section 8.6 Access to Certain Documentation and
Information Regarding the
Receivables . . . . . . . . . . . . . 77
Section 8.7 Delegation of Duties . . . . . . . . . 77
Section 8.8 Examination of Records . . . . . . . . 77
ARTICLE IX
INSOLVENCY EVENTS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 9.1 Rights upon the Occurrence of an
Insolvency Event . . . . . . . . . . 79
ARTICLE X
SERVICER DEFAULTS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.1 Servicer Defaults . . . . . . . . . . 81
Section 10.2 Trustee To Act; Appointment of
Successor . . . . . . . . . . . . . 83
Section 10.3 Notification to Certificateholders . . 84
ARTICLE XI
THE TRUSTEE
. . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.1 Duties of Trustee . . . . . . . . . . 86
Section 11.2 Certain Matters Affecting the Trustee. 88
Section 11.3 Trustee Not Liable for Recitals in
Certificates . . . . . . . . . . . 89
Section 11.4 Trustee May Own Certificates . . . . . 89
Section 11.5 The Servicer To Pay Trustee's Fees and
Expenses . . . . . . . . . . . . . . 89
Section 11.6 Eligibility Requirements for Trustee . 90
Section 11.7 Resignation or Removal of Trustee . . 90
Section 11.8 Successor Trustee . . . . . . . . . . 91
Section 11.9 Merger or Consolidation of Trustee . . 91
Section 11.10 Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . 92
Section 11.11 Tax Returns . . . . . . . . . . . . . 93
Section 11.12 Trustee May Enforce Claims Without
Possession of Certificates . . . . . 93
Section 11.13 Suits for Enforcement . . . . . . . . 93
Section 11.14 Rights of Certificateholders To Direct
Trustee . . . . . . . . . . . . . . 94
Section 11.15 Representations and Warranties of
Trustee . . . . . . . . . . . . . . 94
Section 11.16 Maintenance of Office or Agency . . . 95
ARTICLE XII
TERMINATION
. . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 12.1 Termination of Trust . . . . . . . . . 96
Section 12.2 Final Distribution . . . . . . . . . . 96
Section 12.3 The Transferor's Termination Rights. . 97
ARTICLE XIII
MISCELLANEOUS PROVISIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.1 Amendment; Waiver of Past Defaults . . 98
Section 13.2 Protection of Right, Title and
Interest to Trust . . . . . . . . . 100
Section 13.3 Limitation on Rights of
Certificateholders . . . . . . . . . 101
Section 13.4 Governing Law . . . . . . . . . . . . 101
Section 13.5 Notices; Payments . . . . . . . . . . 102
Section 13.6 Severability of Provisions . . . . . . 102
Section 13.7 Certificates Nonassessable and Fully
Paid . . . . . . . . . . . . . . . 102
Section 13.8 Further Assurances . . . . . . . . . . 103
Section 13.9 Nonpetition Covenant . . . . . . . . . 103
Section 13.10 No Waiver; Cumulative Remedies . . . . 103
Section 13.11 Counterparts . . . . . . . . . . . . . 103
Section 13.12 Third-Party Beneficiaries. . . . . . . 103
Section 13.13 Actions by Certificateholders . . . . 104
Section 13.14 Rule 144A Information . . . . . . . . 104
Section 13.15 Merger and Integration . . . . . . . . 104
Section 13.16 Headings . . . . . . . . . . . . . . . 104
EXHIBITS
Exhibit A Form of Transferor Certificate
Exhibit B Form of Assignment of Receivables in
Additional Accounts
Exhibit C Form of Reassignment of Receivables in
Removed Accounts
Exhibit D Form of Annual Servicer's Certificate
Exhibit E-1 Form of Opinion of Counsel with respect
to Amendments
Exhibit E-2 Form of Opinion of Counsel with respect
to Accounts
Exhibit E-3 Form of Annual Opinion of Counsel
Exhibit F-1 Form of Certificate of Foreign Clearing
Agency
Exhibit F-2 Form of Alternate Certificate to be
delivered to Foreign Clearing Agency
Exhibit F-3 Form of Certificate to be delivered to
Foreign Clearing Agency
Exhibit G-1 Private Placement Legend
Exhibit G-2 Representation Letter
Exhibit G-3 ERISA Legend
SCHEDULES
Schedule 1 List of Accounts [Deemed Incorporated]
POOLING AND SERVICING AGREEMENT dated as of
_________, 1997, among CREDIT CARD RECEIVABLES FUNDING
CORPORATION, a Delaware corporation, as Transferor;
BANKBOSTON (NH), NATIONAL ASSOCIATION, a national banking
association, as Servicer; and THE BANK OF NEW YORK, a New
York banking corporation, as Trustee.
In consideration of the mutual agreements
herein contained, each party agrees as follows for the
benefit of the other parties, the Certificateholders and
any Series Enhancer (as defined below) to the extent
provided herein and in any Supplement:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in
this Agreement, the following words and phrases shall
have the following meanings, and the definitions of such
terms are applicable to the singular as well as the
plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
"Account" shall mean (a) each Initial
Account, (b) each Additional Account (but only from and
after the Addition Date with respect thereto), (c) each
Related Account, and (d) each Transferred Account, but
shall exclude (e) any Account all the Receivables in
which on and after the date of such action are: (i)
removed by the Transferor pursuant to Section 2.10, (ii)
reassigned to the Transferor pursuant to Section 2.5 or
(iii) assigned and transferred to the Servicer pursuant
to Section 3.3.
"Account Owner" shall mean, either the entity
which is the original issuer of the credit card relating
to an Account pursuant to a Credit Card Agreement or an
entity which has acquired such Account.
"Accumulation Period" shall mean, with
respect to any Series, or any Class within a Series, a
period following the Revolving Period, which shall be the
controlled accumulation period, the principal
accumulation period, the rapid accumulation period, the
optional accumulation period, the limited accumulation
period or other accumulation period, in each case as
defined with respect to such Series in the related
Supplement.
"Act" shall mean the Securities Act of 1933,
as amended.
"Addition Date" shall mean (i) with respect
to Aggregate Addition Accounts, the date from and after
which such Aggregate Addition Accounts are to be included
as Accounts pursuant to subsection 2.9(a) or (b), (ii)
with respect to Participation Interests, the date from
and after which such Participation Interests are to be
included as assets of the Trust pursuant to subsection
2.9(a) or (b), and (iii) with respect to New Accounts,
the date on which such New Accounts are activated.
"Additional Account" shall mean each New
Account and each Aggregate Addition Account.
"Additional Cut-Off Date" shall mean (i) with
respect to Aggregate Addition Accounts or Participation
Interests, the date specified as such in the notice
delivered with respect thereto pursuant to subsection
2.9(c) and (ii) with respect to New Accounts, the later
of the dates on which such New Accounts are originated or
designated pursuant to subsection 2.9(d).
"Adverse Effect" shall mean, with respect to
any action, that such action will (a) result in the
occurrence of a Pay Out Event or a Reinvestment Event or
(b) materially adversely affect the amount or timing of
distributions to be made to the Investor
Certificateholders of any Series or Class pursuant to
this Agreement and the related Supplement.
"Affiliate" shall mean, with respect to any
specified Person, any other Person controlling or
controlled by or under common control with such specified
Person. For the purposes of this definition, "control"
shall mean the power to direct the management and
policies of a Person, directly or indirectly, whether
through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Addition" shall mean the
designation of additional Eligible Accounts, other than
New Accounts, to be included as Accounts or of
Participation Interests to be included as Trust Assets
pursuant to subsection 2.9(a) or (b).
"Aggregate Addition Account" shall mean each
Eligible Account designated pursuant to subsection 2.9(a)
or (b) to be included as an Account and identified in the
computer file or microfiche list delivered to the Trustee
by the Transferor pursuant to Sections 2.1 and 2.9(h).
"Aggregate Invested Amount" shall mean, as of
any date of determination, the aggregate adjusted
Invested Amounts of all Series of Certificates issued and
outstanding on such date of determination.
"Agreement" shall mean this Pooling and
Servicing Agreement and all amendments hereof and
supplements hereto, including, with respect to any Series
or Class, the related Supplement.
"Amortization Period" shall mean, with
respect to any Series, or any Class within a Series, a
period following the Revolving Period, which shall be the
controlled amortization period, the principal
amortization period, the rapid amortization period, the
optional amortization period, the limited amortization
period or other amortization period, in each case as
defined with respect to such Series in the related
Supplement.
"Applicants" shall have the meaning specified
in Section 6.8.
"Appointment Date" shall have the meaning
specified in subsection 9.1(a).
"Assignment" shall have the meaning specified
in subsection 2.9(h).
"Authorized Newspaper" shall mean any
newspaper or newspapers of general circulation in the
Borough of Manhattan, The City of New York, printed in
the English language (and, with respect to any Series or
Class, if and so long as the Investor Certificates of
such Series are listed on the Luxembourg Stock Exchange
and such Exchange shall so require, in Luxembourg,
printed in any language satisfying the requirements of
such exchange) and customarily published on each business
day at such place, whether or not published on Saturdays,
Sundays or holidays.
"Average Rate" shall mean, as of any date of
determination and with respect to any Group, the
percentage equivalent of a decimal equal to the sum of
the amounts for each outstanding Series (or each Class
within any Series consisting of more than one Class)
within such Group obtained by multiplying (a) the
Certificate Rate (reduced to take into account the
payments received pursuant to any interest rate
agreements net of any amounts payable under such
agreements, or, if such agreements result in a net amount
payable, increased by such net amount payable) for such
Series or Class, by (b) a fraction, the numerator of
which is the aggregate unpaid principal amount of the
Investor Certificates of such Series or Class and the
denominator of which is the aggregate unpaid principal
amount of all Investor Certificates within such Group.
"Bank" shall mean BankBoston (NH), National
Association, a national banking association incorporated
under the laws of the United States.
"Bearer Certificates" shall have the meaning
specified in Section 6.1.
"Benefit Plan" shall have the meaning
specified in subsection 6.4(c).
"BKB CT" shall mean Bank of Boston
Connecticut, a state-chartered banking institution
organized and existing under the laws of the State of
Connecticut.
"Book-Entry Certificates" shall mean
beneficial interests 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" shall mean any day other than
(a) a Saturday or Sunday or (b) any other day on which
national banking associations or state banking
institutions in [Delaware, __________, New Hampshire] or
any other State in which the principal executive offices
of the Bank, the Trustee, or an Account Owner, is
located, are authorized or obligated by law, executive
order or governmental decree to be closed or (c) for
purposes of any particular Series, any other day
specified in the applicable Series Supplement.
"Cash Advance Fees" shall mean cash advance
transaction fees and cash advance late fees, if any, as
specified in the Credit Card Agreement applicable to each
Account.
"CCRFC" shall mean Credit Card Receivables
Funding Corporation, a Delaware corporation, and its
successors and permitted assigns.
"Cedel" shall mean Cedel Bank, societe
anonyme, a professional depository incorporated under the
laws of Luxembourg, and its successors.
"Certificate" shall mean any one of the
Investor Certificates or the Transferor Certificates.
"Certificateholder" or "Holder" shall mean an
Investor Certificateholder or a Person in whose name any
one of the Transferor Certificates is registered.
"Certificateholders' Interest" shall have the
meaning specified in Section 4.1. For purposes of
determining whether Holders of Investor Certificates
evidencing a specified percentage of the
Certificateholders' Interest have approved, consented or
otherwise agreed to any action hereunder, such
determination shall be made based on the percentage of
the Invested Amount represented by such Investor
Certificates.
"Certificate Owner" shall mean, with respect
to a Book-Entry Certificate, the Person who is the owner
of such Book-Entry Certificate, as reflected on the books
of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an
indirect participant, in accordance with the rules of
such Clearing Agency).
"Certificate Rate" shall mean, as of any
particular date of determination and with respect to any
Series or Class, the certificate rate as of such date
specified therefor in the related Supplement.
"Certificate Register" shall mean the
register maintained pursuant to Section 6.4, providing
for the registration of the Registered Certificates and
transfers and exchanges thereof.
"Class" shall mean, with respect to any
Series, any one of the classes of Investor Certificates
of that Series.
"Clearing Agency" shall mean an organization
registered as a "clearing agency" pursuant to Section 17A
of the Securities Exchange Act of 1934, as amended, and
serving as clearing agency for a Series or Class of Book-
Entry Certificates.
"Clearing Agency Participant" shall mean a
broker, dealer, bank, other financial institution or
other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" shall mean, with respect to
any Series, the closing date specified in the related
Supplement.
"Code" shall mean the Internal Revenue Code
of 1986, as amended.
"Collection Account" shall have the meaning
specified in Section 4.2.
"Collections" shall mean all payments by or
on behalf of Obligors (including Insurance Proceeds)
received in respect of the Receivables, in the form of
cash, checks, wire transfers, electronic transfers, ATM
transfers or any other form of payment in accordance with
a Credit Card Agreement in effect from time to time and
all other amounts specified by this Agreement or any
Supplement as constituting Collections. As specified in
any Participation Interest Supplement or Series
Supplement, Collections shall include amounts received
with respect to Participation Interests. The aggregate
Recoveries received during any Monthly Period not in
excess of the aggregate amount of Principal Receivables
(other than Ineligible Receivables) which became
Defaulted Receivables during such Monthly Period shall be
treated as Collections of Principal Receivables. The
aggregate Recoveries received during any Monthly Period
in excess of the aggregate Principal Receivables (other
than Ineligible Receivables) which became Defaulted
Receivables during such Monthly Period shall be treated
as Collections of Finance Charge Receivables.
Collections with respect to any Monthly Period shall
include a portion, calculated pursuant to subsection
2.7(i), of Interchange paid to the Trust with respect to
such Monthly Period, to be applied as if such amount were
Collections of Finance Charge Receivables for all
purposes. Amounts withdrawn from the yield supplement
account or reserve account established with respect to
any Series and deposited in the Collection Account shall,
unless otherwise specified in the related Supplement, be
treated as Collections of Finance Charge Receivables.
"Commission" shall mean the Securities and
Exchange Commission and its successors in interest.
"Companion Series" shall mean (i) each Series
which has been paired with another Series (which Series
may be prefunded or partially prefunded), such that the
reduction of the Invested Amount of such Series results
in the increase of the Invested Amount of such other
Series, as described in the related Supplements, and (ii)
such other Series.
"Corporate Trust Office" shall have the
meaning specified in Section 11.16.
"Coupon" shall have the meaning specified in
Section 6.1.
"Credit Card Agreement" shall mean, with
respect to a revolving credit card account, the
agreements between an Account Owner and the Obligor
governing the terms and conditions of such account, as
such agreements may be amended, modified or otherwise
changed from time to time and as distributed (including
any amendments and revisions thereto) to holders of such
account.
"Credit Card Guidelines" shall mean the
respective policies and procedures of the Bank or any
other Account Owner, as such policies and procedures may
be amended from time to time, (a) relating to the
operation of its credit card business, which generally
are applicable to its portfolio of revolving credit card
accounts or, in the case of an Account Owner that has
only a portion of its portfolio subject to a Receivables
Purchase Agreement, applicable to such portion of its
portfolio, and in each case which are consistent with
prudent practice, including the policies and procedures
for determining the creditworthiness of credit card
customers and the extension of credit to credit card
customers, and (b) relating to the maintenance of credit
card accounts and collection of credit card receivables.
"Date of Processing" shall mean, with respect
to any transaction or receipt of Collections, the date on
which such transaction is first recorded on the
Servicer's computer file of revolving credit card
accounts (without regard to the effective date of such
recordation).
"Defaulted Amount" shall mean, with respect
to any Monthly Period, an amount (which shall not be less
than zero) equal to (a) the excess, if any, of the amount
of Principal Receivables which became Defaulted
Receivables in such Monthly Period over the Recoveries
for such Monthly Period, minus (b) the amount of any
Defaulted Receivables of which the Transferor or the
Servicer became obligated to accept reassignment or
assignment in accordance with the terms of this Agreement
during such Monthly Period; provided, however, that, if
an Insolvency Event occurs with respect to the
Transferor, the amount of such Defaulted Receivables
which are subject to reassignment to the Transferor in
accordance with the terms of this Agreement shall not be
added to the sum so subtracted and, if any of the events
described in subsection 10.1(d) occur with respect to the
Servicer, the amount of such Defaulted Receivables which
are subject to reassignment or assignment to the Servicer
in accordance with the terms of this Agreement shall not
be added to the sum so subtracted.
"Defaulted Receivables" shall mean, with
respect to any Monthly Period, all Principal Receivables
which are charged off as uncollectible in such Monthly
Period in accordance with the Credit Card Guidelines and
the Servicer's customary and usual servicing procedures
for servicing revolving credit card accounts. A
Principal Receivable shall become a Defaulted Receivable
on the day on which such Principal Receivable is recorded
as charged-off on the Servicer's computer file of
revolving credit card accounts.
"Definitive Certificates" shall have the
meaning specified in Section 6.10.
"Definitive Euro-Certificates" shall have the
meaning specified in subsection 6.13(a).
"Deposit Date" shall mean each day on which
the Servicer deposits Collections in the Collection
Account.
"Depository Agreement" shall mean, with
respect to any Series or Class of Book-Entry
Certificates, the agreement among the Transferor, the
Trustee and the Clearing Agency.
"Determination Date" shall mean, unless
otherwise specified in the Supplement for a particular
Series, the third Business Day preceding the Distribution
Date in each Monthly Period.
"Discount Option Date" shall mean each date
on which a Discount Percentage designated by the
Transferor pursuant to Section 2.12 takes effect.
"Discount Option Receivables" shall have the
meaning specified in subsection 2.12(a). The aggregate
amount of Discount Option Receivables outstanding on any
Date of Processing occurring on or after the Discount
Option Date shall equal the sum of (a) the aggregate
Discount Option Receivables at the end of the prior Date
of Processing (which amount, prior to the Discount Option
Date, shall be zero) plus (b) any new Discount Option
Receivables created on such Date of Processing minus (c)
any Discount Option Receivables Collections received on
such Date of Processing. Discount Option Receivables
created on any Date of Processing shall mean the product
of the amount of any Principal Receivables created on
such Date of Processing (without giving effect to the
proviso in the definition of Principal Receivables) and
the Discount Percentage.
"Discount Option Receivable Collections"
shall mean on any Date of Processing occurring in any
Monthly Period succeeding the Monthly Period in which the
Discount Option Date occurs, the product of (a) a
fraction the numerator of which is the Discount Option
Receivables and the denominator of which is the sum of
the Principal Receivables and the Discount Option
Receivables in each case (for both the numerator and the
denominator) at the end of the preceding Monthly Period
and (b) Collections of Principal Receivables on such Date
of Processing (without giving effect to the proviso in
the definition of Principal Receivables).
"Discount Percentage" shall mean the
percentages, if any, designated by the Transferor
pursuant to subsection 2.12(a).
"Distribution Date" shall mean, with respect
to any Series, the date specified in the applicable
Supplement.
"Document Delivery Date" shall have the
meaning specified in subsection 2.9(g).
"Dollars", "$" or "U.S. $" shall mean United
States dollars.
"Eligible Account" shall mean a consumer
revolving credit card account, which, as of (i) the
Initial Cut Off Date, in the case of an Initial Account,
or (ii) as of the applicable Additional Cut Off Date, in
the case of an Additional Account:
(a) is a revolving credit card account in
existence and maintained by the applicable Account
Owner;
(b) is payable in Dollars;
(c) has a cardholder who has provided, as his
most recent billing address, an address located in the
United States or its territories or possessions or a
military address;
(d) except as provided below, has a
cardholder who has not been identified by the Servicer
in its computer files as being involved in a voluntary
or involuntary bankruptcy proceeding;
(e) has not been identified as an account
with respect to which the related card has been lost or
stolen or has a cardholder who has not been identified
by the Servicer in its computer files as being deceased;
(f) has not been sold or pledged to any other
party except for any sale to another Account Owner that
has entered into a Receivables Purchase Agreement;
(g) does not have outstanding receivables
which have been sold or pledged by the related Account
Owner to any party other than the Transferor pursuant to
a Receivables Purchase Agreement;
(h) except as provided below, does not have
any Receivables that are Defaulted Receivables;
(i) does not have any Receivables that have
been identified by the Servicer or the relevant Obligor
as having been incurred as a result of fraudulent use of
any related credit card;
(j) was created in accordance with the Credit
Card Guidelines of the applicable Account Owner at the
time of creation of such account; and
(k) with respect to Additional Accounts, may,
lieu of satisfying the requirements of clauses (a)
through (j) above, be an account which shall have
satisfied the Rating Agency Condition.
Eligible Accounts may include Accounts, the
Receivables of which have been written off, or with
respect to which the Servicer believes the related
Obligor is bankrupt, in each case as of the Initial Cut-
Off Date, with respect to the Initial Accounts, and as of
the related Additional Cut-Off Date, with respect to
Additional Accounts; provided, that (a) the balance of
all Receivables included in such Accounts is reflected on
the books and records of such Seller (and is treated for
purposes of this Agreement) as "zero" and (b) charging
privileges with respect to all such Accounts have been
canceled in accordance with the relevant Credit Card
Guidelines.
"Eligible Deposit Account" shall mean either
(a) a segregated account with an Eligible Institution or
(b) a segregated trust account with the corporate trust
department of a depository institution organized under
the laws of the United States or any one of the states
thereof, including the District of Columbia (or any
domestic branch of a foreign bank), and acting as a
trustee for funds deposited in such account, so long as
any of the unsecured, unguaranteed senior debt securities
of such depository institution shall have a credit rating
from each Rating Agency in one of its generic credit
rating categories that signifies investment grade.
"Eligible Institution" shall mean any
depository institution (which may be the Trustee)
organized under the laws of the United States or any one
of the states thereof, including the District of Columbia
(or any domestic branch of a foreign bank), which
depository institution at all times (a) is a member of
the FDIC and (b) has (i) a long-term unsecured debt
rating acceptable to the Rating Agency or (ii) a
certificate of deposit rating acceptable to the Rating
Agency, except that no such rating will be required with
respect to an institution which maintains a trust fund in
a fully segregated trust account with the corporate trust
department of such institution; provided that such
institution is a member of the FDIC and maintains a
credit rating in one of the Rating Agency's generic
credit rating categories which signifies investment
grade. Notwithstanding the previous sentence, any
institution the appointment of which satisfies the Rating
Agency Condition shall be considered an Eligible
Institution. If so qualified, the Servicer may be
considered an Eligible Institution for the purposes of
this definition.
"Eligible Investments" shall mean negotiable
instruments or securities represented by instruments in
bearer or registered form, or, in the case of deposits
described below, deposit accounts held in the name of the
Trustee in trust for the benefit of the
Certificateholders, subject to the exclusive custody and
control of the Trustee and for which the Trustee has sole
signature authority, which evidence:
(a) obligations issued or fully guaranteed,
as to timely payment, by the United States of America or
any instrumentality or agency thereof when such
obligations are backed by the full faith and credit of
the United States of America;
(b) demand deposits, time deposits or
certificates of deposit (having original maturities of
no more than 365 days) of depository institutions or
trust companies incorporated under the laws of the
United States of America or any state thereof, including
the District of Columbia (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 depository institution or trust
company shall have the Highest Rating;
(c) commercial paper or other short-term
obligations having, at the time of the Trust's
investment or contractual commitment to invest therein,
the Highest Rating;
(d) demand deposits, time deposits and
certificates of deposit which are fully insured by the
FDIC having, at the time of the Trust's investment
therein, the Highest Rating;
(e) bankers' acceptances (having original
maturities of no more than 365 days) issued by any
depository institution or trust company referred to in
clause (b) above;
(f) money market funds having, at the time of
the Trust's investment therein, the Highest Rating
(including funds for which the Trustee or any of its
Affiliates is investment manager or advisor);
(g) time deposits other than as referred to
in clause (d) above, with a Person the commercial paper
of which has a credit rating satisfactory to the Rating
Agency;
(h) repurchase agreements transacted with
either
(i) an entity subject to the United
States federal bankruptcy code, provided that (A) the
repurchase agreement matures prior to the next
Distribution Date or is due on demand, (B) the Trustee
or a third party acting solely as agent for the Trustee
has possession of the collateral, (C) the Trustee on
behalf of the Trust has a perfected first priority
security interest in the collateral, (D) the market
value of the collateral is maintained at the requisite
collateral percentage of the obligation in accordance
with standards of the Rating Agencies, (E) the failure
to maintain the requisite collateral level will obligate
the Trustee to liquidate the collateral immediately, (F)
the securities subject to the repurchase agreement are
either obligations of, or fully guaranteed as to
principal and interest by, the United States of America
or any instrumentality or agency thereof, certificates
of deposit or bankers acceptances and (G) the securities
subject to the repurchase agreement are free and clear
of any third party lien or claim; or
(ii) a financial institution insured by
the FDIC, or any broker-dealer with "retail customers"
that is under the jurisdiction of the Securities
Investors Protection Corp. ("SIPC") provided that (A)
the market value of the collateral is maintained at the
requisite collateral percentage of the obligation in
accordance with the standards of the Rating Agencies,
(B) the Trustee or a third party (with a short-term debt
rating of P-1 or higher by Moody's) acting solely as
agent for the Trustee has possession of the collateral,
(C) the Trustee on behalf of the Trust has a perfected
first priority security interest in the collateral, (D)
the collateral is free and clear of third party liens
and, in the case of an SIPC broker, was not acquired
pursuant to a repurchase or reverse repurchase agreement
and (E) the failure to maintain the requisite collateral
percentage will obligate the Trustee to liquidate the
collateral; provided, however, that at the time of the
Trust's investment or contractual commitment to invest
in any repurchase agreement, the short-term deposits or
commercial paper rating of such entity or institution in
subsections (i) and (ii) shall have a credit rating not
lower than the Highest Rating; and
(i) any other investment of a type or rating
that satisfies the Rating Agency Condition.
"Eligible Receivable" shall mean each
Receivable, including, where applicable, the underlying
receivable:
(a) which has arisen in an Eligible Account;
(b) which was created in compliance in all
material respects with all Requirements of Law
applicable to the related Account Owner at the time of
the creation of such Receivable and which was created
pursuant to a Credit Card Agreement which complies in
all material respects with all Requirements of Law
applicable to the related Account Owner at the time of
the creation of such Receivable and the Requirements of
Law applicable to any subsequent Account Owner with
respect to such Receivable;
(c) with respect to which all material
consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental
Authority required to be obtained, effected or given in
connection with the creation of such Receivable or the
execution, delivery and performance by the applicable
Account Owner of the Credit Card Agreement pursuant to
which such Receivable was created, have been duly
obtained, effected or given and are in full force and
effect;
(d) as to which at the time of the transfer
of such Receivable to the Trust, the Transferor or the
Trust will have good and marketable title thereto and
which itself is, and the underlying receivables are,
free and clear of all Liens (other than any Lien for
municipal or other local taxes if such taxes are not
then due and payable or if the Transferor is then
contesting the validity thereof in good faith by
appropriate proceedings and has set aside on its books
adequate reserves with respect thereto);
(e) which 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, 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) which, at the time of transfer to the
Trust, is not subject to any right of rescission,
setoff, counterclaim or any other defense (including
defenses arising out of violations of usury laws) of the
Obligor, other than defenses arising out of applicable
bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of
creditors' rights in general; and
(g) which constitutes either an "account" or
a "general intangible" under and as defined in Article 9
of the UCC as then in effect in the Relevant UCC State.
"Eligible Servicer" shall mean the Bank or
the Trustee or, if the Bank or the Trustee is not acting
as Servicer, an entity which, at the time of its
appointment as Servicer, (a) is servicing a portfolio of
revolving credit card accounts, (b) is legally qualified
and has the capacity to service the Accounts, (c) in the
sole determination of the Trustee, which determination
shall be conclusive and binding, has demonstrated the
ability to service professionally and competently a
portfolio of similar accounts in accordance with high
standards of skill and care, (d) is qualified to use the
software that is then being used to service the Accounts
or obtains the right to use or has its own software which
is adequate to perform its duties under this Agreement
and (e) has a net worth of at least $50,000,000 as of the
end of its most recent fiscal quarter or the obligations
of such entity have been guaranteed by an Affiliate
thereof which has .a net worth of at least $50,000,000 as
of the end of its most recent fiscal quarter.
"Enhancement Agreement" shall mean any
agreement, instrument or document governing the terms of
any Series Enhancement or pursuant to which any Series
Enhancement is issued or outstanding.
"ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
"Euroclear Operator" shall mean Morgan
Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System.
"Excess Allocation Series" shall mean a
Series that, pursuant to the Supplement therefor, is
entitled to receive certain excess Collections of Finance
Charge Receivables, as more specifically set forth in
such Supplement.
"Exchange Date" shall mean, with respect to
any Series, any date that is after the related Closing
Date, in the case of Definitive Euro-Certificates in
registered form, or upon presentation of certification of
non-United States beneficial ownership (as described in
Section 6.13), in the case of Definitive
Euro-Certificates in bearer form.
"FAMIS" shall have the meaning specified in
Section 8.7.
"FDIC" shall mean the Federal Deposit
Insurance Corporation or any successor.
"FDR" shall have the meaning specified in
Section 8.7.
"Finance Charge Receivables" shall mean all
amounts billed to the Obligors on any Account in respect
of (i) all Periodic Rate Finance Charges, (ii) Cash
Advance Fees, (iii) annual membership fees and annual
service charges, (iv) Late Fees, (v) Overlimit Fees, (vi)
Returned Check Fees, (vii) Discount Option Receivables,
if any, (viii) any other fees with respect to the
Accounts designated by the Transferor at any time and
from time to time to be included as Finance Charge
Receivables; provided, however, that after the Premium
Option Date, Finance Charge Receivables on any Date of
Processing thereafter shall mean Finance Charge
Receivables as otherwise determined pursuant to this
definition minus the amount of Premium Option
Receivables. Finance Charge Receivables shall also
include (a) the interest portion of Participation
Interests as shall be determined pursuant to, and only if
so provided in, the applicable Participation Interest
Supplement or Series Supplement and (b) Interchange as
calculated pursuant to the Supplement for any Series.
Collections of Finance Charge Receivables shall include
the aggregate Recoveries received during any Monthly
Period in excess of the aggregate Principal Receivables
(other than Ineligible Receivables) which became
Defaulted Receivables during such Monthly Period.
"FIRREA" shall mean the Financial
Institutions Reform, Recovery and Enforcement Act of
1989, as amended.
"Fitch" shall mean Fitch Investors Service,
L.P. or its successors.
"Foreign Clearing Agency" shall mean Cedel
and the Euroclear Operator.
"Global Certificate" shall have the meaning
specified in subsection 6.13(a).
"Governmental Authority" shall mean the
United States of America, any state or other political
subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Group" shall mean, with respect to any
Series, the group of Series, if any, in which the related
Supplement specifies such Series is to be included.
"Highest Rating" shall mean, with respect to
Moody's, P-1 or Aaa, and with respect to Standard &
Poor's, A-1+ or AAA, or any rating category that will not
cause a Ratings Event.
"Independent Director" shall have the meaning
specified in subsection 2.7(h)(vii).
"Ineligible Receivables" shall have the
meaning specified in subsection 2.5(a).
"Initial Account" shall mean each MasterCard
and VISA (1) consumer revolving credit card account
established pursuant to a Credit Card Agreement between
BKB CT or the Bank and any Person and which, in the case
of BKB CT, was sold by BKB CT to the Bank on the Initial
Issuance Date, which account is identified in the
computer file or microfiche list delivered to the Trustee
by the Transferor pursuant to Section 2.1 on the Initial
Issuance Date.
--------------------
1 MasterCard and VISA are registered trademarks of
MasterCard International Incorporated and VISA USA,
Inc., respectively.
"Initial Cut-Off Date" shall mean __________,
1997.
"Initial Issuance Date" shall mean
__________, 1997, the date the Transferor Certificate is
issued by the Trust and delivered to the Transferor.
"Insolvency Event" shall have the meaning
specified in subsection 9.1(a).
"Insolvency Proceeds" shall have the meaning
specified in subsection 9.1(b).
"Institutional Investor" shall mean an
institutional accredited investor within the meaning of
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act of 1933, as amended.
"Insurance Proceeds" shall mean any amounts
received pursuant to the payment of benefits under any
credit life insurance policies, credit disability or
unemployment insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account or
any other credit insurance policy designated by the
Transferor including, without limitation, credit
insurance coverage of Receivables on a pooled basis.
"Interchange" shall mean interchange fees
payable to an Account Owner, as partial compensation for
taking credit risk, absorbing fraud losses, and funding
receivables for the period prior to the initial billing.
Any reference in this Agreement or any Supplement to
Interchange shall refer only to the interchange fees that
are transferred by an Account Owner to the Transferor,
which shall be an amount equal to the product of (i) the
percentage equivalent of a fraction, the numerator of
which is the amount of cardholder sales charges in the
Accounts of such Account Owner, and the denominator of
which is the total amount of cardholder sales charges for
all accounts in the Account Owner's entire portfolio and
(ii) the total interchange fees payable to the Account
Owner in respect of all of the accounts in the Account
Owner's entire portfolio. Interchange for any Series
shall be calculated pursuant to the related Supplement.
"Invested Amount" shall mean, with respect to
any Series and for any date, an amount equal to the
invested amount or adjusted invested amount, as
applicable, specified in the related Supplement.
"Investment Company Act" shall mean the
Investment Company Act of 1940, as amended.
"Investor Certificateholder" shall mean the
Person in whose name a Registered Certificate is
registered in the Certificate Register or the bearer of
any Bearer Certificate (or the Global Certificate, as the
case may be) or Coupon.
"Investor Certificates" shall mean any
certificated or uncertificated interest in the Trust
designated as, or deemed to be, an "Investor Certificate"
in the related Supplement.
"Late Fees" shall have the meaning specified
in the Credit Card Agreement applicable to each Account
for late fees or similar terms.
"Lien" shall mean any mortgage, deed of
trust, pledge, hypothecation, assignment, deposit
arrangement, equity interest, encumbrance, lien
(statutory or other), preference, participation interest,
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 or comparable law
of any jurisdiction to evidence any of the foregoing;
provided, however, that any assignment permitted by
subsection 6.3(b) or Section 7.2 and the lien created by
this Agreement shall not be deemed to constitute a Lien.
"Manager" shall mean the lead manager,
manager or co-manager or Person performing a similar
function with respect to an offering of Definitive Euro-
Certificates.
"MasterCard" shall mean MasterCard
International Incorporated, and its successors in
interest.
"Monthly Period" shall mean, with respect to
each Distribution Date, unless otherwise provided in a
Supplement, the period from and including the first day
of the preceding calendar month to and including the last
day of such calendar month; provided, however, that
unless otherwise specified in the related Supplement, the
initial Monthly Period with respect to any Series will
commence on the Closing Date with respect to such Series.
"Monthly Servicing Fee" shall have the
meaning specified in Section 3.2.
"Moody's" shall mean Moody's Investors
Service, Inc., or its successor.
"New Account" shall mean each MasterCard and
VISA consumer revolving credit card account established
pursuant to a Credit Card Agreement, which account is
designated pursuant to subsection 2.9(d) to be included
as an Account and is identified in the computer file or
microfiche list delivered to the Trustee by the
Transferor pursuant to Section 2.1 and subsection 2.9(h).
"Notices" shall have the meaning specified in
subsection 13.5(a).
"Obligor" shall mean, with respect to any
Account, the Person or Persons obligated to make payments
with respect to such Account, including any guarantor
thereof, but excluding any merchant.
"Officer's Certificate" shall mean, unless
otherwise specified in this Agreement, a certificate
delivered to the Trustee signed by the President, any
Vice President or the Treasurer of the Transferor or the
Servicer, as the case may be, or by the President, any
Vice President or the financial controller (or an officer
holding an office with equivalent or more senior
responsibilities or, in the case of the Servicer, a
Servicing Officer, and, in the case of the Transferor,
any executive of the Transferor designated in writing by
a Vice President or more senior officer of the Transferor
for this purpose) of a Successor Servicer.
"Opinion of Counsel" shall mean a written
opinion of counsel, who may be counsel for, or an
employee of, the Person providing the opinion and who
shall be reasonably acceptable to the Trustee.
"Overlimit Fees" shall have the meaning
specified in the Credit Card Agreement applicable to each
Account for overlimit fees or similar terms if such fees
are provided for with respect to such Account.
"Participation Interest Supplement" shall
mean a Supplement entered into pursuant to subsection
2.9(a)(ii) or (b) in connection with the conveyance of
Participation Interests to the Trust.
"Participation Interests" shall have the
meaning specified in subsection 2.9(a)(ii).
"Paying Agent" shall mean any paying agent
appointed pursuant to Section 6.7 and shall initially be
the Trustee; provided, that if the Supplement for a
Series so provides, a separate or additional Paying Agent
may be appointed with respect to such Series.
"Pay Out Event" shall mean, with respect to
any Series, any Pay Out Event specified in the related
Supplement.
"Periodic Rate Finance Charges" shall have
the meaning specified in the Credit Card Agreement
applicable to each Account for finance charges (due to
periodic rate) or any similar term.
"Person" shall mean any legal person,
including any individual, corporation, limited liability
company, partnership, joint venture, association, joint-
stock company, trust, unincorporated organization,
governmental entity or other entity of similar nature.
"Portfolio Yield" shall mean with respect to
the Trust as a whole and, with respect to any Monthly
Period, the annualized percentage equivalent of a
fraction (a) the numerator of which is the aggregate of
the sum of the Series Allocable Finance Charge
Collections for all Series during the immediately
preceding Monthly Period calculated on a cash basis,
after subtracting therefrom the Series Allocable
Defaulted Amounts for all Series with respect to such
Monthly Period and (b) the denominator of which is the
total amount of Principal Receivables plus (without
duplication) the then outstanding principal amount of any
Participation Interests conveyed to the Trust, plus the
amount of funds on deposit in the Special Funding
Account, in each case, as of the last day of the
immediately preceding Monthly Period; provided that, with
respect to any Monthly Period in which an Aggregate
Addition occurs or a removal of Accounts pursuant to
Section 2.10 occurs, the amount of Principal Receivables
and Participation Interests referred to in clause (b)
shall be the average amount of Principal Receivables and
Participation Interests in the Trust on each Business Day
during such Monthly Period based upon the assumptions
that (1) the aggregate amount of Principal Receivables in
the Trust plus the then outstanding principal amount of
any Participation Interests conveyed to the Trust at the
end of the day on the last day of the prior Monthly
Period is the aggregate amount of Principal Receivables
and Participation Interests in the Trust on each Business
Day of the period from and including the first day of
such Monthly Period to but excluding the related Addition
Date or Removal Date and (2) the aggregate amount of
Principal Receivables in the Trust plus the then
outstanding principal amount of any Participation
Interests conveyed to the Trust at the end of the day on
the related Addition Date or Removal Date is the
aggregate amount of Principal Receivables and
Participation Interests in the Trust on each Business Day
of the period from and including the related Addition
Date or Removal Date to and including the last day of
such Monthly Period.
"Premium Option Date" shall mean each date on
which a Premium Percentage designated by the Transferor
pursuant to Section 2.13 takes effect.
"Premium Option Receivables" shall have the
meaning specified in Section 2.13. The aggregate amount
of Premium Option Receivables outstanding on any Date of
Processing occurring on or after the Premium Option Date
shall equal the sum of (a) the aggregate Premium Option
Receivables at the end of the prior Date of Processing
(which amount, prior to the Premium Option Date, shall be
zero) plus (b) any new Premium Option Receivables created
on such Date of Processing minus (c) any Premium Option
Receivables Collections received on such Date of
Processing. Premium Option Receivables created on any
Date of Processing shall mean the product of the amount
of any Finance Charge Receivables created on such Date of
Processing and the Premium Percentage.
"Premium Option Receivable Collections" shall
mean on any Date of Processing occurring in any Monthly
Period succeeding the Monthly Period in which the Premium
Option Date occurs, the product of (a) a fraction the
numerator of which is the Premium Option Receivables and
the denominator of which is the sum of the Finance Charge
Receivables and the Premium Option Receivables in each
case (for both the numerator and the denominator) at the
end of the preceding Monthly Period and (b) Collections
of Finance Charge Receivables on such Date of Processing.
"Premium Percentage" shall mean the
percentages, if any, designated by the Transferor
pursuant to Section 2.13.
"Principal Receivables" shall mean all
Receivables other than Finance Charge Receivables or
Defaulted Receivables. Principal Receivables shall
include the principal portion of Participation Interests
as shall be determined pursuant to, and only if so
provided in, the applicable Participation Interest
Supplement or Series Supplement. Collections of
Principal Receivables also shall include the aggregate
Recoveries with respect to each Monthly Period not in
excess of the aggregate amount of Principal Receivables
(other than Ineligible Receivables) which became
Defaulted Receivables during such Monthly Period. 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 Principal Receivables which
the Transferor is unable to transfer as provided in
Section 2.11 shall not be included in calculating the
amount of Principal Receivables.
"Principal Sharing Series" shall mean a
Series that, pursuant to the Supplement therefor, is
entitled to receive Shared Principal Collections.
"Principal Shortfalls" shall have the meaning
specified in Section 4.4.
"Principal Terms" shall mean, with respect to
any Series, (i) the name or designation; (ii) the initial
principal amount (or method for calculating such amount),
the Invested Amount, the Series Invested Amount and the
Required Series Transferor Amount, (iii) the Certificate
Rate (or method for the determination thereof); (iv) the
payment date or dates and the date or dates from which
interest shall accrue; (v) the method for allocating
Collections to Investor Certificateholders; (vi) the
designation of any Series Accounts and the terms
governing the operation of any such Series Accounts;
(vii) the Servicing Fee; (viii) the terms of any form of
Series Enhancements with respect thereto; (ix) the terms
on which the Investor Certificates of such Series may be
exchanged for Investor Certificates of another Series,
repurchased by the Transferor or remarketed to other
investors; (x) the Series Termination Date; (xi) the
number of Classes of Investor Certificates of such Series
and, if more than one Class, the rights and priorities of
each such Class; (xii) the extent to which the Investor
Certificates of such Series will be issuable in temporary
or permanent global form (and, in such case, the
depositary for such global certificate or certificates,
the terms and conditions, if any, upon which such global
certificate may be exchanged, in whole or in part, for
Definitive Certificates, and the manner in which any
interest payable on a temporary or global certificate
will be paid); (xiii) whether the Investor Certificates
of such Series may be issued in bearer form and any
limitations imposed thereon; (xiv) the priority of such
Series with respect to any other Series; (xv) whether
such Series will be part of a Group; (xvi) whether such
Series will be a Principal Sharing Series, (xvii) whether
such Series will be an Excess Allocation Series, (xviii)
the Distribution Date for such Series, and (xix) any
other terms of such Series.
"Rating Agency" shall mean, with respect to
any outstanding Series or Class, each rating agency, as
specified in the applicable Supplement, selected by the
Transferor to rate the Investor Certificates of such
Series or Class.
"Rating Agency Condition" shall mean, with
respect to any action, that each Rating Agency shall have
notified the Transferor, the Servicer and the Trustee in
writing that such action will not result in a reduction
or withdrawal of the then existing rating of any
outstanding Series or Class with respect to which it is a
Rating Agency.
"Ratings Event" with respect to any Class of
any outstanding Series of Investor Certificates rated by
a Rating Agency, shall mean a reduction or withdrawal of
the rating of any such Class by a Rating Agency.
"Reassignment" shall have the meaning
specified in Section 2.10.
"Receivables" shall mean all amounts shown on
the Servicer's records as amounts payable by Obligors on
any Account from time to time, including amounts owing
for purchases of goods and services, cash advances and
Finance Charge Receivables. Receivables which become
Defaulted Receivables will cease to be included as
Receivables as of the day on which they become Defaulted
Receivables. A Receivable shall be deemed to have been
created at the end of the Date of Processing of such
Receivable.
"Receivables Purchase Agreement" shall mean,
as applicable, the receivables purchase agreement between
the Transferor and BKB CT and the receivables purchase
agreement between the Transferor and the Bank, each dated
as of _______ __, 1997, and in each case as amended from
time to time in accordance with the terms thereof, and any
receivables purchase agreement entered into by the Transferor
and another Account Owner in the future; provided, that (A)
the Rating Agency Condition is satisfied with respect to
such receivables purchase agreement and (B) the
Transferor shall have delivered to the Trustee an
Officer's Certificate to the effect that such officer
reasonably believes that the execution and delivery of
such receivables purchase agreement will not have an
Adverse Effect.
"Record Date" shall mean, with respect to any
Distribution Date, the last day of the calendar month
immediately preceding such Distribution Date unless
otherwise specified for a Series in the applicable
Supplement.
"Recoveries" shall mean all amounts received
(net of out-of-pocket costs of collection) including
Insurance Proceeds, with respect to Defaulted
Receivables, including the net proceeds of any sale of
such Defaulted Receivables by the Transferor.
"Registered Certificateholder" shall mean the
Holder of a Registered Certificate.
"Registered Certificates" shall have the
meaning specified in Section 6.1.
"Reinvestment Event" shall mean, if
applicable with respect to any Series, any Reinvestment
Event specified in the related Supplement.
"Related Account" shall mean an Account with
respect to which a new credit account number has been
issued by the applicable Account Owner or Servicer or the
Transferor under circumstances resulting from a lost or
stolen credit card and not requiring standard application
and credit evaluation procedures under the Credit Card
Guidelines.
"Relevant UCC State" shall mean each
jurisdiction in which the filing of a UCC financing
statement is necessary to evidence the security interest
of the Trustee established under this Agreement.
"Removal Date" shall have the meaning
specified in Section 2.10.
"Removed Accounts" shall have the meaning
specified in Section 2.10.
"Removed Participation Interests" shall have
the meaning specified in Section 2.10.
"Required Designation Date" shall have the
meaning specified in subsection 2.9(a).
"Required Minimum Principal Balance" shall
mean, with respect to any date (a) the sum of the Series
Invested Amounts for each Series outstanding on such date
minus (b) the amount on deposit in the Special Funding
Amount.
"Required Transferor Amount" shall mean, with
respect to any date, the sum of the Series Required
Transferor Amounts for all Series outstanding on such
date.
"Requirements of Law" shall mean any law,
treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, whether Federal,
state or local (including usury laws, the Federal Truth
in Lending Act and Regulation B and Regulation Z of the
Board of Governors of the Federal Reserve System), and,
when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or
governing documents of such Person.
"Responsible Officer" shall mean, when used
with respect to the Trustee, any officer within the
Corporate Trust Office of the Trustee including any vice
president, assistant vice president, assistant treasurer,
assistant secretary, trust officer or any other officer
of the Trustee customarily performing functions similar
to those performed by the persons who at the time shall
be such officers or to whom any corporate trust matter is
referred at the Corporate Trust Office because of such
officer's knowledge of and familiarity with the
particular subject.
"Returned Check Fees" shall have the meaning
specified in the Credit Card Agreement applicable to each
Account for fees for returned checks or similar terms.
"Revolving Period" shall mean, with respect
to any Series, the period specified in the related
Supplement.
"Series" shall mean any series of Investor
Certificates issued pursuant to Section 6.3.
"Series Account" shall mean any deposit,
trust, escrow or similar account maintained for the
benefit of the Investor Certificateholders of any Series
or Class, as specified in any Supplement.
"Series Adjusted Invested Amount" shall mean,
with respect to any Series and for any Monthly Period,
the Series Invested Amount of such Series, after
subtracting therefrom the excess, if any, of the
cumulative amount (calculated in accordance with the
terms of the related Supplement) of investor charge-offs,
subordination of principal collections and funding the
investor default amount [for any other Class of Investor
Certificates of such Series] or another Series allocable
to the Invested Amount for such Series as of the last day
of the immediately preceding Monthly Period over the
aggregate reimbursement of such investor charge-offs,
subordination of principal collections and funding the
investor default amount for any other Class of Investor
Certificates of such Series or another Series as of such
last day, or such lesser amount as may be provided in the
Series Supplement for such Series.
"Series Allocable Defaulted Amount" shall
mean, with respect to any Series and for any Monthly
Period, the product of the Series Allocation Percentage
and the Defaulted Amount with respect to such Monthly
Period.
"Series Allocable Finance Charge Collections"
shall mean, with respect to any Series and for any
Monthly Period, the product of the Series Allocation
Percentage and the amount of Collections of Finance
Charge Receivables deposited in the Collection Account
for such Monthly Period.
"Series Allocable Principal Collections"
shall mean, with respect to any Series and for any
Monthly Period, the product of the Series Allocation
Percentage and the amount of Collections of Principal
Receivables deposited in the Collection Account for such
Monthly Period.
"Series Allocation Percentage" shall mean,
with respect to any Series and for any Monthly Period,
the percentage equivalent of a fraction, the numerator of
which is the Series Adjusted Invested Amount plus the
Series Required Transferor Amount as of the last day of
the immediately preceding Monthly Period and the
denominator of which is the Trust Adjusted Invested
Amount plus the sum of all Series Required Transferor
Amounts as of such last day.
"Series Enhancement" shall mean the rights
and benefits provided to the Trust or the Investor
Certificateholders of any Series or Class pursuant to any
letter of credit, surety bond, cash collateral account or
guaranty, collateral invested amount, spread account,
yield supplement account, guaranteed rate agreement,
maturity liquidity facility, tax protection agreement,
interest rate swap agreement, interest rate cap
agreement, insurance policy or other similar arrangement.
The subordination of any Series or Class to another
Series or Class shall be deemed to be a Series
Enhancement.
"Series Enhancer" shall mean the Person or
Persons providing any Series Enhancement, other than
(except to the extent otherwise provided with respect to
any Series in the Supplement for such Series) the
Investor Certificateholders of any Series or Class which
is subordinated to another Series or Class.
"Series Invested Amount" shall have, with
respect to any Series, the meaning specified in the
related Supplement.
"Series Issuance Date" shall mean, with
respect to any Series, the date on which the Investor
Certificates of such Series are to be originally issued
in accordance with Section 6.3 and the related
Supplement.
"Series Required Transferor Amount" shall
have the meaning, with respect to any Series, specified
in the related Supplement.
"Series Termination Date" shall mean, with
respect to any Series, the termination date for such
Series specified in the related Supplement.
"Service Transfer" shall have the meaning
specified in Section 10.1.
"Servicer" shall mean the Bank, in its
capacity as Servicer pursuant to this Agreement, and,
after any Service Transfer, the Successor Servicer.
"Servicer Default" shall have the meaning
specified in Section 10.1.
"Servicer Interchange" shall have the meaning
specified in Section 3.2.
"Servicing Fee" shall have the meaning
specified in Section 3.2.
"Servicing Fee Rate" shall mean, with respect
to any Series, the servicing fee rate specified in the
related Supplement.
"Servicing Officer" shall mean any officer of
the Servicer or an attorney-in-fact of the Servicer who
in either case is involved in, or responsible for, the
administration and servicing of the Receivables and whose
name appears on a list of servicing officers furnished to
the Trustee by the Servicer, as such list may from time
to time be amended.
"Shared Principal Collections" shall have the
meaning specified in Section 4.4.
"Special Funding Account" shall have the
meaning set forth in Section 4.2.
"Special Funding Amount" shall mean the
amount on deposit in the Special Funding Account.
"Standard & Poor's" shall mean Standard &
Poor's Ratings Group or its successor.
"Successor Servicer" shall have the meaning
specified in subsection 10.2(a).
"Supplement" shall mean, with respect to any
Series, a supplement to this Agreement, executed and
delivered in connection with the original issuance of the
Investor Certificates of such Series pursuant to Section
6.3, and, with respect to any Participation Interest, an
amendment to this Agreement executed pursuant to
Section 13.1, and, in either case, including all
amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the
meaning specified in subsection 6.3(b).
"Tax Opinion" shall mean, with respect to any
action, an Opinion of Counsel to the effect that, for
federal income tax purposes, (a) such action will not
adversely affect the tax characterization as debt of the
Investor Certificates of any outstanding Series or Class
that was characterized as debt at the time of its
issuance, (b) following such action the Trust will not be
deemed to be an association (or publicly traded
partnership) taxable as a corporation, (c) such action
will not cause or constitute an event in which gain or
loss would be recognized by any Investor
Certificateholder and (d) except as is otherwise provided
in a Supplement, in the case of subsection 6.3(b)(vi),
the Investor Certificates of the Series or class thereof
established pursuant to such Supplement will be properly
characterized as debt.
"Termination Notice" shall have the meaning
specified in subsection 10.1(d).
"Termination Proceeds" shall have the meaning
specified in subsection 12.2(c).
"Transfer Agent and Registrar" shall have the
meaning specified in Section 6.4.
"Transfer Date" shall mean the Business Day
immediately preceding each Distribution Date.
"Transfer Restriction Event" shall have the
meaning specified in Section 2.11.
"Transferor" shall mean Credit Card
Receivables Funding Corporation, a wholly owned special
purpose subsidiary of BankBoston Corporation and
incorporated in the State of Delaware, or its successor
under this Agreement.
"Transferor Amount" shall mean on any date of
determination an amount equal to the difference between
(I) the sum of (A) the aggregate balance of Principal
Receivables at the end of the day immediately prior to
such date of determination and (B) Special Funding Amount
at the end of the day immediately prior to such date of
determination minus (II) the Aggregate Invested Amount at
the end of such day.
"Transferor Certificate" shall mean the
certificate executed by Credit Card Receivables Funding
Corporation and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A, as the
same may be modified in accordance with Exhibit A.
"Transferor Certificate Supplement" shall
have the meaning specified in subsection 6.3(b).
"Transferor Certificates" shall mean,
collectively, the Transferor Certificate and any
outstanding Supplemental Certificates.
"Transferor's Interest" shall have the
meaning specified in Section 4.1.
"Transferred Account" shall mean each account
into which an Account shall be transferred provided that
(i) such transfer was made in accordance with the Credit
Card Guidelines and (ii) such account can be traced or
identified as an account into which an Account has been
transferred.
"Trust" shall mean the BankBoston Credit Card
Master Trust created by this Agreement.
"Trust Adjusted Invested Amount" shall mean,
with respect to any Monthly Period, the aggregate Series
Adjusted Invested Amounts as adjusted in any Supplement
for all outstanding Series for such Monthly Period.
"Trust Assets" shall have the meaning
specified in Section 2.1.
"Trustee" shall mean The Bank of New York, a
New York banking corporation, in its capacity as trustee
on behalf of the Trust, or its successor in interest, or
any successor trustee appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code,
as amended from time to time, as in effect in any
specified jurisdiction.
"VISA" shall mean VISA USA, Inc., and its
successors in interest.
Section 1.2 Other Definitional Provisions.
(a) With respect to any Series, all terms
used herein and not otherwise defined herein shall have
meanings ascribed to them in the related Supplement.
(b) All terms defined in this Agreement shall
have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless
otherwise defined therein.
(c) As used in this Agreement and in any
certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document,
and accounting terms partly defined in this Agreement or
in any such certificate or other document to the extent
not defined, shall have the respective meanings given to
them under generally accepted accounting principles or
regulatory accounting principles, as applicable and as in
effect on the date of this Agreement. To the extent that
the definitions of accounting terms in this Agreement or
in any such certificate or other document are
inconsistent with the meanings of such terms under
generally accepted accounting principles or regulatory
accounting principles in the United States, the
definitions contained in this Agreement or in any such
certificate or other document shall control.
(d) The agreements, representations and
warranties of CCRFC and the Bank in this Agreement in
each of their respective capacities as Transferor and
Servicer shall be deemed to be the agreements,
representations and warranties of CCRFC and the Bank
solely in each such capacity for so long as CCRFC and the
Bank act in each such capacity under this Agreement.
(e) Any reference to each Rating Agency shall
only apply to any specific rating agency if such rating
agency is then rating any outstanding Series.
(f) Unless otherwise specified, references to
any amount as on deposit or outstanding on any particular
date shall mean such amount at the close of business on
such day.
(g) The words "hereof", "herein" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement;
references to any subsection, Section, Schedule or
Exhibit are references to subsections, Sections,
Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" means
"including without limitation."
[END OF ARTICLE I]
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.1 Conveyance of Receivables. By
execution of this Agreement, CCRFC does hereby transfer,
assign, set over, and otherwise convey to the Trustee, on
behalf of the Trust, for the benefit of the
Certificateholders, without recourse except as provided
herein, all its right, title and interest in, to and
under (i) the Receivables existing at the close of
business on the Initial Cut-Off Date, in the case of
Receivables arising in the Initial Accounts, and on each
Additional Cut-Off Date, in the case of Receivables
arising in the Additional Accounts, and in each case
thereafter created from time to time until the
termination of the Trust, all Interchange and Recoveries
allocable to the Trust as provided herein, all monies due
or to become due and all amounts received with respect
thereto and all proceeds (including "proceeds" as defined
in the UCC) thereof and (ii) the Receivables Purchase
Agreement. Such property, together with all monies and
other property on deposit in the Collection Account, the
Series Accounts and the Special Funding Account, the
rights of the Trustee on behalf of the Trust under this
Agreement and any Supplement, the property conveyed to
the Trustee on behalf of the Trust under any
Participation Interest Supplement, any Series Enhancement
and the right to receive Recoveries attributed to
cardholder charges for merchandise and services in the
Accounts shall constitute the assets of the Trust (the
"Trust Assets"). The foregoing does not constitute and
is not intended to result in the creation or assumption
by the Trust, the Trustee, any Investor Certificateholder
or any Series Enhancer of any obligation of any Account
Owner or the Transferor, the Servicer or any other Person
in connection with the Accounts or the Receivables or
under any agreement or instrument relating thereto,
including any obligation to Obligors, merchant banks,
merchants clearance systems, VISA, MasterCard or
insurers. The Obligors shall not be notified in
connection with the creation of the Trust of the
transfer, assignment, set-over and conveyance of the
Receivables to the Trust. The foregoing transfer,
assignment, set-over and conveyance to the Trust shall be
made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such transfer, assignment,
set-over and conveyance shall be construed accordingly.
The Transferor agrees to record and file, at
its own expense, financing statements (and continuation
statements when applicable) with respect to the
Receivables conveyed by the Transferor now existing and
hereafter created meeting the requirements of applicable
state law in such manner and in such jurisdictions as are
necessary to perfect, and maintain the perfection of, the
transfer and assignment of its interest in such
Receivables to the Trust, and to deliver a file stamped
copy of each such financing statement or other evidence
of such filing to the Trustee as soon as practicable
after the first Closing Date, in the case of Receivables
arising in the Initial Accounts, and (if any additional
filing is so necessary) as soon as practicable after the
applicable Addition Date, in the case of Receivables
arising in Additional Accounts. The 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 transfer and assignment.
The Transferor further agrees, at its own
expense, (a) on or prior to (x) the first Closing Date,
in the case of the Initial Accounts, (y) the applicable
Addition Date, in the case of Additional Accounts, and
(z) the applicable Removal Date, in the case of Removed
Accounts, to indicate in the appropriate computer files
that Receivables created (or reassigned, in the case of
Removed Accounts) in connection with the Accounts have
been conveyed to the Trust pursuant to this Agreement for
the benefit of the Certificateholders (or conveyed to the
Transferor or its designee in accordance with Section
2.10, in the case of Removed Accounts) by including (or
deleting in the case of Removed Accounts) in such
computer files the code identifying each such Account and
(b) on or prior to (w) the first Closing Date, in the
case of the Initial Accounts, (x) the date that is five
Business Days after the applicable Addition Date, in the
case of Aggregate Additions, (y) the date that is 30 days
after the applicable Addition Date, in the case of New
Accounts, and (z) the date that is five Business Days
after the applicable Removal Date, in the case of Removed
Accounts, to deliver to the Trustee a computer file or
microfiche list containing a true and complete list of
all such Accounts specifying for each such Account, as of
the Initial Cut-Off Date, in the case of the Initial
Accounts, the applicable Additional Cut-Off Date in the
case of Additional Accounts, and the applicable Removal
Date in the case of Removed Accounts, its account number
and, other than in the case of New Accounts, the
aggregate amount outstanding in such Account and the
aggregate amount of Principal Receivables outstanding in
such Account. Each such file or list, as supplemented,
from time to time, to reflect Additional Accounts and
Removed Accounts, shall be marked as Schedule 1 to this
Agreement and is hereby incorporated into and made a part
of this Agreement. The Transferor further agrees not to
alter the code referenced in this paragraph with respect
to any Account during the term of this Agreement unless
and until such Account becomes a Removed Account.
The Transferor hereby grants and transfers to
the Trust, for the benefit of the Certificateholders, a
security interest in all of the Transferor's right, title
and interest in, to and under the Receivables and all
other Trust Assets, to secure a loan in an amount equal
to the unpaid principal amount of the Investor
Certificates issued hereunder or to be issued pursuant to
this Agreement and the interest accrued at the related
Certificate Rate, and agrees that this Agreement shall
constitute a security agreement under applicable law.
Section 2.2 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its
acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter
created, conveyed to the Trust pursuant to Section 2.1
and declares that it shall maintain such right, title and
interest, upon the trust herein set forth, for the
benefit of all Certificateholders. The Trustee further
acknowledges that, prior to or simultaneously with the
execution and delivery of this Agreement, the Transferor
delivered to the Trustee the computer file or microfiche
list relating to the Initial Accounts described in the
penultimate paragraph of Section 2.1. The Trustee shall
maintain a copy of Schedule 1, as delivered from time to
time, at the Corporate Trust Office.
(b) The Trustee hereby agrees not to disclose
to any Person any of the account numbers or other
information contained in the computer files or microfiche
lists marked as Schedule 1 and delivered to the Trustee,
from time to time, except (i) to a Successor Servicer or
as required by a Requirement of Law applicable to the
Trustee, (ii) in connection with the performance of the
Trustee's duties hereunder, (iii) in enforcing the rights
of Certificateholders or (iv) to bona fide creditors or
potential creditors of any Account Owner, or the
Transferor for the limited purpose of enabling any such
creditor to identify Receivables or Accounts subject to
this Agreement or any Receivables Purchase Agreement.
The Trustee agrees to take such measures as shall be
reasonably requested by the Transferor to protect and
maintain the security and confidentiality of such
information and, in connection therewith, shall allow the
Transferor or its duly authorized representatives to
inspect the Trustee's security and confidentiality
arrangements as they specifically relate to the
administration of the Trust from time to time during
normal business hours upon prior written notice. The
Trustee shall provide the Transferor with notice five
Business Days prior to disclosure of any information of
the type described in this subsection 2.2(b).
(c) The Trustee shall have no power to
create, assume or incur indebtedness or other liabilities
in the name of the Trust other than as contemplated in
this Agreement.
Section 2.3 Representations and Warranties
of the Transferor. The Transferor hereby severally
represents and warrants to the Trust (and agrees that the
Trustee may conclusively rely on each such representation
and warranty in accepting the Receivables in trust and in
authenticating the Certificates) that:
(a) Organization and Good Standing. The
Transferor is a corporation validly existing under the
laws of the jurisdiction of its organization or
incorporation and has, in all material respects, full
power and authority to own its properties and conduct its
business as presently owned or conducted, and to execute,
deliver and perform its obligations under this Agreement,
each Receivables Purchase Agreement and each applicable
Supplement and to execute and deliver to the Trustee the
Certificates.
(b) Due Qualification. The Transferor is
duly qualified to do business and is in good standing as
a foreign corporation and has obtained all necessary
licenses and approvals, in each jurisdiction in which
failure to so qualify or to obtain such licenses and
approvals would (i) render any Credit Card Agreement
relating to an Account or any Receivable conveyed to the
Trust by the Transferor unenforceable by the Transferor
or the Trust or (ii) have a material adverse effect on
the Investor Certificateholders.
(c) Due Authorization. The execution and
delivery of this Agreement, each Receivables Purchase
Agreement and each Supplement by the Transferor and the
execution and delivery to the Trustee of the Certificates
and the consummation by the Transferor of the
transactions provided for in this Agreement, each
Receivables Purchase Agreement and each Supplement have
been duly authorized by the Transferor by all necessary
corporate action on the part of the Transferor.
(d) No Conflict. The execution and delivery
by the Transferor of this Agreement, each Receivables
Purchase Agreement, each Supplement, and the
Certificates, the performance of the transactions
contemplated by this Agreement, each Receivables Purchase
Agreement and each Supplement and the fulfillment of the
terms hereof and thereof applicable to the Transferor,
will not conflict with or violate any Requirements of Law
applicable to the 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 the Transferor is a party or by which
it or its properties are bound.
(e) No Proceedings. There are no proceedings
or investigations, pending or, to the best knowledge of
the Transferor, threatened against the Transferor before
any Governmental Authority (i) asserting the invalidity
of this Agreement, each Receivables Purchase Agreement,
each Supplement or the Certificates, (ii) seeking to
prevent the issuance of any of the Certificates or the
consummation of any of the transactions contemplated by
this Agreement, each Receivables Purchase Agreement, each
Supplement or the Certificates, (iii) seeking any
determination or ruling that, in the reasonable judgment
of the Transferor, would materially and adversely affect
the performance by the Transferor of its obligations
under this Agreement, each Receivables Purchase Agreement
or each Supplement, (iv) seeking any determination or
ruling that would materially and adversely affect the
validity or enforceability of this Agreement, each
Receivables Purchase Agreement, each Supplement or the
Certificates or (v) seeking to affect adversely the
income or franchise tax attributes of the Trust under the
United States Federal or any State income or franchise
tax systems.
(f) All Consents. All authorizations,
consents, orders or approvals of or registrations or
declarations with any Governmental Authority required to
be obtained, effected or given by the Transferor in
connection with the execution and delivery by the
Transferor of this Agreement, each Receivables Purchase
Agreement, each Supplement and the Certificates and the
performance of the transactions contemplated by this
Agreement and each Supplement by the Transferor have been
duly obtained, effected or given and are in full force
and effect.
Section 2.4 Representations and Warranties
of the Transferor Relating to the Agreement and Any
Supplement and the Receivables.
(a) Representations and Warranties. The
Transferor hereby severally represents and warrants to
the Trust as of the Initial Issuance Date, each Closing
Date and, with respect to Additional Accounts, as of the
related Addition Date that:
(i) this Agreement, each Receivables
Purchase Agreement, each Supplement and, in the case of
Additional Accounts, the related Assignment, each
constitutes a legal, valid and binding obligation of the
Transferor enforceable against the Transferor in
accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights generally from time to time
in effect or general principles of equity;
(ii) as of the Initial Cut-Off Date and as
of the related Additional Cut-Off Date with respect to
Additional Accounts, Schedule 1 to this Agreement, as
supplemented to such date, is an accurate and complete
listing in all material respects of all the Accounts the
Receivables in which were transferred by the Transferor
as of the Initial Cut-Off Date or such Additional Cut-
Off Date, as the case may be, and the information
contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is true
and correct in all material respects as of the Initial
Cut-Off Date or such Additional Cut-Off Date, as the
case may be;
(iii) each Receivable conveyed to the Trust
by the Transferor has been conveyed to the Trust free
and clear of any Lien of any Person claiming through or
under the Transferor or any of its Affiliates (other
than Liens permitted under subsection 2.7(b)).
(iv) all authorizations, consents, orders or
approvals of or registrations or declarations with any
Governmental Authority required to be obtained, effected
or given by the Transferor in connection with the
conveyance by the Transferor of Receivables to the Trust
have been duly obtained, effected or given and are in
full force and effect;
(v) either this Agreement or, in the case of
Additional Accounts, the related Assignment constitutes
a valid sale, transfer and assignment to the Trust of
all right, title and interest of the Transferor in the
Receivables conveyed to the Trust and the proceeds
thereof and Recoveries and Interchange identified as
relating to the Receivables conveyed to the Trust or, if
this Agreement or, in the case of Additional Accounts,
the related Assignment does not constitute a sale of
such property, it constitutes a grant of a first
priority perfected "security interest" (as defined in
the UCC) in such property to the Trust, which, in the
case of existing Receivables and the proceeds thereof
and said Recoveries and Interchange, is enforceable upon
execution and delivery of this Agreement, or, with
respect to then existing Receivables in Additional
Accounts, as of the applicable Addition Date, and which
will be enforceable with respect to such Receivables
hereafter and thereafter created and the proceeds
thereof upon such creation. Upon the filing of the
financing statements and, in the case of Receivables
hereafter created and the proceeds thereof, upon the
creation thereof, the Trust shall have a first priority
perfected security or ownership interest in such
property and proceeds;
(vi) on the Initial Cut-Off Date, each
Initial Account specified in Schedule 1 is an Eligible
Account and, on the applicable Additional Cut-Off Date,
each related Additional Account specified in Schedule 1
is an Eligible Account;
(vii) on the Initial Cut-Off Date, each
Receivable then existing and conveyed to the Trust is an
Eligible Receivable and, on the applicable Additional
Cut-Off Date, each Receivable contained in the related
Additional Accounts and conveyed to the Trust is an
Eligible Receivable; and
(viii) as of the date of the creation of any
new Receivable in an Account specified in a Receivables
Purchase Agreement, such Receivable is an Eligible
Receivable.
(b) Notice of Breach. The representations
and warranties set forth in Section 2.3, this Section 2.4
and subsection 2.9(f) shall survive the transfers and
assignments of the Receivables to the Trust and the
issuance of the Certificates. Upon discovery by the
Transferor, the Servicer or the Trustee of a breach of
any of the representations and warranties set forth in
Section 2.3, this Section 2.4 or subsection 2.9(f), the
party discovering such breach shall give notice to the
other parties and to each Series Enhancer within three
Business Days following such discovery; provided that the
failure to give notice within three Business Days does
not preclude subsequent notice.
Section 2.5 Reassignment of Ineligible
Receivables.
(a) Reassignment of Receivables. In the
event (i) any representation or warranty contained in
subsection 2.4(a)(ii), (iii), (iv), (vi), (vii) or (viii)
is not true and correct in any material respect as of the
date specified therein with respect to any Receivable or
the related Account and such breach has a material
adverse effect on the Certificateholders' Interest in any
Receivable (which determination shall be made without
regard to whether funds are then available pursuant to
any Series Enhancement) unless cured within 60 days (or
such longer period, not in excess of 120 days, as may be
agreed to by the Trustee and the Servicer) after the
earlier to occur of the discovery thereof by the
Transferor which conveyed such Receivables to the Trust
or receipt by the Transferor of written notice thereof
given by the Trustee or the Servicer, or (ii) it is so
provided in subsection 2.7(a) or 2.9(d)(iii) with respect
to any Receivables conveyed to the Trust by the
Transferor, then the Transferor shall accept reassignment
of the Certificateholders' Interest in all Receivables in
the related Account ("Ineligible Receivables") on the
terms and conditions set forth in paragraph (b) below.
(b) Price of Reassignment. The Servicer
shall deduct the portion of such Ineligible Receivables
reassigned to the Transferor which are Principal
Receivables from the aggregate amount of the Principal
Receivables used to calculate the Transferor Amount. In
the event that, following the exclusion of such Principal
Receivables from the calculation of the Transferor
Amount, the Transferor Amount would be less than the
Required Transferor Amount, not later than 1:00 P.M., New
York City time, on the first Distribution Date following
the Monthly Period in which such reassignment obligation
arises, the Transferor shall make a deposit into the
Special Funding Account in immediately available funds in
an amount equal to the amount by which the Transferor
Amount would be below the Required Transferor Amount (up
to the amount of such Principal Receivables).
Upon reassignment of any Ineligible
Receivable, the Trustee, on behalf of the Trust, shall
automatically and without further action be deemed to
sell, transfer, assign, set over and otherwise convey to
the Transferor or its designee, 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 and all
proceeds thereof and such reassigned Ineligible
Receivable shall be treated by the Trust as collected in
full as of the date on which it was transferred. The
obligation of the Transferor to accept reassignment of
any Ineligible Receivables conveyed to the Trust by the
Transferor, and to make the deposits, if any, required to
be made to the Special Funding Account as provided in
this Section, shall constitute the sole remedy respecting
the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of the
Certificateholders) or any Series Enhancer.
Notwithstanding any other provision of this subsection
2.5(b), a reassignment of an Ineligible Receivable in
excess of the amount that would cause the Transferor
Amount to be less than the Required Transferor Amount
shall not occur if the Transferor fails to make any
deposit required by this subsection 2.5(b) with respect
to such Ineligible Receivable. The Trustee shall execute
such documents and instruments of transfer or assignment
and take such other actions as shall reasonably be
requested and provided by the Transferor to effect the
conveyance of such Ineligible Receivables pursuant to
this subsection 2.5(b), but only upon receipt of an
Officer's Certificate from the Transferor that states
that all conditions set forth in this Section 2.5 have
been satisfied.
Section 2.6 Reassignment of
Certificateholders' Interest in Trust Portfolio. In the
event any representation or warranty of the Transferor
set forth in subsection 2.3(a) or (c) or subsection
2.4(a)(i) or (v) is not true and correct in any material
respect and such breach has a material adverse effect on
the Certificateholders' Interest in Receivables conveyed
to the Trust by the Transferor or the availability of the
proceeds thereof to the Trust (which determination shall
be made without regard to whether funds are then
available pursuant to any Series Enhancement), then
either the Trustee or the Holders of Investor
Certificates evidencing not less than 50% of the
aggregate unpaid principal amount of all outstanding
Investor Certificates, by notice then given to the
Transferor and the Servicer (and to the Trustee if given
by the Investor Certificateholders), may direct the
Transferor to accept a reassignment of the
Certificateholders' Interest in the Receivables and any
Participation Interests conveyed to the Trust by the
Transferor if such breach and any material adverse effect
caused by such breach is not cured within 60 days of such
notice (or within such longer period, not in excess of
120 days, as may be specified in such notice), and upon
those conditions the Transferor shall be obligated to
accept such reassignment on the terms set forth below;
provided, however, that such Receivables will not be
reassigned to the Transferor if, on any day prior to the
end of such 60-day or longer period (i) the relevant
representation and warranty shall be true and correct in
all material respects as if made on such day and (ii) the
Transferor shall have delivered to the Trustee a
certificate of an authorized officer describing the
nature of such breach and the manner in which the
relevant representation and warranty has become true and
correct.
The Transferor shall deposit in the
Collection Account in immediately available funds not
later than 1:00 P.M., New York City time, on the first
Transfer Date following the Monthly Period in which such
reassignment obligation arises, in payment for such
reassignment, an amount equal to the sum of the amounts
specified therefor with respect to each outstanding
Series in the related Supplement. Notwithstanding
anything to the contrary in this Agreement, such amounts
shall be distributed to the Investor Certificateholders
on such Distribution Date in accordance with the terms of
each Supplement. If the Trustee or the Investor
Certificateholders give notice directing the Transferor
to accept a reassignment of the Certificateholders'
Interest in the Receivables as provided above, the
obligation of the Transferor to accept such reassignment
pursuant to this Section and to make the deposit required
to be made to the Collection Account as provided in this
paragraph shall constitute the sole remedy respecting an
event of the type specified in the first sentence of this
Section available to the Certificateholders (or the
Trustee on behalf of the Certificateholders) or any
Series Enhancer.
Section 2.7 Covenants of the Transferor.
The Transferor hereby covenants that:
(a) Receivables Not To Be Evidenced by
Promissory Notes. Except in connection with its
enforcement or collection of an Account, the Transferor
will take no action to cause any Receivable conveyed by
it to the Trust to be evidenced by any instrument (as
defined in the UCC) and if any such Receivable (or any
underlying receivable) is so evidenced as a result of any
action of the Transferor it shall be deemed to be an
Ineligible Receivable in accordance with Section 2.5(a)
and shall be reassigned to the Transferor in accordance
with Section 2.5(b).
(b) Security Interests. Except for the
conveyances hereunder, the Transferor will not sell,
pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on, any
Receivable or Participation Interest conveyed by it to
the Trust, whether now existing or hereafter created, or
any interest therein, and the Transferor shall defend the
right, title and interest of the Trust in, to and under
the Receivables and any Participation Interest, whether
now existing or hereafter created, against all claims of
third parties claiming through or under the Transferor;
provided, however, that nothing in this Section 2.7(b)
shall prevent or be deemed to prohibit the Transferor
from suffering to exist upon any of the Receivables or
Participation Interests any Liens for taxes if such taxes
shall not at the time be due and payable or if the
Transferor shall currently be contesting the validity
thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with
respect thereto. Notwithstanding the foregoing, nothing
in this Section 2.7(b) shall be construed to prevent or
be deemed to prohibit the transfer of the Exchangeable
Transferor Certificate and certain other rights of the
Transferor in accordance with the terms of this Agreement
and any related Supplement.
(c) Transferor's Interest. Except for the
conveyances hereunder, in connection with any transaction
permitted by Section 7.2 and Section 6.3, the Transferor
agrees not to transfer, sell, assign, exchange or
otherwise convey or pledge, hypothecate or otherwise
grant a security interest in the Transferor's Interest
represented by the Transferor Certificate or any
Supplemental Certificate and any such attempted transfer,
assignment, exchange, conveyance, pledge, hypothecation,
grant or sale shall be void.
(d) Delivery of Collections or Recoveries.
In the event that the Transferor receives Collections or
Recoveries, the Transferor agrees to pay the Servicer all
such Collections and Recoveries as soon as practicable
after receipt thereof.
(e) Notice of Liens. The Transferor shall
notify the Trustee and each Series Enhancer promptly
after becoming aware of any Lien on any Receivable (or on
the underlying receivable) or Participation Interest
conveyed by it to the Trust other than the conveyances
hereunder and under each Receivables Purchase Agreement.
(f) Amendment of the Certificate of
Incorporation. The Transferor will not amend in any
material respect its Certificate of Incorporation without
providing the Rating Agency with notice no later than the
fifth Business Day prior to such amendment (unless the
right to such notice is waived by the Rating Agency) and
satisfying the Rating Agency Condition.
(g) Other Indebtedness. The Transferor shall
not incur any additional debt, unless the Rating Agency
is provided with notice no later than the fifth Business
Day prior to the incurrence of such additional debt
(unless the right to such notice is waived by the Rating
Agency) and the Rating Agency Condition is satisfied with
respect to the incurrence of such debt.
(h) Separate Corporate Existence. The
Transferor shall:
(i) maintain its corporate existence and
remain in good standing under the laws of the State of
Delaware;
(ii) observe all corporate procedures
required by its certificate of incorporation, its bylaws
and the corporation law of the State of Delaware;
(iii) ensure that (x) the business and
affairs of the Transferor are at all times managed by or
under the direction of its Board of Directors, (y) its
Board of Directors shall have duly authorized all
corporate actions requiring such authorization and, (z)
when necessary, the Transferor shall have obtained
proper authorization for corporate action from its
stockholder;
(iv) at all times includes at least two
Independent Directors (as such term is defined in the
certificate of incorporation of the Transferor);
(v) maintain separate corporate records and
books of account from those of any Affiliate and keep
correct and complete books and records of account and
minutes of the meetings and other proceedings of its
stockholder and Board of Directors;
(vi) pay the fair market rent for any office
space located in the office of any Affiliate and a fair
share of any overhead costs;
(vii) maintain separate bank accounts and
books of account from those of its Affiliates and ensure
that its funds and other assets shall at all times be
readily distinguishable from the funds and other assets
of its Affiliates and not be commingled with the funds
or other assets of its Affiliates;
(viii) pay from its own separate funds all
material liabilities incurred by it, including material
operating and administrative expenses; provided that the
organizational expenses of the Transferor and expenses
relating to the preparation, negotiation, execution and
delivery of the documentation with respect to the
issuance of the Certificates or notes that it may issue
from time to time may be paid by an Affiliate. No
general overhead or administrative expenses of any
Affiliate shall be charged or otherwise allocated to the
Transferor unless such general overhead or
administrative expenses are directly attributable to
services provided to or for the account of the
Transferor.
(ix) conduct its business solely in its own
name so as not to mislead others as to its identity or
the identity of any Affiliate. All oral and written
communications of the Transferor, including without
limitation letters, invoices, purchase orders,
contracts, statements, and applications shall be made
solely in the name of the Transferor;
(x) not make any guaranty with respect to
the obligations of any Affiliate and no Affiliate shall
make any guaranty with respect to the obligations of the
Transferor;
(xi) ensure that there will be no
intercompany debt between the Transferor and any
Affiliate; provided, that the stockholder of the
Transferor may contribute capital to the Transferor in
such amounts as are necessary to assure that such
Transfer has adequate capital for its business and the
Transferor may issue subordinated notes in the amount
and manner specified in the Receivables Purchase
Agreement;
(xii) act solely in its own name and through
its duly authorized officers or agents in the conduct of
its business and at all times maintain an arm's length
relationship with its Affiliates. The Transferor shall
not: (v) hold itself out as having agreed to pay or
become liable for the debts of any Affiliate; (w) fail
to correct any known misrepresentation with respect to
the Transferor's agreement to pay or become liable for
the debts of any Affiliate; (x) operate or purport to
operate as an integrated, single economic unit with any
Affiliate in its dealings with any other Person; (y)
seek or obtain credit or incur any obligation to any
Person based upon the assets of an Affiliate or
unaffiliated entity; or (z) induce any Person reasonably
to rely on the creditworthiness of any Affiliate in its
dealings with the Transferor; and
(xiii) disclose in its annual financial
statements the effects of the transactions contemplated
herein and in each Receivables Purchase Agreement in
accordance with generally accepted accounting
principles. Such financial statements shall (x) clearly
indicate the separate existence of the Transferor and
its Affiliates, (y) reflect the Transferor's separate
assets and liabilities and (z) record the purchase of
the Receivables pursuant to the applicable Receivables
Purchase Agreement as a purchase under generally
accepted accounting principles.
(i) Interchange. With respect to any
Distribution Date, on or prior to the immediately
preceding Determination Date, the Servicer shall notify
the Transferor of the amount of Interchange required to
be included as Collections of Finance Charge Receivables
with respect to such Monthly Period, which amount for any
Series shall be specified in the related Supplement. Not
later than 1:00 p.m., New York City time, on the related
Transfer Date, the Transferor shall deposit into the
Collection Account, in immediately available funds, the
amount of Interchange to be so included as Collections of
Finance Charge Receivables with respect to such Monthly
Period.
Section 2.8 Covenants of the Transferor with
Respect to Receivables Purchase Agreement. The
Transferor, in its capacity as purchaser of Receivables
from an Account Owner pursuant to a Receivables Purchase
Agreement, hereby covenants that the Transferor will at
all times enforce the covenants and agreements of the
applicable Account Owner in such Receivables Purchase
Agreement, including, without limitation, the covenants
to the effect set forth below:
(a) Periodic Rate Finance Charges. (i)
Except (x) as otherwise required by any Requirements of
Law or (y) as is deemed by the related Account Owner to
be necessary in order for it to maintain its credit card
business or a program operated by such credit card
business on a competitive basis based on a good faith
assessment by it of the nature of the competition with
respect to the credit card business or such program, it
shall not at any time take any action which would have
the effect of reducing the Portfolio Yield to a level
that could be reasonably expected to cause any Series to
experience any Pay Out Event or Reinvestment Event based
on the insufficiency of the Portfolio Yield or any
similar test and (ii) except as otherwise required by any
Requirements of Law, it shall not take any action which
would have the effect of reducing the Portfolio Yield to
less than the highest current Average Rate for any Group.
(b) Credit Card Agreements and Guidelines.
Subject to compliance with all Requirements of Law and
paragraph (a) above any Account Owner may change the
terms and provisions of the applicable Credit Card
Agreements or the applicable Credit Card Guidelines in
any respect (including the calculation of the amount or
the timing of charge-offs and the Periodic Rate Finance
Charges to be assessed thereon). Notwithstanding the
above, unless required by Requirements of Law or as
permitted by Section 2.8(a), no Account Owner will take
any action with respect to the applicable Credit Card
Agreements or the applicable Credit Card Guidelines,
which, at the time of such action, the Account Owner
reasonably believes will have a material adverse effect
on the Investor Certificateholders.
The Transferor further covenants that it will
not enter into any amendments to a Receivables Purchase
Agreement or enter into a new Receivables Purchase
Agreement unless the Rating Agency Condition has been
satisfied.
Section 2.9 Addition of Accounts.
(a) Required Additional Accounts. (i) If,
as of the close of business on the last Business Day of
any calendar month, (a) the total amount of Principal
Receivables and the then outstanding principal amount of
any Participation Interests theretofore conveyed to the
Trust is less than the Required Minimum Principal Balance
on such date or (b) the Transferor Amount on the last
business day of any calendar month is less than the
Required Transferor Amount, the Transferor shall on or
prior to the close of business on the tenth Business Day
of the next succeeding calendar month (the "Required
Designation Date"), cause to be designated additional
Eligible Accounts to be included as Accounts as of the
Required Designation Date or any earlier date in a
sufficient amount (or such lesser amount as shall
represent all Eligible Accounts constituting VISA and
MasterCard consumer revolving credit card accounts then
available to the Transferor under the Receivables
Purchase Agreements) such that, after giving effect to
such addition the aggregate principal balance of
Principal Receivables, plus the then outstanding
principal amount of any Participation Interests conveyed
to the Trust as of the close of business on the Addition
Date is at least equal to the Required Minimum Principal
Balance on such date.
(ii) In lieu of, or in addition to, causing
the designation of Additional Accounts pursuant to clause
(i) above, the Transferor may (but shall not be
required), subject to the conditions specified in
paragraph (c) below, convey to the Trust participations
(including 100% participations) representing undivided
interests in a pool of assets primarily consisting of
revolving credit card receivables, consumer loan
receivables (secured and unsecured), charge card
receivables, and any interests in any of the foregoing,
including securities representing or backed by such
receivables, and other self-liquidating financial assets
including any "Eligible Assets" as such term is defined
in Rule 3a-7 under the Investment Company Act (or any
successor to such Rule) and collections, together with
all earnings, revenue, dividends, distributions, income,
issues and profits thereon ("Participation Interests").
Receivables shall not be treated as a Participation
Interest for purposes of this Agreement. The addition of
Participation Interests in the Trust pursuant to this
paragraph (a) or paragraph (b) below shall be effected by
a Participation Interest Supplement, dated the applicable
Addition Date and entered into pursuant to Section
13.1(a).
(iii) Any Additional Accounts or
Participation Interests designated to be included as
Trust Assets pursuant to clauses (i) or (ii) above may
only be so included if (x) Standard & Poor's shall have
notified the Transferor, the Servicer and the Trustee in
writing that such addition will not result in a reduction
or withdrawal of the then existing rating of any
outstanding Series or Class with respect to which
Standard & Poor's is a Rating Agency and (y) the
applicable conditions specified in paragraph (c) below
have been satisfied.
(b) Permitted Aggregate Additions. The
Transferor may from time to time, at its sole discretion,
subject to the conditions specified in paragraph (c)
below, voluntarily cause the designation of additional
Eligible Accounts to be included as Accounts or
Participation Interests to be included as Trust Assets,
in either case as of the applicable Additional Cut-Off
Date.
(c) Conditions to Aggregate Additions. On
the Addition Date with respect to any Aggregate
Additions, the Trust shall purchase the Receivables in
Aggregate Addition Accounts (and such Aggregate Addition
Accounts shall be deemed to be Accounts for purposes of
this Agreement) or shall purchase such Participation
Interests as of the close of business on the applicable
Additional Cut-Off Date, subject to the satisfaction of
the following conditions:
(i) on or before the eighth Business Day
immediately preceding the Addition Date, the Transferor
shall have given the Trustee, the Servicer and each
Rating Agency notice (unless such notice requirement is
otherwise waived) that the Aggregate Addition Accounts
or Participation Interests will be included and
specifying the applicable Addition Date and Additional
Cut-Off Date;
(ii) all Aggregate Addition Accounts shall be
Eligible Accounts;
(iii) the Transferor shall have delivered to
the Trustee copies of UCC-1 financing statements
covering such Aggregate Addition Accounts, if necessary
to perfect the Trust's interest in the Receivables
arising therein;
(iv) to the extent required by Section 4.3,
the Transferor shall have deposited in the Collection
Account all Collections with respect to such Aggregate
Addition Accounts since the Additional Cut-Off Date;
(v) as of each of the Additional Cut-Off Date
and the Addition Date, no Insolvency Event with respect
to the related Account Owner or the Transferor shall
have occurred nor shall the transfer to the Trust of the
Receivables arising in the Aggregate Addition Accounts
or of the Participation Interests have been made in
contemplation of the occurrence thereof;
(vi) solely with respect to Aggregate
Additions designated pursuant to subsection 2.9(b), the
Rating Agency Condition shall have been satisfied;
(vii) the Transferor shall have delivered to
the Trustee an Officer's Certificate, dated the Addition
Date, confirming, to the extent applicable, the items
set forth in clauses (ii) through (vi) above;
(viii) the addition to the Trust of the
Receivables arising in the Aggregate Addition Accounts
or of the Participation Interests will not result in an
Adverse Effect and, in the case of Aggregate Additions,
the Transferor shall have delivered to the Trustee an
Officer's Certificate, dated the Addition Date, stating
that the Transferor reasonably believes that the
addition to the Trust of the Receivables arising in the
Aggregate Addition Accounts or of the Participation
Interests will not have an Adverse Effect; and
(ix) the Transferor shall have delivered to
the Trustee and each Rating Agency an Opinion of
Counsel, dated the Addition Date, in accordance with
subsection 13.2(d)(ii) or (iv), as applicable.
(d) New Accounts.
(i) The Transferor may from time to time, at
its sole discretion, subject to and in compliance with
the limitations specified in clause (ii) below and the
conditions specified in paragraph (e) below, voluntarily
designate newly originated Eligible Accounts to be
included as New Accounts. For purposes of this
paragraph, Eligible Accounts shall be deemed to include
only MasterCard and VISA revolving credit card accounts
of the same nature as those included as Initial Accounts
or which have previously been included in any Aggregate
Addition if the Assignment related to such Aggregate
Addition expressly provides that such type of revolving
credit card account is permitted to be designated as a
New Account.
(ii) Unless and until each Rating Agency
otherwise consents in writing, the Transferor shall not
be permitted to designate New Accounts and, upon
obtaining such consent, the number and balance of New
Accounts designated with respect to any period
designated by the Rating Agency shall not exceed the
amounts designated by the Rating Agency.
(e) Conditions to Addition of New Accounts.
On the Addition Date with respect to any New Accounts,
the Trust shall purchase the Receivables in such New
Accounts (and such New Accounts shall be deemed to be
Accounts for purposes of this Agreement) as of the close
of business on the applicable Additional Cut-Off Date,
subject to the satisfaction of the following conditions:
(i) the New Accounts shall all be Eligible
Accounts;
(ii) the Transferor shall have delivered to
the Trustee copies of UCC-1 financing statements
covering such New Accounts, if necessary to perfect the
Trust's interest in the Receivables arising therein;
(iii) to the extent required by Section 4.3,
the Transferor shall have deposited in the Collection
Account all Collections with respect to such New
Accounts since the Additional Cut-Off Date;
(iv) as of each of the Additional Cut-Off
Date and the Addition Date, no Insolvency Event with
respect to the related Account Owner or the Transferor,
shall have occurred nor shall the transfer to the Trust
of the Receivables arising in the New Accounts have been
made in contemplation of the occurrence thereof; and
(v) the addition of the Receivables arising
in the New Accounts to the Trust will not result in the
occurrence of a Pay Out Event or Reinvestment Event.
(f) Representations and Warranties. The
Transferor conveying Additional Accounts or Participation
Interests hereby represents and warrants to the Trust as
of the related Addition Date as to the matters set forth
in clauses (v) and (viii) of subsection 2.9(c) above and
that, in the case of Additional Accounts, the list
delivered pursuant to paragraph (h) below is, as of the
applicable Additional Cut-Off Date, true and complete in
all material respects.
(g) Delivery of Documents. In the case of
the designation of Additional Accounts, the Transferor
designating such Accounts shall deliver to the Trustee
(i) the computer file or microfiche list required to be
delivered pursuant to Section 2.1 with respect to such
Additional Accounts on the date such file or list is
required to be delivered pursuant to Section 2.1 (the
"Document Delivery Date") and (ii) a duly executed,
written Assignment (including an acceptance by the
Trustee for the benefit of the Certificateholders),
substantially in the form of Exhibit B (the
"Assignment"), on the Document Delivery Date. In
addition, in the case of the designation of New Accounts,
the Transferor shall deliver to the Trustee on the
Document Delivery Date an Officer's Certificate
confirming, to the extent applicable, the items set forth
in clauses (i) through (v) of subsection 2.9(e) above.
Section 2.10 Removal of Accounts and
Participation Interests. On any day of any Monthly
Period the Transferor shall have the right to require the
reassignment to it or its designee of all the Trust's
right, title and interest in, to and under the
Receivables then existing and thereafter created, all
monies due or to become due and all amounts received
thereafter with respect thereto and all proceeds thereof
in or with respect to the Accounts specified in a
Receivables Purchase Agreement (the "Removed Accounts")
or Participation Interests conveyed to the Trust by the
Transferor (the "Removed Participation Interests")
(unless otherwise set forth in the applicable
Participation Interest Supplement or Series Supplement)
and designated for removal by the Transferor, upon
satisfaction of the conditions in clauses (i), (iii),
(iv) and (v) below:
(i) on or before the eighth Business Day
immediately preceding the Removal Date, the Transferor
shall have given the Trustee, the Servicer, the Rating
Agency and each Series Enhancer notice (unless such
notice requirement is otherwise waived) of such removal
and specifying the date for removal of the Removed
Accounts and removed Participation Interests (the
"Removal Date");
(ii) on or prior to the date that is five
Business Days after the Removal Date, the Transferor
shall amend Schedule 1 by delivering to the Trustee a
computer file or microfiche list containing a true and
complete list of the Removed Accounts specifying for
each such Account, as of the date notice of the Removal
Date is given, its account number, the aggregate amount
outstanding in such Account and the aggregate amount of
Principal Receivables outstanding in such Account;
(iii) the Transferor shall have represented
and warranted as of the Removal Date that the list of
Removed Accounts delivered pursuant to paragraph (ii)
above, as of the Removal Date, is true and complete in
all material respects;
(iv) the Rating Agency Condition shall have
been satisfied with respect to the removal of the
Removed Accounts and removed Participation Interests;
(v) the Transferor shall have delivered to
the Trustee an Officer's Certificate, dated the Removal
Date, to the effect that the Transferor reasonably
believes that (a) such removal will not have an Adverse
Effect, and (b) (I) no selection procedures believed by
the Transferor to be materially adverse to the interests
of the Investor Certificateholders have been used in
selecting the Removed Accounts or (II) a random
selection procedure was used by the Transferor in
selecting the Removed Accounts.
Upon satisfaction of the above conditions,
the Trustee shall execute and deliver to the Transferor a
written reassignment in substantially the form of Exhibit
C (the "Reassignment") and shall, without further action,
be deemed to sell, transfer, assign, set over and
otherwise convey to the Transferor or its designee,
effective as of the Removal Date, without recourse,
representation or warranty, all the right, title and
interest of the Trust in and to the Receivables arising
in the Removed Accounts and Removed Participation
Interests, all monies due and to become due and all
amounts received with respect thereto and all proceeds
thereof and any Insurance Proceeds relating thereto. The
Trustee may conclusively rely on the Officer's
Certificate delivered pursuant to this Section 2.10 and
shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in
so relying.
In addition to the foregoing, on the date
when any Receivable in an Account becomes a Defaulted
Receivable, the Trust shall automatically and without
further action or consideration be deemed to transfer,
set over and otherwise convey to the Transferor, without
recourse, representation or warranty, all right, title
and interest of the Trust in and to the Defaulted
Receivables in such Account, all monies due or to become
due with respect thereto, all proceeds thereof and any
Insurance Proceeds relating thereto; provided, that
Recoveries of such Account shall be applied as provided
herein.
The foregoing conditions may be amended with
the consent of each Rating Agency but without the consent
of Certificateholders if such amendment is required to
comply with any accounting or regulatory restrictions to
which the Trust, the Transferor or any Account Owner may
become subject.
Section 2.11 Account Allocations. In the
event that the Transferor is unable for any reason to
transfer Receivables to the Trust in accordance with the
provisions of this Agreement, including by reason of the
application of the provisions of Section 9.1 or any order
of any Governmental Authority (a "Transfer Restriction
Event"), then, in any such event, (a) the Transferor and
the Servicer agree (except as prohibited by any such
order) to allocate and pay to the Trust, after the date
of such inability, all Collections, including Collections
of Receivables transferred to the Trust prior to the
occurrence of such event, and all amounts which would
have constituted Collections but for the Transferor's
inability to transfer Receivables (up to an aggregate
amount equal to the amount of Receivables transferred to
the Trust by the Transferor in the Trust on such date),
(b) the Transferor and the Servicer agree that such
amounts will be applied as Collections in accordance with
Article IV and the terms of each Supplement and (c) for
so long as the allocation and application of all
Collections and all amounts that would have constituted
Collections are made in accordance with clauses (a) and
(b) above, Principal Receivables and all amounts which
would have constituted Principal Receivables but for the
Transferor's inability to transfer Receivables to the
Trust which are written off as uncollectible in
accordance with this Agreement shall continue to be
allocated in accordance with Article IV and the terms of
each Supplement. For the purpose of the immediately
preceding sentence, the Transferor and the Servicer shall
treat the first received Collections with respect to the
Accounts as allocable to the Trust until the Trust shall
have been allocated and paid Collections in an amount
equal to the aggregate amount of Principal Receivables in
the Trust as of the date of the occurrence of such event.
If the Transferor and the Servicer are unable pursuant to
any Requirements of Law to allocate Collections as
described above, the Transferor and the Servicer agree
that, after the occurrence of such event, payments on
each Account with respect to the principal balance of
such Account shall be allocated first to the oldest
principal balance of such Account and shall have such
payments applied as Collections in accordance with
Article IV and the terms of each Supplement. The parties
hereto agree that Finance Charge Receivables, whenever
created, accrued in respect of Principal Receivables
which have been conveyed to the Trust shall continue to
be a part of the Trust notwithstanding any cessation of
the transfer of additional Principal Receivables to the
Trust and Collections with respect thereto shall continue
to be allocated and paid in accordance with Article IV
and the terms of each Supplement.
Section 2.12 Discount Option.
(a) The Transferor shall have the option to
designate at any time and from time to time a percentage
or percentages, which may be a fixed percentage or a
variable percentage based on a formula (the "Discount
Percentage"), of all or any specified portion of
Principal Receivables created after the Discount Option
Date to be treated as Finance Charge Receivables
("Discount Option Receivables"). The Transferor shall
also have the option of reducing or withdrawing the
Discount Percentage, at any time and from time to time,
on and after such Discount Option Date; provided,
however, such reduction or withdrawal shall occur only if
the Transferor delivers to the Trustee and, in connection
with certain Series, the applicable Series Enhancers, a
certificate of an authorized representative to the effect
that, in the reasonable belief of the Transferor, such
reduction or withdrawal would not have adverse regulatory
or other accounting implications for the Transferor. The
Transferor shall provide to the Servicer, the Trustee and
any Rating Agency 30 days' prior written notice of the
Discount Option Date, and such designation shall become
effective on the Discount Option Date only if (a) the
Transferor has delivered to the Trustee and any such
Series Enhancer a certificate of an authorized
representative to the effect that, based on the facts
known to such representative at the time, the Transferor
reasonably believes that such designation or reduction or
withdrawal will not at the time of its occurrence cause a
Pay Out Event or Reinvestment Event or an event that,
with notice or the lapse of time or both, would
constitute a Pay Out Event or Reinvestment Event, to
occur with respect to any Series and (b) the Transferor
has received written notice from each Rating Agency that
such designation, reduction or withdrawal will satisfy
the Rating Agency Condition.
(b) After the Discount Option Date, Discount
Option Receivable Collections shall be treated as
Collections of Finance Charge Receivables.
Section 2.13 Premium Option.
(a) The Transferor shall have the option to
designate at any time and from time to time a percentage
or percentages, which may be a fixed percentage or a
variable percentage based on a formula (the "Premium
Percentage"), of all or any specified portion of Finance
Charge Receivables created after the Premium Option Date
to be treated as Principal Receivables ("Premium Option
Receivables"). The Transferor shall also have the option
of reducing or withdrawing the Premium Percentage, at any
time and from time to time, on and after such Premium
Option Date; provided, however, that such reduction or
withdrawal may occur only if the Transferor delivers to
the Trustee and, in connection with certain Series, the
applicable Series Enhancers, a certificate of an
authorized representative to the effect that, in the
reasonable belief of the Transferor, such reduction or
withdrawal would not have adverse regulatory or other
accounting implications for the Transferor. The
Transferor shall provide to the Servicer, the Trustee and
any Rating Agency 30 days' prior written notice of the
Premium Option Date, and such designation shall become
effective on the Premium Option Date only if (a) the
Transferor has delivered to the Trustee and any such
Series Enhancer a certificate of an authorized
representative to the effect that, based on the facts
known to such representative at the time, the Transferor
reasonably believes that such designation, reduction or
withdrawal will not at the time of its occurrence cause a
Pay Out Event or Reinvestment Event or an event that,
with notice or the lapse of time or both, would
constitute a Pay Out Event or Reinvestment Event, to
occur with respect to any Series and (b) the Transferor
has received written notice from each Rating Agency that
such designation, reduction or withdrawal will satisfy
the Rating Agency Condition.
(b) After the Premium Option Date, Premium
Option Receivables Collections shall be treated as
Collections of Principal Receivables.
[END OF ARTICLE II]
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and
Other Matters Relating to the Servicer.
(a) The Bank agrees to act as the Servicer
under this Agreement and the Certificateholders by their
acceptance of Certificates consent to the Bank acting as
Servicer. Notwithstanding the foregoing or any other
provisions of this Agreement or any Supplement, the
Investor Certificateholders consent to any other Account
Owner acting as Servicer hereunder, in full substitution
for the Bank; provided that such Account Owner acting as
Servicer shall expressly assume in writing (unless such
assumption occurs by operation of law), by an agreement
supplemental hereto, executed and delivered to the
Trustee, the performance of every covenant and obligation
of the Servicer, as applicable hereunder, and shall in
all respects be designated the Servicer under this
Agreement.
(b) As agent for the Transferor and the
Trust, the Servicer shall service and administer the
Receivables (including the underlying receivables) and
any Participation Interests, shall collect and deposit
into the Collection Account payments due under the
Receivables (including the underlying receivables) and
any Participation Interests and shall charge-off as
uncollectible Receivables, all in accordance with its
customary and usual servicing procedures for servicing
credit card receivables comparable to the Receivables and
in accordance with the Credit Card Guidelines. As agent
for the Transferor and the Trust, the Servicer 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;
provided, however, that subject to the rights of the
Trustee and the Certificateholders hereunder, CCRFC shall
have the absolute right to direct the Servicer with
respect to any power conferred on the Servicer hereunder
in accordance with any such direction. Without limiting
the generality of the foregoing and subject to Section
10.1, the Servicer or its designee is hereby authorized
and empowered, unless such power is revoked by the
Trustee on account of the occurrence of a Servicer
Default pursuant to Section 10.1, (i) to instruct the
Trustee to make withdrawals and payments from the
Collection Account, the Special Funding Account and any
Series Account, as set forth in this Agreement or any
Supplement, (ii) to take any action required or permitted
under any Series Enhancement, as set forth in this
Agreement or any Supplement, (iii) to execute and
deliver, on behalf of the Trust for the benefit of the
Certificateholders, any and all instruments of
satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable
instruments, with respect to the Receivables and, after
the delinquency of any Receivable and to the extent
permitted under and in compliance with applicable
Requirements of Law, to commence collection proceedings
with respect to such Receivables and (iv) to make any
filings, reports, notices, applications and registrations
with, and to seek any consents or authorizations from,
the 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 or other laws or regulations. The Trustee
shall furnish the Servicer with any documents necessary
or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
(c) The Servicer shall not, and no Successor
Servicer shall, be obligated to use separate servicing
procedures, offices, employees or accounts for servicing
the Receivables from the procedures, offices, employees
and accounts used by the Servicer or such Successor
Servicer, as the case may be, in connection with
servicing other credit card receivables.
(d) The Servicer shall comply with and
perform its servicing obligations with respect to the
Accounts and Receivables in accordance with the Credit
Card Agreements relating to the Accounts and the Credit
Card Guidelines and all applicable rules and regulations
of MasterCard and VISA, except insofar as any failure to
so comply or perform would not materially and adversely
affect the Trust or the Investor Certificateholders.
(e) The Servicer shall pay out of its own
funds, without reimbursement, all expenses incurred in
connection with the Trust and the servicing activities
hereunder including expenses related to enforcement of
the Receivables, fees and disbursements of the Trustee
(including the reasonable fees and expenses of its
outside counsel) and independent accountants and all
other fees and expenses, including the costs of filing
UCC continuation statements, the costs and expenses
relating to obtaining and maintaining the listing of any
Investor Certificates on any stock exchange and any
stamp, documentary, excise, property (whether on real,
personal or intangible property) or any similar tax
levied on the Trust or the Trust's assets that are not
expressly stated in this Agreement to be payable by the
Trust or the Transferor (other than federal, state, local
and foreign income and franchise taxes, if any, or any
interest or penalties with respect thereto, assessed on
the Trust).
Section 3.2 Servicing Compensation. As full
compensation for its servicing activities hereunder and
as reimbursement for any expense incurred by it in
connection therewith, the Servicer shall be entitled to
receive a servicing fee (the "Servicing Fee") with
respect to each Monthly Period, payable monthly on the
related Distribution Date, in an amount equal to one-
twelfth of the product of (a) the weighted average of the
Servicing Fee Rates with respect to each outstanding
Series (based upon the Servicing Fee Rate for each Series
and the Invested Amount (or such other amount as
specified in the related Supplement) of such Series, in
each case as of the last day of the prior Monthly Period)
and (b) the amount of Principal Receivables on the last
day of the prior Monthly Period. The share of the
Servicing Fee allocable to the Certificateholders'
Interest of a particular Series with respect to any
Monthly Period (the "Monthly Servicing Fee") will be
determined in accordance with the relevant Supplement.
For any Monthly Period, the portion of the Monthly
Servicing Fee with respect to any Series payable from
Interchange shall be an amount equal to the portion of
collections of Finance Charge Receivables allocated to
the Certificateholders' Interest of such Series with
respect to such Monthly Period that is attributable to
Interchange (the "Servicer Interchange"); provided,
however, that Servicer Interchange for a Monthly Period
may not exceed one-twelfth of the product of the Series
Adjusted Investor Amount, as of the last day of such
Monthly Period and the percentage specified in the
related Supplement. The portion of the Servicing Fee
with respect to any Monthly Period not so allocated to
the Certificateholders' Interest of any particular Series
shall be paid by the Holders of the Transferor
Certificates on the related Distribution Date and in no
event shall the Trust, the Trustee, the Investor
Certificateholders of any Series or any Series Enhancer
be liable for the share of the Servicing Fee with respect
to any Monthly Period to be paid by the Holders of the
Transferor Certificates.
Section 3.3 Representations, Warranties and
Covenants of the Servicer. The Bank, as initial
Servicer, hereby makes, and any Successor Servicer by its
appointment hereunder shall make, with respect to itself,
on each Closing Date (and on the date of any such
appointment), the following representations, warranties
and covenants on which the Trustee shall be deemed to
have relied in accepting the Receivables in trust and in
authenticating the Certificates:
(a) Organization and Good Standing. The
Servicer is a corporation or other legal entity validly
existing under the applicable law of the jurisdiction of
its organization or incorporation and has, in all
material respects, full power and authority to own its
properties and conduct its credit card servicing business
as presently owned or conducted, and to execute, deliver
and perform its obligations under this Agreement and each
Supplement.
(b) Due Qualification. The Servicer is duly
qualified to do business and is in good standing as a
foreign corporation or other foreign entity (or is exempt
from such requirements) and has obtained all necessary
licenses and approvals in each jurisdiction in which the
servicing of the Receivables (including the underlying
receivables) and any Participation Interests as required
by this Agreement requires such qualification except
where the failure to so qualify or obtain licenses or
approvals would not have a material adverse effect on its
ability to perform its obligations as Servicer under this
Agreement.
(c) Due Authorization. The execution,
delivery, and performance of this Agreement and each
Supplement, and the other agreements and instruments
executed or to be executed by the Servicer as
contemplated hereby, have been duly authorized by the
Servicer by all necessary action on the part of the
Servicer.
(d) Binding Obligation. This Agreement and
each Supplement constitutes a legal, valid and binding
obligation of the Servicer, enforceable in accordance
with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights generally from time to time
in effect or by general principles of equity.
(e) No Conflict. The execution and delivery
of this Agreement and each Supplement by the Servicer,
and the performance of the transactions contemplated by
this Agreement and each Supplement and the fulfillment of
the terms hereof and thereof applicable to the Servicer,
will not conflict with, violate or result in any breach
of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a
default under, any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it or its properties are
bound which would have an Adverse Effect.
(f) No Violation. The execution and delivery
of this Agreement and each Supplement by the Servicer,
the performance of the transactions contemplated by this
Agreement and each Supplement and the fulfillment of the
terms hereof and thereof applicable to the Servicer will
not conflict with or violate any Requirements of Law
applicable to the Servicer in a manner which would have
an Adverse Effect.
(g) No Proceedings. There are no proceedings
or investigations pending or, to the best knowledge of
the Servicer, threatened against the Servicer before any
Governmental Authority seeking to prevent the
consummation of any of the transactions contemplated by
this Agreement or any Supplement or seeking any
determination or ruling that, in the reasonable judgment
of the Servicer, would materially and adversely affect
the performance by the Servicer of its obligations under
this Agreement or any Supplement.
(h) Compliance with Requirements of Law. The
Servicer shall duly satisfy all obligations on its part
to be fulfilled under or in connection with each
Receivable (and the underlying receivable) and the
related Account, if any, will maintain in effect all
qualifications required under Requirements of Law in
order to service properly each Receivable and the related
Account, if any, 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 an Adverse
Effect.
(i) No Rescission or Cancellation. The
Servicer shall not permit any rescission or cancellation
of any Receivable (or the underlying receivable) except
in accordance with the Credit Card Guidelines or as
ordered by a court of competent jurisdiction or other
Governmental Authority.
(j) Protection of Certificateholders' Rights.
The Servicer shall take no action which, nor omit to take
any action the omission of which, would impair the rights
of Certificateholders in any Receivable (or the
underlying receivable) or the related Account, if any,
nor shall it reschedule, revise or defer payments due on
any Receivable except in accordance with the Credit Card
Guidelines.
(k) Receivables Not To Be Evidenced by
Promissory Notes. Except in connection with its
enforcement or collection of an Account, the Servicer
will take no action to cause any Receivable to be
evidenced by any instrument, other than an instrument
that, taken together with one or more other writings,
constitutes chattel paper (as such terms are defined in
the UCC) and if any Receivable is so evidenced it shall
be reassigned or assigned to the Servicer as provided in
this Section.
(l) All Consents. All authorizations,
consents, orders or approvals of or registrations or
declarations with any Governmental Authority required to
be obtained, effected or given by the Servicer in
connection with the execution and delivery of this
Agreement and each Supplement by the Servicer and the
performance of the transactions contemplated by this
Agreement and each Supplement by the Servicer, have been
duly obtained, effected or given and are in full force
and effect; provided, however, that the Servicer makes no
representation or warranty regarding state securities or
"blue sky" laws in connection with the distribution of
the Certificates.
In the event (x) any of the representations,
warranties or covenants of the Servicer contained in
subsection 3.3 (h), (i) or (j) with respect to any
Receivable or the related Account is breached, and such
breach has a material adverse effect on the
Certificateholders' Interest in such Receivable (which
determination shall be made without regard to whether
funds are then available to any Investor
Certificateholders pursuant to any Series Enhancement)
and is not cured within 60 days (or such longer period,
not in excess of 150 days, as may be agreed to by the
Trustee and the Transferor) of the earlier to occur of
the discovery of such event by the Servicer, or receipt
by the Servicer of notice of such event given by the
Trustee or the Transferor, or (y) as provided in
subsection 3.3(k) with respect to any Receivable, all
Receivables in the Account or Accounts to which such
event relates shall be assigned and transferred to the
Servicer on the terms and conditions set forth below.
The Servicer shall effect such assignment by
making a deposit into the Collection Account in
immediately available funds on the Transfer Date
following the Monthly Period in which such assignment
obligation arises in an amount equal to the amount of
such Receivables.
Upon each such reassignment or assignment to
the Servicer, the Trustee, on behalf of the Trust, shall
automatically and without further action be deemed to
sell, transfer, assign, set over and otherwise convey to
the Servicer, without recourse, representation or
warranty, all right, title and interest of the Trust in
and to such Receivables, all monies due or to become due
and all amounts received with respect thereto and all
proceeds thereof. The Trustee shall execute such
documents and instruments of transfer or assignment and
take such other actions as shall be reasonably requested
by the Servicer to effect the conveyance of any such
Receivables pursuant to this Section but only upon
receipt of an Officer's Certificate of the Servicer that
states that all conditions set forth in this section have
been satisfied. The obligation of the Servicer to accept
reassignment or assignment of such Receivables, and to
make the deposits, if any, required to be made to the
Collection Account as provided in the preceding
paragraph, shall constitute the sole remedy respecting
the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of
Certificateholders) or any Series Enhancer, except as
provided in Section 8.4.
Section 3.4 Reports and Records for the
Trustee.
(a) Daily Records. On each Business Day,
the Servicer shall make or cause to be made available at
the office of the Servicer for inspection by the Trustee
upon request a record setting forth (i) the Collections
in respect of Principal Receivables and in respect of
Finance Charge Receivables processed by the Servicer on
the second preceding Business Day in respect of each
Account and (ii) the amount of Receivables as of the
close of business on the second preceding Business Day in
each Account. The Servicer shall, at all times, maintain
its computer files with respect to the Accounts in such a
manner so that the Accounts may be specifically
identified and shall make available to the Trustee at the
office of the Servicer on any Business Day any computer
programs necessary to make such identification. The
Trustee shall enter into such reasonable confidentiality
agreements as the Servicer shall deem necessary to
protect its interests and as are reasonably acceptable in
form and substance to the Trustee.
(b) Monthly Servicer's Certificate. Not
later than the second Business Day preceding each
Distribution Date, the Servicer shall, with respect to
each outstanding Series, deliver to the Trustee and each
Rating Agency a certificate of a Servicing Officer in
substantially the form set forth in the related
Supplement.
Section 3.5 Annual Certificate of Servicer.
The Servicer shall deliver to the Trustee and the Rating
Agency on or before March 31 of each calendar year,
beginning with March 31, 1998, an Officer's Certificate
substantially in the form of Exhibit D.
Section 3.6 Annual Servicing Report of
Independent Public Accountants; Copies of Reports
Available.
(a) On or before March 31 of each calendar
year, beginning with March 31, 1998, the Servicer shall
cause a firm of nationally recognized independent public
accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report
(addressed to the Trustee) to the Trustee, the Servicer
and each Rating Agency to the effect that they have
applied certain procedures agreed upon with the Servicer
and examined certain documents and records relating to
the servicing of Accounts under this Agreement and each
Supplement and that, on the basis of such agreed-upon
procedures, nothing has come to the attention of such
accountants that caused them to believe that the
servicing (including the allocation of Collections) has
not been conducted in compliance with the terms and
conditions as set forth in Articles III and Article IV
and Section 8.8 of this Agreement and the applicable
provisions of each Supplement, except for such exceptions
as they believe to be immaterial and such other
exceptions as shall be set forth in such statement. Such
report shall set forth the agreed-upon procedures
performed.
(b) On or before March 31 of each calendar
year, beginning with March 31, 1998, the Servicer shall
cause a firm of nationally recognized independent public
accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report to the
Trustee, the Servicer and each Rating Agency, to the
effect that they have randomly selected three of the 12
monthly certificates forwarded by the Servicer pursuant
to subsection 3.4(b) during the period covered by such
report (which shall be the 12-month period ending on
December 31 of the preceding calendar year) and have
compared the amounts set forth therein with the
Servicer's computer reports which were the source or such
amounts and found them to be in agreement or shall
disclose any exceptions noted and that they have
recalculated the mathematical accuracy of amounts derived
in such monthly certificates; provided, however, that
upon the occurrence of a charge-off with respect to any
Investor Certificate, the Servicer shall cause such
accountants to furnish such report with respect to all 12
of the monthly certificates forwarded by the Servicer
during such 12-month period.
(c) A copy of each certificate and report
provided pursuant to subsection 3.4(b), or Section 3.5 or
3.6 may be obtained by any Investor Certificateholder or
Certificate Owner by a request in writing to the Trustee
addressed to the Corporate Trust Office.
Section 3.7 Tax Treatment. The Transferor
has entered into this Agreement, and the Certificates
will be issued with the intention that, unless otherwise
specified in any Supplement, for Federal, state and local
income and franchise tax purposes, the Investor
Certificates (except any Certificates held by the
Transferor) of each Series will qualify as debt secured
by the Receivables. The Transferor, by entering into
this Agreement, each Certificateholder, by the acceptance
of its Certificate (and each Certificate Owner, by its
acceptance of an interest in the applicable Certificate),
agree to treat the Investor Certificates for Federal,
state and local income and franchise tax purposes as
debt. Each Holder of an Investor Certificate agrees that
it will cause any Certificate Owner acquiring an interest
in an Investor Certificate through it to comply with this
Agreement as to treatment as debt under applicable tax
law, as described in this Section 3.7. Furthermore,
subject to Section 11.11 or unless the Transferor shall
determine that the filing of returns is appropriate, the
Trustee shall treat the Trust as a security device only
and shall not file tax returns or obtain an employer
identification number on behalf of the Trust and none of
the parties hereto shall make the election provided for
in Treasury Regulation Section 301.7701-3(c).
Section 3.8 Notices to the Bank. In the
event that the Bank is no longer acting as Servicer, any
Successor Servicer shall deliver or make available to the
Bank each certificate and report required to be provided
thereafter pursuant to subsection 3.4(b) and Sections 3.5
and 3.6.
Section 3.9 Adjustments.
(a) If the Servicer adjusts downward the
amount of any Receivable because of a rebate, refund,
unauthorized charge or billing error to a cardholder,
because such Receivable was created in respect of
merchandise which was refused or returned by a
cardholder, or if the Servicer otherwise adjusts downward
the amount of any Receivable without receiving
Collections therefor or charging off such amount as
uncollectible, then, in any such case, the amount of
Principal Receivables used to calculate the Transferor
Amount, the Transferor's Interest, and (unless otherwise
specified) any other amount required herein or in any
Supplement to be calculated by reference to the amount of
Principal Receivables, will be reduced by the amount of
the adjustment. Similarly, the amount of Principal
Receivables used to calculate the Transferor Amount and
(unless otherwise specified) any other amount required
herein or in any Supplement to be calculated by reference
to the amount of Principal Receivables will be reduced by
the principal amount of any Receivable which was
discovered as having been created through a fraudulent or
counterfeit charge or with respect to which the covenant
contained in subsection 2.7(b) was breached. Any
adjustment required pursuant to either of the two
preceding sentences shall be made on or prior to the end
of the Monthly Period in which such adjustment obligation
arises. In the event that, following the exclusion of
such Principal Receivables from the calculation of the
Transferor Amount, the Transferor Amount would be less
than the Required Transferor Amount, not later than 1:00
P.M., New York City time, on the Distribution Date
following the Monthly Period in which such adjustment
obligation arises, the Transferor shall make a deposit
into the Special Funding Account in immediately available
funds in an amount equal to the amount by which the
Transferor Amount would be less than the Required
Transferor Amount, due to adjustments with respect to
Receivables conveyed by such the Transferor (up to the
amount of such Principal Receivables).
(b) If (i) the Servicer makes a deposit into
the Collection Account in respect of a Collection of a
Receivable and such Collection was received by the
Servicer in the form of a check which is not honored for
any reason or (ii) the Servicer makes a mistake with
respect to the amount of any Collection and deposits an
amount that is less than or more than the actual amount
of such Collection, the Servicer shall appropriately
adjust the amount subsequently deposited into the
Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored
check is received shall be deemed not to have been paid.
Notwithstanding the first two sentences of this
paragraph, adjustments made pursuant to this Section
shall not require any change in any report previously
delivered pursuant to subsection 3.4(a).
Section 3.10 Reports to the Commission. The
Servicer shall, on behalf of the Trust, cause to be filed
with the Commission any periodic reports required to be
filed under the provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the
Commission thereunder. The Transferor shall, at the
expense of the Servicer, cooperate in any reasonable
request of the Servicer in connection with such filings.
[END OF ARTICLE III]
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders.
The Investor Certificates shall represent fractional
undivided interests in the Trust, which, with respect to
each Series, shall consist of the right to receive, to
the extent necessary to make the required payments with
respect to the Investor Certificates of such Series at
the times and in the amounts specified in the related
Supplement, the portion of Collections allocable to
Investor Certificateholders of such Series pursuant to
this Agreement and such Supplement, funds on deposit in
the Collection Account and the Special Funding Account
allocable to Certificateholders of such Series pursuant
to this Agreement and such Supplement, funds on deposit
in any related Series Account and funds available
pursuant to any related Series Enhancement (collectively,
with respect to all Series, the "Certificateholders'
Interest"), it being understood that, except as
specifically set forth in the Supplement with respect
thereto, the Investor Certificates of any Series or Class
shall not represent any interest in any Series Account or
Series Enhancement for the benefit of any other Series or
Class. The Transferor Certificates shall represent the
ownership interest in the remainder of the Trust Assets
not allocated pursuant to this Agreement or any
Supplement to the Certificateholders' Interest, including
the right to receive Collections with respect to the
Receivables and other amounts at the times and in the
amounts specified in any Supplement to be paid to the
Transferor on behalf of all Holders of the Transferor
Certificates (the "Transferor's Interest"); provided,
however, that the Transferor Certificates shall not
represent any interest in the Collection Account, any
Series Account or any Series Enhancement, except as
specifically provided in this Agreement or any
Supplement.
Section 4.2 Establishment of Collection
Account and Special Funding Account. The Servicer, for
the benefit of the Certificateholders, shall establish
and maintain in the name of the Trustee, on behalf of the
Trust, an Eligible Deposit Account bearing a designation
clearly indicating that the funds deposited therein are
held for the benefit of the Certificateholders (the
"Collection Account"). The Trustee shall possess all
right, title and interest in all monies, instruments,
securities, documents, certificates of deposit and other
property on deposit from time to time in the Collection
Account and in all proceeds, earnings, income, revenue,
dividends and distributions thereof for the benefit of
the Certificateholders.
The Collection Account shall be under the
sole dominion and control of the Trustee for the benefit
of the Certificateholders. Except as expressly provided
in this Agreement, the Servicer agrees that it shall have
no right of setoff or banker's lien against, and no right
to otherwise deduct from, any funds held in the
Collection Account for any amount owed to it by the
Trustee, the Trust, any Certificateholder or any Series
Enhancer. If, at any time, the Collection Account ceases
to be an Eligible Deposit Account, the Trustee (or the
Servicer on its behalf) shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new
Collection Account meeting the conditions specified
above, transfer any monies, documents, instruments,
securities, certificates of deposit and other property to
such new Collection Account and from the date such new
Collection Account is established, it shall be the
"Collection Account." Pursuant to the authority granted
to the Servicer in subsection 3.1(b), the Servicer shall
have the power, revocable by the Trustee, to make
withdrawals and payments from the Collection Account and
to instruct the Trustee to make withdrawals and payments
from the Collection Account for the purposes of carrying
out the Servicer's or the Trustee's duties hereunder.
The Servicer shall reduce deposits into the Collection
Account payable by the Transferor on any Deposit Date to
the extent the Transferor is entitled to receive funds
from the Collection Account on such Deposit Date, but
only to the extent such reduction would not reduce the
Transferor Amount to an amount less than the Required
Transferor Amount.
Funds on deposit in the Collection Account
(other than investment earnings and amounts deposited
pursuant to Sections 2.6, 9.1, 10.1 or 12.2) shall at the
written direction of the Servicer be invested by the
Trustee in Eligible Investments selected by the Servicer.
All such Eligible Investments shall be held by the
Trustee for the benefit of the Certificateholders. The
Trustee shall maintain for the benefit of the
Certificateholders possession of the instruments,
documents, certificates of deposit or securities, if any,
evidencing such Eligible Investments. Investments of
funds representing Collections collected during any
Monthly Period shall be invested in Eligible Investments
that will mature so that such funds will be available no
later than the close of business on each monthly Transfer
Date following such Monthly Period in amounts sufficient
to the extent of such funds to make the required
distributions on the following Distribution Date. No
such Eligible Investment shall be disposed of prior to
its maturity; provided, however, that the Trustee may
sell, liquidate or dispose of any such Eligible
Investment before its maturity, at the written direction
of the Servicer, if such sale, liquidation or disposal
would not result in a loss of all or part of the
principal portion of such Eligible Investment or if,
prior to the maturity of such Eligible Investment, a
default occurs in the payment of principal, interest or
any other amount with respect to such Eligible
Investment. Unless directed by the Servicer, funds
deposited in the Collection Account on a Transfer Date
with respect to the immediately succeeding Distribution
Date are not required to be invested overnight. On each
Distribution Date, all interest and other investment
earnings (net of losses and investment expenses) on funds
on deposit in the Collection Account shall be paid to the
Transferor, except as otherwise specified in any
Supplement. The Trustee shall bear no responsibility or
liability for any losses resulting from investment or
reinvestment of any funds in accordance with this Section
4.2 nor for the selection of Eligible Investments in
accordance with the provisions of this Agreement.
The Servicer, for the benefit of the
Certificateholders, shall establish and maintain in the
name of the Trustee, on behalf of the Trust, an Eligible
Deposit Account bearing a designation clearly indicating
that the funds deposited therein are held for the benefit
of the Certificateholders (the "Special Funding
Account"). The Trustee shall possess all right, title
and interest in all monies, instruments, securities,
documents, certificates of deposit and other property on
deposit from time to time in the Special Funding Account
and in all proceeds, dividends, distributions, earnings,
income and revenue thereof for the benefit of the
Certificateholders. The Special Funding Account shall be
under the sole dominion and control of the Trustee for
the benefit of the Certificateholders. Except as
expressly provided in this Agreement, the Servicer agrees
that it shall have no right of setoff or banker's lien
against, and no right to otherwise deduct from, any funds
held in the Special Funding Account for any amount owed
to it by the Trustee, the Trust, any Certificateholder or
any Series Enhancer. If, at any time, the Special
Funding Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within
10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may
consent) establish a new Special Funding Account meeting
the conditions specified above, transfer any monies,
documents, instruments, securities, certificates of
deposit and other property to such new Special Funding
Account and from the date such new Special Funding
Account is established, it shall be the "Special Funding
Account."
Funds on deposit in the Special Funding
Account shall at the written direction of the Servicer be
invested by the Trustee in Eligible Investments selected
by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the
Certificateholders. The Trustee shall maintain for the
benefit of the Certificateholders possession of the
instruments, documents, certificates of deposit or
securities, if any, evidencing such Eligible Investments.
Funds on deposit in the Special Funding Account on any
Distribution Date will be invested in Eligible
Investments that will mature so that such funds will be
available no later than the close of business on the
Transfer Date following such Monthly Period. No such
Eligible Investment shall be disposed of prior to its
maturity; provided, however, that the Trustee may sell,
liquidate or dispose of an Eligible Investment before its
maturity, at the written direction of the Servicer, if
such sale, liquidation or disposal would not result in a
loss of all or part of the principal portion of such
Eligible Investment or if, prior to the maturity of such
Eligible Investment, a default occurs in the payment of
principal, interest or any other amount with respect to
such Eligible Investment. Unless directed by the
Servicer, funds deposited in the Special Funding Account
on a Transfer Date with respect to the immediately
succeeding Distribution Date are not required to be
invested overnight. On each Distribution Date, all
interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Special
Funding Account shall be treated as Collections of
Finance Charge Receivables with respect to the last day
of the related Monthly Period except as otherwise
specified in the related Supplement. On each Business
Day on which funds are on deposit in the Special Funding
Account and on which no Series is in an Accumulation
Period or Amortization Period, the Servicer shall
determine the amount (if any) by which the Transferor
Amount exceeds the Required Transferor Amount on such
date and shall instruct the Trustee to withdraw any such
excess from the Special Funding Account and pay such
amount to the Holders of the Transferor Certificates;
provided, however, that, if an Accumulation Period or
Amortization Period has commenced and is continuing with
respect to one or more outstanding Series, any funds on
deposit in the Special Funding Account shall be treated
as Shared Principal Collections and shall be allocated
and distributed in accordance with Section 4.4 and the
terms of each Supplement.
Section 4.3 Collections and Allocations.
(a) The Servicer will apply or will instruct
the Trustee to apply all funds on deposit in the
Collection Account as described in this Article IV and in
each Supplement. Except as otherwise provided below, the
Servicer shall deposit Collections into 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 the Date of
Processing. Subject to the express terms of any
Supplement, but notwithstanding anything else in this
Agreement to the contrary, for so long as either (i) the
Bank remains the Servicer and the Bank or an Affiliate of
the Bank acceptable to the Rating Agencies maintains a
short-term rating of not less than A-1 by Standard & Poor
and P-1 by Moody's and a certificate of deposit rating of
not less than A-1 by Standard & Poor's and P-1 by Moody's
and no Pay Out Event or Reinvestment Event shall have
occurred or (ii) the Bank shall have made arrangements
which satisfy the Rating Agency Condition, the Servicer
need not make the daily deposits of Collections into the
Collection Account as provided in the preceding sentence,
but may make a single deposit in the Collection Account
in immediately available funds not later than 1:00 P.M.,
New York City time, on the Transfer Date following the
Monthly Period with respect to which such deposit
relates. In the event that neither of the foregoing
conditions is satisfied, then the Bank shall commence
making daily deposits of Collections into the Collection
Account as provided above, within five Business Days of
the date on which neither of such conditions shall have
been satisfied. Subject to the first proviso in Section
4.4, but notwithstanding anything else in this Agreement
to the contrary, with respect to any Monthly Period,
whether the Servicer is required to make deposits of
Collections pursuant to the first or the second preceding
sentence, (i) the Servicer will only be required to
deposit Collections into the Collection Account up to the
aggregate amount of Collections required to be deposited
into any Series Account or, without duplication,
distributed on or prior to the related Distribution Date
to Investor Certificateholders or to any Series Enhancer
pursuant to the terms of any Supplement or Enhancement
Agreement 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. Subject to the immediately preceding sentence,
the Servicer may retain its Servicing Fee with respect to
a Series and shall not be required to deposit it in the
Collection Account.
(b) Collections of Finance Charge
Receivables, Principal Receivables and Defaulted
Receivables will be allocated to each Series on the basis
of the Series Allocable Finance Charge Collections of
such Series, Series Allocable Principal Collections of
such Series and Series Allocable Defaulted Amount of such
Series and amounts so allocated to any Series will not,
except as specified in the related Supplement, be
available to the Investor Certificateholders of any other
Series. Allocations of the foregoing amounts between the
Certificateholders' Interest and the Transferor's
Interest, among the Series and among the Classes in any
Series, shall be set forth in the related Supplement or
Supplements.
Section 4.4 Shared Principal Collections.
On each Distribution Date, (a) the Servicer shall
allocate Shared Principal Collections (as described
below) to each Principal Sharing Series, pro rata, in
proportion to the Principal Shortfalls, if any, with
respect to each such Series and (b) the Servicer shall
withdraw from the Collection Account and pay to the
Holders of the Transferor Certificates an amount equal to
the excess, if any, of (x) the aggregate amount for all
outstanding Series of Collections of Principal
Receivables which the related Supplements specify are to
be treated as "Shared Principal Collections" for such
Distribution Date over (y) the aggregate amount for all
outstanding Series which the related Supplements specify
are "Principal Shortfalls" for such Series and for such
Distribution Date; provided, however, that if the
Transferor Amount as of such Distribution Date
(determined after giving effect to the Principal
Receivables or Participation Interests transferred to the
Trust on such date) is less than the Required Transferor
Amount, the Servicer will not distribute to the Holders
of the Transferor Certificates any such amounts that
otherwise would be distributed to the Holders of the
Transferor Certificates, but shall deposit such funds in
the Special Funding Account. The Transferor may, at its
option, instruct the Trustee to deposit Shared Principal
Collections which are otherwise payable to the Holders of
the Transferor Certificates pursuant to the provisions
set forth above into the Special Funding Account.
Section 4.5 Additional Withdrawals from the
Collection Account. On or before the Determination Date
with respect to any Monthly Period, the Servicer shall
determine the amounts payable to each Account Owner with
respect to such Monthly Period under the applicable
Receivables Purchase Agreement in respect of amounts on
deposit in the Collection Account that were not
transferred to the Trust hereunder, and the Servicer
shall withdraw such amounts from the Collection Account
and pay such amount to the applicable Account Owner.
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 subsection 13.1(a),
Receivables conveyed to the Trust pursuant to Section 2.1
and Receivables or Participation Interests conveyed to
the Trust pursuant to Section 2.9 or any Participation
Interest Supplement, and all Collections received with
respect to 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,
however, that any such allocation or application shall be
effective only upon satisfaction of the following
conditions:
(i) on or before the fifth Business Day
immediately preceding such allocation, the Servicer
shall have given the 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
the Trustee an Officer's Certificate, dated the date of
such allocation, to the effect that the Servicer
reasonably believes that such allocation will not have
an Adverse Effect.
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) that 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.
[END OF ARTICLE IV]
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Distributions shall be made to, and reports
shall be provided to, Certificateholders as set forth in
the applicable Supplement. The identity of the
Certificateholders with respect to distributions and
reports shall be determined according to the immediately
preceding Record Date.
[END OF ARTICLE V]
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. The Investor
Certificates of any Series or Class shall be issued in
fully registered form (including any uncertificated
Series or Class which is registered in the Certificate
Register, the "Registered Certificates") unless the
applicable Supplement provides, in accordance with then
applicable laws, that such Certificates be issued in
bearer form ("Bearer Certificates") with attached
interest coupons and a special coupon (collectively the
"Coupons"). Such Registered Certificates or Bearer
Certificates, as the case may be, shall be substantially
in the form of the exhibits with respect thereto attached
to the applicable Supplement. The Transferor Certificate
will be issued in registered form, substantially in the
form of Exhibit A, and shall upon issue, be executed and
delivered by the Transferor to the Trustee for
authentication and redelivery as provided in Section 6.2.
If specified in any Supplement, the Investor Certificates
of any Series or Class shall be issued upon initial
issuance as one or more certificates evidencing the
aggregate original principal amount of such Series or
Class as described in Section 6.10. The Transferor
Certificate shall be a single certificate and shall
initially represent the entire Transferor's Interest.
Each Certificate shall be executed by manual or facsimile
signature on behalf of the Transferor by its President or
any Vice President or by any attorney-in-fact duly
authorized to execute such Certificate on behalf of any
such officer. Certificates bearing the manual or
facsimile signature of an individual who was, at the time
when such signature was affixed, authorized to sign on
behalf of the Transferor shall not be rendered invalid,
notwithstanding that such individual ceased to be so
authorized prior to the authentication and delivery of
such Certificates or does not hold such office at the
date of such Certificates. No Certificates shall be
entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form
provided for herein executed by or on behalf of the
Trustee by the manual signature of a duly authorized
signatory, and such certificate upon any Certificate
shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and
delivered hereunder. Bearer Certificates shall be dated
the Series Issuance Date. All Registered Certificates
and Transferor's Certificates shall be dated the date of
their authentication.
Section 6.2 Authentication of Certificates.
The Trustee shall, at the written direction of the
Transferor, authenticate and deliver the Investor
Certificates of each Series and Class that are issued
upon original issuance to or upon the order of the
Transferor against payment to the Transferor of the
purchase price therefor. The Trustee shall authenticate
and deliver the Transferor Certificate to the Transferor
simultaneously with the execution of this Agreement. If
specified in the related Supplement for any Series or
Class, the Trustee shall authenticate and deliver outside
the United States the Global Certificate that is issued
upon original issuance thereof.
Section 6.3 New Issuances.
(a) The Transferor may from time to time
direct the Trustee, on behalf of the Trust, to issue one
or more new Series of Investor Certificates. The
Investor Certificates of all outstanding Series shall be
equally and ratably entitled as provided herein to the
benefits of this Agreement without preference, priority
or distinction, all in accordance with the terms and
provisions of this Agreement and the applicable
Supplement except, with respect to any Series or Class,
as provided in the related Supplement.
(b) On or before the Series Issuance Date
relating to any new Series, the parties hereto will
execute and deliver a Supplement which will specify the
Principal Terms of such new Series. The Trustee shall
execute the Supplement and the Transferor shall execute
the Investor Certificates of such Series and deliver such
Investor Certificates to the Trustee for authentication.
In connection with the issuance of a new Series of
Investor Certificates or at any other time, a Transferor
may surrender its Transferor Certificate to the Trustee
in exchange for a newly issued Transferor Certificate and
a second certificate (a "Supplemental Certificate"), the
terms of which shall be defined in a supplement (a
"Transferor Certificate Supplement") to this Agreement
(which Transferor Certificate Supplement shall be subject
to Section 13.1 to the extent that it amends any of the
terms of this Agreement) to be delivered to or upon the
order of the Transferor. The issuance of any such
Investor Certificates or Supplemental Certificate shall
be subject to satisfaction of the following conditions:
(i) on or before the fifth day immediately
preceding the Series Issuance Date or Transferor
Certificate surrender and exchange, as the case may be,
the Transferor shall have given the Trustee, the
Servicer and each Rating Agency notice (unless such
notice requirement is otherwise waived) of such issuance
and the Series Issuance Date or the Transferor
Certificate surrender and exchange, as the case may be;
(ii) the Transferor shall have delivered to
the Trustee the related Supplement or Transferor
Certificate Supplement, as applicable, in form
satisfactory to the Trustee, executed by each party
hereto (other than the Trustee and the Holder of the
Supplemental Certificate, if any);
(iii) the Transferor shall have delivered to
the Trustee any related Enhancement Agreement executed
by each of the parties thereto, other than the Trustee;
(iv) the Trustee shall have received
confirmation from each Rating Agency that the Rating
Agency Condition shall have been satisfied with respect
to such issuance or the Transferor Certificate surrender
and exchange, as the case may be;
(v) such issuance or surrender and exchange,
as the case may be, will not result in any Adverse
Effect and the Transferor shall have delivered to the
Trustee an Officer's Certificate, dated the Series
Issuance Date or the date of such surrender and
exchange, as the case may be, to the effect that the
Transferor reasonably believes that such issuance or
such surrender and exchange, as the case may be, will
not, based on the facts known to such officer at the
time of such certification, have an Adverse Effect;
(vi) the Transferor shall have delivered to
the Trustee (with a copy to each Rating Agency) a Tax
Opinion, dated the Series Issuance Date or the date of
such surrender and exchange, as the case may be, with
respect to such issuance or surrender and exchange,
respectively; and
(vii) the aggregate amount of Principal
Receivables plus the principal amount of any
Participation Interest theretofore conveyed to the Trust
as of the Series Issuance Date or the date of such
surrender and exchange, as the case may be, shall be
greater than the Required Minimum Principal Balance as
of the Series Issuance Date or the date of such
surrender and exchange, as the case may be, and after
giving effect to such issuance or such surrender and
exchange, respectively.
Any Supplemental Certificate held by any
Person, and any Investor Certificate held by the
Transferor at any time after the date of its initial
issuance, may be transferred or exchanged only upon the
delivery to the Trustee of a Tax Opinion dated as of the
date of such transfer or exchange, as the case may be,
with respect to such transfer or exchange.
Section 6.4. Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall cause to be kept at
the Corporate Trust Office a register (the "Certificate
Register") in which, subject to such reasonable
regulations as it may prescribe, a transfer agent and
registrar (which may be the Trustee) (the "Transfer Agent
and Registrar") shall provide for the registration of the
Registered Certificates and of transfers and exchanges of
the Registered Certificates as herein provided. The
Transfer Agent and Registrar shall initially be the
Trustee and any co-transfer agent and co-registrar chosen
by the Transferor and acceptable to the Trustee,
including, if and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such exchange
shall so require, a co-transfer agent and co-registrar in
Luxembourg. Any reference in this Agreement to the
Transfer Agent and Registrar shall include any
co-transfer agent and registrar unless the context
requires otherwise.
The Trustee may revoke such appointment and
remove any Transfer Agent and Registrar if the Trustee
determines in its sole discretion that such transfer
Agent and Registrar failed to perform its obligations
under this Agreement in any material respect. Any
Transfer Agent and Registrar shall be permitted to resign
as Transfer Agent and Registrar upon 30 days' notice to
the Transferor, the Trustee and the Servicer; provided,
however, that such resignation shall not be effective and
such Transfer Agent and Registrar shall continue to
perform its duties as Transfer Agent and Registrar until
the Trustee has appointed a successor Transfer Agent and
Registrar reasonably acceptable to the Transferor.
Subject to subsection (c) below, upon
surrender for registration of transfer or exchange of any
Registered Certificate at any office or agency of the
Transfer Agent and Registrar maintained for such purpose,
one or more new Registered Certificates (of the same
Series and Class) in authorized denominations of like
aggregate fractional undivided interests in the
Certificateholders' Interest shall be executed,
authenticated and delivered, in the name of the
designated transferee or transferees.
At the option of a Registered
Certificateholder, subject to subsection (c) below,
Registered Certificates (of the same Series and Class)
may be exchanged for other Registered Certificates of
authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest,
upon surrender of the Registered Certificates to be
exchanged at any such office or agency; Registered
Certificates, including Registered Certificates received
in exchange for Bearer Certificates, may not be exchanged
for Bearer Certificates. At the option of the Holder of
a Bearer Certificate, subject to applicable laws and
regulations, Bearer Certificates may be exchanged for
other Bearer Certificates or Registered Certificates (of
the same Series and Class) of authorized denominations of
like aggregate fractional undivided interests in the
Certificateholders' Interest, 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 shall have attached
thereto all unmatured Coupons; provided that any Bearer
Certificate so surrendered after the close of business on
the Record Date preceding the relevant payment date or
distribution date after the expected final payment date
need not have attached the Coupon relating to such
payment date or distribution date (in each case, as
specified in the applicable Supplement).
The preceding provisions of this Section
notwithstanding, the Trustee or the Transfer Agent and
Registrar, as the case may be, shall not be required to
register the transfer of or exchange any Certificate for
a period of 15 days preceding the due date for any
payment with respect to the Certificate.
Whenever any Investor Certificates are so
surrendered for exchange, the Transferor shall execute,
the Trustee shall authenticate and the Transfer Agent and
Registrar shall deliver (in the case of Bearer
Certificates, outside the United States) the Investor
Certificates which the Investor Certificateholder making
the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the
Trustee or the Transfer Agent and Registrar duly executed
by the Investor Certificateholder or the attorney-in-fact
thereof duly authorized in writing.
No service charge shall be made for any
registration of transfer or exchange of Investor
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 such transfer or exchange.
All Investor Certificates (together with any
Coupons) surrendered for registration of transfer and
exchange or for payment shall be canceled and disposed of
in a manner satisfactory to the Trustee. The Trustee
shall cancel and destroy any Global Certificate upon its
exchange in full for Definitive Euro-Certificates and
shall deliver a certificate of destruction to the
Transferor. Such certificate shall also state that a
certificate or certificates of a 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 Euro-Certificates.
The Transferor shall execute and deliver to
the Trustee Bearer Certificates and Registered
Certificates in such amounts and at such times as are
necessary to enable the Trustee to fulfill its
responsibilities under this Agreement, each Supplement
and the Certificates.
The interest of any Investor
Certificateholder in any Receivable shall not be
transferable other than through the transfer of an
Investor Certificate, and except as provided in this
Article VI, a Certificate shall not be transferable or
divisible.
(b) The Transfer Agent and Registrar will
maintain at its expense in the Borough of Manhattan, The
City of New York, and, if and so long as any Series or
Class is listed on the Luxembourg Stock Exchange,
Luxembourg, an office or agency where Investor
Certificates may be surrendered for registration of
transfer or exchange (except that Bearer Certificates may
not be surrendered for exchange at any such office or
agency in the United States or its territories and
possessions).
(c) (i) Registration of transfer of Investor
Certificates containing a legend substantially to the
effect set forth on Exhibit G-1 shall be effected only
if such transfer (x) is made pursuant to an effective
registration statement under the Act, or is exempt from
the registration requirements under the Act, and (y) is
made to a Person which is not an employee benefit plan,
trust or account, including an individual retirement
account, that is subject to ERISA or that is described
in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a
plan's investment in such entity (a "Benefit Plan"). In
the event that registration of a transfer is to be made
in reliance upon an exemption from the registration
requirements under the Act, the transferor or the
transferee shall deliver, at its expense, to the
Transferor, the Servicer and the Trustee, an investment
letter from the transferee, substantially in the form of
the investment and ERISA representation letter attached
hereto as Exhibit G-2, and no registration of transfer
shall be made until such letter is so delivered.
Investor Certificates issued upon
registration or transfer of, or Investor Certificates
issued in exchange for, Investor Certificates bearing
the legend referred to above shall also bear such legend
unless the Transferor, the Servicer, the Trustee and the
Transfer Agent and Registrar receive an Opinion of
Counsel, satisfactory to each of them, to the effect
that such legend may be removed.
Whenever an Investor Certificate containing
the legend referred to above is presented to the
Transfer Agent and Registrar for registration of
transfer, the Transfer Agent and Registrar shall
promptly seek instructions from the Servicer regarding
such transfer and shall be entitled to receive
instructions signed by a Servicing Officer prior to
registering any such transfer. The Transferor hereby
agrees to indemnify the Transfer Agent and Registrar and
the Trustee and to hold each of them harmless against
any loss, liability or expense incurred without
negligence or bad faith on their part arising out of or
in connection with actions taken or omitted by them in
relation to any such instructions furnished pursuant to
this clause (i).
(ii) Registration of transfer of Investor
Certificates containing a legend to the effect set forth
on Exhibit G-3 shall be effected only if such transfer
is made to a Person which is not a Benefit Plan. By
accepting and holding any such Investor Certificate, an
Investor Certificateholder shall be deemed to have
represented and warranted that it is not a Benefit Plan.
By acquiring any interest in a Book-Entry Certificate
which contains such legend, a Certificate Owner shall be
deemed to have represented and warranted that it is not
a Benefit Plan.
(iii) If so requested by the Transferor, the
Trustee will make available to any prospective purchaser
of Investor Certificates who so requests, a copy of a
letter provided to the Trustee by or on behalf of the
Transferor relating to the transferability of any Series
or Class to a Benefit Plan.
Section 6.5 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 and the Trustee such security or
indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee
that such Certificate has been acquired by a bona fide
purchaser, the Transferor shall execute, the Trustee
shall authenticate and the Transfer Agent and Registrar
shall deliver (in the case of Bearer Certificates,
outside the United States), in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and
aggregate fractional undivided interest. In connection
with the issuance of any new Certificate under this
Section, the Trustee or the Transfer Agent and Registrar
may require the payment by the Certificateholder of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee
and Transfer Agent and Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section
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 6.6 Persons Deemed Owners. The
Trustee, the Paying Agent, the Transfer Agent and
Registrar, the Transferor, the Servicer and any agent of
any of them may (a) prior to due presentation of a
Registered Certificate for registration of transfer,
treat the Person in whose name any Registered Certificate
is registered as the owner of such Registered Certificate
for the purpose of receiving distributions pursuant to
the terms of the applicable Supplement and for all other
purposes whatsoever, and (b) 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 the terms of the applicable
Supplement and for all other purposes whatsoever; and, in
any such case, neither the Trustee, the Paying Agent, the
Transfer Agent and Registrar, the Transferor, the
Servicer nor any agent of any of them shall be affected
by any notice to the contrary. Notwithstanding the
foregoing, in determining whether the Holders of the
requisite Investor Certificates have given any request,
demand, authorization, direction, notice, consent or
waiver hereunder, Certificates owned by any of the
Transferor, the Servicer, any other Holder of the
Transferor Certificate or any Affiliate thereof, shall be
disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be
protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only
Certificates which a Responsible Officer of the Trustee
actually knows to be so owned shall be so disregarded.
Certificates so owned which have been pledged in good
faith shall not be disregarded and may be regarded as
outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act
with respect to such Certificates and that the pledgee is
not the Transferor, the Servicer, any other Holder of the
Transferor Certificate or any Affiliate thereof. None of
the Transferor, the Servicer, the Trustee, the Registrar
or the Paying Agent will have any responsibility or
liability for any of the records relating to or on
account of beneficial ownership in Book-Entry
Certificates or for maintaining, supervising or reviewing
records relating thereto.
Section 6.7 Appointment of Paying Agent.
The Paying Agent shall make distributions to Investor
Certificateholders from the Collection Account or
applicable Series Account pursuant to the provisions of
the applicable Supplement and shall report the amounts of
such distributions to the Trustee. Any Paying Agent
shall have the revocable power to withdraw funds from the
Collection Account or applicable Series Account for the
purpose of making the distributions referred to above.
The Trustee may revoke such power and remove the Paying
Agent if the Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its
obligations under this Agreement or any Supplement in any
material respect. The Paying Agent shall initially be
the Trustee and any co-paying agent chosen by the
Transferor and acceptable to the Trustee, including, if
and so long as any Series or Class is listed on the
Luxembourg Stock Exchange and such exchange so requires,
a co-paying agent in Luxembourg or another western
European city. In the event that any Paying Agent shall
resign, the Trustee shall appoint a successor to act as
Paying Agent. The Trustee shall act as Paying Agent
until a successor is appointed. The Trustee shall cause
each successor or additional Paying Agent to execute and
deliver to the Trustee an instrument in which such
successor or additional Paying Agent shall agree with the
Trustee that it will hold all sums, if any, held by it
for payment to the Investor Certificateholders in trust
for the benefit of the Investor Certificateholders
entitled thereto until such sums shall be paid to such
Investor Certificateholders. The Paying Agent shall
return all unclaimed funds to the Trustee and upon
removal shall also return all funds in its possession to
the Trustee. The provisions of Sections 11.1, 11.2, 11.3
and 11.5 shall apply to the Trustee also in its role as
Paying Agent, for so long as the Trustee shall act as
Paying Agent. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the
context requires otherwise.
Section 6.8 Access to List of Registered
Certificateholders' Names and Addresses. The Trustee
will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer or the Paying Agent,
within five Business Days after receipt by the Trustee of
a request therefor, a list in such form as the Servicer
or the Paying Agent may reasonably require, of the names
and addresses of the Registered Certificateholders. If
any Holder or group of Holders of Investor Certificates
of any Series or all outstanding Series, as the case may
be, evidencing not less than 10% of the aggregate unpaid
principal amount of such Series or all outstanding
Series, as applicable (the "Applicants"), apply to the
Trustee, and such application states that the Applicants
desire to communicate with other Investor
Certificateholders with respect to their rights under
this Agreement or any Supplement or under the Investor
Certificates and is accompanied by a copy of the
communication which such Applicants propose to transmit,
then the Trustee, after having been adequately
indemnified by such Applicants for its costs and
expenses, shall afford or shall cause the Transfer Agent
and Registrar to afford such Applicants access during
normal business hours to the most recent list of
Registered Certificateholders of such Series or all
outstanding Series, as applicable, held by the Trustee,
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.
With respect to any Series of Registered
Certificates, every Registered Certificateholder, by
receiving and holding a Registered Certificate, agrees
with the Trustee that neither the Trustee, the Transfer
Agent and Registrar, nor any of their respective agents,
shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the
Registered Certificateholders hereunder, regardless of
the sources from which such information was derived.
Section 6.9 Authenticating Agent.
(a) The Trustee may appoint one or more
authenticating agents with respect to the Certificates
which shall be authorized to act on behalf of the Trustee
in authenticating the Certificates in connection with the
issuance, delivery, registration of transfer, exchange or
repayment of the Certificates. Whenever reference is made
in this Agreement to the authentication of Certificates
by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an
authenticating agent and certificate of authentication
executed on behalf of the Trustee by an authenticating
agent. Each authenticating agent must be acceptable to
the Transferor and the Servicer.
(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 power or any further act on
the part of the Trustee or such authenticating agent. An
authenticating agent may at any time resign by giving
notice of resignation to the Trustee and to the
Transferor. The Trustee may at any time terminate the
agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the
Transferor. Upon receiving such a notice of resignation
or upon such a termination, or in case at any time an
authenticating agent shall cease to be acceptable to the
Trustee or the Transferor, the Trustee promptly may
appoint a successor authenticating agent. Any successor
authenticating agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect
as if originally named as an authenticating agent. No
successor authenticating agent shall be appointed unless
acceptable to the Trustee and the Transferor. The
Transferor agrees to pay to each authenticating agent
from time to time reasonable compensation for its
services under this Section. The provisions of Sections
11.1, 11.2 and 11.3 shall be applicable to any
authenticating agent.
(c) Pursuant to an appointment made under
this Section, the Certificates may have endorsed thereon,
in lieu of the Trustee's certificate of authentication,
an alternate certificate of authentication in
substantially the following form:
This is one of the Certificates described in
the Pooling and Servicing Agreement.
____________________________
____________________________
as Authenticating Agent
for the Trustee,
By _________________________
Authorized Officer
Section 6.10 Book-Entry Certificates. Unless
otherwise specified in the related Supplement for any
Series or Class, the Investor Certificates, upon original
issuance, shall be issued in the form of one or more
master Investor Certificates representing the Book-Entry
Certificates, to be delivered to the Clearing Agency, by,
or on behalf of, the Transferor. The Investor
Certificates shall initially be registered on the
Certificate Register in the name of the Clearing Agency
or its nominee, and no Certificate Owner will receive a
definitive certificate representing such Certificate
Owner's interest in the Investor Certificates, except as
provided in Section 6.12. Unless and until definitive,
fully registered Investor Certificates ("Definitive
Certificates") have been issued to the applicable
Certificate Owners pursuant to Section 6.12 or as
otherwise specified in any such Supplement:
(a) the provisions of this Section shall be in
full force and effect;
(b) the Transferor, the Servicer and the
Trustee may deal with the Clearing Agency and the
Clearing Agency Participants for all purposes (including
the making of distributions) as the authorized
representatives of the respective Certificate Owners;
(c) to the extent that the provisions of this
Section conflict with any other provisions of this
Agreement, the provisions of this Section shall control;
and
(d) the rights of the respective Certificate
Owners shall be exercised only through the Clearing
Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements
between such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 6.12, the
Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit
distributions of principal and interest on the related
Investor Certificates to such Clearing Agency
Participants.
For purposes of any provision of this Agreement
requiring or permitting actions with the consent of, or
at the direction of, Investor Certificateholders
evidencing a specified percentage of the aggregate unpaid
principal amount of Investor Certificates, such direction
or consent may be given by Certificate Owners (acting
through the Clearing Agency and the Clearing Agency
Participants) owning Investor Certificates evidencing the
requisite percentage of principal amount of Investor
Certificates.
Section 6.11 Notices to Clearing Agency.
Whenever any notice or other communication is required to
be given to Investor Certificateholders of any Series or
Class with respect to which Book-Entry Certificates have
been issued, unless and until Definitive Certificates
shall have been issued to the related Certificate Owners,
the Trustee shall give all such notices and
communications to the applicable Clearing Agency.
Section 6.12 Definitive Certificates. If
Book-Entry Certificates have been issued with respect to
any Series or Class and (a) the Transferor advises the
Trustee that the Clearing Agency is no longer willing or
able to discharge properly its responsibilities under the
Depository Agreement with respect to such Series or Class
and the Trustee or the Transferor is unable to locate a
qualified successor, (b) the Transferor, at its option,
advises the Trustee that it elects to terminate the book-
entry system with respect to such Series or Class through
the Clearing Agency or (c) after the occurrence of a
Servicer Default, Certificate Owners of such Series or
Class evidencing not less than 50% of the aggregate
unpaid principal amount of such Series or Class advise
the Trustee and the Clearing Agency through the Clearing
Agency Participants that the continuation of a book-entry
system with respect to the Investor Certificates of such
Series or Class through the Clearing Agency is no longer
in the best interests of the Certificate Owners with
respect to such Certificates, then the Trustee shall
notify all Certificate Owners of such Certificates,
through the Clearing Agency, of the occurrence of any
such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same.
Upon surrender to the Trustee of any such Certificates by
the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration,
the Trustee shall authenticate and deliver such
Definitive Certificates. Neither the Transferor nor the
Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the
issuance of such Definitive Certificates all references
herein to obligations imposed upon or to be performed by
the Clearing Agency shall be deemed to be imposed upon
and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates and the
Trustee shall recognize the Holders of such Definitive
Certificates as Investor Certificateholders hereunder.
Section 6.13 Global Certificate; Exchange
Date.
(a) If specified in the related Supplement for
any Series or Class, the Investor Certificates for such
Series or Class will initially be issued in the form of a
single temporary global Certificate (the "Global
Certificate") in bearer form, without interest coupons,
in the denomination of the entire aggregate principal
amount of such Series or Class and substantially in the
form set forth in the exhibit with respect thereto
attached to the related Supplement. The Global
Certificate will be executed by the Transferor and
authenticated by the Trustee upon the same conditions, in
substantially the same manner and with the same effect as
the Definitive Certificates. The Global Certificate may
be exchanged as described below for Bearer or Registered
Certificates in definitive form (the "Definitive Euro-
Certificates").
(b) The Manager shall, upon its determination
of the date of completion of the distribution of the
Investor Certificates of such Series or Class, so advise
the Trustee, the Transferor, the Depositaries, and each
Foreign Clearing Agency forthwith. Without unnecessary
delay, but in any event not prior to the Exchange Date,
the Transferor will execute and deliver to the Trustee at
its London office or its designated agent outside the
United States definitive Bearer Certificates in an
aggregate principal amount equal to the entire aggregate
principal amount of such Series or Class. All Bearer
Certificates so issued and delivered will have Coupons
attached. The Global Certificate may be exchanged for an
equal aggregate principal amount of Definitive Euro-
Certificates only on or after the Exchange Date. An
Institutional Investor that is a U.S. Person may exchange
the portion of the Global Certificate beneficially owned
by it only for an equal aggregate principal amount of
Registered Certificates bearing the applicable legend set
forth in the form of Registered Certificates attached to
the related Supplement and having a minimum denomination
of $500,000, which may be in temporary form if the
Transferor so elects. The Transferor may elect to waive
the $500,000 minimum denomination requirement. Upon any
demand for exchange for Definitive Euro-Certificates in
accordance with this paragraph, the Transferor shall
cause the Trustee to authenticate and deliver the
Definitive Euro-Certificates to the Holder (x) outside
the United States, in the case of Bearer Certificates,
and (y) according to the instructions of the Holder, in
the case of Registered Certificates, but in either case
only upon presentation to the Trustee of a written
statement substantially in the form of Exhibit F-1 with
respect to the Global Certificate or portion thereof
being exchanged, signed by a Foreign Clearing Agency and
dated on the Exchange Date or a subsequent date, to the
effect that it has received in writing or by tested telex
a certification substantially in the form of (i) in the
case of beneficial ownership of the Global Certificate or
a portion thereof being exchanged by a Institutional
Investor that is a U.S. Person pursuant to the second
preceding sentence, the certificate in the form of
Exhibit F-2 signed by the Manager which sold the relevant
Certificates or (ii) in all other cases, the certificate
in the form of Exhibit F-3, the certificate referred to
in this clause (ii) being dated on the earlier of the
first actual payment of interest in respect of such
Certificates and the date of the delivery of such
Certificate in definitive form. Upon receipt of such
certification, the Trustee shall cause the Global
Certificate to be endorsed in accordance with paragraph
(d) below. Any exchange as provided in this Section
shall be made free of charge to the Holders and the
beneficial owners of the Global Certificate and to the
beneficial owners of the Definitive Euro-Certificates
issued in exchange, except that a person receiving
Definitive Euro-Certificates must bear the cost of
insurance, postage, transportation and the like in the
event that such person does not receive such Definitive
Euro-Certificates in person at the offices of a Foreign
Clearing Agency.
(c) The delivery to the Trustee by a Foreign
Clearing Agency of any written statement referred to
above may be relied upon by the Transferor and the
Trustee as conclusive evidence that a corresponding
certification or certifications has or have been
delivered to such Foreign Clearing Agency pursuant to the
terms of this Agreement.
(d) Upon any such exchange of all or a portion
of the Global Certificate for a Definitive Euro-
Certificate or Certificates, such Global Certificate
shall be endorsed by or on behalf of the Trustee to
reflect the reduction of its principal amount by an
amount equal to the aggregate principal amount of such
Definitive Euro-Certificate or Certificates. Until so
exchanged in full, such Global Certificate shall in all
respects be entitled to the same benefits under this
Agreement as Definitive Euro-Certificates authenticated
and delivered hereunder except that the beneficial owners
of such Global Certificate shall not be entitled to
receive payments of interest on the Certificates until
they have exchanged their beneficial interests in such
Global Certificate for Definitive Euro-Certificates.
Section 6.14 Meetings of Certificateholders.
(a) If at the time any Bearer Certificates are
issued and outstanding with respect to any Series or
Class to which any meeting described below relates, the
Servicer or the Trustee may at any time call a meeting of
Investor Certificateholders of any Series or Class or of
all Series, to be held at such time and at such place as
the Servicer or the Trustee, as the case may be, shall
determine, for the purpose of approving a modification of
or amendment to, or obtaining a waiver of any covenant or
condition set forth in, this Agreement, any Supplement or
the Investor Certificates or of taking any other action
permitted to be taken by Investor Certificateholders
hereunder or under any Supplement. Notice of any meeting
of Investor Certificateholders, setting forth the time
and place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be given in
accordance with Section 13.5, the first mailing and
publication to be not less than 20 nor more than 180 days
prior to the date fixed for the meeting. To be entitled
to vote at any meeting of Investor Certificateholders a
Person shall be (i) a Holder of one or more Investor
Certificates of the applicable Series or Class or (ii) a
person appointed by an instrument in writing as proxy by
the Holder of one or more such Investor Certificates.
The only persons who shall be entitled to be present or
to speak at any meeting of Investor Certificateholders
shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Transferor,
the Servicer and the Trustee and their respective
counsel.
(b) At a meeting of Investor
Certificateholders, persons entitled to vote Investor
Certificates evidencing a majority of the aggregate
unpaid principal amount of the applicable Series or Class
or all outstanding Series, as the case may be, shall
constitute a quorum. No business shall be transacted in
the absence of a quorum, unless a quorum is present when
the meeting is called to order. In the absence of a
quorum at any such meeting, the meeting may be adjourned
for a period of not less than 10 days; in the absence of
a quorum at any such meeting, such adjourned meeting may
be further adjourned for a period of not less than 10
days; at the reconvening of any meeting further adjourned
for lack of a quorum, the persons entitled to vote
Investor Certificates evidencing at least 25% of the
aggregate unpaid principal amount of the applicable
Series or Class or all outstanding Series, as the case
may be, shall constitute a quorum for the taking of any
action set forth in the notice of the original meeting.
Notice of the reconvening of any adjourned meeting shall
be given as provided above except that such notice must
be given not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice
of the reconvening of an adjourned meeting shall state
expressly the percentage of the aggregate principal
amount of the outstanding applicable Investor
Certificates which shall constitute a quorum.
(c) Any Investor Certificateholder who has
executed an instrument in writing appointing a person as
proxy shall be deemed to be present for the purposes of
determining a quorum and be deemed to have voted;
provided that such Investor Certificateholder shall be
considered as present or voting only with respect to the
matters covered by such instrument in writing. Subject
to the provisions of Section 13.1, any resolution passed
or decision taken at any meeting of Investor
Certificateholders duly held in accordance with this
Section shall be binding on all Investor
Certificateholders whether or not present or represented
at the meeting.
(d) The holding of Bearer Certificates shall be
proved by the production of such Bearer Certificates or
by a certificate, satisfactory to the Servicer, executed
by any bank, trust company or recognized securities
dealer, wherever situated, satisfactory to the Servicer.
Each such certificate shall be dated and shall state that
on the date thereof a Bearer Certificate bearing a
specified serial number was deposited with or exhibited
to such bank, trust company or recognized securities
dealer by the Person named in such certificate. Any such
certificate may be issued in respect of one or more
Bearer Certificates specified therein. The holding by
the Person named in any such certificate of any Bearer
Certificate specified therein shall be presumed to
continue for a period of one year from the date of such
certificate unless at the time of any determination of
such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be
produced, (ii) the Bearer Certificate specified in such
certificate shall be produced by some other Person or
(iii) the Bearer Certificate specified in such
certificate shall have ceased to be outstanding. The
appointment of any proxy shall be proved by having the
signature of the Person executing the proxy guaranteed by
any bank, trust company or recognized securities dealer
satisfactory to the Trustee.
(e) The Trustee shall appoint a temporary chair
of the meeting. A permanent chair and a permanent
secretary of the meeting shall be elected by vote of the
Holders of Investor Certificates evidencing a majority of
the aggregate unpaid principal amount of Investor
Certificates of the applicable Series or Class or all
outstanding Series, as the case may be, represented at
the meeting. No vote shall be cast or counted at any
meeting in respect of any Investor Certificate challenged
as not outstanding and ruled by the chair of the meeting
to be not outstanding. The chair of the meeting shall
have no right to vote except as an Investor
Certificateholder or proxy. Any meeting of Investor
Certificateholders duly called at which a quorum is
present may be adjourned from time to time, and the
meeting may be held as so adjourned without further
notice.
(f) The vote upon any resolution submitted to
any meeting of Investor Certificateholders shall be by
written ballot on which shall be subscribed the
signatures of Investor Certificateholders or proxies and
on which shall be inscribed the serial number or numbers
of the Investor Certificates held or represented by them.
The permanent chair of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified
written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of
each meeting of Investor Certificateholders shall be
prepared by the secretary of the meeting and there shall
be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of
the facts setting forth a copy of the notice of the
meeting and showing that said notice was published as
provided above. The record shall be signed and verified
by the permanent chair and secretary of the meeting and
one of the duplicates shall be delivered to the Servicer
and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots
voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein
stated.
Section 6.15 Uncertificated Classes.
Notwithstanding anything to the contrary contained in
this Article VI or in Article XII, unless otherwise
specified in any Supplement any provisions contained in
this Article VI and in Article XII relating to the
registration, form, execution, authentication, delivery,
presentation, cancellation and surrender of Certificates
shall not be applicable to any uncertificated
Certificates.
[END OF ARTICLE VI]
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
Section 7.1 Liability of the Transferor. The
Transferor shall be severally, and not jointly, liable
for all obligations, covenants, representations and
warranties of the Transferor arising under or related to
this Agreement or any Supplement. Except as provided in
the preceding sentence, the Transferor shall be liable
only to the extent of the obligations specifically
undertaken by it in its capacity as the Transferor.
Section 7.2 Merger or Consolidation of, or
Assumption of the Obligations of, the Transferor.
(a) The Transferor shall not dissolve,
liquidate, consolidate with or merge into any other
corporation or convey, transfer or sell its properties
and assets substantially as an entirety to any Person
unless:
(i) (x) the corporation formed by such
consolidation or into which the Transferor is merged
or the Person which acquires by conveyance, transfer
or sale the properties and assets of the Transferor
substantially as an entirety shall be, if the
Transferor is not the surviving entity, organized
and existing under the laws of the United States of
America or any State or the District of Columbia,
and shall be a savings association, a national
banking association, a bank or other entity which is
not eligible to be a debtor in a case under Title 11
of the United States Code or is a special purpose
corporation whose powers and activities are limited
to substantially the same degree as provided in the
certificate of incorporation of CCRFC and, if the
Transferor is not the surviving entity, shall
expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, the
performance of every covenant and obligation of the
Transferor hereunder; and (y) the Transferor or the
surviving entity, as the case may be, has delivered
to the Trustee (with a copy to each Rating Agency)
an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger,
conveyance, transfer or sale and such supplemental
agreement comply with this Section, that such
supplemental agreement is a valid and binding
obligation of such surviving entity enforceable
against such surviving entity in accordance with its
terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights generally from time to
time in effect or general principles of equity, and
that all conditions precedent herein provided for
relating to such transaction have been complied
with; and
(ii) the Rating Agency Condition shall have
been satisfied with respect to such consolidation,
merger, conveyance or transfer.
(b) Except as permitted by subsection 2.7(c),
the obligations, rights or any part thereof of the
Transferor hereunder shall not be assignable nor shall
any Person succeed to such obligations or rights of the
Transferor hereunder except (i) for conveyances, mergers,
consolidations, assumptions, sales or transfers in
accordance with the provisions of the foregoing paragraph
and (ii) for conveyances, mergers, consolidations,
assumptions, sales or transfers to other entities (1)
which the Transferor and the Servicer determine will not
result in an Adverse Effect, (2) which meet the
requirements of clause (ii) of the preceding paragraph
and (3) for which such purchaser, transferee, pledgee or
entity shall expressly assume, in an agreement
supplemental hereto, executed and delivered to the
Trustee in writing in form satisfactory to the Trustee,
the performance of every covenant and obligation of the
Transferor thereby conveyed.
Section 7.3 Limitations on Liability of the
Transferor. Subject to Section 7.1, neither the
Transferor nor any of the directors, officers, employees,
incorporators or agents of the Transferor acting in such
capacities shall be under any liability to the Trust, the
Trustee, the Certificateholders, any Series Enhancer or
any other Person for any action taken or for refraining
from the taking of any action in good faith in such
capacities pursuant to this Agreement, it being expressly
understood that such liability is expressly waived and
released as a condition of, and consideration for, the
execution of this Agreement and any Supplement and the
issuance of the Certificate; provided, however, that this
provision shall not protect the Transferor or any such
person 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. The Transferor and any director, officer,
employee or agent of the Transferor may rely in good
faith on any document of any kind prima facie properly
executed and submitted by any Person (other than the
Transferor) respecting any matters arising hereunder.
Section 7.4 Transferor Authorized to execute
Registration Statements and Reports on Behalf of the
Trust. The Trustee hereby authorizes the Transferor to
execute, on behalf of the Trust and file or cause to be
filed with the Securities and Exchange Commission any
registration statements prepared in connection with the
issuance of Investor Certificates and any periodic or
annual reports prepared in connection with the issuance
of Investor Certificates or the delivery of the monthly
servicer's certificates required by Section 3.4.
[END OF ARTICLE VII]
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.1 Liability of the Servicer. The
Servicer shall be liable under this Article only to the
extent of the obligations specifically undertaken by the
Servicer in its capacity as Servicer.
Section 8.2 Merger or Consolidation of, or
Assumption of the Obligations of, the Servicer. The
Servicer shall not consolidate with or merge into any
other corporation or convey, transfer or sell its
properties and assets substantially as an entirety to any
Person, unless:
(a) the corporation formed by such
consolidation or into which the Servicer is merged
or the Person which acquires by conveyance, transfer
or sale the properties and assets of the Servicer
substantially as an entirety shall be, if the
Servicer is not the surviving entity, a corporation
organized and existing under the laws of the United
States of America or any State or the District of
Columbia, and, if the Servicer is not the surviving
entity, such corporation shall expressly assume, by
an agreement supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to
the Trustee, the performance of every covenant and
obligation of the Servicer hereunder;
(b) the Servicer has delivered to the Trustee
an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger,
conveyance, transfer or sale comply with this
Section and that all conditions precedent herein
provided for relating to such transaction have been
complied with;
(c) the Servicer shall have given the
Rating Agencies notice of such consolidation,
merger or transfer or assets; and
(d) the corporation formed by such
consolidation or into which the Servicer is merged or the
Person which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an
entirety shall be an Eligible Servicer.
Section 8.3 Limitation on Liability of the
Servicer and Others. Except as provided in Section 8.4
and Section 11.5, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer
in its capacity as Servicer shall be under any liability
to the Trust, the Trustee, the Certificateholders, any
Series Enhancer or any other Person for any action taken
or for refraining from the taking of any action in good
faith in its capacity as Servicer pursuant to this
Agreement; provided, however, that this provision shall
not protect the Servicer or any such Person 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. The Servicer and
any director, officer, employee or agent of the Servicer
may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person
(other than the Servicer) respecting any matters arising
hereunder. The Servicer shall not be under any
obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties as Servicer
in accordance with this Agreement and which in its
reasonable judgment may involve it in any expense or
liability. The Servicer may, in its sole discretion,
undertake any such legal action which it may deem
necessary or desirable for the benefit of the
Certificateholders with respect to this Agreement and the
rights and duties of the parties hereto and the interests
of the Certificateholders hereunder.
Section 8.4 Servicer Indemnification of the
Trust and the Trustee. The Servicer shall indemnify and
hold harmless the Trust and the Trustee (including the
Trustee in its capacity as Transfer Agent and Registrar
or as Paying Agent) and its directors, officers,
employees and agents from and against any loss,
liability, expense, damage or injury suffered or
sustained by reason of (a) any acts or omissions of the
Servicer with respect to the Trust pursuant to this
Agreement or (b) the administration by the Trustee of the
Trust (in the case of clause (a) or (b), other than any
such loss, liability, expense, damage, or injury as may
arise from the negligence or wilful misconduct of the
Trustee), including any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any action,
proceeding or claim. Indemnification pursuant to this
Section shall not be payable from the Trust Assets. The
Servicer's obligations under this Section 8.4 shall
survive the termination of this Agreement or the Trust or
the earlier removal or resignation of the Trustee.
Section 8.5 Resignation of the Servicer. The
Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) 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 the Servicer could take to make
the performance of its duties hereunder permissible under
applicable law or (b) upon the assumption, by an
agreement supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, of the
obligations and duties of the Servicer hereunder by any
of its Affiliates (for purposes of this Section 8.5, [New
Bank] shall be an Affiliate of the Bank) or by any other
entity the appointment of which shall have satisfied the
Rating Agency Condition and, in either case, qualifies as
an Eligible Servicer. Any determination permitting the
resignation of the Servicer shall be evidenced (i) as to
clause (a) above, by an Opinion of Counsel to such effect
delivered to the Trustee and (ii) as to clause (b) above,
by an Officer's Certificate and an Opinion of Counsel
delivered to the Trustee (with a copy to each Rating
Agency) each stating that such assignment by the Bank and
assumption by such Affiliate and such supplemental
agreement comply with this Section, that such
supplemental agreement is a valid and binding obligation
of such Affiliate enforceable against it in accordance
with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights generally from time to time
in effect or general principles of equity, and that all
conditions precedent herein relating to such transaction
have been complied with. No resignation shall become
effective until the Trustee or a Successor Servicer shall
have assumed the responsibilities and obligations of the
Servicer in accordance with Section 10.2 hereof. If
within 120 days of the date of the determination that the
Servicer may no longer act as Servicer under clause (a)
above the Trustee is unable to appoint a Successor
Servicer, the Trustee shall serve as Successor Servicer.
Notwithstanding the foregoing, the Trustee shall, if it
is legally unable so to act, petition a court of
competent jurisdiction to appoint any established
institution qualifying as an Eligible Servicer as the
Successor Servicer hereunder. The Trustee shall give
prompt notice to each Rating Agency and each Series
Enhancer upon the appointment of a Successor Servicer.
Section 8.6 Access to Certain Documentation
and Information Regarding the Receivables. The Servicer
shall provide to the Trustee access to the documentation
regarding the Accounts and the Receivables in such cases
where the Trustee is required in connection with the
enforcement of the rights of Certificateholders or by
applicable statutes or regulations to review such
documentation, such access being afforded without charge
but only (a) upon reasonable request, (b) during normal
business hours, (c) subject to the Servicer's normal
security and confidentiality procedures and (d) at
reasonably accessible offices in the continental United
States designated by the Servicer. Nothing in this
Section shall derogate from the obligation of the
Transferor, the Trustee and the Servicer to observe any
applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to
provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this
Section.
Section 8.7 Delegation of Duties. It is
understood and agreed by the parties hereto that the
Servicer may delegate certain of its duties hereunder to
First Data Resources, Inc. ("FDR") and certain of its
duties to First Annapolis Marketing Information Services,
Inc. ("FAMIS"). In the ordinary course of business, the
Servicer may at any time delegate its duties hereunder
with respect to the Accounts and the Receivables to any
Person that agrees to conduct such duties in accordance
with the Credit Card Guidelines and this Agreement. No
such delegation shall relieve the Servicer of its
liability and responsibility with respect to such duties,
or constitute a resignation within the meaning of Section
8.5.
Section 8.8 Examination of Records. The
Transferor and the Servicer shall indicate generally in
their computer files or other records that the
Receivables arising in the Accounts have been conveyed to
the Trustee, on behalf of the Trust, pursuant to this
Agreement for the benefit of the Certificateholders. The
Transferor and the Servicer shall, prior to the sale or
transfer to a third party of any receivable held in its
custody, examine its computer records and other records
to determine that such receivable is not, and does not
include, a Receivable.
[END OF ARTICLE VIII]
ARTICLE IX
INSOLVENCY EVENTS
Section 9.1 Rights upon the Occurrence of an
Insolvency Event.
(a) If CCRFC shall consent or fail to object to
the appointment of a bankruptcy trustee or conservator,
receiver or liquidator in any bankruptcy proceeding or
other insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or
relating to CCRFC of or relating to all or substantially
all of CCRFC's property, or the commencement of an action
seeking a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises
for the appointment of a bankruptcy trustee or
conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-
up, insolvency, bankruptcy, reorganization,
conservatorship, receivership or liquidation of such
entity's affairs, or notwithstanding an objection by
CCRFC any such action shall have remained undischarged or
unstayed for a period of 60 days; or CCRFC shall admit in
writing its inability to pay its debts generally as they
become due, file, or consent or fail to object (or object
without dismissal of any such filing within 60 days of
such filing) to the filing of, a petition to take
advantage of any applicable bankruptcy, insolvency or
reorganization, receivership or conservatorship statute,
make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations (any such
act or occurrence with respect to any Person being an
"Insolvency Event"), the Transferor shall on the day any
such Insolvency Event occurs (the "Appointment Date"),
immediately cease to transfer Principal Receivables to
the Trust and shall promptly give notice to the Trustee
thereof. Notwithstanding any cessation of the transfer
to the Trust of additional Principal Receivables,
Principal Receivables transferred to the Trust prior to
the occurrence of such Insolvency Event, Collections in
respect of such Principal Receivables and Finance Charge
Receivables (whenever created) accrued in respect of such
Principal Receivables shall continue to be a part of the
Trust Assets. Upon the Appointment Date, this Agreement
and the Trust shall terminate, subject to the
liquidation, winding-up, insolvency, bankruptcy,
reorganization and dissolution procedures described
below. Within 15 days of the Appointment Date, the
Trustee shall (i) publish a notice in an Authorized
Newspaper that an Insolvency Event has occurred, that the
Trust has terminated and that the Trustee intends to
sell, dispose of or otherwise liquidate the Receivables
on commercially reasonable terms and in a commercially
reasonable manner and (ii) give notice to
Certificateholders describing the provisions of this
Section and requesting instructions from such Holders.
Unless the Trustee shall have received instructions
within 90 days from the date notice pursuant to clause
(i) above is first published from (x) Holders of Investor
Certificates evidencing more than 50% of the aggregate
unpaid principal amount of each Series or, with respect
to any Series with two or more Classes, of each Class,
(y) the Transferor, and any Holder of a Supplemental
Certificate and any permitted assignee or successor under
Section 7.2, and (z) any other Person specified in any
related Supplement to the effect that such Persons
disapprove of the liquidation of the Receivables and wish
to reconstitute the Trust pursuant to the terms of this
Agreement (as amended in connection with such
reconstitution), the Trustee shall promptly sell, dispose
of or otherwise liquidate the Receivables in a
commercially reasonable manner and on commercially
reasonable terms, which may include the solicitation of
competitive bids. The Trustee may obtain a prior
determination from any such conservator, receiver or
liquidator of the Transferor that the terms and manner of
any proposed sale, disposition or liquidation are
commercially reasonable. The provisions of this Section
9.1 and any provisions in a Supplement regarding an
Insolvency Event shall not be deemed to be mutually
exclusive.
(b) The proceeds from the sale, disposition or
liquidation of the Receivables and any Participation
Interests pursuant to paragraph (a) ("Insolvency
Proceeds") shall be immediately deposited in the
Collection Account. The Trustee shall determine
conclusively the amount of the Insolvency Proceeds which
are deemed to be Finance Charge Receivables and Principal
Receivables, allocating Insolvency Proceeds to Finance
Charge Receivables and Principal Receivables in the same
proportion as the amount of Finance Charge Receivables
and Principal Receivables bear to one another on the
prior Determination Date. The Insolvency Proceeds shall
be allocated and distributed to Investor
Certificateholders in accordance with the terms of each
Supplement.
[END OF ARTICLE IX]
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of
the following events (a "Servicer Default") shall occur
and be continuing:
(a) any failure by the Servicer to make any
payment, transfer or deposit or to give instructions or
to give notice to the Trustee to make such payment,
transfer or deposit on or before the date occurring five
Business Days after the date such payment, transfer or
deposit or such instruction or notice is required to be
made or given, as the case may be, under the terms of
this Agreement or any Supplement;
(b) failure on the part of the Servicer duly to
observe or perform in any material respect any other
covenants or agreements of the Servicer set forth in this
Agreement or any Supplement which has an Adverse Effect
and which continues unremedied for a period of 60 days
after the date on which notice of such failure, requiring
the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the
Trustee by Holders of Investor Certificates evidencing
not less than 10% of the aggregate unpaid principal
amount of all Investor Certificates (or, with respect to
any such failure that does not relate to all Series, 10%
of the aggregate unpaid principal amount of all Series to
which such failure relates); or the Servicer shall assign
or delegate its duties under this Agreement, except as
permitted by Sections 3.1(a), 8.2, 8.5 or 8.7;
(c) any representation, warranty or
certification made by the Servicer in this Agreement or
any Supplement or in any certificate delivered pursuant
to this Agreement or any Supplement shall prove to have
been incorrect when made, which has an Adverse Effect on
the rights of the Investor Certificateholders of any
Series (which determination shall be made without regard
to whether funds are then available pursuant to any
Series Enhancement) and which Adverse Effect continues
for a period of 60 days after the date on which notice
thereof, requiring the same to be remedied, shall have
been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor
Certificates evidencing not less than 10% of the
aggregate unpaid principal amount of all Investor
Certificates (or, with respect to any such
representation, warranty or certification that does not
relate to all Series, 10% of the aggregate unpaid
principal amount of all Series to which such
representation, warranty or certification relates); or
(d) the Servicer shall consent to the
appointment of a bankruptcy trustee or conservator or
receiver or liquidator in any bankruptcy proceeding or
other insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or
substantially all 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
bankruptcy trustee or a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings, or the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or the
Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to
take advantage of any applicable bankruptcy, insolvency
or reorganization statute, make any assignment for the
benefit of its creditors or voluntarily suspend payment
of its obligations;
then, in the event of any Servicer Default, so long as
the Servicer Default shall not have been remedied, either
the Trustee, or the Holders of Investor Certificates
evidencing more than 50% of the aggregate unpaid
principal amount of all Investor Certificates, by notice
then given to the Servicer (and to the Trustee if given
by the Investor Certificateholders) (a "Termination
Notice"), may terminate all but not less than all the
rights and obligations of the Servicer as Servicer under
this Agreement; provided, however, if within 60 days of
receipt of a Termination Notice the Trustee does not
receive any bids from Eligible Servicers in accordance
with subsection 10.2(c) to act as a Successor Servicer
and receives an Officer's Certificate of the Transferor
to the effect that the Servicer cannot in good faith cure
the Servicer Default which gave rise to the Termination
Notice, the Trustee shall grant a right of first refusal
to the Transferor which would permit the Transferor at
its option to purchase the Certificateholders' Interest
on the Distribution Date in the next calendar month.
The purchase price for the Certificateholders'
Interest shall be equal to the sum of the amounts
specified therefor with respect to each outstanding
Series in the related Supplement. The Transferor shall
notify the Trustee prior to the Record Date for the
Distribution Date of the purchase if it is exercising
such right of first refusal. If the Transferor exercises
such right of first refusal, the Transferor shall deposit
the purchase price into the Collection Account not later
than 1:00 P.M., New York City time, on such Distribution
Date in immediately available funds. The purchase price
shall be allocated and distributed to Investor
Certificateholders in accordance with the terms of each
Supplement.
After receipt by the Servicer of a Termination
Notice, and on the date that a Successor Servicer is
appointed by the Trustee pursuant to Section 10.2, all
authority and power of the Servicer under this Agreement
shall pass to and be vested in the Successor Servicer (a
"Service Transfer"); and, without limitation, the Trustee
is hereby authorized and empowered (upon the failure of
the Servicer to cooperate) to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise,
all documents and other instruments upon the failure of
the Servicer to execute or deliver such documents or
instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of
such Service Transfer. The Servicer agrees to cooperate
with the Trustee and such Successor Servicer in effecting
the termination of the responsibilities and rights of the
Servicer to conduct servicing hereunder, including the
transfer to such Successor Servicer of all authority of
the 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 the Servicer for deposit, or which have been deposited
by the Servicer, in the Collection Account, or which
shall thereafter be received with respect to the
Receivables, and in assisting the Successor Servicer. The
Servicer shall within 20 Business Days transfer its
electronic records relating to the Receivables to the
Successor Servicer in such electronic form as the
Successor Servicer may reasonably request and shall
promptly transfer to the Successor Servicer all other
records, correspondence and documents necessary for the
continued servicing of the Receivables in the manner and
at such times as the Successor Servicer shall reasonably
request. To the extent that compliance with this Section
shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer deems
to be confidential, the Successor Servicer shall be
required to enter into such customary licensing and
confidentiality agreements as the Servicer shall deem
reasonably necessary to protect its interests.
Notwithstanding the foregoing, a delay in or
failure of performance referred to in paragraph (a) above
for a period of 10 Business Days after the applicable
grace period or under paragraph (b) or (c) above for a
period of 60 Business Days after the applicable grace
period, shall not constitute a Servicer Default if such
delay or failure could not be prevented by the exercise
of reasonable diligence by the Servicer and such delay or
failure was caused by an act of God or the public enemy,
acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods or similar causes.
The preceding sentence shall not relieve the Servicer
from using all commercially reasonable efforts to perform
its obligations in a timely manner in accordance with the
terms of this Agreement and the Servicer shall provide
the Trustee, the Transferor and any Series Enhancer with
an Officer's Certificate giving prompt notice of such
failure or delay by it, together with a description of
its efforts so to perform its obligations.
Section 10.2 Trustee To Act; Appointment of
Successor.
(a) On and after the receipt by the Servicer of
a Termination Notice pursuant to Section 10.1, the
Servicer shall continue to perform all servicing
functions under this Agreement until the date specified
in the Termination Notice or otherwise specified by the
Trustee or until a date mutually agreed upon by the
Servicer and Trustee. The Trustee shall as promptly as
possible after the giving of a Termination Notice appoint
an Eligible Servicer as a successor servicer (the
"Successor Servicer"), and such Successor Servicer shall
accept its appointment by a written assumption in a form
acceptable to the Trustee. In the event that a Successor
Servicer has not been appointed or has not accepted its
appointment at the time when the Servicer ceases to act
as Servicer, the Trustee without further action shall
automatically be appointed the Successor Servicer. The
Trustee may delegate any of its servicing obligations to
an Affiliate or agent in accordance with Sections 3.1(b)
and 8.7. Notwithstanding the foregoing, the Trustee
shall, if it is legally unable so to act, petition a
court of competent jurisdiction to appoint any
established institution qualifying as an Eligible
Servicer as the Successor Servicer hereunder. The
Trustee shall give prompt notice to each Rating Agency
and each Series Enhancer upon the appointment of a
Successor Servicer.
(b) Upon its appointment, the Successor
Servicer shall be the successor in all respects to the
Servicer with respect to servicing functions under this
Agreement and shall be subject to all the
responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the
Servicer shall be deemed to refer to the Successor
Servicer.
(c) In connection with any Termination Notice,
the Trustee will review any bids which it obtains from
Eligible Servicers and shall be permitted to appoint any
Eligible Servicer submitting such a bid as a Successor
Servicer for servicing compensation not in excess of the
aggregate Servicing Fees for all Series plus the sum of
the amounts with respect to each Series and with respect
to each Distribution Date equal to any Collections of
Finance Charge Receivables allocable to Investor
Certificateholders of such Series which are payable to
the Holders of the Transferor Certificates after payment
of all amounts owing to the Investor Certificateholders
of such Series with respect to such Distribution Date or
required to be deposited in the applicable Series
Accounts with respect to such Distribution Date and any
amounts required to be paid to any Series Enhancer for
such Series with respect to such Distribution Date
pursuant to the terms of any Enhancement Agreement;
provided, however, that the Holders of the Transferor
Certificates shall be responsible for payment of their
portion of such aggregate Servicing Fees and all other
such amounts in excess of such aggregate Servicing Fees.
Each holder of any of the Transferor's Certificates
agrees that, if the Bank (or any Successor Servicer) is
terminated as Servicer hereunder, the portion of the
Collections in respect of Finance Charge Receivables that
the Transferor is entitled to receive pursuant to this
Agreement or any Supplement shall be reduced by an amount
sufficient to pay the Transferor's share of the
compensation of the Successor Servicer.
(d) All authority and power granted to the
Successor Servicer under this Agreement shall
automatically cease and terminate upon termination of the
Trust pursuant to Section 12.1, and shall pass to and be
vested in the Transferor and, without limitation, the
Transferor is hereby authorized and empowered to execute
and deliver, on behalf of the Successor Servicer, as
attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of
such transfer of servicing rights. The Successor
Servicer agrees to cooperate with the Transferor in
effecting the termination of the responsibilities and
rights of the Successor Servicer to conduct servicing of
the Receivables. The Successor Servicer shall transfer
its electronic records relating to the Receivables to the
Bank or its designee in such electronic form as it may
reasonably request and shall transfer all other records,
correspondence and documents to it in the manner and at
such times as it shall reasonably request. To the extent
that compliance with this Section shall require the
Successor Servicer to disclose to the Bank information of
any kind which the Successor Servicer deems to be
confidential, the Bank 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
Certificateholders. Within five Business Days after the
Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Trustee, each
Rating Agency and each Series Enhancer and the Trustee
shall give notice to the Investor Certificateholders.
Upon any termination or appointment of a Successor
Servicer pursuant to this Article, the Trustee shall give
prompt notice thereof to the Investor Certificateholders.
[END OF ARTICLE X]
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of a
Servicer Default of which a Responsible Officer of the
Trustee has actual knowledge and after the curing of all
Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are
specifically set forth in this Agreement and no implied
duties or covenants by the Trustee shall be read into
this Agreement. If a Servicer Default to the actual
knowledge of a Responsible Officer of the Trustee has
occurred (which has not been cured or waived) the Trustee
shall exercise such of the rights and powers vested in it
by this Agreement and use the same degree of care and
skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) The Trustee may conclusively rely on and
shall be fully protected in acting on, or in refraining
from acting in accord with, any resolution, certificate,
statement, instrument, Officer's Certificate, opinion,
report, notice, request, consent, order, appraisal,
approval, bond or other paper or document furnished to
the Trustee pursuant to this Agreement and 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. The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents,
orders or other instruments furnished to the Trustee
which are specifically required to be furnished pursuant
to any provision of this Agreement, shall examine them to
determine whether they substantially conform to the
requirements of this Agreement. The Trustee shall give
prompt written notice to the Transferor and the Servicer
of any material lack of conformity of any such instrument
to the applicable requirements of this Agreement
discovered by the Trustee which would entitle a specified
percentage of Investor Certificateholders to take any
action pursuant to this Agreement. If within 5 Business
Days the Transferor or the Servicer shall not have cured
such material lack of conformity, the Trustee shall
provide notice of such material lack of conformity to the
Investor Certificateholders.
(c) Subject to paragraph (a), no provision of
this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct;
provided, however, that:
(i) the Trustee shall not be liable for an
error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be 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 more than 50% of the aggregate unpaid
principal amount of all Investor Certificates (or,
with respect to any such action that does not relate
to all Series, 50% of the aggregate unpaid principal
amount of the Investor Certificates of all Series to
which such action relates) relating to the time,
method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under
this Agreement; and
(iii) the Trustee shall not be charged with
knowledge of any failure by the Servicer to comply
with the obligations of the Servicer referred to in
subsection 10.1 (a) or (b) nor with knowledge of a
Pay Out Event or Reinvestment Event unless a
Responsible Officer of the Trustee obtains actual
knowledge of such failure or event or the Trustee
receives written notice of such failure or event
from the Servicer or any Holders of Investor
Certificates evidencing not less than 10% of the
aggregate unpaid principal amount of all Investor
Certificates (or, with respect to any such failure
that does not relate to all Series, 10% of the
aggregate unpaid principal amount of the Investors
Certificates of all Series to which such failure
relates).
(d) The Trustee shall not be required to expend
or risk its own funds or otherwise incur financial
liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it,
and none of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any
obligations of the Servicer under this Agreement except
during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties,
powers and privileges of, the Servicer in accordance with
the terms of this Agreement.
(e) Except for actions expressly authorized by
this Agreement, the Trustee shall take no actions
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 expressly provided in this
Agreement, the Trustee shall have no power to vary the
corpus of the Trust including by (i) accepting any
substitute obligation for a Receivable initially assigned
to the Trust under Section 2.1 or 2.9, (ii) adding any
other investment, obligation or security to the Trust or
(iii) withdrawing from the Trust any Receivables.
(g) In the event that 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, the Trustee shall be obligated promptly
upon its knowledge thereof to perform such obligation,
duty or agreement in the manner so required.
Section 11.2 Certain Matters Affecting the
Trustee. Except as otherwise provided in Section 11.1:
(a) the Trustee may consult with counsel and
any written advice of counsel or an Opinion of Counsel
shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by
it hereunder in good faith and in accordance with such
written advice of counsel or an Opinion of Counsel;
(b) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the
request, order or direction of any of the
Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be
incurred therein or thereby; provided, however, that
nothing contained herein shall relieve the Trustee of the
obligations, upon the occurrence of a Servicer Default
(which has not been cured or waived) 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 their
exercise as a prudent person would exercise or use under
the circumstances in the conduct of his or her own
affairs;
(c) the Trustee shall not be 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;
(d) the Trustee shall not be bound to make any
investigation into the facts of matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal,
approval, bond or other paper or document believed by it
to be genuine, unless requested in writing so to do by
Holders of Investor Certificates evidencing more than 25%
of the aggregate unpaid principal amount of all Investor
Certificates (or, with respect to any such matters that
do not relate to all Series, 25% of the aggregate unpaid
principal amount of the Investor Certificates of all
Series to which such matters relate); provided, however,
that if the payment within a reasonable time to the
Trustee of the costs, expenses, or liabilities likely to
be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms
of this Agreement, the Trustee may require reasonable
indemnity against such cost, expense, or liability as a
condition to so proceed;
(e) the Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys or a
custodian, nominee and the Trustee shall not be
responsible for any misconduct or negligence on the part
of any such agent, attorney, custodian or nominee
appointed with due care by it hereunder;
(f) except as may be required by subsection
11.1(a), the Trustee shall not be required to make any
initial or periodic examination of any documents or
records related to the Receivables or the Accounts for
the purpose of establishing the presence or absence of
defects, the compliance by the Transferor with its
representations and warranties or for any other purpose;
(g) whether or not therein expressly so
provided, every provision of this Agreement relating to
the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the
provisions of this Section 11.2;
(h) the Trustee shall have no liability with
respect to the acts or omissions of the Servicer (except
and to the extent the Servicer is the Trustee),
including, acts or omissions in connection with the
servicing, management or administration of Receivables;
calculations made by the Servicer whether or not reported
to the Trustee; and deposits into or withdrawals from any
accounts or funds established pursuant to the terms of
this Agreement; and
(i) in the event that the Trustee is also
acting as Paying Agent or Transfer Agent and Registrar
hereunder, the rights and protections afforded to the
Trustee pursuant to this Article XI shall also be
afforded to such Paying Agent, Transfer Agent and
Registrar.
Section 11.3 Trustee Not Liable for Recitals in
Certificates. The 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, the Trustee makes no representations as
to the validity or sufficiency of this Agreement or any
Supplement or of the Certificates (other than the
certificate of authentication on the Certificates) or of
any Receivable or related document or as to the
perfection or priority of any security interest therein
or as to the efficacy of the Trust. The Trustee shall
not be accountable for the use or application by the
Transferor of any of the Certificates or of the proceeds
of such Certificates, or for the use or application of
any funds paid to the Transferor in respect of the
Receivables or deposited in or withdrawn from the
Collection Account, any Series Accounts or any other
accounts hereafter established to effectuate the
transactions contemplated by this Agreement and in
accordance with the terms of this Agreement.
Section 11.4 Trustee May Own Certificates.
Subject to any restrictions that may otherwise be imposed
by Section 406 of ERISA or Section 4975(e) of the Code,
the Trustee in its individual or any other capacity may
become the owner or pledgee of Investor Certificates with
the same rights as it would have if it were not the
Trustee.
Section 11.5 The Servicer To Pay Trustee's
Fees and Expenses. The Servicer covenants and agrees to
pay to the Trustee from time to time, and the Trustee
shall be entitled to receive, reasonable compensation
(which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express
trust) for all services rendered by it in the execution
of the trust hereby created and in the exercise and
performance of any of the powers and duties hereunder of
the Trustee, and the Servicer will pay or reimburse the
Trustee upon its request for all reasonable expenses
(including, without limitation, expenses incurred in
connection with notices or other communications to
Certificateholders), disbursements and advances incurred
or made by the Trustee in accordance with any of the
provisions of this Agreement or any Enhancement Agreement
(including the reasonable fees and expenses of its
agents, any co-trustee and counsel) except any such
expense, disbursement or advance as may arise from its
negligence or bad faith and except as provided in the
following sentence. If the Trustee is appointed
Successor Servicer pursuant to Section 10.2, the
provisions of this Section shall not apply to expenses,
disbursements and advances made or incurred by the
Trustee in its capacity as Successor Servicer, which
shall be paid out of the Servicing Fee. The Servicer's
covenant to pay the expenses, disbursements and advances
provided for in this Section shall survive the
termination of this Agreement or the earlier resignation
or removal of the Trustee.
Section 11.6 Eligibility Requirements for
Trustee. The Trustee hereunder shall at all times be a
corporation organized and doing business under the laws
of the United States or any state thereof authorized
under such laws to exercise corporate trust powers, have
a net worth of at least $50,000,000, be subject to
supervision or examination by Federal or state authority
and maintain any credit or deposit rating required by any
Rating Agency (which shall be Baa3, in the case of
Moody's unless otherwise notified, and BBB- in the case
of Standard & Poor's unless otherwise notified) or any
higher credit or deposit rating required in connection
with the issuance of a particular Series. 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, the combined capital and
surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most
recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, the 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) The Trustee may at any time resign and be
discharged from the trust hereby created by giving
written notice thereof to the Transferor and the
Servicer. Upon receiving such notice of resignation, the
Transferor 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
appointment 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.
(b) If at any time the Trustee shall cease to
be eligible in accordance with the provisions of Section
11.6 and shall fail to resign after request therefor by
the Servicer, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or
insolvent, or if a receiver of the Trustee or of its
property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Servicer may remove
the Trustee and promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed
and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee
and appointment of successor trustee pursuant to any of
the provisions of this Section shall not become effective
until acceptance of appointment by the successor trustee
as provided in Section 11.8.
(d) No Trustee under this Agreement shall be
personally liable for any action or omission of any
successor trustee.
Section 11.8 Successor Trustee.
(a) Any successor trustee appointed as provided
in Section 11.7 shall execute, acknowledge and deliver to
the Transferor, to the Servicer 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 like effect as if originally named as
Trustee herein. The predecessor Trustee shall deliver,
at the expense of the Servicer, to the successor trustee
all documents or copies thereof and statements held by it
hereunder; and the Transferor and the predecessor Trustee
shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and
certainly vesting and confirming in the successor trustee
all such rights, powers, duties and obligations.
(b) No successor trustee shall accept
appointment as provided in this Section unless at the
time of such acceptance such successor trustee shall be
eligible under the provisions of Section 11.6.
(c) Notwithstanding any other provisions
herein, the appointment of a successor trustee shall not
be effective unless the Rating Agency Condition shall
have been satisfied.
(d) Upon acceptance of appointment by a
successor trustee as provided in this Section, such
successor trustee shall provide notice of such succession
hereunder to all Certificateholders and the Servicer
shall provide such notice to each Rating Agency and each
Series Enhancer.
Section 11.9 Merger or Consolidation of
Trustee. Any Person into which the Trustee may be merged
or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or
any Person succeeding to the corporate trust business of
the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible
under the provisions of Section 11.6, 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 Requirements of Law of any jurisdiction in which any
part of the Trust may at the time be located, the 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 Certificateholders, such title to
the Trust, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties,
obligations, rights and trusts as the Trustee may
consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the
terms of eligibility as a successor trustee under Section
11.6 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall
be required under Section 11.8.
(b) Every separate trustee and co-trustee
shall, to the extent permitted by law, be appointed and
act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be
conferred or imposed upon and exercised or performed
by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such
act) except to the extent that under any law of any
jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as
Successor Servicer) the Trustee shall be incompetent
or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations
(including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction
of the Trustee;
(ii) no trustee hereunder shall be liable by
reason of any act or omission of any other trustee
hereunder; and
(iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-
trustee.
(c) Any notice, request or other writing given
to the Trustee shall be deemed to have been given to each
of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee
shall refer to this Agreement and the conditions of this
Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of
appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all
the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the
Servicer.
(d) Any separate trustee or co-trustee may at
any time constitute the Trustee, 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 of 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 its
estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or
successor trustee.
Section 11.11 Tax Returns. In the event the
Trust shall be required to file tax returns, the Servicer
shall prepare or shall cause to be prepared such tax
returns and shall provide such tax returns to the Trustee
for signature at least five days before such tax returns
are due to be filed. The Servicer, in accordance with
the terms of each Supplement, shall also prepare or shall
cause to be prepared all tax information required by law
to be distributed to Investor Certificateholders and
shall deliver such information to the Trustee at least
five days prior to the date it is required by law to be
distributed to Investor Certificateholders. The Trustee,
upon request, will furnish the Servicer with all such
information known to the Trustee as may be reasonably
required in connection with the preparation of all tax
returns of the Trust, and shall, upon request, execute
such returns. In no event shall the Trustee be liable
for any liabilities, costs or expenses of the Trust or
any Certificateholder arising under any tax law,
including without limitation, federal, state or local
income or excise taxes or any other tax imposed on or
measured by income (or any interest or penalty with
respect thereto 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 the Certificates may
be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in
its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable
benefit of the Certificateholders in respect of which
such judgment has been obtained.
Section 11.13 Suits for Enforcement.
(a) If a Servicer Default shall occur and be
continuing, the Trustee, in its discretion may, subject
to the provisions of Sections 11.1 and 11.14, proceed to
protect and enforce its rights and the rights of the
Certificateholders under this Agreement by 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 the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of the rights of the
Trustee or the Certificateholders.
(b) Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Certificateholder any
plan of reorganization, arrangement, adjustment or
composition affecting the Investor Certificates or the
rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Certificateholder
in any such proceeding.
Section 11.14 Rights of Certificateholders To
Direct Trustee. Except as otherwise provided in the
applicable Supplement, holders of Investor Certificates
evidencing more than 50% of the aggregate unpaid
principal amount of all Investor Certificates (or, with
respect to any remedy, trust or power that does not
relate to all Series, 50% of the aggregate unpaid
principal amount of the Investor Certificates of all
Series to which such remedy, trust or power relates)
shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or
power conferred on the Trustee; provided, however, that,
subject to Section 11.1, the Trustee shall have the right
to decline to follow any such direction if the Trustee
after being advised by counsel determines that the action
so directed may not lawfully be taken, or if a
Responsible Officer or Officers of the Trustee in good
faith shall determine that the proceedings so directed
would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Investor
Certificateholders not parties to such direction; and
provided further, that nothing in this Agreement shall
impair the right of the Trustee to take any action deemed
proper by the Trustee and which is not inconsistent with
such direction of the Investor Certificateholders.
Section 11.15 Representations and Warranties
of Trustee. The Trustee represents and warrants that:
(i) the Trustee is a banking corporation
organized, existing and in good standing under the
laws of State of New York;
(ii) the Trustee has full power, authority and
right to execute, deliver and perform this Agreement
and each Supplement, and has taken all necessary
action to authorize the execution, delivery and
performance by it of this Agreement and each
Supplement;
(iii) this Agreement and each Supplement has
been duly executed and delivered by the Trustee;
(iv) the Trustee meets the eligibility
requirements set forth in Section 11.6; and
(v) the Trustee will not use any office, place
of business, agents or employees of the Trustee in the
State of Florida to act for, or on behalf of, the Trust
or the Trustee (in its capacity as Trustee of the Trust),
except to the extent that the Trustee first provides an
opinion (at the sole expense of the Transferor) of
counsel satisfactory to the Servicer stating that any
such activities proposed to be carried on in Florida will
not cause the Trust to be subject to any Florida income
or franchise tax.
Section 11.16 Maintenance of Office or Agency.
The Trustee will maintain at its expense an office or
agency (the "Corporate Trust Office") where notices and
demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served in the
State of New York. The Trustee maintains its Corporate
Trust Office at 101 Barclay Street 12E, New York, NY
10286, as such office and will give prompt notice to the
Servicer and to Investor Certificateholders of any change
in the location of the Certificate Register or any such
office or agency.
[END OF ARTICLE XI]
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust. The Trust
and the respective obligations and responsibilities of
the Transferor, the Servicer and the Trustee created
hereby (other than the obligation of the Trustee to make
payments to Investor Certificateholders as hereinafter
set forth) shall terminate, except with respect to the
duties described in Section 8.4 and subsection 12.2(b),
upon the earlier of (i) August 1, 2018, (ii) at the
option of the Transferor, the day following the
Distribution Date on which the Invested Amount for each
Series is zero and (iii) the time provided in Section
9.1.
Section 12.2 Final Distribution.
(a) The Servicer shall give the Trustee at
least 30 days' prior notice of the Distribution Date on
which the Investor Certificateholders of any Series or
Class may surrender their Investor Certificates for
payment of the final distribution on and cancellation of
such Investor Certificates (or, in the event of a final
distribution resulting from the application of Section
2.6, 9.1 or 10.1, notice of such Distribution Date
promptly after the Servicer has determined that a final
distribution will occur, if such determination is made
less than 30 days prior to such Distribution Date). Such
notice shall be accompanied by an Officer's Certificate
setting forth the information specified in Section 3.5
covering the period during the then-current calendar year
through the date of such notice. Not later than the
fifth day of the month in which the final distribution in
respect of such Series or Class is payable to Investor
Certificateholders, the Trustee shall provide notice to
Investor Certificateholders of such Series or Class
specifying (i) the date upon which final payment of such
Series or Class will be made upon presentation and
surrender of Investor Certificates of such Series or
Class at the office or offices therein designated, (ii)
the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such payment date is
not applicable, payments being made only upon
presentation and surrender of such Investor Certificates
at the office or offices therein specified (which, in the
case of Bearer Certificates, shall be outside the United
States). The Trustee shall give such notice to the
Transfer Agent and Registrar and the Paying Agent at the
time such notice is given to Investor Certificateholders.
(b) Notwithstanding a final distribution to the
Investor Certificateholders of any Series or Class (or
the termination of the Trust), except as otherwise
provided in this paragraph, all funds then on deposit in
the Collection Account and any Series Account allocated
to such Investor Certificateholders shall continue to be
held in trust for the benefit of such Investor
Certificateholders and the Paying Agent or the Trustee
shall pay such funds to such Investor Certificateholders
upon surrender of their Investor Certificates, if
certificated (and any excess shall be paid in accordance
with the terms of any Enhancement Agreement). In the
event that all such Investor Certificateholders shall not
surrender their Investor Certificates for cancellation
within six months after the date specified in the notice
from the Trustee described in paragraph (a), the Trustee
shall give a second notice to the remaining such Investor
Certificateholders to surrender their Investor
Certificates for cancellation and receive the final
distribution with respect thereto (which surrender and
payment, in the case of Bearer Certificates, shall be
outside the United States). If within one year after the
second notice all such Investor Certificates shall not
have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining such Investor
Certificateholders concerning surrender of their Investor
Certificates, and the cost thereof shall be paid out of
the funds in the Collection Account or any Series Account
held for the benefit of such Investor Certificateholders.
The Trustee and the Paying Agent shall pay to the
Transferor any monies held by them for the payment of
principal or interest that remains unclaimed for two
years. After payment to the Transferor, Investor
Certificateholders entitled to the money must look to the
Transferor for payment as general creditors unless an
applicable abandoned property law designates another
Person.
(c) In the event that the Invested Amount with
respect to any Series is greater than zero on its Series
Termination Date (after giving effect to deposits and
distributions otherwise to be made on such Series
Termination Date) the Trustee will sell or cause to be
sold on such Series Termination Date an amount of
Principal Receivables (or interests therein) equal to
100% of the Invested Amount with respect to such Series
on such Series Termination Date plus related Finance
Charge Receivables (after giving effect to such deposits
and distributions); provided, however, that in no event
shall such amount exceed the Series Allocation Percentage
of Receivables with respect to such Series on such Series
Termination Date. The proceeds (the "Termination
Proceeds") from such sale shall be immediately deposited
into the Collection Account for such Series. The
Termination Proceeds shall be allocated and distributed
to Investor Certificateholders of such Series in
accordance with the terms of the applicable Supplement.
Section 12.3 The Transferor's Termination
Rights. Upon the termination of the Trust pursuant to
Section 12.1 and the surrender of the Transferor
Certificates, the Trustee shall sell, assign and convey
to the Holders of the Transferor Certificates or any of
their designees, without recourse, representation or
warranty, all right, title and interest of the Trust in
the Receivables, whether then existing or thereafter
created, all monies due or to become due and all amounts
received with respect thereto (including all moneys then
held in the Collection Account or any Series Account) and
all proceeds thereof, except for amounts held by the
Trustee pursuant to subsection 12.2(b). The Trustee
shall execute and deliver such instruments of transfer
and assignment, in each case without recourse, as shall
be reasonably requested by the Transferor to vest in the
Holders of the Transferor Certificates or any of their
designees all right, title and interest which the Trust
had in the Receivables.
[END OF ARTICLE XII]
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment; Waiver of Past
Defaults.
(a) This Agreement may be amended by the
parties hereto from time to time prior to, or in
connection with, the issuance of the first Series of
Investor Certificates hereunder without the requirement
of any consents or the satisfaction of any conditions set
forth below. This Agreement or any Supplement may be
amended from time to time (including in connection with
the issuance of a Supplemental Certificate, conveyance of
a Participation Interest, allocation of assets pursuant
to Section 4.6, or to change the definition of Monthly
Period, Determination Date or Distribution Date) by the
Servicer, the Transferor and the Trustee, by a written
instrument signed by each of them, without the consent of
any of the Certificateholders, provided that (i) an
Opinion of Counsel for the Transferor (which Opinion of
Counsel may, as to factual matters, rely upon Officer's
Certificates of the Transferor or the Servicer) is
addressed and delivered to the Trustee, dated the date of
any such amendment, to the effect that the conditions
precedent to any such amendment have been satisfied, (ii)
the Transferor shall have delivered to the Trustee an
Officer's Certificate, dated the date of any such
Amendment, stating that the Transferor reasonably
believes that such amendment will not have an Adverse
Effect and (iii) the Rating Agency Condition shall have
been satisfied with respect to any such amendment.
(b) This Agreement or any Supplement may also
be amended from time to time (including in connection
with the issuance of a Supplemental Certificate) by the
Servicer, the Transferor and the Trustee, with the
consent of the Holders of Investor Certificates
evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Investor Certificates of all
affected Series for which the Transferor has not
delivered an Officer's Certificate stating that there is
no Adverse Effect, 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 of modifying in any manner the rights of the
Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of or
delay the timing of any distributions to (changes in Pay
Out Events or Reinvestment Events that decrease the
likelihood of the occurrence thereof shall not be
considered delays in the timing of distributions for
purposes of this clause) be made to Investor
Certificateholders or deposits of amounts to be so
distributed or the amount available under any Series
Enhancement without the consent of each affected
Certificateholder, (ii) change the definition of or the
manner of calculating the interest of any Investor
Certificateholder without the consent of each affected
Investor Certificateholder, (iii) reduce the aforesaid
percentage required to consent to any such amendment
without the consent of each Investor Certificateholder or
(iv) adversely affect the rating of any Series or Class
by each Rating Agency without the consent of the Holders
of Investor Certificates of such Series or Class
evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Investor Certificates of such
Series or Class.
(c) Promptly after the execution of any such
amendment or consent (other than an amendment pursuant to
paragraph (a)), the Trustee shall furnish notification of
the substance of such amendment to each Investor
Certificateholder, and the Servicer shall furnish
notification of the substance of such amendment to each
Rating Agency and each Series Enhancer.
(d) It shall not be necessary for the consent
of Investor Certificateholders under this Section to
approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the
execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee
may prescribe.
(e) Notwithstanding anything in this Section to
the contrary, no amendment may be made to this Agreement
or any Supplement which would adversely affect in any
material respect the interests of any Series Enhancer
without the consent of such Series Enhancer.
(f) Any Supplement executed in accordance with
the provisions of Section 6.3 shall not be considered an
amendment to this Agreement for the purposes of this
Section.
(g) The Holders of Investor Certificates
evidencing more than 66-2/3% of the aggregate unpaid
principal amount of the Investor Certificates of each
Series or, with respect to any Series with two or more
Classes, of each Class (or, with respect to any default
that does not relate to all Series, 66-2/3% of the
aggregate unpaid principal amount of the Investor
Certificates of each Series to which such default relates
or, with respect to any such Series with two or more
Classes, of each Class) may, on behalf of all
Certificateholders, waive any default by the Transferor
or the Servicer in the performance of their obligations
hereunder and its consequences, except the failure to
make any distributions required to be made to Investor
Certificateholders or to make any required deposits of
any amounts to be so distributed. 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.
(h) The Trustee may, but shall not be obligated
to, enter into any such amendment which affects the
Trustee's rights, duties or immunities under this
Agreement or otherwise. In connection with the execution
of any amendment hereunder, the Trustee shall be entitled
to receive the Opinion of Counsel described in subsection
13.2(d).
Section 13.2 Protection of Right, Title and
Interest to Trust.
(a) The Servicer shall cause this Agreement,
all amendments and supplements hereto and all financing
statements and continuation statements and any other
necessary documents covering the Certificateholders' and
the Trustee's right, title and interest to the Trust to
be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, all in
such manner and in such places as may be required by law
fully to preserve and protect the right, title and
interest of the Certificateholders and the Trustee
hereunder to all property comprising the Trust. The
Servicer shall deliver to the Trustee file-stamped copies
of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as
available following such recording, registration or
filing. The Transferor shall cooperate fully with the
Servicer in connection with the obligations set forth
above and will execute any and all documents reasonably
required to fulfill the intent of this paragraph.
(b) Within 30 days after the Transferor makes
any change in its name, identity or corporate structure
which would make any financing statement or continuation
statement filed in accordance with paragraph (a)
seriously misleading within the meaning of Section 9-
402(7) (or any comparable provision) of the UCC, such
Transferor shall give the Trustee notice of any such
change and shall file such financing statements or
amendments as may be necessary to continue the perfection
of the Trust's security interest or ownership interest in
the Receivables and the proceeds thereof.
(c) The Transferor and the Servicer shall give
the Trustee prompt notice of any relocation of any office
from which it services Receivables (or the underlying
receivables) or keeps records concerning the Receivables
(or the underlying receivables) or of its principal
executive office and whether, as a result of such
relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously
filed financing or continuation statement or of any new
financing statement and shall file such financing
statements or amendments as may be necessary to perfect
or to continue the perfection of the Trust's security
interest in the Receivables and the proceeds thereof.
The Transferor and the Servicer shall at all times
maintain each office from which it services Receivables
and its principal executive offices within the United
States.
(d) The Servicer shall deliver to the Trustee
(i) upon the execution and delivery of each amendment of
this Agreement or any Supplement, an Opinion of Counsel
to the effect specified in Exhibit E-1; (ii) on each date
specified in subsection 2.9(c)(ix) with respect to
Aggregate Additions to be designated as Accounts, an
Opinion of Counsel substantially in the form of Exhibit
E-2, (iii) semiannually, with respect to any New Accounts
included as Accounts, an Opinion of Counsel substantially
in the form of Exhibit E-2, (iv) on each Addition Date on
which any Participation Interests are to be included in
the Trust pursuant to subsection 2.9(a) or (b), an
Opinion of Counsel covering the same substantive legal
issues addressed by Exhibits E-1 and E-2 but conformed to
the extent appropriate to relate to Participation
Interests; and (v) on or before March 31 of each year,
beginning with March 31, 1998, an Opinion of Counsel
substantially in the form of Exhibit E-3.
Section 13.3 Limitation on Rights of
Certificateholders.
(a) The death or incapacity of any
Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall such death or
incapacity entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court
for a partition or winding up of the Trust, nor otherwise
affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Investor Certificateholder shall have
any right to vote (except as expressly provided in this
Agreement) 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 Investor
Certificateholders from time to time as partners or
members of an association, nor shall any Investor
Certificateholder be under any liability to any third
person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) No Investor Certificateholder shall have
any right by virtue of any provisions of this Agreement
to institute any suit, action or proceeding in equity or
at law upon or under or with respect to this Agreement,
unless such Investor Certificateholder previously shall
have made, and unless the Holders of Investor
Certificates evidencing more than 50% of the aggregate
unpaid principal amount of all Investor Certificates (or,
with respect to any such action, suit or proceeding that
does not relate to all Series, 50% of the aggregate
unpaid principal amount of the Investor Certificates of
all Series to which such action, suit or proceeding
relates) shall have made, a request to the Trustee to
institute such action, suit or proceeding in its own name
as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days
after such 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 Investor
Certificateholder with every other Investor
Certificateholder and the Trustee, that no one or more
Investor Certificateholders shall have any 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 Investor Certificates, or to obtain or seek
to obtain priority over or preference to any other such
Investor Certificateholder, or to enforce any right under
this Agreement, except in the manner herein provided and
for the equal, ratable and common benefit of all Investor
Certificateholders except as otherwise expressly provided
in this Agreement. For the protection and enforcement of
the provisions of this Section, each and every Investor
Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 13.4 Governing Law. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 13.5 Notices; Payments.
(a) All demands, notices, instructions,
directions and communications (collectively, "Notices")
under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered
at, mailed by registered mail, return receipt requested,
or sent by facsimile transmission (i) in the case of the
Transferor, to Credit Card Receivables Funding
Corporation, at 157 Main Street, Nashua, New Hampshire
03060 Attention: _________ (facsimile no. ___________),
with a copy to: ______________________, Attention:
________________ (facsimile no. _____________), (ii) in
the case of the Servicer, to BankBoston (NH), National
Association, at 157 Main Street, Nashua, New Hampshire
03060, Attention: _______________, (facsimile no.
__________), (iii) in the case of the Trustee, the Paying
Agent or Transfer Agent and Registrar, to The Bank of New
York at 101 Barclay Street 12E, New York, NY 10286,
Attention: ____________________ (facsimile no.
__________________), (iv) in the case of Moody's, to 99
Church Street, New York, New York 10007, Attention: ABS
Monitoring Department, 4th Floor (facsimile no. (212)
553-4600), (v) in the case of Standard & Poor's, to 26
Broadway, New York, New York 10004, Attention: Asset
Backed Group, 15th Floor (facsimile no. (212) 412-0323),
(vi) in the case of Fitch, to One State Street Plaza, New
York, New York, Attention: Structured Finance Department
(facsimile no. (212) 480-4438), and (vii) to any other
Person as specified in any Supplement; or, as to each
party, at such other address or facsimile number as shall
be designated by such party in a written notice to each
other party.
(b) Any Notice required or permitted to be
given to a Holder of Registered Certificates shall be
given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate
Register. No Notice shall be required to be mailed to a
Holder of Bearer Certificates or Coupons but shall be
given as provided below. Any Notice so mailed within the
time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the
Investor Certificateholder receives such Notice. In
addition, (a) if and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such Exchange
shall so require, any Notice to Investor
Certificateholders shall be published in an Authorized
Newspaper of general circulation in Luxembourg within the
time period prescribed in this Agreement and (b) in the
case of any Series or Class with respect to which any
Bearer Certificates are outstanding, any Notice required
or permitted to be given to Investor Certificateholders
of such Series or Class shall be published in an
Authorized Newspaper within the time period prescribed in
this Agreement.
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 provisions shall be
deemed severable from the remaining provisions of this
Agreement and shall in no way affect the validity or
enforceability of the remaining provisions or of the
Certificates or the rights of the Certificateholders.
Section 13.7 Certificates Nonassessable and
Fully Paid. It is the intention of the parties to this
Agreement that the Certificateholders shall not be
personally liable for obligations of the Trust, that the
interests in the Trust represented by the Certificates
shall be nonassessable for any losses or expenses of the
Trust or for any reason whatsoever and that the
Certificates upon authentication and delivery thereof by
the Trustee pursuant to Section 6.2 are and shall be
deemed fully paid.
Section 13.8 Further Assurances. The
Transferor and the 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
the 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 13.9 Nonpetition Covenant.
Notwithstanding any prior termination of this Agreement,
the Investor Certificateholders, the Servicer, the
Trustee, the Transferor, the Paying Agent, the
Authenticating Agent, the Transfer Agent, the Registrar,
the Series Enhancers and each Holder of a Supplemental
Certificate shall not, prior to the date which is one
year and one day after the termination of this Agreement
with respect to the Trust or the Transferor, acquiesce,
petition or otherwise invoke or cause the Trust or the
Transferor to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a
case against the Trust or the Transferor under any
Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the
Trust or the Transferor or any substantial part of its
property or ordering the winding-up or liquidation of the
affairs of the Trust or the Transferor.
Section 13.10 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the
part of the Trustee or the Certificateholders, any right,
remedy, power or privilege under this Agreement shall
operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege
under this Agreement preclude any other or further
exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers
and privileges provided under this Agreement are
cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
Section 13.11 Counterparts. This Agreement
may be executed in two or more counterparts (and by
different parties on separate counterparts), each of
which shall be an original, but all of which together
shall constitute one and the same instrument.
Section 13.12 Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding
upon the parties hereto, the Certificateholders, any
Series Enhancer and their respective successors and
permitted assigns. Except as otherwise expressly
provided in this Agreement (including Section 7.4), no
other Person will have any right or obligation hereunder.
Section 13.13 Actions by Certificateholders.
(a) Wherever in this Agreement a provision is
made that an action may be taken or a Notice given by
Certificateholders, such action or Notice may be taken or
given by any Certificateholder, unless such provision
requires a specific percentage of Certificateholders.
(b) Any Notice, request, authorization,
direction, consent, waiver or other act by the Holder of
a Certificate shall bind such Holder and every subsequent
Holder of such Certificate and of any Certificate issued
upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done
or omitted to be done by the Trustee or the Servicer in
reliance thereon, whether or not notation of such action
is made upon such Certificate.
Section 13.14 Rule 144A Information. For so
long as any of the Investor Certificates of any Series or
Class are "restricted securities" within the meaning of
Rule 144(a)(3) under the Act, each of the Transferor, the
Trustee, the Servicer and any Series Enhancer agree to
cooperate with each other to provide to any Investor
Certificateholders of such Series or Class and to any
prospective purchaser of Certificates designated by such
an Investor Certificateholder, upon the request of such
Investor Certificateholder or prospective purchaser, any
information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth
in Rule 144A(d)(4) under the Act.
Section 13.15 Merger and Integration. Except
as specifically stated otherwise herein, this Agreement
sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this
Agreement. This Agreement may not be modified, amended,
waived or supplemented except as provided herein.
Section 13.16 Headings. The headings herein
are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any
provision hereof.
[END OF ARTICLE XIII]
IN WITNESS WHEREOF, the Transferor, the
Servicer and the Trustee have caused this Pooling and
Servicing Agreement to be duly executed by their
respective officers as of the day and year first above
written.
CREDIT CARD RECEIVABLES
FUNDING
CORPORATION,
Transferor,
by _____________________________
Name:
Title:
[BANK OF BOSTON (NH),
NATIONAL ASSOCIATION,]
Servicer,
by _____________________________
Name:
Title:
THE BANK OF NEW YORK
______________________,
Trustee
by ____________________________
Name:
Title:
===========================================================================
SERIES 1997-1 SUPPLEMENT
Dated as of _______, 1997
to
POOLING AND SERVICING AGREEMENT
Dated as of _______, 1997
$_______________
among
CREDIT CARD RECEIVABLES FUNDING CORPORATION
Transferor
BANKBOSTON (NH), NATIONAL ASSOCIATION
Servicer
and
THE BANK OF NEW YORK
Trustee
on behalf of the Series 1997-1 Certificateholders
______________________________
BANKBOSTON CREDIT CARD MASTER TRUST
Series 1997-1
______________________________
===========================================================================
TABLE OF CONTENTS
Page
ARTICLE I
Creation of the Series 1997-1 Certificates
ARTICLE I
Creation of the Series 1997-1 Certificates
Section 1.1. Designation . . . . . . . . . . . . . . . 1
ARTICLE II
Definitions
Section 2.1. Definitions . . . . . . . . . . . . . . . 2
ARTICLE III
Servicing Fee and Interchange
Section 3.1. Servicing Compensation; Interchange . . . . 18
ARTICLE IV
Rights of Series 1997-1 Certificateholders and
Allocation and Application of Collections
Section 4.1. Collections and Allocations . . . . . . . 19
Section 4.2. Determination of Monthly Interest . . . . 22
Section 4.3. Principal Funding Account; Controlled
Accumulation Period . . . . . . . . . . . 23
Section 4.4. Required Amount . . . . . . . . . . . . . 25
Section 4.5. Application of Class A Available Funds,
Class B Available Funds, Collateral
Available Funds and Available
Principal Collections . . . . . . . . . . 26
Section 4.6. Defaulted Amounts; Investor Charge-Offs . 28
Section 4.7. Excess Spread; Excess Finance Charge
Collections . . . . . . . . . . . . . . . 30
Section 4.8. Reallocated Principal Collections . . . . 32
Section 4.9. Excess Finance Charge Collections . . . . 32
Section 4.10. Reallocated Investor Finance Charge
Collections . . . . . . . . . . . . . . . 33
Section 4.11. Shared Principal Collections . . . . . . . 34
Section 4.12. Reserve Account . . . . . . . . . . . . . 34
Section 4.13. Determination of LIBOR . . . . . . . . . . 36
Section 4.14. Investment Instructions . . . . . . . . . 37
Section 4.15. Yield Supplement Account . . . . . . . . . 37
Section 4.16. Cash Collateral Account . . . . . . . . . 38
ARTICLE V
Distributions and Reports to
Series 1997-1 Certificateholders
Section 5.1. Distributions . . . . . . . . . . . . . . 40
Section 5.2. Reports and Statements to Series 1997-1
Certificateholders . . . . . . . . . . . 41
ARTICLE VI
Pay Out Events
Section 6.1. Pay Out Events . . . . . . . . . . . . . . 42
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1. Optional Repurchase . . . . . . . . . . . 43
Section 7.2. Series Termination . . . . . . . . . . . . 43
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or
Certificateholders' Interest pursuant
to Section 2.6 or 10.1 of the Agreement
and Section 7.1 or 7.2 of this
Supplement . . . . . . . . . . . . . . . 44
Section 8.2. Distribution of Proceeds of Sale,
Disposition or Liquidation of the
Receivables pursuant to Section 9.1 of
the Agreement . . . . . . . . . . . . . . 45
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Ratification of Agreement . . . . . . . . 47
Section 9.2. Counterparts . . . . . . . . . . . . . . . 47
Section 9.3. Governing Law . . . . . . . . . . . . . . 47
EXHIBITS
EXHIBIT A-1 - Form of Class A Certificate
EXHIBIT A-2 - Form of Class B Certificate
EXHIBIT B - Form of Monthly Payment Instructions and
Notification to the Trustee
EXHIBIT C - Form of Monthly Series 1997-1
Certificateholders' Statement
EXHIBIT D - Form of Servicer's Certificate
SERIES 1997-1 SUPPLEMENT, dated as of _______, 1997
(the "Supplement"), between CREDIT CARD RECEIVABLES
FUNDING CORPORATION, a Delaware corporation, as
Transferor, BANKBOSTON (NH), NATIONAL ASSOCIATION, as
Servicer, and THE BANK OF NEW YORK, a national banking
association incorporated under the laws of the United
States, not in its individual capacity, but solely as
Trustee.
Pursuant to the Pooling and Servicing Agreement dated
as of _______, 1997 (as amended and supplemented, the
"Agreement"), among the Transferor, the Servicer and the Trustee,
the Transferor has created the BankBoston Credit Card Master
Trust (the "Trust"). Section 6.3 of the Agreement provides that
the Transferor may from time to time direct the Trustee to
authenticate one or more new Series of Investor Certificates
representing fractional undivided interests in the Trust. The
Principal Terms of any new Series are to be set forth in a
Supplement to the Agreement.
Pursuant to this Supplement, the Transferor and the
Trustee shall create a new Series of Investor Certificates and
specify the Principal Terms thereof.
ARTICLE I
Creation of the Series 1997-1 Certificates
Section 1.1. Designation.
(a) There is hereby created a Series of Investor
Certificates to be issued pursuant to the Agreement and this
Supplement to be known as "BankBoston Credit Card Master Trust,
Series 1997-1." The Series 1997-1 Certificates shall be issued
in two Classes, the first of which shall be known as the "Class A
Series 1997-1 Floating Rate Asset Backed Certificates" and the
second of which shall be known as the "Class B Series 1997-1
Floating Rate Asset Backed Certificates." In addition, there is
hereby created a third Class of uncertificated interests in the
Trust which, except as expressly provided herein, shall be deemed
to be "Investor Certificates" for all purposes under the
Agreement and this Supplement (other than for purposes of the
definition of the term "Tax Opinion" in Section 1.1 of the
Agreement) and which shall be known as the "Collateral Interest,
Series 1997-1." The Collateral Interest shall be considered a
Class of Series 1997-1 for all purposes of the Agreement and this
Supplement, including for purposes of voting concerning the
liquidation of the Trust pursuant to Section 9.1 of the
Agreement. The Collateral Interest Holder shall be deemed to be
the Series Enhancer for all purposes under the Agreement and this
Supplement.
(b) Series 1997-1 shall be included in Group I and
shall be a Principal Sharing Series. Series 1997-1 shall be an
Excess Allocation Series. Series 1997-1 shall not be
subordinated to any other Series. Notwithstanding any provision
in the Agreement or in this Supplement to the contrary, the first
Distribution Date with respect to Series 1997-1 shall be the
________________ Distribution Date and the first Monthly Period
shall begin on and include _______, 1997 and end on and include
____________, 1997.
(c) Notwithstanding the foregoing, except as expressly
provided herein, (i) 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,
(ii) the Opinion of Counsel specified in clause (d) of the
definition of Tax Opinion Section shall not be required pursuant
to Section 6.3(b)(vi) of the Agreement with respect to the
Collateral Interest and (iii) the Tax Opinion required pursuant
to Section 6.3(b)(vi) of the Agreement shall address the effect
of the issuance of the Collateral Interest but parts (a) and (c)
of any such Tax Opinion shall not address, or be required to
address, any tax consequences that shall result to any Collateral
Interest Holder.
ARTICLE II
Definitions
Section 2.1. Definitions.
(a) Whenever used in this Supplement, the following
words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well
as the plural forms of such terms and the masculine as well as
the feminine and neuter genders of such terms.
"Additional Interest" means, with respect to any
Distribution Date, the Class A Additional Interest and the Class
B Additional Interest for such Distribution Date.
"Adjusted Invested Amount" shall mean, with respect to
any date of determination, an amount equal to the Invested Amount
less the Principal Funding Account Balance on such date of
determination.
"Available Cash Collateral Amount" shall mean, with
respect to any Distribution Date, the lesser of (a) the amount on
deposit in the Cash Collateral Account (before giving effect to
any deposit to, or withdrawal from, the Cash Collateral Account
on such Distribution Date) and (b) the Required Cash Collateral
Amount.
"Available Enhancement Amount" shall mean, with respect
to any Distribution Date, the lesser of (a) the sum of the
Collateral Invested Amount and the Available Cash Collateral
Amount and (b) the Required Enhancement Amount.
"Available Principal Collections" shall mean, with
respect to any Monthly Period, an amount equal to the sum of
(a) (i) an amount equal to the Principal Allocation Percentage of
Series 1997-1 Allocable Principal Collections received during
such Monthly Period minus (ii) the amount of Reallocated
Principal Collections with respect to such Monthly Period which
pursuant to subsection 4.8(a) or (b) are required to fund the
Required Amount for the related Distribution Date, (b) any Shared
Principal Collections with respect to other Series that are
allocated to Series 1997-1 in accordance with Section 4.4 of the
Agreement and Section 4.11 hereof, and (c) any other amounts
which pursuant to Section 4.5 or 4.7 hereof are to be treated as
Available Principal Collections with respect to the related
Distribution Date.
"Available Reserve Account Amount" shall mean, with
respect to any Distribution Date, the lesser of (a) the amount on
deposit in the Reserve Account on such date (before giving effect
to any deposit to be made to the Reserve Account on such date)
and (b) the Required Reserve Account Amount.
"Base Rate" shall mean, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, the
numerator of which is equal to the sum of the Class A Monthly
Interest, the Class B Monthly Interest, Collateral Monthly
Interest and the Monthly Servicing Fee with respect to the
related Distribution Date and the denominator of which is the
Invested Amount as of the last day of the preceding Monthly
Period.
"Cash Collateral Account" shall have the meaning
specified in subsection 4.16(a).
"Class A Additional Interest" shall have the meaning
specified in subsection 4.2(a).
"Class A Adjusted Invested Amount" shall mean, with
respect to any date of determination, an amount equal to the
Class A Invested Amount less the Principal Funding Account
Balance (but not in excess of the Class A Invested Amount) on
such date.
"Class A Available Funds" shall mean, with respect to
any Monthly Period, an amount equal to the sum of (a) if such
Monthly Period relates to a Distribution Date with respect to the
Controlled Accumulation Period, the amount of Principal Funding
Investment Proceeds, if any, with respect to such Distribution
Date, (b) the Class A Floating Percentage of the sum of the
Reallocated Investor Finance Charge Collections and the Yield
Supplement Draw Amount, if any, for the Distribution Date related
to such Monthly Period and (c) the amount of funds, if any, to be
withdrawn from the Reserve Account which, pursuant to subsection
4.12(d), are required to be included in Class A Available Funds
with respect to such Distribution Date.
"Class A Certificate Rate" shall mean ___% per annum,
calculated on the basis of a 360-day year consisting of twelve
30-day months.
"Class A Certificateholder" shall mean the Person in
whose name a Class A Certificate is registered in the Certificate
Register.
"Class A Certificates" shall mean any one of the
Certificates executed by the Transferor and authenticated by or
on behalf of the Trustee, substantially in the form of Exhibit
A-1.
"Class A Floating Percentage" shall mean, with respect
to any Monthly Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator
of which is equal to the Class A Adjusted Invested Amount 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
Invested Amount as of such day; provided, however, that with
respect to the first Monthly Period, the Class A Floating
Percentage shall mean the percentage equivalent of a fraction,
the numerator of which is the Class A Initial Invested Amount and
the denominator of which is the Initial Invested Amount.
"Class A Initial Invested Amount" shall mean
$___________.
"Class A Interest Shortfall" shall have the meaning
specified in subsection 4.2(a).
"Class A Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class A Initial
Invested Amount, minus (b) the aggregate amount of principal
payments made to the Class A Certificateholders on or prior to
such date, minus (c) the excess, if any, of the aggregate amount
of Class A Investor Charge-Offs for all prior Distribution Dates
over Class A Investor Charge-Offs reimbursed pursuant to
subsection 4.7(b) prior to such date.
"Class A Investor Charge-Offs" shall have the meaning
specified in subsection 4.6(a).
"Class A Investor Default Amount" shall mean, with
respect to each Distribution Date, an amount equal to the product
of (i) the Investor Default Amount for the related Monthly Period
and (ii) the Class A Floating Percentage for such Monthly Period.
"Class A Monthly Interest" shall have the meaning
specified in subsection 4.2(a).
"Class A Principal Percentage" shall mean, with respect
to any Monthly Period (i) during the Revolving Period, the
percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Class A Invested
Amount as of the last day of the immediately preceding Monthly
Period and the denominator of which is the Invested Amount as of
such day and (ii) during the Controlled Accumulation Period or
the Early Amortization Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator
of which is the Class A Invested Amount as of the end of the
Revolving Period, and the denominator of which is the Invested
Amount as of the end of the Revolving Period; provided, however,
that with respect to the first Monthly Period, the Class A
Principal Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Class A Initial Invested
Amount and denominator of which is the Initial Invested Amount.
"Class A Required Amount" shall have the meaning
specified in subsection 4.4(a).
"Class A Servicing Fee" shall have the meaning
specified in Section 3.1.
"Class A Scheduled Payment Date" shall mean
_________________ .
"Class B Additional Interest" shall have the meaning
specified in subsection 4.2(b).
"Class B Adjusted Invested Amount" shall mean an amount
equal to the Class B Invested Amount less the positive
difference, if any, between the Principal Funding Account Balance
and the Class A Invested Amount on such date.
"Class B Available Funds" shall mean, with respect to
any Monthly Period, an amount equal to the Class B Floating
Percentage of the sum of the Reallocated Investor Finance Charge
Collections and the Yield Supplement Draw Amount, if any, for the
Distribution Date related to such Monthly Period.
"Class B Certificate Rate" shall mean ___% per annum,
calculated on the basis of a 360-day year consisting of twelve
30-day months.
"Class B Certificateholder" shall mean the Person in
whose name a Class B Certificate is registered in the Certificate
Register.
"Class B Certificates" shall mean any one of the
Certificates executed by the Transferor and authenticated by or
on behalf of the Trustee, substantially in the form of Exhibit
A-2.
"Class B Floating Percentage" shall mean, 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 Adjusted Invested Amount 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
Invested Amount as of the close of business on such day;
provided, however, that with respect to the first Monthly Period,
the Class B Floating Percentage shall mean the percentage
equivalent of a fraction, the numerator of which is the Class B
Initial Invested Amount and the denominator of which is the
Initial Invested Amount.
"Class B Initial Invested Amount" shall mean
$__________.
"Class B Interest Shortfall" shall have the meaning
specified in subsection 4.2(b).
"Class B Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class B Initial
Invested Amount, minus (b) the aggregate amount of principal
payments made to the Class B Certificateholders prior to such
date, minus (c) the aggregate amount of Class B Investor
Charge-Offs for all prior Distribution Dates, minus (d) the
amount of Reallocated Principal Collections allocated on all
prior Distribution Dates pursuant to subsection 4.8(a) (excluding
any Reallocated Principal Collections that have resulted in a
reduction in the Collateral Invested Amount pursuant to Section
4.8), minus (e) an amount equal to the amount by which the Class
B Invested Amount has been reduced on all prior Distribution
Dates pursuant to subsection 4.6(a) and plus (f) the amount of
Excess Spread and Excess Finance Charge Collections allocated and
available on all prior Distribution Dates pursuant to subsection
4.7(d) for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (c), (d) and (e); provided, however,
that the Class B Invested Amount may not be reduced below zero.
"Class B Investor Charge-Offs" shall have the meaning
specified in subsection 4.6(b).
"Class B Investor Default Amount" shall mean, with
respect to each Distribution Date, an amount equal to the product
of (i) the Investor Default Amount for the related Monthly Period
and (ii) the Class B Floating Percentage for such Monthly Period.
"Class B Monthly Interest" shall have the meaning
specified in subsection 4.2(b).
"Class B Principal Percentage" shall mean, with respect
to any Monthly Period, (i) during the Revolving Period, the
percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Class B Invested
Amount as of the last day of the immediately preceding Monthly
Period and the denominator of which is the Invested Amount as of
such day and (ii) during the Controlled Accumulation Period or
the Early Amortization Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator
of which is the Class B Invested Amount as of the end of the
Revolving Period, and the denominator of which is the Invested
Amount as of the end of the Revolving Period; provided, however,
that with respect to the first Monthly Period, the Class B
Principal Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Class B Initial Invested
Amount and the denominator of which is the Initial Invested
Amount.
"Class B Required Amount" shall have the meaning set
forth in subsection 4.4(b).
"Class B Servicing Fee" shall have the meaning
specified in Section 3.1.
"Class B Scheduled Payment Date" shall mean
_____________.
"Closing Date" shall mean _________, 1997.
"Collateral Additional Interest" shall have the meaning
specified in subsection 4.2(c).
"Collateral Available Funds" shall mean with respect to
any Distribution Date, the Collateral Floating Percentage of the
sum of the Reallocated Investor Finance Charge Collections with
respect to the preceding Monthly Period and the Yield Supplement
Draw Amount, if any, for such Distribution Date..
"Collateral Charge-Offs" shall have the meaning
specified in subsection 4.6(c).
"Collateral Default Amount" shall mean, with respect to
any Distribution Date, the product of the Investor Default Amount
for the related Monthly Period and the Collateral Floating
Percentage.
"Collateral Floating Percentage" shall mean, with
respect to any Distribution Date, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the
numerator of which is equal to the Collateral Invested Amount as
of the close of business on the last day of the preceding Monthly
Period and the denominator of which is the Adjusted Invested
Amount as of the close of business on such last day; provided,
however, that with respect to the first Monthly Period, the
Collateral Floating Percentage shall mean the percentage
equivalent of a fraction, the numerator of which is the
Collateral Initial Invested Amount and the denominator of which
is the Initial Invested Amount.
"Collateral Initial Invested Amount" shall mean
$__________.
"Collateral Interest" shall mean a fractional undivided
interest in the Trust which shall consist of the right to
receive, to the extent necessary to make the required payments to
the Collateral Interest Holder under this Supplement, the portion
of Collections allocable thereto under the Agreement and this
Supplement and funds on deposit in the Collection Account
allocable thereto pursuant to the Agreement and this Supplement.
"Collateral Interest Holder" shall mean the entity so
designated in the Loan Agreement.
"Collateral Interest Shortfall" shall have the meaning
specified in subsection 4.2(c).
"Collateral Invested Amount" shall mean, when used with
respect to any date, an amount equal to (a) the Collateral
Initial Invested Amount, minus (b) the aggregate amount of
principal payments made to the Collateral Interest Holder prior
to such date, minus (c) the aggregate amount of Collateral
Charge-Offs for all prior Distribution Dates pursuant to
subsection 4.6(c), minus (d) the aggregate amount of Reallocated
Principal Collections allocated on all prior Distribution Dates
pursuant to Section 4.8 allocable to the Collateral Invested
Amount, minus (e) an amount equal to the amount by which the
Collateral Invested Amount has been reduced on all prior
Distribution Dates pursuant to subsections 4.6(a) and (b), and
plus (f) the amount allocated and available on all prior
Distribution Dates pursuant to subsection 4.7(h), for the purpose
of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided, however, that the Collateral Invested
Amount may not be reduced below zero.
"Collateral Monthly Interest" shall have the meaning
specified in subsection 4.2(c).
"Collateral Monthly Principal" shall mean (a) with
respect to any Distribution Date relating to the Revolving Period
following any reduction of the Required Enhancement Amount
pursuant to clause (z) of the proviso in the definition thereof,
any Optional Deposit pursuant to subsection 4.16(g) or otherwise
at the option of the Transferor, an amount equal to the lesser of
(i) the excess, if any, of the sum of the Collateral Invested
Amount (after giving effect to reductions for any Collateral
Charge-Offs and Reallocated Principal Collections on such
Distribution Date and after giving effect to any adjustments
thereto for the benefit of the holders of the Series 1997-1
Certificates on such Distribution Date) and the amount on deposit
in the Cash Collateral Account (after giving effect to any
deposits to be made therein or withdrawals to be made therefrom
on such Distribution Date) over the Required Enhancement Amount
on such Distribution Date, and (ii) the Available Principal
Collections on such Distribution Date or (b) with respect to any
Distribution Date relating to the Controlled Accumulation Period
an amount equal to the lesser of (i) the excess, if any, of the
sum of the Collateral Invested Amount (after giving effect to
reductions for any Collateral Charge-Offs and Reallocated
Principal Collections on such Distribution Date and after giving
effect to any adjustments thereto for the benefit of the holders
of the Series 1997-1 Certificates on such Distribution Date) and
the amount on deposit in the Cash Collateral Account (after
giving effect to any deposits to be made therein on such
Distribution Date) over the Required Enhancement Amount on such
Distribution Date, and (ii) the excess, if any, of (A) the
Available Principal Collections on such Distribution Date over
(B) the lesser of (x) the Controlled Deposit Amount and (y) the
sum of the Class A Adjusted Invested Amount and the Class B
Adjusted Invested Amount for such Distribution Date.
"Collateral Principal Percentage" shall mean, with
respect to any Monthly Period, (i) during the Revolving Period,
the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Collateral
Invested Amount as of the last day of the immediately preceding
Monthly Period and the denominator of which is the Invested
Amount as of such day and (ii) during the Controlled Accumulation
Period or the Early Amortization Period, the percentage
equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Collateral Invested
Amount as of the end of the Revolving Period, and the denominator
of which is the Invested Amount as of the end of the Revolving
Period; provided, however, that with respect to the first Monthly
Period, the Collateral Principal Percentage shall mean the
percentage equivalent of a fraction, the numerator of which is
the Collateral Initial Invested Amount and the denominator of
which is the Initial Invested Amount.
"Collateral Rate" shall mean, for any Interest Period,
the rate specified in the Loan Agreement.
"Collateral Servicing Fee" shall have the meaning set
forth in Section 3.1.
"Controlled Accumulation Amount" shall mean, for any
Distribution Date with respect to the Controlled Accumulation
Period, $__________; provided, however, that, if the Controlled
Accumulation Period Length is determined to be less than 12
months, the Controlled Accumulation Amount for each Distribution
Date with respect to the Controlled Accumulation Period will be
equal to (i) the product of (x) the sum of the Class A Initial
Invested Amount and the Class B Initial Invested Amount and
(y) the Controlled Accumulation Period Factor for the related
Monthly Period divided by (ii) the Required Accumulation Factor
Number.
"Controlled Accumulation Period" shall mean, unless a
Pay Out Event shall have occurred prior thereto, the period
commencing at the close of business on _______, 1997 or such
later date as is determined in accordance with subsection 4.3(c)
and ending on the first to occur of (a) the commencement of the
Early Amortization Period, (b) the payment in full of the
Invested Amount and (c) the Series 1997-1 Termination Date.
"Controlled Accumulation Period Factor" shall mean, for
each Monthly Period, a fraction, the numerator of which is equal
to the sum of the series invested amounts as of the last day of
the prior Monthly Period of all outstanding Series, and the
denominator of which of which is equal to the sum (without
duplication) of (a) the Series Invested Amount as of the last day
of the prior Monthly Period, (b) the series invested amounts as
of the last day of the prior Monthly Period of all outstanding
Series (other than Series 1997-1) that are not expected to be in
their revolving periods, and (c) the series invested amounts as
of the last day of the prior Monthly Period of all other
outstanding Series that are not Principal Sharing Series and are
in their revolving periods.
"Controlled Accumulation Period Length" has the meaning
specified in subsection 4.3(c).
"Controlled Deposit Amount" shall mean, for any
Distribution Date with respect to the Controlled Accumulation
Period, an amount equal to the sum of the Controlled Accumulation
Amount for such Distribution Date and any Deficit Controlled
Accumulation Amount for the immediately preceding Distribution
Date.
"Conversion Deposit" has the meaning specified in
subsection 4.16(h).
"Covered Amount" shall mean, shall mean, for any
Distribution Date with respect to the Controlled Accumulation
Period or the first Distribution Date during the Early
Amortization Period, if such Distribution Date occurs prior to
the date the Class A Invested Amount is paid in full, an amount
equal to one-twelfth of the product of (i) the Class A
Certificate Rate (ii) the Principal Funding Account Balance, if
any, as of the preceding Distribution Date.
"Deficit Controlled Accumulation Amount" shall mean (a)
on the first Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled
Accumulation Amount for such Distribution Date over the amount
deposited in the Principal Funding Account on such Distribution
Date and (b) on each subsequent Distribution Date with respect to
the Controlled Accumulation Period, the excess, if any, of the
Controlled Deposit Amount for such subsequent Distribution Date
over the amount deposited in the Principal Funding Account on
such subsequent Distribution Date.
"Distribution Date" shall mean __________, 1997 and the
___________ day of each calendar month thereafter, or if such
___________ day is not a Business Day, the next succeeding
Business Day.
"Early Amortization Period" shall mean the period
commencing at the close of business on the Business Day
immediately preceding the day on which a Pay Out Event with
respect to Series 1997-1 is deemed to have occurred, and ending
on the first to occur of (i) the payment in full of the Invested
Amount or (ii) the Series 1997-1 Termination Date.
"Excess Spread" shall mean, with respect to any
Distribution Date, the sum of the amounts, if any, specified
pursuant to subsections 4.5(a)(iv), 4.5(b)(iii) and 4.5(c)(ii)
with respect to such Distribution Date.
"Finance Charge Shortfall" shall have the meaning
specified in Section 4.9.
"Floating Allocation Percentage" shall mean, with
respect to any Monthly Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator
of which is the Adjusted Invested Amount as of the last day of
the preceding Monthly Period (or with respect to the first
Monthly Period, the Initial Invested Amount) and the denominator
of which is the product of (x) the Series 1997-1 Allocation
Percentage with respect to such Monthly Period and (y) the sum of
(i) the total amount of Principal Receivables in the Trust as of
such day (or with respect to the first Monthly Period, the total
amount of Principal Receivables in the Trust on the Closing Date)
and (ii) the principal amount on deposit in the Special Funding
Account as of such last day (or with respect to the first Monthly
Period, as of the Closing Date); provided, however, that with
respect to any Monthly Period in which an Addition Date for an
Aggregate Addition or a Removal Date occurs the amount in (y)(i)
above shall be (1) the aggregate amount of Principal Receivables
in the Trust at the end of the day on the last day of the prior
Monthly Period for the period from and including the first day of
such Monthly Period to but excluding the related Addition Date or
Removal Date and (2) the aggregate amount of Principal
Receivables in the Trust at the end of the day on the related
Addition Date or Removal Date for the period from and including
the related Addition Date or Removal Date to and including the
last day of such Monthly Period.
"Group I" shall mean Series 1997-1 and each other
Series specified in the related Supplement to be included in
Group I.
"Group I Investor Additional Amounts" shall mean, with
respect to any Distribution Date, the sum of (a) Series 1997-1
Additional Amounts for such Distribution Date and (b) for all
other Series included in Group I, the sum of (i) the aggregate
net amount by which the Invested Amounts of such Series have been
reduced as a result of investor charge-offs, subordination of
principal collections and funding the investor default amounts in
respect of any Class or Series Enhancement interests of such
Series as of such Distribution Date and (ii) if the applicable
Supplements so provide, the aggregate unpaid amount of interest
at the applicable certificate rates that has accrued on the
amounts described in the preceding clause (i) for such
Distribution Date.
"Group I Investor Default Amount" shall mean, with
respect to any Distribution Date, the sum of (a) the Investor
Default Amount for such Distribution Date and (b) the aggregate
amount of the investor default amounts for all other Series
included in Group I for such Distribution Date.
"Group I Investor Finance Charge Collections" shall
mean, with respect to any Distribution Date, the sum of (a)
Investor Finance Charge Collections for such Distribution Date
and (b) the aggregate amount of the investor finance charge
collections for all other Series included in Group I for such
Distribution Date.
"Group I Investor Monthly Fees" shall mean with respect
to any Distribution Date, the sum of (a) Series 1997-1 Monthly
Fees for such Distribution Date and (b) the aggregate amount of
the servicing fees, investor fees, fees payable to any Series
Enhancer and any other similar fees, which are payable out of
reallocated investor finance charge collections pursuant to the
related Supplements, for all other Series included in Group I for
such Distribution Date.
"Group I Investor Monthly Interest" shall mean, with
respect to any Distribution Date, the sum of (a) Series 1997-1
Monthly Interest for such Distribution Date and (b) the aggregate
amount of monthly interest, including overdue monthly interest
and interest on such overdue monthly interest, if such amounts
are payable out of reallocated investor finance charge
collections pursuant to the related Supplements, for all other
Series included in Group I for such Distribution Date.
"Initial Invested Amount" shall mean $_____________.
"Initial Cash Collateral Deposit" has the meaning
specified in subsection 4.16(b).
"Initial Yield Supplement Deposit" has the meaning
specified in subsection 4.15(b).
"Interest Period" shall mean, with respect to any
Distribution Date, the period from and including the immediately
preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) to but excluding such
Distribution Date.
"Invested Amount" shall mean, as of any date of
determination, an amount equal to the sum of (a) the Class A
Invested Amount as of such date, (b) the Class B Invested Amount
as of such date and (c) the Collateral Invested Amount as of such
date.
"Investor Charge-Offs" shall mean Class A Investor
Charge-Offs, Class B Investor Charge-Offs and Collateral Charge-
Offs.
"Investor Default Amount" shall mean, with respect to
any Distribution Date, an amount equal to the product of (a) the
Series 1997-1 Allocable Defaulted Amount for the related Monthly
Period and (b) the Floating Allocation Percentage for such
Monthly Period.
"Investor Finance Charge Collections" shall mean with
respect to any Distribution Date, an amount equal to the product
of (a) the Floating Allocation Percentage for the related Monthly
Period and (b) Series 1997-1 Allocable Finance Charge Collections
deposited in the Collection Account for the related Monthly
Period.
"LIBOR" shall mean, for any Interest Period, an
interest rate per annum determined by the Trustee for such
Interest Period in accordance with the provisions of Section
4.13.
"LIBOR Determination Date" shall mean _________, 1997
for the initial Interest Period, and the second London Business
Day prior to the commencement of the second and each subsequent
Interest Period.
"Loan Agreement" shall mean the agreement among the
Transferor, the Trustee and the Collateral Interest Holder, dated
_________, 1997.
"London Business Day" shall mean any day on which
dealings in deposits in United States dollars are transacted in
the London interbank market.
"Monthly Interest" means, with respect to any
Distribution Date, the Class A Monthly Interest, the Class B
Monthly Interest and the Collateral Monthly Interest for such
Distribution Date.
"Monthly Period" shall mean each calendar month.
"Monthly Servicing Fee" shall have the meaning
specified in Section 3.1.
"Net Servicing Fee Rate" shall mean (a) so long as the
Transferor, an Affiliate thereof, the Bank or an Affiliate
thereof is the Servicer, 1.25% per annum and (b) if the
Transferor, an Affiliate thereof, the Bank or an Affiliate
thereof is no longer the Servicer, 2% per annum.
"Optional Deposit" has the meaning specified in
subsection 4.16(g).
"Pay Out Event" shall mean any Pay Out Event specified
in Section 6.1.
"Principal Allocation Percentage" shall mean, with
respect to any day during a Monthly Period, the percentage
equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is (a) during the Revolving
Period, the Series Adjusted Invested Amount for Series 1997-1 as
of the last day of the immediately preceding Monthly Period (or,
in the case of the first Monthly Period, the Initial Invested
Amount) and (b) during the Controlled Accumulation Period or the
Early Amortization Period, the Series Adjusted Invested Amount
for Series 1997-1 as of the last day of the Revolving Period and
the denominator of which is the product of (x) the sum of (i) the
total amount of Principal Receivables in the Trust as of the last
day of the immediately preceding Monthly Period (or with respect
to the first Monthly Period, the total amount of Principal
Receivables in the Trust as of the Closing Date) and (ii) the
principal amount on deposit in the Special Funding Account as of
such last day (or with respect to the first Monthly Period, the
Closing Date) and (y) the Series 1997-1 Allocation Percentage as
of the last day of the immediately preceding Monthly Period;
provided, however, that with respect to any Monthly Period in
which an Addition Date for an Aggregate Addition or a Removal
Date occurs the amount in (x)(i) above shall be (1) the aggregate
amount of Principal Receivables in the Trust at the end of the
day on the last day of the prior Monthly Period for the period
from and including the first day of such Monthly Period to but
excluding the related Addition Date or Removal Date and (2) the
aggregate amount of Principal Receivables in the Trust at the end
of the day on the related Addition Date or Removal Date for the
period from and including the related Addition Date or Removal
Date to and including the last day of such Monthly Period; and
provided further, that if after the commencement of the
Controlled Accumulation Period a Pay Out Event occurs with
respect to another Series that was designated in the Supplement
therefor as a Series that is a "Paired Series" with respect to
Series 1997-1, the Transferor may, by written notice delivered to
the Trustee and the Servicer, designate a different numerator for
the foregoing fraction, provided that (x) such numerator is not
less than the Adjusted Invested Amount as of the last day of the
revolving period for such Paired Series, (y) the Transferor shall
have received written notice from each Rating Agency that the
Rating Agency Condition has been satisfied with respect to such
designation and shall have delivered copies of each such written
notice to the Servicer and the Trustee and (z) the Transferor
shall have delivered to the Trustee an Officer's Certificate 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 constitute
a Pay Out Event, to occur with respect to Series 1997-1.
"Principal Funding Account" shall have the meaning
specified in subsection 4.3(a)(i).
"Principal Funding Account Balance" shall mean, with
respect to any date of determination during the Controlled
Accumulation Period, the principal amount, if any, on deposit in
the Principal Funding Account on such date of determination.
"Principal Funding Investment Proceeds" shall have the
meaning specified in subsection 4.3(a)(ii).
"Principal Funding Investment Shortfall" shall mean,
with respect to each Interest Period during the Controlled
Accumulation Period, the amount, if any, by which the Principal
Funding Investment Proceeds are less than the Covered Amount.
"Reallocated Investor Finance Charge Collections" shall
mean that portion of Group I Investor Finance Charge Collections
allocated to Series 1997-1 pursuant to Section 4.10.
"Reallocated Principal Collections" shall mean, with
respect to any Monthly Period, the product of (a) the Series
1997-1 Allocable Principal Collections deposited in the
Collection Account for such Monthly Period and (b) the sum of the
Class B Principal Percentage and the Collateral Principal
Percentage.
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and
distributions otherwise to be made on such Distribution Date, the
sum of (i) the Adjusted Invested Amount on such Distribution
Date, plus (ii) Monthly Interest for such Distribution Date and
any Monthly Interest previously due but not distributed to the
Series 1997-1 Certificateholders on a prior Distribution Date,
plus (iii) the amount of Additional Interest, if any, for such
Distribution Date and any Additional Interest previously due but
not distributed to the Series 1997-1 Certificateholders on a
prior Distribution Date.
"Reference Banks" shall mean three major banks in the
London interbank market selected by the Servicer.
"Required Accumulation Factor Number" shall be equal to
a fraction, rounded upwards to the nearest whole number, the
numerator of which is one and the denominator of which is equal
to the lowest monthly principal payment rate on the Accounts,
expressed as a decimal, for the three months preceding the date
of such calculation.
"Required Amount" shall mean, with respect to any
Monthly Period, the sum of the Class A Required Amount and the
Class B Required Amount.
"Required Cash Collateral Amount" shall mean, on any
Transfer Date, an amount equal to the Required Enhancement Amount
minus the Collateral Interest (after giving effect to any
adjustments to be made in the Collateral Interest with respect to
such Transfer Date), or any higher amount designated by the
Transferor.
"Required Enhancement Amount" shall mean (a) on the
initial Distribution Date, $__________ and (b) on any
Distribution Date thereafter, an amount equal to the greater of
(i) __% of the sum of the Class A Adjusted Invested Amount and
the Class B Invested Amount on such Distribution Date, after
taking into account deposits into the Principal Funding Account
on such Distribution Date and payments to be made on such
Distribution Date, and the Collateral Invested Amount on the
prior Distribution Date after any adjustments made on such
Distribution Date and (ii) the sum of (A) the product of (I)
$_____________, (II) __% and (III) a fraction the numerator of
which is the Available Cash Collateral Amount as of the
immediately preceding Distribution Date and the denominator of
which is the Total Enhancement as of such immediately preceding
Distribution Date (in each case after giving effect to all
deposits, withdrawals and payments made with respect to such
immediately preceding Distribution Date) and (B) the product of
(I) $_______________, (II) __% and (III) a fraction the numerator
of which is equal to the Collateral Invested Amount as of the
immediately preceding Distribution Date and the denominator of
which the Total Enhancement as of such immediately preceding
Distribution Date (in each case after giving effect to all
deposits, withdrawals and payments made with respect to such
immediately preceding Distribution Date); provided, however, that
(x) if either (i) there is a reduction in the Collateral Invested
Amount pursuant to clause (c), (d) or (e) of the definition of
such term or (ii) a Pay Out Event with respect to the Series
1997-1 Certificates has occurred, the Required Enhancement Amount
for any Distribution Date shall equal the Required Enhancement
Amount for the Distribution Date immediately preceding such
reduction or Pay Out Event, (y) in no event shall the Required
Enhancement Amount 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 Distribution Date after taking into account the
payments to be made on such immediately preceding Distribution
Date and (z) the Required Enhancement Amount may be reduced at
the Transferor's option at any time to a lesser amount if the
Transferor, the Servicer, the Collateral Interest Holder and the
Trustee have been provided evidence that the Rating Agency
Condition shall have been satisfied.
"Required Reserve Account Amount" shall mean, with
respect to any Distribution Date on or after the Reserve Account
Funding Date, an amount equal to (1) [0.5%] of the Class A
Invested Amount as of the preceding Distribution Date (after
giving effect to all changes therein on such date) or (2) any
other amount designated by the Transferor, provided that if such
amount is less than the amount specified in clause (1) above, the
Transferor shall have received written notice from each Rating
Agency that the Rating Agency Condition shall have been satisfied
with respect to such designation and shall have delivered copies
of each such written notice to the Servicer and the Trustee.
"Reserve Account" shall have the meaning specified in
subsection 4.12(a).
"Reserve Account Funding Date" shall mean (1) the
Distribution Date with respect to the Monthly Period which
commences [three months] prior to the Distribution Date with
respect to the first Monthly Period in the Controlled
Accumulation Period or such earlier date as the Transferor may
determine by written notice to the Trustee and the Servicer.
"Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount on deposit
in the Reserve Account exceeds the Required Reserve Account
Amount.
"Reserve Draw Amount" shall have the meaning specified
in subsection 4.16(d).
"Revolving Period" shall mean the period beginning at
the close of business on the Series Cut-Off Date and ending on
the earlier of (a) the close of business on the day immediately
preceding the day the Controlled Accumulation Period commences
and (b) the close of business on the day immediately preceding
the day the Early Amortization Period commences.
"Series Adjusted Portfolio Yield" shall mean, with
respect to any Monthly Period, the annualized percentage
equivalent of a fraction, (A) the numerator of which is equal to
(a) Reallocated Investor Finance Charge Collections with respect
to such Monthly Period, plus (b) the amount of any Principal
Funding Investment Proceeds for the related Distribution Date,
plus (c) provided that each Rating Agency has consented in
writing to the inclusion thereof in calculating the Series
Adjusted Portfolio Yield, any Excess Finance Charge Collections
that are allocated to Series 1997-1 with respect to such Monthly
Period plus (d) the amount of funds, if any, withdrawn from the
Reserve Account which pursuant to Section 4.12(d) are required to
be included as Class A Available Funds for the Distribution Date
with respect to such Monthly Period and plus (e) the Yield
Supplement Draw Amount for the Distribution Date with respect to
such Monthly Period, if any, minus (f) the Investor Default
Amount for the Distribution Date with respect to such Monthly
Period, and (B) the denominator of which is the Invested Amount
as of the last day of the preceding Monthly Period.
"Series Cut-Off Date" shall mean the close of business
on _______, 1997.
"Series Enhancement" with respect to Series 1997-1shall
mean (a) with respect to the Class A Certificates, amounts
available on deposit the Cash Collateral Account and the
subordination of the Class B Certificates and the Collateral
Interest, and (b) with respect to the Class B Certificates,
amounts available on deposit in the Cash Collateral Account and
the subordination of the Collateral Interest.
"Series 1997-1" shall mean the Series of Certificates
the terms of which are specified in this Supplement.
"Series 1997-1 Additional Amounts" shall mean, with
respect to any Distribution Date, the sum of the amounts
determined pursuant to subsections 4.7(b), (d) and (h) for such
Distribution Date.
"Series 1997-1 Allocable Defaulted Amount" shall mean
the Series Allocable Defaulted Amount with respect to Series
1997-1.
"Series 1997-1 Allocable Finance Charge Collections"
shall mean the Series Allocable Finance Charge Collections with
respect to Series 1997-1.
"Series 1997-1 Allocable Principal Collections" shall
mean the Series Allocable Principal Collections with respect to
Series 1997-1.
"Series 1997-1 Allocation Percentage" shall mean the
Series Allocation Percentage with respect to Series 1997-1.
"Series 1997-1 Certificate" shall mean a Class A
Certificate or a Class B Certificate or the Collateral Interest.
"Series 1997-1 Certificateholder" shall mean a Class A
Certificateholder or a Class B Certificateholder or the
Collateral Interest Holder.
"Series 1997-1 Certificateholders' Interest" shall mean
the Certificateholders' Interest for Series 1997-1, including the
Collateral Interest.
"Series 1997-1 Monthly Fees" shall mean, with respect
to any Distribution Date, the amount determined pursuant to
subsection 4.5(a)(ii), (b)(ii) and (c)(i) and subsection 4.7(f).
"Series 1997-1 Monthly Interest" shall mean the amounts
determined pursuant to subsections 4.2(a), (b) and (c).
"Series 1997-1 Principal Shortfall" shall have the
meaning specified in Section 4.11.
"Series 1997-1 Termination Date" shall mean the
________ _____ Distribution Date.
"Series Invested Amount" shall mean the Initial
Invested Amount.
"Series Required Transferor Amount" shall mean an
amount equal to [7%] of the Invested Amount.
"Servicer Interchange" shall mean, for any Monthly
Period, the portion of Collections of Finance Charge Receivables
allocated to the Investor Certificates and deposited in the
Collection Account 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) .75%.
"Servicing Base Amount" shall have the meaning
specified in Section 3.1.
"Servicing Fee Rate" shall mean 2.0% per annum.
"Telerate Page 3750" shall mean the display page
currently so designated on the Dow Jones Telerate Service (or
such other page as may replace that page on that service for the
purpose of displaying comparable rates or prices).
"Total Enhancement" shall mean, for purposes of
determining the Required Enhancement Amount with respect to any
Transfer Date, the sum of the Available Cash Collateral Amount
and the Collateral Interest as of the immediately preceding
Transfer Date, in each case after giving effect to all deposits,
withdrawals and payments made with respect to such immediately
preceding Transfer Date.
"Transferor Percentage" shall mean 100% minus (a) the
Floating Allocation Percentage, when used at any time with
respect to Finance Charge Receivables and Defaulted Receivables,
or (b) the Principal Allocation Percentage, when used at any time
with respect to Principal Receivables.
(b) Notwithstanding anything to the contrary in this
Supplement or the Agreement, the term "Rating Agency" shall mean,
whenever used in this Supplement or the Agreement with respect to
Series 1997-1, Moody's, Standard & Poor's and Fitch; provided,
however, that references to "Rating Agency" in the definition of
"Eligible Investments" shall be deemed to not include Fitch to
the extent that an investment is rated by Moody's and Standard &
Poor's, but not by Fitch. As used in this Supplement and in the
Agreement with respect to Series 1997-1, "highest investment
category" shall mean (i) in the case of Standard & Poor's, AAA or
A-1+, as applicable, (ii) in the case of Moody's, Aaa or P-1, as
applicable, and (iii) in the case of Fitch, F-1+ or AAA, as
applicable.
(c) Each capitalized term defined herein shall relate
to the Series 1997-1 Certificates and no other Series of
Certificates issued by the Trust, unless the context otherwise
requires. All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the
Agreement. In the event that any term or provision contained
herein shall conflict with or be inconsistent with any term or
provision contained in the Agreement, the terms and provisions of
this Supplement shall govern.
(d) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Supplement shall refer
to this Supplement as a whole and not to any particular provision
of this Supplement; references to any Article, subsection,
Section or Exhibit are references to Articles, subsections,
Sections and Exhibits in or to this Supplement unless otherwise
specified; and the term "including" means "including without
limitation."
"Yield Supplement Account" shall have the meaning
specified in subsection 4.15(a).
"Yield Supplement Draw Amount" shall mean (a) __% of
the Initial Yield Supplement Deposit for the six Distribution
Dates from and including the September __, 1997 Distribution Date
through and including the February __, 1998 Distribution Date and
(b) __% of the Initial Yield Supplement Deposit for the six
Distribution Dates from and including the March __ 1998
Distribution Date through and including the August __ 1998
Distribution Date and (c) zero, thereafter.
ARTICLE III
Servicing Fee and Interchange
Section 3.1. Servicing Compensation; Interchange.
(a) Servicing Fee.The share of the Servicing Fee
allocable to the Series 1997-1 Certificateholders with respect to
any Distribution Date (the "Monthly Servicing Fee") shall be
equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) (i) the Adjusted Invested Amount as of the last day of
the Monthly Period preceding such Distribution Date, minus (ii)
the product of the amount, if any, on deposit in the Special
Funding Account as of the last day of the Monthly Period
preceding such Distribution Date and the Series 1997-1 Allocation
Percentage with respect to such Monthly Period (the amount
calculated pursuant to this clause (b) is referred to as the
"Servicing Base Amount"); provided, however, that with respect to
the first Distribution Date, the Monthly Servicing Fee shall be
equal to $____________. On each Distribution Date related to a
monthly period for which the Bank or an Affiliate of the Bank is
the Servicer, the Servicer Interchange with respect to the
related Monthly Period on deposit in the Collection Account shall
be withdrawn from the Collection Account and paid to the Servicer
in payment of a portion of the Monthly Servicing Fee with respect
to such Monthly Period. Should the Servicer Interchange on
deposit in the Collection Account on any Distribution Date with
respect to the related Monthly Period be less than one-twelfth of
.75% of the Adjusted Investor Interest as of the last day of such
Monthly Period, the Monthly 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
Collection Account. The share of the Monthly Servicing Fee
allocable to the Class A Certificateholders with respect to any
Distribution Date (the "Class A Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Class A Floating
Percentage, (b) the Net Servicing Fee Rate and (c) the Servicing
Base Amount; provided, however, that with respect to the first
Distribution Date, the Class A Servicing Fee shall be equal to
$____________. The share of the Monthly Servicing Fee allocable
to the Class B Certificateholders with respect to any
Distribution Date (the "Class B Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Class B Floating
Percentage, (b) the Net Servicing Fee Rate and (c) the Servicing
Base Amount; provided, however, that with respect to the first
Distribution Date, the Class B Servicing Fee shall be equal to
$__________. The share of the Monthly Servicing Fee allocable to
the Collateral Interest with respect to any Distribution Date
(the "Collateral Servicing Fee") shall be equal to one-twelfth of
the product of the (a) Collateral Floating Percentage, (b) the
Net Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the first Distribution
Date, the Collateral Servicing Fee shall be equal to $__________.
The remainder of the Servicing Fee shall be paid by the Holders
of the Transferor Certificates or the investor certificateholders
of other Series (as provided in the related Supplements) and in
no event shall the Trust, the Trustee or the Series 1997-1
Certificateholders be liable for the share of the Servicing Fee
to be paid by the Holders of the Transferor Certificates or the
investor certificateholders of any other Series. To the extent
that the Class A Servicing Fee, the Class B Servicing Fee and the
Collateral Servicing Fee are not paid in full pursuant to the
preceding provisions of this Section 3.1, and Sections 4.5 and
4.7, they shall be paid by the Holder of the Transferor
Certificate.
(b) Interchange. On or before each Determination
Date, the Transferor shall notify the Servicer of the amount of
Interchange to be included as Series 1997-1 Allocable Finance
Charge Collections with respect to the preceding Monthly Period
as determined pursuant to this subsection 3.1(b). Such amount of
Interchange shall be equal to the product of (i) the amount of
Interchange attributable to the Accounts, as reasonably estimated
by the Transferor, and (ii) the Series 1997-1 Allocation
Percentage. On each Transfer Date, the Transferor shall pay to
the Servicer, and the Servicer shall deposit into the Collection
Account, in immediately available funds, the amount of
Interchange to be so included as Series 1997-1 Allocable Finance
Charge Collections with respect to the preceding Monthly Period
and such Interchange shall be treated as a portion of Series
1997-1 Allocable Finance Charge Collections for all purposes of
this Supplement and the Agreement. Notwithstanding the above, if
the Rating Agency Condition is satisfied with respect thereto,
the Transferor may, in lieu of transferring Interchange as set
forth above, designate Discount Option Receivables pursuant to
Section 2.12 of the Agreement in an amount approximately equal to
the then current Interchange with respect to the Accounts.
ARTICLE IV
Rights of Series 1997-1 Certificateholders and
Allocation and Application of Collections
Section 4.1. Collections and Allocations.
(a) Allocations. Collections of Finance Charge
Receivables and Principal Receivables and Defaulted Receivables
allocated to Series 1997-1 pursuant to Article IV of the
Agreement (and, as described herein, Collections of Finance
Charge Receivables reallocated from other Series in Group I)
shall be allocated and distributed or reallocated as set forth in
this Article.
(b) Payments to the Transferor. The Servicer shall on
Deposit Dates withdraw from the Collection Account and pay to the
Holder of the Transferor Certificate the following amounts:
(i) an amount equal to the Transferor Percentage for
the related Monthly Period of Series 1997-1 Allocable Finance
Charge Collections to the extent such amount is deposited in the
Collection Account; and
(ii) an amount equal to the Transferor Percentage for
the related Monthly Period of Series 1997-1 Allocable Principal
Collections deposited in the Collection Account, if the
Transferor Amount (determined after giving effect to any
Principal Receivables transferred to the Trust on such Deposit
Date) exceeds zero.
The withdrawals to be made from the Collection Account
pursuant to this subsection 4.1(b) do not apply to deposits into
the Collection Account that do not represent Collections,
including payment of the purchase price for the
Certificateholders' Interest pursuant to Section 2.6 or 10.1 of
the Agreement, payment of the purchase price for the Series
1997-1 Certificateholders' Interest pursuant to Section 7.1 of
this Supplement and proceeds from the sale, disposition or
liquidation of Receivables pursuant to Section 9.1 or 12.2 of the
Agreement.
(c) Allocations to the Series 1997-1
Certificateholders. The Servicer shall, prior to the close of
business on any Deposit Date, allocate to the Series 1997-1
Certificateholders the following amounts as set forth below:
(i) Allocations of Finance Charge Collections. The
Servicer shall allocate to the Series 1997-1
Certificateholders and retain in the Collection Account for
application as provided herein an amount equal to the
product of (A) the Floating Allocation Percentage and (B)
the Series 1997-1 Allocation Percentage and (C) the
aggregate amount of Collections of Finance Charge
Receivables deposited in the Collection Account on such
Deposit Date.
(ii) Allocations of Principal Collections. The
Servicer shall allocate to the Series 1997-1
Certificateholders the following amounts as set forth below:
(x) Allocations During the Revolving Period. During the
Revolving Period (A) an amount equal to the product of (I)
the sum of the Class B Principal Percentage and the
Collateral Principal Percentage and (II) the Principal
Allocation Percentage and (III) the Series 1997-1 Allocation
Percentage and (IV) the aggregate amount of Collections of
Principal Receivables deposited in the Collection Account on
such Deposit Date, shall be allocated to the Series 1997-1
Certificateholders and retained in the Collection Account
until applied as provided herein and (B) an amount equal to
the product of (I) the Class A Principal Percentage and (II)
the Principal Allocation Percentage and (III) the Series
1997-1 Allocation Percentage and (IV) the aggregate amount
of Collections of Principal Receivables deposited in the
Collection Account on such Deposit Date shall be allocated
to the Series 1997-1 Certificateholders and, to the extent
needed to make any distribution pursuant to subsection
4.5(d)(i), deposited in the Collection Account, and
otherwise shall be first, if any other Principal Sharing
Series is outstanding and in its amortization period or
accumulation period, retained in the Collection Account for
application, to the extent necessary, as Shared Principal
Collections on the related Distribution Date, and second
paid to the Holders of the Transferor Certificates;
provided, however, that such amount to be paid to the
Holders of the Transferor Certificates on any Deposit Date
shall be paid to such Holders only if the Transferor Amount
on such Deposit Date is greater than the Required Transferor
Amount (after giving effect to all Principal Receivables
transferred to the Trust on such day) and otherwise shall be
deposited in the Special Funding Account.
(y) Allocations During the Controlled Accumulation
Period. During the Controlled Accumulation Period (A) an
amount equal to the product of (I) the sum of the Class B
Principal Percentage and the Collateral Principal Percentage
and (II) the Principal Allocation Percentage and (III) the
Series 1997-1 Allocation Percentage and (IV) the aggregate
amount of Collections of Principal Receivables deposited in
the Collection Account on such Deposit Date, shall be
allocated to the Series 1997-1 Certificateholders and
retained in the Collection Account until applied as provided
herein and (B) an amount equal to the product of (I) the
Class A Principal Percentage and (II) the Principal
Allocation Percentage and (III) the Series 1997-1 Allocation
Percentage and (IV) the aggregate amount of Collections of
Principal Receivables deposited in the Collection Account on
such Deposit Date (such product for any such date, a
"Percentage Allocation") shall be allocated to the Series
1997-1 Certificateholders and retained in the Collection
Account until applied as provided herein; provided, however,
that if the sum of such Percentage Allocation and all
preceding Percentage Allocations with respect to the same
Monthly Period exceeds the Controlled Deposit Amount for the
related Distribution Date, then such excess shall not be
treated as a Percentage Allocation and shall be first, if
any other Principal Sharing Series is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary,
as Shared Principal Collections on the related Distribution
Date, and second paid to the Holders of the Transferor
Certificates only if the Transferor Amount on such Deposit
Date is greater than the Required Transferor Amount (after
giving effect to all Principal Receivables transferred to
the Trust on such day) and otherwise shall be deposited in
the Special Funding Account.
(z) Allocations During the Early Amortization Period.
During the Early Amortization Period, an amount equal to the
product of (A) the Principal Allocation Percentage and (B)
the Series 1997-1 Allocation Percentage and (C) the
aggregate amount of Collections of Principal Receivables
deposited in the Collection Account on such Deposit Date,
shall be allocated to the Series 1997-1 Certificateholders
and retained in the Collection Account until applied as
provided herein; provided, however, that after the date on
which an amount of such Collections equal to the Adjusted
Invested Amount has been deposited into the Collection
Account and allocated to the Series 1997-1
Certificateholders, such amount shall be first, if any other
Principal Sharing Series is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary,
as Shared Principal Collections on the related Distribution
Date, and second paid to the Holders of the Transferor
Certificates only if the Transferor Amount on such date is
greater than the Required Transferor Amount (after giving
effect to all Principal Receivables transferred to the Trust
on such day) and otherwise shall be deposited in the Special
Funding Account.
Section 4.2. Determination of Monthly Interest.
(a) The amount of monthly interest (the "Class A
Monthly Interest") distributable from the Collection Account with
respect to the Class A Certificates on any Distribution Date
shall be an amount equal to one-twelfth of the product of (i) the
Class A Certificate Rate and (ii) the outstanding principal
balance of the Class A Certificates as of the close of business
on the preceding Record Date, provided that, in the case of the
first Distribution Date, Class A Monthly Interest shall be an
amount equal to $__________________..
On the Determination Date preceding each Distribution
Date, the Servicer shall determine the excess, if any (the "Class
A Interest Shortfall"), of (x) the Class A Monthly Interest for
such Distribution Date over (y) the aggregate amount of funds
allocated and available to pay such Class A Monthly Interest on
such Distribution Date. If the Class A Interest Shortfall with
respect to any Distribution Date is greater than zero, on each
subsequent Distribution Date until such Class A Interest
Shortfall is fully paid, an additional amount ("Class A
Additional Interest") equal to one-twelfth of the product of (i)
the Class A Certificate Rate plus 2.0% per annum and (ii) such
Class A Interest Shortfall (or the portion thereof which has not
been paid to the Class A Certificateholders) shall be payable as
provided herein with respect to the Class A Certificates.
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 (the "Class B
Monthly Interest") distributable from the Collection Account with
respect to the Class B Certificates on any Distribution Date
shall be an amount equal to one-twelfth of the product of (i) the
Class B Certificate Rate and (ii) the Class B Invested Amount
close of business on the preceding Record Date, provided that, in
the case of the first Distribution Date, Class B Monthly Interest
shall be an amount equal to $__________________.
On the Determination Date preceding each Distribution
Date, the Servicer shall determine the excess, if any (the "Class
B Interest Shortfall"), of (x) the Class B Monthly Interest for
such Distribution Date over (y) the aggregate amount of funds
allocated and available to pay such Class B Monthly Interest on
such Distribution Date. If the Class B Interest Shortfall with
respect to any Distribution Date is greater than zero, on each
subsequent Distribution Date until such Class B Interest
Shortfall is fully paid, an additional amount ("Class B
Additional Interest") equal to one-twelfth of the product of (i)
the Class B Certificate Rate plus 2.0% per annum and (ii) such
Class B Interest Shortfall (or the portion thereof which has not
been paid to the Class B Certificateholders) shall be payable as
provided herein with respect to the Class B Certificates.
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 ("Collateral Monthly
Interest") distributable from the Collection Account with respect
to the Collateral Invested Amount on any Distribution Date shall
be an amount equal to the product of (i) (A) a fraction, the
numerator of which is the actual number of days in the Interest
Period immediately preceding such Distribution Date and the
denominator of which is 360, times (B) the Collateral Rate in
effect with respect to the applicable Interest Period, and (ii)
the Collateral Invested Amount as of the close of business on the
preceding Distribution Date (after giving effect to any increase
or decrease in the Collateral Invested Amount on such preceding
Distribution Date); provided that with respect to the first
Distribution Date such Collateral Invested Amount shall be
determined as of the close of business on the Closing Date.
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Collateral
Interest Shortfall") equal to (x) the aggregate Collateral
Monthly Interest for such Distribution Date minus (y) the
aggregate amount of funds allocated and available to pay such
Collateral Monthly Interest on such Distribution Date. If the
Collateral Interest Shortfall with respect to any Distribution
Date is greater than zero, on each subsequent Distribution Date
until such Collateral Interest Shortfall is fully paid, an
additional amount ("Collateral Additional Interest") shall be
payable as provided herein with respect to the Collateral
Invested Amount equal to the product of (i) (A) a fraction, the
numerator of which is the actual number of days in the Interest
Period immediately preceding such Distribution Date and the
denominator of which is 360, times (B) the Collateral Rate in
effect with respect to the period from and including the
immediately preceding Distribution Date to but including such
Distribution Date, (ii) such Collateral Interest Shortfall (or
the portion thereof which has not been paid to the Collateral
Interest Holder) and (iii) the Collateral Rate in effect with
respect to the applicable Interest Period. Notwithstanding
anything to the contrary herein, Collateral Additional Interest
shall be payable or distributed to the Collateral Interest Holder
only to the extent permitted by applicable law.
Section 4.3. Principal Funding Account; Controlled
Accumulation Period.
(a)(i) The Servicer, for the benefit of the Series
1997-1 Certificateholders, shall establish and maintain in
the name of the Trustee, on behalf of the Trust, an Eligible
Deposit Account (the "Principal Funding Account"), bearing a
designation clearly indicating that the funds deposited
therein are held for the benefit of the Series 1997-1
Certificateholders. The Principal Funding Account shall
initially be established with the Trustee.
(ii) At the written direction of the Servicer, funds on
deposit in the Principal Funding Account shall be invested
by the Trustee in Eligible Investments selected by the
Servicer. All such Eligible Investments shall be held by
the Trustee for the benefit of the Series 1997-1
Certificateholders; provided, that on each Distribution Date
all interest and other investment income (net of losses and
investment expenses) ("Principal Funding Investment
Proceeds") on funds on deposit therein shall be applied as
set forth in paragraph (iii) below. Funds on deposit in the
Principal Funding Account shall be invested in Eligible
Investments that will mature so that such funds will be
available at the close of business on the Transfer Date
immediately preceding the following Distribution Date.
Unless the Servicer directs otherwise, funds deposited in
the Principal Funding Account on a Transfer Date (which
immediately precedes a Distribution Date) upon the maturity
of any Eligible Investments are not required to be invested
overnight. No such Eligible Investment shall be disposed of
prior to its maturity; provided, however, that the Trustee
may sell, liquidate or dispose of any such Eligible
Investment before its maturity, at the written direction of
the Servicer, if such sale, liquidation or disposal would
not result in a loss of all or part of the principal portion
of such Eligible Investment or if, prior to the maturity of
such Eligible Investment, a default occurs in the payment of
principal, interest or any other amount with respect to such
Eligible Investment.
(iii) On each Distribution Date with respect to the
Controlled Accumulation Period, the Servicer shall direct
the Trustee in writing to withdraw from the Principal
Funding Account and deposit into the Collection Account all
Principal Funding Investment Proceeds then on deposit in the
Principal Funding Account and such Principal Funding
Investment Proceeds shall be treated as a portion of Class A
Available Funds.
(iv) Reinvested interest and other investment income on
funds deposited in the Principal Funding Account shall not
be considered to be principal amounts on deposit therein for
purposes of this Supplement.
(b)(i) The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the
Principal Funding Account and in all proceeds thereof. The
Principal Funding Account shall be under the sole dominion
and control of the Trustee for the benefit of the Series
1997-1 Certificateholders. If, at any time, the Principal
Funding Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10
Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent)
establish a new Principal Funding Account meeting the
conditions specified in paragraph (a)(i) above as an
Eligible Deposit Account and shall transfer any cash or any
investments to such new Principal Funding Account.
(ii) Pursuant to the authority granted to the Servicer
in subsection 3.1(b) of the Agreement, the Servicer shall
have the power, revocable by the Trustee, to make
withdrawals and payments or to instruct the Trustee to make
withdrawals and payments from the Principal Funding Account
for the purposes of carrying out the Servicer's or Trustee's
duties hereunder. Pursuant to the authority granted to the
Paying Agent in Section 5.1 of this Supplement and Section
6.7 of the Agreement, the Paying Agent shall have the power,
revocable by the Trustee, to withdraw funds from the
Principal Funding Account for the purpose of making
distributions to the Series 1997-1 Certificateholders.
(c) The Controlled Accumulation Period is scheduled to
commence at the close of business on _______, 1997; provided,
however, that if the Controlled Accumulation Period Length
(determined as described below) is less than twelve months, the
date on which the Controlled Accumulation Period actually
commences will be delayed to the close of business on the last
day of the month preceding the month that is the number of months
prior to the Class A Scheduled Payment Date at least equal to the
Controlled Accumulation Period Length and, as a result, the
number of Monthly Periods in the Controlled Accumulation Period
will at least equal the Controlled Accumulation Period Length.
On the Determination Date immediately preceding the _________
Distribution Date, and on each Determination Date thereafter that
occurs prior to the Determination Date occurring in the Monthly
Period in which the Controlled Accumulation Period commences, the
Servicer will determine the "Controlled Accumulation Period
Length" which will equal the number of months such that the sum
of the Controlled Accumulation Period Factors for each month
during such period will be equal to or greater than the Required
Accumulation Factor Number; provided, however, that the
Controlled Accumulation Period Length shall not be less than one
month. Notwithstanding the foregoing, if the Controlled
Accumulation Period Length shall have been determined to be less
than twelve months and, after the date on which such
determination is made, a Pay Out Event or Reinvestment Event (as
those terms are defined in the Supplement for such Series) shall
occur with respect to any outstanding Principal Sharing Series
other than Series 1997-1, the Controlled Accumulation Period will
commence on the earlier of (i) the first day of the Monthly
Period immediately succeeding the date that such Pay Out Event or
Reinvestment Event shall have occurred with respect to such
Series and (ii) the date on which the Controlled Accumulation
Period is then scheduled to commence.
Section 4.4. Required Amount.
(a) With respect to each Distribution Date, on the
related Determination Date, the Servicer shall determine the
amount (the "Class A Required Amount"), if any, by which (x) the
sum of (i) Class A Monthly Interest for such Distribution Date,
(ii) any Class A Monthly Interest previously due but not paid to
the Class A Certificateholders on a prior Distribution Date,
(iii) any Class A Additional Interest for such Distribution Date
and (iv) any Class A Additional Interest previously due but not
paid to the Class A Certificateholders on a prior Distribution
Date, (v) if the Bank or an Affiliate of the Bank is no longer
the Servicer, the Class A Servicing Fee for such Distribution
Date, (vi) if the Bank or an Affiliate of the Bank is no longer
the Servicer, any Class A Servicing Fee previously due but not
paid to the Servicer, and (vii) the Class A Investor Default
Amount, if any, for such Distribution Date exceeds (y) the Class
A Available Funds. In the event that the difference between (x)
the Class A Required Amount for such Distribution Date and (y)
the amount of Excess Spread and Excess Finance Charge Collections
applied with respect thereto pursuant to subsection 4.7(a) on
such Distribution Date is greater than zero, the Servicer shall
give written notice to the Trustee of such positive Class A
Required Amount on the date of computation.
(b) With respect to each Distribution Date, on the
related Determination Date, the Servicer shall determine the
amount (the "Class B Required Amount"), if any, equal to the sum
of (x) the amount, if any, by which (A) the sum of (i) Class B
Monthly Interest for such Distribution Date, (ii) any Class B
Monthly Interest previously due but not paid to the Class B
Certificateholders, (iii) Class B Additional Interest, if any,
for such Distribution Date, (iv) any Class B Additional Interest
previously due but not paid to the Class B Certificateholders on
a prior Distribution Date, (v) if the Bank or an Affiliate of the
Bank is no longer the Servicer, the Class B Servicing Fee for
such Distribution Date and (vi) if the Bank or an Affiliate of
the Bank is no longer the Servicer, any Class B Servicing Fee
previously due but not paid to the Servicer exceeds (B) the Class
B Available Funds and (y) the Class B Investor Default Amount for
such Distribution Date. In the event that the difference between
(x) the Class B Required Amount for such Distribution Date and
(y) the amount of Excess Spread and Excess Finance Charge
Collections applied with respect thereto pursuant to subsection
4.7(c) on such Distribution Date is greater than zero, the
Servicer shall give written notice to the Trustee of such excess
Class B Required Amount on the date of computation.
Section 4.5. Application of Class A Available Funds,
Class B Available Funds, Collateral Available Funds and Available
Principal Collections. The Servicer shall apply, or shall cause
the Trustee to apply by written instruction to the Trustee, on
each Distribution Date, Class A Available Funds, Class B
Available Funds, Collateral Available Funds and Available
Principal Collections on deposit in the Collection Account with
respect to such Distribution Date to make the following
distributions:
(a) On each Distribution Date, an amount equal to the
Class A Available Funds with respect to such Distribution Date
will be distributed or deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for
such Distribution Date, plus the amount of any Class A
Monthly Interest previously due but not distributed to Class
A Certificateholders on a prior Distribution Date, plus the
amount of any Class A Additional Interest for such
Distribution Date and any Class A Additional Interest
previously due but not distributed to Class A
Certificateholders on a prior Distribution Date, shall be
distributed to the Paying Agent for payment to Class A
Certificateholders;
(ii) if the Bank or an Affiliate of the Bank is no
longer the Servicer, an amount equal to the Class A
Servicing Fee for such Distribution Date, plus the amount of
any Class A Servicing Fee previously due but not distributed
to the Servicer on a prior Distribution Date, shall be
distributed to the Servicer (unless such amount has been
netted against deposits to the Collection Account in
accordance with Section 4.3 of the Agreement);
(iii) an amount equal to the Class A Investor Default
Amount for such Distribution Date shall be treated as a
portion of Available Principal Collections for such
Distribution Date; and
(iv) the balance, if any, shall constitute Excess
Spread and shall be allocated and distributed or deposited
as set forth in Section 4.7.
(b) On each Distribution Date, an amount equal to the
Class B Available Funds with respect to such Distribution Date
will be distributed or deposited in the following priority:
(i) an amount equal to Class B Monthly Interest for
such Distribution Date, plus the amount of any Class B
Monthly Interest previously due but not distributed to Class
B Certificateholders on a prior Distribution Date, plus the
amount of any Class B Additional Interest for such
Distribution Date and any Class B Additional Interest
previously due but not distributed to Class B
Certificateholders on a prior Distribution Date, shall be
distributed to the Paying Agent for payment to Class B
Certificateholders;
(ii) if the Bank or an Affiliate of the Bank is no
longer the Servicer, an amount equal to the Class B
Servicing Fee for such Distribution Date, plus the amount of
any Class B Servicing Fee previously due but not distributed
to the Servicer on a prior Distribution Date, shall be
distributed to the Servicer (unless such amount has been
netted against deposits to the Collection Account in
accordance with Section 4.3 of the Agreement); and
(iii) the balance, if any, shall constitute Excess
Spread and shall be allocated and distributed or deposited
as set forth in Section 4.7.
(c) On each Distribution Date, an amount equal to the
Collateral Available Funds with respect to such Distribution Date
will be distributed or deposited in the following priority:
(i) if the Bank or an Affiliate of the Bank is no
longer the Servicer, an amount equal to the Collateral
Servicing Fee for such Distribution Date, plus the amount of
any Collateral Servicing Fee previously due but not
distributed to the Servicer on a prior Distribution Date,
shall be distributed to the Servicer (unless such amount has
been netted against deposits to the Collection Account in
accordance with Section 4.3 of the Agreement); and
(ii) the balance, if any, shall constitute Excess
Spread and shall be allocated and distributed or deposited
as set forth in Section 4.7.
(d) On each Distribution Date with respect to the
Revolving Period, an amount equal to the Available Principal
Collections deposited in the Collection Account for the related
Monthly Period shall be distributed in the following order of
priority:
(i) an amount equal to the Collateral Monthly Principal
shall be paid to the Collateral Interest Holder for
application in accordance with the Loan Agreement; and
(ii) the balance of such Available Principal
Collections shall be treated as Shared Principal Collections
and applied in accordance with Section 4.4 of the Agreement.
(e) On each Distribution Date with respect to the
Controlled Accumulation Period, an amount equal to the Available
Principal Collections deposited in the Collection Account for the
related Monthly Period shall be distributed in the following
order of priority:
(i) an amount equal to the lesser of (x) the Controlled
Deposit Amount and (y) the sum of the Class A Adjusted
Invested Amount and the Class B Adjusted Invested Amount
shall be deposited in the Principal Funding Account;
(ii) for each Distribution Date prior to the
Distribution Date on which the Class B Invested Amount is
paid in full, in which a reduction in the Required
Enhancement Amount has occurred, an amount equal to the
Collateral Monthly Principal shall be paid to the Collateral
Interest Holder for application in accordance with the Loan
Agreement.
(iii) for each Distribution Date beginning on the
Distribution Date on which the Class B Invested Amount shall
have been paid in full, an amount up to the Collateral
Invested Amount shall be paid to the Collateral Interest
Holder for application in accordance with the Loan
Agreement; and
(f) On each Distribution Date with respect to the Early
Amortization Period, an amount equal to Available Principal
Collections deposited in the Collection Account for the related
Monthly Period shall be distributed or deposited in the following
order of priority:
(i) an amount up to the Class A Adjusted Invested
Amount on such Distribution Date shall be deposited in the
Principal Funding Account for distribution to the Class A
Certificateholders;
(ii) for each Distribution Date beginning on the
Distribution Date on which the Class A Invested Amount is
paid in full, an amount up to the Class B Adjusted Invested
Amount on such Distribution Date shall be deposited in the
Principal Funding Account for distribution to the Class B
Certificateholders;
(iii) for each Distribution Date beginning on the
Distribution Date on which the Class B Invested Amount is
paid in full, an amount up to the Collateral Invested Amount
on such Distribution Date shall be paid to the Collateral
Interest Holder for application in accordance with the Loan
Agreement; and
(iv) for each Distribution Date, after giving effect to
paragraphs (i), (ii) and (iii) above, an amount equal to the
balance, if any, of such Available Principal Collections
will be treated as Shared Principal Collections and applied
in accordance with Section 4.4 of the Agreement.
Section 4.6. Defaulted Amounts; Investor Charge-Offs.
(a) On each Determination Date, the Servicer shall
calculate the Class A Investor Default Amount, if any, for the
related Distribution Date. If, on any Distribution Date, the
Class A Required Amount for the related Monthly Period exceeds
the sum of (x) the amount of Reallocated Principal Collections
allocated to Series 1997-1 with respect to such Monthly Period,
(y) the amount of Excess Spread and the Excess Finance Charge
Collections allocable to Series 1997-1 with respect to such
Monthly Period and (z) the Available Cash Collateral Amount, the
Collateral Invested Amount (after giving effect to any reductions
for any Collateral Charge-Offs pursuant to subsection 4.6(c) and
Reallocated Principal Collections pursuant to Section 4.8 on such
Distribution Date), if any, will be reduced by the amount of such
excess, but not by more than the Class A Investor Default Amount
for such Distribution Date. In the event that such reduction
would cause the Collateral Invested Amount to be a negative
number, the Collateral Invested Amount will be reduced to zero
and the Class B Invested Amount (after giving effect to
reductions for any Class B Investor Charge-Offs pursuant to
subsection 4.6(b) and any Reallocated Class B Principal
Collections pursuant to Section 4.8 for which the Collateral
Invested Amount was not reduced on such Distribution Date) shall
be reduced by the amount by which the Collateral Invested Amount
would have been reduced below zero (but not by more than the
excess, if any, of the Class A Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of
the Collateral Invested Amount with respect to such Distribution
Date). In the event that such reduction would cause the Class B
Invested Amount to be a negative number, the Class B Invested
Amount shall be reduced to zero, and the Class A Invested Amount
shall be reduced by the amount by which the Class B Invested
Amount (after giving effect to such reductions) would have been
reduced below zero, but not by more than the excess, if any, of
the Class A Investor Default Amount for such Distribution Date
over the aggregate amount of the reductions, if any, of the
Collateral Invested Amount and the Class B Invested Amount for
such Distribution Date (a "Class A Investor Charge-Off"). Class
A Investor Charge-Offs shall thereafter be reimbursed and the
Class A Invested Amount increased (but not by an amount in excess
of the aggregate unreimbursed Class A Investor Charge-Offs) on
any Distribution Date by the amount of Excess Spread and Excess
Finance Charge Collections allocated and available for that
purpose pursuant to subsection 4.7(b).
(b) On each Determination Date, the Servicer shall
calculate the Class B Investor Default Amount, if any, for the
related Distribution Date. If, on any Distribution Date, the
Class B Required Amount for such Distribution Date exceeds the
sum of (x) the amount of Excess Spread and Excess Finance Charge
Collections allocated to Series 1997-1 with respect to the
related Monthly Period which are allocated and available to pay
such amount pursuant to subsection 4.7(c), (y) the Reallocated
Principal Collections allocable to the Collateral Interest and
not allocated to pay the Class A Required Amount pursuant to
subsection 4.8(a) with respect to such Distribution Date and (z)
the Available Cash Collateral Amount (after giving effect to any
reductions thereto pursuant to subsection 4.6(a)), then the
Collateral Invested Amount (after giving effect to any reductions
for any Collateral Charge-Offs pursuant to subsection 4.6(c) and
for Reallocated Collateral Principal Collections pursuant to
Section 4.8 and any reductions pursuant to subsection 4.6(a) on
such Distribution Date) shall be reduced by the amount of such
excess. In the event that such reduction would cause the
Collateral Invested Amount (after giving effect to any reductions
for any Collateral Charge-Offs pursuant to subsection 4.6(c) and
for Reallocated Collateral Principal Collections pursuant to
Section 4.8 and any reductions pursuant to subsection 4.6(a) on
such Distribution Date) to be a negative number, the Collateral
Invested Amount shall be reduced to zero, and the Class B
Invested Amount (after giving effect to any reductions for Class
B Investor Charge-Offs pursuant to subsection 4.6(b), any
Reallocated Class B Principal Collections pursuant to Section
4.8 for which the Collateral Invested Amount was not reduced on
such Distribution Date and for any reductions pursuant to
subsection 4.6(a)) shall be reduced by the amount by which the
Collateral Invested Amount would have been reduced below zero,
but not by more than the excess, if any, of the Class B Investor
Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Collateral Invested Amount with respect
to such Distribution Date (a "Class B Investor Charge-Off").
Class B Investor Charge-Offs shall thereafter be reimbursed and
the Class B Invested Amount increased (but not by an amount in
excess of the aggregate unreimbursed Class B Investor
Charge-Offs) on any Distribution Date by the amount of Excess
Spread and Excess Finance Charge Collections allocated and
available for that purpose pursuant to subsection 4.7(d).
(c) On each Determination Date, the Servicer shall
calculate the Collateral Default Amount. If on any Distribution
Date the Collateral Default Amount for the previous Monthly
Period exceeds the sum of (x) the amount of Excess Spread and
Excess Finance Charge Collections allocated to Series 1997-1 with
respect to the related Monthly Period which are allocated and
available to pay such amount pursuant to subsection 4.7(g) and
(y) the Available Cash Collateral Amount (after giving effect to
any reductions thereto pursuant to subsections 4.(6)(a) and
4.6(b)), the Collateral Invested Amount (after giving effect to
any reductions for any Collateral Charge-Offs pursuant to
subsection 4.6(c) and any reductions in respect of Reallocated
Collateral Principal Collections pursuant to Section 4.8 on such
Distribution Date and any reductions pursuant to subsections
4.6(a) and 4.6(b)) will be reduced by the amount of such excess
but not by more than the lesser of the Collateral Default Amount
and the Collateral Invested Amount for such Distribution Date (a
"Collateral Charge-Off"). The Collateral Invested Amount will be
reimbursed after any reduction pursuant to this Section 4.6 on
any Distribution Date by the amount of Excess Spread and Excess
Finance Charge Collections allocated and available on such
Distribution date for that purpose as described under subsection
4.7(h).
Section 4.7. Excess Spread; Excess Finance Charge
Collections. The Servicer shall apply, or shall cause the
Trustee to apply by written instruction to the Trustee, on each
Distribution Date, Excess Spread and Excess Finance Charge
Collections allocated to Series 1997-1 with respect to the
related Monthly Period, to make the following distributions or
deposits in the following order of priority:
(a) an amount equal to the Class A Required Amount, if
any, with respect to such Distribution Date shall be distributed
by the Trustee to fund the Class A Required Amount in accordance
with, and in the priority set forth in, subsections 4.5(a)(i),
(ii) and (iii);
(b) an amount equal to the aggregate amount of Class A
Investor Charge-Offs which have not been previously reimbursed
shall be treated as a portion of Available Principal Collections
for such Distribution Date;
(c) an amount equal to the Class B Required Amount, if
any, with respect to such Distribution 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, subsections 4.5(b) (i)
and (ii) and then any remaining amount up to the amount of the
Class B Investor Default Amount shall be treated as a portion of
Available Principal Collections for such Distribution Date;
(d) an amount equal to the aggregate amount by which
the Class B Invested Amount has been reduced pursuant to clauses
(c), (d) and (e) of the definition of "Class B Invested Amount"
in Section 2.1 of this Supplement (but not in excess of the
aggregate amount of such reductions which have not been
previously reimbursed) shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(e) an amount equal to Collateral Monthly Interest for
such Distribution Date, plus the amount of any Collateral Monthly
Interest previously due but not distributed to the Collateral
Interest Holder on a prior Distribution Date, plus the amount of
any Collateral Additional Interest for such Distribution Date and
any Collateral Additional Interest previously due but not
distributed to the Collateral Interest Holder on a prior
Distribution Date, shall be distributed to the Collateral
Interest Holder for application in accordance with the Loan
Agreement;
(f) an amount equal to the Monthly Servicing Fee for
such Distribution Date that has not been paid to the Servicer and
any Monthly Servicing Fee due but not paid to the Servicer on a
prior Distribution Date shall be paid to the Servicer;
(g) an amount equal to the Collateral Default Amount,
if any, for such Distribution Date shall be treated as a portion
of Available Principal Collections for such Distribution Date;
(h) an amount equal to the aggregate amount by which
the Collateral Invested Amount has been reduced pursuant to
clauses (c), (d) and (e) of the definition of "Collateral
Invested Amount" (but not in excess of the aggregate amount of
such reductions which have not been previously reimbursed) shall
be treated as a portion of Available Principal Collections for
such Distribution Date;
(i) an amount up to the excess, if any, of the Required
Cash Collateral Amount over the amount that would otherwise
remain in the Cash Collateral Account shall be deposited into the
Cash Collateral Account;
(j) on each Distribution Date from and after the
Reserve Account Funding Date, but prior to the date on which the
Reserve Account terminates pursuant to subsection 4.12(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;
(k) an amount equal to the aggregate of any other
amounts then required to be applied pursuant to the Loan
Agreement (to the extent such amounts are required to be applied
pursuant to the Loan Agreement out of Excess Spread and Excess
Finance Charge Collections) shall be distributed to the
Collateral Interest Holder for application in accordance with the
Loan Agreement; and
(l) the balance, if any, will constitute a portion of
Excess Finance Charge Collections for such Distribution Date and
will be available for allocation to other Series or to the
Holders of the Transferor Certificates as described in Section
4.5 of the Agreement.
Section 4.8. Reallocated Principal Collections. On
each Distribution Date, the Servicer shall apply, or shall cause
the Trustee to apply, Reallocated Principal Collections with
respect to such Distribution Date, to make the following
distributions or deposits in the following order of priority:
(a) an amount equal to the excess, if any, of (i) the
Class A Required Amount, if any, with respect to such
Distribution Date over (ii) the amount of Excess Spread and
Excess Finance Charge Collections allocated to Series 1997-1
with respect to the related Monthly Period and the Available
Cash Collateral Amount with respect to such Distribution
Date shall be distributed by the Trustee to fund any
deficiency pursuant to and in the priority set forth in
subsections 4.5(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
Distribution Date over (ii) the amount of Excess Spread and
Excess Finance Charge Collections and the portion of the
Available Cash Collateral Amount allocated and available to
the Class B Certificates pursuant to subsection 4.7(c) and
subsection 4.16(e) on such Distribution Date shall be
applied first to fund any deficiency pursuant to subsections
4.5(b)(i) and (ii) and then to fund any deficiency pursuant
to and in the priority set forth in subsection 4.7(c).
On each Distribution Date, the Collateral Invested
Amount shall be reduced by the amount of Reallocated Principal
Collections for such Distribution Date. In the event that such
reduction would cause the Collateral Invested Amount (after
giving to any Collateral Charge-Offs for such Distribution Date)
to be a negative number, the Collateral Invested Amount (after
giving effect to any Collateral Charge-Offs for such Distribution
Date) shall be reduced to zero and the Class B Invested Amount
shall be reduced by the amount by which the Collateral Invested
Amount would have been reduced below zero. In the event that the
reallocation of Reallocated Principal Collections would cause the
Class B Invested Amount (after giving effect to any Class B
Investor Charge-Offs for such Distribution Date) to be a negative
number on any Distribution Date, Reallocated Principal
Collections shall be reallocated on such Distribution Date in an
aggregate amount not to exceed the amount which would cause the
Class B Invested Amount (after giving to any Class B Investor
Charge-Offs for such Distribution Date) to be reduced to zero.
References to "negative numbers" above shall be determined
without regard to the requirement that the Invested Amount of a
Class not be reduced below zero.
Section 4.9. Excess Finance Charge Collections.
Series 1997-1 shall be an Excess Allocation Series. Subject to
Section 4.5 of the Agreement, Excess Finance Charge Collections
with respect to the Excess Allocation Series for any Distribution
Date will be allocated to Series 1997-1 in an amount equal to the
product of (x) the aggregate amount of Excess Finance Charge
Collections with respect to all the Excess Allocation Series for
such Distribution Date and (y) a fraction, the numerator of which
is the Finance Charge Shortfall for Series 1997-1 for such
Distribution Date and the denominator of which is the aggregate
amount of Finance Charge Shortfalls for all the Excess Allocation
Series for such Distribution Date. The "Finance Charge
Shortfall" for Series 1997-1 for any Distribution Date will be
equal to the excess, if any, of (a) the full amount required to
be paid, without duplication, pursuant to subsections 4.5(a),
4.5(b) and 4.5(c) and subsections 4.7(a) through (j) on such
Distribution Date over (b) the sum of (i) the Reallocated
Investor Finance Charge Collections, (ii) if such Monthly Period
relates to a Distribution Date with respect to the Controlled
Accumulation Period or Early Amortization Period, the amount of
Principal Funding Investment Proceeds, if any, with respect to
such Distribution Date and (iii) the amount of funds, if any, to
be withdrawn from the Reserve Account which, pursuant to
subsection 4.12(d), are required to be included in Class A
Available Funds with respect to such Distribution Date.
Section 4.10. Reallocated Investor Finance Charge
Collections.
(a) That portion of Group I Investor Finance Charge
Collections for any Distribution Date equal to the amount of
Reallocated Investor Finance Charge Collections for such
Distribution 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 Distribution Date shall equal the sum of (i)
the aggregate amount of Series 1997-1 Monthly Interest, Investor
Default Amount, Series 1997-1 Monthly Fees and Series 1997-1
Additional Amounts 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 (c) hereof; provided, however, 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 Default Amount, (y) Group
I Investor Monthly Fees and (z) Group I Investor Additional
Amounts, 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 1997-1 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 Default Amount) and
(II) a fraction, the numerator of which is the Investor
Default Amount and the denominator of which is the Group I
Investor Default Amount;
(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 Default Amount (up to
Group I Investor Monthly Fees) and (II) a fraction, the
numerator of which is Series 1997-1 Monthly Fees and the
denominator of which is Group I Investor Monthly Fees; and
(D) the product of (I) Group I Investor Finance Charge
Collections less the sum of (i) Group I Investor Monthly
Interest, (ii) the Group I Investor Default Amount and (iii)
Group I Investor Monthly Fees and (II) a fraction, the
numerator of which is Series 1997-1 Additional Amounts and
the denominator of which is Group I Investor Additional
Amounts.
(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 Default
Amount, (iii) Group I Investor Monthly Fees and (iv) Group I
Investor Additional Amounts, 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 Invested Amount as
of the last day of the second preceding Monthly Period and the
denominator of which is the sum of such Invested Amount and the
aggregate invested amounts for all other Series included in Group
I as of such last day.
Section 4.11. Shared Principal Collections. Subject
to Section 4.4 of the Agreement, Shared Principal Collections for
any Distribution Date will be allocated to Series 1997-1 in an
amount equal to the product of (x) the aggregate amount of Shared
Principal Collections with respect to all Principal Sharing
Series for such Distribution Date and (y) a fraction, the
numerator of which is the Series 1997-1 Principal Shortfall for
such Distribution Date and the denominator of which is the
aggregate amount of Principal Shortfalls for all the Series which
are Principal Sharing Series for such Distribution Date. The
"Series 1997-1 Principal Shortfall" will be equal to (a) for any
Distribution Date with respect to the Revolving Period, zero, (b)
for any Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled
Deposit Amount with respect to such Distribution Date over the
amount of Available Principal Collections for such Distribution
Date (excluding any portion thereof attributable to Shared
Principal Collections) and (c) for any Distribution Date with
respect to the Early Amortization Period, the excess, if any, of
the Invested Amount over the amount of Available Principal
Collections for such Distribution Date (excluding any portion
thereof attributable to Shared Principal Collections).
Section 4.12. Reserve Account.
(a) The Servicer shall establish and maintain, in the
name of the Trustee, on behalf of the Trust, for the benefit of
the Class A Certificateholders and the Collateral Interest
Holder, an Eligible Deposit Account (the "Reserve Account")
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Class A
Certificateholders and the Collateral Interest Holder. The
Reserve Account shall initially be established with the Trustee.
The Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Reserve Account and in
all proceeds thereof. The Reserve Account shall be under the
sole dominion and control of the Trustee for the benefit of the
Class A Certificateholders and the Collateral Interest Holder.
If at any time the Reserve Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf)
shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency shall
consent) establish a new Reserve Account meeting the conditions
specified above as an Eligible Deposit Account, and shall
transfer any cash or any investments to such new Reserve Account.
The Trustee, at the direction of the Servicer, shall (i) make
withdrawals from the Reserve Account from time to time in an
amount up to the Available Reserve Account Amount at such time,
for the purposes set forth in this Supplement, and (ii) on each
Distribution Date (from and after the Reserve Account Funding
Date) prior to the termination of the Reserve Account make a
deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.7(i).
(b) Funds on deposit in the Reserve Account shall be
invested at the written direction of the Servicer by the Trustee
in Eligible Investments. Funds on deposit in the Reserve Account
on any Transfer Date, after giving effect to any withdrawals from
the Reserve Account on such Transfer Date, shall be invested in
such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Transfer
Date. The Trustee shall maintain for the benefit of the Class A
Certificateholders and the Collateral Interest Holder possession
of the negotiable instruments or securities, if any, evidencing
such Eligible Investments. No such Eligible Investment shall be
disposed of prior to its maturity; provided, however, that the
Trustee may sell, liquidate or dispose of any such Eligible
Investment before its maturity, at the written direction of the
Servicer, if such sale, liquidation or disposal would not result
in a loss of all or part of the principal portion of such
Eligible Investment or if, prior to the maturity of such Eligible
Investment, a default occurs in the payment of principal,
interest or any other amount with respect to such Eligible
Investment. On each Distribution Date, all interest and earnings
(net of losses and investment expenses) accrued since the
preceding Distribution 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 in the Collection Account and treated as collections
of Finance Charge Receivables allocable to Series 1997-1. For
purposes of determining the availability of funds or the balance
in the Reserve Account for any reason under this Supplement,
except as otherwise provided in the preceding sentence,
investment earnings on such funds shall be deemed not to be
available or on deposit.
(c) On the Determination Date preceding each
Distribution Date with respect to the Controlled Accumulation
Period and the first Distribution Date with respect to the Early
Amortization Period, the Servicer shall calculate the "Reserve
Draw Amount" which shall be equal to the excess, if any, of the
Covered Amount with respect to such Distribution Date over the
Principal Funding Investment Proceeds with respect to such
Distribution Date; provided, that such amount shall be reduced to
the extent that funds otherwise would be available for deposit in
the Reserve Account under subsection 4.7(i) with respect to such
Distribution Date.
(d) In the event that for any Distribution Date the
Reserve Draw Amount is greater than zero, the Reserve Draw
Amount, up to the Available Reserve Account Amount, shall be
withdrawn from the Reserve Account on the related Transfer Date
by the Trustee (acting in accordance with the instructions of the
Servicer), deposited into the Collection Account and included in
Class A Available Funds for such Distribution Date.
(e) In the event that the Reserve Account Surplus on
any Distribution Date, after giving effect to all deposits to and
withdrawals from the Reserve Account with respect to such
Distribution Date, is greater than zero, the Trustee, acting in
accordance with the written instructions of the Servicer, shall
withdraw from the Reserve Account, and pay to the Collateral
Interest Holder for application in accordance with the Loan
Agreement, an amount equal to such Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the day on which
the Invested Amount is paid in full to the Series 1997-1
Certificateholders, (ii) if the Controlled Accumulation Period
has not commenced, the occurrence of a Pay Out Event with respect
to Series 1997-1, (iii) if the Controlled Accumulation Period has
commenced, the earlier with the first Distribution Date with
respect to the Early Amortization Period and the Class A
Scheduled Payment Date and (iv) the termination of the Trust
pursuant to the Agreement, the Trustee, acting in accordance with
the instructions of the Servicer, after the prior payment of all
amounts owing to the Class A Certificateholders which are payable
from the Reserve Account as provided herein, shall withdraw from
the Reserve Account and pay to the Collateral Interest Holder for
application 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
Supplement.
Section 4.13. Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee shall
determine LIBOR, which shall be the rate for deposits in United
States dollars for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period) which
appears on Telerate page 3750 as of 11:00 a.m., London time, on
such date. Upon such determination, the Trustee shall notify the
Servicer of LIBOR for such LIBOR Determination Date. If such
rate does not appear on Telerate Page 3750, the rate for the
LIBOR Determination Date will be determined on the basis of the
rates at which deposits in United States dollars are offered by
the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a
period equal to the relevant Interest Period (commencing on the
first day of such Interest Period). The Servicer shall request
the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations
are provided, the rate for that LIBOR Determination Date will be
the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that LIBOR
Determination Date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer,
at approximately 11:00 a.m., New York City time, on that day for
loans in United States dollars to leading European banks for a
period equal to the relevant Interest Period (commencing on the
first day of such Interest Period). If the banks selected by the
Servicer are not quoting rates as provided in the immediately
preceding sentence, LIBOR for such Interest Period shall be LIBOR
in effect for the immediately preceding Interest Period.
(b) The Servicer shall determine, and promptly notify
the Trustee of, the Class A Certificate Rate and the Class B
Certificate Rate for the applicable Interest Period. The Class A
Certificate Rate and Class B Certificate Rate applicable to the
then current and the immediately preceding Interest Periods may
be obtained by any Investor Certificateholder by telephoning the
Trustee at its Corporate Trust Office at (___) ________.
(c) On each LIBOR Determination Date prior to 3:00 p.m.
New York City time, the Trustee shall send to the Servicer by
facsimile, notification of LIBOR for the following Interest
Period.
Section 4.14. Investment Instructions. Any investment
instructions required to be given to the Trustee pursuant to the
terms hereof must be given to the Trustee no later than 10:00
a.m. (New York time) on the date such investment is to be made.
In the event the Trustee receives such investment instruction
later than such time, the Trustee may, but shall have no
obligation to, make such investment. In the event the Trustee is
unable to make an investment required in an investment
instruction received by the Trustee after 10:00 a.m. on such day,
such investment shall be made by the Trustee on the next
succeeding Business Day. In no event shall the Trustee be liable
for any investment not made pursuant to investment instructions
received after 10:00 a.m. on the day such investment is requested
to be made.
Section 4.15. Yield Supplement Account.
(a) The Servicer shall establish and maintain, in the
name of the Trustee, on behalf of the Trust, for the benefit of
the Series 1997-1 Certificateholders, an Eligible Deposit Account
(the "Yield Supplement Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Series 1997-1 Certificateholders. The Servicer
does hereby transfer, assign, set over and otherwise convey to
the Trustee for the benefit of the Series 1997-1
Certificateholders, without recourse, all of its right, title and
interest in, to and under the Yield Supplement Account, any
Eligible Investments on deposit therein and any proceeds of the
foregoing. The Yield Supplement Account shall initially be
established with the Trustee. The Trustee shall possess all
right, title and interest in all funds on deposit from time to
time in the Yield Supplement Account and in all proceeds thereof.
The Yield Supplement Account shall be under the sole dominion and
control of the Trustee for the benefit of the Series 1997-1
Certificateholders. If, at any time, the Yield Supplement
Account ceases to be an Eligible Deposit Account, the Servicer
shall direct the Trustee to establish within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which
each Rating Agency shall consent) a new Yield Supplement Account
meeting the conditions specified above, transfer any cash and/or
any investments from the old Yield Supplement Account to such new
Yield Supplement Account and from the date such new Yield
Supplement Account is established, it shall be the "Yield
Supplement Account." In addition, after five-days notice to the
Trustee, the Servicer may direct the Trustee to establish a new
Yield Supplement Account meeting the conditions specified above,
transfer any cash and/or investments from the old Yield
Supplement Account to such new Yield Supplement Account and from
the date such new Yield Supplement Account is established, it
shall be the "Yield Supplement Account." Pursuant to the
authority granted to the Servicer in subsection 3.1(b) of the
Agreement, the Servicer shall have the power, revocable by the
Trustee, to make withdrawals and payments or to instruct the
Trustee to make withdrawals and payments from the Yield
Supplement Account for the purposes of carrying out the
Servicer's or the Trustee's duties hereunder.
(b) On the Closing Date, the Bank shall deposit
$_______________, in immediately available funds, from the
proceeds of the issuance and sale of the Series 1997-1
Certificates into the Yield Supplement Account (the "Initial
Yield Supplement Deposit"). On each Distribution Date commencing
with the September 17,1997 Distribution Date, the Trustee, acting
in accordance with the written instructions of Servicer, shall
withdraw an amount equal to the Yield Supplement Draw Amount from
the Yield Supplement Account and deposit such amount in the
Collection Account. [DISCUSSION POINT:WHAT ABOUT INVESTMENT
EARNINGS?] Such amount shall be deemed to be Collections of
Finance Charge Receivables allocated to the Series 1997-1
Certificates.
(c) Funds on deposit in the Yield Supplement Account
shall be invested at the written direction of the Servicer by the
Trustee in Eligible Investments. Funds on deposit in the Yield
Supplement Account on the Closing Date and thereafter shall be
invested in Eligible Investments that will mature so that such
funds will be available for withdrawal on each of the Business
Days preceding the Transfer Dates on which withdrawals from the
Yield Supplement Account are scheduled to be made pursuant to
Section 4.15(b). As long as the Trustee shall have complied and
be in compliance with the terms of the Agreement, the Trustee
shall not be liable for any insufficiency of amounts available in
the Yield Supplement Account resulting from losses in connection
with Eligible Investments.
Section 4.16. Cash Collateral Account.
(a) The Servicer shall establish and maintain, in the
name of the Trustee, on behalf of the Trust, for the benefit of
the Series 1997-1 Certificateholders, an Eligible Deposit Account
(the "Cash Collateral Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Series 1997-1 Certificateholders. The Servicer
does hereby transfer, assign, set over and otherwise convey to
the Trustee for the benefit of the Series 1997-1
Certificateholders, without recourse, all of its right, title and
interest in, to and under the Cash Collateral Account, any
Eligible Investments on deposit therein and any proceeds of the
foregoing. The Cash Collateral Account shall initially be
established with the Trustee. The Trustee shall possess all
right, title and interest in all funds on deposit from time to
time in the Cash Collateral Account and in all proceeds thereof.
The Cash Collateral Account shall be under the sole dominion and
control of the Trustee for the benefit of the Series 1997-1
Certificateholders. If, at any time, the Cash Collateral Account
ceases to be an Eligible Deposit Account, the Servicer shall
direct the Trustee to establish within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each
Rating Agency shall consent) a new Cash Collateral Account
meeting the conditions specified above, transfer any cash and/or
any investments from the old Cash Collateral Account to such new
Cash Collateral Account and from the date such new Cash
Collateral Account is established, it shall be the "Cash
Collateral Account." In addition, after five-days notice to the
Trustee, the Servicer may direct the Trustee to establish a new
Cash Collateral Account meeting the conditions specified above,
transfer any cash and/or investments from the old Cash Collateral
Account to such new Cash Collateral Account and from the date
such new Cash Collateral Account is established, it shall be the
"Cash Collateral Account." Pursuant to the authority granted to
the Servicer in subsection 3.1(b) of the Agreement, the Servicer
shall have the power, revocable by the Trustee, to make
withdrawals and payments or to instruct the Trustee to make
withdrawals and payments from the Cash Collateral Account for the
purposes of carrying out the Servicer's or the Trustee's duties
hereunder.
(b) On the Closing Date, the Bank shall deposit
$_______________, in immediately available funds, from the
proceeds of the issuance and sale of the Series 1997-1
Certificates into the Cash Collateral Account (the "Initial Cash
Collateral Deposit".)
(c) Funds on deposit in the Cash Collateral Account on
any Distribution Date, after giving effect to any withdrawals
from the Cash Collateral Account on such Distribution Date, shall
be invested in such Eligible Investments that will mature so that
such funds will be available for withdrawal on or prior to the
following Distribution Date. The Trustee shall maintain for the
benefit of the Series 1997-1 Certificateholders possession of the
negotiable instruments or securities, if any, evidencing such
Eligible Investments. No Eligible Investment shall be disposed
of prior to its maturity. On each Distribution Date, all
interest and earnings (net of losses and investment expenses)
accrued since the preceding Distribution Date on funds on deposit
in the Cash Collateral Account shall be retained in the Cash
Collateral Account to the extent the amount on deposit therein is
less than the Required Cash Collateral Amount, or deposited in
the Collection Account and treated as collections of Finance
Charge Receivables allocable to Series 1997-1.
(d) On or before each Distribution Date, the Servicer
shall calculate the "Required Draw Amount" which shall be equal
to the amount payable from the Cash Collateral Account (up to the
Available Cash Collateral Amount) to fund any deficiency in
respect of the Class A Required Amount or the Class B Required
Amount, in that order of priority, pursuant to subsections 4.6(a)
and (b).
(e) In the event that for any Distribution Date the
Required Draw Amount is greater than zero, the Required Draw
Amount, up to the Available Cash Collateral Amount, shall be
withdrawn from the Cash Collateral Account on such Distribution
Date by the Trustee (acting in accordance with the instructions
of the Servicer), and applied in accordance with subsections
4.6(a) and (b).
(f) In the event that the amount on deposit in the Cash
Collateral Account on any Distribution Date, after giving effect
to all deposits to, and withdrawals from, the Cash Collateral
Account with respect to such Distribution Date, is greater than
the Required Cash Collateral Amount, the Trustee, acting in
accordance with the instructions of the Servicer, shall withdraw
such excess from the Cash Collateral Account, and pay such excess
to the [Collateral Interest Holder for application in accordance
with the Loan Agreement].
(g) Pursuant to the terms of and subject to the
limitations contained in subsection [___________] of the Loan
Agreement, the Transferor may on any Distribution Date elect to
cause an additional deposit to be made into the Cash Collateral
Account (each such deposit, an "Optional Deposit"). The
Transferor may cause any such deposit to be made on a
Distribution Date after forwarding notice of such deposit
(including the amount thereof) to the Trustee. Any such deposit
shall be deemed to be available in the Cash Collateral Account
for purposes of calculating the amount of Collateral Monthly
Principal for such Distribution Date, but shall not be included
in the Available Cash Collateral Amount for such Distribution
Date, but shall be included in the Available Cash Collateral
Amount for the subsequent Distribution Date.
(h) The Transferor, at its option, may, at any time
following the occurrence of a Conversion Event and prior to the
commencement of the Early Amortization Period, elect to cause
Collateral Monthly Principal with respect to a Distribution Date
to be deposited into the Cash Collateral Account (each such
deposit, a "Conversion Deposit"); provided, however, that the
Rating Agency Condition shall have been satisfied. The
Transferor may cause any such deposit to be made on a
Distribution Date after forwarding notice of such deposit to the
Trustee. Any such deposit shall not be included in the Available
Cash Collateral Amount for such Distribution Date, but shall be
included in the Available Cash Collateral Amount for the
subsequent Distribution Date.
ARTICLE V
Distributions and Reports to
Series 1997-1 Certificateholders
Section 5.1. Distributions.
(a) On each Distribution Date, the Paying Agent shall
distribute to each Class A Certificateholder of record on the
related Record Date (other than as provided in Section 12.2 of
the Agreement) such Class A Certificateholder's pro rata share of
the amounts on deposit in the Collection Account or otherwise
held by the Paying Agent that are allocated and available on such
Distribution Date to pay Class A Monthly Interest and any Class A
Additional Interest pursuant to subsection 4.5(a)(i).
(b) On the Class A Scheduled Final Payment Date, the
Paying Agent shall distribute to each Class A Certificateholder
of record on the related Record Date (other than as provided in
Section 12.2 of the Agreement) such Class A Certificateholder's
pro rata share of the amounts on deposit in the Principal Funding
Account or otherwise held by the Paying Agent that are allocated
and available on such date to pay principal of the Class A
Certificates pursuant to subsections 4.5(e)(i) or 4.5(f)(i) up to
a maximum amount on any such date equal to the Class A Invested
Amount on such date (unless there has been an optional repurchase
of the Series 1997-1 Certificateholders' Interest pursuant to
Section 10.1 of the Agreement, in which event the foregoing
limitation will not apply).
(c) On each Distribution Date, the Paying Agent shall
distribute to each Class B Certificateholder of record on the
related Record Date (other than as provided in Section 12.2 of
the Agreement) such Class B Certificateholder's pro rata share of
the amounts on deposit in the Collection Account or otherwise
held by the Paying Agent that are allocated and available on such
Distribution Date to pay interest on the Class B Certificates
pursuant to subsection 4.5(b)(i).
(d) On the Class B Scheduled Final Payment Date, the
Paying Agent shall distribute to each Class B Certificateholder
of record on the related Record Date (other than as provided in
Section 12.2 of the Agreement) such Class B Certificateholder's
pro rata share of the amounts on deposit in the Principal Funding
Account or otherwise held by the Paying Agent that are allocated
and available on such date to pay principal of the Class B
Certificates pursuant to subsections 4.5(e)(i) or 4.5(f)(ii) up
to a maximum amount on any such date equal to the Class B
Invested Amount on such date (unless there has been an optional
repurchase of the Series 1997-1 Certificateholders' Interest
pursuant to Section 10.1 of the Agreement, in which event the
foregoing limitation will not apply).
(e) The distributions to be made pursuant to this
Section 5.1 are subject to the provisions of Sections 2.6, 9.1,
10.1 and 12.2 of the Agreement and Sections 8.1 and 8.2 of this
Supplement.
(f) Except as provided in Section 12.2 of the Agreement
with respect to a final distribution, distributions to Series
1997-1 Certificateholders hereunder shall be made by check mailed
to each Series 1997-1 Certificateholder at such Series 1997-1
Certificateholder's address appearing in the Certificate Register
without presentation or surrender of any Series 1997-1
Certificate or the making of any notation thereon; provided,
however, that with respect to Series 1997-1 Certificates
registered in the name of a Clearing Agency, such distributions
shall be made to such Clearing Agency in immediately available
funds.
Section 5.2. Reports and Statements to Series 1997-1
Certificateholders.
(a) On each Distribution Date, the Paying Agent, on
behalf of the Trustee, shall forward to each Series 1997-1
Certificateholder a statement substantially in the form of
Exhibit C prepared by the Servicer.
(b) Not later than each Determination Date, the
Servicer shall deliver to the Trustee, the Paying Agent, each
Rating Agency and the Collateral Interest Holder (i) a statement
substantially in the form of Exhibit C prepared by the Servicer
and (ii) a certificate of a Servicing Officer substantially in
the form of Exhibit D.
(c) A copy of each statement or certificate provided
pursuant to paragraph (a) or (b) may be obtained by any Series
1997-1 Certificateholder or any Certificate Owner thereof by a
request in writing to the Servicer.
(d) On or before March 31 of each calendar year,
beginning with calendar year 1998, the Paying Agent, on behalf of
the Trustee, shall furnish or cause to be furnished to each
Person who at any time during the preceding calendar year was a
Series 1997-1 Certificateholder, a statement prepared by the
Servicer containing the information which is required to be
contained in the statement to Series 1997-1 Certificateholders,
as set forth in paragraph (a) above aggregated for such calendar
year or the applicable portion thereof during which such Person
was a Series 1997-1 Certificateholder, together with other
information as is required to be provided by an issuer of
indebtedness under the Code. Such obligation of the Servicer
shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the
Paying Agent pursuant to any requirements of the Code as from
time to time in effect.
ARTICLE VI
Pay Out Events
Section 6.1. Pay Out Events. If any one of the
following events shall occur with respect to the Series 1997-1
Certificates:
(a) the occurrence of an Insolvency Event relating to
the Transferor or, unless the Rating Agency Condition is
satisfied with respect to the deletion of the Bank from this
subsection 6.1(a), the occurrence of an Insolvency Event relating
to the Bank;
(b) the Trust becomes an investment company within the
meaning of the Investment Company Act;
(c) failure on the part of the Transferor (i) to make
any payment or deposit required by the terms of the Agreement or
this Supplement on or before the date occurring five Business
Days after the date such payment or deposit is required to be
made therein or herein or (ii) duly to observe or perform any
other covenants or agreements of the Transferor set forth in the
Agreement or this Supplement, which failure has a material
adverse effect on the Series 1997-1 Certificateholders and which
continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Trustee,
or to the Transferor and the Trustee by any Holder of the Series
1997-1 Certificates;
(d) any representation or warranty made by the
Transferor in the Agreement or this Supplement, or any
information contained in a computer file or microfiche list
required to be delivered by the Transferor pursuant to Section
2.1 or subsection 2.9(f) of the Agreement shall prove to have
been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material
respect for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall
have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by any Holder of the Series 1997-1
Certificates and as a result of which the interests of the Series
1997-1 Certificateholders are materially and adversely affected
for such period; provided, however, that a Pay Out Event pursuant
to this subsection 6.1(d) shall not be deemed to have occurred
hereunder if the Transferor has accepted reassignment of the
related Receivable, or all of such Receivables, if applicable,
during such period in accordance with the provisions of the
Agreement;
(e) a failure by the Transferor to convey Receivables
in Additional Accounts or Participations to the Trust within five
Business Days after the day on which it is required to convey
such Receivables or Participations pursuant to subsection 2.9(a)
of the Agreement;
(f) any Servicer Default shall occur;
(g) the average Series Adjusted Portfolio Yield for any
three consecutive Monthly Periods is reduced to a rate which is
less than the average of the Base Rates for such period;
(h) a Transfer Restriction Event shall occur;
then, in the case of any event described in subparagraph (c), (d)
or (f), after the applicable grace period, if any, set forth in
such subparagraphs, either the Trustee or the Holders of Series
1997-1 Certificates evidencing more than 50% of the aggregate
unpaid principal amount of Series 1997-1 Certificates by notice
then given in writing to the Transferor and the Servicer (and to
the Trustee if given by the Series 1997-1 Certificateholders) may
declare that a Pay Out Event has occurred with respect to Series
1997-1 as of the date of such notice, and, in the case of any
event described in subparagraph (a), (b), (e), (g), or (h), a Pay
Out Event shall occur with respect to Series 1997-1 without any
notice or other action on the part of the Trustee or the Series
1997-1 Certificateholders immediately upon the occurrence of such
event.
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1. Optional Repurchase.
(a) On any day occurring on or after the date on which
the Invested Amount is reduced to 10% or less of the Initial
Invested Amount, the Transferor shall have the option to purchase
the Series 1997-1 Certificateholders' Interest, at a purchase
price equal to (i) if such day is a Distribution Date, the
Reassignment Amount for such Distribution Date or (ii) if such
day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day.
(b) The Transferor shall give the Servicer and the
Trustee at least 30 days prior written notice of the date on
which the Transferor intends to exercise such purchase option.
Not later than 12:00 noon, New York City time, on such day the
Transferor shall deposit the Reassignment Amount into the
Collection Account in immediately available funds. Such purchase
option is subject to payment in full of the Reassignment Amount.
Following the deposit of the Reassignment Amount into the
Collection Amount in accordance with the foregoing, the Invested
Amount for Series 1997-1 shall be reduced to zero and the Series
1997-1 Certificateholders shall have no further interest in the
Receivables. The Reassignment Amount shall be distributed as set
forth in subsection 8.1(b).
Section 7.2. Series Termination.
(a) If, on the _________ Distribution Date, the
Invested Amount (after giving effect to all changes therein on
such date) would be greater than zero, the Servicer, on behalf of
the Trustee, shall, within the 40-day period which begins on such
Distribution Date, solicit bids for the sale of Principal
Receivables and the related Finance Charge Receivables (or
interests therein) in an amount equal to the Invested Amount at
the close of business on the last day of the Monthly Period
preceding the Series 1997-1 Termination Date (after giving effect
to all distributions required to be made on the Series 1997-1
Termination Date, except pursuant to this Section 7.2). Such
bids shall require that such sale shall (subject to subsection
7.2(b)) occur on the Series 1997-1 Termination Date. The
Transferor shall be entitled to participate in, and to receive
from the Trustee a copy of each other bid submitted in connection
with, such bidding process.
(b) The Servicer, on behalf of the Trustee, shall sell
such Receivables (or interests therein) on the Series 1997-1
Termination Date to the bidder who made the highest cash purchase
offer. The proceeds of any such sale shall be treated as
Collections on the Receivables allocated to the Series 1997-1
Certificateholders pursuant to the Agreement and this Supplement;
provided, however, that the Servicer shall determine conclusively
the amount of such proceeds which are allocable to Finance Charge
Receivables and the amount of such proceeds which are allocable
to Principal Receivables. During the period from the _________
Distribution Date to the Series 1997-1 Termination Date, the
Servicer shall continue to collect payments on the Receivables
and allocate and deposit such Collections in accordance with the
provisions of the Agreement and the Supplements.
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or
Certificateholders' Interest pursuant to Section 2.6 or 10.1 of
the Agreement and Section 7.1 or 7.2 of this Supplement.
(a)(i) The amount to be paid by the Transferor with
respect to Series 1997-1 in connection with a reassignment
of Receivables to the Transferor pursuant to Section 2.6 of
the Agreement shall equal the Reassignment Amount for the
first Distribution Date following the Monthly Period in
which the reassignment obligation arises under the
Agreement.
(ii) The amount to be paid by the Transferor with
respect to Series 1997-1 in connection with a repurchase of
the Certificateholders' Interest pursuant to Section 10.1 of
the Agreement shall equal the sum of (x) the Reassignment
Amount for the Distribution Date of such repurchase and (y)
the sum of (A) the excess, if any, of (I) a price equivalent
to the average of bids quoted on the Record Date preceding
the date of repurchase or, if not a Business Day, on the
next succeeding Business Day by at least two recognized
dealers selected by the Trustee for the purchase by such
dealers of a security which is similar to the Class A
Certificates with a remaining maturity approximately equal
to the remaining maturity of the Class A Certificates and
rated by each Rating Agency in the rating category
originally assigned to the Class A Certificates over (II)
the portion of the Reassignment Amount attributable to the
Class A Certificates and (B) the excess, if any, of (I) a
price equivalent to the average of bids quoted on such
Record Date, or if not a Business Day, on the next
succeeding Business Day by at least two recognized dealers
selected by the Trustee for the purchase by such dealers of
a security which is similar to the Class B Certificates with
a remaining maturity approximately equal to the remaining
maturity of the Class B Certificates and rated by each
Rating Agency in the rating category originally assigned to
the Class B Certificates over (II) the portion of the
Reassignment Amount attributable to the Class B
Certificates.
(b) With respect to the Reassignment Amount deposited
into the Collection Account pursuant to Section 7.1 or any
amounts allocable to the Series 1997-1 Certificateholders'
Interest deposited into the Collection Account pursuant to
Section 7.2, the Trustee shall, in accordance with the written
direction of the Servicer, not later than 12:00 noon, New York
City time, on the related Distribution Date, make deposits or
distributions of the following amounts (in the priority set forth
below and, in each case after giving effect to any deposits and
distributions otherwise be made on such date) in immediately
available funds: (i) (x) the Class A Invested Amount on such
Distribution Date will be distributed to the Paying Agent for
payment to the Class A Certificateholders and (y) an amount equal
to the sum of (A) Class A Monthly Interest for such Distribution
Date, (B) any Class A Monthly Interest previously due but not
distributed to the Class A Certificateholders on a prior
Distribution Date and (C) the amount of Class A Additional
Interest, if any, for such Distribution Date and any Class A
Additional Interest previously due but not distributed to the
Class A Certificateholders on any prior Distribution Date, will
be distributed to the Paying Agent for payment to the Class A
Certificateholders, (ii) (x) the Class B Invested Amount on such
Distribution Date will be distributed to the Paying Agent for
payment to the Class B Certificateholders and (y) an amount equal
to the sum of (A) Class B Monthly Interest for such Distribution
Date, (B) any Class B Monthly Interest previously due but not
distributed to the Class B Certificateholders on a prior
Distribution Date and (C) the amount of Class B Additional
Interest, if any, for such Distribution Date and any Class B
Additional Interest previously due but not distributed to the
Class B Certificateholders on any prior Distribution Date, will
be distributed to the Paying Agent for payment to the Class B
Certificateholders and (iii) the balance, if any, will be
distributed to the Collateral Interest Holder for application in
accordance with the Loan Agreement.
(c) Notwithstanding anything to the contrary in this
Supplement or the Agreement, all amounts distributed to the
Paying Agent pursuant to subsection 8.1(b) for payment to the
Series 1997-1 Certificateholders shall be deemed distributed in
full to the Series 1997-1 Certificateholders on the date on which
such funds are distributed to the Paying Agent pursuant to this
Section and shall be deemed to be a final distribution pursuant
to Section 12.2 of the Agreement.
Section 8.2. Distribution of Proceeds of Sale,
Disposition or Liquidation of the Receivables pursuant to Section
9.1 of the Agreement.
(a) Not later than 12:00 noon, New York City time, on
the Distribution Date following the date on which the Insolvency
Proceeds are deposited into the Collection Account pursuant to
subsection 9.1(b) of the Agreement, the Trustee shall in
accordance with the written direction of the Servicer (in the
following priority and, in each case, after giving effect to any
deposits and distributions otherwise to be made on such
Distribution Date) (i) deduct an amount equal to the Class A
Invested Amount on such Distribution Date from the portion of the
Insolvency Proceeds allocated to Series 1997-1 Allocable
Principal Collections and distribute such amount to the Paying
Agent for payment to the Class A Certificateholders, provided
that the amount of such distribution shall not exceed the product
of (x) the portion of the Insolvency Proceeds allocated to Series
1997-1 Allocable Principal Collections and (y) the Principal
Allocation Percentage with respect to the related Monthly Period,
(ii) deduct an amount equal to the Class B Invested Amount on
such Distribution Date from the portion of the Insolvency
Proceeds allocated to Series 1997-1 Allocable Principal
Collections and distribute such amount to the Paying Agent for
payment to the Class B Certificateholders, provided that the
amount of such distribution shall not exceed (x) the product of
(A) the portion of such Insolvency Proceeds allocated to Series
1997-1 Allocable Principal Collections and (B) the Principal
Allocation Percentage with respect to the related Monthly Period
minus (y) the amount distributed to the Paying Agent pursuant to
clause (i) of this sentence and (iii) deduct an amount equal to
the Collateral Invested Amount, if any, on such Distribution Date
from the portion of the Insolvency Proceeds allocated to Series
1997-1 Allocable Principal Collections and distribute such amount
to the Collateral Interest Holder for application in accordance
with the Loan Agreement, provided that the amount of such
distribution shall not exceed (x) the product of (1) the portion
of the Insolvency Proceeds allocated to Series 1997-1 Allocable
Principal Collections and (2) the Principal Allocation Percentage
with respect to such Monthly Period minus (y) the amounts
distributed to the Paying Agent pursuant to clauses (i) and (ii)
of this sentence. To the extent that the product of (A) the
portion of the Insolvency Proceeds allocated to Series 1997-1
Allocable Principal Collections and (B) the Principal Allocation
Percentage with respect to the related Monthly Period exceeds the
aggregate amounts distributed to the Paying Agent pursuant to the
preceding sentence, the excess shall be allocated to the
Transferor's Interest and shall be released to the Holders of the
Transferor Certificates on such Distribution Date.
(b) Not later than 12:00 noon, New York City time, on
such Distribution Date, the Trustee shall in accordance with the
written direction of the Servicer (in the following priority and,
in each case, after giving effect to any deposits and
distributions otherwise to be made on such Distribution Date)
(i) deduct an amount equal to the sum of (w) Class A Monthly
Interest for such Distribution Date, (x) any Class A Monthly
Interest previously due but not distributed to the Class A
Certificateholders on a prior Distribution Date and (y) the
amount of Class A Additional Interest, if any, for such
Distribution Date and any Class A Additional Interest previously
due but not distributed to the Class A Certificateholders on a
prior Distribution Date from the portion of the Insolvency
Proceeds allocated to Collections of Finance Charge Receivables
and distribute such amount to the Paying Agent for payment to the
Class A Certificateholders, provided that the amount of such
distribution shall not exceed the product of (x) the portion of
the Insolvency Proceeds allocated to Series 1997-1 Allocable
Finance Charge Collections, (y) the Floating Allocation
Percentage with respect to the related Monthly Period and (z) the
Class A Floating Percentage with respect to such Monthly Period
and (ii) deduct an amount equal to the sum of (w) Class B Monthly
Interest for such Distribution Date, (x) Class B Monthly Interest
previously due but not distributed to the Class B
Certificateholders on a prior Distribution Date and (y) the
amount of Class B Additional Interest, if any, for such
Distribution Date and any Class B Additional Interest previously
due but not distributed to the Class B Certificateholders on a
prior Distribution Date from the portion of the Insolvency
Proceeds allocated to Series 1997-1 Allocable Finance Charge
Collections and distribute such amount to the Paying Agent for
payment to the Class B Certificateholders, provided that the
amount of such distribution shall not exceed the product of
(x) the portion of the Insolvency Proceeds allocated to Series
1997-1 Allocable Finance Charge Collections, (y) the Floating
Allocation Percentage with respect to the related Monthly Period
and (z) the Class B Floating Percentage with respect to such
Monthly Period. To the extent that the product of (A) the
portion of the Insolvency Proceeds allocated to Series 1997-1
Allocable Finance Charge Collections and (B) the Floating
Allocation Percentage with respect to the related Monthly Period
exceeds the aggregate amount distributed to the Paying Agent
pursuant to the preceding sentence, the excess shall be released
to the Collateral Interest Holder for application by the
Collateral Interest Holder in accordance with the Loan Agreement.
(c) Notwithstanding anything to the contrary in this
Supplement or the Agreement, all amounts distributed to the
Paying Agent pursuant to this Section for payment to the Series
1997-1 Certificateholders shall be distributed in full to the
Series 1997-1 Certificateholders on the date on which funds are
distributed to the Paying Agent pursuant to this Section and
shall be deemed to be a final distribution pursuant to Section
12.2 of the Agreement.
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Ratification of Agreement. As
supplemented by this Supplement, the Agreement is in all respects
ratified and confirmed and the Agreement as so supplemented by
this Supplement shall be read, taken and construed as one and the
same instrument.
Section 9.2. Counterparts. This Supplement 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.
Section 9.3. Governing Law. THIS SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the undersigned have caused this
Supplement to be duly executed and delivered by their respective
duly authorized officers on the day and year first above written.
CREDIT CARD RECEIVABLES FUNDING CORPORATION,
Transferor
By:_________________________
Name:
Title:
BANKBOSTON (NH), NATIONAL ASSOCIATION,
Servicer
By:_________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity, but
solely as Trustee,
By:_________________________
Name:
Title:
FORM OF CLASS A CERTIFICATE EXHIBIT A-1
REGISTERED $__________1/
No. R-_______ CUSIP No. _________
Unless this Class A Certificate is presented by an
authorized representative of The Depository Trust Company, a New
York corporation ("DTC"), to Credit Card Receivables Funding
Corporation 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 is 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.
1/ Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
BANKBOSTON CREDIT CARD MASTER TRUST
SERIES 1997-1
CLASS A FLOATING RATE ASSET BACKED CERTIFICATE
Class A Scheduled Payment Date
The ___________ Distribution Date
Each $1,000 minimum denomination represents a
1/_______ undivided interest
in Class A of the
BANKBOSTON CREDIT CARD MASTER TRUST, SERIES 1997-1
Evidencing an undivided interest in certain assets of a trust,
the corpus of which consists primarily of an interest in
receivables generated from time to time in the ordinary course of
business in a portfolio of consumer revolving credit card
accounts serviced by
BANKBOSTON (NH), NATIONAL ASSOCIATION
and other assets and interests constituting the Trust under the
Pooling and Servicing Agreement referred to below.
(Not an interest in or obligation of BankBoston (NH), National
Association, Credit Card Receivables Funding Corporation or any
of their respective affiliates)
This certifies that CEDE & CO. (the "Class A Certificateholder")
is the registered owner of a fractional undivided interest in
certain assets of a trust (the "Trust") created pursuant to the
Pooling and Servicing Agreement, dated as of _______, 1997 (as
amended and supplemented, the "Agreement"), as supplemented by
the Series 1997-1 Supplement dated as of _______, 1997 (as
amended and supplemented, the "Supplement"), among Credit Card
Receivables Funding Corporation, as Transferor, BankBoston (NH)
National Association, as Servicer, and The Bank of New York, a
New York banking corporation, as trustee (the "Trustee"). The
corpus of the Trust consists of (i) the Transferor's ownership
interest in a portfolio of receivables (the "Receivables")
existing in the consumer revolving credit card accounts
identified under the Agreement from time to time (the
"Accounts"), (ii) all Receivables generated under the Accounts
from time to time thereafter, (iii) funds collected or to be
collected from cardmembers in respect of the Receivables, (iv)
all funds which are from time to time on deposit in the
Collection Account, the Special Funding Account, the Yield
Supplement Account and any other Series Accounts and (v) all
other assets and interests constituting the Trust. The Holder of
this Certificate is entitled to the benefits of the subordination
of the Class B Certificates and the Collateral Interest to the
extent provided in the Supplement. Although a summary of certain
provisions of the Agreement and the Supplement is set forth below
and in the Summary of Terms and Conditions attached hereto and
made a part hereof, this Class A Certificate does not purport to
summarize the Agreement and the Supplement and reference is made
to the Agreement and the Supplement for information with respect
to the interests, rights, benefits, obligations, proceeds and
duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Supplement (without
schedules) may be requested from the Trustee by writing to the
Trustee at the Corporate Trust Office. To the extent not defined
herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement or the Supplement, as
applicable.
This Class A Certificate is issued under and is subject
to the terms, provisions and conditions of the Agreement and the
Supplement, to which Agreement and Supplement, each as amended
and supplemented from time to time, the Class A Certificateholder
by virtue of the acceptance hereof assents and is bound.
It is the intent of the Transferor and the Class A
Certificateholders that, for federal, state and local income and
franchise tax purposes only, the Class A Certificates will
qualify as indebtedness of the Transferor secured by the
Receivables. The Class A Certificateholder, by the acceptance of
this Class A Certificate, agrees to treat this Class A
Certificate for federal, state and local income and franchise tax
purposes as debt of the Transferor.
In general, payments of principal with respect to the
Class A Certificates are limited to the Class A Invested Amount,
which may be less than the unpaid principal balance of the Class
A Certificates. The Class A Scheduled Payment Distribution Date
is the ______ ____ Distribution Date, but principal with respect
to the Class A Certificates may be paid earlier or later under
certain circumstances described in the Agreement and the
Supplement. If for one or more months during the Controlled
Accumulation Period there are not sufficient funds to pay the
Controlled Deposit Amount, then to the extent that excess funds
are not available on subsequent Distribution Dates with respect
to the Controlled Accumulation Period to make up for such
shortfalls, the final payment of principal of the Class A
Certificates will occur later than the Class A Scheduled Payment
Date.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee, by manual
signature, this Class A Certificate shall not be entitled to any
benefit under the Agreement or the Supplement or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Class A Certificate to be duly executed.
CREDIT CARD RECEIVABLES FUNDING CORPORATION
By: ________________________
Name:
Title:
Dated: _________, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates described in the
within-mentioned Agreement and Supplement.
THE BANK OF NEW YORK,
as Trustee,
By: ________________________
Authorized Officer
or
By: ________________________
as Authenticating Agent
for the Trustee,
By: ________________________
Authorized Officer
BANKBOSTON CREDIT CARD MASTER TRUST
SERIES 1997-1
CLASS A FLOATING RATE ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which
arise generally from the purchase of goods and services and
amounts advanced to cardmembers as cash advances and Finance
Charge Receivables. This Class A Certificate is one of a Series
of Certificates entitled BankBoston Credit Card Master Trust,
Series 1997-1 (the "Series 1997-1 Certificates"), and one of a
class thereof entitled Class A Series 1997-1 Floating Rate Asset
Backed Certificates, (the "Class A Certificates"), each of which
represents a fractional, undivided interest in certain assets of
the Trust. The assets of the Trust are allocated in part to the
investor certificateholders of all outstanding Series (the
"Certificateholders' Interest") with the remainder allocated to
the Holders of the Transferor Certificates. The aggregate
interest represented by the Class A Certificates at any time in
the Principal Receivables in the Trust shall not exceed an amount
equal to the Class A Invested Amount at such time. The Class A
Initial Invested Amount is $___________. The Class A Invested
Amount on any date will be an amount equal to (a) the Class A
Initial Invested Amount, minus (b) the aggregate amount of
principal payments made to the Class A Certificateholders on or
prior to such date, minus (c) the excess, if any, of the
aggregate amount of Class A Investor Charge-Offs for all prior
Distribution Dates over Class A Investor Charge-Offs reimbursed
pursuant to subsection 4.7(b) of the Supplement prior to such
date.
Subject to the terms and conditions of the Agreement,
the Transferor may, from time to time, direct the Trustee, on
behalf of the Trust, to issue one or more new Series of Investor
Certificates, which will represent fractional, undivided
interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall
distribute to each Class A Certificateholder of record on the
last day of the preceding calendar month (each a "Record Date")
such Class A Certificateholder's pro rata share of such amounts
(including amounts on deposit in the Collection Account) as are
payable to the Class A Certificateholders pursuant to the
Agreement and the Supplement. Distributions with respect to this
Class A Certificate will be made by the Paying Agent by check
mailed to the address of the Class A Certificateholder of record
appearing in the Certificate Register without the presentation or
surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of
this Class A Certificate) except that with respect to Class A
Certificates registered in the name of Cede & Co., the nominee
for The Depository Trust Company, distributions will be made in
the form of immediately available funds. Final payment of this
Class A Certificate will be made only upon presentation and
surrender of this Class A Certificate at the office or agency
specified in the notice of final distribution delivered by the
Trustee to the Series 1997-1 Certificateholders in accordance
with the Agreement and the Supplement.
On any day occurring on or after the day on which the
Invested Amount is reduced to 10% or less of the Initial Invested
Amount, the Transferor has the option to repurchase the Series
1997-1 Certificateholders' Interest in the Trust. The repurchase
price will be equal to (a) if such day is a Distribution Date,
the Reassignment Amount for such Distribution Date or (b) if such
day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day. Following the deposit of
the Reassignment Amount in the Collection Account, Series 1997-1
Certificateholders will not have any interest in the Receivables
and the Series 1997-1 Certificates will represent only the right
to receive such Reassignment Amount.
THIS CLASS A CERTIFICATE DOES NOT REPRESENT AN
OBLIGATION OF, OR AN INTEREST IN, THE TRANSFEROR OR THE SERVICER
OR ANY AFFILIATE OF EITHER OF THEM AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS CLASS A
CERTIFICATE IS LIMITED IN RIGHT OF PAYMENT TO CERTAIN COLLECTIONS
WITH RESPECT TO THE RECEIVABLES (AND CERTAIN OTHER AMOUNTS), ALL
AS MORE SPECIFICALLY SET FORTH HEREINABOVE AND IN THE AGREEMENT
AND THE SUPPLEMENT.
The Class A Certificates are issuable only in minimum
denominations of $1,000 and integral multiples of $1,000. The
transfer of this Class A Certificate shall be registered in the
Certificate Register upon surrender of this Class A Certificate
for registration of transfer at any office or agency maintained
by the Transfer Agent and Registrar accompanied by a written
instrument of transfer, in a form satisfactory to the Trustee or
the Transfer Agent and Registrar, duly executed by the Class A
Certificateholder or such Class A Certificateholder's attorney,
and duly authorized in writing with such signature guaranteed,
and thereupon one or more new Class A Certificates of authorized
denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or
transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, Class A Certificates are
exchangeable for new Class A Certificates evidencing like
aggregate fractional, undivided interests as requested by the
Class A Certificateholder surrendering such Class A Certificates.
No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith.
The Servicer, the Trustee, the Paying Agent and the
Transfer Agent and Registrar and any agent of any of them, may
treat the person in whose name this Class A Certificate is
registered as the owner hereof for all purposes, and neither the
Servicer nor the Trustee, the Paying Agent, the Transfer Agent
and Registrar, nor any agent of any of them, shall be affected by
notice to the contrary except in certain circumstances described
in the Agreement.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
ASSIGNMENT
Social Security or other identifying number of assignee
______________________________
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _____________________________________
(name and address of assignee)
the within certificate and all rights thereunder, and hereby
irrevocably constitutes and appoints ____________________,
attorney, to transfer said certificate on the books kept for
registration thereof, with full power of substitution in the
premises.
Dated: ____________ ______________________2/
Signature Guaranteed:
______________________
---------------------
2/ NOTE: The signature to this assignment must correspond with
the name of the registered owner as it appears on the face
of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever.
EXHIBIT A-2
[FORM OF CLASS B CERTIFICATE]
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE
ACCOUNT OF A BENEFIT PLAN (AS DEFINED BELOW)
REGISTERED $__________1/
No. R-_______ CUSIP No. _________
Unless this Class B Certificate is presented by an
authorized representative of The Depository Trust Company, a New
York corporation ("DTC"), to Credit Card Receivables Funding
Corporation 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 is 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.
--------------------
1/ Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
BANKBOSTON CREDIT CARD MASTER TRUST
SERIES 1997-1
CLASS B FLOATING RATE ASSET BACKED CERTIFICATE
Class B Scheduled Payment Date
The ___________ Distribution Date
Each $1,000 minimum denomination represents a
1/______ undivided interest
in Class B of the
BANKBOSTON CREDIT CARD MASTER TRUST, SERIES 1997-1
Evidencing an undivided interest in certain assets of a trust,
the corpus of which consists primarily of an interest in
receivables generated from time to time in the ordinary course of
business in a portfolio of consumer revolving credit card
accounts serviced by
BANKBOSTON (NH), NATIONAL ASSOCIATION,
and other assets and interests constituting the Trust under the
Pooling and Servicing Agreement referred to below.
(Not an interest in or obligation of BankBoston (NH), National
Association, Credit Card Receivables Funding Corporation or any
of their respective affiliates)
This certifies that CEDE & CO. (the "Class B Certificateholder")
is the registered owner of a fractional, undivided interest in
certain assets of a trust (the "Trust") created pursuant to the
Pooling and Servicing Agreement, dated as of _______, 1997 (as
amended and supplemented, the "Agreement"), as supplemented by
the Series 1997-1 Supplement dated as of _______, 1997 (as
amended and supplemented, the "Supplement"), among Credit Card
Receivables Funding Corporation, as Transferor, BankBoston (NH),
National Association, as Servicer, and The Bank of New York, a
New York banking corporation, as trustee (the "Trustee"). The
corpus of the Trust consists of (i) the Transferor's ownership
interest in a portfolio of receivables (the "Receivables")
existing in the consumer revolving credit card accounts
identified under the Agreement from time to time (the
"Accounts"), (ii) all Receivables generated under the Accounts
from time to time thereafter, (iii) funds collected or to be
collected from cardmembers in respect of the Receivables,
(iv) all funds which are from time to time on deposit in the
Collection Account, the Special Funding Account, the Yield
Supplement Account and the other Series Accounts and (v) all
other assets and interests constituting the Trust. The Holder of
this Certificate is entitled to the benefits of the subordination
of the Collateral Interest to the extent provided in the
Supplement. Although a summary of certain provisions of the
Agreement and the Supplement is set forth below and in the
Summary of Terms and Conditions attached hereto and made a part
hereof, this Class B Certificate does not purport to summarize
the Agreement and the Supplement and reference is made to the
Agreement and the Supplement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and obligations of the
Trustee. A copy of the Agreement and the Supplement (without
schedules) may be requested from the Trustee by writing to the
Trustee at the Corporate Trust Office. To the extent not defined
herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement or the Supplement, as
applicable.
This Class B Certificate is issued under and is subject
to the terms, provisions and conditions of the Agreement and the
Supplement, to which Agreement and Supplement, each as amended
and supplemented from time to time, the Class B Certificateholder
by virtue of the acceptance hereof assents and is bound.
This Class B Certificate may not be acquired by or for
the account of any employee benefit plan, trust or account,
including an individual retirement account, that is subject to
the Employee Retirement Income Security Act of 1974, as amended,
or that is described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended, or an entity whose underlying
assets include plan assets by reason of a plan's investment in
such entity (a "Benefit Plan"). By accepting and holding this
Class B Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not a Benefit Plan. By
acquiring any interest in this Class B Certificate, the
applicable Certificate Owner or Owners shall be deemed to have
represented and warranted that it or they are not Benefit Plans.
THIS CLASS B CERTIFICATE IS SUBORDINATED TO THE EXTENT
NECESSARY TO FUND PAYMENTS ON THE CLASS A CERTIFICATES TO THE
EXTENT SPECIFIED IN THE SUPPLEMENT.
It is the intent of the Transferor and the Class B
Certificateholders that, for federal, state and local income and
franchise tax purposes only, the Class B Certificates will
qualify as indebtedness of the Transferor secured by the
Receivables. The Class B Certificateholder, by the acceptance of
this Class B Certificate, agrees to treat this Class B
Certificate for federal, state and local income and franchise tax
purposes as debt of the Transferor.
In general, payments of principal with respect to the
Class B Certificates are limited to the Class B Invested Amount,
which may be less then the unpaid principal balance of the Class
B Certificates. The Expected Final Distribution Date is the
______ ____ Distribution Date, but principal with respect to the
Class B Certificates may be paid earlier or later under certain
circumstances described in the Agreement and the Supplement. If
for one or more months during the Controlled Accumulation Period
there are not sufficient funds to pay the Controlled Deposit
Amount, then to the extent that excess funds are not available on
subsequent Distribution Dates with respect to the Accumulation
Period to make up for such shortfalls, the final payment of
principal of the Certificates will occur later than the Class B
Scheduled Payment Date.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee, by manual
signature, this Class B Certificate shall not be entitled to any
benefit under the Agreement or the Supplement or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Class B Certificate to be duly executed.
CREDIT CARD RECEIVABLES FUNDING CORPORATION
By: ______________________________
Name:
Title:
Dated: _________, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates described in
the within mentioned Agreement and Supplement.
THE BANK OF NEW YORK,
as Trustee
By: ____________________________
Authorized Signatory
BANKBOSTON CREDIT CARD MASTER TRUST
SERIES 1997-1
CLASS B FLOATING RATE ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which
arise generally from the purchase of goods and services and
amounts advanced to cardmembers as cash advances and Finance
Charge Receivables. This Class B Certificate is one of a Series
of Certificates entitled BankBoston Credit Card Master Trust,
Series 1997-1 (the "Series 1997-1 Certificates"), and one of a
class thereof entitled Class B Series 1997-1 Floating Rate Asset
Backed Certificates, (the "Class B Certificates"), each of which
represents a fractional, undivided interest in certain assets of
the Trust. The assets of the Trust are allocated in part to the
investor certificateholders of all outstanding Series (the
"Certificateholders' Interest") with the remainder allocated to
the Holders of the Transferor Certificates. The aggregate
interest represented by the Class B Certificates at any time in
the Principal Receivables in the Trust shall not exceed an amount
equal to the Class B Invested Amount at such time. The Class B
Initial Invested Amount is $__________. The Class B Invested
Amount on any date will be an amount equal to (a) the Class B
Initial Invested Amount, minus (b) the aggregate amount of
principal payments made to the Class B Certificateholders prior
to such date, minus (c) the aggregate amount of Class B Investor
Charge-Offs for all prior Distribution Dates , minus (d) the
amount of Reallocated Principal Collections allocated on all
prior Distribution Dates pursuant to subsection 4.8(a) of the
Supplement (excluding any Reallocated Principal Collections that
have resulted in a reduction in the Collateral Invested Amount
pursuant to Section 4.8), minus (e) an amount equal to the amount
by which the Class B Invested Amount has been reduced to cover
the Class A Investor Default Amount on all prior Distribution
Dates, and plus (f) the amount of Excess Spread and Excess
Finance Charge Collections allocated to Series 1997-1 and applied
on all prior Distribution Dates for the purpose of reimbursing
amounts deducted pursuant to the foregoing clauses (c), (d) and
(e); provided, however, that the Class B Invested Amount may not
be reduced below zero.
Subject to the terms and conditions of the Agreement,
the Transferor may, from time to time, direct the Trustee, on
behalf of the Trust, to issue one or more new Series of Investor
Certificates, which will represent fractional, undivided
interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall
distribute to each Class B Certificateholder of record on the
last day of the preceding calendar month (each a "Record Date")
such Class B Certificateholder's pro rata share of such amounts
(including amounts on deposit in the Collection Account) as are
payable to the Class B Certificateholders pursuant to the
Agreement and the Supplement. Distributions with respect to this
Class B Certificate will be made by the Paying Agent by check
mailed to the address of the Class B Certificateholder of record
appearing in the Certificate Register without the presentation or
surrender of this Class B Certificate or the making of any
notation thereon (except for the final distribution in respect of
this Class B Certificate) except that with respect to Class B
Certificates registered in the name of Cede & Co., the nominee
for The Depository Trust Company, distributions will be made in
the form of immediately available funds. Final payment of this
Class B Certificate will be made only upon presentation and
surrender of this Class B Certificate at the office or agency
specified in the notice of final distribution delivered by the
Trustee to the Series 1997-1 Certificateholders in accordance
with the Agreement and the Supplement.
On any day occurring on or after the day on which the
Invested Amount is reduced to 10% or less of the Initial Invested
Amount, the Transferor has the option to repurchase the Series
1997-1 Certificateholders' Interest in the Trust. The repurchase
price will be equal to (a) if such day is a Distribution Date,
the Reassignment Amount for such Distribution Date or (b) if such
day is not a Distribution Date, the Reassignment Amount for the
Distribution Date next following such day. Following the deposit
of the Reassignment Amount in the Collection Account, Series
1997-1 Certificateholders will not have any interest in the
Receivables and the Series 1997-1 Certificates will represent
only the right to receive such Reassignment Amount.
THIS CLASS B CERTIFICATE DOES NOT REPRESENT AN
OBLIGATION OF, OR AN INTEREST IN, THE TRANSFEROR OR THE SERVICER
OR ANY AFFILIATE OF EITHER OF THEM AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS CLASS B
CERTIFICATE IS LIMITED IN RIGHT OF PAYMENT TO CERTAIN COLLECTIONS
WITH RESPECT TO THE RECEIVABLES (AND CERTAIN OTHER AMOUNTS), ALL
AS MORE SPECIFICALLY SET FORTH HEREINABOVE AND IN THE AGREEMENT
AND THE SUPPLEMENT.
The Class B Certificates are issuable only in minimum
denominations of $1,000 and integral multiples of $1,000. The
transfer of this Class B Certificate shall be registered in the
Certificate Register upon surrender of this Class B Certificate
for registration of transfer at any office or agency maintained
by the Transfer Agent and Registrar accompanied by a written
instrument of transfer, in a form satisfactory to the Trustee or
the Transfer Agent and Registrar, duly executed by the Class B
Certificateholder or such Class B Certificateholder's attorney,
and duly authorized in writing with such signature guaranteed,
and thereupon one or more new Class B Certificates of authorized
denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or
transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, Class B Certificates are
exchangeable for new Class B Certificates evidencing like
aggregate fractional undivided interests as requested by the
Class B Certificateholder surrendering such Class B Certificates.
No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith.
The Servicer, the Trustee, the Paying Agent and the
Transfer Agent and Registrar and any agent of any of them, may
treat the person in whose name this Class B Certificate is
registered as the owner hereof for all purposes, and neither the
Servicer nor the Trustee, the Paying Agent, the Transfer Agent
and Registrar, nor any agent of any of them, shall be affected by
notice to the contrary except in certain circumstances described
in the Agreement.
THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
ASSIGNMENT
Social Security or other identifying number of assignee
____________________
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
_________________________________________________________________
(name and address of assignee)
the within certificate and all rights thereunder, and hereby
irrevocably constitutes and appoints ____________________,
attorney, to transfer said certificate on the books kept for
registration thereof, with full power of substitution in the
premises.
Dated: ____________________2/
Signature Guaranteed:
____________________
____________________
---------------------
2/ NOTE: The signature to this Assignment must correspond with
the name of the registered owner as it appears on the face
of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever.
EXHIBIT B
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO THE TRUSTEE
______________________________
BANKBOSTON CREDIT CARD MASTER TRUST
SERIES 1997-1
______________________________
The undersigned, a duly authorized representative of
BankBoston (NH), National Association (the "Bank"), as Servicer
pursuant to the Pooling and Servicing Agreement dated as of
_______, 1997 (as amended and supplemented, the "Pooling and
Servicing Agreement"), among the Bank, Credit Card Receivables
Funding Corporation ("CCRFC"), as Transferor and The Bank of New
York, as trustee (the "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 or the Series 1997-1 Supplement dated as of ________,
1997, among the Bank, CCRFC and the Trustee (as amended and
supplemented, the "Supplement"), as applicable.
2. The Bank is the Servicer.
3. The undersigned is a Servicing Officer.
I. INSTRUCTION TO MAKE A WITHDRAWAL.
Pursuant to subsections 4.5(a), (b) and (c), the
Servicer does hereby instruct the Trustee (i) to make
withdrawals from the Collection Account on ___________, ____,
which date is a Distribution Date under the Supplement, in the
aggregate amounts (equal to the Class A Available Funds, Class
B Available Funds and Collateral Available Funds, respectively)
as set forth below in respect of the following amounts and
(ii) to apply the proceeds of such withdrawals in accordance
with subsections 4.5(a) (b) and (c):
With respect to the Class A Certificates:
A) Pursuant to subsection 4.5(a)(i):
(1) Interest at the Class A
Certificate Rate for the related
Interest Period on the Class A
Invested Amount . . . . . . . . . $_______
(2) Class A Monthly Interest
previously due but not paid . . . $_______
(3) Class A Additional Interest
and any Class A Additional
Interest due but not paid . . . . $_______
B) Pursuant to subsection 4.5(a)(ii):
(1) The Class A Servicing Fee for
the preceding Monthly Period, if
applicable . . . . . . . . . . . . $_______
(2) Accrued and unpaid Class A
Servicing Fees, if applicable . . $_______
C) Pursuant to subsection 4.5(a)(iii):
Class A Investor Default Amount
for the preceding Monthly Period . $_______
With respect to the Class B Certificates,
A) Pursuant to subsection 4.5(b)(i):
(1) Interest at the Class B
Certificate Rate for the preceding
Monthly Period on the Class B
Invested Amount . . . . . . . . . $_______
(2) Class B Monthly Interest
previously due but not paid . . . $_______
(3) Class B Additional Interest
and any Class B Additional
Interest previously due but not
paid . . . . . . . . . . . . . . . $_______
B) Pursuant to subsection 4.5(b)(ii):
(1) The Class B Servicing Fee for
the preceding Monthly Period, if
applicable . . . . . . . . . . . . $_______
(2) Accrued and unpaid Class B
Servicing Fees, if applicable . . $_______
With respect to the Collateral Interest
A) Pursuant to subsection 4.5(c)(i):
(1) The Collateral Servicing Fee
for the preceding Monthly Period,
if applicable . . . . . . . . . . $_______
(2) Accrued and unpaid Collateral
Servicing Fee, if applicable . . . $_______
Pursuant to subsections 4.5(d), (e) and
(f), the Servicer hereby instructs the
Trustee (i) to make withdrawals from
the Collection Account on ____________,
which date is a Distribution Date under
the Supplement, in the aggregate
amounts (equal to the Available
Principal Collections) as set forth
below in respect of the following
amounts and (ii) to apply the proceeds
of such withdrawals in accordance with
subsections 4.5(d), (e) and (f):
A) Pursuant to subsection 4.5(d):
(1) The excess, if any, of the
Collateral Invested Amount over
the Required Collateral Invested
Amount paid to the Collateral
Interest Holder pursuant to the
Loan Agreement . . . . . . . . . . $_______
(2) Amount to be treated as
Shared Principal Collections . . . $_______
B) Pursuant to subsection 4.5(e):
(1) The Lesser of the Controlled
Deposit Amount and the sum of the
Class A Adjusted Invested Amount
and the Class B Adjusted Invested
Amount deposited in the Principal
Funding Account . . . . . . . . . $_______
(2) After the Class B Invested
Amount is paid in full, the amount
paid to the Collateral Interest
Holder (up to the Collateral
Invested Amount) pursuant to the
Loan Agreement . . . . . . . . . . $_______
(3) Prior to the date the Class B
Invested Amount is paid in full,
the excess of the Collateral
Invested Amount over the Required
Collateral Invested Amount paid to
the Collateral Interest Holder
pursuant to the Loan Agreement . . $_______
(4) Prior to the date the Class B
Invested Amount is paid in full,
the amount to be treated as Shared
Principal Collections . . . . . . $_______
C) Pursuant to subsection 4.5(f):
(1) An amount up to the Class A
Adjusted Invested Amount deposited
in the Principal Funding Account . $_______
(2) On and after the Distribution
Date on which the Class A Invested
Amount is paid in full, an amount
up to the Class B Invested Amount
deposited in the Principal Funding
Account . . . . . . . . . . . . . $_______
(3) On an after the Distribution
Date on which the Class B Invested
Amount is paid in full, an amount
up to the Collateral Invested
Amount paid to the Collateral
Interest Holder pursuant to the
Loan Agreement . . . . . . . . . . $_______
Pursuant to Section 4.7, the Servicer does hereby
instruct the Trustee to apply on __________, which is a
Distribution Date under the Supplement, any Excess Spread and
Excess Finance Charge Collections allocated to Series 1997-1 as
follows:
A) Pursuant to subsection 4.7(a):
Class A Required Amount applied in
the priority set forth in
subsections 4.5(a)(i), (ii) and
(iii) . . . . . . . . . . . . . . $_______
B) Pursuant to subsection 4.7(b):
Aggregate amount of Class A
Investor Charge-Offs not
previously reimbursed allocated to
Available Principal Collections . $_______
C) Pursuant to subsection 4.7(c):
Class B Required Amount applied
first in the priority set forth in
subsections 4.5(b)(i) and (ii) and
any remaining amount up to the
Class B Investor Default Amount
allocated to Available Principal
Collections . . . . . . . . . . . $_______
D) Pursuant to subsection 4.7(d):
The amount by which the "Class B
Invested Amount" has been reduced
pursuant to clauses (c), (d) and
(e) of the definition thereof
allocated to Available Principal
Collections . . . . . . . . . . . $_______
E) Pursuant to subsection 4.7(e):
(1) Collateral Monthly Interest . $_______
(2) Collateral Monthly Interest
previously due but not paid . . . $_______
(3) Collateral Additional
Interest and any Collateral
Additional Interest previously due
and not paid . . . . . . . . . . . $_______
F) Pursuant to subsection 4.7(f):
Monthly Servicing Fee for such
Distribution Date that has not
been paid to the Servicer and any
Monthly Servicing Fee previously
due but not paid to the Servicer . $_______
G) Pursuant to subsection 4.7(g):
Collateral Default Amount
allocated to Available Principal
Collections . . . . . . . . . . . $_______
H) Pursuant to subsection 4.7(h):
The amount by which the
"Collateral Invested Amount" has
been reduced pursuant to clauses
(c), (d) and (e) of the definition
thereof allocated to Available
Principal Collections . . . . . . $_______
I) Pursuant to subsection 4.7(i):
The excess of the Required Reserve
Account Amount over the Available
Reserve Amount deposited into the
Reserve Account . . . . . . . . . $_______
J) Pursuant to subsection 4.7(j):
Paid to the Collateral Interest
Holder pursuant to the Loan
Agreement . . . . . . . . . . . . $_______
K) Pursuant to subsection 4.7(k):
Treated as Excess Finance Charge
Collections and allocated to other
Series or paid to the Holders of
the Transferor Certificates . . . $_______
Pursuant to Section 4.8, the Servicer does hereby
instruct the Trustee to apply on __________, which is a
Distribution Date under the Pooling and Servicing Agreement,
$__________ of Reallocated Principal Collections to fund any
deficiencies in the Required Amount after applying Class A
Available Funds, Class B Available Funds,
Excess Spread and Excess Finance Charge Collections thereto.
II. INSTRUCTION TO MAKE CERTAIN PAYMENTS
Pursuant to Section 5.1 of the Series Supplement, the
Servicer does hereby instruct the Trustee to pay in accordance
with Section 5.1 from the Collection Account or the Principal
Funding Account, as applicable, on __________, which date is a
Distribution Date under the Supplement, the following amounts as
set forth below:
A) Pursuant to subsection 5.1(a):
Interest to be distributed to Class
A Certificateholders . . . . . . . $__________
B) Pursuant to subsection 5.1(b):
On the Class A Scheduled Payment
Date, principal to be distributed
to the Class A Certificateholders $__________
C) Pursuant to subsection 5.1(c):
Interest to be distributed to Class
B Certificateholders . . . . . . . $__________
D) Pursuant to subsection 5.1(d):
On the Class B Scheduled Payment
Date, on or after the date Class A
Invested Amount is paid in full,
principal to be distributed to the
Class B Certificateholders . . . . $__________
III. ACCRUED AND UNPAID AMOUNTS
After giving effect to the withdrawals and transfers to
be made in accordance with this notice, the following amounts
will be accrued and unpaid with respect to all Monthly Periods
preceding the current calendar month.
1. Subsection 4.6(a):
The aggregate amount of all
unreimbursed Class A Investor
Charge-Offs . . . . . . . . . . . $__________
2. Subsections 4.6(a), (b) and 4.8(a):
The aggregate amount by which the
"Class B Invested Amount" has been
reduced pursuant to clauses (c),
(d) and (e) of the definition
thereof . . . . . . . . . . . . . $__________
3. Subsections 4.6(a), (b), (c) and
4.8(a) and (b):
The aggregate amount by which the
"Collateral Invested Amount" has
been reduced pursuant to clauses
(c), (d) and (e) of the definition
thereof . . . . . . . . . . . . . $__________
IN WITNESS WHEREOF, the undersigned has duly executed
this Certificate this ____ day of __________, ____.
BANKBOSTON (NH), NATIONAL ASSOCIATION
by ________________________
Name:
Title:
EXHIBIT C
FORM OF MONTHLY STATEMENT
BANKBOSTON CREDIT CARD MASTER TRUST
SERIES 1997-1
Pursuant to the Pooling and Servicing Agreement dated
as of _______, 1997 (hereinafter as such agreement may have been
or may be from time to time, amended or otherwise modified, the
"Pooling and Servicing Agreement"), among BankBoston (NH),
National Association (the "Bank"), as Servicer, Credit Card
Receivables Funding Corporation ("CCRFC"), as Transferor, and The
Bank of New York, as trustee (the "Trustee"), as supplemented by
the Series 1997-1 Supplement dated as of _______, 1997 (the
"Supplement") among the Bank, CCRFC and the Trustee, as Servicer
is required to prepare certain information each month regarding
current distributions to the Series 1997-1 Certificateholders and
the performance of the BankBoston Credit Card Master Trust (the
"Trust") during the previous month. The information which is
required to be prepared with respect to the Distribution Date of
__________, and with respect to the performance of the Trust
during the month of __________ is set forth below. Certain of
the information is presented on the basis of an original
principal amount of $1,000 per Series 1997-1 Certificate (a
"Certificate"). Certain other information is presented based on
the aggregate amounts for the Trust as a whole. Capitalized
terms used in this Monthly Statement have their respective
meanings set forth in the Pooling and Servicing Agreement and the
Supplement.
A) Information regarding distributions in
respect of the Class A Certificates
per $1,000 original certificate
principal amount:
(1) The total amount of the
distribution in respect of Class A
Certificates, per $1,000 original
certificate principal amount . . . . $__________
(2) The amount of the distribution
set forth in paragraph 1 above in
respect of interest on the Class A
Certificates, per $1,000 original
certificate principal amount . . . . $__________
(3) The amount of the distribution
set forth in paragraph 1 above in
respect of principal of the Class A
Certificates, per $1,000 original
certificate principal amount . . . . $__________
B) Class A Investor Charge Offs and
Reimbursement of Charge Offs:
(1) The amount of Class A Investor
Charge Offs . . . . . . . . . . . . . $__________
(2) The amount of Class A Investor
Charge Offs set forth in paragraph 1
above, per $1,000 original certificate
principal amount . . . . . . . . . . $__________
(3) The total amount reimbursed in
respect of Class A Investor Charge
Offs . . . . . . . . . . . . . . . . $__________
(4) The amount set forth in paragraph
3 above, per $1,000 original
certificate principal amount . . . . $__________
(5) The amount, if any, by which the
outstanding principal balance of the
Class A Certificates exceeds the Class
A Invested Amount after giving effect
to all transactions on such
Distribution Date . . . . . . . . . . $__________
C) Information regarding distributions in
respect of the Class B Certificates,
per $1,000 original certificate
principal amount:
(1) The total amount of the
distribution in respect of Class B
Certificates, per $1,000 original
certificate principal amount . . . . $__________
(2) The amount of the distribution
set forth in paragraph 1 above in
respect of interest on the Class B
Certificates, per $1,000 original
certificate principal amount . . . . $__________
(3) The amount of the distribution
set forth in paragraph 1 above in
respect of principal of the Class B
Certificates, per $1,000 original
certificate principal amount . . . . $__________
D) Amount of reductions in Class B
Invested Amount pursuant to clauses
(c), (d), and (e) of the definition of
Class B Invested Amount:
(1) The amount of reductions in Class
B Invested Amount pursuant to clauses
(c), (d) and (e) of the definition of
Class B Invested Amount . . . . . . . $__________
(2) The amount of the reductions in
the Class B Invested Amount set forth
in paragraph 1 above, per $1,000
original certificate principal amount $__________
(3) The total amount reimbursed in
respect of such reductions in the
Class B Invested Amount . . . . . . . $__________
(4) The amount set forth in paragraph
3 above, per $1,000 original
certificate principal amount . . . . $__________
(5) The amount, if any, by which the
outstanding principal balance of the
Class B Certificates exceeds the Class
B Invested Amount after giving effect
to all transactions on such
Distribution Date . . . . . . . . . . $__________
E) Information regarding certain
distributions to the Collateral
Interest Holder:
(1) The amount distributed to the
Collateral Interest Holder in respect
of interest on the Collateral Invested
Amount . . . . . . . . . . . . . . . $__________
(2) The amount distributed to the
Collateral Interest Holder in respect
of principal on the Collateral
Invested Amount . . . . . . . . . . . $__________
F) Amount of reductions in Collateral
Invested Amount pursuant to clauses
(c), (d), and (e) of the definition of
Collateral Invested Amount:
(1) The amount of reductions in the
Collateral Invested Amount pursuant to
clauses (c), (d) and (e) of the
definition of Collateral Invested
Amount . . . . . . . . . . . . . . . $__________
(2) The total amount reimbursed in
respect of such reductions in the
Collateral Invested Amount . . . . . $__________
BANKBOSTON (NH), NATIONAL ASSOCIATION,
SERVICER
By ________________________
Name:
Title:
RECEIVABLES --
Beginning of the Month Principal Receivables . . . . $________
Beginning of the Month Finance Charge Receivables. . $________
Beginning of the Month Discounted Receivables . . . $_________
Beginning of the Month Premium Receivables . . . . $_________
Beginning of the Month Total Receivables. . . . . . $_________
Removed Principal Receivables . . . . . . . . . . . $_________
Removed Finance Charge Receivables . . . . . . . . $_________
Removed Total Receivables . . . . . . . . . . . . . $_________
Additional Principal Receivables . . . . . . . . . $_________
Additional Finance Charge Receivables . . . . . . . $_________
Additional Total Receivables . . . . . . . . . . . $_________
Discounted Receivables Generated this Period. . . . $_________
Premium Receivables Generated this Period . . . . . $_________
End of the Month Principal Receivables . . . . . . $_________
End of the Month Finance Charge Receivables . . . . $_________
End of the Month Discounted Receivables . . . . . . $_________
End of the Month Premium Receivables . . . . . . . $_________
End of the Month Total Receivables . . . . . . . . $_________
Special Funding Account Balance . . . . . . . . . . $_________
Aggregate Invested Amount (all Master Trust Series). $_________
End of the Month Transferor Amount . . . . . . . . $_________
DELINQUENCIES AND LOSSES --RECEIVABLES
End of the Month Delinquencies
30-59 Days Delinquent . . . . . . . . . $_________
60-89 Days Delinquent . . . . . . . . . $_________
90+ Days Delinquent . . . . . . . . . . $_________
Total 30+ Days Delinquent . . . . . . . $_________
Defaulted Accounts During the Month . . . $_________
INVESTED AMOUNTS --
Class A Initial Invested Amount . . . . $_________
Class B Initial Invested Amount . . . . $_________
Collateral Initial Invested Amount . . $_________
INITIAL INVESTED AMOUNT . . . . . . . . . $__________
Class A Invested Amount . . . . . . . . $_________
Class B Invested Amount . . . . . . . . $_________
Collateral Invested Amount . . . . . . $_________
INVESTED AMOUNT . . . . . . . . . . . . . $_________
Class A Adjusted Invested Amount . . . $_________
Class B Adjusted Invested Amount . . . $_________
ADJUSTED INVESTED AMOUNT . . . . . . . . $_________
MONTHLY SERVICING FEE . . . . . . . . . . $_________
INVESTOR DEFAULT AMOUNT . . . . . . . . . $_________
GROUP I INFORMATION
WEIGHTED AVERAGE CERTIFICATE RATE FOR
ALL SERIES IN GROUP ONE . . . . . . . . $_________
GROUP I INVESTOR FINANCE CHARGE
COLLECTIONS . . . . . . . . . . . . . . $_________
GROUP I INVESTOR ADDITIONAL AMOUNTS . . $_________
GROUP I INVESTOR DEFAULT AMOUNT . . . . $_________
GROUP I INVESTOR MONTHLY FEES . . . . . $_________
GROUP I INVESTOR MONTHLY INTEREST . . . $_________
SERIES 1997-1 INFORMATION
SERIES 1997-1 ALLOCATION PERCENTAGE . . _________%
SERIES 1997-1 ALLOCABLE FINANCE CHARGE
COLLECTIONS . . . . . . . . . . . . . . $_________
SERIES 1997-1 ADDITIONAL AMOUNTS . . . $_________
SERIES 1997-1 ALLOCABLE DEFAULTED AMOUNT $_________
SERIES 1997-1 MONTHLY FEES . . . . . . $_________
SERIES 1997-1 ALLOCABLE PRINCIPAL
COLLECTIONS . . . . . . . . . . . . . . $_________
SERIES 1997-1 REQUIRED TRANSFEROR AMOUNT $_________
FLOATING ALLOCATION PERCENTAGE . . . . $_________
INVESTOR FINANCE CHARGE COLLECTIONS . . _________%
INVESTOR DEFAULT AMOUNT . . . . . . . . $_________
REALLOCATED INVESTOR FINANCE CHARGE
COLLECTIONS . . . . . . . . . . . . . $_________
PRINCIPAL ALLOCATIONS PERCENTAGE . . . _________%
AVAILABLE PRINCIPAL COLLECTIONS . . . . $_________
CLASS A AVAILABLE FUNDS --
CLASS A FLOATING PERCENTAGE . . . . . . . _________%
Class A Floating Percentage of
Reallocated Investor Finance Charge
Collections . . . . . . . . . . . . . . $_________
Other Amounts . . . . . . . . . . . . . $_________
TOTAL CLASS A AVAILABLE FUNDS . . . . . . $_________
Class A Monthly Interest . . . . . . . $_________
Class A Servicing Fee (if applicable) . $_________
Class A Investor Default Amount . . . . $_________
TOTAL CLASS A EXCESS SPREAD . . . . . . . $_________
CLASS A REQUIRED AMOUNT . . . . . . . . . $_________
CLASS B AVAILABLE FUNDS -- $
CLASS B FLOATING PERCENTAGE . . . . . . . _________%
CLASS B AVAILABLE FUNDS . . . . . . . . . $_________
Class B Monthly Interest . . . . . . . $_________
Class B Servicing Fee (if applicable) . $_________
COLLATERAL AVAILABLE FUNDS COLLATERAL
FLOATING PERCENTAGE . . . . . . . . . . . _________%
COLLATERAL AVAILABLE FUNDS . . . . . . . $_________
Collateral Interest Servicing Fee (if
applicable) . . . . . . . . . . . . . . $_________
TOTAL COLLATERAL EXCESS SPREAD . . . . . $_________
TOTAL CLASS B EXCESS SPREAD . . . . . . . $_________
EXCESS SPREAD --
TOTAL EXCESS SPREAD . . . . . . . . . . . $_________
Excess Spread Applied to Class A
Required Amount . . . . . . . . . . . . $_________
Excess Spread Applied to Class A
Investor Charge Offs . . . . . . . . . $_________
Excess Spread Applied to Class B
Required Amount . . . . . . . . . . . . $_________
Excess Spread Applied to Reductions of
Class B Invested Amount pursuant to
clauses (c), (d) and (e) . . . . . . . $_________
Excess Spread Applied to Collateral
Monthly Interest . . . . . . . . . . . $_________
Excess Spread Applied to Unpaid Monthly
Servicing Fee . . . . . . . . . . . . . $_________
Excess Spread Applied Collateral Default
Amount . . . . . . . . . . . . . . . . $_________
Excess Spread Applied to Reductions of
Collateral Invested Amount Pursuant to
Clauses (c), (d) and (e) . . . . . . . $_________
Excess Spread Applied to Reserve Account$_________
Excess Spread Applied to Other Amounts
Owed to Collateral Interest Holder . . $_________
TOTAL EXCESS FINANCE CHARGE COLLECTIONS
ELIGIBLE FOR OTHER EXCESS ALLOCATION
SERIES . . . . . . . . . . . . . . . . . $_________
EXCESS FINANCE CHARGES COLLECTIONS
TOTAL EXCESS FINANCE CHARGE COLLECTIONS
FOR ALL ALLOCATION SERIES . . . . . . . . $_________
SERIES 1997-1 EXCESS FINANCE CHARGE COLLECTIONS --
EXCESS FINANCE CHARGE COLLECTIONS
ALLOCATED TO SERIES 1997-1 . . . . . . . $_________
Excess Finance Charge Collections
Applied to Class A Required Amount . . $_________
Excess Finance Charge Collections
Applied to Class A Investor Charge Offs $_________
Excess Finance Charge Collections
Applied to Class B Required Amount . . $_________
Excess Finance Charge Collections
Applied to Reductions of Class B
Invested Amount Pursuant to Clauses (c),
(d) and (e) . . . . . . . . . . . . . . $_________
Excess Finance Charge Collections
Applied to Collateral Monthly Interest $_________
Excess Finance Charge Collections
Applied to Unpaid Monthly Servicing Fee $_________
Excess Finance Charge Collections
Applied to Collateral Default Amount . $_________
Excess Finance Charge Collections
Applied to Reductions of Collateral
Invested Amount Pursuant to Clauses (c),
(d) and (e) . . . . . . . . . . . . . . $_________
Excess Finance Charge Collections
Applied to Reserve Account . . . . . . $_________
Excess Finance Charge Collections
Applied to Other Amounts Owed to
Collateral Interest Holder . . . . . . $_________
YIELD AND BASE RATE --
Base Rate (Current Month) . . . . . . . _________%
Base Rate (Prior Month) . . . . . . . . _________%
Base Rate (Two Months Ago) . . . . . . _________%
THREE MONTH AVERAGE BASE RATE . . . . . . _________%
Series Adjusted Portfolio Yield (Current
Month) . . . . . . . . . . . . . . . . _________%
Series Adjusted Portfolio Yield (Prior
Month) . . . . . . . . . . . . . . . . _________%
Series Adjusted Portfolio Yield (Two
Months Ago) . . . . . . . . . . . . . . _________%
THREE MONTH AVERAGE SERIES ADJUSTED
PORTFOLIO YIELD . . . . . . . . . . . . . _________%
PRINCIPAL COLLECTIONS --
CLASS A PRINCIPAL PERCENTAGE . . . . . . _________%
Class A Principal Collections . . . . . $_________
CLASS B PRINCIPAL PERCENTAGE . . . . . . _________%
Class B Principal Collections . . . . . $_________
COLLATERAL PRINCIPAL PERCENTAGE . . . . ________%
Collateral Principal Collections . . . $_________
AVAILABLE PRINCIPAL COLLECTIONS . . . . . $_________
REALLOCATED PRINCIPAL COLLECTIONS . . . . $_________
SERIES 1997-1 PRINCIPAL SHORTFALL . . . . $_________
SHARED PRINCIPAL COLLECTIONS ALLOCABLE
FROM OTHER PRINCIPAL SHARING SERIES . . . $_________
ACCUMULATION --
Controlled Accumulation Amount . . . . $_________
Deficit Controlled Accumulation Amount $_________
CONTROLLED DEPOSIT AMOUNT . . . . . . . . $_________
PRINCIPAL FUNDING ACCOUNT BALANCE . . . . $_________
SHARED PRINCIPAL COLLECTIONS ELIGIBLE FOR
OTHER PRINCIPAL SHARING SERIES . . . . . $_________
INVESTOR CHARGE OFFS AND RECOVERIES--
CLASS A INVESTOR CHARGE OFFS . . . . . . $_________
REDUCTIONS IN CLASS B INVESTED AMOUNT
(OTHER THAN BY PRINCIPAL PAYMENTS) . . . $_________
REDUCTIONS IN COLLATERAL INVESTED AMOUNT
(OTHER THAN BY PRINCIPAL PAYMENTS) . . . $_________
PREVIOUS CLASS A CHARGE OFFS REIMBURSED . $_________
PREVIOUS CLASS B INVESTED AMOUNT
REDUCTIONS REIMBURSED . . . . . . . . . . $_________
PREVIOUS COLLATERAL INVESTED AMOUNT
REDUCTIONS REIMBURSED . . . . . . . . . . $_________
BANKBOSTON (NH), NATIONAL ASSOCIATION,
as Servicer
By: ________________________
Name:
Title:
EXHIBIT D
FORM OF MONTHLY SERVICER'S CERTIFICATE
BANKBOSTON (NH), NATIONAL ASSOCIATION
BANKBOSTON CREDIT CARD MASTER TRUST
SERIES 1997-1
The undersigned, a duly authorized representative of
BankBoston (NH), National Association, as Servicer (the "Bank"),
pursuant to the Pooling and Servicing Agreement dated as of
_______, 1997 (as amended and supplemented, the "Agreement"), as
supplemented by the Series 1997-1 Supplement (as amended and
supplemented, the "Series Supplement"), among the Bank, as
Servicer, Credit Card Receivables Funding Corporation, as
Transferor, and The Bank of New York, as Trustee, does hereby
certify as follows:
1. Capitalized terms used in this Certificate have
their respective meanings as set forth in the Agreement or
the Series Supplement, as applicable.
2. The Bank is, as of the date hereof, the Servicer
under the Agreement.
3. The undersigned is a Servicing Officer.
4. This Certificate relates to the Distribution Date
occurring on __________ ____, _____.
5. As of the date hereof, to the best knowledge of the
undersigned, the Servicer has performed in all material
respects all its obligations under the Agreement through the
Monthly Period preceding such Distribution Date [or, if
there has been a default in the performance of any such
obligation, set forth in detail the (i) nature of such
default, (ii) the action taken by the Servicer, if any, to
remedy such default and (iii) the current status of each
such default; if applicable, insert "None"].
6. As of the date hereof, to the best knowledge of the
undersigned, no Pay Out Event occurred on or prior to such
Distribution Date.
IN WITNESS WHEREOF, the undersigned has duly executed
and delivered this Certificate this ____ day of __________, ____.
BANKBOSTON (NH), NATIONAL ASSOCIATION,
Servicer
By: ________________________
Name:
Title:
--------------------------------------------------------------------
BANKBOSTON (NH), NATIONAL ASSOCIATION
and
CREDIT CARD RECEIVABLES FUNDING CORPORATION
--------------------------------------------------------------------
RECEIVABLES PURCHASE AGREEMENT
Dated as of , 1997
-------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . 1
Section 1.01. Definitions . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitional Provisions . . . . . . . . 5
ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES . . . . 6
Section 2.01. Purchase . . . . . . . . . . . . . . . . . . 6
Section 2.02. Addition of Aggregate Addition Accounts . . . 7
Section 2.03. Addition of New Accounts . . . . . . . . . . 8
Section 2.04. Representations and Warranties . . . . . . . 9
Section 2.05. Delivery of Documents . . . . . . . . . . . . 9
ARTICLE III
CONSIDERATION AND PAYMENT . . . . . . . 10
Section 3.01. Purchase Price . . . . . . . . . . . . . . . 10
Section 3.02. Adjustments to Purchase Price . . . . . . . . 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . 11
Section 4.01. Representations and Warranties of the
Bank Relating to the Bank . . . . . . . . . 11
Section 4.02. Representations and Warranties of the
Bank Relating to the Agreement and
the Receivables . . . . . . . . . . . . . . 12
Section 4.03. Representations and Warranties of CCRFC . . . 14
ARTICLE V
COVENANTS . . . . . . . . . . . 15
Section 5.01. Covenants of the Bank . . . . . . . . . . . . 15
Section 5.02. Covenants of CCRFC with Respect to
Receivables Purchase Agreements . . . . . . 17
ARTICLE VI
REPURCHASE OBLIGATION . . . . . . . . 18
Section 6.01. Reassignment of Ineligible Receivables . . . 18
Section 6.02. Reassignment of Certificateholders'
Interest in Trust Portfolio . . . . . . . . 19
ARTICLE VII
CONDITIONS PRECEDENT . . . . . . . . . 19
Section 7.01. Conditions to CCRFC's Obligations
Regarding Initial Receivables . . . . . . . 19
Section 7.02. Conditions Precedent to the Bank's
Obligations . . . . . . . . . . . . . . . . 20
ARTICLE VIII
TERM AND PURCHASE TERMINATION . . . . . . 20
Section 8.01. Term . . . . . . . . . . . . . . . . . . . . 20
Section 8.02. Purchase Termination . . . . . . . . . . . . 21
ARTICLE IX
MISCELLANEOUS PROVISIONS . . . . . . . . 21
Section 9.01. Amendment . . . . . . . . . . . . . . . . . . 21
Section 9.02. Governing Law . . . . . . . . . . . . . . . . 22
Section 9.03. Notices . . . . . . . . . . . . . . . . . . . 22
Section 9.04. Severability of Provisions . . . . . . . . . 22
Section 9.05. Assignment . . . . . . . . . . . . . . . . . 22
Section 9.06. Acknowledgement and Agreement of the Bank . . 23
Section 9.07. Further Assurances . . . . . . . . . . . . . 23
Section 9.08. No Waiver; Cumulative Remedies . . . . . . . 23
Section 9.09. Counterparts . . . . . . . . . . . . . . . . 23
Section 9.10. Binding; Third-Party Beneficiaries . . . . . 23
Section 9.11. Merger and Integration . . . . . . . . . . . 24
Section 9.12. Headings . . . . . . . . . . . . . . . . . . 24
Section 9.13. Schedules and Exhibits . . . . . . . . . . . 24
Section 9.14. Survival of Representations and Warranties . 24
Section 9.15. Nonpetition Covenant . . . . . . . . . . . . 24
RECEIVABLES PURCHASE AGREEMENT, dated as of , 1997,
by and between BANK BOSTON (NH), NATIONAL ASSOCIATION, a national
banking association organized under the laws of the United States
(the "Bank"), and CREDIT CARD RECEIVABLES FUNDING CORPORATION, a
Delaware corporation ("CCRFC").
W I T N E S S E T H:
WHEREAS, CCRFC desires to purchase, from time to time,
certain Receivables (hereinafter defined) originated or purchased
by the Bank and arising under certain credit card accounts
originated or purchased by the Bank;
WHEREAS, the Bank desires to sell from time to time
certain Receivables originated or purchased by the Bank to CCRFC
upon the terms and conditions hereinafter set forth;
WHEREAS, it is contemplated that the Receivables
purchased hereunder will be transferred by CCRFC to the Trust
(hereinafter defined) in connection with the issuance of certain
Certificates (hereinafter defined); and
WHEREAS, the Bank agrees that all covenants and
agreements made by the Bank herein with respect to the Accounts
(hereinafter defined) and Receivables shall also be for the benefit
of the Trustee (hereinafter defined) and all beneficiaries of the
Trust, including the holders of the Certificates.
NOW, THEREFORE, it is hereby agreed by and between CCRFC
and the Bank as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All capitalized terms used
herein or in any certificate, document, or Conveyance Paper made or
delivered pursuant hereto, and not defined herein or therein, shall
have the meaning ascribed thereto in the Pooling and Servicing
Agreement; in addition, the following words and phrases shall have
the following meanings:
"Account" shall mean (a) each MasterCard[REGISTERED MARK](1)
and VISA[REGISTERED MARK](1) account established pursuant to a Credit
Card Agreement between an Account Owner and any Person, which account
is identified by account number and by the receivables balance in the
computer file, microfiche list or printed list delivered to CCRFC by
the Bank on the Closing Date (b) each Additional Account (but only
from and after the Addition Date with respect thereto), (c) each
Related Account, and (d) each account into which an Account shall
be transferred (a "Transferred Account") provided that (i) such
transfer was made in accordance with the Credit Card Guidelines and
(ii) such account can be traced or identified as an account into
which an Account has been transferred, but shall exclude (g) any
Account that (x) after the Removal Date, the newly generated
Receivables in which shall not be assigned to CCRFC hereunder, (y)
the right, title and interest of CCRFC in the Receivables in which
are reassigned to the Bank pursuant to Section 6.01 or (z) the
right, title and interest of the Trust in the Receivables in which
are assigned and transferred to the Servicer pursuant to Section
3.3 of the Pooling and Servicing Agreement.
-------------
(1) MasterCard and VISA are registered trademarks of MasterCard
International Incorporated and of VISA USA, Inc.,
respectively.
"Account Owner" shall mean the Bank, [New Bank] or any
other entity which is the issuer of the credit card relating to an
Account pursuant to a Credit Card Agreement.
"Additional Account" shall mean each New Account and each
Aggregate Additional Account.
"Additional Cut-Off Date" shall mean (i) with respect to
Aggregate Addition Accounts, the date specified as such in the
notice delivered with respect thereto pursuant to Section 2.02, and
(ii) with respect to New Accounts, the later of the dates on which
such New Accounts are originated or designated pursuant to Section
2.03.
"Addition Date" shall mean (a) with respect to Aggregate
Addition Accounts, the date from and after which such Aggregate
Addition Accounts are to be included as Accounts pursuant to
Section 2.02 and (b) with respect to New Accounts, the first
Distribution Date following the calendar month in which such New
Accounts are originated.
"Addition Notice Date" shall have the meaning specified
in Section 2.02 of this Agreement.
"Aggregate Addition Account" shall mean each Eligible
Account that is designated pursuant to Section 2.02 to be included
as an Account and is identified in the computer file or microfiche
list delivered to CCRFC by the Bank pursuant to Sections 2.01 and
2.05.
"Agreement" shall mean this Receivables Purchase
Agreement and all amendments hereof and supplements hereto.
"Bank" shall mean BankBoston (NH), National Association
and its successor and assigns.
"BKB CT" shall mean the Bank of Boston Connecticut and
its successors and assigns.
"CCRFC" shall mean Credit Card Receivables Financing
Corporation and its permitted successors and assigns.
"Closing Date" shall mean , 1997.
"Conveyance" shall have the meaning specified in
subsection 2.01(a).
"Conveyance Papers" shall have the meaning specified in
subsection 4.01(c).
"Credit Adjustment" shall have the meaning specified in
Section 3.02.
"Debtor Relief Laws" shall mean (i) the Bankruptcy Code
of the United States of America and (ii) all other applicable
liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension
of payments, readjustment of debt, marshalling of assets or similar
debtor relief laws of the United States, any state or any foreign
country from time to time in effect affecting the rights of
creditors generally.
"Finance Charge Receivables" shall mean all Receivables
in the Accounts which would be treated as "Finance Charge
Receivables" in accordance with the definition for such term in the
Pooling and Servicing Agreement.
"Initial Account" shall mean any Account designated as an
"Account" hereunder and as an "Account" under the Pooling and
Servicing Agreement on the Closing Date.
"Initial Cut-Off Date" shall mean the close of business
on , 1997.
"Insolvency Event" shall have the meaning specified in
Section 8.02.
"Interchange" shall mean interchange fees payable to an
Account Owner in its capacity as credit card issuer, through VISA
or MasterCard in connection with cardholder charges for goods and
services with respect to the Accounts.
"Investor Certificate" shall have the meaning specified
in the Pooling and Serving Agreement.
"New Account" shall mean each MasterCard and VISA
consumer revolving credit card account established pursuant to a
Credit Card Agreement, which account is designated pursuant to
Section 2.03 to be included as an Account and is identified in the
computer file or microfiche list delivered to CCRFC by the Bank
pursuant to Sections 2.01 and 2.05.
"New Principal Receivables" shall have the meaning set
forth in Section 3.01.
"Obligor" shall mean, with respect to each Account, each
person that would be treated as an "Obligor" in accordance with the
definition for such term in the Pooling and Servicing Agreement.
"Pooling and Servicing Agreement" shall mean the Pooling
and Servicing Agreement, dated as of , 1997, among the
Bank, as Servicer, CCRFC, as Transferor, and the Trustee, and all
amendments and supplements thereto.
"Portfolio Reassignment Price" shall mean the portion of
the amount payable by CCRFC to the Trustee pursuant to Section 2.6
of the Pooling and Servicing Agreement with respect to the
Receivables.
"Principal Receivables" shall mean all Receivables in the
Accounts that would be treated as "Principal Receivables" in
accordance with the definition for such term in the Pooling and
Servicing Agreement.
"Receivables Purchase Agreements" shall have the meaning
set forth in Section 5.02.
"Purchase Price" shall have the meaning set forth in
Section 3.01.
"Purchased Assets" shall have the meaning set forth in
Section 2.01.
"Receivables" shall mean all amounts shown on the
Servicer's records as amounts payable by Obligors on any Account
from time to time, including amounts payable for Principal
Receivables and Finance Charge Receivables. Receivables that
become Defaulted Receivables will cease to be included as
Receivables as of the day on which they become Defaulted
Receivables. Unless the context otherwise requires (whether or not
there is a specific reference to the underlying receivable), any
reference in this Agreement or any Supplemental Conveyance to a
Receivable (including any Principal Receivable, Finance Charge
Receivable or Defaulted Receivable) and any Collections thereon or
other amounts recoverable with respect thereto (including any
Insurance Proceeds or Recoveries with respect thereto) shall refer
to only the fractional interest that is transferred from an Account
Owner to the Bank pursuant to a Purchase Agreement in the amounts
paid or payable by Obligors on the Accounts, which fractional
interest may be less than a 100% fractional interest therein, and
which fractional interest may exclude certain types of Receivables.
Any reference in this Agreement to the "underlying receivable" with
respect to a Receivable shall refer to the receivable in which such
Receivable represents an undivided interest.
"Removed Account" shall mean an Account hereunder that is
a "Removed Account" (as such term is defined in the Pooling and
Servicing Agreement) that is designated for removal pursuant to
Section 2.10 of the Pooling and Servicing Agreement.
"Repurchase Price" shall have the meaning set forth in
Section 6.01(b).
"Servicer" shall have the meaning set forth in the
Pooling and Services Agreement.
"Supplemental Conveyance" shall have the meaning set
forth in Section 2.05.
"Trust" shall mean the trust created by the Pooling and
Servicing Agreement.
"Trustee" shall mean , a New York banking
corporation, the institution executing the Pooling and Servicing
Agreement as, and acting in the capacity of Trustee thereunder, or
its successor in interest, or any successor trustee appointed as
provided in the Pooling and Servicing Agreement.
Section 1.02. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificate, other document, or
Conveyance Paper made or delivered pursuant hereto unless otherwise
defined therein.
(b) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement or any
Conveyance Paper shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; and Section,
Subsection, Schedule and Exhibit references contained in this
Agreement are references to Sections, Subsections, Schedules and
Exhibits in or to this Agreement unless otherwise specified.
(c) All determinations of the principal or finance
charge balance of Receivables, and of any collections thereof,
shall be made in accordance with the Pooling and Servicing
Agreement and all applicable Supplements.
ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES
Section 2.01. Purchase.
(a) By execution of this Agreement, the Bank does hereby
sell, transfer, assign, set over and otherwise convey to CCRFC
(collectively, the "Conveyance"), without recourse except as
provided herein, all its right, title and interest in, to and under
(i) all of the Receivables in the Accounts owned by the Bank and
all of the Receivables created in such Accounts following the
initial Series Closing Date in the case of the Bank and upon
origination of Accounts by the Bank and the Receivables in each
Additional Account owned by the Bank designated from time to time
for inclusion as an Account as of the date of such designation,
whether such Receivables shall then be existing or shall thereafter
be created and all monies due and or to become due and all amounts
received with respect thereto and all proceeds (including, without
limitation, "proceeds" as defined in the UCC) thereof and (ii) the
right to receive Interchange and Recoveries with respect to such
Receivables (the "Purchased Assets").
(b) In connection with such Conveyance, the Bank agrees
(i) to record and file, at its own expense, any financing
statements (and continuation statements with respect to such
financing statements 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, and maintain perfection
of, the Conveyance of such Purchased Assets from the Bank to CCRFC,
(ii) that such financing statements shall name the Bank, as seller,
and CCRFC, as purchaser, of the Receivables and (iii) to deliver a
file-stamped copy of such financing statements or other evidence of
such filings (excluding such continuation statements, which shall
be delivered as filed) to CCRFC as soon as is practicable after
filing.
(c) In connection with such Conveyance, the Bank further
agrees that it will, at its own expense, (i) on or prior to (x) the
Closing Date, in the case of Initial Accounts, (y) the applicable
Addition Date, in the case of Additional Accounts, and (z) the
applicable Removal Date, in the case of Removed Accounts, to
indicate in its computer files that, in the case of the Initial
Accounts or the Additional Accounts, Receivables created in
connection with such Accounts have been conveyed to CCRFC in
accordance with this Agreement and have been conveyed by CCRFC to
the Trustee pursuant to the Pooling and Servicing Agreement for the
benefit of the Certificateholders by including (or deleting, in the
case of newly originated Receivables in Removed Accounts) in such
computer files the code identifying each such Account and (ii) on
or prior to (w) the Closing Date, in the case of the Initial
Accounts, (x) the date that is five Business Days after the
applicable Addition Date, in the case of designation of Aggregate
Addition Accounts, (y) the date that is [30] days after the
applicable Addition Date, in the case of New Accounts, and (z) the
date that is five Business Days after the applicable Removal Date,
in the case of Removed Accounts, to deliver to CCRFC a computer
file or microfiche list containing a true and complete list of all
such Accounts specifying for each such Account, as of the Initial
Cut-Off Date, in the case of the Initial Accounts, the applicable
Additional Cut-off Date, in the case of Additional Accounts, and
the applicable Removal Date, in the case of Removed Accounts,
(A) its account number, (B) the aggregate amount outstanding in
such Account and (C) the aggregate amount of Principal Receivables
in such Account. Each such file or list, as supplemented from time
to time to reflect Additional Accounts or Removed Accounts, shall
be marked as Schedule I to this Agreement, shall be delivered to
CCRFC, and is hereby incorporated into and made a part of this
Agreement. The Bank further agrees not to alter the code
referenced in clause (i) of this paragraph with respect to any
Account during the term of this Agreement unless and until such
Account becomes a Removed Account.
(d) The parties hereto intend that the conveyance of the
Bank's right, title and interest in and to the Receivables shall
constitute an absolute sale, conveying good title free and clear of
any liens, claims, encumbrances or rights of others from the Bank
to CCRFC. It is the intention of the parties hereto that the
arrangements with respect to the Receivables shall constitute a
purchase and sale of such Receivables and not a loan. In the
event, however, that it were to be determined that the transactions
evidenced hereby constitute a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement shall
constitute a security agreement under applicable law, and that the
Bank shall be deemed to have granted and does hereby grant to CCRFC
a first priority perfected security interest, in all of the bank's
right, title and interest, whether now owned or hereafter acquired,
in, to and under the Receivables and other Purchased Assets to
secure the rights of CCRFC hereunder and the obligations of the
Bank hereunder.
Section 2.02. Addition of Aggregate Addition Accounts.
(a) If, from time to time, CCRFC becomes obligated to
designate Aggregate Addition Accounts (as such term is defined in
the Pooling and Servicing Agreement) pursuant to subsection 2.9(a)
of the Pooling and Servicing Agreement, then CCRFC may, at its
option, give the Bank written notice thereof on or before the
eighth Business Day (the "Addition Notice Date") prior to the
Addition Date therefor, and upon receipt of such notice the Bank
shall on or before the Addition Date, designate sufficient Eligible
Accounts to be included as Additional Accounts so that after the
inclusion thereof CCRFC will be in compliance with the requirements
of said subsection 2.9(a). Additionally, subject to subsections
2.9(b) and (c) of the Pooling and Servicing Agreement and
subsection 2.02(b), from time to time Eligible Accounts may be
designated to be included as Aggregate Addition Accounts, upon the
mutual agreement of CCRFC and the Bank. In either event, the Bank
shall have sole responsibility for selecting the Aggregate Addition
Accounts.
(b) On the Addition Date with respect to any designation
of Aggregate Addition Accounts, CCRFC shall purchase the Bank's
right, title and interest in, to and under the Receivables in
Aggregate Addition Accounts (and such Aggregate Addition Accounts
shall be deemed to be Accounts for purposes of this Agreement),
subject to the satisfaction of the following conditions:
(i) any Aggregate Addition Accounts shall all be
Eligible Accounts;
(ii) the Bank shall have delivered to CCRFC copies of
UCC-1 financing statements covering such Aggregate Addition
Accounts, if necessary to perfect CCRFC's undivided interest
in the Receivables arising therein;
(iii) to the extent required of CCRFC by Section 4.3 of
the Pooling and Servicing Agreement, the Bank shall have
deposited in the Collection Account all Collections with
respect to such Aggregate Addition Accounts since the
Additional Cut-Off Date;
(iv) as of each of the Additional Cut-Off Date and the
Addition Date, no Insolvency Event with respect to the Bank
shall have occurred nor shall the transfer of the Receivables
arising in the Aggregate Addition Accounts to CCRFC have been
made in contemplation of the occurrence thereof;
(v) solely with respect to Aggregate Addition Accounts
designated pursuant to the second sentence of subsection
2.02(a), the Rating Agency Condition shall have been
satisfied;
(vi) the Bank shall have delivered to CCRFC an
Officer's Certificate, dated the Addition Date, confirming, to
the extent applicable, the items set forth in clauses (i)
through (v) above; and
(vii) the transfer of the Receivables arising in the
Aggregate Addition Accounts to CCRFC and by CCRFC to the Trust
will not result in an Adverse Effect and, in the case of
Aggregate Addition Accounts, the Bank shall have delivered to
CCRFC an Officer's Certificate, dated the Addition Date,
stating that the Bank reasonably believes that the addition of
the Receivables arising in the Aggregate Addition Accounts to
CCRFC and by CCRFC to the Trust will not have an Adverse
Effect.
Section 2.03. Addition of New Accounts.
(a) Upon the mutual agreement of CCRFC and the Bank,
subject to compliance by CCRFC with the conditions specified in
subsections 2.9(d) and (e) of the Pooling and Servicing Agreement
and compliance by the Bank with subsection 2.03(b), the Bank may
designate newly originated Eligible Accounts to be included as New
Accounts. Upon such designation, such New Accounts shall be deemed
to be Accounts hereunder. The Bank shall take all actions
necessary to comply, or to enable CCRFC to comply, with the
requirements of Section 2.9 of the Pooling and Servicing Agreement
and shall cooperate with CCRFC to enable it to perform with respect
to the Receivables in such New Accounts all actions specified in
subsections 2.9(d) and (e) of the Pooling and Servicing Agreement.
(b) On the Addition Date with respect to any New
Accounts, CCRFC shall purchase the Bank's right, title and interest
in, to and under the Receivables in New Accounts (and such New
Accounts shall be deemed to be Accounts for purposes of this
Agreement) as of the close of business on the applicable Additional
Cut-Off Date, subject to the satisfaction of the following
conditions:
(i) the New Accounts shall all be Eligible Accounts;
(ii) the Bank shall have delivered to CCRFC copies of
UCC-1 financing statements covering such New Accounts, if
necessary to perfect CCRFC's interest in the Receivables
arising therein;
(iii) to the extent required of CCRFC by Section 4.3 of
the Pooling and Servicing Agreement, the Bank shall have
deposited in the Collection Account all Collections with
respect to such New Accounts since the Additional Cut-Off
Date;
(iv) as of each of the Additional Cut-Off Date and the
Addition Date, no Insolvency Event with respect to the related
Account Owner shall have occurred nor shall the transfer of
the Receivables arising in the New Accounts to CCRFC have been
made in contemplation of the occurrence thereof; and
(v) the transfer of the Receivables arising in the New
Accounts to CCRFC and by CCRFC to the Trust will not result in
the occurrence of a Pay Out Event or a Reinvestment Event.
Section 2.04. Representations and Warranties. The Bank
hereby represents and warrants to CCRFC as of the related Addition
Date as to the matters set forth in Sections 2.02(b)(v) and (vi)
above and that, in the case of Additional Accounts, the list
delivered pursuant to Section 2.05 below is, as of the applicable
Additional Cut-Off Date, true and complete in all material
respects.
Section 2.05. Delivery of Documents. In the case of the
designation of Additional Accounts, the Bank shall deliver to CCRFC
(i) the computer file or microfiche list required to be delivered
pursuant to Section 2.01 with respect to such Additional Accounts
on the date such file or list is required to be delivered pursuant
to Section 2.01 (the "Document Delivery Date") and (ii) a duly
executed, written assignment (including an acceptance by CCRFC),
substantially in the form of Exhibit A (the "Supplemental
Conveyance"), on the Document Delivery Date. In addition, in the
case of the designation of New Accounts, the Bank shall deliver to
CCRFC on the Document Delivery Date an Officer's Certificate
confirming, to the extent applicable, the items set forth in clause
(i) through (v) of subsection 2.03(b) above.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.01. Purchase Price.
(a) The "Purchase Price" for the Receivables in the
Initial Accounts as of the Initial Cut-Off Date conveyed to CCRFC
under this Agreement shall be payable on the Closing Date and shall
be an amount equal to 100% of the aggregate balance of Principal
Receivables in those Accounts as of the Initial Cut-Off Date,
adjusted to reflect such factors as the Bank and CCRFC mutually
agree will result in a Purchase Price determined to be the fair
market value of such Receivables. This computation of initial
purchase price should assume no reinvestment in new Receivables.
The Purchase Price for the Receivables (including Receivables in
Additional Accounts) to be conveyed to CCRFC under this Agreement
which come into existence after the Closing Date, shall be payable
on the Distribution Date following the Monthly Period in which such
Receivables are conveyed by the Bank to CCRFC in an amount equal to
100% of the aggregate balance of the Principal Receivables so
conveyed (the "New Principal Receivables"), adjusted to reflect
such factors as the Bank and CCRFC mutually agree will result in a
Purchase Price determined to be the fair market value of such New
Principal Receivables.
(b) The Purchase Price to be paid by CCRFC on the
Closing Date and on each Distribution Date following a Monthly
Period during which New Principal Receivables are conveyed to CCRFC
shall be paid in cash.
Section 3.02. Adjustments to Purchase Price. The
Purchase Price shall be adjusted on each Distribution Date (a
"Credit Adjustment") with respect to any Receivable previously
conveyed to CCRFC by the Bank which has since been reversed by the
Bank or the Servicer because of a rebate, refund, unauthorized
charge or billing error to a cardholder because such Receivable was
created in respect of merchandise which was refused or returned by
a cardholder or due to the occurrence of any other event referred
to in Section 3.09 of the Pooling and Servicing Agreement. The
amount of such adjustment shall equal (x) the reduction in the
principal balance of such Receivable resulting from the occurrence
of such event multiplied by (y) the quotient (expressed as a
percentage) of (i) the Purchase Price for Principal Receivables
payable on such Distribution Date computed in accordance with
Section 3.01 divided by (ii) the Principal Receivables paid for on
such date pursuant to such Section. In the event that an
adjustment pursuant to this Section 3.02 causes the Purchase Price
to be a negative number, the Bank agrees that, not later than 1:00
P.M. New York City time on such Distribution Date, the Bank shall
pay to CCRFC an amount equal to the amount by which the Purchase
Price minus the Credit Adjustment would be a negative number.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Bank
Relating to the Bank. The Bank hereby represents and warrants to,
and agrees with, CCRFC as of the Closing Date and on each Addition
Date, that:
(a) Organization and Good Standing. The Bank is a
corporation duly organized and validly existing in good standing
under the laws of the United States of America and has, in all
material respects, full power and authority 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. The Bank is duly qualified to do
business and is in good standing as a foreign corporation (or is
exempt from such requirements) and has obtained all necessary
licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would (i) render
any Credit Card Agreement relating to an Account, any Receivable or
this Agreement unenforceable by the Bank, CCRFC or the Trust and
(ii) have a material adverse effect on the Investor
Certificateholders.
(c) Due Authorization. The execution, delivery and
performance of this Agreement and each Purchase Agreement and any
other document or instrument delivered pursuant hereto, including
any Supplemental Conveyance (such other documents or instruments,
collectively, the "Conveyance Papers"), and the consummation of the
transactions provided for in this Agreement and the Conveyance
Papers have been duly authorized by the Bank by all necessary
corporate action on the part of the Bank.
(d) No Conflict. The execution and delivery of this
Agreement and the Conveyance Papers by the Bank, the performance of
the transactions contemplated by this Agreement and the Conveyance
Papers, and the fulfillment of the terms of this Agreement and the
Conveyance Papers will not conflict with, violate or 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 the Bank is a
party or by which it or any of its properties are bound.
(e) No Violation. The execution, delivery and
performance of this Agreement and the Conveyance Papers by the Bank
and the fulfillment of the terms contemplated herein and therein
applicable to the Bank will not conflict with or violate any
Requirements of Law applicable to the Bank.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Bank,
threatened against the Bank, before any Governmental Authority (i)
asserting the invalidity of this Agreement or the Conveyance
Papers, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or the Conveyance
Papers, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Bank, would materially and adversely
affect the performance by the Bank of its obligations under this
Agreement or the Conveyance Papers, (iv) seeking any determination
or ruling that would materially and adversely affect the validity
or enforceability of this Agreement or the Conveyance Papers or (v)
seeking to affect adversely the income tax attributes of the Trust
under the United States Federal or New Hampshire income tax
systems.
(g) All Consents. All authorizations, consents, orders
or approvals of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given
by the Bank in connection with the execution and delivery by the
Bank of this Agreement and the Conveyance Papers and the
performance of the transactions contemplated by this Agreement or
the Conveyance Papers by the Bank have been duly obtained, effected
or given and are in full force and effect.
The representations and warranties set forth in this
Section 4.01 shall survive the transfer and assignment of the
Receivables to CCRFC. Upon discovery by the Bank or CCRFC of a
breach of any of the foregoing representations and warranties, the
party discovering such breach shall give written notice to the
other party and the Trustee within three Business Days following
such discovery.
Section 4.02. Representations and Warranties of the Bank
Relating to the Agreement and the Receivables.
(a) Representations and Warranties. The Bank hereby
represents and warrants to CCRFC as of the date of this Agreement,
as of the Closing Date and, with respect to Additional Accounts, as
of the related Addition Date that:
(i) this Agreement and, in the case of Additional
Accounts, the related Supplemental Conveyance, each
constitutes a legal, valid and binding obligation of the Bank
enforceable against the Bank in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally from time
to time in effect or general principles of equity;
(ii) as of the Initial Cut-Off Date, and as of the
related Additional Cut-Off Date with respect to Additional
Accounts, Schedule I to this Agreement, as supplemented to
such date, is an accurate and complete listing in all material
respects of all the Accounts as of the Initial Cut-Off Date or
such Additional Cut-Off Date, as the case may be, and the
information contained therein with respect to the identity of
such Accounts and the Receivables existing thereunder is true
and correct in all material respects as of the Initial Cut-Off
Date or such applicable Additional Cut-Off Date, as the case
may be, and as of the Initial Cut-Off Date, the aggregate
amount of Receivables in all the Initial Accounts was $
, of which $ were Principal
Receivables;
(iii) each Receivable has been conveyed to CCRFC free
and clear of any Lien of any Person claiming through or under
the Bank or any of its other affiliates (other than Liens
permitted under subsection 2.7(b) of the Pooling and Servicing
Agreement)
(iv) all authorizations, consents, orders or approvals
of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by the
Bank in connection with the conveyance of Receivables to CCRFC
have been duly obtained, effected or given and are in full
force and effect;
(v) this Agreement or, in the case of Additional
Accounts, the related Supplemental Conveyance constitutes a
valid sale, transfer and assignment to CCRFC of all right,
title and interest of the Bank in the Receivables and the
proceeds thereof and the Interchange payable pursuant to this
Agreement and the Recoveries payable pursuant to this
Agreement [or, if this Agreement or, in the case of Additional
Accounts, the related Supplemental Conveyance does not
constitute a sale of such property, it constitutes a grant of
a first priority perfected "security interest" (as defined in
the UCC) in such property to CCRFC, which, in the case of
existing Receivables and the proceeds thereof and said
Recoveries and Interchange, is enforceable upon execution and
delivery of this Agreement, or, with respect to then existing
Receivables in Additional Accounts, as of the applicable
Addition Date, and which will be enforceable with respect to
such Receivables hereafter and thereafter created and the
proceeds thereof upon such creation. Upon the filing of the
financing statements and, in the case of Receivables hereafter
created and the proceeds thereof, upon the creation thereof,
CCRFC shall have a first priority perfected security or
ownership interest in such property and proceeds];
(vi) on the Initial Cut-Off Date, each Account is an
Eligible Account and, in the case of Additional Accounts, on
the Additional Cut-Off Date, each related Additional Account
is an Eligible Account;
(vii) on the Initial Cut-Off Date, each Receivable then
existing is an Eligible Receivable, and in the case of
Additional Accounts, on the applicable Additional Cut-Off
Date, each Receivable generated thereunder is an Eligible
Receivable;
(viii) as of the date of the creation of any new
Receivable, such Receivable is an Eligible Receivable;
(ix) no selection procedures believed by the Bank to be
materially adverse to the interests of CCRFC or the Investor
Certificateholders have been used in selecting such Accounts;
and
(x) the Receivables are "accounts" or "general
intangibles" for the purposes of the UCC.
(b) Notice of Breach. The representations and
warranties set forth in this Section 4.02 shall survive the
transfer and assignment of the Receivables to CCRFC. Upon
discovery by either the Bank or CCRFC of a breach of any of the
representations and warranties set forth in this Section 4.02, the
party discovering such breach shall give written notice to the
other party and the Trustee within three Business Days following
such discovery; provided that the failure to give notice within
three Business Days does not preclude subsequent notice. The Bank
hereby acknowledges that CCRFC intends to rely on the
representations hereunder in connection with representations made
by CCRFC to secured parties, assignees or subsequent transferees
including but not limited to transfers made by CCRFC to the Trust
pursuant to the Pooling and Servicing Agreement and that the
Trustee may enforce such representations directly against the Bank.
Section 4.03. Representations and Warranties of CCRFC.
As of the Closing Date, CCRFC hereby represents and warrants to,
and agrees with, the Bank that:
(a) Organization and Good Standing. CCRFC is a
corporation duly organized and validly existing under the laws of
the State of Delaware and has, in all material respects, full power
and authority 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 Authorization. The execution and delivery of
this Agreement and the Conveyance Papers and the consummation of
the transactions provided for in this Agreement and the Conveyance
Papers have been duly authorized by CCRFC by all necessary
corporate action on the part of CCRFC.
(c) No Conflict. The execution and delivery of this
Agreement and the Conveyance Papers by CCRFC, the performance of
the transactions contemplated by this Agreement and the Conveyance
Papers, and the fulfillment of the terms of this Agreement and the
Conveyance Papers applicable to CCRFC, 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 indenture, contract, agreement,
mortgage, deed of trust or other instrument to which CCRFC is a
party or by which it or any of its properties are bound.
(d) No Violation. The execution, delivery and
performance of this Agreement and the Conveyance Papers by CCRFC
and the fulfillment of the terms contemplated herein and therein
applicable to CCRFC will not conflict with or violate any
Requirements of Law applicable to CCRFC.
(e) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of CCRFC,
threatened against CCRFC, before any court, regulatory body,
administrative agency, or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Agreement or
the Conveyance Papers, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or the
Conveyance Papers, (iii) seeking any determination or ruling that,
in the reasonable judgment of CCRFC, would materially and adversely
affect the performance by CCRFC of its obligations under this
Agreement or the Conveyance Papers or (iv) seeking any
determination or ruling that would materially and adversely affect
the validity or enforceability of this Agreement or the Conveyance
Papers.
(f) All Consents. All authorizations, consents, orders
or approvals of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given
by CCRFC in connection with the execution and delivery by CCRFC of
this Agreement and the Conveyance Papers and the performance of the
transactions contemplated by this Agreement and the Conveyance
Papers have been duly obtained, effected or given and are in full
force and effect.
The representations and warranties set forth in this
Section 4.03 shall survive the Conveyance of the Receivables to
CCRFC. Upon discovery by CCRFC or the Bank of a breach of any of
the foregoing representations and warranties, the party discovering
such breach shall give prompt written notice to the other party.
ARTICLE V
COVENANTS
Section 5.01. Covenants of the Bank. The Bank hereby
covenants and agrees with CCRFC as follows:
(a) Receivables Not To Be Evidenced by Promissory
Notes. Except in connection with its enforcement or collection of
an Account, the Bank will take no action to cause any Receivable
(or underlying receivable) to be evidenced by any instrument (as
defined in the UCC) and if any Receivable (or underlying
receivable) is so evidenced as a result of any action by the Bank
it shall be deemed to be an Ineligible Receivable in accordance
with Section 6.01(a) and shall be reassigned to the Bank in
accordance with Section 6.01(b)
(b) Security Interests. Except for the conveyances
hereunder, the Bank will not sell, pledge, assign or transfer to
any other Person, or take any other action inconsistent with
CCRFC's ownership of the Receivables or grant, create, incur,
assume or suffer to exist any Lien on, any Receivable (or the
underlying receivable), whether now existing or hereafter created,
or any interest therein, and the Bank shall not claim any ownership
interest in the Receivables and shall defend the right, title and
interest of CCRFC in, to and under the Receivables, whether now
existing or hereafter created, against all claims of third parties
claiming through or under the Bank; provided, however, that nothing
in this section shall prevent or be deemed to prohibit the Bank
from suffering to exist upon any of the Receivables or
Participation Interests any Liens for taxes if such taxes if such
taxes shall not at the time be due and payable or if the Bank 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. Notwithstanding the
foregoing, nothing in this section shall be construed to prevent or
be deemed to prohibit the transfer of the Exchangeable Transferor
Certificate and certain other rights of the Transferor in
accordance with the terms of this Agreement and any related
Supplement.
(c) Transferor's Interest. Except for the conveyances
hereunder, in connection with any transaction permitted by Section
7.2 of the Pooling and Servicing Agreement and as provided in
subsection 2.9(g) and Section 6.3 of the Pooling and Servicing
Agreement, the Bank agrees not to transfer, sell, assign, exchange
or otherwise convey or pledge, hypothecate or otherwise grant a
security interest in the Transferor's Interest represented by the
Transferor Certificate or any Supplemental Certificate and any such
attempted transfer, assignment, exchange, conveyance, pledge,
hypothecation, grant or sale shall be void.
(d) Account Allocations. In the event that the Bank is
unable for any reason to transfer Receivables to CCRFC in
accordance with the provisions of this Agreement (including,
without limitation, by reason of the application of the provisions
of Section 8.02 or any order of any Governmental Authority), then,
in any such event, the Bank agrees (except as prohibited by any
such order) to allocate and pay to CCRFC, after the date of such
inability, all amounts in the manner by which CCRFC will allocate
and pay to the Trust after such inability by CCRFC pursuant to
Section 2.11 of the Pooling and Servicing Agreement.
(e) Notice of Liens. The Bank shall notify CCRFC
promptly after becoming aware of any Lien on any Receivable (or on
the underlying receivable) other than the conveyances hereunder and
under the Pooling and Servicing Agreement.
(f) Interchange. Not later than 1:00 p.m., New York
City time, on each Transfer Date, the Bank shall deposit into the
Collection Account, in immediately available funds, (i) the amount
of Interchange to be included as Collections of Finance Charge
Receivables with respect to the preceding Monthly Period or (ii) if
at any time the Bank cannot identify the amount of such
Interchange, the amount reasonably estimated by the Bank as the
amount of such Interchange.
(g) Documentation of Transfer. The Bank shall undertake
to file the documents which would be necessary to perfect and
maintain the transfer of the Purchased Assets to CCRFC.
(h) Segregation of Accounts. The records and agreements
relating to the Accounts and Receivables may not be segregated by
the Account Owners from other documents and agreements relating to
other credit card accounts and receivables and may not be stamped
or marked to reflect the sale or transfer of the Receivables to the
Transferor, but the records of the Account Owners will be marked to
evidence such sale or transfer.
Section 5.02. Covenants of CCRFC with Respect to
Receivables Purchase Agreements. CCRFC, in its capacity as
purchaser of Receivables from any other Account Owner pursuant to a
receivables purchase agreement in, or substantially in, the form of
this agreement (each a "Receivables Purchase Agreement") hereby
covenants that CCRFC will at all times enforce the covenants and
agreements of the Account Owner in such Receivables Purchase
Agreement, including covenants substantially to the effect set
forth below:
(a) Periodic Rate Finance Charges. (i) Except (x) as
otherwise required by any Requirements of Law or (y) as is
deemed by the related Account Owner to be necessary in order
for it to maintain its credit card business or a program
operated by such credit card business on a competitive basis
based on a good faith assessment by it of the nature of the
competition with respect to the credit card business or such
program, it shall not at any time take any action which would
have the effect of reducing the Portfolio Yield to a level
that could be reasonably expected to cause any Series to
experience any Pay Out Event or Reinvestment Event based on
the insufficiency of the Portfolio Yield or any similar test
and (ii) except as otherwise required by any Requirements of
Law, it shall not take any action which would have the effect
of reducing the Portfolio Yield to be less than the highest
Average Rate for any Group.
(b) Credit Card Agreements and Guidelines. Subject to
compliance with all Requirements of Law and paragraph (a)
above, any Account Owner as the case may be, may change the
terms and provisions of the applicable Credit Card Agreements
or the applicable Credit Card Guidelines in any respect
(including the calculation of the amount or the timing of
charge-offs and the Periodic Rate Finance Charges to be
assessed thereon). Notwithstanding the above, unless required
by Requirements of Law or as permitted by Section 5.02(a), no
Account Owner will take action with respect to the applicable
Credit Card Agreements or the applicable Credit Card
Guidelines, which, at the time of such action, such Account
Owner reasonably believes will have a material adverse effect
on the Investor Certificateholders.
CCRFC further covenants that it will not enter into any
amendments to the Receivables Purchase Agreements or enter into a
new Receivables Purchase Agreement unless the Rating Agency
Condition has been satisfied.
CCRFC covenants that, at any time that the Bank is not
the Servicer under the Pooling and Servicing Agreement, it will
provide the Bank with such information as the Bank may reasonably
request to enable the Bank to determine compliance with the
covenants contained in Section 5.02(b).
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.01. Reassignment of Ineligible Receivables.
(a) In the event any representation or warranty under
Section 4.02(a)(ii), (iii), (iv), (vi), (vii) or (viii) is not true
and correct in any material respect as of the date specified
therein with respect to any Receivable or the related Account and
as a result of such breach CCRFC is required to accept reassignment
of Ineligible Receivables previously sold by the Bank to CCRFC
pursuant to Section 2.5(a) of the Pooling and Servicing Agreement,
the Bank shall accept reassignment of CCRFC's interest in such
Ineligible Receivables on the terms and conditions set forth in
Section 6.01(b).
(b) The Bank shall accept reassignment of any Ineligible
Receivables previously sold by the Bank to CCRFC from CCRFC on the
date on which such reassignment obligation arises, and shall pay
for such reassigned Ineligible Receivables by paying to CCRFC, not
later than 3:00 p.m., New York City time on such date, an amount
equal to the unpaid principal balance of such Ineligible
Receivables plus accrued and unpaid finance charges at the annual
percentage rate applicable to such Receivables from the last date
billed through the end of the Monthly Period in which such
reassignment obligation arises. Upon reassignment of such
Ineligible Receivables, CCRFC shall automatically and without
further action be deemed to sell, transfer, assign, set-over and
otherwise convey to the Bank, without recourse, representation or
warranty, all the right, title and interest of CCRFC in and to such
Ineligible Receivables, all monies due or to become due with
respect thereto and all proceeds thereof; and such reassigned
Ineligible Receivables shall be treated by CCRFC as collected in
full as of the date on which they were transferred. CCRFC shall
execute such documents and instruments of transfer or assignment
and take such other actions as shall reasonably be requested by the
Bank to effect the conveyance of such Ineligible Receivables
pursuant to this subsection.
Section 6.02. Reassignment of Certificateholders'
Interest in Trust Portfolio. In the event any representation or
warranty set forth in Section 4.01(a) or (c) or Section 4.02(a)(i)
or (a)(v) is not true and correct in any material respect and as a
result of such breach CCRFC is required to accept a reassignment of
the Certificateholders' Interest in the Receivables previously sold
by the Bank to CCRFC pursuant to Section 2.6 of the Pooling and
Servicing Agreement, the Bank shall be obligated to accept a
reassignment of CCRFC's interest in such Receivables on the terms
set forth below.
The Bank shall pay to CCRFC by depositing in the
Collection Account in immediately available funds, not later than
1:00 P.M. New York City time, on the first Transfer Date following
the Monthly Period in which such reassignment obligation arises, in
payment for such reassignment, an amount equal to the amount
specified in Section 2.06 of the Pooling and Servicing Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to CCRFC's Obligations
Regarding Initial Receivables. The obligations of CCRFC to
purchase the Receivables in the Initial Accounts on the Closing
Date shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of the Bank
contained in this Agreement shall be true and correct on the
Closing Date with the same effect as though such representations
and warranties had been made on such date;
(b) All information concerning the Initial Accounts
provided to CCRFC shall be true and correct as of the Initial Cut-
Off Date in all material respects;
(c) The Bank shall have (i) delivered to CCRFC a
computer file or microfiche list containing a true and complete
list of all Initial Accounts identified by account number and by
the Receivables balance as of the Initial Cut-Off Date and (ii)
substantially performed all other obligations required to be
performed by the provisions of this Agreement;
(d) The Bank shall have recorded and filed, at its
expense, any financing statement with respect to the Receivables
(other than Receivables in Additional Accounts) now existing and
hereafter created for the transfer of accounts and general
intangibles (each as defined in Section 9-106 of the UCC) meeting
the requirements of applicable state law in such manner and in such
jurisdiction as would be necessary to perfect the sale of and
security interest in the Receivables from the Bank to CCRFC, and
shall deliver a file-stamped copy of such financing statements or
other evidence of such filings to CCRFC;
(e) On or before the Closing Date, CCRFC and the Trustee
shall have entered into the Pooling and Servicing Agreement and the
closing under the Pooling and Servicing Agreement shall take place
simultaneously with the initial closing hereunder; and
(f) All corporate and legal proceedings and all
instruments in connection with the transactions contemplated by
this Agreement shall be satisfactory in form and substance to
CCRFC, and CCRFC shall have received from the Bank copies of all
documents (including, without limitation, records of corporate
proceedings) relevant to the transactions herein contemplated as
CCRFC may reasonably have requested.
Section 7.02. Conditions Precedent to the Bank's
Obligations. The obligations of the Bank to sell Receivables in
the Initial Accounts on the Closing Date shall be subject to the
satisfaction of the following conditions:
(a) All representations and warranties of CCRFC
contained in this Agreement shall be true and correct with the same
effect as though such representations and warranties had been made
on such date;
(b) Payment or provision for payment of the Purchase
Price in accordance with the provision of Section 3.01 hereof shall
have been made; and
(c) All corporate and legal proceedings and all
instruments in connection with the transactions contemplated by
this Agreement shall be satisfactory in form and substance to the
Bank, and the Bank shall have received from CCRFC copies of all
documents (including, without limitation, records of corporate
proceedings) relevant to the transactions herein contemplated as
the Bank may reasonably have requested.
ARTICLE VIII
TERM AND PURCHASE TERMINATION
Section 8.01. Term. This Agreement shall commence as of
the date of execution and delivery hereof and shall continue until
the termination of the Trust as provided in Article XII of the
Pooling and Servicing Agreement.
Section 8.02. Purchase Termination. If the Bank shall
fail generally to, or admit in writing its inability to, pay its
debts as they become due; or if a proceeding shall have been
instituted in a court having jurisdiction in the premises seeking a
decree or order for relief in respect of the Bank in an involuntary
case under any Debtor Relief Law, or for the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator,
conservator or other similar official of the Bank or for any
substantial part of the Bank's property, or for the winding-up or
liquidation of the Bank's affairs and, if instituted against the
Bank, any such proceeding shall continue undismissed or unstayed
and in effect, for a period of 60 consecutive days, or any of the
actions sought in such proceeding shall occur; or if the Bank shall
commence a voluntary case under any Debtor Relief Law, or if the
Bank shall consent to the entry of an order for relief in an
involuntary case under any Debtor Relief Law, or consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator, conservator or other
similar official of, or for, any substantial part of its property,
or any general assignment for the benefit of its creditors; or the
Bank or any subsidiary of the Bank shall have taken any corporate
action in furtherance of any of the foregoing actions (each an
"Insolvency Event"); then the Bank shall immediately cease to
transfer Principal Receivables to CCRFC and shall promptly give
notice to CCRFC and the Trustee of such Insolvency Event.
Notwithstanding any cessation of the transfer to CCRFC of
additional Principal Receivables, Principal Receivables transferred
to CCRFC prior to the occurrence of such Insolvency Event and
Collections in respect of such Principal Receivables and Finance
Charge Receivables whenever created, accrued in respect of such
Principal Receivables, shall continue to be property of CCRFC
available for transfer by CCRFC to the Trust pursuant to the
Pooling and Servicing Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment. This Agreement and any
Conveyance Papers and the rights and obligations of the parties
hereunder may not be changed orally, but only by an instrument in
writing signed by CCRFC and the Bank in accordance with this
Section 9.01. This Agreement and any Conveyance Papers may be
amended from time to time by CCRFC and the Bank (i) to cure any
ambiguity, (ii) to correct or supplement any provisions herein
which may be inconsistent with any other provisions herein or in
any such other Conveyance Papers, (iii) to add any other provisions
with respect to matters or questions arising under this Agreement
or any Conveyance Papers which shall not be inconsistent with the
provisions of this Agreement or any Conveyance Papers, (iv) to
change or modify the Purchase Price and (v) to change, modify,
delete or add any other obligation of the Bank or CCRFC; provided,
however, that no amendment pursuant to clause (iv) or (v) of this
Section 9.01 shall be effective unless the Bank and CCRFC have been
notified in writing that the Rating Agency Condition has been
satisfied; provided, further, that such action shall not (as
evidenced by an Opinion of Counsel delivered to the Trustee)
adversely affect in any material respect the interests of the
Trustee or the Investor Certificateholders, unless the Trustee
shall consent thereto. Any reconveyance executed in accordance
with the provisions hereof shall not be considered to be an
amendment to this Agreement. A copy of any amendment to this
Agreement shall be sent to the Rating Agency.
Section 9.02. Governing Law. THIS AGREEMENT AND THE
CONVEYANCE PAPERS SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF [DELAWARE], WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.03. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered at or mailed by
registered mail, return receipt requested, to (a) in the case of
the Bank, , Attention:
(facsimile no. ), (b) in the case of CCRFC,
Attention:
(facsimile no. ), (c) in the case of the Trustee,
, Attention:
(facsimile no. ; or, as
to each party, at such other address as shall be designated by such
party in a written notice to each other party.
Section 9.04. Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this
Agreement or any Conveyance Paper 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, and terms of this Agreement or any
Conveyance Paper and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of any
Conveyance Paper.
Section 9.05. Assignment. Notwithstanding anything to
the contrary contained herein, other than CCRFC's assignment of its
rights, title, and interests in, to, and under this Agreement to
the Trustee for the benefit of the beneficiaries of the Trust,
including the Certificateholders as contemplated by the Pooling and
Servicing Agreement and Section 9.06 hereof, this Agreement and all
other Conveyance Papers may not be assigned by the parties hereto;
provided, however, that the Bank shall have the right to assign its
rights, title and interests, in to and under this Agreement to (i)
any successor by merger assuming this Agreement (ii) to any
affiliate owned directly or indirectly by BankBoston Corporation
which assumes the obligations of this Agreement or (iii) to any
entity provided that the Rating Agency has advised CCRFC and the
Bank that the Rating Agency Condition has been satisfied.
Section 9.06. Acknowledgement and Agreement of the Bank.
By execution below, the Bank expressly acknowledges and agrees that
all of CCRFC's right, title, and interest in, to, and under this
Agreement, including, without limitation, all of CCRFC's right,
title, and interest in and to the Receivables purchased pursuant to
this Agreement, shall be assigned by CCRFC to the Trustee for the
benefit of the beneficiaries of the Trust, including the
Certificateholders, and the Bank consents to such assignment. The
Bank further agrees that notwithstanding any claim, counterclaim,
right or setoff or defense which it may have against CCRFC, due to
a breach by CCRFC of this Agreement or for any other reason, and
notwithstanding the bankruptcy of CCRFC or any other event
whatsoever, the Bank's sole remedy shall be a claim against CCRFC
for money damages and, then only to the extent of funds received by
CCRFC pursuant to the Pooling and Servicing Agreement, and in no
event shall the Bank assert any claim on or any interest in the
Receivables or any proceeds thereof or take any action which would
reduce or delay receipt by Certificateholders of collections with
respect to the Receivables. Additionally, the Bank agrees for the
benefit of the Trustee that any amounts payable by the Bank to
CCRFC hereunder which are to be paid by CCRFC to the Trustee for
the benefit of the Certificateholders shall be paid by the Bank, on
behalf of CCRFC, directly to the Trustee.
Section 9.07. Further Assurances. CCRFC and the Bank
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 the other party or the Trustee more fully to effect
the purposes of this Agreement, the Conveyance Papers and the
Pooling and Servicing Agreement, including, without limitation, the
execution of any financing statements or continuation statements or
equivalent documents relating to the Receivables for filing under
the provisions of the UCC or other law of any applicable
jurisdiction.
Section 9.08. No Waiver; Cumulative Remedies. No
failure to exercise and no delay in exercising, on the part of
CCRFC or the Bank, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. Subject to Section
9.06, the rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers
and privileges provided by law.
Section 9.09. Counterparts. This Agreement and all
Conveyance Papers 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 9.10. Binding; Third-Party Beneficiaries. This
Agreement and the Conveyance Papers will inure to the benefit of
and be binding upon the parties hereto and their respective
successors and permitted assigns. The Trustee shall be considered
a third-party beneficiary of this Agreement.
Section 9.11. Merger and Integration. Except as
specifically stated otherwise herein, this Agreement and the
Conveyance Papers set forth the entire understanding of the parties
relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement
and the Conveyance Papers. This Agreement and the Conveyance
Papers may not be modified, amended, waived or supplemented except
as provided herein.
Section 9.12. Headings. The headings are for purposes
of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
Section 9.13. Schedules and Exhibits. The schedules and
exhibits attached hereto and referred to herein shall constitute a
part of this Agreement and are incorporated into this Agreement for
all purposes.
Section 9.14. Survival of Representations and
Warranties. All representations, warranties and agreements
contained in this Agreement or contained in any Supplemental
Conveyance, shall remain operative and in full force and effect and
shall survive conveyance of the Receivables by CCRFC to the Trustee
pursuant to the Pooling and Servicing Agreement.
Section 9.15. Nonpetition Covenant. The Bank hereby
covenants and agrees that prior to the date which is one year and
one day after the payment in full of all Investor Certificates of
all Series, it will not institute against or join any other Person
in instituting against CCRFC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceeding under the laws of the United States or any state of the
United States.
IN WITNESS WHEREOF, the undersigned have caused this
Receivables Purchase Agreement to be duly executed by their
respective officers as of the day and year first above written.
BANKBOSTON (NH), NATIONAL ASSOCIATION
By:__________________________________
Title:_______________________________
CREDIT CARD RECEIVABLES FUNDING
CORPORATION
By:__________________________________
Title:_______________________________
EXHIBIT A
FORM OF SUPPLEMENTAL CONVEYANCE
(As required by Section 2.05 of
the Receivables Purchase Agreement)
SUPPLEMENTAL CONVEYANCE No. dated as of , 19
, by and between BANKBOSTON (NH), NATIONAL ASSOCIATION, as
Transferor ("the Bank"), and CREDIT CARD RECEIVABLES FINANCING
CORPORATION ("CCRFC"), pursuant to the Receivables Purchase
Agreement referred to below.
WITNESSETH:
WHEREAS, the Bank and CCRFC are parties to a Receivables
Purchase Agreement, dated as of , 1997 (hereinafter
as such agreement may have been, or may from time to time be,
amended, supplemented or otherwise modified, the "Receivables
Purchase Agreement");
WHEREAS, pursuant to the Receivables Purchase Agreement,
the Bank wishes to designate Additional Accounts to be included as
Accounts and the Bank wishes to convey its right, title and
interest in the Receivables of such Additional Accounts, whether
now existing or hereafter created, to CCRFC pursuant to the
Receivables Purchase Agreement (as each such term is defined in the
Receivables Purchase Agreement); and
WHEREAS, CCRFC is willing to accept such designation and
conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the Bank and CCRFC hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein
shall have the meanings ascribed to them in the Receivables
Purchase Agreement unless otherwise defined herein.
"Addition Date" shall mean, with respect to the
Additional Accounts designated hereby, , 19 .
"Additional Cut-Off Date" shall mean, with respect to the
Additional Accounts designated hereby, , 19 .
2. Designation of Additional Accounts. The Bank
delivers herewith a computer file or microfiche list containing a
true and complete schedule identifying all such Additional Accounts
and specifying for each such Account, as of the Additional Cut-Off
Date, its account number, the aggregate amount outstanding in such
Account and the aggregate amount of Principal Receivables in such
Account. Such computer file, microfiche list or other
documentation shall be as of the date of this Supplemental
Conveyance incorporated into and made part of this Supplemental
Conveyance and is marked as Schedule I to this Supplemental
Conveyance.
3. Conveyance of Receivables.
(a) The Bank does hereby sell, transfer, assign, set
over and otherwise convey to CCRFC, without recourse except as
provided in the Receivables Purchase Agreement, all its right,
title and interest in, to and under (i) the Receivables generated
by such Additional Accounts, now existing at the close of business
on the Additional Cut-Off Date and hereafter created until
termination of the Receivables Purchase Agreement, all monies due
or to become due and all amounts received with respect thereto and
all "proceeds" (including, without limitation, "proceeds" as
defined in Article 9 of the UCC) thereof and (ii) the right to
receive Interchange and Recoveries with respect to such
Receivables.
(b) In connection with such sale, the Bank agrees to
record and file, at its own expense, one or more financing
statements (and continuation statements with respect to such
financing statements when applicable) with respect to the
Receivables, now existing and hereafter created, for the transfer
of accounts and general intangibles meeting the requirements of
applicable state law in such manner and in such jurisdictions as
are necessary to perfect the sale and assignment of and the
security interest in the Receivables to CCRFC, and to deliver a
file-stamped copy of such financing statement or other evidence of
such filing to CCRFC.
(c) In connection with such sale, the Bank further
agrees, at its own expense, on or prior to the date of this
Supplemental Conveyance, to indicate in the appropriate computer
files or microfiche list that all Receivables created in connection
with the Additional Accounts designated hereby have been conveyed
to CCRFC pursuant to this Supplemental Conveyance.
4. Acceptance by CCRFC. CCRFC hereby acknowledges its
acceptance of all right, title and interest to the property, now
existing and hereafter created, conveyed to CCRFC pursuant to
Section 3(a) of this Supplemental Conveyance, and declares that it
shall maintain such right, title and interest. CCRFC further
acknowledges that, prior to or simultaneously with the execution
and delivery of this Supplemental Conveyance, the Bank delivered to
CCRFC the computer file or microfiche list described in Section 2
of this Supplemental Conveyance.
5. Representations and Warranties of the Bank. The Bank
hereby represents and warrants to CCRFC as of the date of this
Supplemental Conveyance and as of the Addition Date that:
(a) Legal, Valid and Binding Obligation. This
Supplemental Conveyance constitutes a legal, valid and binding
obligation of the Bank enforceable against the Bank in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally from time
to time in effect or general principles of equity;
(b) Eligibility of Accounts. On the Additional Cut-Off
Date, each Additional Account designated hereby is an Eligible
Account;
(c) No Liens. Each Receivable in an Additional Account
designated hereby has been conveyed to CCRFC free and clear of any
Lien of any Person claiming through or under the Bank or any of its
other affiliates (other than Liens permitted under subsection
2.7(b) of the Pooling and Servicing Agreement);
(d) Eligibility of Receivables. On the Additional Cut-
Off Date, each Receivable existing in an Additional Account
designated hereby is an Eligible Receivable and as of the date of
creation of any Receivable in an Additional Account designated
hereby, such Receivable is an Eligible Receivable;
(e) Selection Procedures. No selection procedure
believed by the Bank to be adverse to the interests of CCRFC or the
Investor Certificateholders was utilized in selecting the
Additional Accounts;
(f) Transfer of Receivables. This Supplemental
Conveyance constitutes a valid sale, transfer and assignment to
CCRFC of all right, title and interest of the Bank in the
Receivables arising in the Additional Accounts designated hereby
now existing or hereafter created, all monies due or to become due
and all amounts received with respect thereto and the "proceeds"
(including, without limitation, "proceeds" as defined in Article 9
of the UCC) thereof and the Interchange and the Recoveries with
respect thereto;
(g) No Conflict. The execution and delivery of this
Supplemental Conveyance, the performance of the transactions
contemplated by this Supplemental Conveyance and the fulfillment of
the terms hereof, 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 indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Bank is a party or by which it or its
properties are bound;
(h) No Violation. The execution and delivery of this
Supplemental Conveyance by the Bank, the performance of the
transactions contemplated by this Supplemental Conveyance and the
fulfillment of the terms hereof applicable to the Bank will not
conflict with or violate any Requirements of Law applicable to the
Bank;
(i) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of the Bank,
threatened against the Bank before any Governmental Authority (i)
asserting the invalidity of this Supplemental Conveyance, (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Supplemental Conveyance, (iii) seeking any
determination or ruling that, in the reasonable judgment of the
Bank, would materially and adversely affect the performance by the
Bank of its obligations under this Supplemental Conveyance or (iv)
seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this
Supplemental Conveyance; and
(j) All Consents. All authorizations, consents, orders
or approvals of any court or other governmental authority required
to be obtained by the Bank in connection with the execution and
delivery of this Supplemental Conveyance by the Bank and the
performance of the transactions contemplated by this Supplemental
Conveyance by the Bank, have been obtained.
6. Ratification of the Receivables Purchase Agreement.
The Receivables Purchase Agreement is hereby ratified, and all
references to the "Receivables Purchase Agreement", to "this
Agreement" and "herein" shall be deemed from and after the Addition
Date to be a reference to the Receivables Purchase Agreement as
supplemented by this Supplemental Conveyance. Except as expressly
amended hereby, all the representations, warranties, terms,
covenants and conditions of the Receivables Purchase Agreement
shall remain unamended and shall continue to be, and shall, remain,
in full force and effect in accordance with its terms and except as
expressly provided herein shall not constitute or be deemed to
constitute a waiver of compliance with or consent to non-compliance
with any term or provision of the Receivables Purchase Agreement.
7. Counterparts. This Supplemental Conveyance may be
executed in any number of counterparts, all of which taken together
shall constitute one and the same instrument.
8. Headings. The headings are for purposes of reference
only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
IN WITNESS WHEREOF, the undersigned have caused this
Supplemental Conveyance to be duly executed and delivered by their
respective duly authorized officers on the day and the year first
above written.
BANKBOSTON (NH), NATIONAL ASSOCIATION
By:__________________________________
Name:_____________________________
Title:____________________________
CREDIT CARD RECEIVABLES FINANCING
CORPORATION
By:__________________________________
Name:_____________________________
Title:____________________________
Schedule I to
Supplemental
Conveyance
Additional Accounts
Schedule I
LIST OF ACCOUNTS
DEEMED INCORPORATED BY REFERENCE
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted without the delivery of a final prospectus
supplement and prospectus. This prospectus supplement and the accompanying
prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy, nor shall there be any sale of these securities in any State
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
Subject to Completion, Dated _______ __, 1997 PROSPECTUS SUPPLEMENT (To
Prospectus Dated , 1997)
$
BankBoston Credit Card Master Trust
$__________ _____% Class A Series 1997-1 Asset Backed Certificates
$__________ _____% Class B Series 1997-1 Asset Backed Certificates
Credit Card Receivables Funding Corporation
Transferor
BankBoston (NH), National Association
Servicer
---------------
The _____% Class A Series 1997-1 Asset Backed Certificates (the "Class
A Certificates") and the _____% Class B Series 1997-1 Asset Backed
Certificates (the "Class B Certificates" and, together with the Class A
Certificates, the "Offered Certificate ") offered hereby will represent
undivided interests in certain assets of the BankBoston Credit Card Master
Trust (the "Trust") created pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") among Credit Card Receivables
Funding Corporation ("CCRFC"), as transferor (in such capacity, the
"Transferor"), BankBoston (NH), National Association (the "Bank"), as
servicer (in such capacity, the "Servicer"), and The Bank of New York, as
trustee (the "Trustee"). The property of the Trust includes the receivables
(the "Receivables") that are generated from time to time in a portfolio of
consumer revolving credit card accounts (the "Accounts"), collections
thereon, monies on deposit in certain accounts of the Trust, any
Participation Interests included in the Trust, collections thereon and the
benefits of a Yield Supplement Account and a Cash Collateral Account. In
addition, the Collateral Interest (as defined herein) will be issued in the
initial amount of $ and will be subordinated to the Offered Certificates as
described herein. The Transferor initially will own the remaining undivided
interest in the Trust not represented by the Offered Certificates, the
Collateral Interest and the other investor certificates or interests issued
by the Trust.
Potential investors should consider, among other things, the information
set forth in ommencing on page herein and on page 17 in the Prospectus.
THE OFFERED CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE TRANSFEROR, THE BANK
OR ANY AFFILIATE OF EITHER THEREOF. AN OFFERED CERTIFICATE IS NOT
A DEPOSIT AND NEITHER THE OFFERED CERTIFICATES NOR THE
UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Price to Underwriting Proceeds to the
Public(1) Discount Transferor(1)(2)
Per Class A Certificate % % %
Per Class B Certificate % % %
Total......... $ $ $
- ----------
(1) Plus accrued interest, if any, at the Class A Certificate Rate or the
Class B Certificate Rate, as applicable, from , 1997.
(2) Before deduction of expenses payable by the Transferor, estimated to be
$ .
[After the initial distribution of the Offered Certificates by the
Underwriters, this Prospectus Supplement and the Prospectus may be used by
BancBoston Securities Inc., an affiliate of the Transferor, in connection
with offers and sales relating to market-making transactions in the Offered
Certificates. BancBoston Securities Inc. may act as principal or agent in
such transactions. Such sales will be made at prices related to prev iling
market prices at the time of sale. Certain information in this Prospectus
Supplement and the Prospectus will be updated from time to time as
described in "Incorporation of Certain Documents by Reference" in the
Prospectus.]
The Offered Certificates are offered by the Underwriters when, as and
if issued by the Trust and accepted by the Underwriters and subject to the
Underwriters' right to reject orders in whole or in part. It is expected
that the Offered Certificates will be delivered in book-entry form on or
about , 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, PIERCE, FENNER & SMITH
INCORPORATED
Underwriters of the Class B Certificates
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
, 1997
The Transferor may offer from time to time other series of
certificates that evidence undivided interests in certain assets of the
Trust, which may have terms significantly different from the Offered
Certificates and which are not offered hereby. The issuance of additional
series of certificates may impact the timing or amount of payments received
by holders of the Offered Certificates.
Interest will accrue on the Class A Certificates at the rate of ____%
per annum (the "Class A Certificate Rate"). Interest will accrue on the
Class B Certificates at the rate of ____% per annum (the "Class B
Certificate Rate"). Interest with respect to the Certificates will be paid
on October 17, 1997 and on the 17th day of each month thereafter (or, if
any such 17th day is not a business day, the next succeeding business day)
(each, a "Distribution Date"). Interest on the Offered Certificates will be
calculated on the basis of a 360-day year consisting of twelve 30-day
months.
Principal with respect to the Class A Certificates is scheduled to be
distributed on the ___________ Distribution Date (the "Class A Scheduled
Payment Date"), but may be paid earlier or later under certain limited
circumstances described herein. Principal with respect to the Class B
Certificates is scheduled to be distributed on the ___________ Distribution
Date (the "Class B Scheduled Payment Date"), but may be paid earlier or
later under certain limited circumstances described herein. See "Maturity
Considerations" and "Series Provisions -- Pay Out Events" herein and
"Description of the Certificates -- Pay Out Events and Reinvestment Events"
in the Prospectus. Principal payments will not be made to Class B
Certificateholders until the final principal payment has been made in
respect of the Class A Certificates. See "Series Provisions -- Principal
Payments."
There currently is no secondary market for the Offered Certificates,
and there is no assurance that one will develop or, if one does develop,
that it will continue until the Offered Certificates are paid in full.
---------------
The fractional undivided interest in the Trust represented by the
Class B Certificates will be subordinated to the extent necessary to fund
payments with respect to the Class A Certificates to the extent described
herein.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
OFFERED CERTIFICATES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE
PURCHASE OF THE OFFERED CERTIFICATES TO COVER SYNDICATE SHORT POSITIONS.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING" HEREIN.
---------------
The Offered Certificates constitute a separate Series of investor
certificates being offered by the Trust from time to time pursuant to a
Prospectus dated , 1997. This Prospectus Supplement does not contain
complete information about the offering of the Offered 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 Offered Certificates may not be consummated unless the
purchaser has received both this Prospectus Supplement and the Prospectus.
Upon receipt of a request by an investor, or his or her representative,
within the period during which there is a prospectus delivery obligation,
the Underwriters will transmit or cause to be transmitted promptly, without
charge and in addition to any such delivery requirements, a paper copy of a
Prospectus Supplement and a Prospectus or a Prospectus Supplement and a
Prospectus in electronic format.
TABLE OF CONTENTS
SUMMARY OF SERIES TERMS...................................................S-4
RISK FACTORS.............................................................S-17
MATURITY CONSIDERATIONS..................................................S-17
THE BANK PORTFOLIO.......................................................S-19
General............................................................S-19
Loss and Delinquency Experience....................................S-19
Revenue Experience.................................................S-21
Interchange........................................................S-23
Payment Rates......................................................S-23
THE RECEIVABLES..........................................................S-23
USE OF PROCEEDS..........................................................S-25
THE SERVICER.............................................................S-25
SERIES PROVISIONS........................................................S-25
Interest Payments..................................................S-25
Principal Payments.................................................S-26
Subordination of the Class B Certificates
and the Collateral Interest.......................................S-27
Allocation Percentages.............................................S-28
Principal Funding Account..........................................S-31
Reserve Account....................................................S-31
Reallocation of Cash Flows.........................................S-32
Application of Collections.........................................S-33
Cash Collateral Account; Required Enhancement Amount...............S-38
Defaulted Receivables; Investor Charge-Offs........................S-39
Paired Series......................................................S-40
Pay Out Events.....................................................S-41
Servicing Compensation and Payment of Expenses.....................S-42
Series Termination.................................................S-43
Reports............................................................S-43
UNDERWRITING.............................................................S-43
LEGAL MATTERS............................................................S-45
INDEX OF DEFINED TERMS...................................................S-46
SUMMARY OF SERIES TERMS
The following is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and
the accompanying Prospectus. Reference is made to the Index of Defined
Terms beginning on page of this Prospectus Supplement and on page 75 of the
Prospectus for the location herein and therein of the definitions of
certain capitalized terms used herein. Certain capitalized terms used but
not defined herein have the meanings assigned to them in the Prospectus.
Trust......................... BankBoston Credit Card Master Trust (the
"Trust").
Title of Securities........... $____________ aggregate principal amount
of ___% Class A Series 1997-1 Asset Backed
Certificates (the "Class A Certifi-
cates") and $__________ aggregate
principal amount of ___% Class B Series
1997-1 Asset Backed Certificates (the
"Class B Certificates" and, together with
the Class A Certificates, the "Offered
Certificates").
Initial Invested Amount....... $_______________ (the "Initial Invested
Amount").
Class A Initial Invested
Amount........................ $_______________ (the "Class A Initial
Invested Amount").
Class B Initial Invested
Amount........................ $_______________ (the "Class B Initial
Invested Amount").
Collateral Initial Invested
Amount........................ $_______________ (the "Collateral Initial
Invested Amount").
Series Required Transferor
Amount........................ For any date, 7% of the Invested
Amount (the "Series Required Transferor
Amount").
Class A Certificate Rate...... ____% per annum.
Class B Certificate Rate...... ____% per annum.
Distribution Dates............ On __________, 1997 and on the ___th day
of each month thereafter (or if any such
___th day is not a business day, the next
succeeding business day).
Controlled Accumulation
Amount........................ For each Distribution Date with respect to
the Controlled Accumulation Period, $
; except that, if the commencement of the
Controlled Accumulation Period is delayed
as described herein under "Series
Provisions--Principal Payments," the
Controlled Accumulation Amount for each
Distribution Date with respect to the
Controlled Accumulation Period will be
determined as described under "Series
Provisions--Application of Collections--
Payments of Principal."
Class A Scheduled Payment
Date.......................... The __________ Distribution Date.
Class B Scheduled Payment
Date.......................... The __________ Distribution Date.
Closing Date.................. _____, 1997 (the "Closing Date").
Series Invested Amount........ The Initial Invested Amount.
The Offered Certificates; the
Collateral
Interest...................... Each of the Offered Certificates
represents an undivided interest in the
Trust. The portion of the Trust Assets
allocated to Series 1997-1 (the "Offered
Series") as described under "Description
of the Pooling and Servicing Agreement--
Allocations" in the Prospectus will be
further allocated among the interest of
the holders of the Class A Certificates
(the "Class A Certificateholders'
Interest"), the interest of the holders of
the Class B Certificates (the "Class B
Certificateholders' Interest") and the
interest of the Collateral Interest Holder
(as defined below), and the interest of
the holders of the Transferor Certifi-
cate (the "Transferor's Interest"), as
described below. The Class A
Certificateholders' Interest and the Class
B Certificateholders' Interest are
sometimes collectively referred to herein
as the "Offered Certificateholders'
Interest." The holders of the Offered
Certificateholders' Interest are referred
to herein as the "Series
Certificateholders." A specified undivided
interest in the Trust Assets (the
"Collateral Interest") in the initial
amount of $ __________ (which amount
represents ___% of the sum of the Class A
Initial Invested Amount, the Class B
Initial Invested Amount and the Collateral
Initial Invested Amount) and funds on
deposit in the Cash Collateral Account in
an initial amount of $_______ (which
amount represents ___% of the sum of the
Class A Initial Invested Amount, the Class
B Initial Invested Amount and the
Collateral Initial Invested Amount)
constitute Credit Enhancement for the
Offered Certificates. The holder of the
Collateral Interest is referred to herein
as the "Collateral Interest Holder."
Allocations will be made to the Collateral
Interest and the Collateral Interest
Holder will have voting and certain other
rights as if the Collateral Interest were
a subordinated Class of Offered
Certificates. For purposes of this Pro-
spectus Supplement, the "Collateral
Interest" will be deemed to be the
"Enhancement Invested Amount" for the
Offered Certificates for all purposes
under the Prospectus. The Transferor's
Interest will represent the right to the
assets of the Trust not allocated to the
Class A Certificateholders' Interest, the
Class B Certificateholders' Interest, the
Collateral Interest or the holders of
other interests in the Trust. The
principal amount of the Transferor's
Interest will fluctuate as the amount of
Receivables in the Trust changes from time
to time.
The aggregate amount of Principal
Receivables allocated to the Offered
Certificateholders' Interest and the
Collateral Interest (the "Invested
Amount") will be $ __________ on the
Closing Date (the "Initial Invested
Amount").
The aggregate amount of Principal
Receivables allocable to the Class A
Certificateholders' Interest (as more
fully defined herein, the "Class A
Invested Amount") will be $ ________ on the
Closing Date (the "Class A Initial
Invested Amount"). The aggregate amount of
Principal Receivables allocable to the
Class B Certificateholders' Interest (as
more fully defined herein, the "Class B
Invested Amount") will be $ _________ on the
Closing Date (the "Class B Initial
Invested Amount"). The aggregate amount of
Principal Receivables allocable to the
Collateral Interest (as more fully defined
herein, the "Collateral Invested Amount")
will be $ __________on the Closing Date (the
"Collateral Initial Invested Amount"). The
Class B Certificateholders' Interest will
decline in certain circumstances as a
result of (a) the allocation to the Class
B Certificateholders' Interest of certain
Defaulted Amounts, including such amounts
otherwise allocable to the Class A
Certificateholders' Interest when the
Collateral Interest is zero, and (b) the
reallocation of collections of Principal
Receivables otherwise allocable to the
Class B Certificateholders' Interest to
fund certain payments in respect of the
Class A Certificates. Any such reductions
in the Class B Certificateholders'
Interest may be reimbursed out of Excess
Spread, if any, Excess Finance Charge
Collections allocable to the Offered
Series, if any, and the reallocation of
certain amounts allocable to the
Collateral Interest as described herein.
During the Controlled Accumulation Period,
for the purpose of allocating collections
of Finance Charge Receivables and the
Defaulted Amount with respect to each
Monthly Period, the Class A
Certificateholders' Interest will be
further reduced (in an amount not to
exceed the Class A Invested Amount) by the
amount on deposit in the Principal Funding
Account (as so reduced, the "Class A
Adjusted Invested Amount") and the Class B
Certificateholders' Interest will be
further reduced by the amount by which the
amount on deposit in the Principal Funding
Account exceeds the Class A Invested
Amount (as so reduced, the "Class B
Adjusted Invested Amount," and, together
with the Class A Adjusted Invested Amount
and the Collateral Invested Amount, the
"Adjusted Invested Amount"). The principal
amount of the Transferor's Interest will
fluctuate as the amount of Principal
Receivables in the Trust, the adjusted
invested amount of each Series and the
amounts on deposit in the Special Funding
Account change from time to time.
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
payments of interest on each Interest
Payment Date at the applicable certificate
rate and payments of principal and subject
to any reallocation of such amounts as
described herein), varying percentages of
the collections of Finance Charge
Receivables and Principal Receivables
and will be allocated varying percentages
of the Defaulted Amount with respect to
each Monthly Period. Collections of
Finance Charge Receivables and Principal
Receivables and the Defaulted Amount
will be allocated to the Offered Series
based on the Series Allocation Percentage
for the Offered Series (subject to
reallocation, in the case of certain
Series Allocable Finance Charge
Collections, to other Series in Group I as
described under "Description of the
Pooling and Servicing Agreement--
Reallocations Among Certificates of
Different Series within a Reallocation
Group" in the Prospectus). Reallocated
Investor Finance Charge Collections and
the Investor Default Amount will be
further allocated to the holders of the
Class A Certificates and the holders of
the Class B Certificates and the
Collateral Interest based on the Class A
Floating Percentage and the Class B
Floating Percentage and the Collateral
Floating Percentage, respectively (each
defined herein). The Principal Allocation
Percentage of Series Allocable Principal
Collections will be allocated to the
holders of the Class A Certificates, the
Class B Certificates and the Collateral
Interest based on the Class A Principal
Percentage, the Class B Principal
Percentage and the Collateral Principal
Percentage, respectively (each defined
herein).
Other Series.................. The Offered Certificates will be the first
Series of investor certificates issued by
the Trust. Additional Series are expected
to be issued from time to time by the
Trust. See "Description of the Pooling and
Servicing Agreement-- New Issuances" and
"--Reallocations Among Certificates of
Different Series within a Reallocation
Group" in the Prospectus and "Maturity
Considerations" herein.
Receivables................... The Receivables arise in Accounts that
have been selected from the total
portfolio of VISA and MasterCard accounts
serviced by the Bank, based on criteria
provided in the Pooling and Servicing
Agreement as applied on the Initial
Cut-Off Date and as more fully described
herein under "The Bank Portfolio." The
aggregate amount of Receivables in the
Accounts as of _____, 1997 was $ _____,
comprised of $ _____ of Principal
Receivables and $ _____ of Finance Charge
Receivables.
Denominations................. Beneficial interests in the Offered
Certificates will be offered for purchase
in denominations of $1,000 and
integral multiples thereof.
Registration of the Offered
Certificates.................. The Offered Certificates initially will
be represented by Certificates
registered in the name of Cede, as the
nominee of DTC. No purchaser of an
Offered Certificate will be entitled to
receive a definitive certificate except
under certain limited circumstances
described in the Prospectus. Purchasers
of the Offered Certificates may elect to
hold their Certificates through DTC (in
the United States) or Cedel or Euroclear
(in Europe). See "Description of the
Certificates -- Definitive Certificates"
in the Prospectus.
Servicing Fee................. The Servicing Fee Rate for the Offered
Certificates will be 2.0% per annum. On
each Transfer Date, Servicer Interchange
with respect to the related Monthly
Period will be withdrawn from the
Collection Account and paid to the
Servicer in respect of the Servicing
Fee. The Class A Servicing Fee, the
Class B Servicing Fee and the Collateral
Interest Servicing Fee will be paid on
each Distribution Date as described
under "Series Provisions--Application
of Collections--Payment of Fees,
Interest and Other Items" and "--
Servicing Compensation and Payment of
Expenses" herein. See "Description of
the Certificates--Servicing
Compensation and Payment of Expenses" in
the Prospectus.
Revolving Period and Controlled
Accumulation Period........... The "Revolving Period" with respect to the
Offered Certificates means the period
from and excluding ______, 1997 (the
"Series Cut-Off Date"), to, but not
including, the earlier of (a) the com-
mencement of the controlled accumulation
period with respect to the Offered
Certificates (the "Controlled
Accumulation Period") and (b) the
commencement of the Early Amortization
Period. Unless a Pay Out Event has
occurred, the Controlled Accumulation
Period will commence at the close of
business on ______; provided, that
subject to the conditions set forth
under "Series Provisions--Principal
Payments" herein, the day on which the
Revolving Period ends and the Controlled
Accumulation Period begins may be
delayed to no later than the close of
business on ____________. The Controlled
Accumulation Period will end on the
earliest of (a) the commencement of the
Early Amortization Period, (b) the
payment in full of the Invested Amount
and (c) the Series Termination Date for
the Offered Series (the "Stated Series
Termination Date"). No principal will be
payable to Class A Certificateholders
until the ____________ Distribution Date
(the "Class A Scheduled Payment Date"),
or, upon the occurrence of a Pay Out
Event as described herein, the first
Distribution Date with respect to the
Early Amortization Period. No principal
will be payable to the Class B
Certificateholders until the Class A
Invested Amount is paid in full.
Principal with respect to the Class B
Certificates is expected to be
distributed on the _____ Distribution
Date (the "Class B Scheduled Payment
Date"). No principal will be payable to
the Collateral Interest Holder until the
Class B Invested Amount is paid in full;
provided, that during the Revolving
Period or the Controlled Accumulation
Period, certain collections of Principal
Receivables allocable to the Offered
Certificateholders' Interest and the
Collateral Interest will be paid to the
Collateral Interest Holder to the extent
the sum of the Collateral Invested
Amount and the Available Cash Collateral
Amount exceeds the Required Enhancement
Amount. For the period beginning on the
Closing Date and ending with the
commencement of the Controlled
Accumulation Period or the Early
Amortization Period, collections of
Principal Receivables otherwise
allocable to the Offered
Certificateholders' Interest and the
Collateral Interest (other than
collections of Principal Receivables
allocated to the Class B
Certificateholders' Interest and the
Collateral Interest ("Reallocated
Principal Collections") that are used to
pay any deficiency in the Class A
Required Amount or Class B Required
Amount) will, subject to certain
limitations, be treated as Shared
Principal Collections and applied to
cover principal payments due to or for
the benefit of Certificateholders of
other Principal Sharing Series, or paid
to the holders of the Transferor
Certificates or, in certain
circumstances, deposited in the Special
Funding Account. See "Series
Provisions--Pay Out Events" herein and
"Description of the Certificates--Pay
Out Events and Reinvestment Events" in
the Prospectus 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. In
addition, see "Series Provisions--
Principal Payments" herein and
"Description of the Pooling and
Servicing Agreement--Shared Principal
Collections" in the Prospectus.
Early 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
Invested Amount in full and (b) the Stated
Series Termination Date (the "Early
Amortization Period"), Available Principal
Collections (as defined herein) will be
distributed monthly on each Distribution
Date to the holders of the Class A
Certificates and, following payment in
full of the Class A Invested Amount, to
the holders of the Class B Certificates
and, following payment in full of the
Class B Invested Amount, to the Collateral
Interest Holder beginning with the
Distribution Date in the month following
the commencement of the Early Amortization
Period. See "Series Provisions--Pay Out
Events" herein and "Description of the
Certificates--Pay Out Events and
Reinvestment Events" in the Prospectus for
a discussion of the events which might
lead to the commencement of the Early
Amortization Period.
Subordination of the
Class B Certificates
and the Collateral Interest... The Class B Certificates and the
Collateral Interest will be subordinated,
as described herein, to the extent
necessary to fund payments with respect to
the Class A Certificates as described
herein. In addition, the Collateral
Interest will be subordinated to the
extent necessary to fund certain payments
with respect to the Class B Certificates.
If the Collateral Interest is reduced to
zero, holders of the Class B Certificates
will bear directly the credit and other
risks associated with their interest in
the Trust. To the extent the Class B
Invested Amount is reduced, the percentage
of collections of Finance Charge
Receivables allocable to holders of the
Class B Certificates in subsequent Monthly
Periods will be reduced. Moreover, to the
extent the amount of such reduction in the
Class B Invested Amount is not reimbursed,
the amount of principal distributable to
holders of the Class B Certificates will
be reduced. Such reductions of the Class B
Invested Amount will thereafter be
reimbursed and the Class B Invested Amount
increased on each Distribution Date by the
amount, if any, of Excess Spread and
Excess Finance Charge Collections
allocable to the Offered Series for such
Distribution Date available for that
purpose. See "Description of the Pooling
and Servicing Agreement--Credit
Enhancement--Subordination" in the
Prospectus.
Cash Collateral Account....... The Offered Certificates will have the
benefit of an account (the "Cash
Collateral Account"), which will be held
in the name of the Trustee for the benefit
of the Series Certificateholders. On the
Closing Date, the Transferor will deposit
$____________ (the "Initial Cash
Collateral Amount") into the Cash
Collateral Account from the proceeds of
the sale of the Offered Certificates.
Withdrawals will be made from the Cash
Collateral Account, to the extent of
available funds on deposit therein, to pay
the Class A Required Amount and the Class
B Required Amount. The amount of funds
available on deposit in the Cash
Collateral Account may be increased (i)
under certain circumstances, and subject
to certain conditions described herein, in
connection with the application of
collections of Principal Receivables to
decrease the Collateral Invested Amount
and (ii) to the extent Excess Spread and
Excess Finance Charge Collections are
required and available to be deposited
therein. See "Series Provisions--Cash
Collateral Account; Required Enhancement
Amount."
Yield Supplement Account...... The Offered Certificates will have the
benefit of an account (the "Yield
Supplement Account"), which will be held
in the name of the Trustee for the benefit
of the holders of the Offered Certifi-
cates. On the Closing Date, the Transferor
will deposit $__________ (the "Initial
Yield Supplement Deposit") into the Yield
Supplement Account from the proceeds of
the issuance of the Offered Certificates.
On each Distribution Date, an amount equal
to the Yield Supplement Draw Amount will
be released and deposited into the
Collection Account and will be treated as
collections of Finance Charge Receivables
allocable to the Offered Certificates.
The Yield Supplement Account will not be
replenished following the withdrawals of
amounts on deposit therein on any
Distribution Date. The "Yield Supplement
Draw Amount" means ___% of the Initial
Yield Supplement Deposit for the six
Distribution Dates from and including the
September ___, 1997 Distribution Date
through and including the February ___,
1998 Distribution Date, and ___% of the
Initial Yield Supplement Deposit for the
six Distribution Dates from and including
the March ___, 1998 Distribution Date
through and including the August ___, 1998
Distribution Date. See "Description of
the Certificates --Yield Supplement
Account."
Additional Amounts Available
to Certificateholders......... With respect to any Distribution Date,
Excess Spread and Excess Finance Charge
Collections allocable to the Offered
Series will be applied to fund the Class A
Required Amount and the Class B Required
Amount, as well as certain other items.
The "Class A Required Amount" means with
respect to any Distribution Date the
amount, if any, by which the sum of (a)
the Class A Monthly Interest due on such
Distribution Date and any overdue Class A
Monthly Interest and Class A Additional
Interest thereon, (b) if the Bank or an
affiliate of the Bank is no longer the
Servicer, 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 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) if
the Bank or an affiliate of the Bank is no
longer the Servicer, 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 shall mean
the sum of (a) the Class A Required Amount
and (b) the Class B Required Amount for
such Monthly Period. "Excess Spread" for
any Transfer Date will equal the sum of
(a) the excess of (i) Class A Available
Funds for the related Monthly Period over
(ii) the sum of the amounts referred to in
clauses (a), (b) and (c) in the definition
of "Class A Required Amount" above and (b)
the excess of (i) Class B Available Funds
for the related Monthly Period over (ii)
the sum of the amounts referred to in
clauses (a)(i) and (ii) in the definition
of "Class B Required Amount" above and (c)
Collateral Available Funds (defined
herein) for the related Monthly Period not
used, if the Bank or an affiliate of the
Bank is no longer the Servicer, to pay the
Collateral Interest Servicing Fee, as
described herein.
If, on any Distribution Date, Excess
Spread and Excess Finance Charge
Collections allocable to the Offered
Series are less than the Class A Required
Amount, the amount, if any, available on
deposit in the Cash Collateral Account
will be used to fund the remaining Class A
Required Amount. If such amount on
deposit in the Cash Collateral Account is
exhausted, Reallocated Principal
Collections allocable first to the
Collateral Interest and then to the Class
B Certificateholders' 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 Distribution Date, then the
Collateral Invested Amount (after giving
effect to reductions for any Collateral
Charge-Offs (defined herein) and
Reallocated Principal Collections on such
Distribution 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 Invested Amount to be a
negative number, the Collateral Invested
Amount will be reduced to zero, and the
Class B Invested Amount (after giving
effect to reductions for any Class B
Investor Charge-Offs (defined below) and
any Reallocated Class B Principal
Collections on such Distribution Date)
will be reduced by the amount by which the
Collateral Invested Amount would have been
reduced below zero (but not by more than
the excess of the Class A Investor Default
Amount, if any, for such Monthly Period
over the amount of such reduction, if any,
of the Collateral Invested Amount with
respect to such Monthly Period). In the
event that such reduction would cause the
Class B Invested Amount to be a negative
number, the Class B Invested Amount will
be reduced to zero and the Class A
Invested Amount will be reduced by the
amount by which the Class B Invested
Amount would have been reduced below zero
(but not by more than the excess, if any,
of the Class A Investor Default Amount for
such Monthly Period over such reductions
in the Collateral Invested Amount and the
Class B Invested Amount with respect to
such Monthly Period) (such reduction, a
"Class A Investor Charge-Off"). If the
Cash Collateral Account is exhausted and
the Collateral Invested Amount and the
Class B Invested Amount are reduced to
zero, the Class A Certificateholders will
bear directly the credit and other risks
associated with their undivided interest
in the Trust. See "Series Provisions--
Reallocation of Cash Flows" and "--
Defaulted Receivables; Investor
Charge-Offs."
If, on any Distribution Date, Excess
Spread and Excess Finance Charge
Collections allocated to the Offered
Series not required to pay the Class A
Required Amount or reimburse Class A
Investor Charge-Offs is less than the
Class B Required Amount, the amount, if
any, available on deposit in the Cash
Collateral Account not required to fund
the Class A Required Amount will be used
to fund the remaining Class B Required
Amount. If such amount on deposit in the
Cash Collateral Account is exhausted,
Reallocated Principal Collections
allocable to the Collateral Interest for
the related Monthly Period not required to
pay the Class A Required Amount will be
used to fund the remaining Class B
Required Amount. If such remaining Real-
located Principal Collections allocable to
the Collateral Interest with respect to
such Monthly Period are insufficient to
fund the remaining Class B Required Amount
for such Distribution Date, then the
Collateral Invested Amount (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
Certificateholders) will be reduced by the
amount of such deficiency (but not by more
than the Class B Investor Default Amount
for such Monthly Period). In the event
that such reduction would cause the
Collateral Invested Amount to be a
negative number, the Collateral Invested
Amount will be reduced to zero, and the
Class B Invested Amount will be reduced by
the amount by which the Collateral
Invested Amount would have been reduced
below zero (but not by more than the
excess, if any, of the Class B Investor
Default Amount for such Monthly Period
over such reduction in the Collateral
Invested Amount with respect to such
Monthly Period) (such reduction, a "Class
B Investor Charge-Off"). In the event of a
reduction of the Class A Invested Amount,
the Class B Invested Amount or the
Collateral Invested Amount, the 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 "De-
scription of the Certificates--
Reallocation of Cash Flows" and "--
Defaulted Receivables; Investor
Charge-Offs."
Available Enhancement Amount.. The Cash Collateral Account and the
Collateral Invested Amount constitute the
Credit Enhancement for the Offered
Certificates. On each Distribution Date,
the amount of Credit Enhancement available
to the holder of the Offered Certificates
will equal the lesser of (a) the sum of
the Collateral Invested Amount and the
amount, if any, on deposit in the Cash
Collateral Account (the "Available
Enhancement Amount") and (b) the Required
Enhancement Amount. The "Required
Enhancement Amount" with respect to any
Distribution Date means, subject to
certain limitations more fully described
herein, (a) $__________ on the initial
Distribution Date and (b) on any
Distribution Date thereafter, an amount
equal to the greater of (i) __% of the sum
of the Class A Adjusted Invested Amount
and the Class B Adjusted Invested Amount
on such Distribution Date (in each case
after taking into account deposits into
the Principal Funding Account and payments
to be made on such Distribution Date), and
the Collateral Invested Amount on the
prior Distribution Date after any
adjustments made to the Collateral
Invested Amount on such prior Distribution
Date, and (ii) the sum of (A) the product
of (I) $___________, (II) _% and (III) a
fraction the numerator of which is the
Available Cash Collateral Amount as of the
immediately preceding Distribution Date
and the denominator of which is the Total
Enhancement as of such immediately
preceding Distribution Date (in each
case after giving effect to all deposits,
withdrawals and payments made with respect
to such immediately preceding
Distribution Date) and (B) the product of
(I) $___________, (II) _% and (III) a
fraction the numerator of which is the
Collateral Invested Amount as of the
immediately preceding Distribution Date
and the denominator of which is the Total
Enhancement as of such immediately
preceding Distribution Date (in each
case after giving effect to all deposits,
withdrawals and payments made with respect
to such immediately preceding
Distribution Date); provided, however, (x)
if certain reductions in the Collateral
Invested Amount occur or if a Pay Out
Event occurs, the Required Enhancement
Amount for such Distribution Date will
equal the Required Enhancement Amount for
the Distribution Date immediately
preceding the occurrence of such reduction
or Pay Out Event; (y) in no event will the
Required Enhancement Amount exceed the
unpaid principal amount of the Offered
Certificates as of the last day of the
Monthly Period preceding such Distribution
Date after taking into account payments to
be made on such preceding Distribution
Date and subtracting amounts then on
deposit in the Principal Funding Account;
and (z) the Required Enhancement Amount
may be reduced at any time to a lesser
amount if the Rating Agency Condition is
satisfied. "Total Enhancement" means, on
any date of determination, the sum of the
Available Cash Collateral Amount and the
Collateral Invested Amount. See
"Description of the Certificates--Cash
Collateral Account; Required Enhancement
Amount."
If on any Distribution Date, the Available
Enhancement Amount is less than the
Required Enhancement Amount, Excess
Spread and Excess Finance Charge
Collections, if available, will be used to
increase the Collateral Invested Amount to
the extent of certain prior unreimbursed
reductions thereof and then deposited in
the Cash Collateral Account to the extent
of such shortfall. If on any Distribution
Date the Available Enhancement Amount
equals or exceeds the required Enhancement
Amount, any such Excess Spread and Excess
Finance Charge Collections 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 and will not be
available to the Certificateholders.
Reallocated Investor Finance
Charge Collections............ The Offered Certificates will be the first
Series issued by the Trust in a Group of
Series ("Group I"), constituting a
Reallocation Group, which may be issued
by the Trust from time to time.
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 Pooling and Servicing
Agreement--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 Offered Certificates. See "Risk
Factors--Issuance of New Series" 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 Principal Collections.. The Offered Series has been designated as
a Principal Sharing Series. Collections of
Principal Receivables and certain other
amounts otherwise allocable to other
Principal Sharing Series, if any, to the
extent such collections are not needed to
make payments to or deposits for the
benefit of the certificateholders of such
other Series, will be applied to cover
principal payments due to or for the
benefit of the holders of the Offered
Certificates and the Collateral
Interest. See "Description of the Pool-
ing and Servicing Agreement--Shared
Principal Collections" in the Prospectus.
There can be no assurance that any Series
issued by the Trust in the future will be
designated a Principal Sharing Series.
Excess Finance Charge
Collections.................... The Offered Series has been designated as
an Excess Allocation Series. See
"Description of the Pooling and Servicing
Agreement--Sharing of Excess Finance
Charge Collections Among Excess Allocation
Series" in the Prospectus. There can be
no assurance that any Series issued by the
Trust in the future will be designated
an Excess Allocation Series.
Optional Repurchase........... The Offered Certificateholders' Interest
and the Collateral Interest will be
subject to optional repurchase by the
Transferor on any Distribution Date on or
after the Distribution Date on which the
sum of the Class A Invested Amount, the
Class B Invested Amount and the Collateral
Invested Amount, if any, is reduced to an
amount which is not more than $________ (10%
of the Initial Invested Amount). The
purchase price will be equal to the sum of
the Class A Invested Amount and the Class
B Invested Amount (less the Principal
Funding Account Balance, if any), the
Collateral Invested Amount, if any, and
accrued and unpaid interest on the Offered
Certificates and the Collateral Interest
(and accrued and unpaid interest with
respect to interest amounts that were due
but not paid on a prior Interest Payment
Date) through the day preceding such
Distribution Date.
Stated Series Termination Date The Distribution Date. See "Series
Provisions -- Series Termination."
Trustee....................... The Bank of New York, in its capacity as
Trustee under the Pooling and Servicing
Agreement.
Tax Status.................... Special tax counsel to the Transferor is
of the opinion that under existing law the
Offered Certificates will be characterized
as debt for federal income tax purposes.
Under the Pooling and Servicing
Agreement, the Certificate Owners will
agree to treat the Offered Certificates as
debt of the Transferor for federal income
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 the 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 completion
of the public offering made hereby, by at
least 100 investors who are independent of
the Transferor and of one another. The
Class A Underwriters expect that the Class
A Certificates will be held by at least
100 independent investors at the
conclusion of the offering, although no
assurance can be given, and no monitoring
or other measures will be taken to ensure,
that such condition will be met with
respect to the Class A Certificates. 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 transac-
tion" 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 Offered 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 Class B Underwriters currently do not
expect that the Class B Certificates will
be held by at least 100 independent
investors 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
by (a) any employee benefit plan that is
subject to ERISA, (b) any plan or other
arrangement (including an individual
retirement account or Keogh plan) that is
subject to Section 4975 of the Code, or
(c) any entity whose underlying assets
include "plan assets" under the regulation
by reason of any such plan's investment in
the entity. By its acceptance of a Class B
Certificate, each Class B Certificate-
holder 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 nationally recognized rating agency.
The rating of the Class A Certificates is
based primarily on the value of the
Receivables, the terms of the Class B
Certificates and the benefits of the
Collateral Interest, the Yield Supplement
Account and the Cash Collateral Account.
See "Risk Factors--Limited Nature of
Rating" in the Prospectus.
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 nationally recognized
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, the Yield
Supplement Account and the Cash Collateral
Account. See "Risk Factors-- imited
Nature of Rating" in the Prospectus.
RISK FACTORS
Potential investors should consider the risk factors discussed under
"Risk Factors" in the Prospectus and the following risk factors in
connection with the purchase of the Offered Certificates.
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,
by the Collateral Interest, Yield Supplement Account and the Cash
Collateral Account, and with respect to the Class B Certificates, will be
provided by the Collateral Interest, Yield Supplement Account and the Cash
Collateral Account, the amount available thereunder is limited, may decline
during the Controlled Accumulation Period and will be reduced by payments
made pursuant thereto. If the Available Enhancement Amount 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 Invested Amount may be reduced. If the Class B Invested Amount is reduced
to zero, Class A Certificateholders will bear directly the credit and other
risks associated with their undivided interest in the Trust. Further, in
the event of a reduction of the Class B Invested Amount or the Available
Enhancement Amount, 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.
Effect of Subordination of Class B Certificates; Principal Payments.
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 Invested Amount 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 the Offered Series, amounts available on deposit in the Cash Collateral
Account not required to fund the Class A Required Amount, Reallocated
Principal Collections with respect to the Collateral Interest and
reductions in the Collateral Invested Amount, if any. To the extent the
Class B Invested Amount is reduced, the percentage of collections of
Finance Charge Receivables allocable to the Class B Certificateholders'
Interest in future Monthly Periods will be reduced. Moreover, to the extent
the amount of such reduction in the Class B Invested Amount is not
reimbursed, the amount of principal and interest distributable to the Class
B Certificateholders will be reduced. See "Series Provisions -- Allocation
Percentages" and "-- Subordination of the Class B Certificates and the
Collateral Interest" herein. If the Class B Invested Amount is reduced to
zero, the holders of the Class A Certificates will bear directly the credit
and other risks associated with their undivided interest in the Trust.
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement and the Supplement for the Offered
Series (the "Offered Series Supplement") provide that the Class A
Certificateholders will not receive payments of principal until the Class A
Scheduled Distribution Date, or earlier in the event of a Pay Out Event
which results in the commencement of the Early Amortization Period. Class A
Certificateholders will receive payments of principal on each Distribution
Date following the Monthly Period in which a Pay Out Event occurs until the
Class A Invested Amount has been paid in full or the Stated Series
Termination Date has occurred. The Class B Certificateholders will not
receive payments of principal until the Class B Scheduled Payment Date, or
earlier in the event of a Pay Out Event which results in the commencement
of the Early Amortization Period, but not until the Class A Invested Amount
has been paid in full. The Class B Certificateholders will not begin to
receive payments of principal until the final principal payment on the
Class A Certificates has been made.
On each Distribution Date during the Controlled Accumulation Period,
amounts equal to the least of (a) Available Principal Collections (see
"Series Provisions -- Principal Payments") for the related Monthly Period
on deposit in the Collection Account, (b) the Controlled Deposit Amount,
which is equal to the sum of the Controlled Accumulation Amount for such
Monthly Period and any Deficit Controlled Accumulation Amount (both as
defined under "Series Provisions -- Application of Collections -- Payments
of Principal") and (c) the sum of the Class A Adjusted Invested Amount and
the Class B Adjusted Invested Amount (prior to any deposits on such day)
will be deposited in the Principal Funding Account for the Offered Series
held by the Trustee (the "Principal Funding Account") until the principal
amount on deposit in the Principal Funding Account (the "Principal Funding
Account Balance") equals the sum of the Class A Invested Amount and the
Class B Invested Amount or the first Distribution Date with respect to the
Early Amortization Period. After the Class A Invested Amount has been paid
in full, or following the first Distribution Date on which the Principal
Funding Account Balance has increased to the Class A Invested Amount,
Available Principal Collections, to the extent required will be distributed
to the Class B Certificateholders on each Distribution Date beginning,
during the Controlled Accumulation Period, on the Class B Scheduled Payment
Date, until the earlier of the Distribution Date on which the Class B
Invested Amount has been paid in full and the Stated Series Termination
Date. Amounts in the Principal Funding Account are expected to be available
to pay the Class A Invested Amount on the Class A Scheduled Payment Date.
After payment of the Class A Invested Amount in full, Available Principal
Collections are expected to be available to pay the Class B Invested Amount
on the Class B Scheduled Payment Date. Although it is anticipated that
collections of Principal Receivables will be available on each Distribution
Date during the Controlled Accumulation Period to make a deposit of the
applicable Controlled Deposit Amount and that the Class A Invested Amount
will be paid to the Class A Certificateholders on the Class A Scheduled
Distribution date and that the Class B Invested Amount will be paid to the
Class B Certificateholders on the Class B Scheduled Distribution date,
respectively, no assurance can be given in this regard. See "Series
Provisions -- Principal Payments" for a discussion of the circumstances
under which the commencement of the Controlled Accumulation Period may be
delayed.
The Transferor may, at or after the time at which the Controlled
Accumulation Period commences for the Offered Series, cause the Trust to
issue another Series (or some portion thereof, to the extent that the full
principal amount of such other Series is not otherwise outstanding at such
time) as a Paired Series with respect to the Offered Series to be used to
finance the increase in the Transferor Amount caused by the accumulation of
principal in the Principal Funding Account with respect to the Offered
Series. Although no assurances can be given as to whether such other Series
will be issued and, if issued, the 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 the Offered Certificates), and the interest
rate with respect to certificates of such other Series may be established
on its date of issuance and may be reset periodically. Further, since the
terms of the Offered Certificates will vary from the terms of such other
Series, the Pay Out Events or Reinvestment Events with respect to such
other Series will vary from the Pay Out Events with respect to the Offered
Series and may include Pay Out Events or Reinvestment Events which are
unrelated to the status of the Transferor or the Servicer or the
Receivables, such as Pay Out Events or Reinvestment Events related to the
continued availability and rating of certain providers of Series
Enhancement to such other Series. If a Pay Out Event or Reinvestment Event
does occur with respect to any such Paired Series prior to the payment in
full of the Offered Certificates, the final payment of principal to the
Series Certificateholders may be delayed.
Should a Pay Out Event occur with respect to the Offered Certificates
and the Early Amortization Period commence, any amount on deposit in the
Principal Funding Account will be paid to the Class A Certificateholders on
the Distribution Date in the month following the commencement of the Early
Amortization Period and the Class A Certificateholders will be entitled to
receive Available Principal Collections on each Distribution Date with
respect to such Early Amortization Period as described herein until the
Class A Invested Amount has been paid in full or until the Stated Series
Termination Date occurs. After the Class A Invested Amount has been paid in
full and if the Stated Series Termination Date has not occurred, Available
Principal Collections will be paid to the Class B Certificates on each
Distribution Date until the earlier to occur of the date on which the Class
B Invested Amount has been paid in full and the Stated Series Termination
Date.
Should a Pay Out Event occur with respect to the Offered Certificates
and the Early Amortization Period commence, any amount on deposit in the
Special Funding Account will be released and treated as Shared Principal
Collections to the extent needed to cover principal payments due to or for
the benefit of any Series, including the Offered Series, entitled to the
benefits of Shared Principal Collections. See "Description of the
Certificates -- Pay Out Events and Reinvestment Events" in the Prospectus
and "Series Provisions -- Pay Out Events" herein.
The ability of the Class A Certificateholders and the Class B
Certificateholders to receive payments of principal on the Class A
Scheduled Payment Date and on the Class B Scheduled Payment Date,
respectively, depends on the payment rates on the Receivables, the amount
of outstanding Receivables, delinquencies, charge-offs and new borrowings
on the Accounts, the potential issuance by the Trust of additional Series
and the availability of Shared Principal Collections. Monthly payment rates
on the Receivables may vary because, among other things, cardholders may
fail to make required minimum payments, may only make payments as low as
the minimum required amount or may make payments as high as the entire
outstanding balance. Monthly payment rates may also vary due to seasonal
purchasing and payment habits of cardholders and to changes in any terms of
rebate programs in which cardholders participate. See the table entitled
"Cardholder Monthly Payment Rates -- Bank Portfolio" under "The Bank
Portfolio -- Payment Rates" herein. The Transferor cannot predict, and no
assurance can be given, as to the cardholder monthly payment rates that
will actually occur in any future period, as to the actual rate of payment
of principal of the Offered Certificates or whether the terms of any
subsequently issued Series might have an impact on the amount or timing of
any such payment of principal. See "Risk Factors -- Generation of
Additional Receivables; Dependency on Cardholder Repayments" and
"Description of the Pooling and Servicing Agreement -- Shared Principal
Collections" in the Prospectus.
In addition, the amount of outstanding Receivables and the
delinquencies, charge-offs and new borrowings on the Accounts may vary from
month to month due to seasonal variations, the availability of other
sources of credit, legal factors, general economic conditions and spending
and borrowing habits of individual cardholders. There can be no assurance
that collections of Principal Receivables with respect to the Trust
Portfolio, and thus the rate at which the Series Certificateholders could
expect to receive payments of principal on their Certificates during the
Early Amortization Period or the rate at which the Principal Funding
Account could be funded during the Controlled Accumulation Period, will be
similar to the historical experience set forth in the table entitled
"Cardholder Monthly Payment Rates -- Bank Portfolio" under "The Bank
Portfolio -- Payment Rates" herein. As described under "Series Provisions
- -- Principal Payments," the Transferor may shorten the 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 Invested Amount
and the Class B Invested Amount on the Class A Scheduled Payment Date and
on the Class B Scheduled Payment Date, respectively. In addition, the
Trust, as a master trust, may issue additional Series from time to time,
and there can be no assurance that the terms of any such Series might not
have an impact on the timing or amount of payments received by the Series
Certificateholders. Further, if a Pay Out Event occurs, the average life
and maturity of the Class A Certificates and the Class B Certificates could
be significantly reduced.
Due to the reasons set forth above, there can be no assurance that
deposits in the Principal Funding Account will be made on or prior to the
Class A Scheduled Payment Date in an amount sufficient to pay the Class A
Invested Amount to the Class A Certificateholders on the Class A Scheduled
Payment Date, or that the amount remaining in the Principal Funding Account
following payment in full of the Class A Certificates together with
Available Principal Collections will be sufficient to pay the Class B
Invested Amount in full on the Class B Scheduled Payment Date or that the
actual number of months elapsed from the date of issuance of the Class A
Certificates and Class B Certificates to their respective final
Distribution Dates will equal the expected number of months. See "Risk
Factors -- Generation of Additional Receivables; Dependency on Cardholder
Repayments" in the Prospectus.
THE BANK PORTFOLIO
General
The Transferor has identified a pool of consumer revolving credit card
accounts serviced by the Bank (the "Bank Portfolio"), from which the
Receivables included in the Trust (the "Trust Portfolio") were selected
based upon the eligibility criteria specified in the Pooling and Servicing
Agreement applied as of the Initial Cut-Off Date. The Trust Portfolio does
not include the Accounts of relationship customers in Massachusetts, Rhode
Island, northern Connecticut and southern New Hampshire. Additional
Accounts may be designated from time to time and Receivables arising
therein will be included in the Trust on and after their respective cut-off
dates. See "Risk Factors -- Addition of Trust Assets" in the Prospectus for
a description of applicable eligibility criteria. Set forth below is
certain information with respect to the Bank Portfolio. See "Credit Card
Activities" and "The Accounts" in the Prospectus. Because the Trust's
assets consist primarily of Receivables generated from Accounts originated
since August 1995, the historical information set forth below with respect
to the Bank Portfolio may not be indicative of the performance of the Bank
Portfolio as the Receivables and the Accounts mature. There can be no
assurance that the yield, loss and delinquency experience with respect to
the Receivables will be comparable to that set forth below with respect to
the entire Bank Portfolio.
Loss and Delinquency Experience
The following tables set forth the loss and delinquency experience
for the Bank Portfolio for each of the periods shown.
<TABLE>
<CAPTION>
Loss Experience for the Bank Portfolio
(Dollars in Thousands)
One
Quarter Quarter Ended Year Quarter Ended Month
Ended --------------------------------- Ended ---------------- Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dec. March June Sept. Dec. 31, Dec. 3 March June July 31,
31, 1995 31, 1996 30, 1996 30, 1996 1996 1996 31, 1997 30, 1997 1997
------- ------- ------- ------- -------- ------- -------- -------- -------
Average
Receivables
Outstanding(1).
Total Net
Charge-
Offs(2) .......
Total Net
Charge-Offs as
a Percentage
of Average
Receivables
Outstanding(3).
</TABLE>
- ----------
(1) Average Receivables Outstanding ("Average Receivables Outstanding")
is calculated by determining the daily average of outstanding account
balances for each month during the period indicated and then dividing
the sum of such daily averages for such months by the number of
months in such period.
(2) 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. Net Charge-Offs
are Gross Charge-Offs less recoveries.
(3) The percentage reflected for the periods shown above, other than the
year ended December 31, 1996, are annualized figures.
<TABLE>
<CAPTION>
Delinquencies as a Percentage of the Bank Portfolio
(Dollars in Thousands)
Quarter Ended
Quarter Ended ----------------------------------------------------------------------------------
Dec. 31, 1995 March 31, 1996 June 30, 1996 Sept. 30, 1996 Dec. 31, 1996
-------------------- ----------------- ------------------ ------------------ ------------------
Percent Percent- Percent- Percent- Percent-
age of age of age of age of age of
Receiv- Receiv- Receiv- Receiv- Receiv- Receiv- Receiv- Receiv- Receiv- Receiv-
ables ables ables ables ables ables ables ables ables ables
Outstand- Outstand- Outstand- Outstand- Outstand- Outstand- Outstand- Outstand- Outstand- Outstand-
ing ing ing ing ing ing ing ing ing ing
_________ _________ _________ _________ _________ _________ _________ _________ _________ _________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Out-
standing(1)
Receivables
De-
linquent:
35-64 Days
65-94 Days
95 Days
or More...
Total.....
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
Quarter Ended ------------------------------------------ One Month Ended
Dec. 31, 1996 March 31, 1997 June 30, 1997 July 31, 1997
-------------------- ----------------- ------------------ ------------------
Percent Percent- Percent- Percent-
age of age of age of age of
Receiv- Receiv- Receiv- Receiv- Receiv- Receiv- Receiv- Receiv-
ables ables ables ables ables ables ables ables
Outstand- Outstand- Outstand- Outstand- Outstand- Outstand- Outstand- Outstand-
ing ing ing ing ing ing ing ing
_________ _________ _________ _________ _________ _________ _________ _________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Outstanding(1)
Receivables
Delinquent:
35-64 Days.
65-94 Days.
95 Days or
More.......
Total......
</TABLE>
- ----------
(1) The Receivables Outstanding in the Accounts consist of all amounts due
from cardholders as posted to the Accounts.
[Discuss significant trends in loss and delinquency tables]
Revenue Experience
The revenues for the Bank Portfolio from finance charges and fees
billed to cardholders and Interchange are set forth in the following table
for each of the periods shown.
The historical revenue figures in the tables include interest on
purchases and cash advances and fees accrued during the cycle. Cash
collections on the receivables may not reflect the historical experience in
the table. During periods of increasing delinquencies, billings of finance
charges and fees may exceed cash payments as amounts collected on credit
card receivables lag behind amounts billed to cardholders. Conversely, as
delinquencies decrease, cash payments may exceed billings of finance
charges and fees as amounts collected in a current period may include
amounts billed during prior periods. Revenues from finance charges and fees
on both a billed and a cash basis will be affected by numerous factors,
including the periodic finance charges on the receivables, the amount of
fees paid by cardholders, the percentage of cardholders who pay off their
balances in full each month and do not incur periodic finance charges on
purchases and changes in the level of delinquencies on the receivables. See
"Risk Factors" in the Prospectus. See also "-- Loss and Delinquency
Experience" for a description of factors that have affected the revenue
experience for the Bank Portfolio.
Revenue Experience for the Bank Portfolio
(Dollars in Thousands)
<TABLE>
<CAPTION>
One
Quarter Quarter Ended Year Quarter Ended Month
Ended --------------------------------- Ended ------------------- Ended
Dec. March June Sept. Dec. 31, Dec. March June July 31,
31, 1995 31, 1996 30, 1996 30, 1996 1996 31, 1996 31, 1997 30, 1997 1997
------- ------- ------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average
Receivables
Outstanding(1).
Total Finance
Charges and
Fees Billed(2).
Interchange(3)..
Total Finance
Charges and
Fees Billed....
Average
Revenue
Yield(4)(5)....
</TABLE>
- ----------
(1) Average Receivables Outstanding is calculated by determining the
daily average of outstanding account balances for each month during
the period indicated and then dividing the sum of such daily averages
for such months by the number of months in such period.
(2) Total Finance Charges and Fees Billed are comprised of periodic
finance charges, cash advance fees, annual membership fees and other
charges.
(3) Interchange represents revenue attributable to Interchange received
during the period indicated. The amount of Interchange allocable to
each period indicated above has been estimated.
(4) Average Revenue Yield is the result of dividing Total Finance Charges
and Fees Billed and Interchange by the Average Receivables
Outstanding during the period indicated.
(5) The percentage reflected for the periods show above, other than the
year ended December 31, 1996, are annualized figures.
The revenues for the Bank Portfolio shown in the tables above are
related to finance charges, together with fees, billed to holders of the
accounts and Interchange. The revenues related to finance charges depend in
part upon the collective preference of cardholders to use their credit
cards as revolving debt instruments for purchases and cash advances and
paying off credit card account balances over several months as opposed to
convenience use, where the cardholders prefer instead to pay off their
entire balance each month, thereby avoiding finance charges on purchases,
and upon other services of which cardholders choose to avail themselves and
which are paid for by the use of the card. Revenues related to finance
charges and fees also depend on the types of charges and fees assessed by
the Account Owners on the accounts in the Bank Portfolio and on whether
such accounts are nonpremium or premium credit card accounts. Accordingly,
revenues will be affected by future changes in the types of charges and
fees assessed on the accounts and on the respective percentages of the
receivable balances of nonpremium and premium credit card accounts.
Revenues could be adversely affected by future changes in the charges and
fees assessed by the Account Owners and other factors. See "Certain Legal
Aspects of the Receivables -- Consumer Protection Laws" in the Prospectus.
Neither the Servicer nor any of its affiliates has any basis to predict how
any future changes in the usage of the accounts by cardholders or in the
terms of accounts may affect the revenue for the Bank Portfolio.
Interchange
The Transferor will be required, pursuant to the terms of the Offered
Series Supplement, to transfer to the Trust for the benefit of the Offered
Series, a percentage of the Interchange attributed to cardholder charges
for goods and services in the Accounts. Interchange arising under the
Accounts will be allocated to the Offered Series on the basis of the Series
Allocation Percentage for the Offered Series of the amount of Interchange
attributable to the Accounts, 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 a portion of Series Allocable Finance Charge Collections for the
purposes of allocating collections of Finance Charge Receivables, making
required monthly payments, and calculating the Portfolio Yield. See "Credit
Card Activities -- Interchange" in the Prospectus.
In the future, subject to certain requirements contained in the
Offered Series Supplement and the Pooling and Servicing Agreement, the
Transferor may, in lieu of transferring Interchange to the Trust as set
forth above, allocate Interchange to the Trust and the Offered Series by
treating a percentage of collections of the Principal Receivables (whether
arising from cardholder charges for goods and services or cash advances),
as collections of Finance Charge Receivables approximately equivalent to
the then current Interchange on the credit card accounts in the Bank
Portfolio (subject to adjustment at the option of the Transferor upon the
satisfaction of certain conditions as described in the Prospectus under
"Description of the Pooling and Servicing Agreement -- Discount Option").
Payment Rates
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 each period shown, calculated as the percentage equivalent of a
fraction. For the highest and lowest monthly payment rates, the numerator
of the fraction is equal to all payments from cardholders as posted to the
accounts during the applicable month and the denominator is equal to the
Average Receivables Outstanding for such month. For the monthly average
payment rate, the numerator of the fraction is equal to all payments from
cardholders as posted to the accounts during the indicated period divided
by the number of months in the period, and the denominator is equal to the
Average Receivables Outstanding. See "--Loss and Delinquency Experience"
for a description of factors that have affected the payment rates for the
Bank Portfolio.
<TABLE>
<CAPTION>
Cardholder Monthly Payment Rates
Bank Portfolio
One
Quarter Quarter Ended Year Quarter Ended Month
Ended ----------------------------------------- Ended ------------------ Ended
Dec. 31, March June 30, Sept. Dec. 31, Dec. 31, March June 30, July 31,
1995 31, 1996 1996 30, 1996 1996 1996 31, 1997 1997 1997
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lowest
month....
Highest
month....
Monthly
average..
</TABLE>
THE RECEIVABLES
The Receivables in the Trust Portfolio as of _____ __, 1997, included
$________ of Principal Receivables and $_______ of Finance Charge
Receivables. The Accounts had an average total receivables balance of $____
and an average credit limit of $_____. The percentage of the aggregate
total receivables balance to the aggregate total credit limit was ___%. The
average age of the Accounts was approximately ___ months. As of _____ __,
1997, all of the Accounts in the Trust Portfolio were VISA or MasterCard
credit card accounts, of which ___% were non-premium accounts and ___% were
premium accounts, and the total receivables balances of non-premium
accounts and premium accounts, as a percentage of the total receivables,
were ___% and ___%, respectively. Approximately ___%, ___%, ___%, ___% and
___% of the Receivables related to cardholders having billing addresses in
[New York, Florida, Texas and New Jersey], respectively. Not more than ___%
of the Receivables related to cardholders having billing addresses in any
other single state.
The following tables summarize the Trust Portfolio by various
criteria as of _____ __, 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 time subsequent to _____
__, 1997. References to "Receivables Outstanding," "Receivables" and to
"total receivables" in the preceding paragraph and in the following tables
include Finance Charge Receivables and Principal Receivables.
Composition by Account Balance
Trust Portfolio
Percentage
of Total Percentage
Number of Total s
Account Balance Number of of Receivables Receivables
Range Accounts Accounts Outstanding Outstanding
- ---------------- --------- ---------- ----------- -----------
Credit Balance........
No Balance............
$ 0.01--$5,000.00....
$
5,000.01--$10,000.00
$10,000.01--$15,000.00
$15,000.01--$20,000.00
$20,000.01--$25,000.00
$25,000.01--or
More..................
TOTAL...........
Composition by Credit Limit
Trust Portfolio
Percentage Percentage
Number of Total of Total
of Number of Receivables Receivables
Credit Limit Range Accounts Accounts Outstanding Outstanding
- ------------------ -------- -------- ----------- -----------
Less than or equal
to $5,000.00
$ 5,000.01--
$10,000.00.........
$10,000.01--
$15,000.00.........
$15,000.01--
$20,000.00.........
$20,000.01--
$25,000.00.........
$25,000.01 or More.
TOTAL........
Composition by Period of Delinquency
Trust Portfolio
Percentage
of Total Percentage
Period of Delinquency Number of Total s
(Days Contractually Number of of Receivables Receivables
Delinquent) Accounts Accounts Outstanding Outstanding
--------------------- --------- ---------- ----------- -----------
Not Delinquent.......
Up to 34 Days........
35 -- 64 Days........
65 -- 94 Days........
95 or More Days......
TOTAL..........
Composition by Account Age
Trust Portfolio
Percentage
of Total Percentage
Number of Total
Number of of Receivables Receivables
Account Age Accounts Accounts Outstanding Outstanding
----------- --------- ---------- ----------- -----------
Not More than 6
Months..............
Over 6 Months to 12
Months..............
Over 12 Months to
24 Months...........
Over 24 Months to
36 Months...........
Over 36 Months to
48 Months...........
Over 48 Months to
60 Months...........
Over 60 Months to
72 Months...........
Over 72 Months......
TOTAL......... 100.0% 100.0%
===== =====
USE OF PROCEEDS
The net proceeds from the issuance of the Offered Certificates will be paid
to the Transferor. The Transferor will use such proceeds to make initial
deposits to the Yield Supplement Account and the Cash Collateral Account
and to pay to the Bank the purchase price of the Receivables.
THE SERVICER
As of _____ 1997, the Bank had approximately $______ in total assets,
approximately $_______ in total liabilities and approximately $_______
in shareholder's equity.
SERIES PROVISIONS
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement and the Offered Series Supplement specifying the
Principal Terms of the Certificates, the forms of which have been filed as
exhibits to the Registration Statement of which the Prospectus and this
Prospectus Supplement are a part. The following summary describes certain
terms applicable to the Offered Certificates. Reference should be made to
the Prospectus for additional information concerning the Offered
Certificates and the Pooling and Servicing Agreement. See "Description of
the Pooling and Servicing Agreement" in the Prospectus.
Interest Payments
Interest on the Class A Certificates and the Class B Certificates
will accrue from the Closing Date on the outstanding principal balance of
the Class A Certificates and the Class B Invested Amount at the Class A
Certificate Rate and Class B Certificate Rate, respectively. Interest will
be distributed on _______ __, 1997, and on the __th day of each month
thereafter, or if any such __th day is not a business day, the next
succeeding business day (each, a "Distribution Date"), to the Series
Certificateholders in whose names the Offered Certificates were registered
at the close of business on the preceding Record Date. Interest for any
Distribution Date will accrue from and including the preceding Distribution
Date (or in the case of the first Distribution Date, from and including the
Closing Date) to but excluding such Distribution Date. "Record Date" means,
with respect to any Distribution Date, the business day preceding such
Distribution Date, except that, with respect to any Definitive
Certificates, Record Date means, with respect to any Distribution Date, the
fifth day of the Monthly Period during which such Distribution Date occurs.
Interest payments on the Offered Certificates with respect to each
Distribution Date will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Interest payments with respect to the Class A Certificates for each
Distribution Date will be calculated on the outstanding principal balance
of the Class A Certificates as of the preceding Record Date (or in the case
of the initial Distribution Date, on the Class A Initial Invested Amount).
On each Distribution Date, Class A Available Funds for the related Monthly
Period will be applied to pay Class A Monthly Interest and Class A Monthly
Interest previously due but not paid to the Class A Certificateholders and
any Class A Additional Interest. To the extent Class A Available Funds
allocated to the Class A Certificateholders' Interest for such Monthly
Periods are insufficient to pay such interest, Excess Spread and Excess
Finance Charge Collections allocated to the Offered Series, amounts, if
any, available on deposit in the Cash Collateral Account and Reallocated
Principal Collections allocable first to the Collateral Invested Amount and
then the Class B Invested Amount will be used to make such payments. "Class
A Available Funds" means, with respect to any Monthly Period, an amount
equal to the sum of (i) the Class A Floating Percentage of the sum of the
Reallocated Investor Finance Charge Collections allocated to the Offered
Certificates and the Collateral Interest with respect to such Monthly
Period (including any investment earnings and certain other amounts that
are to be treated as collections of Finance Charge Receivables allocable to
the Offered Series in accordance with the Pooling and Servicing Agreement
and the Offered Series Supplement) and the amounts withdrawn from the Yield
Supplement Account on the related Distribution Date, (ii) if such Monthly
Period relates to a Distribution Date with respect to the Controlled
Accumulation Period, Principal Funding Investment Proceeds, if any, with
respect to the related Distribution Date, and (iii) amounts, if any, to be
withdrawn from the Reserve Account that must be included in Class A
Available Funds pursuant to the Offered Series Supplement with respect to
such Distribution Date.
Interest payments with respect to the Class B Certificates for each
Distribution Date will be calculated on the Class B Invested Amount as of
the preceding Record Date (or in the case of the initial Distribution Date,
on the Class B Initial Invested Amount). On each Distribution Date Class B
Available Funds for the related Monthly Period will be applied to pay Class
B Monthly Interest and Class B Monthly Interest previously due but not paid
to the Class B Certificateholders and any Class B Additional Interest. To
the extent Class B Available Funds allocated to the Class B
Certificateholders' Interest for such Monthly Period are insufficient to
pay such interest, Excess Spread and Excess Finance Charge Collections
allocated to the Offered Series, amounts, if any, on deposit in the Cash
Collateral Account and Reallocated Principal Collections allocable to the
Collateral Invested Amount, in each case not required to pay the Class A
Required Amount or reimburse Class A Investor Charge-Offs will be used to
make such payments. "Class B Available Funds" means, with respect to any
Monthly Period, an amount equal to the Class B Floating Percentage of the
sum of the Reallocated Investor Finance Charge Collections allocated to the
Offered Certificates and the Collateral Interest with respect to such
Monthly Period (including any investment earnings and certain other amounts
that are to be treated as collections of Finance Charge Receivables in
accordance with the Pooling and Servicing Agreement) and the amounts
withdrawn from the Yield Supplement Account on the related Distribution
Date.
Principal Payments
During the Revolving Period (which begins on the Series Cut-Off Date
and ends on the day before the commencement of the Controlled Accumulation
Period or, if earlier, the Early Amortization Period), no principal
payments will be made to the Series Certificateholders. During the
Controlled Accumulation Period (on or prior to the Class A Scheduled
Payment Date), principal will be deposited in the Principal Funding Account
as described below and on the Class A Scheduled Payment Date will be
distributed to Class A Certificateholders up to the Class A Invested Amount
and then to Class B Certificateholders up to the Class B Invested Amount.
During the Early Amortization Period, which will begin upon the occurrence
of a Pay Out Event, and until the Stated Series Termination Date occurs,
principal will be paid first to the Class A Certificateholders until the
Class A Invested Amount has been paid in full, and then to the Class B
Certificateholders until the Class B Invested Amount has been paid in full.
Unless a reduction in the Required Enhancement Amount has occurred, no
principal payments will be made in respect of the Collateral Invested
Amount until the final principal payment has been made to the Class A
Certificateholders and the Class B Certificateholders.
On each Distribution Date with respect to the Controlled Accumulation
Period, the Trustee will deposit in the Principal Funding Account an amount
equal to the least of (a) Available Principal Collections on deposit in the
Collection Account with respect to such Distribution Date, (b) the
Controlled Deposit Amount for such Distribution Date and (c) the sum of the
Class A Adjusted Invested Amount and the Class B Adjusted Invested Amount,
until the Principal Funding Account Balance equals the sum of the Class A
Invested Amount and the Class B Invested Amount. Amounts on deposit in the
Principal Funding Account up to the Class A Invested Amount will be paid to
the Class A Certificateholders on the Class A Scheduled Payment Date. If
the amount on deposit in the Principal Funding Account on the Class A
Scheduled Payment Date exceeds the Class A Invested Amount, the amount of
such excess, up to the Class B Invested Amount will be paid to the Class B
Certificateholders on the Class B Scheduled Payment Date. After the Class A
Invested Amount has been paid in full, on each Distribution Date during the
Controlled Accumulation Period, amounts equal to the lesser of (a)
Available Principal Collections with respect to such Distribution Date and
(b) the Class B Invested Amount will be deposited in the Collection Account
for distribution to the Class B Certificateholders until the Class B
Invested Amount has been paid in full. Such amounts in the Collection
Account will be paid to the Class B Certificateholders on the Class B
Scheduled Payment Date.
If a Pay Out Event occurs with respect to the Offered Certificates
during the Controlled Accumulation Period, the Early Amortization Period
will commence and any amount on deposit in the Principal Funding Account
will be paid first to the Class A Certificateholders on the first
Distribution Date with respect to the Early Amortization Period and then,
after the Class A Invested Amount is paid in full, to the Class B
Certificateholders. After payment in full of the Class A Invested Amount,
the Class B Certificateholders will be entitled to receive an amount equal
to the Class B Invested Amount.
"Available Principal Collections" means, with respect to any Monthly
Period, an amount equal to the sum of (1) an amount equal to the Principal
Allocation Percentage of the Series Allocation Percentage of all
collections of Principal Receivables received during such Monthly Period
(minus the Reallocated Principal Collections, if any, used to fund the
Required Amount), (2) any Shared Principal Collections with respect to
other Principal Sharing Series that are allocated to the Offered Series,
and (3) certain other amounts which pursuant to the Offered Series
Supplement are to be treated as Available Principal Collections with
respect to the related Distribution Date.
The Controlled Accumulation Period is currently expected to commence
at the close of business on ____________; however, the date on which the
Controlled Accumulation Period actually commences may be delayed if the
Controlled Accumulation Period Length (determined as described below) is
less than twelve months. Beginning on the Determination Date immediately
preceding the ____________ Distribution Date and on each Determination Date
thereafter until the Controlled Accumulation Period actually commences, the
Transferor will determine the "Controlled Accumulation Period Length" based
on, among other things, the then current principal payment rate on the
Accounts and the principal amount of Principal Sharing Series that are
entitled to share principal with the Offered Series; provided, however,
that the Controlled Accumulation Period Length will not be less than one
month. If the Controlled Accumulation Period Length is less than twelve
months, the Controlled Accumulation Period will commence no later than the
close of business on ____________, and the number of months in the
Controlled Accumulation Period will be equal to the Controlled Accumulation
Period Length. The effect of the foregoing calculation is to reduce the
Controlled Accumulation Period Length based on the invested amounts of
other Principal Sharing Series that are scheduled to be in their revolving
periods and thus scheduled to make Shared Principal Collections available
to the Offered Series during the Controlled Accumulation Period. In
addition, if the Controlled Accumulation Period Length shall have been
determined to be less than 12 months and, after the date on which such
determination is made, a Pay Out Event or Reinvestment Event (as those
terms are defined in the Supplement for such Series) shall occur with
respect to any outstanding Principal Sharing Series, the Controlled
Accumulation Period will commence on the earlier of (i) the date that such
Pay Out Event or Reinvestment Event shall have occurred with respect to
such Series and (ii) the date on which the Controlled Accumulation Period
is then scheduled to commence.
On each Distribution Date with respect to the Early Amortization
Period until the Class A Invested Amount has been paid in full or the
Stated Series Termination Date occurs, the holders of the Class A
Certificates will be entitled to receive Available Principal Collections in
an amount up to the Class A Invested Amount. After payment in full of the
Class A Invested Amount, the holders of the Class B Certificates will be
entitled to receive, on each Distribution Date, Available Principal
Collections until the earlier of the date the Class B Invested Amount is
paid in full and the Stated Series Termination Date. After payment in full
of the Class B Invested Amount, the Collateral Interest Holder will be
entitled to receive, on each Distribution Date, Available Principal
Collections until the earlier of the date the Collateral Invested Amount is
paid in full and the Stated Series Termination Date.
Subordination of the Class B Certificates and the Collateral Interest
The Class B Certificateholders' Interest and the Collateral Interest
will be subordinated to the extent necessary to fund certain payments with
respect to the Class A Certificates. In addition, the Collateral Interest
will be subordinated to the extent necessary to fund certain payments with
respect to the Class B Certificates. Certain principal payments otherwise
allocable to the Class B Certificateholders may be reallocated to the Class
A Certificateholders and the Class B Invested Amount may be reduced.
Similarly, certain principal payments otherwise allocable to the Collateral
Interest may be reallocated to the Class A Certificateholders and the Class
B Certificateholders and the Collateral Invested Amount may be reduced. If
the Collateral Invested Amount is reduced to zero and there are no funds on
deposit in the Cash Collateral Account, holders of the Class B Certificates
will bear directly the credit and other risks associated with their
interest in the Trust. To the extent the Class B Invested Amount is
reduced, the percentage of collections of Finance Charge Receivables
allocated to the Class B Certificateholders in subsequent Monthly Periods
will be reduced. Moreover, to the extent the amount of such reduction in
the Class B Invested Amount is not reimbursed, the amount of principal
distributable to the Class B Certificateholders will be reduced. If the
Class B Invested Amount is reduced to zero, the Class A Certificateholders
will bear directly the credit and other risks associated with their
undivided interest in the Trust. In the event of a reduction in the Class A
Invested Amount, the Class B Invested Amount or the Collateral Invested
Amount, 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 "-- Allocation Percentages," "-- Reallocation of Cash
Flows," "-- Application of Collections -- Excess Spread; Excess Finance
Charge Collections" below.
Allocation Percentages
Pursuant to the Pooling and Servicing Agreement, the Servicer will
allocate among the Offered Series and all other Series outstanding all
collections of Finance Charge Receivables and Principal Receivables and the
Defaulted Amount with respect to such Monthly Period as described under
"Description of the Pooling and Servicing Agreement -- Allocations" in the
Prospectus and, with respect to the Offered Series specifically, as
described below.
Pursuant to the Pooling and Servicing Agreement, during each Monthly
Period, the Servicer will allocate to the Offered Series its Series
Allocable Finance Charge Collections, Series Allocable Principal
Collections and Series Allocable Defaulted Amount.
"Series Allocable Finance Charge Collections," "Series Allocable
Principal Collections" and "Series Allocable Defaulted Amount" mean, with
respect to the Offered Series and for any Monthly Period, the product of
(a) the Series Allocation Percentage for the Offered Series and (b) the
amount of collections of Finance Charge Receivables deposited in the
Collection Account, the amount of collections of Principal Receivables
deposited in the Collection Account and the amount of all Defaulted Amounts
with respect to such Monthly Period, respectively.
"Series Allocation Percentage" means, with respect to the Offered
Series and for any Monthly Period, the percentage equivalent of a fraction,
the numerator of which is the sum of the Series Adjusted Invested Amount
for the Offered Series as of the last day of the immediately preceding
Monthly Period plus the Series Required Transferor Amount for the Offered
Series as of the last day of the immediately preceding Monthly Period and
the denominator of which is the Trust Adjusted Invested Amount plus the sum
of all Series Required Transferor Amounts as of such last day.
"Series Adjusted Invested Amount" means, with respect to the Offered
Series and for any Monthly Period, the Series Invested Amount for the
Offered Series, less the excess, if any, of all reductions in the Invested
Amount (other than any reductions occasioned by payments of principal to
the Series Certificateholders or to the Collateral Interest Holder) as of
the last day of the preceding Monthly Period over the aggregate amount of
any reimbursement of such reductions as of such last day.
The Series Allocable Finance Charge Collections and the Series
Allocable Defaulted Amount for the Offered Series with respect to any
Monthly Period will be allocated to the Offered Certificates and the
Collateral Interest based on the Floating Allocation Percentage and the
remainder of such Series Allocable Finance Charge Collections and Series
Allocable Defaulted Amount will be allocated to the Transferor's Interest.
The "Floating Allocation Percentage" means, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Adjusted Invested Amount
as of the last day of the preceding Monthly Period (or with respect to the
first Monthly Period, the Initial Invested Amount) and the denominator of
which is the product of (a) the sum of the total amount of the Principal
Receivables in the Trust as of such day (subject to adjustment to give
effect to designations of Additional Accounts and Removed Accounts) (or
with respect to the first Monthly Period, the total amount of Principal
Receivables in the Trust on the Closing Date) and the principal amount on
deposit in the Special Funding Account as of such day and (b) the Series
Allocation Percentage.
Investor Finance Charge Collections (which for any Monthly Period is
equal to the product of the Floating Allocation Percentage and the Series
Allocable Finance Charge Collections) will be reallocated among all Series
in Group I as set forth in "Description of the Pooling and Servicing
Agreement -- Reallocations Among Certificates of Different Series within a
Reallocation Group" in the Prospectus. Reallocated Investor Finance Charge
Collections allocated to the Offered Series and the Investor Default Amount
will be further allocated between the Class A Certificateholders, the Class
B Certificateholders and the Collateral Interest Holder in accordance with
the Class A Floating Percentage, the Class B Floating Percentage and the
Collateral Floating Percentage, respectively. The "Class A Floating
Percentage" means, with respect to any Monthly Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is equal to the Class A Adjusted Invested Amount 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 Invested Amount as of the
close of business on such day (or, with respect to the first Monthly
Period, the Initial Invested Amount). The "Class B Floating Percentage"
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 Adjusted Invested Amount 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 Invested Amount at the close of business on
such day (or with respect to the first Monthly Period, the Initial Invested
Amount). The "Collateral Floating Percentage" 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 Invested Amount 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 Invested Amount as of the close of business on such day (or with
respect to the first Monthly Period, the Initial Invested Amount).
The Series Allocable Principal Collections for the Offered Series
will be allocated to the Offered Certificates and the Collateral Interest
based on the Principal Allocation Percentage and the remainder of such
Series Allocable Principal Collections will be allocated to the
Transferor's Interest. The "Principal Allocation Percentage" means, with
respect to any Monthly Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is (a)
during the Revolving Period, the Series Adjusted Invested Amount for the
Offered Series as of the last day of the immediately preceding Monthly
Period (or, in the case of the first Monthly Period, the Closing Date) and
(b) during the Controlled Accumulation Period or the Early Amortization
Period, the Series Adjusted Invested Amount for the Offered Series as of
the last day of the Revolving Period and the denominator of which is the
product of (i) the sum of the total amount of Principal Receivables in the
Trust as of the last day of the immediately preceding Monthly Period
(subject to adjustment to give effect to designations of Additional
Accounts and Removed Accounts) and the principal amount on deposit in the
Special Funding Account as of such last day (or, in the case of the first
Monthly Period, the Closing Date) and (ii) the Series Allocation Percentage
for the Offered Series as of the last day of the immediately preceding
Monthly Period; provided, however, that because the Offered Certificates
are subject to being paired with a future Series, if a Pay Out Event or a
Reinvestment Event (as those terms are defined in the related Supplement)
occurs with respect to a Paired Series during the Controlled Accumulation
Period with respect to the Offered Series, the Transferor may, by written
notice delivered to the Trustee and the Servicer, designate a different
numerator for the foregoing fraction, provided that such numerator is not
less than the Adjusted Invested Amount as of the last day of the revolving
period for such Paired Series and the Transferor shall have received
written notice from each Rating Agency that such designation will satisfy
the Rating Agency Condition 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 the 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 lapse of time, would constitute a Pay
Out Event, to occur with respect to the Offered Series.
Such amounts so allocated to the Offered Certificates and the
Collateral Interest will be further allocated to the Class A
Certificateholders, the Class B Certificateholders and the Collateral
Interest Holder based on the Class A Principal Percentage, the Class B
Principal Percentage and the Collateral Principal Percentage, respectively.
The "Class A Principal Percentage" means, with respect to any Monthly
Period (a) during the Revolving Period, the percentage equivalent (which
shall never exceed 100%) of a fraction, the numerator of which is equal to
the Class A Invested Amount as of the last day of the immediately preceding
Monthly Period (or, in the case of the first Monthly Period, the Class A
Initial Invested Amount), and the denominator of which is equal to the
Invested Amount as of such day (or, in the case of the first Monthly
Period, the Initial Invested Amount) and (b) during the Controlled
Accumulation Period or the Early Amortization Period, the percentage
equivalent (which shall never exceed 100%) of a fraction, the numerator of
which is the Class A Invested Amount as of the end of the Revolving Period,
and the denominator of which is the Invested Amount as of such day. The
"Class B Principal Percentage" means, with respect to any Monthly Period,
(i) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which
is the Class B Invested Amount as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Class B Initial Invested Amount) and the denominator of which is the
Invested Amount as of such day (or, in the case of the first Monthly
Period, the Initial Invested Amount) and (ii) during the Controlled
Accumulation Period or the Early Amortization Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Class B Invested Amount as of the end of the
Revolving Period, and the denominator of which is the Invested Amount as of
such day. The "Collateral Principal Percentage" means, with respect to any
Monthly Period, (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of
which is the Collateral Invested Amount as of the last day of the
immediately preceding Monthly Period (or, in the case of the first Monthly
Period, the Collateral Initial Invested Amount) and the denominator of
which is the Invested Amount as of such day (or in the case of the first
Monthly Period, the Initial Invested Amount) and (ii) during the Controlled
Accumulation Period or the Early Accumulation Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Collateral Invested Amount as of the end of the
Revolving Period, and the denominator of which is the Invested Amount as of
such day.
As used herein, the following terms have the meanings indicated:
"Class A Invested Amount" for any date means an amount equal to
(i) the Class A Initial Invested Amount, less (ii) the amount of
principal payments made to holders of the Class A Certificates on or
prior to such date, less (iii) the excess, if any, of the aggregate
amount of Class A Investor Charge-Offs for all prior Distribution
Dates over the aggregate amount of any reimbursements of Class A
Investor Charge-Offs for all Distribution Dates prior to such date.
"Class B Invested Amount" for any date means an amount equal to
(i) the Class B Initial Invested Amount, less (ii) the amount of
principal payments made to holders of the Class B Certificates on or
prior to such date, less (iii) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates, less (iv) the
aggregate amount of Reallocated Principal Collections for all prior
Distribution Dates which have been used to fund the Required Amount
with respect to such Distribution Dates (excluding any Reallocated
Principal Collections that have resulted in a reduction of the
Collateral Invested Amount), less (v) an amount equal to the amount
by which the Class B Invested Amount has been reduced to cover the
Class A Investor Default Amount on all prior Distribution Dates as
described herein under "-- Defaulted Receivables; Investor
Charge-Offs," plus (vi) the aggregate amount of Excess Spread and
Excess Finance Charge Collections allocated to the Offered Series and
applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (iii),
(iv) and (v); provided, however, that the Class B Invested Amount may
not be reduced below zero.
"Class A Adjusted Invested Amount" for any date means an amount
equal to the then current Class A Invested Amount less the funds on
deposit in the Principal Funding Account (up to the Class A Invested
Amount) on such date.
"Class B Adjusted Invested Amount" for any date means an amount
equal to the Class B Invested Amount less the funds on deposit in the
Principal Funding Account in excess of the Class A Invested Amount on
such date.
"Collateral Invested Amount" for any date means an amount equal
to (a) the Collateral Initial Invested Amount, less (b) the aggregate
amount of principal payments made to the Collateral Interest Holder
prior to such date, less (c) the aggregate amount of Collateral
Charge-Offs for all prior Distribution Dates, less (d) the aggregate
amount of Reallocated Principal Collections for all prior
Distribution Dates, less (e) an amount equal to the aggregate amount
by which the Collateral Invested Amount has been reduced to fund the
Class A Investor Default Amount and the Class B Investor Default
Amount on all prior Distribution Dates as described under "--
Defaulted Receivables; Investor Charge-Offs," and plus (f) the
aggregate amount of Excess Spread and Excess Finance Charge
Collections allocated to the Offered Series and applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e); provided,
however, that the Collateral Invested Amount may not be reduced below
zero.
"Invested Amount" for any date means an amount equal to the sum
of the Class A Invested Amount, the Class B Invested Amount and the
Collateral Invested Amount on such date.
Principal Funding Account
The Servicer will establish and maintain in the name of the Trustee,
on behalf of the Trust, the Principal Funding Account as a deposit account
meeting the eligibility requirements specified in the Pooling and Servicing
Agreement (an "Eligible Deposit Account") held for the benefit of the
Series Certificateholders. During the Controlled Accumulation Period, the
Servicer will transfer collections in respect of Principal Receivables,
Shared Principal Collections allocated to the Offered Series and other
amounts described herein to be treated in the same manner as collections of
Principal Receivables from the Collection Account to the Principal Funding
Account as described below under "-- Application of Collections."
Unless a Pay Out Event has occurred with respect to the Offered
Certificates, all amounts on deposit in the Principal Funding Account (the
"Principal Funding Account Balance") on any Distribution Date (after giving
effect to any deposits to, or withdrawals from, the Principal Funding
Account to be made on such Distribution Date) will be invested to the
following Distribution Date by the Trustee at the direction of the Servicer
in Eligible Investments. On each Distribution Date with respect to the
Controlled Accumulation Period the interest and other investment income
(net of investment expenses and losses) earned on such investments (the
"Principal Funding Investment Proceeds") will be withdrawn from the
Principal Funding Account and will be treated as a portion of Class A
Available Funds. If such investments with respect to any such Distribution
Date yield less than the Class A Certificate Rate, the Principal Funding
Investment Proceeds with respect to such Distribution Date will be less
than the Covered Amount for such Distribution Date. It is intended that any
such shortfall will be funded from other Class A Available Funds (including
a withdrawal from the Reserve Account, if necessary, as described below
under "-- Reserve Account"). The Available Reserve Account Amount at any
time will be limited and there can be no assurance that sufficient funds
will be available to fund any such shortfall. The "Covered Amount" for any
Distribution Date with respect to the Controlled Accumulation Period or the
first Distribution Date with respect to the Early Amortization Period Date,
means if such Distribution Date occurs prior to the payment in full of the
Class A Invested Amount, an amount equal to one-twelfth of the product of
(i) the weighted average of the Class A Certificate Rate and the Class B
Certificate Rate and (ii) the Principal Funding Account Balance, if any, as
of the preceding Distribution Date.
Reserve Account
The Servicer will establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account for the benefit of the
Class A Certificateholders and the Collateral Interest Holder (the "Reserve
Account"). The Reserve Account is established to assure the subsequent
distribution of interest on the Class A Certificates as provided in this
Prospectus Supplement during the Controlled Accumulation Period. On each
Distribution Date from and after the Reserve Account Funding Date, but
prior to the termination of the Reserve Account, the Trustee, acting
pursuant to the Servicer's instructions, will apply Excess Spread and
Excess Finance Charge Collections allocated to the Offered Series (in the
order of priority described below under "-- Application of Collections --
Excess Spread; Excess Finance Charge Collections") to increase the amount
on deposit in the Reserve Account (to the extent such amount is less than
the Required Reserve Account Amount). In addition, on each such
Distribution Date, the Transferor will have the option, but will not be
required, to make a deposit in the Reserve Account to the extent that the
amount on deposit in the Reserve Account, after giving effect to any Excess
Spread and Excess Finance Charge Collections allocated and available to be
deposited in the Reserve Account on such Distribution Date, is less than
the Required Reserve Account Amount. The "Reserve Account Funding Date"
will be the Distribution Date with respect to the Monthly Period that
commences three months prior to the Distribution Date with respect to the
first Monthly Period in the Controlled Accumulation Period, or such earlier
date as the Transferor may determine. The "Required Reserve Account Amount"
for any Distribution Date on or after the Reserve Account Funding Date will
be equal to 0.5% of the Class A Invested Amount as of the preceding
Distribution Date, or any other amount designated by the Transferor
provided that the Transferor has received written notice from each Rating
Agency that such designation will satisfy the Rating Agency Condition. On
each Distribution Date, after giving effect to any deposit to be made to,
and any withdrawal to be made from, the Reserve Account on such
Distribution Date, the Trustee will withdraw from the Reserve Account an
amount equal to the excess, if any, of the amount on deposit in the Reserve
Account over the Required Reserve Account Amount and shall distribute such
excess to the Collateral Interest Holder for application in accordance with
the terms of the Loan Agreement.
Provided that the Reserve Account has not terminated as described
below, all amounts on deposit in the Reserve Account on any Distribution
Date (after giving effect to any deposits to, or withdrawals from, the
Reserve Account to be made on such Distribution Date) will be invested to
the following Distribution Date by the Trustee at the direction of the
Servicer in Eligible Investments. The interest and other investment income
(net of investment expenses and losses) earned on such investments will be
retained in the Reserve Account (to the extent the amount on deposit
therein is less than the Required Reserve Account Amount) or deposited in
the Collection Account and treated as collections of Finance Charge
Receivables allocable to the Offered Series.
On or before each Distribution Date with respect to the Controlled
Accumulation Period and on the first Distribution Date with respect to the
Early Amortization Period, a withdrawal will be made from the Reserve
Account, and the amount of such withdrawal will be deposited in the
Collection Account and included in collections of Finance Charge
Receivables in an amount equal to the lesser of (a) the Available Reserve
Account Amount with respect to such Distribution Date and (b) the excess,
if any, of the Covered Amount with respect to such Distribution Date over
the Principal Funding Investment Proceeds with respect to such Distribution
Date; provided that the amount of such withdrawal will be reduced to the
extent that funds otherwise would be available to be deposited in the
Reserve Account on such Distribution Date. On each Distribution 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 Distribution Date) and the Required
Reserve Account Amount for such Distribution Date.
The Reserve Account will be terminated following the earlier to occur
of (a) the termination of the Trust pursuant to the Pooling and Servicing
Agreement, (b) the date on which the Offered Certificates are paid in full
and (c) if the Controlled Accumulation Period has not commenced, the
occurrence of a Pay Out Event with respect to the Offered Certificates or,
if the Controlled Accumulation Period has commenced, the earlier of the
first Distribution Date with respect to the Early Amortization Period and
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 Class A
Certificateholders.
Reallocation of Cash Flows
With respect to each Distribution Date, on each Determination Date,
the Servicer will determine the amount (the "Class A Required Amount"),
which will be equal to the amount, if any, by which (a) the sum of (i)
Class A Monthly Interest for such Distribution Date, (ii) any Class A
Outstanding Monthly Interest, (iii) any Class A Additional Interest, (iv)
if the Bank or an affiliate of the Bank is no longer the Servicer, the
Class A Servicing Fee for such Distribution Date and any unpaid Class A
Servicing Fee and (v) the Class A Investor Default Amount, if any, for such
Distribution Date exceeds the Class A Available Funds for the related
Monthly Period. If the Class A Required Amount is greater than zero, Excess
Spread and Excess Finance Charge Collections allocated to the Offered
Series and available for such purpose will be used to fund the Class A
Required Amount with respect to such Distribution Date. If such Excess
Spread and Excess Finance Charge Collections are insufficient to fund the
Class A Required Amount, the amounts, if any, available on deposit in the
Cash Collateral Account will be used to fund the remaining Class A Required
Amount. If such amounts on deposit in the Cash Collateral Account are
insufficient to fund the remaining Class A Required Amount,collections of
Principal Receivables allocable first to the Collateral Invested Amount and
then to the Class B Certificates for the related Monthly Period
("Reallocated Principal Collections") will then 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 and
Excess Finance Charge Collections allocated to the Offered Series, and the
amounts, if any, available on deposit in the Cash Collateral Account are
insufficient to fund the Class A Required Amount for such related Monthly
Period, then the Collateral Invested Amount (after giving effect to
reductions for any Collateral Charge-Offs and Reallocated Principal
Collections on such Distribution Date) will be reduced by the amount of
such excess (but not by more than the Class A Investor Default Amount for
such Distribution Date). In the event that such reduction would cause the
Collateral Invested Amount to be a negative number, the Collateral Invested
Amount will be reduced to zero, and the Class B Invested Amount (after
giving effect to reductions for any Class B Investor Charge-Offs and any
Reallocated Class B Principal Collections for which the Collateral Invested
Amount was not reduced on such Distribution Date) will be reduced by the
amount by which the Collateral Invested Amount would have been reduced
below zero (but not by more than the excess of the Class A Investor Default
amount, if any, for such Distribution Date over the amount of such
reduction, if any, of the Collateral Invested Amount with respect to such
Distribution Date). In the event that such reduction would cause the Class
B Invested Amount to be a negative number, the Class B Invested Amount will
be reduced to zero and the Class A Invested Amount will be reduced by the
amount by which the Class B Invested Amount would have been reduced below
zero (but not by more than the excess, if any, of the Class A Investor
Default Amount for such Distribution Date over the amount of the
reductions, if any, of the Collateral Invested Amount and the Class B
Invested Amount with respect to such Distribution Date as described above).
Any such reduction in the Class A Invested Amount will have the effect of
slowing or reducing the return of principal and interest to the Class A
Certificateholders. In such case, the Class A Certificateholders will bear
directly the credit and other risks associated with their undivided
interest in the Trust. See "-- Defaulted Receivables; Investor Charge-Offs"
below.
With respect to each Distribution Date, on each Determination 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 for such Distribution Date, (ii) any Class
B Outstanding Monthly Interest, (iii) any Class B Additional Interest, and
(iv) if the Bank or an affiliate of the Bank is no longer the Servicer, the
Class B Servicing Fee for such Distribution Date and any unpaid Class B
Servicing Fee exceeds the Class B Available Funds for the related Monthly
Period and (b) the Class B Investor Default Amount. If the Class B Required
Amount is greater than zero, Excess Spread and Excess Finance Charge
Collections allocated to the Offered Series and 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 Distribution
Date. If such Excess Spread and Excess Finance Charge Collections available
with respect to such Distribution Date are less than the Class B Required
Amount, the amounts, if any, available on deposit in the Cash Collateral
Account not required to fund the Class A Required Amount will be used to
fund the remaining Class B Required Amount. If such amounts on deposit in
the Cash Collateral Account are insufficient to fund the remaining Class B
Required Amount, Reallocated Principal Collections allocable to the
Collateral Interest and not required to fund the Class A Required Amount
for the related Monthly Period will then be used to fund the remaining
Class B Required Amount. If such Reallocated Principal Collections
allocable to the Collateral Interest with respect to the related Monthly
Period are insufficient to fund the remaining Class B Required Amount, then
the Collateral Invested Amount (after any adjustments made thereto for the
benefit of the Class A Certificateholders) will be reduced by the amount of
such insufficiency (but not by more than the Class B Investor Default
Amount for such Distribution Date). In the event that such reduction would
cause the Collateral Invested Amount to be a negative number, the
Collateral Invested Amount will be reduced to zero, and the Class B
Invested Amount will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero (but not by more than
the excess of the Class B Investor Default Amount for such Distribution
Date over the amount of such reduction of the Collateral Invested Amount),
and the Class B Certificateholders will bear directly the credit and other
risks associated with their undivided interests in the Trust. See "--
Defaulted Receivables; Investor Charge-Offs" below.
Reductions of the Class A Invested Amount or Class B Invested Amount
shall thereafter be reimbursed and the Class A Invested Amount or Class B
Invested Amount increased on each Distribution Date by the amount, if any,
of Excess Spread and Excess Finance Charge Collections allocable and
available to reimburse such amounts. See "-- Application of Collections --
Excess Spread; Excess Finance Charge Collections" below. When such
reductions of the Class A Invested Amount and Class B Invested Amount have
been fully reimbursed, reductions of the Collateral Invested Amount shall
be reimbursed to the extent of the full amount of any prior reduction
thereof.
Application of Collections
Payment of Fees, Interest and Other Items. On each Distribution Date,
the Trustee, acting pursuant to the Servicer's instructions, will apply the
Class A Available Funds, Class B Available Funds and Collateral Available
Funds (see "-- Interest Payments" above) on deposit in the Collection
Account in the following priority:
(A) On each Distribution Date, an amount equal to the Class A
Available Funds with respect to such Distribution Date will be
distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus any Class A Outstanding Monthly Interest,
plus additional interest with respect to any such Class A Outstanding
Monthly Interest at a rate equal to the Class A Certificate Rate plus
2% per annum (the "Class A Additional Interest"), will be distributed
to holders of the Class A Certificates;
(ii) if the Bank or an affiliate of the Bank is no longer the
Servicer, an amount equal to the Class A Servicing Fee for such
Distribution Date, plus the amount of any Class A Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, will be distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount
for such Distribution Date will be treated as a portion of Available
Principal Collections for such Distribution Date; and
(iv) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as described under
"-- Excess Spread; Excess Finance Charge Collections" below.
(B) On each Distribution Date, an amount equal to the Class B
Available Funds with respect to such Distribution Date will be
distributed in the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Outstanding Monthly
Interest, plus any additional interest with respect to any such Class
B Outstanding Monthly Interest at a rate equal to the Class B
Certificate Rate plus 2% per annum ("Class B Additional Interest"),
will be distributed to the holders of the Class B Certificates;
(ii) if the Bank or an affiliate of the Bank is no longer the
Servicer, an amount equal to the Class B Servicing Fee for such
Distribution Date, plus the amount of any Class B Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, will be distributed to the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as described under
"-- Excess Spread; Excess Finance Charge Collections" below.
(C) On each Distribution Date, an amount equal to the
Collateral Available Funds with respect to such Distribution Date
will be distributed or deposited in the following priority:
(i) if the Bank or an affiliate of the Bank is no longer the
Servicer, an amount equal to the Collateral Interest Servicing Fee
for such Distribution Date, plus the amount of any Collateral
Interest Servicing Fee previously due but not distributed to the
Servicer on a prior Distribution Date, 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 or deposited as
described under "-- Excess Spread; Excess Finance Charge Collections"
below.
"Class A Monthly Interest" means, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of the Class A
Certificate Rate and (ii) the outstanding principal balance of the Class A
Certificates as of the close of business on the preceding Record Date (or
with respect to the initial Distribution Date, the Closing Date).
"Class A Outstanding Monthly Interest" means, with respect to any
Distribution Date, the amount of Class A Monthly Interest previously due
but not paid to the Class A Certificateholders.
"Class B Monthly Interest" means, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of (i) the Class B
Certificate Rate and (ii) the Class B Invested Amount as of the close of
business on the last day of the preceding Record Date (or with respect to
the initial Distribution Date, the Closing Date).
"Class B Outstanding Monthly Interest" means, with respect to any
Distribution Date, the amount of Class B Monthly Interest previously due
but not paid to the Class B Certificateholders.
"Collateral Available Funds" means, with respect to any Monthly
Period, an amount equal to the Collateral Floating Percentage of the sum of
the Reallocated Investor Finance Charge Collections (including any
investment earnings and certain other amounts that are to be treated as
collections of Finance Charge Receivables allocable to the Offered Series
in accordance with the Pooling and Servicing Agreement and the Offered
Series Supplement) and the amounts withdrawn from the Yield Supplement
Account on the related Distribution Date.
"Excess Spread" means, with respect to any Distribution Date, an
amount equal to the sum of the amounts described in clause (A)(iv) above,
clause (B)(iii) above and clause (C)(ii) above.
Excess Spread; Excess Finance Charge Collections. On each
Distribution Date, the Trustee, acting in accordance with the applicable
monthly Servicer's Certificate, will apply Excess Spread and Excess Finance
Charge Collections allocated to the Offered Series with respect to the
related Monthly Period, to make the following distributions or deposits in
the following priority:
(a) an amount equal to the Class A Required Amount, if any,
with respect to the related Monthly Period will be used to fund any
deficiency pursuant to clauses (i), (ii) and (iii) above under "--
Payment of Fees, Interest and Other Items" in such order of priority;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated
as a portion of Available Principal Collections for such Distribution
Date as described under "-- Payments of Principal" below;
(c) an amount equal to the Class B Required Amount, if any,
with respect to such Distribution Date will be (I) used to fund any
deficiency pursuant to clauses (B)(i) and (ii) above under "--
Payment of Fees, Interest and Other Items" in such order of priority
and then (II) treated, up to the Class B Investor Default Amount, as
a portion of Available Principal Collections for such Distribution
Date;
(d) an amount equal to the aggregate amount by which the Class
B Invested Amount has been reduced pursuant to clauses (iii), (iv)
and (v) of the definition of "Class B Invested Amount" under "--
Allocation Percentages" above (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed)
will be treated as a portion of Available Principal Collections for
such Distribution Date;
(e) an amount equal to Collateral Monthly Interest for such
Distribution Date, plus the amount of any Collateral Monthly Interest
previously due but not distributed to the Collateral Interest Holder
on a prior Distribution Date and any Collateral Additional Interest
previously due but not distributed to the Collateral Interest Holder
on a prior Distribution Date, will be distributed to the Collateral
Interest Holder for application in accordance with the Loan
Agreement;
(f) an amount equal to the Monthly Servicing Fee due but not
paid to the Servicer on such Distribution Date or a prior
Distribution Date shall be paid to the Servicer;
(g) an amount equal to the Collateral Default Amount shall be
treated as a portion of Available Principal Collections with respect
to such Distribution Date;
(h) an amount equal to the aggregate amount by which the
Collateral Invested Amount has been reduced pursuant to clauses (c),
(d) and (e) of the definition of "Collateral Invested Amount" under
"-- Allocation Percentages" above (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed)
shall be treated as a portion of Available Principal Collections for
such Distribution Date;
(i) an amount up to the excess, if any, of the Required Cash
Collateral Amount over the amount that would otherwise remain in the
Cash Collateral Account on such Distribution Date will be deposited
into the Cash Collateral Account;
(j) on each Distribution 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" above, 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;
(k) an amount equal to the aggregate of any other amounts then
required to be applied pursuant to the Loan Agreement among the
Transferor, the Trustee, the Servicer and the Collateral Interest
Holder (the "Loan Agreement") (to the extent such amounts are
required to be applied pursuant to the Loan Agreement out of Excess
Spread and Excess Finance Charge Collections) shall be distributed to
the Collateral Interest Holder for application in accordance with the
Loan Agreement; and
(l) the balance, if any, will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and will be
available for allocation to other Excess Allocation Series or to the
holders of the Transferor Certificates as described in "Description
of the Pooling and Servicing Agreement -- Sharing of Excess Finance
Charge Collections Among Excess Allocation Series" in the Prospectus.
"Collateral Monthly Interest" means, with respect to any Distribution
Date, an amount equal to the product of (i)(A) a fraction, the numerator of
which is the actual number of days in the period from and including the
preceding Distribution Date to but excluding such Distribution Date and the
denominator of which is 360, times (B) the Collateral Rate and (ii) the
Collateral Invested Amount as of the preceding Record Date; provided,
however, with respect to the first Distribution Date, Collateral Monthly
Interest shall be equal to the interest accrued on the Collateral Initial
Invested Amount at the Collateral Rate for the period from the Closing Date
to but excluding the first Distribution Date.
"Collateral Rate" means a rate specified in the Loan Agreement not to
exceed one-month LIBOR plus [1.00]% per annum.
"Collateral Additional Interest" means, with respect to any
Distribution Date, additional interest with respect to Collateral Monthly
Interest due but not paid to the Collateral Interest Holder on a prior
Distribution Date at a rate equal to the Collateral Rate.
Payments of Principal. On each Distribution Date, the Trustee, acting
pursuant to the Servicer's instructions, will distribute Available
Principal Collections (see "-- Principal Payments" above) on deposit in the
Collection Account in the following priority:
(i) on each Distribution Date with respect to the Revolving
Period, all such Available Principal Collections will be distributed
or deposited in the following priority:
(A) an amount equal to the Collateral Monthly Principal will be
paid to the Collateral Interest Holder to be applied in accordance
with the terms of the Loan Agreement; and
(B) the balance will be treated as Shared Principal Collections
and applied as described under "Description of the Pooling and
Servicing Agreement -- Shared Principal Collections" in the
Prospectus;
(ii) on each Distribution Date with respect to the Controlled
Accumulation Period, all such Available Principal Collections will be
distributed or deposited in the following priority:
(A) an amount equal to the lesser of (x) the Controlled Deposit
Amount and (y) the sum of the Class A Adjusted Invested Amount and
the Class B Adjusted Invested Amount will be deposited in the
Principal Funding Account;
(B) for each Distribution Date before the Class B Invested
Amount is paid in full with respect to which a reduction in the
Required Enhancement Amount has occurred, an amount equal to the
Collateral Monthly Principal will be paid to the Collateral Interest
Holder to be applied in accordance with the Loan Agreement;
(C) for each Distribution Date beginning on the Distribution
Date on which the Class B Invested Amount is paid in full, an amount
up to the Collateral Invested Amount will be paid to the Collateral
Interest Holder to be applied in accordance with the Loan Agreement;
and
(D) for each Distribution Date, the balance, if any, of
Available Principal Collections not applied pursuant to paragraphs
(A) and (B) or (C) (as applicable) above will be treated as Shared
Principal Collections and applied as described under "Description of
the Pooling and Servicing Agreement -- Shared Principal Collections"
in the Prospectus; and
(iii) on each Distribution Date with respect to the Early
Amortization Period, all such Available Principal Collections will be
distributed as follows:
(A) an amount up to the Class A Adjusted Invested Amount will
be distributed to the Class A Certificateholders;
(B) for each Distribution Date beginning on the Distribution
Date on which the Class A Invested Amount is paid in full, an amount
up to the Class B Adjusted Invested Amount will be distributed to the
Class B Certificateholders;
(C) for each Distribution Date beginning on the Distribution
Date on which the Class B Invested Amount is paid in full, an amount
up to the Collateral Invested Amount will be paid to the Collateral
Interest Holder; and
(D) for each Distribution Date, after giving effect to
paragraphs (A), (B) and (C) above, an amount equal to the balance, if
any, of such Available Principal Collections will be allocated to
Shared Principal Collections and applied in accordance with the
Pooling and Servicing Agreement.
"Controlled Accumulation Amount" means for any Distribution Date with
respect to the Controlled Accumulation Period, $________; provided,
however, that, if the commencement of the Controlled Accumulation Period is
delayed as described above under "-- Principal Payments," the Controlled
Accumulation Amount for each Distribution Date with respect to the
Controlled Accumulation Period may be different for each Distribution Date
with respect to the Controlled Accumulation Period and will be determined
by the Transferor in accordance with the Offered Series Supplement based on
the principal payment rates for the Accounts and on the invested amounts of
other Principal Sharing Series that are scheduled to be in their revolving
periods and then scheduled to create Shared Principal Collections during
the Controlled Accumulation Period.
"Deficit Controlled Accumulation Amount" means (a) on the first
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount for such Distribution
Date over the amount deposited in the Principal Funding Account on such
Distribution Date and (b) on each subsequent Distribution Date with respect
to the Controlled Accumulation Period, the excess, if any, of the
Controlled Deposit Amount for such subsequent Distribution Date over the
amount deposited in the Principal Funding Account on such subsequent
Distribution Date.
"Controlled Deposit Amount" shall mean, for any Distribution Date
with respect to the Controlled Accumulation Period, an amount equal to the
sum of the Controlled Accumulation Amount for such Distribution Date and
any Deficit Controlled Accumulation Amount for the immediately preceding
Distribution Date.
"Collateral Monthly Principal" means (a) with respect to any
Distribution Date relating to the Revolving Period, an amount equal to the
lesser of (i) the excess, if any, of the sum of the Collateral Invested
Amount (after giving effect to reductions for any Collateral Charge-Offs
and Reallocated Principal Collections on such Distribution Date and after
giving effect to a y adjustments thereto for the benefit of the holders of
the Offered Certificates on such Distribution Date) and the amount on
deposit in the Cash Collateral Account (after giving effect to any deposits
to be made therein or withdrawals to be made therefrom on such Distribution
Date) over the Required Enhancement Amount on such Distribution Date, and
(ii) the Available Principal Collections on such Distribution Date or (b)
with respect to any Distribution Date relating to the Controlled
Accumulation Period an amount equal to the lesser of (i) the excess, if
any, of the sum of the Collateral Invested Amount (after giving effect to
reductions for any Collateral Charge-Offs and Reallocated Principal
Collections on such Distribution Date and after giving effect to any
adjustments thereto for the benefit of the holders of the Offered
Certificates on such Distribution Date) and the amount on deposit in the
Cash Collateral Account (after giving effect to any deposits to be made
therein on such Distribution Date) over the Required Enhancement Amount on
such Distribution Date, and (ii) the excess, if any, of (A) the Available
Principal Collections on such Distribution Date over (B) the lesser of (x)
the Controlled Deposit Amount and (y) the sum of the Class A Adjusted
Invested Amount and the Class B Adjusted Invested Amount for such
Distribution Date.
Yield Supplement Account
The Offered Certificates will have the benefit of an account (the
"Yield Supplement Account"), which will be held in the name of the Trustee
for the benefit of the holders of the Offered Certificates. On the Closing
Date, the Transferor will deposit $__________ (the "Initial Yield
Supplement Deposit") into the Yield Supplement Account from the proceeds of
the issuance of the Offered Certificates. On each Distribution Date, an
amount equal to the Yield Supplement Draw Amount will be released and
deposited into the Collection Account and will be treated as collections
of Finance Charge Receivables allocable to the Offered Certificates. The
Yield Supplement Account will not be replenished following the withdrawals
of amounts on deposit therein on any Distribution Date. The "Yield
Supplement Draw Amount" means ___% of the Initial Yield Supplement Deposit
for the six Distribution Dates from and including the September ___, 1997
Distribution Date through and including the February ___, 1998 Distribution
Date, and ___% of the Initial Yield Supplement Deposit for the six
Distribution Dates from and including the March ___, 1998 Distribution Date
through and including the August ___, 1998 Distribution Date. See
"Description of the Certificates -- Yield Supplement Account."
Cash Collateral Account; Required Enhancement Amount
The Servicer will establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account for the benefit of the
holders of the Offered Certificates and the Collateral Interest Holder (the
"Cash Collateral Account"). Amounts on deposit in the Cash Collateral
Account are part of the Credit Enhancement for the Offered Certificates.
The Cash Collateral Account will have an initial Available Cash
Collateral Amount of $________. On each Distribution Date, the amount
available to be withdrawn from the Cash Collateral Account (the "Available
Cash Collateral Amount") will be equal to the lesser of (i) the amount on
deposit in the Cash Collateral Account (before giving effect to any deposit
to, or withdrawal from, the Cash Collateral Account on such Distribution
Date) and (ii) the Required Cash Collateral Amount. The "Required Cash
Collateral Amount" means, on any date of determination, the Required
Enhancement Amount less the Collateral Invested Amount, or any higher
amount designated by the Transferor.
The "Required Enhancement Amount" with respect to any Distribution
Date means (a) $___________ on the initial Distribution Date and (b) on any
Distribution Date thereafter, an amount equal to the greater of (i) ___% of
the sum of the Class A Adjusted Invested Amount and the Class B Invested
Amount on such Distribution Date, after taking into account deposits into
the Principal Funding Account on such Distribution Date and payments to be
made on such Distribution Date, and the Collateral Invested Amount on the
prior Distribution Date after any adjustments made on such prior
Distribution Date and (ii) the sum of (A) the product of (I) $__________,
(II) _% and (III) a fraction the numerator of which is the Available Cash
Collateral Amount as of the immediately preceding Distribution Date and the
denominator of which is the Total Enhancement as of such immediately
preceding Distribution Date (in each case after giving effect to all
deposits, withdrawals and payments made with respect to such immediately
preceding Distribution Date) and (B) the product of (I) $_____________,
(II) __% and (III) a fraction the numerator of which is equal to the
Collateral Invested Amount as of the immediately preceding Distribution
Date and the denominator of which is the Total Enhancement as of such
immediately preceding Distribution Date (in each case after giving effect
to all deposits, withdrawals and payments made with respect to such
immediately preceding Distribution Date); provided, however, (1) that if
certain reductions in the Collateral Invested Amount are made or if a Pay
Out Event occurs, the Required Enhancement Amount for such Distribution
Date shall equal the Required Enhancement Amount for the Distribution Date
immediately preceding the occurrence of such reduction or Pay Out Event,
(2) in no event shall the Required Enhancement Amount exceed the unpaid
principal amount of the Offered Certificates as of the last day of the
Monthly Period preceding such Distribution Date after taking into account
payments to be made on such Distribution Date and (3) the Required
Enhancement Amount may be reduced to a lesser amount at any time if the
Rating Agency Condition is satisfied. "Total Enhancement" means, on any
date of determination, the sum of the Available Cash Collateral Amount and
the Collateral Invested Amount.
With respect to any Distribution Date, if the Available Enhancement
Amount is less than the Required Enhancement Amount, Excess Spread and
Excess Finance Charge Collections allocated to the Offered Series and
available for such purposes will be allocated to increase the Collateral
Invested Amount to the extent of certain prior unreimbursed reductions
thereof and then deposited in the Cash Collateral Account to the extent of
such shortfall. See "-- Application of Collections -- Excess Spread; Excess
Finance Charge Collections."
All amounts on deposit in the Cash Collateral Account on any
Distribution Date (after giving effect to any deposits to, or withdrawals
from, the Cash Collateral Account to be made on such Distribution Date)
will be invested to the following Distribution Date by the Trustee at the
direction of the Servicer in Eligible Investments. The interest and other
investment income (net of investment expenses and losses) earned on such
investments will be retained in the Cash Collateral Account (to the extent
the amount on deposit therein is less than the Required Cash Collateral
Amount) or deposited in the Collection Account and treated as collections
of Finance Charge Receivables allocable to the Offered Series.
Under certain circumstances specified in the Loan Agreement, the
Transferor will have the option to elect to deposit certain amounts held
pursuant to the Loan Agreement into the Cash Collateral Account, which will
result in a reduction of the Collateral Invested Amount. Any such election
will have the effect of converting all or a portion of the Credit
Enhancement in the form of the Collateral Interest into Credit Enhancement
in the form of amounts on deposit in the Cash Collateral Account.
Defaulted Receivables; Investor Charge-Offs
On each Determination 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 (i) the Floating
Allocation Percentage with respect to such Monthly Period and (ii) the
Series Allocable Defaulted Amount for such Monthly Period. A portion of the
Investor Default Amount will be allocated to the Class A Certificates (the
"Class A Investor Default Amount") on each Distribution Date in an amount
equal to the product of the Class A Floating Percentage 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 Certificates (the "Class B Investor Default Amount") in an amount
equal to the product of the Class B Floating Percentage applicable during
the related Monthly Period and the Investor Default Amount for such Monthly
Period. An amount equal to the Class A Investor Default Amount for each
Monthly Period will be paid from Class A Available Funds, Excess Spread and
Excess Finance Charge Collections allocated to the Offered Series, from
amounts on deposit in the Cash Collateral Account to the extent of the
Available Cash Collateral Amount and from Reallocated Principal
Collections, if applicable, and applied as described above in "--
Application of Collections -- Payment of Fees, Interest and Other Items."
An amount equal to the Class B Investor Default Amount for each Monthly
Period will be paid from Excess Spread and Excess Finance Charge
Collections allocated to the Offered Series, from amounts on deposit in the
Cash Collateral Account to the extent of the Available Cash Collateral
Amount remaining after application thereof with respect to the Class A
Required Amount and from Reallocated Principal Collections allocable to the
Collateral Invested Amount, if applicable, and applied as described above
under "-- Application of Collections -- Excess Spread; Excess Finance
Charge Collections."
On each Distribution Date, if the Class A Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance
Charge Collections allocable to the Offered Series, amounts on deposit in
the Cash Collateral Account to the extent of the Available Cash Collateral
Amount and Reallocated Principal Collections, the Collateral Invested
Amount (after giving effect to reductions for any Collateral Charge-Offs
and any Reallocated Principal Collections on such Distribution Date) will
be reduced by the amount of such excess, but not by more than the lesser of
the Class A Investor Default Amount and the Collateral Invested Amount
(after giving effect to reductions for any Collateral Charge-Offs and any
Reallocated Principal Collections on such Distribution Date) for such
Distribution Date. In the event that such reduction would cause the
Collateral Invested Amount to be a negative number, the Collateral Invested
Amount will be reduced to zero, and the Class B Invested Amount (after
giving effect to reductions for any Class B Investor Charge-Offs and any
Reallocated Class B Principal Collections on such Distribution Date) will
be reduced by the amount by which the Collateral Invested Amount would have
been reduced below zero, but not by more than the excess, if any, of the
Class A Investor Default Amount for such Distribution Date over the amount
of such reduction, if any, of the Collateral Invested Amount with respect
to such Distribution Date. In the event that such reduction would cause the
Class B Invested Amount to be a negative number, the Class B Invested
Amount will be reduced to zero, and the Class A Invested Amount will be
reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Investor Default Amount for such Distribution Date over the amount of the
reductions, if any, of the Collateral Invested Amount and of the Class B
Invested Amount with respect to such Distribution Date as described above
(a "Class A Investor Charge-Off"), which will have the effect of slowing or
reducing the return of principal to the holders of the Class A
Certificates. If the Class A Invested Amount has been reduced by the amount
of any Class A Investor Charge-Offs, it will thereafter be increased on any
Distribution Date (but not by an amount in excess of the aggregate Class A
Investor Charge-Offs) by the amount of Excess Spread and Excess Finance
Charge Collections allocable to the Offered Series available for such
purpose as described above under "-- Application of Collections -- Excess
Spread; Excess Finance Charge Collections."
On each Distribution Date, if the Class B Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance
Charge Collections allocable to the Offered Series and not required to pay
the Class A Required Amount or reimburse Class A Investor Charge-Offs,
amounts on deposit in the Cash Collateral Account to the extent of the
Available Cash Collateral Amount not required to fund the Class A Required
Amount and Reallocated Principal Collections allocable to the Collateral
Interest and not required to fund the Class A Required Amount, then the
Collateral Invested Amount (after giving effect to reductions for any
Collateral Charge-Offs and any Reallocated Principal Collections on such
Distribution Date and after giving effect with respect to any adjustments
thereto as described in the preceding paragraph) will be reduced by the
amount of such excess, but not by more than the lesser of the Class B
Investor Default Amount and the Collateral Invested Amount (after giving
effect to reductions for any Collateral Charge-Offs and any Reallocated
Principal Collections on such Distribution Date and after giving effect
with respect to any adjustments thereto as described in the preceding
paragraph) for such Monthly Period. In the event that such reduction would
cause the Collateral Invested Amount to be a negative number, the
Collateral Invested Amount will be reduced to zero, and the Class B
Invested Amount will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero, but not by more than
the excess, if any, of the Class B Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of the
Collateral Invested Amount with respect to such Distribution Date (a "Class
B Investor Charge-Off"). The Class B Invested Amount will also be reduced
by the amount of Reallocated Principal Collections in excess of the
Collateral Invested Amount (after giving effect to reductions for any
Collateral Charge-Offs and any Reallocated Principal Collections on such
Distribution Date) and the amount of any portion of the Class B Invested
Amount allocated to the Class A Certificates to avoid a reduction in the
Class A Invested Amount. The Class B Invested Amount will thereafter be
increased on any Distribution Date (but not by an amount in excess of the
amount of such reductions in the Class B Invested Amount) by the amount of
Excess Spread and Excess Finance Charge Collections allocable to the
Offered Series available for such purpose as described above under "--
Application of Collections -- Excess Spread; Excess Finance Charge
Collections."
On each Distribution Date, if the Collateral Floating Percentage of
the Investor Default Amount (the "Collateral Default Amount") for such
Distribution Date exceeds the amount of Excess Spread and Excess Finance
Charge Collections allocated to the Offered Series which is allocated and
available to fund such amount as described under "-- Application of
Collections -- Excess Spread; Excess Finance Charge Collections," and
amounts on deposit in the Cash Collateral Account to the extent of the
Available Cash Collateral Amount not required to fund the Class A Required
Amount or the Class B Required Amount, the Collateral Invested Amount will
be reduced by the amount of such excess but not more than the lesser of the
Collateral Default Amount and the Collateral Invested Amount for such
Distribution 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 Invested Amount allocated to the
Class A Certificates to avoid a reduction in the Class A Invested Amount or
to the Class B Certificates to avoid a reduction in the Class B Invested
Amount. The Collateral Invested Amount will thereafter be increased on any
Distribution Date (but not by an amount in excess of the amount of such
reductions in the Collateral Invested Amount) by the amount of Excess
Spread and Excess Finance Charge Collections allocated to the Offered
Series allocated and available for that purpose as described under "--
Application of Collections -- Excess Spread; Excess Finance Charge
Collections."
Paired Series
The Offered Certificates may be paired with one or more other Series
(each, a "Paired Series") at or after the commencement of the Controlled
Accumulation Period. As funds are accumulated in the Principal Funding
Account, the invested amount in the Trust of such Paired Series will
increase by up to a corresponding amount. Upon payment in full of the
Offered Certificates, assuming that there have been no unreimbursed
charge-offs with respect to any related Paired Series, the aggregate
invested amount of such related Paired Series will have been increased by
an amount up to an aggregate amount equal to the Invested Amount paid to or
deposited for the benefit of the Series Certificateholders after the
Offered Certificates were paired with the Paired Series. The issuance of a
Paired Series will be subject to the conditions described under
"Description of the Pooling and Servicing Agreement -- New Issuances" 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 the Series Certificateholders. See "Risk Factors -- Issuance of
New Series" and "Description of the Pooling and Servicing Agreement --
Paired Series" in the Prospectus.
Pay Out Events
The "Pay Out Events" with respect to the Offered Certificates will
include each of the following:
(a) the occurrence of an Insolvency Event relating to the
Transferor or the occurrence of certain events of insolvency with
respect to the Bank unless, in the latter case, the Rating Agency
Condition is satisfied with respect to the deletion of the Bank from
this Pay Out Event;
(b) the Trust becomes an investment company within the meaning
of the Investment Company Act of 1940, as amended;
(c) a failure on the part of the Transferor (i) to make any
payment or deposit required under the Pooling and Servicing Agreement
or the Offered Series Supplement within five business days after the
day such payment or deposit is required to be made; or (ii) to
observe or perform any other covenants or agreements of the
Transferor set forth in the Pooling and Servicing Agreement or the
Offered Series Supplement, which failure has a material adverse
effect on the Series Certificateholders and which continues
unremedied for a period of 60 days after written notice;
(d) any representation or warranty made by the Transferor in
the Pooling and Servicing Agreement or the Offered Series Supplement
or any information required to be given by the Transferor to the
Trustee to identify the Accounts proves to have been incorrect in any
material respect when made and continues to be incorrect in any
material respect for a period of 60 days after written notice and as
a result of which the interests of the Series Certificateholders are
materially and adversely affected; provided, however, that a Pay Out
Event shall not be deemed to occur thereunder if the Transferor has
repurchased the related Receivables or all such Receivables, if
applicable, during such period in accordance with the provisions of
the Pooling and Servicing Agreement;
(e) a failure by the Transferor to make an Addition to the
Trust within five business days after the day on which it is required
to make such Addition pursuant to the Pooling and Servicing Agreement
or the Offered Series Supplement;
(f) the occurrence of any Servicer Default;
(g) a reduction of the average Series Adjusted Portfolio Yield
for any three consecutive Monthly Periods to a rate less than the
average of the Base Rates for such three Monthly Periods; and
(h) the Transferor is unable for any reason to transfer
Receivables to the Trust in accordance with the Pooling and Servicing
Agreement or the Offered Series Supplement.
Then, in the case of any event described in subparagraph (c), (d) or
(f), after the applicable grace period, if any, set forth in such
subparagraphs, either the Trustee or the holders of Offered Certificates
evidencing more than 50% of the aggregate unpaid principal amount of
Offered Certificates by notice then given in writing to the Transferor and
the Servicer (and to the Trustee if given by the Series Certificateholders)
may declare that a Pay Out Event has occurred with respect to the Offered
Series as of the date of such notice, and, in the case of any event
described in subparagraph (a), (b), (e), (g) or (h), a Pay Out Event shall
occur with respect to the Offered Series without any notice or other action
on the part of the Trustee immediately upon the occurrence of such event.
For purposes of the Pay Out Event described in clause (g) above, the
terms "Base Rate" and "Series Adjusted Portfolio Yield" will be defined as
follows with respect to the Offered Certificates:
"Base Rate" means, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of
which is equal to the sum of Class A Monthly Interest, Class B
Monthly Interest, Collateral Monthly Interest and the Monthly
Servicing Fee with respect to the Offered Certificates and the
Collateral Interest for the related Distribution Date and the
denominator of which is the Invested Amount as of the last day of the
preceding Monthly Period.
"Series Adjusted Portfolio Yield" means, with respect to any
Monthly Period, the annualized percentage equivalent of a fraction,
(A) the numerator of which is equal to (a) Reallocated Investor
Finance Charge Collections (including any investment earnings and
certain other amounts that are to be treated as collections of
Finance Charges Receivables allocable to the Offered Series in
accordance with the Pooling and Servicing Agreement) for such Monthly
Period, plus (b) the amount of Principal Funding Investment Proceeds
for the related Distribution Date, plus (c) provided that each Rating
Agency has consented to the inclusion thereof in calculating the
Series Adjusted Portfolio Yield, any Excess Finance Charge
Collections that are allocated to the Offered Series, plus (d) the
amount of funds withdrawn from the Reserve Account and included in
Class A Available Funds for the Distribution Date with respect to
such Monthly Period and plus (e) the aggregate amount of funds
withdrawn from the Yield Supplement Account and included in Class A
Available Funds, Class B Available Funds and Collateral Available
Funds for the Distribution Date with respect to such Monthly Period,
and less (f) the Investor Default Amount for the Distribution Date
with respect to such Monthly Period, and (B) the denominator of which
is the Invested Amount as of the last day of the preceding Monthly
Period.
If the proceeds of any sale of the Receivables following the
occurrence of an Insolvency Event with respect to the Transferor, as
described in the Prospectus under "Description of the Certificates -- Pay
Out Events and Reinvestment Events," allocated to the Class A Invested
Amount and the proceeds of any collections on the Receivables in the
Collection Account and any amounts on deposit in the Interest Funding
Account are not sufficient to pay in full the remaining amount due on the
Class A Certificates, the Class A Certificateholders will suffer a
corresponding loss and no such proceeds will be available to the Class B
Certificateholders.
Servicing Compensation and Payment of Expenses
The share of the Servicing Fee allocable to the Series
Certificateholders and the Collateral Interest Holder with respect to any
Distribution Date (the "Monthly Servicing Fee") shall be equal to
one-twelfth of the product of (a) 2.0% (the "Servicing Fee Rate") and (b)
(i) the Adjusted Invested Amount as of the last day of the Monthly Period
preceding such Distribution Date, less (ii) the product of (A) any amount
on deposit in the Special Funding Account as of the last day of the Monthly
Period preceding such Distribution Date and (B) the Series Allocation
Percentage for the Offered Series with respect to such Monthly Period (the
amount calculated pursuant to this clause (b) is referred to as the
"Servicing Base Amount"); provided, however, with respect to the first
Distribution Date, the Monthly Servicing Fee shall be equal to $ . On each
Distribution Date a portion of Interchange with respect to the related
Monthly Period that is on deposit in the Collection Account will be
withdrawn from the Collection Account and paid to the Servicer in payment
of a portion of the Monthly Servicing Fee with respect to such Monthly
Period ("Servicer Interchange"). The Servicer Interchange for any Monthly
Period will be an amount equal to the portion of collections of Finance
Charge Receivables allocated to the Invested Amount with respect to such
Monthly Period that is attributable to Interchange; provided, however, that
Servicer Interchange for a Monthly Period may not exceed one-twelfth of the
product of the Adjusted Invested Amount, as of the last day of such Monthly
Period and (ii) .75%. In the case of any insufficiency of Servicer
Interchange on deposit in the Collection Account on any Distribution Date,
a portion of the Monthly Servicing Fee with respect to such Monthly Period
will not be paid to the extent of such insufficiency and in no event shall
the Trust, the Trustee or the holders of the Offered Certificates or the
Collateral Interest Holder be liable for the share of the Monthly Servicing
Fee to be paid out of Servicer Interchange. The share of the Monthly
Servicing Fee allocable to the Class A Certificateholders with respect to
any Distribution Date (the "Class A Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Class A Floating Percentage, (b)
1.25% (the "Net Servicing Fee Rate") and (c) the Servicing Base Amount;
provided, however, that with respect to the first Distribution Date, the
Class A Servicing Fee shall be equal to $ . The share of the Monthly
Servicing Fee allocable to the Class B Certificateholders with respect to
any Distribution Date (the "Class B Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Class B Floating Percentage, (b) the
Net Servicing Fee Rate and (c) the Servicing Base Amount; provided,
however, that with respect to the first Distribution Date, the Class B
Servicing Fee shall be equal to $ . The share of the Monthly Servicing Fee
allocable to the Collateral Interest with respect to any Distribution Date
(the "Collateral Interest Servicing Fee") shall be equal to one-twelfth of
the product of (a) the Collateral Floating Percentage, (b) the Net
Servicing Fee Rate and (c) the Servicing Base Amount; provided, however,
that with respect to the first Distribution Date, the Collateral Interest
Servicing Fee shall be equal to $ . The remainder of the Servicing Fee
shall be paid by the holders of the Transferor Certificates or the
certificateholders of other Series (as provided in the related Supplements)
and in no event will the Trust, the Trustee or the Series
Certificateholders be liable for the share of the Servicing Fee to be paid
by the holders of the Transferor Certificates or the certificateholders of
any other Series.
Series Termination
If, on the Distribution Date which is two months prior to the Stated
Series Termination Date, the Invested Amount (after giving effect to all
changes therein on such date) exceeds zero, the Servicer will, within the
40-day period beginning on such date, solicit bids for the sale of
interests in the Principal Receivables or certain Principal Receivables,
together in each case with the related Finance Charge Receivables, in an
amount equal to the Invested Amount at the close of business on the last
day of the Monthly Period preceding the Termination Date (after giving
effect to all distributions required to be made on the Termination Date
other than from the proceeds of the sale). The Transferor and the
Collateral Interest Holder will be entitled to participate in, and to
receive notice of each bid submitted in connection with, such bidding
process. Upon the expiration of such 40-day period, the Trustee will
determine (a) which bid is the highest cash purchase offer (the "Highest
Bid") and (b) the amount (the "Available Final Distribution Amount") which
otherwise would be available in the Collection Account on the Termination
Date for distribution to the Series Certificateholders and the Collateral
Interest Holder. The Servicer will sell such Receivables on the Termination
Date to the bidder who provided the Highest Bid and will deposit the
proceeds of such sale in the Collection Account for allocation (together
with the Available Final Distribution Amount) to the Offered
Certificateholders' Interest and the Collateral Interest in the order of
priority specified herein.
Reports
No later than the second business day prior to each Distribution
Date, the Servicer will forward to the Trustee, the Paying Agent, each
Rating Agency and the Collateral Interest Holder, a statement (the "Monthly
Report") prepared by the Servicer setting forth certain information with
respect to the Trust and the Class A Certificates and the Class B
Certificates, including: (a) the aggregate amount of Principal Receivables
and Finance Charge Receivables in the Trust as of the end of such Monthly
Period; (b) the Invested Amount, the Class A Invested Amount, the Class B
Invested Amount and the Collateral Invested Amount at the close of business
on the last day of the preceding Monthly Period; (c) the amounts on deposit
in the Yield Supplement Account, the Cash Collateral Account and the
Available Credit Enhancement at the close of business on the last day of
the preceding Monthly Period; (d) the Series Allocation Percentage, the
Floating Allocation Percentage, the Class A Floating Percentage, the Class
B Floating Percentage and the Collateral Floating Percentage and the
Principal Allocation Percentage, the Class A Principal Percentage, the
Class B Principal Percentage and the Collateral Principal Percentage; (e)
the amount of collections of Principal Receivables and Finance Charge
Receivables processed during the related Monthly Period and the portion
thereof allocated to the Offered Certificateholders' Interest; (f) the
aggregate outstanding balance of Accounts that were 35, 65 and 95 days or
more delinquent as of the end of such Monthly Period; (g) the Investor
Default Amount, the Class A Investor Default Amount, the Class B Investor
Default Amount and the Collateral Default Amount and the Defaulted Amount
with respect to such Monthly Period; (h) the aggregate amount, if any, of
Class A Investor Charge-Offs, Class B Investor Charge-Offs, any reductions
in the Class B Invested Amount pursuant to clauses (iv) and (v) of the
definition of "Class B Invested Amount," under " - Allocation Percentages"
above, and the amounts by which the Collateral Invested Amount has been
reduced pursuant to clauses (c), (d) and (e) of the definition of
"Collateral Invested Amount" under " - Allocation Percentages" above, and
any Class A or Class B Investor Charge-Offs reimbursed on the related
Monthly Period, for such Monthly Period; (i) the Monthly Servicing Fee,
Class A Servicing Fee, Class B Servicing Fee and Collateral Interest
Servicing Fee for such Monthly Period; (j) the Series Adjusted Portfolio
Yield for such Monthly Period; (k) the Base Rate for such Monthly Period;
(l) Reallocated Principal Collections; and (m) Shared Principal
Collections.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement (the "Underwriting Agreement") among the Transferor, the Bank,
the underwriters of the Class A Certificates named below (the "Class A
Underwriters") and the underwriters of the Class B Certificates named below
(the "Class B Underwriters," and together with the Class A Underwriters,
the "Underwriters"), the Transferor has agreed to cause the Trust to sell
to the Underwriters, and the Underwriters have agreed to purchase, the
principal amount of the Class A Certificates and Class B Certificates set
forth opposite their names:
Principal
Amount of
Underwriters of the Class A Class A
Certificates Certificates
- --------------------------- ------------
Merrill Lynch, Pierce,
Fenner & Smith Incorporated $
Total................. $
=
Principal
Amount of
Underwriters of the Class A Class A
Certificates Certificates
- --------------------------- ------------
Merrill Lynch, Pierce, $
Fenner & Smith Incorporated
Total...................... $
=
The Underwriting Agreement provides that the obligation of the Class
A Underwriters to pay for and accept delivery of the Class A Certificates
and the obligation of the Class B Underwriters to pay for and accept
delivery of the Class B Certificates are subject to the approval of certain
legal matters by their counsel and to certain other conditions. All of the
Offered Certificates will be issued if any are issued.
The Underwriters presently intend to make a market in the Offered
Certificates; however, they are not obligated to do so, any market-making
may be discontinued at any time, and there can be no assurance that an
active public market for the Offered Certificates will develop.
If the Underwriters create a short position in the Offered
Certificates in connection with the offering, i.e., if they sell more
Offered Certificates than are set forth on the cover page of this
Prospectus Supplement, the Underwriters may reduce that short position by
purchasing Offered Certificates in the open market.
In general, the purchase of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might be in the absence of such purchase.
None of the Transferor, the Servicer, or the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the prices of the Offered
Certificates. In addition, none of the Transferor, the Servicer, or the
Underwriters makes any representation that the Underwriters will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.
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 % 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 % 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 Underwriters propose initially to offer the Class B
Certificates to the public at the price set forth on the cover page hereof
and to certain dealers at such price less concessions not in excess of % of
the principal amount of the Class B Certificates. The Class B Underwriters
may allow, and such dealers may reallow, concessions not in excess of % of
the principal amount of the Class B Certificates to certain brokers and
dealers. After the initial public offering, the public offering price and
other selling terms may be changed by the Class B Underwriters.
Each Underwriter has represented and agreed that (a) it has only
issued, distributed or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of
the Offered 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 or passed on, (b) 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 Offered Certificates in, from or
otherwise involving the United Kingdom and (c) if that Underwriter is an
authorized person under the Financial Services Act 1986, it has only
promoted and will only promote (as that term is defined in Regulation
1.02(2) of the Financial Services (Promotion of Unregulated Schemes)
Regulations 1991) to any person in the United Kingdom the scheme described
herein if that person is a kind described either in Section 76(2) of the
Financial Services Act 1986 or in Regulation 1.04 of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991.
The Transferor and the Bank will indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or
contribute to payments the Underwriters may be required to make in respect
thereof. The Underwriters have agreed to reimburse the Transferor for
certain expenses of the issuance and distribution of the Offered
Certificates.
[BancBoston Securities, Inc., an underwriter of the Offered
Certificates, is a wholly-owned subsidiary of BankBoston Corporation and an
affiliate of the Transferor. See "the Bank" in the Prospectus.]
[After the initial distribution of the Offered Certificates by the
Underwriters, this Prospectus Supplement and the Prospectus may be used by
BancBoston Securities Inc. in connection with offers and sales relating to
market-making transactions in the Offered Certificates. BancBoston
Securities Inc. may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the
time of sale. BancBoston Securities Inc. has no obligation to make a market
in the Offered Certificates and any such market-making may be discontinued
by BancBoston Securities Inc. at any time without notice, in its sole
discretion. BancBoston Securities Inc. is among the Underwriters
participating in the initial distribution of the Offered Certificates.]
LEGAL MATTERS
Certain legal matters relating to the Offered Certificates will be
passed upon for the Transferor and the Trust by Skadden, Arps, Slate,
Meagher & Flom LLP. Certain legal matters will be passed upon for the
Underwriters by Orrick, Herrington & Sutcliffe LLP. Certain legal matters
relating to the federal tax consequences of the issuance of the Offered
Certificates will be passed upon for the Transferor by Skadden, Arps,
Slate, Meagher & Flom LLP.
INDEX OF DEFINED TERMS
Accounts .........................................................S-1
Adjusted Invested Amount.............................................S-6
Available Cash Collateral Amount....................................S-38
Available Enhancement Amount........................................S-13
Available Final Distribution Amount.................................S-43
Available Principal Collections.....................................S-27
Available Reserve Account Amount....................................S-32
Average Receivables Outstanding.....................................S-20
Bank .........................................................S-1
Base Rate ........................................................S-41
Cash Collateral Account.......................................S-10, S-38
CCRFC .........................................................S-1
Class A Additional Interest.........................................S-33
Class A Adjusted Invested Amount...............................S-6, S-30
Class A Available Funds.............................................S-26
Class A Certificateholders' Interest.................................S-5
Class A Certificates............................................S-1, S-4
Class A Floating Percentage.........................................S-29
Class A Initial Invested Amount......................................S-4
Class A Invested Amount........................................S-5, S-30
Class A Investor Charge-Off...................................S-12, S-39
Class A Investor Default Amount.....................................S-39
Class A Monthly Interest............................................S-34
Class A Outstanding Monthly Interest................................S-34
Class A Principal Percentage........................................S-29
Class A Required Amount.......................................S-10, S-32
Class A Scheduled Payment Date..................................S-2, S-8
Class A Servicing Fee...............................................S-42
Class A Underwriters................................................S-43
Class B Additional Interest.........................................S-34
Class B Adjusted Invested Amount...............................S-6, S-30
Class B Available Funds.............................................S-26
Class B Certificateholders' Interest.................................S-5
Class B Certificates............................................S-1, S-4
Class B Floating Percentage.........................................S-29
Class B Initial Invested Amount......................................S-4
Class B Invested Amount........................................S-6, S-30
Class B Investor Charge-Off...................................S-13, S-40
Class B Investor Default Amount.....................................S-39
Class B Monthly Interest............................................S-34
Class B Outstanding Monthly Interest................................S-34
Class B Principal Percentage........................................S-30
Class B Required Amount.......................................S-11, S-33
Class B Scheduled Payment Date..................................S-2, S-8
Class B Servicing Fee...............................................S-42
Class B Underwriters................................................S-43
Closing Date.........................................................S-4
Code ........................................................S-16
Collateral Additional Interest......................................S-36
Collateral Available Funds..........................................S-34
Collateral Charge-Off...............................................S-40
Collateral Default Amount.....................................S-35, S-40
Collateral Floating Percentage......................................S-29
Collateral Initial Invested Amount...................................S-4
Collateral Interest..................................................S-5
Collateral Interest Holder...........................................S-5
Collateral Interest Servicing Fee...................................S-42
Collateral Invested Amount.....................................S-6, S-30
Collateral Monthly Interest.........................................S-36
Collateral Monthly Principal........................................S-37
Collateral Principal Percentage.....................................S-30
Collateral Rate.....................................................S-36
Controlled Accumulation Amount......................................S-37
Controlled Accumulation Period.......................................S-8
Controlled Accumulation Period Length...............................S-27
Controlled Deposit Amount...........................................S-37
Covered Amount......................................................S-31
Deficit Controlled Accumulation Amount..............................S-37
Distribution Date..............................................S-2, S-25
Early Amortization Period............................................S-9
Eligible Deposit Account............................................S-31
Enhancement Invested Amount..........................................S-5
ERISA ........................................................S-16
Excess Spread.................................................S-11, S-35
Floating Allocation Percentage......................................S-28
Group I ........................................................S-14
Highest Bid ........................................................S-43
Initial Cash Collateral Amount......................................S-10
Initial Invested Amount..............................................S-4
Invested Amount......................................................S-5
Investor Default Amount.............................................S-39
Loan Agreement......................................................S-36
Monthly Report......................................................S-43
Monthly Servicing Fee...............................................S-42
Net Servicing Fee Rate..............................................S-42
Offered Certificateholders' Interest.................................S-5
Offered Certificates............................................S-1, S-4
Offered Series Supplement...........................................S-17
Paired Series.......................................................S-40
Pay Out Events......................................................S-41
Pooling and Servicing Agreement......................................S-1
Principal Allocation Percentage.....................................S-29
Principal Funding Account...........................................S-17
Principal Funding Account Balance.............................S-17, S-31
Principal Funding Investment Proceeds...............................S-31
Reallocated Principal Collections..............................S-8, S-32
Receivables .........................................................S-1
Record Date ........................................................S-25
Required Amount.....................................................S-11
Required Cash Collateral Amount.....................................S-38
Required Enhancement Amount...................................S-13, S-38
Required Reserve Account Amount.....................................S-31
Reserve Account.....................................................S-31
Reserve Account Funding Date........................................S-31
Revolving Period.....................................................S-8
Series Adjusted Invested Amount.....................................S-28
Series Adjusted Portfolio Yield.....................................S-41
Series Allocable Defaulted Amount...................................S-28
Series Allocable Finance Charge Collections.........................S-28
Series Allocable Principal Collections..............................S-28
Series Allocation Percentage........................................S-28
Series Cut-Off Date..................................................S-8
Series Required Transferor Amount....................................S-4
Servicer .........................................................S-1
Servicer Interchange................................................S-42
Servicing Base Amount...............................................S-42
Servicing Fee Rate..................................................S-42
Stated Series Termination Date.......................................S-8
Total Enhancement.............................................S-14, S-38
Transferor .........................................................S-1
Transferor's Interest................................................S-5
Trust ....................................................S-1, S-4
Trust Portfolio.....................................................S-19
Trustee .........................................................S-1
Underwriters........................................................S-43
Underwriting Agreement..............................................S-43
Yield Supplement Account......................................S-10, S-38
============================================================================
No dealer, salesman or other person has been authorized to give any
information or to make any representations not contained in this Prospectus
Supplement or the accompanying Prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized by the Transferor. Neither this Prospectus Supplement nor the
accompanying Prospectus constitutes an offer or a solicitation by anyone in
any state in which such offer or solicitation is not qualified or to anyone
to whom it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus Supplement or the accompanying Prospectus, nor
any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Transferor
since the date hereof or thereof or that the information contained or
incorporated by reference herein or therein is correct as of any time
subsequent to its date.
---------------
TABLE OF CONTENTS
Prospectus Supplement
Page
Summary of Series Terms...... S-4
Risk Factors................. S-17
Maturity Considerations...... S-17
The Bank Portfolio........... S-19
The Receivables.............. S-24
Use of Proceeds.............. S-25
The Servicer................. S-25
Series Provisions............ S-25
Underwriting................. S-43
Legal Matters................ S-45
Index of Defined Terms....... S-46
Prospectus
Prospectus Supplement........ v
Reports to Certificateholders v
Available Information........ v
Incorporation of Certain
Documents by................
Reference................... v
Prospectus Summary........... 1
Risk Factors................. 17
Use of Proceeds.............. 25
The Trust.................... 26
Credit Card Activities....... 26
The Bank..................... 31
Credit Card Receivables
Funding Corporation.......... 31
The Accounts................. 31
Description of the
Certificates................. 32
Description of the Pooling
and Servicing Agreement...... 40
Description of the Purchase
Agreements................... 60
Certain Legal Aspects of the
Receivables.................. 61
U.S. Federal Income Tax
Consequences................. 65
ERISA Considerations......... 70
Plan of Distribution......... 73
Legal Matters................ 74
Index of Defined Terms....... 75
Until _____ (90 days after the date of this Prospectus Supplement), all
dealers effecting transactions in the Offered Certificates whether or not
participating in this distribution, may be required to deliver a Prospectus
Supplement and Prospectus. This is in addition to the obligation of dealers
to deliver a Prospectus Supplement and Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
=============================================================================
BankBoston Credit
Card Master Trust
$ % Class A
Series 1997-1
Asset Backed Certificates
$ % Class B
Series 1997-1
Asset Backed Certificates
CREDIT CARD RECEIVABLES
FUNDING CORPORATION
Transferor
BANKBOSTON (NH),
NATIONAL ASSOCIATION
Servicer
---------------
PROSPECTUS SUPPLEMENT
, 1997
---------------
Underwriters of the Class A Certificates
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Underwriters of the Class B Certificates
Merrill Lynch, Pierce, Fenner & Smith Incorporated
=============================================================================
EXHIBIT 5.1
, 1997
Credit Card Receivables
Funding Corporation
157 Main Street
Nashua, NH 03060
Re: Registration Statement on Form S-3
(Registration No. 333-29495)
Ladies and Gentlemen:
We have acted as counsel to Credit Card
Receivables Funding Corporation, a Delaware corporation
(the "CCRFC"), in connection with the transfer of
receivables ("Receivables") generated from time to time
in a portfolio of VISA and MasterCard revolving credit
card accounts by CCRFC to The Bank of New York, as
trustee (the "Trustee") for BankBoston Credit Card Master
Trust (the "Trust") to be formed pursuant to a Pooling
and Servicing Agreement (the "Pooling and Servicing
Agreement") among CCRFC, as transferor and BankBoston
(NH), National Association (the "Bank"), as servicer of
the Receivables, and the Trustee, as amended, in exchange
for certain Asset Backed Certificates (the
"Certificates"), each such Certificate evidencing a
fractional undivided interest in the Trust, which
Certificates will be offered and sold pursuant to the
Registration Statement filed on Form S-3 (Registration
No. 333-29495), as amended from time to time (the
"Registration Statement") being filed concurrently
herewith under the Securities Act of 1933.
In connection herewith, we have examined and
relied upon the forms of the Pooling and Servicing
Agreement, the Series 1997-1 Supplement and the
Underwriting Agreement filed as exhibits to the
Registration Statement. We also have examined such
corporate records, certificates and other documents, and
reviewed such questions of law as we deemed appropriate.
In rendering the following opinions, we have
assumed the accuracy and truthfulness of all public
records of the Bank and of all certifications, documents
and other proceedings examined by me that have been
produced by officials of the Bank acting within the scope
of their official capacities, without verifying the
accuracy or truthfulness of such representations. We
also have assumed the genuineness of such signatures
appearing upon such public records, certifications,
documents and proceedings. In addition, we have assumed
that the Underwriting Agreement will be executed and
delivered in substantially the form filed as an exhibit
to the Registration Statement, and that the Certificates
will be sold as described therein.
Members of our firm are admitted to the Bar of
the State of Delaware, and we do not express any opinion
as to the laws of any other jurisdiction other than the
federal laws of the United States of America and the laws
of Delaware.
Based upon and subject to the foregoing, it is
our opinion that when a particular series of Certificates
to be issued under the Registration Statement has been
duly and validly authorized by the Bank, and when such
Certificates are executed by the Trustee in accordance
with the provisions of the Pooling and Servicing
Agreement and are paid for by the Underwriters pursuant
to the Underwriting Agreement, such series of
Certificates will be legally issued, fully paid and non-
assessable.
We hereby consent to the filing of this opinion
as an exhibit to the Registration Statement and to the
reference to us under the heading "Legal Matters" in the
Prospectus included in the Registration Statement without
implying or admitting that we are an "expert" within the
meaning of the Securities Act of 1933, as amended, or
other rules and regulations of the Securities Act of
1933, as amended, or other rules and regulations of the
Securities and Exchange Commission issued thereunder with
respect to any part of the Registration Statement
including this exhibit.
Sincerely,
August 22, 1997
Credit Card Receivables Funding Corporation
157 Main Street
Nashua, New Hampshire 03060
Re: Amendment No. 2 to Registration
Statement No. 333-29495 on Form S-3
relating to BankBoston Credit Card
Master Trust
Ladies and Gentlemen:
In connection with the filing of Amendment No.
2 to the registration statement on Form S-3 (No. 333-
29495) relating to BankBoston Credit Card Master Trust
(together with all amendments thereto, the "Registration
Statement") with the Securities and Exchange Commission
contemporaneously herewith, you have requested our
opinion regarding certain descriptions of tax
consequences contained in the form of prospectus (the
"Prospectus") included in the Registration Statement.
Our opinion is based on an examination of the
Prospectus, the form of Pooling and Servicing Agreement
between Credit Card Receivables Funding Corporation as
Transferor, BankBoston (NH), National Association as
Servicer and The Bank of New York as Trustee (the
"Agreement"), the form of Series Supplement to the
Agreement (the "Series Supplement"), and such other
documents, instruments and information as we considered
necessary. Our opinion is also based upon the Internal
Revenue Code of 1986, as amended, administrative rulings,
judicial decisions, Treasury regulations and other
applicable authorities. The statutory provisions,
regulations and interpretations on which our opinion is
based are subject to changes, and such changes could
apply retroactively. In addition, there can be no
assurance that positions contrary to those stated in our
opinion may not be taken by the Internal Revenue Service.
Based on the foregoing, we hereby confirm that
the statements in the Prospectus under the headings
"Prospectus Summary-Tax Status," and "U.S. Federal Income
Tax Consequences," subject to the qualifications set
forth therein, accurately describe the material Federal
income tax consequences to holders of the offered
Certificates, under existing law and the assumptions
stated therein.
We express no opinion with respect to the
matters addressed in this letter other than as set forth
above.
We also note that the Prospectus, the Agreement
and the Series Supplement do not relate to a specific
transaction. Accordingly, the above-referenced
description of Federal income tax consequences may, under
certain circumstances, require modification in the
context of an actual transaction.
We consent to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
