AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 14, 1997
REGISTRATION NO. 333-29495
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION
Originator of the Trust described herein
Exact name of registrant as specified in its charter
PARTNERS FIRST 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)
PARTNERS FIRST 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
BankBoston Corporation and 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
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
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. ( )
CALCULATION OF REGISTRATION FEE
TITLE OF EACH AMOUNT TO PROPOSED PROPOSED AMOUNT OF
CLASS OF BE MAXIMUM MAXIMUM REGISTRATION
SECURITIES TO REGISTERED OFFERING OFFERING FEE
BE REGISTERED PRICE PRICE (1)
PER UNIT (1)
Asset Backed
Certificates $1,000,000 100% $1,000,000 $303.03(2)
(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.
[FLAG]
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 NOVEMBER 14, 1997
P R O S P E C T U S
PARTNERS FIRST CREDIT CARD MASTER TRUST
ASSET BACKED CERTIFICATES
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION
TRANSFEROR
PARTNERS FIRST NATIONAL BANK
SERVICER
_______________
Partners First Receivables Funding Corporation ("PFRFC"), 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 Partners First Credit Card Master Trust (the "Trust"), to be
created pursuant to a pooling and servicing agreement (the "Pooling
and Servicing Agreement") among the Transferor, Partners First
National Bank (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 PFRFC and then
transferred by PFRFC 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 24 HEREIN.
_______________
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT INTERESTS IN OR RECOURSE 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 __________, 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 . . . . . . . . . . . . . . . . . . . . . . . . 25
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . 35
THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . 35
CREDIT CARD ACTIVITIES . . . . . . . . . . . . . . . . . . . 35
General . . . . . . . . . . . . . . . . . . . . . . . . 35
Business Strategy . . . . . . . . . . . . . . . . . . . 36
Processing and Servicing of Credit Card Accounts . . . . 37
Account Origination . . . . . . . . . . . . . . . . . . 38
Underwriting Procedures . . . . . . . . . . . . . . . . 38
Additional Accounts . . . . . . . . . . . . . . . . . . 39
Billing and Payments . . . . . . . . . . . . . . . . . . 39
Interchange . . . . . . . . . . . . . . . . . . . . . . 41
Collection of Delinquent Accounts . . . . . . . . . . . 41
Recoveries . . . . . . . . . . . . . . . . . . . . . . . 42
Fraud Prevention . . . . . . . . . . . . . . . . . . . . 43
THE BANK . . . . . . . . . . . . . . . . . . . . . . . . . . 43
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION . . . . . . . 43
THE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . 43
DESCRIPTION OF THE CERTIFICATES . . . . . . . . . . . . . . . 44
General . . . . . . . . . . . . . . . . . . . . . . . . 44
Book-Entry Registration . . . . . . . . . . . . . . . . 45
Definitive Certificates . . . . . . . . . . . . . . . . 47
Interest . . . . . . . . . . . . . . . . . . . . . . . . 48
Principal . . . . . . . . . . . . . . . . . . . . . . . 48
Pay Out Events and Reinvestment Events . . . . . . . . . 50
Servicing Compensation and Payment of Expenses . . . . . 51
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENT . . . . . 52
Conveyance of Receivables . . . . . . . . . . . . . . . 52
Representations and Warranties . . . . . . . . . . . . . 53
The Transferor Certificates . . . . . . . . . . . . . . 55
Additions of Accounts or Participation Interests . . . . 55
Removal of Accounts . . . . . . . . . . . . . . . . . . 56
Discount Option . . . . . . . . . . . . . . . . . . . . 56
Yield Supplement Account . . . . . . . . . . . . . . . . 57
Premium Option . . . . . . . . . . . . . . . . . . . . . 57
Indemnification . . . . . . . . . . . . . . . . . . . . 58
Collection and Other Servicing Procedures . . . . . . . 58
New Issuances . . . . . . . . . . . . . . . . . . . . . 59
Collection Account . . . . . . . . . . . . . . . . . . . 61
Allocations . . . . . . . . . . . . . . . . . . . . . . 61
Groups of Series . . . . . . . . . . . . . . . . . . . . 62
Reallocations Among Certificates of Different Series
within a Reallocation Group . . . . . . . . . . . . 63
Sharing of Excess Finance Charge Collections Among
Excess Allocation Series . . . . . . . . . . . . . 64
Shared Principal Collections . . . . . . . . . . . . . . 65
Paired Series . . . . . . . . . . . . . . . . . . . . . 65
Special Funding Account . . . . . . . . . . . . . . . . 65
Funding Period; Pre-Funding Account . . . . . . . . . . 66
Defaulted Receivables; Rebates and Fraudulent Charges . 66
Credit Enhancement . . . . . . . . . . . . . . . . . . . 67
Interest Rate Swaps and Related Caps, Floors and
Collars . . . . . . . . . . . . . . . . . . . . . . 69
Servicer Covenants . . . . . . . . . . . . . . . . . . . 69
Certain Matters Regarding the Servicer . . . . . . . . . 70
Servicer Default . . . . . . . . . . . . . . . . . . . . 70
Evidence as to Compliance . . . . . . . . . . . . . . . 71
Amendments . . . . . . . . . . . . . . . . . . . . . . . 72
List of Certificateholders . . . . . . . . . . . . . . . 72
The Trustee . . . . . . . . . . . . . . . . . . . . . . 72
DESCRIPTION OF THE PURCHASE AGREEMENTS . . . . . . . . . . . 73
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES . . . . . . . . . . 74
Transfer of Receivables . . . . . . . . . . . . . . . . 74
Certain Matters Relating to Insolvency . . . . . . . . . 75
Consumer Protection Laws . . . . . . . . . . . . . . . . 78
Proposed Legislation . . . . . . . . . . . . . . . . . . 78
U.S. FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . . 78
General . . . . . . . . . . . . . . . . . . . . . . . . 78
Characterization of the Certificates as Indebtedness . . 79
Taxation of Interest Income of Certificateholders . . . 79
Sale of a Certificate . . . . . . . . . . . . . . . . . 80
Tax Characterization of the Trust . . . . . . . . . . . 81
FASIT . . . . . . . . . . . . . . . . . . . . . . . . . 82
Foreign Investors . . . . . . . . . . . . . . . . . . . 82
STATE AND LOCAL TAXATION . . . . . . . . . . . . . . . . . . 84
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . 84
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . 86
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 87
INDEX OF DEFINED TERMS . . . . . . . . . . . . . . . . . . . 88
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 Partners First National
Bank; 220 Continental Drive, Suite 208, Newark, Delaware 19713;
Attention: Chief Financial Officer. Telephone requests for such
copies should be directed to (302) 283-3000.
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
86 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 . . . . . . . . Partners First 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 . . . . . . . Partners First National Bank, 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"). 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
certain of its servicing duties to
First Data Resources, Inc. ("FDR").
See "Description of the Certificates
Servicing Compensation and Payment
of Expenses."
Trustee . . . . . . . . The Bank of New York (the
"Trustee"), a New York banking
corporation.
Transferor . . . . . . Partners First Receivables Funding
Corporation ("PFRFC"), a Delaware
corporation and a special purpose
wholly owned subsidiary of Partners
First Receivables, LLC, ("PFR") a
Delaware limited liability company,
as transferor (in such capacity, the
"Transferor").
Account Originators . . On the date of issuance of the first
Series of Certificates (the
"Initial Series Closing Date")
BankBoston (NH), National
Association ("BKB"), a national
banking association organized
under the laws of the United
States, and Harris Trust and
Savings Bank, a bank chartered
under the laws of the State of
Illinois ("Harris") each will
contribute certain identified
credit card accounts to
Partners First Holdings, LLC
("Holdings"), a limited
liability company organized
under the laws of the State of
Delaware. BKB and Harris will
effect such contribution by
transferring (i) to Holdings
the list of the names and
addresses of the cardholders
and certain other proprietary
information related to such
accounts and (ii) to the Bank,
which is a wholly owned
subsidiary of Holdings, the
credit card accounts. The
transfer of accounts to the
Bank will be made at the
direction Holdings. The Bank
will enter into an agreement
with Holdings pursuant to which
the Bank will obtain an
exclusive license to use the
list of cardholder names and
addresses and other proprietary
information in connection with
its credit card business and
the servicing of the accounts.
Immediately upon giving effect
to such transactions, the Bank
will be entitled to exercise
all of the rights of the owner
of the accounts.
Holdings will be formed on the
Initial Series Closing Date pursuant
to a Master Agreement for the
Formation of a Limited Liability
Company, dated as of September 2,
1997 (the "Master Formation
Agreement"), among BankBoston
Corporation ("BankBoston"), a
Massachusetts corporation, of which
BKB is a subsidiary, Bankmont
Financial Corp., a Delaware
corporation ("Bankmont"), Harris,
which is an indirect subsidiary of
Bankmont, and First Annapolis
Consulting, Inc., a Maryland
corporation ("First Annapolis").
After consummation of the
transactions contemplated by the
Master Formation Agreement,
including the contributions of BKB
and Harris described in the
preceding paragraph, the owners of
Holdings will be BankBoston,
Bankmont, First Annapolis and
certain individuals and entities
associated with First Annapolis.
Bankmont, BankBoston, and First
Annapolis together with such related
individual and entities will have a
69%, 19% and 12% interest
respectively, in the common equity
of Holdings.
Following the Initial Series Closing
Date, the Bank will originate credit
card accounts directly. As used
herein, "Account Originator" means
BKB, Harris, the Bank and any other
originator of consumer revolving
credit card accounts designated as
Accounts, the Receivables arising
under which will be included in the
Trust.
Transfer of Receivables Immediately following the foregoing
transactions, BKB will sell to the
Bank approximately $
aggregate principal amount of
Receivables and Harris will sell to
the Bank approximately $
aggregate principal amount of
Receivables. The Bank in turn will
sell the Receivables acquired from
BKB and Harris to PFR and BKB and
Harris will sell approximately
$__________ and approximately $
, aggregate principal amount
of Receivables, respectively,
directly to PFR. Upon giving effect
to such transactions PFR will have
acquired approximately $
aggregate principal amount of
Receivables on the Initial Series
Closing Date (the "Initial
Receivables").
Holdings may from time to time in
the future enter into arrangements
with other Account Originators
similar to the arrangements entered
into with BKB and Harris. The
decision to enter into any such
similar arrangements will be based
on a number of factors, including
pricing and portfolio
characteristics and competition from
entities similar to Holdings. Any
such Account Originator will
contribute to Holdings a list
identifying the relevant cardholders
and certain other proprietary
information in exchange for an
equity interest in Holdings, and in
connection with such contributions
will transfer the credit card
accounts to the Bank. Upon giving
effect to any such transactions, the
Bank will be the owner of such
accounts. Any such accounts may
only be designated as Accounts, the
related Receivables under which will
be included in the Trust upon
satisfaction of certain conditions,
including, among others, that (i) as
of the date on which such accounts
are to be included as Accounts, such
Accounts and the related Receivables
meet the eligibility requirements
set forth in the related Purchase
Agreement and in the Pooling and
Servicing Agreement and (ii) except
under specified circumstances, that
the Rating Agency Condition shall
have been satisfied. See "The
Accounts" and "Description of the
Pooling and Servicing Agreement --
Representations and Warranties" and
"--Additions of Accounts or
Participation Interests" herein.
Pursuant to the receivables purchase
agreement to be entered into between
the Bank and PFR (the "PFR Purchase
Agreement") and the receivables
purchase agreement to be entered
into between PFR and the Transferor
(the "Transferor Purchase Agreement"
and, together with the PFR Purchase
Agreement and the Account Originator
Purchase Agreement, the "Purchase
Agreements"), the Bank will sell to
PFR and then PFR will sell to the
Transferor, all of their respective
right, title and interest in and to
(i) the Initial Receivables, (ii)
all of the Receivables created in
the Initial Accounts following the
Initial Series Closing Date and
(iii) the Receivables in each
Additional Account, which may
include Accounts originated by an
Account Originator other than BKB or
Harris, 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 addition, pursuant to
their respective Purchase
Agreements, the Bank has assigned to
PFR and PFR has assigned to the
Transferor the right to Recoveries
(as defined herein) and Interchange
(as defined herein) 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 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.
Trust Assets . . . . . The assets of the Trust (the "Trust
Assets") include the receivables
("Receivables") arising under
certain VISA and MasterCard *
revolving credit card accounts (the
"Accounts"), and the proceeds
thereof, including recoveries on
charged-off Receivables
("Recoveries"), 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
-------------------------
* VISA and MasterCard are registered trademarks of VISA USA,
Inc. ("VISA") and MasterCard International Incorporated
("MasterCard"), respectively.
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,
(c) the holders of any
Participations and (d) 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, the
interest of any holder of a
Participation 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 four
types of certificates: (a) one or
more Series of Certificates, (b)
Participations representing
participation interests in the
Receivables, as described below, (c)
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 (d)
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." On
the Initial Series Closing Date, the
Transferor will issue a Supplemental
Certificate to an affiliate of the
Transferor.
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 Pooling and Servicing Agreement
provides that, pursuant to any one
or more supplements to the Pooling
and Servicing Agreement (each, a
"Participation Supplement"), the
Transferor may direct the Trustee to
issue on behalf of the Trust one or
more participations (each, a
"Participation"), to be delivered to
or upon the order of the Transferor
upon the satisfaction of certain
conditions described herein under
"Description of the Pooling and
Servicing Agreement New Issuances."
The Accounts . . . . . The Accounts generally consist of
VISA and MasterCard consumer
revolving credit card accounts owned
by the Bank 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 owned by
Holdings and controlled and held by
the Bank unless transferred as
described herein. See "Credit Card
Activities" and "Description of the
Purchase Agreements."
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 originated or
purchased by BKB or Harris and
transferred to the Bank on the
Initial Series Closing Date. 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."
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 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 Bank to PFR and by PFR 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
Series of 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 and to the
extent that any amounts are
specified in any Participation
Supplement to be treated as Shared
Principal Collections, such amounts
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 and any Participations
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, the holders of any
Participations 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. The Bank will be formed on or
about the Initial Series Closing Date and will have no operating
history. The Bank will begin originating credit card accounts
upon the grant of all necessary regulatory approvals and upon
obtaining membership in VISA U.S.A. Inc. and MasterCard
International Incorporation and subsequent consummation of
solicitation operations by Holdings on behalf of the Bank, and
thus has no underwriting or servicing experience, or delinquency,
default and loss experience with respect to credit card accounts,
other than through BKB and Harris. BKB began originating and
servicing credit card accounts in September 1995. BKB thus has
limited underwriting and servicing experience, and limited
delinquency, default and loss experience with respect to the
Accounts. As of the Initial Cut-Off Date, approximately __% of
the Receivables designated to be included in the Trust were
originated or purchased by BKB.
The average age of a credit card issuer's portfolio of
accounts is an indicator of the stability of delinquency and loss
levels of that portfolio. A portfolio of older accounts
generally behaves more predictably than a newly originated
portfolio. As of the Initial Cut-Off Date, approximately two
thirds of the credit card accounts to be transferred to the Trust
upon formation that were originated or purchased by BKB were
originated within the last 25 months and over 42% of such Accounts
were originated within the last 12 months. As of the Initial
Cut-Off Date, approximately __% of the credit card accounts
originated by Harris were originated within the last 12 months.
The credit card accounts originated or purchased by BKB will
represent a significant portion of the Trust's initial portfolio.
The levels of such delinquencies and losses may increase as the
average age of the Accounts increases, until the Accounts become
more seasoned.
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.
Portfolio Acquisitions. A significant portion of the
anticipated growth of the Trust Assets will depend on the Bank's
ability to identify, negotiate and complete Alliances and
portfolio acquisitions on a timely basis and successfully
integrate managed or acquired portfolios into the Trust. Failure
to do so could have a material adverse effect on the Trust. Any
acquisition or Alliance involves inherent uncertainties and
risks, such as the effect on the acquired assets of integration
with the existing Trust Assets, the availability of management
resources of the Servicer to oversee operations with respect to
the managed or acquired assets, and different demographic
characteristics of holders of managed or acquired accounts.
Integrating managed and acquired account portfolios with the
Trust's existing portfolio will require a significant amount of
the Servicer's management's time and skill and may place
significant demands on the Servicer's operations and financial
resources. Although an acquired portfolio may have had certain
levels of delinquencies and losses prior to the acquisition,
there can be no assurance that such levels of delinquencies and
losses would continue thereafter. There can be no assurance that
Holdings or the Bank will be able to locate appropriate
acquisition candidates, that any identified candidates will
ultimately be acquired or that acquired portfolios will be
effectively integrated with the Trust's existing portfolio.
There can be no assurance that the financing necessary to
complete acquisitions can be obtained by Holdings or the Bank on
favorable terms, if at all. See "Credit Activities Business
Strategy"
Reliance on First Data Resources Inc. The Bank will
delegate the majority of both its credit card processing and
account servicing functions to Holdings, which in turn has
contracted with FDR, to perform those functions under a [six-
year], automatically renewable contract entered into in [November
1997]. Under the terms of this contract, the Bank will be
required to obtain some of these services from FDR on an
exclusive basis. If FDR should fail to perform its functions or
become insolvent or if the agreement is terminated, a Pay Out
Event could occur and delays in payments on the Receivables and
possible reductions in the dollar amounts thereof could also
occur. See "Credit Card Activities -- Processing and Servicing
of Credit Card Accounts."
Non-Recourse to the Account Originators, the Bank, PFR, the
Transferor or Affiliates Thereof. No Certificateholder will have
recourse for payment of its Certificates to any assets of the
Account Originators, the Bank, PFR, 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
Account Originators, the Bank, PFR, 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 Originator, the Bank and PFR represents and
warrants in the applicable Purchase Agreement that the transfer
of all Receivables pursuant thereto to the applicable purchaser
is a valid sale and assignment of such Receivables from such
party to such purchaser. In addition, each Account Originator,
the Bank, PFR and the Transferor have agreed that if,
notwithstanding their intent, the respective sales of Receivables
are not treated as sales, the respective Purchase Agreements will
be deemed to create a security interest in the Receivables.
With respect to Receivables conveyed by an Account
Originator to the Bank or to PFR and with respect to Receivables
conveyed by the Bank to PFR, in a receivership or conservatorship
of the Account Originator or of the Bank, if the conveyance of
Receivables by such Account Originator or the Bank, as the case
may be, is not treated as a sale, but is deemed to create a
security interest in the Receivables conveyed, the Bank's and
PFR's interest (in the case of a receivership or conservatorship
of an Account Originator) or PFR's interest (in the case of a
receivership or conservatorship of the Bank) in such Receivables
may be subject to tax or other governmental liens relating to the
Account Originator or to the Bank, as applicable, arising before
the subject Receivables came into existence and to certain
administrative expenses of the receivership, conservatorship or
bankruptcy proceeding. Each of the Account Originators has taken
or will take certain actions required to perfect the Bank's
interest or PFR's interest, as applicable, in the Receivables
conveyed by such Account Originator. The Bank has taken or will
take certain actions required to perfect PFR's interest in the
Receivables conveyed by the Bank to PFR.
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 Originator or the Bank. However, notwithstanding the
insolvency of, or the appointment of a receiver or conservator
for, an Account Originator or for the Bank, subject to certain
qualifications, a valid perfected security interest of the Bank
in the Receivables conveyed to it by the Account Originator, or
of PFR in the Receivables conveyed to it by an Account Originator
or by the Bank, should be enforceable (to the extent of the
Bank's or PFR's, as applicable, "actual direct compensatory
damages" (as described below)) and payments to the Bank or to
PFR, as applicable, with respect to the subject 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 Bank or PFR, to establish
its right to those payments by submitting to and completing the
administrative claims procedure established under FIRREA, or the
conservator or receiver were to request a stay of proceedings
with respect to the Account Originator or the Bank, as
applicable, 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 Bank's or PFR's "actual direct compensatory
damages" in the event a conservator or receiver of an Account
Originator or the Bank, as applicable, repudiated the Purchase
Agreement pursuant to which the subject Receivables were
conveyed, 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.
With respect to Receivables conveyed by PFR to the
Transferor, if PFR were to become subject to a bankruptcy
proceeding and the conveyance of Receivables by PFR to the
Transferor is not treated as a sale, but is deemed to create a
security interest in the Receivables conveyed, the Transferor's
interest in such Receivables may be subject to tax or other
governmental liens relating to PFR arising before the Receivables
came into existence and to certain administrative expenses of the
bankruptcy proceeding. PFR has taken or will take certain
actions required to perfect the Transferor's interest in the
Receivables conveyed to it by the Bank.
In a receivership or conservatorship of an Account
Originator or the Bank, or in a bankruptcy proceeding involving
PFR, if a receiver or conservator for the Account Originator or
for the Bank, or if a bankruptcy trustee for PFR, PFR as debtor
in possession, or a creditor of PFR were to take the view that
the transfer of the Receivables from PFR to the Transferor should
be recharacterized as a pledge of such Receivables, then delays
in payments on the Certificates or (should the bankruptcy court
rule in favor of any such trustee, debtor in possession or
creditor) reductions in such payments on such Certificates could
result. In addition, in a bankruptcy proceeding involving
Holdings or PFR, if a bankruptcy trustee for Holdings, Holdings
as debtor in possession, or a creditor of Holdings, or if a
bankruptcy trustee for PFR, PFR as debtor in possession, or a
creditor of PFR were to take the view that any of Holdings, PFR
or the Transferor should be substantively consolidated, then
delays in payments on the Certificates or (should the bankruptcy
court rule in favor of any such trustee, debtor in possession or
creditor) reductions in such payments on such Certificates could
result.
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 the Certificateholders of each
Series, the holders of any Participations and the Transferor.
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 Originators, the Bank and PFR make similar
representations and warranties with respect to the Receivables
conveyed by each such party. 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 assigned to the Servicer or reassigned to the Transferor
(for reassignment, in turn, to PFR). 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. On the Initial Series Closing Date, the
credit card account relationships for each of the Accounts will
be transferred to Holdings. There can be no assurance that
holders of BKB and Harris credit cards whose accounts are
transferred to Holdings will be willing to maintain their credit
card relationship with Holdings. The failure of Holdings or the
Bank to retain sufficient numbers of these account relationships
could have a material adverse effect on the Trust. 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
Transferor Purchase Agreement provides that PFR and the
Transferor 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 PFR 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 Bank to generate new Receivables. If the rate at
which new Receivables are generated declines significantly and
the Transferor and PFR 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 Bank.
Ability of the Bank 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. The Bank has 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, the Bank 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, the Bank also agrees that, unless required by law and
except as provided above, the Bank 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, the Bank reasonably believes will have a material adverse
effect on PFR and the Transferor and the Certificateholders, as
assignees. 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 Agreements on the ability of the Bank 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 the Bank 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 the Transferor and PFR may be required
from time to time 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.
Premium Option. Under the Pooling and Servicing Agreement
the Transferor may, by exercising the Premium Option, at any time
or from time to time designate a specified percentage of the
amount of Receivables arising in all or a specified portion of
the Accounts that otherwise would be treated as Finance Charge
Receivables to be treated as Principal Receivables. The
Transferor might exercise the Premium 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. Exercise of the Premium Option by the
Transferor could result in a reduction of the portfolio yield
with respect to collections of Finance Charge Receivables thereby
reducing amounts initially allocated to make interest payments
with respect to the Certificates and cover losses allocated to
the Certificates. See "Description of the Pooling and Servicing
Agreement Premium Option."
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 the
Account Originators or the Bank 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, PFR, the Bank or
any Account Originator. 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 the Bank which,
as of the respective date of designation, (a) is a revolving
credit card account in existence and maintained by the Bank, (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) is not sold or pledged to any other party except for any sale
by an Account Originator to the Bank or to an Account Originator
that has entered into a receivables purchase agreement, the Bank
or PFR (g) does not have receivables which have been sold or
pledged by the related Account Originator to any other party
other than the Bank or PFR, (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 Bank, 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 PFR the purchase price of the Receivables, which
in turn will apply such amounts to pay the Bank and the Account
Originators the purchase price of the Receivables acquired from
such parties.
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,
Participations 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 and MasterCard
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 PFR 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
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 contributed by BKB (the
"BKB Portfolio") and Harris (the "Harris Portfolio"). The BKB
Portfolio includes all of its accounts with the exception of
those accounts of cardholders having other banking relationships
or potential banking relationship with BKB or its affiliates
including cardholders with billing addresses in Massachusetts,
Rhode Island, Connecticut and New Hampshire and student, VIP and
foreign accounts. The Harris Portfolio includes all of its
credit card accounts except corporate accounts and secured
accounts. The Receivables also will include all fees billed to
the Accounts. The Accounts were generated under the VISA and
MasterCard associations of which BKB and Harris are members. The
Accounts and Receivables will primarily be serviced by First Data
Resources, Inc. ("FDR").
The BKB Portfolio and the Harris Portfolio include 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 cardholders of standard accounts. For the BKB
originated accounts, the Bank applies the same finance charges to
its premium and standard accounts. In general, for the Harris
Portfolio, premium accounts are priced at a lower annual
percentage rate than standard accounts; however, there are
exceptions based on risk profile and cardholder behavior. With
regard to both portfolios, 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 their account at the Bank. Balance
consolidations, which have been treated by BKB in the same manner
as purchases and by Harris as cash advances, may be done by
cardholders either at the time an account is originated or
anytime thereafter. The Bank will treat balance consolidations
for the BKB Portfolio in the same manner as purchases and by the
end of 1998, consistent with the conversion of the Harris
Portfolio to the FDR platform, the Bank will treat balance
consolidations for the Harris Portfolio in the same manner as
purchases. 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 are 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 will design and market its credit card program
based on an empirical analysis of the credit card business at the
level of the individual cardholder. The Bank will collect
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 which the Bank will consider include credit scores,
balance amounts, purchase types and amounts, finance charges paid
and other indicia of cardholder behavior over time.
The Bank intends to create alliances ("Alliances") with
credit card issuers ("Alliance Partners") who have concluded
that their current size and operational capacities are too
limited to allow them to maintain successful credit card
businesses on a stand alone basis. By entering into an Alliance
with the Bank, Alliance Partners will obtain economies of scale
through outsourcing or partnering with the Bank and will be able
to maintain their visibility and competitiveness in the credit
card industry. The Bank believes that the formation of a
typical Alliance would involve the selling of the Alliance
Partner's non-strategic accounts to the Bank for fair market
value and the retention by the Alliance Partner of those assets
it considers strategic (e.g. relationship or regional accounts).
The Bank would provide management and advisory services for this
strategic portfolio through an exclusive servicing agreement for
all analysis, account origination, account management,
processing, back-office services, accounting and information
management support.
Entering into an alliance with the Bank would enable an
Alliance Partner to divest out-of-market, non-relationship and
other non-strategic credit card accounts and refocus its emphasis
on using the credit card as a mechanism to foster an overall
relationship strategy for its retail customers. Partnering with
the Bank to provide account origination and management services
for this strategic portfolio would enable the Alliance Partner to
continue to grow its retained portfolio and improve the long-term
financial performance of that portfolio. At the same time, the
Alliance Partner would typically retain control over key decision
areas such as brand strategy, credit policy, product pricing and
product packaging, which the Bank believes will be an extremely
important factor for many prospective Alliance Partners.
The Bank believes that this platform of growth based on an
Alliance strategy is unique in the industry, and will represent
an attractive alternative for many potential Alliance Partners.
In addition, the Bank profile as a specialized monoline entity
that does not compete in other areas of traditional banking may
assist it in achieving the image of a bank-friendly partner,
which the Bank believes will serve to enhance the attractiveness
of an Alliance relationship.
PROCESSING AND SERVICING OF CREDIT CARD ACCOUNTS
Historically, BKB delegated the processing and servicing of
its accounts exclusively to FDR. In addition, BKB utilized the
management services of First Annapolis Marketing Information
Services ("FAMIS") to perform functions related to credit policy
and risk management, marketing acquisition and account
management, data mining and FDR oversight.
Historically, the Harris Portfolio was serviced by Harris'
employees in Buffalo Grove, Illinois. As of the Initial Series
Closing Date, the accounts in the Harris Portfolio were
maintained on the system utilized by Harris prior to the Initial
Series Closing Date, which is the CardPac System. FDR has
recently acquired the Buffalo Grove facility, has hired its
employees and is servicing the Harris Portfolio. The Harris
Portfolio is expected to be converted to the FDR processing
system in the first half of 1998.
The Bank has delegated the majority of both the credit card
processing and account servicing functions to Holdings, which in
turn has contracted with FDR, a subsidiary of First Data Corp.
("FDC"), to perform those functions under a [six-year],
automatically renewable contract entered into in [November 1997].
The remainder of the processing and servicing work will be
performed by a combination of alternative vendors and in-house
staff. FDR facilities currently located in Omaha, Nebraska,
Tulsa, Oklahoma, Buffalo Grove, Illinois, Atlanta, Georgia,
Matteson, Illinois and Phoenix, Arizona are utilized to clear
transactions through the VISA and MasterCard systems, post
transactions to cardholder accounts, create billing statements,
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.
All database management functions, data mining activities,
predictive model creating and daily oversight of FDR and FDR
activities will be performed in-house by employees of Holdings as
of the Initial Series Closing Date.
ACCOUNT ORIGINATION
BKB began originating accounts in September 1995 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 BKB; (ii) direct mail solicitations
of individuals residing in the United States without
prescreening; (iii) outbound telemarketing programs and (iv)
applicant initiated requests made at the BKB's branch offices or
by telephone or via written letter. BKB applied the same credit
criteria without distinction among the foregoing sources of
applications, as described below in " Underwriting Procedures."
In addition, BKB 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., of which only $17,874,142 of Receivables will be
included in the Bank Portfolio.
In 1966, Harris began originating accounts through applicant
initiated requests. In 1983, Harris began soliciting new
cardholders through mass mailings from bureau extracts. Outbound
telemarketing programs conducted in 1994 and 1995 were an
additional source of applications for Harris. Credit policy, as
described below in "Underwriting Procedures" does not vary with
application source; however, it has varied over time. In
September 1990, Harris purchased a portfolio of credit card
accounts with approximately $207 million of outstanding
receivables from United Jersey Bank ("UJB") and currently
maintains an agent bank relationship with UJB. As of August
1997, the UJB portfolio comprised approximately 38,000 active
accounts and $81 million of receivables outstanding.
Going forward, the Bank will continue to originate accounts
through pre-approved and non-prescreened direct mail
solicitations to creditworthy consumers on a nationwide basis.
In addition, the Bank has plans to acquire accounts through the
selective acquisition of portfolios.
UNDERWRITING PROCEDURES
Historically, BKB and Harris reviewed all applications for
credit card accounts for completeness and creditworthiness based
on credit underwriting criteria established by each originator.
They used 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, they verified certain information regarding
applicants.
Going forward, the primary new account source for the Bank
will be prescreened direct mail solicitation of qualified
prospective cardholders. Underwriting criteria established by
the Bank will be utilized at the credit bureaus to generate a
list of qualifying prospective cardholders. The Bank will also
obtain 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 to
be 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 will evaluate 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 will be developed by
using statistics to evaluate common characteristics and their
correlation with credit risk. The credit scoring models used by
the Bank will often be reviewed and updated to reflect more
current statistical data.
The Bank will also use information obtained from various
third-party sources and its own internal database and then apply
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 will
be required to complete and return an acceptance certificate.
The information supplied by the potential cardholder on the
acceptance certificate will be used by the Bank to verify the
potential cardholder's credit information. As part of the
verification process the Bank will review a new credit bureau
report and credit score which will be updated based on the
information supplied by the applicant and established lending
criteria. Credit lines will be established after this
verification process has been completed and will be commensurate
with the new cardholder's updated credit profile, credit score
and income.
Non-prescreened applicants for credit cards will be reviewed
for completeness and accuracy. The Bank will credit score all
non-prescreened applicants utilizing a FICO supplied credit
scorecard. Applicants who score above or below pre-set
thresholds will be accepted or rejected accordingly. Applicants
whose credit score lies between these pre-set thresholds will be
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 will be assigned based upon the
cardholder's credit score, income and credit profile.
Generally, the Bank will issue credit cards that expire two
years after issuance and will reissue credit cards with two-year
expiration dates, so long as the payment behavior and usage 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
Bank 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 BKB
Portfolio are currently grouped into twenty-one billing cycles
and of the Harris Portfolio are currently grouped into twenty-
four billing cycles (each, a "Billing Cycle") ending on various
days throughout each month. Consistent with the conversion to
the FDR system in the first half of 1998, the Harris Portfolio
will be grouped into 21 Billing Cycles. 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 such cardholders. FDR sends a monthly
billing statement to each BKB Portfolio 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.
Monthly statements are sent to each Harris Portfolio cardholder
unless (i) the account has been charged off, (ii) the account has
a zero balance with no activity, (iii) the account is coded as
having a bankrupt or deceased cardholder, (iv) the account
activity has been confirmed as fraudulent or (v) the account has
had a credit balance for more than six months.
With respect to the BKB Portfolio, each month cardholders
generally are required to make at least a minimum payment (the
"Minimum Monthly 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.
With respect to the Harris Portfolio, the Minimum Monthly
Payment equals (i) for accounts where the current balance is less
than the credit limit, the greater of 1/36th of the current
balance (not including amounts in dispute) or $15.00 and (ii) for
accounts that are overlimit, the amount the account balance is
above the credit limit.
Going forward, the Bank's policy will mirror BKB's policy
for new accounts originated by the Bank and consistent with the
conversion of the Harris Portfolio to the FDR system, the Minimum
Monthly Payment for the Harris Portfolio will be consistent with
the BKB policy.
With regard to the BKB Portfolio, BKB reserves the option to
allow individual cardholders or groups of cardholders to skip
their Minimum Monthly Payments for one or more months in unusual
circumstances. 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 Bank's policy will mirror the previous BKB policy with
respect to both new accounts originated by the Bank and accounts
from the Harris Portfolio.
Currently, for both the BKB Portfolio and the Harris
Portfolio 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 for the BKB Portfolio (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 calculated on cash advances and purchases for the
Harris Portfolio on the date the transaction is posted to the
account. The monthly periodic finance charges in new accounts
originated by the Bank will mirror BKB policy. Following the
conversion of the Harris portfolio to the FDR platform, monthly
periodic finance charges will be calculated in consistency with
the BKB portfolio. 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 due date
specified in the monthly billing statement, 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 for virtually
every account are variable rates. For the BKB Portfolio, 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%. Spreads in the BKB Portfolio vary depending
on risk profile and cardholder behavior. For the Harris
Portfolio, the current annual percentage rate for both purchases
and cash advances is a variable rate based on The Wall Street
Journal prime rate plus a spread generally ranging from 5.90% to
7.90%. Spreads vary depending on account type (premium or
standard), risk profile and behavior.
For the BKB Portfolio, for accounts with an annual
membership fee, generally the annual membership fee is $18.00 for
standard accounts and $28.00 for premium accounts. Approximately
83% of BKB Portfolio Accounts are assessed an annual fee. BKB
reserves the right to waive the annual membership fee, or a
portion thereof, at its discretion, in connection with
solicitations for new accounts, or when BKB determines a waiver
to be necessary to operate its credit card business on a
competitive basis. For the Harris accounts with an annual
membership fee, generally the annual membership fee is $20.00 for
standard accounts and $35.00 for premium accounts. Approximately
13% of the Harris Portfolio accounts are assessed an annual fee.
Harris reserves the right to waive the annual membership fee, or
a portion thereof, at its discretion, in connection with
solicitations for new accounts, or when Harris determines a
waiver to be necessary to operate its credit card business on a
competitive basis. In general for the Harris Portfolio,
membership fees have not been waived. If a fee is billed and is
not paid, the account becomes delinquent and will be processed by
a collection representative. Generally, an account is closed
upon determining that the related cardholder is unwilling to pay
the fee. The annual membership fee for both the BKB and the
Harris Portfolio Accounts is non-refundable. The annual fee
policy for new accounts will mirror the previous BKB policy of
pricing cardholders according to their behavior and risk profile.
Harris accounts will be repriced gradually over time to achieve
consistency with this policy. However, certain Harris
relationship accounts may be given a more favorable structure.
With reference to the BKB Portfolio, in addition to the
annual membership fee, accounts are charged certain other fees
including: (i) a late fee, generally in the amount of $25.00 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 $25.00 and (iv) an over-the-limit fee, generally in the
amount of $25.00 with respect to any account more than a
specified amount over its credit limit at the time the monthly
billing statement is created. With reference to the Harris
Portfolio, in addition to the annual membership fee, accounts are
charged certain other fees including: (i) a late fee, generally
in the amount of $20.00 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 2.0% of the amount of the advance subject to
a minimum fee of $5.00 and a maximum of $15.00 per transaction,
unless the cash advance is done through an automatic teller
machine, in which case, the cash advance fee is $2.00, (iii) a
returned check charge, generally in the amount of $20.00 and (iv)
an over-the-limit fee, generally in the amount of $20.00 with
respect to any account more than a specified amount over its
credit limit at the time the monthly billing statement is
created. Finance charge policies for new accounts will mirror
the previous BKB policy of pricing cardholders according to their
behavior and risk profile. Harris accounts will be re-priced
gradually over time to achieve consistency with this policy.
With regard to the BKB Portfolio, payments by cardholders
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. Any
excess is applied to unbilled transactions in the order
determined by the Bank and then to unbilled finance charges.
With regard to the Harris Portfolio, payments are applied in the
following priority: (i) retail interest not paid, (ii) retail
past due and overlimit fees, (iii) retail insurance billed not
paid, (iv) retail membership fees billed not paid, (v) retail
current month's balance, (vi) retail statement balance, (vii)
cash interest billed not paid, (viii) cash service charge billed
not paid, (ix) cash current month's balance, and (x) cash
statement balance. By the end of the first half of 1998,
consistent with the conversion of the Harris Portfolio to the FDR
processing platform, Harris Portfolio cardholder payments will be
processed and applied in the same manner that BKB Portfolio was
processed and applied.
With regard to both portfolios, payments by cardholders 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 BKB or Harris, as applicable. 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.
With respect to pricing, the Bank intends to gradually re-
price the accounts in the Harris Portfolio according to policy
established and utilized for the BKB Portfolio. Annual fees and
annual percentage rates will be assigned to accounts based on
risk profile and cardholder behavior. It is expected that,
eventually, most accounts will be subject to the same late,
overlimit, cash advance and returned check fees. 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 Bank'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
With regard to both the Harris and BKB Portfolios, an
account is 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 was generally within five days
after the due date printed in the previous statement. For the
BKB Portfolio, delinquent accounts are routed to the pre-
collections system at FDC where they are prioritized and early
stage collection efforts were initiated. For the Harris
Portfolio, delinquent accounts are routed to the internal
collections tracking and analysis system on the CardPac System.
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. If 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 for the BKB Portfolio and thirty (30) days
past due for the Harris Portfolio, 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 would be
authorized for any reason. Each of BKB and Harris reserves the
right to enter into agreements with delinquent cardholders to
extend or otherwise change an account's payment schedule. A
delinquent account could 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 policy for both portfolios is to charge-off as
uncollectible any account which is six billing cycles past due
(i.e., 180 days delinquent). However, for the BKB Portfolio, if
notice is received 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.
For the Harris Portfolio, bankrupt and deceased accounts are
charged off manually every month. 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.
By the end of the first half of 1998, consistent with the
conversion of the Harris Portfolio to the FDR processing
platform, the collection of all delinquent accounts will be
performed consistent with BKB and Partners First originated
accounts.
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 collecting such amounts, which the Transferor
believes represents an immaterial portion of the total
collections with respect to the Receivables), 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.
For the BKB Portfolio, the Bank utilizes FDR's facilities to
administer the recovery of defaulted receivables. The Bank will
prioritize defaulted receivables according to the likelihood of
successful recovery and 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. For the Harris portfolio, Harris utilizes internal
facilities to administer the recovery of defaulted receivables.
However, by the end of the first half of 1998, consistent with
the conversion of the Harris Portfolio to the FDR processing
platform, FDR will administer the recovery of defaulted
receivables consistent with BKB's and the Bank's originated
accounts.
FRAUD PREVENTION
Historically, for both the BKB and Harris Portfolios, each
organization reviewed 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 were checked against information supplied by the
Issuers' Clearinghouse, a national fraud database maintained
jointly by VISA and MasterCard. For the BKB Portfolio, once an
account is approved, transactions are monitored by FDR which
scores each transaction based upon its likelihood of being
fraudulent. For the Harris Portfolio, the majority of fraud
functions were performed internally; however, both FDR and VISA
monitored transactions and attempted to identify potential
fraudulent activity. Potential fraudulent activity was
researched by investigators and, dependent upon their findings,
accounts may be blocked or closed. Going forward, the Bank's
fraud policy will be identical to that of BKB prior to the Bank's
existence.
THE BANK
Partners First National Bank is a national banking
association organized under the laws of the United States. Its
principal executive office is located at 220 Continental Drive,
Suite 208, Newark, Delaware 19713, and its telephone number is
302-283-3000. The Prospectus Supplement for each Series will
provide additional information relating to the Servicer.
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION
PFRFC was incorporated under the laws of the State of
Delaware on June 4, 1997 and is a special purpose wholly owned
subsidiary of PFR. 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
[75]% of the Eligible Accounts in the Bank Portfolio.
Pursuant to the Transferor Purchase Agreement and the
Pooling and Servicing Agreement, the Transferor has the right or
is obligated (subject to certain limitations and conditions) to
require and PFR is 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. PFR 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, PFR will represent and warrant to the Transferor
that the Receivables generated under the Additional Accounts meet
the eligibility requirements set forth in the 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
re-registration, 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. A Pay Out Event may occur with respect to any
specific Series upon the occurrence of any event specified in the
related Prospectus Supplement. Such events may include (i) the
Trust becoming subject to regulation as an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended, (ii) the failure by the Transferor to make any payment
or deposit required under the Pooling and Servicing Agreement
within a specified period of the date such payment or deposit is
required to be made, (iii) the breach of specified covenants,
representations or warranties contained in the Pooling and
Servicing Agreement, after any applicable notice and cure period
(and, if so specified in the related Prospectus Supplement, only
to the extent such breach has a material adverse effect on the
related Certificateholders), (iv) the failure by the Transferor
to make a required designation of Additional Accounts for the
Trust within a specified time after the date such addition is
required to be made, (v) a reduction in the Series Adjusted
Portfolio Yield below the rates, and for the period, specified in
the related Prospectus Supplement and (vi) the occurrence of a
Servicer Default. 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"), the
holders of any Participations 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, the holders of any
Participations 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.
TERMINATION OF THE TRUST
The Trust and the respective obligations and
responsibilities of the Transferor, the Servicer and the Trustee
created pursuant to the Pooling and Servicing Agreement (other
than the obligation of the Trustee to make payments to Investor
Certificateholders as hereinafter set forth) shall terminate upon
the earlier of (i) December 31, 2029, (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 day an
Insolvency Event has occurred.
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENT
CONVEYANCE OF RECEIVABLES
On the Initial Series Closing Date, BKB will sell to the
Bank Receivables which were not more than [29] days past due as
of the Initial Cut-Off Date, having an aggregate principal
balance of approximately $ as of the Initial Cut-
Off Date, and will sell to PFR Receivables which were at least
[30] days past due as of the Initial Cut-Off Date, having an
aggregate principal balance of approximately $ as of
the Initial Cut-Off Date. Harris will sell to the Bank
Receivables which were not more than [29] days past due as of the
Initial Cut-Off Date having an aggregate principal balance of
approximately $ as of the Initial Cut-Off Date, and
will sell to PFR Receivables which were at least [30] days past
due as of the Initial Cut-Off Date, having an aggregate principal
balance of approximately $ as of the Initial Cut-Off
Date. The Bank in turn will sell the Receivables acquired from
BKB and Harris to PFR. Upon giving effect to such transactions
PFR will have acquired approximately $ aggregate
principal amount of Receivables on the Initial Series Closing
Date (the "Initial Receivables"). Pursuant to the Transferor
Purchase Agreement, PFR will sell and assign to the Transferor
for assignment to the Trust all of its interests in the
Receivables then existing under the Accounts and all Receivables
thereafter created under the Accounts, all Recoveries and
Interchange allocable to the Trust, and the proceeds of all of
the foregoing. PFR 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 transfers of the Receivables, each
Account Originator and the Bank will indicate in its respective
computer records that the applicable Receivables have been
conveyed from such party to the Bank or to PFR, as applicable.
PFR will indicate in its computer records that the Receivables
have conveyed from PFR 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 PFR 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 Originator 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
Originator at the time of the creation of such receivable and the
requirements of law applicable to the Bank 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 Bank 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. PFR will agree, in the Transferor Purchase
Agreement, to repurchase from the Transferor any Ineligible
Receivables 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. 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 plus (ii) the amount on deposit in the
Special Funding Account at such time plus (iii) the aggregate
principal amount on deposit in the Principal Funding Account and
the Pre-Funding Account for each Series minus (iv) 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. 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 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.
TRANSFEROR CERTIFICATES
The Transferor Certificate represents the undivided interest
in the Trust not represented by the Certificates or any
Participation issued and outstanding under the Trust or the
rights, if any, of any providers of enhancement to receive
payments from the Trust. The Transferor will initially own the
Transferor Certificate. The Transferor's Interest at any time
represents the right to the Trust Assets in excess of the
Certificateholders' Interest, the interest of any holder of a
Participation and Enhancement Invested Amounts of all Series then
outstanding. 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. 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. On the Initial Series Closing Date, the
Transferor will issue to one of its affiliates a Supplemental
Certificate representing the excess of the Transferor Amount over
a minimum retained Transferor Amount representing at least 2.0%
of the aggregate Invested Amount of all Series.
ADDITIONS OF ACCOUNTS OR PARTICIPATION INTERESTS
The Transferor has the right under the Transferor Purchase
Agreement to require PFR to designate from time to time
Additional Accounts to be included as Accounts. PFR will convey
to the Transferor, which in turn will convey to the Trust, its
interest in all Receivables arising from the Additional Accounts,
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 PFR 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 Originator. There are currently no Participation
Interests held by the Trust and Participation Interests may be
added to the Trust only if the requirements of the Securities Act
applicable thereto have been satisfied including, that such
Participation Interests either have been registered under the
Securities Act and, if purchased from an affiliate of an
underwriter in the original distribution, the Participation
Interests are purchased in the secondary market at least three
months after the sale of any unsold allotments from the original
distribution, or that such Participation Interests are entitled
to an exemption from the registration requirements of the
Securities Act and have been acquired by the Registrant following
the expiration of any holding period applicable thereto under the
Securities Act. In addition, 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 numerator used in the
Principal Allocation Percentage for each Series outstanding on
such date minus the amount on deposit in the Special Funding
Account minus the amount on deposit in the Principal Funding
Account for each Series outstanding on such date minus the amount
on deposit in the Pre-Funding Account for each Series outstanding
on such date. 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 PFR 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,
Holdings PFR or any Account Originator 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, PFRFC, 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 PFR Purchase Agreement, except as otherwise
required by any requirement of law or as is deemed by the Bank
(or any successor thereto 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, the Bank
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 Bank also covenants that unless required by law and
except as provided above, the Bank 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, the Bank 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.
The Pooling and Servicing Agreement provides that, pursuant
to any one or more supplements to the Pooling and Servicing
Agreement (each, a "Participation Supplement"), the Transferor
may direct the Trustee to issue on behalf of the Trust one or
more participations (each, a "Participation"), to be delivered to
or upon the order of the Transferor; provided that (a) the Rating
Agency Condition shall have been satisfied with respect thereto,
(b) the Transferor Amount (excluding the interest represented by
any Supplemental Certificate) shall not be less than the Required
Transferor Amount as of the date of, and after giving effect to,
such issuance and (c) the Transferor shall have delivered to the
Trustee and each Rating Agency a Tax Opinion, dated the date of
such issuance, with respect to such issuance. Any Participation
may be transferred or exchanged only upon satisfaction of the
conditions described in clauses (a) and (c) above. Each
Participation will entitle its holder to a specified percentage
(the "Participation Percentage") of all Collections of Principal
Receivables and Finance Charge Receivables and any other Trust
Assets to the extent specified in the Participation Supplement.
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 plus
the principal amount of any Participation then outstanding.
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:
(i) 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
(ii) 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, the Bank
or PFR. 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, the Bank, or PFR, 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
plus amounts specified in any Participation Supplement with
respect to any Participation to be treated as shared principal
collections (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 Bank 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 August 31 of each calendar year or such other date as
specified in the related Prospectus Supplement, the Servicer will
cause a firm of independent certified 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 accounting firm has made a study and evaluation of the
Servicer's internal accounting controls relative to the servicing
of the Accounts and that, on the basis of such examination, such
firm is of the opinion that, assuming the accuracy of reports by
the Servicer's third party agents, the system of internal
accounting controls in effect on the date of such statement
relating to servicing procedures performed by the Servicer, taken
as a whole, was sufficient for the prevention and detection of
errors and irregularities in amounts that would be material to
the financial statements of the Servicer and that such servicing
was conducted in compliance with the sections of the Pooling and
Servicing Agreement during the period covered by such report
(which shall be the period from July 1 (or for the initial
period, the relevant Closing Date) of the preceding calendar year
to and including June 30 of such calendar year), except for such
exceptions or errors as such firm shall believe to be immaterial
and such other exceptions as shall be set forth in such
statement.
The Pooling and Servicing Agreement provides for delivery to
the Trustee on or before August 31 of each calendar year or such
other date as specified in the related Prospectus Supplement, of
an annual statement signed by an officer of the Servicer to the
effect that the Servicer has fully performed its obligations
under the 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.
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
ACCOUNT ORIGINATOR PURCHASE AGREEMENTS
Pursuant to separate receivables purchase agreements between
each Account Originator and the Bank or PFR (each, an "Account
Originator Purchase Agreement"), on the Initial Series Closing
Date, BKB will sell to the Bank Receivables which were not more
than [29] days past due as of the Initial Cut-Off Date, having an
aggregate principal balance of approximately [$ ]
as of the Initial Cut-Off Date, and will sell to PFR Receivables
which were at least [30] days past due as of the Initial Cut-Off
Date, having an aggregate principal balance of approximately [$
] as of the Initial Cut-Off Date. Harris will sell to
the Bank Receivables which were not more than [29] days past due
as of the Initial Cut-Off Date having an aggregate principal
balance of approximately [$ ] as of the Initial Cut-
Off Date, and will sell to PFR Receivables which were at least
[30] days past due as of the Initial Cut-Off Date, having an
aggregate principal balance of approximately [$ ] as of
the Initial Cut-Off Date.
Holdings may from time to time in the future enter into
arrangements with other Account Originators similar to the
arrangements entered into with BKB and Harris. The decision to
enter into any such similar arrangements will be based on a
number of factors, including pricing and portfolio
characteristics and competition from entities similar to
Holdings. Any such Account Originator will contribute specified
rights under certain identified credit card accounts owned by it
to Holdings in exchange for an equity interest in Holdings, and
in connection with such contributions will transfer the credit
card accounts to the Bank. Upon giving effect to any such
transactions, the Bank will be the owner of such accounts. Any
such accounts may only be designated as Accounts, the related
Receivables under which will be included in the Trust upon
satisfaction of certain conditions. See "The Accounts" and
"Description of the Pooling and Servicing Agreement --
Representations and Warranties" and "--Additions of Accounts or
Participation Interests" herein.
PFR PURCHASE AGREEMENT
Pursuant to the PFR Purchase Agreement, the Bank sells to
PFR all of its right, title and interest in and to (i) all of the
Receivables acquired by the Bank from the Account Originators
pursuant to the Account Originator Purchase Agreements and (ii)
all of the Receivables created in the Accounts following the date
of the PFR Purchase Agreement. In connection with such sale of
Receivables to PFR, the Bank will indicate in its computer
records that such Receivables have been sold to PFR by such
Account Originator. In addition, the Bank will provide or cause
to be provided to PFR a computer file or a microfiche list
containing a true and complete list showing each Account owned by
the Bank, 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 Bank, as 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 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."
TRANSFEROR PURCHASE AGREEMENT
Sale of Receivables. Pursuant to the Transferor Purchase
Agreement, PFR sells to the Transferor all its right, title and
interest in and to (i) all of the Receivables acquired by PFR
from the Account Originators and from the Bank and all of the
Receivables created in the Accounts following the date of the
Transferor Purchase Agreement and (ii) the Receivables in each
Additional Account 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, PFR will indicate in its computer records that the
Receivables have been sold to PFRFC by it and PFRFC will indicate
in its files that such Receivables will be sold or transferred by
it to the Trust. In addition, PFR 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
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 Receivables
may not be segregated by PFR from other documents and agreements
relating to other receivables and may not be stamped or marked to
reflect the sale or transfer of the Receivables to the
Transferor, but the records of PFR will be marked to evidence
such sale or transfer. PFR, as debtor/seller, will file or cause
to be filed 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 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 Transferor Purchase Agreement, the
Transferor will, subject to certain conditions, if the
designation of Additional Accounts is required under the Pooling
and Servicing Agreement, designate Additional Accounts to be
included as Accounts under the Transferor Purchase Agreement. See
"Description of the Pooling and Servicing Agreement Additions
of Accounts or Participation Interests."
Representations and Warranties. In the Transferor Purchase
Agreement, PFR represents and warrants to the Transferor to the
effect that, among other things, (a) as of the date of the
Transferor Purchase Agreement and as of each date of designation
of Additional Accounts under the Transferor Purchase Agreement,
it is duly organized and in good standing and that it has the
authority to consummate the transactions contemplated by the
Transferor Purchase Agreement, (b) as of the Initial Cut-Off Date
and as of each date of designation of Additional Accounts under
the Transferor 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
Transferor 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 Transferor Purchase Agreement which
results in the requirement that the Transferor accept retransfer
of an Ineligible Receivable, then PFR will be obligated to
repurchase such Ineligible Receivable from the Transferor on the
date of such retransfer. The purchase price for any such
Ineligible Receivable will be the principal amount thereof plus
applicable finance charges.
PFR also represents and warrants to the Transferor that,
among other things, as of the date of the Transferor Purchase
Agreement and as of each date of designation of Additional
Accounts (a) the Transferor Purchase Agreement constitutes a
valid and binding obligation of PFR and (b) the Transferor
Purchase Agreement constitutes a valid sale to the Transferor of
all right, title and interest of PFR in and to the Receivables
then existing and thereafter created in the Accounts 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, PFR 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.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
Under the Purchase Agreements, the Account Originators sell
the Receivables to the Bank and to PFR, the Bank sells the
Receivables it purchased from the Account Originators to PFR, and
PFR sells the Receivables it purchased from the Account
Originators and the Bank to the Transferor. Under the Pooling
and Servicing Agreement, the Transferor, in turn, transfers the
Receivables to the Trust. Each Account Originator, the Bank, PFR
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
subject to the Purchase Agreement to which it is a party. 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 Originator, the Bank, PFR 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 under the Purchase Agreements or the Pooling and
Servicing Agreements are 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 an Account Originator, the Bank, PFR or the
Transferor arising prior to the time a Receivable comes into
existence may also have priority over the interest of the Trust
in such Receivable. Furthermore, if the FDIC were appointed as a
conservator or receiver of an Account Originator or the Bank, 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 Agreements, however, each
Account Originator, the Bank and PFR warrants that it has
transferred the Receivables free and clear of the lien of any
third party. In addition, each Account Originator, the Bank and
PFR covenants that it will not sell, pledge, assign, transfer or
grant any lien on any Receivable (or any interest therein) other
than pursuant to the Purchase Agreement to which it is a party.
CERTAIN MATTERS RELATING TO INSOLVENCY
The Transferor will not engage in any activities except
purchasing accounts receivable from PFR, 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 Originator, the Bank and PFR has represented
and warranted in the Purchase Agreement to which it is a party
that the transfer of Receivables pursuant such Purchase Agreement
is a valid sale of the Receivables. In addition, each Account
Originator, the Bank, PFR and the Transferor has treated and will
treat the transaction described in the Purchase Agreement to
which it is a party as sales of the Receivables. Each Account
Originator has taken or will take all actions that are required
under the UCC to perfect the Bank's interest or PFR's interest,
as applicable, in the Receivables conveyed to the Bank or to PFR,
as applicable, by such Account Originator and the Bank has taken
or will take all actions that are required under the UCC to
perfect PFR's interest in the Receivables conveyed to PFR by the
Bank. PFR 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 Originator or the
Bank, it is possible that a receiver or conservator could attempt
to recharacterize the transfer by such Account Originator or the
Bank as a pledge of the subject 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 Originator or of the Bank.
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 Originator or the Bank. In the event that
PFR were to become a debtor in a bankruptcy case and a creditor
or trustee-in-bankruptcy of such debtor or such debtor itself
were to take the position that the sale of Receivables from PFR
to the Transferor should be recharacterized as a pledge of such
Receivables to secure a borrowing from such debtor, then delays
in payments of collections of Receivables to the Transferor (and
therefore to the Trust and to Certificateholders) could occur and
(should the court rule in favor of any such trustee, debtor in
possession or creditor) reductions in the amount of such payments
could result.
To the extent that (i) an Account Originator or the Bank
granted a security interest in the Receivables, (ii) the interest
was validly perfected before the insolvency of the Account
Originator or the Bank, as the case may be, (iii) the interest
was not taken or granted in contemplation of the Account
Originator's or the Bank's insolvency or with the intent to
hinder, delay or defraud the Account Originator or the Bank, as
applicable, or its respective creditors, (iv) the applicable
Purchase Agreement is continuously a record of such Account
Originator or of the Bank, as applicable, 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
Bank or of PFR, in the case of the transfer by the Account
Originator under the Account Originator Purchase Agreement, or of
PFR, in the case of the transfer by the Bank under the PFR
Purchase Agreement, should be enforceable (to the extent of the
Bank's or PFR's "actual direct compensatory damages")
notwithstanding the insolvency of, or the appointment of a
receiver or conservator for, the Account Originator or the Bank
and payments to the Trust with respect to the Receivables (up to
the amount of such damages) should not be subject to an automatic
stay of payment or to recovery by the FDIC as conservator or
receiver of the Account Originator or the Bank. 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
the Account Originator or the Bank 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 interest on
collateralized borrowings.
In the event of an insolvency, receivership or
conservatorship of an Account Originator or the Bank, and a
creditor or conservator of the Account Originator or the Bank, as
applicable, were to request a court to order that the Account
Originator or the Bank, as applicable, should be substantively
consolidated with the Transferor, delays in payments on the
Certificates and possible reductions in such payments could
result. In addition, in the event of an insolvency, receivership,
conservatorship or bankruptcy of PFR, and a creditor or trustee-
in-bankruptcy of PFR or PFR itself, as debtor in possession, were
to request a court to order that PFR 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 PFR 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 PFRFC, 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
insolvency of the Servicer, and no Servicer Default other than
such insolvency related Servicer Default exists, the 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
Originators and the Bank, the most significant federal laws
include the Federal Truth-in-Lending, Equal Credit Opportunity,
Fair Credit Billing, 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 Originator's or the Bank'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 PFR. 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. Unless
otherwise specified in a Prospectus Supplement for a Series, the
Transferor intends to treat the certificates of each Series that
are sold to investors as indebtedness for Federal income tax
purposes and intends to treat any Participation as a shared
ownership interest in the Receivables, rather than an interest in
a partnership. Accordingly, the Transferor currently does not
intend to file the Federal income tax reports that would apply if
any Class of Certificates or any Participation was treated as an
interest 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").
While these provisions became effective September 1, 1997, many
technical issues concerning FASITs must be addressed by Treasury
regulations (which have not yet been issued). 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 Originator . . . . . . . . . . . . . . . . . . . . . . 8
Account Originator Purchase Agreement . . . . . . . . . . . . 73
Accounts . . . . . . . . . . . . . . . . . . . . . . . 1, 10, 35
Accumulation Period Length . . . . . . . . . . . . . . . . . 49
Additional Accounts . . . . . . . . . . . . . . . . . . . . . 34
Adverse Effect . . . . . . . . . . . . . . . . . . . . . 33, 55
Aggregate Addition . . . . . . . . . . . . . . . . . . . . . 34
Aggregate Addition Accounts . . . . . . . . . . . . . . . . . 33
Alliance Partners . . . . . . . . . . . . . . . . . . . . . . 36
Alliances . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Average Rate . . . . . . . . . . . . . . . . . . . . . . . . 31
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
BankBoston . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Bankmont . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 84
Billing Cycle . . . . . . . . . . . . . . . . . . . . . . . . 39
BKB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
BKB Portfolio . . . . . . . . . . . . . . . . . . . . . . . . 36
Cash Collateral Account . . . . . . . . . . . . . . . . . . . 68
Cash Collateral Guaranty . . . . . . . . . . . . . . . . . . 68
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 44
Cedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Cedel Participants . . . . . . . . . . . . . . . . . . . . . 46
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . 79
Certificate Owners . . . . . . . . . . . . . . . . . . . . . . 5
Certificate Rate . . . . . . . . . . . . . . . . . . . . . . . 5
Certificateholders . . . . . . . . . . . . . . . . . . . . . . 5
Certificateholders' Interest . . . . . . . . . . . . . . . . 11
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Collateral Interest . . . . . . . . . . . . . . . . . . . . . 68
Collection Account . . . . . . . . . . . . . . . . . . . . . 61
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Controlled Accumulation Amount . . . . . . . . . . . . . . . 17
Controlled Accumulation Period . . . . . . . . . . . . . . . 16
Controlled Amortization Amount . . . . . . . . . . . . . . . 18
Controlled Amortization Period . . . . . . . . . . . . . . . 18
Controlled Deposit Amount . . . . . . . . . . . . . . . . . . 17
Controlled Distribution Amount . . . . . . . . . . . . . . . 18
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . 47
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . 22
Credit Enhancer . . . . . . . . . . . . . . . . . . . . . . . 67
Date of Processing . . . . . . . . . . . . . . . . . . . . . 23
Defaulted Amount . . . . . . . . . . . . . . . . . . . . . . 66
Defaulted Receivables . . . . . . . . . . . . . . . . . . . . 66
Definitive Certificates . . . . . . . . . . . . . . . . . . . 44
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . 45
Depository . . . . . . . . . . . . . . . . . . . . . . . . . 44
Determination Date . . . . . . . . . . . . . . . . . . . . . 23
Disclosure Document . . . . . . . . . . . . . . . . . . . . . 12
Discount Option Receivables . . . . . . . . . . . . . . . . . 56
Discount Percentage . . . . . . . . . . . . . . . . . . . . . 56
Distribution Date . . . . . . . . . . . . . . . . . . . . . . 23
DOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Early Accumulation Period . . . . . . . . . . . . . . . . . . 17
Early Amortization Period . . . . . . . . . . . . . . . . . . 18
Eligible Account . . . . . . . . . . . . . . . . . . . . . . 34
Eligible Institution . . . . . . . . . . . . . . . . . . . . 61
Eligible Investments . . . . . . . . . . . . . . . . . . . . 61
Eligible Receivable . . . . . . . . . . . . . . . . . . . . . 53
Enhancement Invested Amount . . . . . . . . . . . . . . . 11, 67
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . 47
Euroclear Participants . . . . . . . . . . . . . . . . . . . 47
Euroclear Provisions . . . . . . . . . . . . . . . . . . . . 47
Excess Allocation Series . . . . . . . . . . . . . . . . . . 19
Excess Finance Charge Collections . . . . . . . . . . . . . . 64
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 5
Expected Final Payment Date . . . . . . . . . . . . . . . . . 15
FAMIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
FASIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
FDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
FDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
FDR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 36
FICO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Final Regulation . . . . . . . . . . . . . . . . . . . . . . 84
Finance Charge Receivables . . . . . . . . . . . . . . . . . 14
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
First Annapolis . . . . . . . . . . . . . . . . . . . . . . . . 8
Floating Allocation Percentage . . . . . . . . . . . . . . . 62
Foreign Investors . . . . . . . . . . . . . . . . . . . . . . 82
Full Invested Amount . . . . . . . . . . . . . . . . . . . . 21
Funding Period . . . . . . . . . . . . . . . . . . . . . . . 21
General Account Regulations . . . . . . . . . . . . . . . . . 86
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Group Investor Additional Amounts . . . . . . . . . . . . . . 63
Group Investor Default Amount . . . . . . . . . . . . . . . . 63
Group Investor Finance Charge Collections . . . . . . . . . . 63
Group Investor Monthly Fees . . . . . . . . . . . . . . . . . 63
Group Investor Monthly Interest . . . . . . . . . . . . . . . 64
Harris . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Harris Portfolio . . . . . . . . . . . . . . . . . . . . . . 36
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Indirect Participants . . . . . . . . . . . . . . . . . . . . 45
Ineligible Receivables . . . . . . . . . . . . . . . . . . . 53
Initial Accounts . . . . . . . . . . . . . . . . . . . . . . 13
Initial Cut-Off Date . . . . . . . . . . . . . . . . . . . . 13
Initial Receivables . . . . . . . . . . . . . . . . . . . . 9, 52
Initial Series Closing Date . . . . . . . . . . . . . . . . . . 7
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . 28
Interchange . . . . . . . . . . . . . . . . . . . . . . . 10, 41
Interest Funding Account . . . . . . . . . . . . . . . . . . 15
Interest Payment Date . . . . . . . . . . . . . . . . . . . . 59
Invested Amount . . . . . . . . . . . . . . . . . . . . . . . 59
Investor Finance Charge Collections . . . . . . . . . . . . . 64
IRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
John Hancock . . . . . . . . . . . . . . . . . . . . . . . . 85
L/C Issuer . . . . . . . . . . . . . . . . . . . . . . . . . 68
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Master Formation Agreement . . . . . . . . . . . . . . . . . . 8
MasterCard . . . . . . . . . . . . . . . . . . . . . . . . . 10
Minimum Monthly Payment . . . . . . . . . . . . . . . . . . . 39
Monthly Period . . . . . . . . . . . . . . . . . . . . . . . 11
Monthly Servicing Fee . . . . . . . . . . . . . . . . . . . . 51
New Accounts . . . . . . . . . . . . . . . . . . . . . . . . 34
New Issuance . . . . . . . . . . . . . . . . . . . . . . . . 59
Offered Certificates . . . . . . . . . . . . . . . . . . . . 79
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Paired Series . . . . . . . . . . . . . . . . . . . . . . . . 20
Participants . . . . . . . . . . . . . . . . . . . . . . . . 45
Participation . . . . . . . . . . . . . . . . . . . . . . 13, 60
Participation Interests . . . . . . . . . . . . . . . . . . . 10
Participation Percentage . . . . . . . . . . . . . . . . . . 61
Participation Supplement . . . . . . . . . . . . . . . . 13, 60
Pay Out Event . . . . . . . . . . . . . . . . . . . . . . . . 50
PFR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PFR Purchase Agreement . . . . . . . . . . . . . . . . . . . . 9
PFRFC . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . 1
Portfolio Yield . . . . . . . . . . . . . . . . . . . . . . . 31
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . 21
Pre-Funding Amount . . . . . . . . . . . . . . . . . . . . . 21
Premium Option Receivables . . . . . . . . . . . . . . . . . 57
Premium Percentage . . . . . . . . . . . . . . . . . . . . . 57
Prepayable Instrument . . . . . . . . . . . . . . . . . . . . 80
Principal Allocation Percentage . . . . . . . . . . . . . 21, 62
Principal Commencement Date . . . . . . . . . . . . . . . . . 15
Principal Funding Account . . . . . . . . . . . . . . . . . . 17
Principal Receivables . . . . . . . . . . . . . . . . . . . . 14
Principal Sharing Series . . . . . . . . . . . . . . . . . . 20
Principal Shortfalls . . . . . . . . . . . . . . . . . . . . 65
Principal Terms . . . . . . . . . . . . . . . . . . . . . . . 59
Prior Series . . . . . . . . . . . . . . . . . . . . . . . . 20
Proposed Regulations . . . . . . . . . . . . . . . . . . . . 83
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . 1
PTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . 9
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . 24
Rating Agency Condition . . . . . . . . . . . . . . . . . . . 33
Reallocated Investor Finance Charge Collections . . . . . . . 63
Reallocation Group . . . . . . . . . . . . . . . . . . . . . 20
Receivables . . . . . . . . . . . . . . . . . . . . . . . . 1, 10
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . 45
Recoveries . . . . . . . . . . . . . . . . . . . . . . . 10, 42
Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 80
Reinvestment Events . . . . . . . . . . . . . . . . . . . . . 51
Removed Accounts . . . . . . . . . . . . . . . . . . . . . . 14
Required Minimum Principal Balance . . . . . . . . . . . . . 56
Required Transferor Amount . . . . . . . . . . . . . . . . . 12
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . 68
Revolving Period . . . . . . . . . . . . . . . . . . . . . . 16
RTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
RTC Policy Statement . . . . . . . . . . . . . . . . . . . . 76
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . 5
Series . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
Series Adjusted Invested Amount . . . . . . . . . . . . . . . 61
Series Allocable Defaulted Amount . . . . . . . . . . . . . . 62
Series Allocable Finance Charge Collections . . . . . . . 62, 64
Series Allocable Principal Collections . . . . . . . . . . . 62
Series Allocation Percentage . . . . . . . . . . . . . . . . 62
Series Closing Date . . . . . . . . . . . . . . . . . . . . . 16
Series Cut-Off Date . . . . . . . . . . . . . . . . . . . . . 16
Series Enhancement . . . . . . . . . . . . . . . . . . . . . 10
Series Invested Amount . . . . . . . . . . . . . . . . . . . 56
Series Required Transferor Amount . . . . . . . . . . . . . . 62
Series Termination Date . . . . . . . . . . . . . . . . . . . 17
Service Transfer . . . . . . . . . . . . . . . . . . . . . . 70
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
Servicer Default . . . . . . . . . . . . . . . . . . . . . . 70
Servicer Interchange . . . . . . . . . . . . . . . . . . . . 51
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . 7, 51
Shared Principal Collections . . . . . . . . . . . . . . . . 65
Special Funding Account . . . . . . . . . . . . . . . . . . . 65
Special Payment Date . . . . . . . . . . . . . . . . . . . . 50
Special Tax Counsel . . . . . . . . . . . . . . . . . . . . . 79
Supplement . . . . . . . . . . . . . . . . . . . . . . . . . 12
Supplemental Certificate . . . . . . . . . . . . . . . . . . 55
Supplemental Certificates . . . . . . . . . . . . . . . . . . 12
Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 60
Termination Notice . . . . . . . . . . . . . . . . . . . . . 70
Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . 23
Transferor . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
Transferor Amount . . . . . . . . . . . . . . . . . . . . 11, 54
Transferor Certificate . . . . . . . . . . . . . . . . . . . 12
Transferor Certificates . . . . . . . . . . . . . . . . . . . 12
Transferor Purchase Agreement . . . . . . . . . . . . . . . . . 9
Transferor Servicing Fee . . . . . . . . . . . . . . . . . . 51
Transferor's Interest . . . . . . . . . . . . . . . . . . . . 11
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
Trust Adjusted Invested Amount . . . . . . . . . . . . . . . 62
Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . 10
Trust Portfolio . . . . . . . . . . . . . . . . . . . . . . . 35
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
UJB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
VISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Yield Supplement Account . . . . . . . . . . . . . . . . . . 14
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 SECTION 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 among the Bank, the Transferor and the Trustee.
4.2 Form of Series 1997-1 Supplement among the Bank, the Transferor
and the Trustee.
4.3 Form of Receivables Purchase Agreement between the Bank and the
Transferor.
4.4 Form of Receivables Purchase Agreement between the Bank and
PFR.***
4.5 Form of Prospectus Supplement.**
4.6 Form of Contribution Agreement between BKB and Holdings.***
4.7 Form of Contribution Agreement between Harris and Holdings.***
4.8 Form of Receivables Purchase Agreement between BKB and the
Bank.***
4.9 Form of Receivables Purchase Agreement between BKB and PFR.***
4.10 Form of Receivables Purchase Agreement between Harris and the
Bank.***
4.11 Form of Receivables Purchase Agreement between Harris and PFR.***
4.12 License Agreement between Holdings and the Bank.***
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.
***To be filed by amendment.
(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. 4 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 November 14, 1997.
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION
(Registrant)
By /s/ Rhanna Kidwell
Name: Rhanna Kidwell
Title: Treasurer
Pursuant to the Requirements of the Securities Act of 1933,
this Amendment No. 4 to the Registration Statement has been signed
by the following persons in the capacities and on the dates
indicated.
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION
SIGNATURE TITLE
*
Kathleen M. McGillycuddy Chairman November 14, 1997
(Principal Executive Officer)
and Director
*
Jeff H. Slawsky President and Director November 14, 1997
/s/ Rhanna Kidwell
Rhanna Kidwell Secretary and Treasurer November 14, 1997
(Principal Financial Officer
Principal Accounting Officer)
*
William M. Parent Director November 14, 1997
The undersigned, by signing her name hereto, does sign and
execute this Amendment No. 4 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 among the
Bank, the Trustee and the
Transferor.
4.2 Form of Series 1997-1 Supplement
among the Bank, the Trustee and
the Transferor.
4.3 Form of Receivables Purchase
Agreement between PFR and the
Transferor.
4.4 Form of Receivables Purchase
Agreement between the Bank and
PFR.***
4.5 Form of Prospectus Supplement.**
4.6 Form of Contribution Agreement between BKB and Holdings.***
4.7 Form of Contribution Agreement between Harris and
Holdings.***
4.8 Form of Receivables Purchase Agreement between BKB and the
Bank.***
4.9 Form of Receivables Purchase Agreement between BKB and
PFR.***
4.10 Form of Receivables Purchase Agreement between Harris
and the Bank.***
4.11 Form of Receivables Purchase Agreement between Harris
and PFR.***
4.12 License Agreement between Holdings and the Bank.***
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.
*** To be filed by amendment.
EXHIBIT 4.1
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION
TRANSFEROR,
PARTNERS FIRST NATIONAL BANK
SERVICER,
AND
THE BANK OF NEW YORK
TRUSTEE
PARTNERS FIRST CARD MASTER TRUST
POOLING AND SERVICING AGREEMENT
DATED AS OF DECEMBER __, 1997
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . 31
ARTICLE II
CONVEYANCE OF RECEIVABLES
. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.1 Conveyance of Receivables . . . . . . . 33
Section 2.2 Acceptance by Trustee . . . . . . . . . 35
Section 2.3 Representations and Warranties of the
Transferor . . . . . . . . . . . . . . 36
Section 2.4 Representations and Warranties of the
Transferor Relating to the Agreement
and Any Supplement and the Receivables. 37
Section 2.5 Reassignment of Ineligible Receivables 39
Section 2.6 Reassignment of Certificateholders'
Interest in Trust Portfolio . . . . . 41
Section 2.7 Covenants of the Transferor . . . . . . 42
Section 2.8 Covenants of the Transferor with Respect
to Receivables Purchase Agreement . . . 45
Section 2.9 Addition of Accounts . . . . . . . . . 46
Section 2.10 Removal of Accounts and Participation
Interests . . . . . . . . . . . . . . 50
Section 2.11 Account Allocations . . . . . . . . . 52
Section 2.12 Discount Option . . . . . . . . . . . 53
Section 2.13 Premium Option . . . . . . . . . . . . 54
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 3.1 Acceptance of Appointment and Other Matters
Relating to the Servicer . . . . . . . 56
Section 3.2 Servicing Compensation . . . . . . . . 58
Section 3.3 Representations, Warranties and Covenants
of the Servicer . . . . . . . . . . . 58
Section 3.4 Reports and Records for the Trustee . . 62
Section 3.5 Annual Certificate of Servicer . . . . 62
Section 3.6 Annual Servicing Report of Independent
Public Accountants; Copies of Reports
Available . . . . . . . . . . . . . . 62
Section 3.7 Tax Treatment . . . . . . . . . . . . . 63
Section 3.8 Notices to the Bank . . . . . . . . . . 64
Section 3.9 Adjustments . . . . . . . . . . . . . . 64
Section 3.10 Reports to the Commission . . . . . . 65
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 4.1 Rights of Certificateholders . . . . . 66
Section 4.2 Establishment of Collection Account and
Special Funding Account . . . . . . . 66
Section 4.3 Collections and Allocations . . . . . . 69
Section 4.4 Shared Principal Collections . . . . . 71
Section 4.5 Additional Withdrawals from the
Collection Account . . . . . . . . . 71
Section 4.6 Allocation of Trust Assets to Series or
Groups . . . . . . . . . . . . . . . 71
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE VI
THE CERTIFICATES
. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.1 The Certificates . . . . . . . . . . . 74
Section 6.2 Authentication of Certificates . . . . 74
Section 6.3 New Issuances . . . . . . . . . . . . . 75
Section 6.4. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . 77
Section 6.5 Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . 80
Section 6.6 Persons Deemed Owners . . . . . . . . . 81
Section 6.7 Appointment of Paying Agent . . . . . . 82
Section 6.8 Access to List of Registered
Certificateholders' Names and
Addresses . . . . . . . . . . . . . . 82
Section 6.9 Authenticating Agent . . . . . . . . . 83
Section 6.10 Book-Entry Certificates . . . . . . . . 84
Section 6.11 Notices to Clearing Agency . . . . . . 85
Section 6.12 Definitive Certificates . . . . . . . 85
Section 6.13 Global Certificate; Exchange Date . . 86
Section 6.14 Meetings of Certificateholders . . . . 88
Section 6.15 Uncertificated Classes . . . . . . . . 91
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
. . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 7.1 Liability of the Transferor . . . . . . 92
Section 7.2 Merger or Consolidation of, or
Assumption of the Obligations of, the
Transferor . . . . . . . . . . . . . . 92
Section 7.3 Limitations on Liability of the
Transferor . . . . . . . . . . . . . . 93
Section 7.4 Transferor Authorized to
execute Registration Statements and
Reports on Behalf of the Trust . . . 93
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
. . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 8.1 Liability of the Servicer . . . . . . . 95
Section 8.2 Merger or Consolidation of, or
Assumption of the Obligations of,
the Servicer . . . . . . . . . . . . . 95
Section 8.3 Limitation on Liability of the Servicer
and Others . . . . . . . . . . . . . 96
Section 8.4 Servicer Indemnification of the Trust
and the Trustee . . . . . . . . . . . 96
Section 8.5 Resignation of the Servicer . . . . . . 96
Section 8.6 Access to Certain Documentation and
Information Regarding the Receivables . 97
Section 8.7 Delegation of Duties . . . . . . . . . 98
Section 8.8 Examination of Records . . . . . . . . 98
ARTICLE IX
INSOLVENCY EVENTS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.1 Rights upon the Occurrence of an
Insolvency Event . . . . . . . . . . 99
ARTICLE X
SERVICER DEFAULTS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 10.1 Servicer Defaults . . . . . . . . . . 101
Section 10.2 Trustee To Act; Appointment of
Successor . . . . . . . . . . . . . . 104
Section 10.3 Notification to Certificateholders . . 106
ARTICLE XI
THE TRUSTEE
. . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 11.1 Duties of Trustee . . . . . . . . . . 107
Section 11.2 Certain Matters Affecting the Trustee 109
Section 11.3 Trustee Not Liable for Recitals in
Certificates . . . . . . . . . . . . 111
Section 11.4 Trustee May Own Certificates . . . . . 111
Section 11.5 The Servicer To Pay Trustee's Fees and
Expenses . . . . . . . . . . . . . . 111
Section 11.6 Eligibility Requirements for Trustee . 112
Section 11.7 Resignation or Removal of Trustee . . 112
Section 11.8 Successor Trustee . . . . . . . . . . 113
Section 11.9 Merger or Consolidation of Trustee . . 114
Section 11.10 Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . 114
Section 11.11 Tax Returns . . . . . . . . . . . . . 115
Section 11.12 Trustee May Enforce Claims Without
Possession of Certificates . . . . . 116
Section 11.13 Suits for Enforcement . . . . . . . . 116
Section 11.14 Rights of Certificateholders To Direct
Trustee . . . . . . . . . . . . . . . 117
Section 11.15 Representations and Warranties of
Trustee . . . . . . . . . . . . . . . 117
Section 11.16 Maintenance of Office or Agency . . . 118
ARTICLE XII
TERMINATION
. . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Section 12.1 Termination of Trust . . . . . . . . . 119
Section 12.2 Final Distribution . . . . . . . . . . 119
Section 12.3 The Transferor's Termination Rights . 121
ARTICLE XIII
MISCELLANEOUS PROVISIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Section 13.1 Amendment; Waiver of Past Defaults . . 122
Section 13.2 Protection of Right, Title and Interest
to Trust . . . . . . . . . . . . . . 124
Section 13.3 Limitation on Rights of
Certificateholders . . . . . . . . . 125
Section 13.4 Governing Law . . . . . . . . . . . . 126
Section 13.5 Notices; Payments . . . . . . . . . . 127
Section 13.6 Severability of Provisions . . . . . . 128
Section 13.7 Certificates Nonassessable and Fully
Paid . . . . . . . . . . . . . . . . 128
Section 13.8 Further Assurances . . . . . . . . . . 128
Section 13.9 Nonpetition Covenant . . . . . . . . . 128
Section 13.10 No Waiver; Cumulative Remedies . . . 128
Section 13.11 Counterparts . . . . . . . . . . . . 129
Section 13.12 Third-Party Beneficiaries . . . . . . 129
Section 13.13 Actions by Certificateholders . . . . 129
Section 13.14 Rule 144A Information . . . . . . . . 129
Section 13.15 Merger and Integration . . . . . . . 130
Section 13.16 Headings . . . . . . . . . . . . . . 130
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 PARTNERS FIRST RECEIVABLES FUNDING
CORPORATION, a Delaware corporation, as Transferor;
PARTNERS FIRST NATIONAL BANK, 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 Originator" shall mean the original
issuer of the credit card relating to an Account,
including the Bank, pursuant to a Credit Card Agreement
or a purchaser of such Account, in either case which has
sold such Account to the Bank.
"Account Originator Purchase Agreement" shall
mean the receivables purchase agreement between PFR and
an Account Originator, pursuant to which the Account
Originator sells Receivables to PFR.
"Account Owner" shall mean, the Bank or
another entity which is either 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, and in either case has sold the related
Receivables to PFR or the Transferor pursuant to a
Receivables Purchase Agreement.
"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 Partners First National
Bank, 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).
"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, __________, Massachusetts] or
any other State in which the principal executive offices
of the Bank or the Trustee, 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.
"PFRFC" shall mean Partners First 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.
"Common Depositary" shall mean, with respect
to the Investor Certificates of any Series or Class, the
common depositary for the respective accounts of any
Foreign Clearing Agencies or any successor thereto.
"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 Originator 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, as of
any date of determination, the respective policies and
procedures of the Bank, and Account Owner or Account
Originator, as such policies and procedures may be
amended from time to time, (a) relating to the operation
of its credit card business as of such date, 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) is not sold or pledged to any other party
except for any sale by an Account Originator to the Bank
or by an Account Owner 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
Originator or Account Owner to any party other than the
Bank, PFR or 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 or
Account Originator 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 Originator 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 Originator 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 Originator and any subsequent 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).
"Global Certificate Exchange Date" shall
mean, with respect to any Series or Class, a date
determined by the Manager with respect to such Series or
Class which is at least 40 days after the later of the
commencement of the offering of the related Investor
Certificates and the related Series Issuance Date.
"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 which
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.
"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.
-----------------
1 MasterCard and VISA are registered trademarks of
MasterCard International Incorporated and VISA USA,
Inc., respectively.
"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 the Bank to PFR and by PFR 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.
"PFR" shall mean Partners First Receivables,
LLC., a Delaware limited liability company and a wholly
owned subsidiary of Partners First Holdings, LLC., a
Delaware limited liability company.
"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.
"Pre-Funding Account" shall mean, with
respect to any Series, the account, if any, specified in
the related Supplement.
"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 Allocation Percentage" shall mean,
with respect to any Series, the percentage specified in
the related Supplement.
"Principal Funding Account" shall mean, with
respect to any Series, the account, if any, specified in
the related Supplement.
"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
PFR and the Transferor, dated as of _____ __, 1997, as
amended from time to time in accordance with the terms
thereof, and any receivables purchase agreement entered
into by the Transferor and an 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
numerators used in the Principal Allocation Percentage
for each Series outstanding on such date minus (b) the
Special Funding Amount minus (c) the amount on deposit in
the Principal Funding Account for each Series outstanding
on such date minus (d) the amount on deposit in the Pre-
Funding Account for each Series outstanding on such date.
"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 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,
notional principal contract, options, hedging agreements,
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 Partners First
Receivables Funding Corporation, a wholly owned special
purpose subsidiary of Partners First Receivables, LLC 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 and (C) the aggregate principal amounts on
deposit in the Principal Funding Account and Pre-Funding
Account for each Series 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.
"Transferor's Percentage" shall have, with
respect to each Series, the meaning specified in the
related Supplement.
"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 Partners First 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 PFRFC 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 PFRFC and the Bank
solely in each such capacity for so long as PFRFC 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, PFRFC 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 the Collection
Account, the Series Accounts and the Special Funding
Account and all monies on deposit in any such 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 Originator, Account
Owner, PFR 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 Trustee (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 Trustee 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 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
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 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 or any other
transaction in connection wit which the Rating Agency
Condition has been satisfied and the Transferor has
delivered to the Trustee a Tax Opinion, the Transferor
agrees not to transfer, sell, assign, exchange,
participate or pledge, hypothecate or otherwise convey or
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 PFR or an Account Owner pursuant to a Receivables
Purchase Agreement, hereby covenants that the Transferor
will at all times enforce the covenants and agreements of
PFR, or such Account Owner, as applicable, 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 is less than the Required Minimum Principal
Balance on such date or (b) the Transferor Amount is less
than the Required Transferor Amount on such date, 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, 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 and the Transferor Amount is at
least equal to the Required Transferor Amount 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 a specified 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, Account Originator, the
Bank, PFR 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, Account
Originator, the Bank, Partners First 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; [and]
[(vi) the Transferor shall have delivered to
the Trustee an Tax Opinion that such removal will not
constitute a reissuance.]
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, PFR, any Account
Originator 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, (b) the Transferor has
received written notice from each Rating Agency that such
designation, reduction or withdrawal will satisfy the
Rating Agency Condition and (c) the Transferor has
delivered a Tax Opinion to the Trustee and each Rating
Agency
(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 and any Participation Interests, shall
collect and deposit into the Collection Account payments
due under the 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, PFRFC 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 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
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 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 Trust Assets not allocated
pursuant to this Agreement or any Supplement to the
Certificateholders' Interest, and 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
(who may be directed by the Transferor, at its option) 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 (who
may be directed by the Transferor, at its option) 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 otherwise 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 and Principal Receivables and Defaulted
Amounts 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 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 and the Transferor Amount shall be greater
than or equal to the Required Transferor Amount.
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 and
subject to the provisions of any Supplement or other
agreement establishing the terms of an instrument,
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 initially will 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 and delivered by the Trustee or its agent
to the Common Depositary outside the United States for
credit to the respective accounts of the Foreign Clearing
Agencies and may be exchanged as described in this
Section 6.13 for Definitive Euro- Certificates in
definitive form substantially in the form set forth in
the exhibit with respect thereto attached to the related
Supplement (the "Definitive Euro-Certificates"). The
"Definitive-Euro-Certificates" shall be Bearer
Certificates for all purposes of this Agreement and the
provisions of this Agreement and the related Supplement
relating to Definitive Euro-Certificates shall apply to
the Definitive Euro-Certificates in all respects. The
Definitive Euro-Certificates shall be issued in the
minimum denominations specified in the related
Supplement.
(b) No interest will be paid in respect of any
beneficial interest in the Global Certificates and no
exchange of an interest in the Global Certificates for a
Definitive Euro- Certificate may occur until the person
entitled to receive such Definitive Euro- Certificate
provides certification as to non-U.S. beneficial
ownership as provided in this Section 6.13. Until the
Global Certificate with respect to a Series or Class is
exchanged for a Definitive Euro-Certificate for such
Series or Class, any holder thereof shall be entitled to
receive payments of interest thereon only to the extent
that the person appearing in the records of the Foreign
Clearing Agency as the beneficial owner thereof or a
portion thereof has delivered to such Foreign Clearing
Agency a certification and the Foreign Clearing Agency
has delivered to the Trustee a certification, in each
case pursuant to this Section 6.13 hereof on or prior to
the date of distribution.
(c) The Manager shall, upon its determination
of the Global Certificate Exchange Date, so advise the
Trustee, the Transferor, the Common Depositary and each
Foreign Clearing Agency forthwith. Without unnecessary
delay, but in any event not later than the Global
Certificate Exchange Date, the Transferor will execute
and deliver to the Trustee at its London office or its
designated office outside the United States Definitive
Euro-Certificates in an aggregate principal amount equal
to the entire Initial Invested Amount of such Series or
Class. All Definitive Euro- Certificates so issued and
delivered will have Coupons attached. The Global
Certificate may be exchanged for an equal aggregate
amount of Bearer Certificates only on or after the Global
Certificate Exchange Date. Notwithstanding the
foregoing, no holder of an interest in a Global
Certificate will have any right to receive a Bearer
Certificate in exchange for such interest prior to the
Global Certificate Exchange Date and prior to
certification (in the manner provided in this Section
6.13) that either such holder is not a United States
person or is otherwise a permitted holder.
(d) The Bearer Certificates shall be
authenticated and delivered by the Trustee or its agent
in exchange for only that portion of the Global
Certificate, in respect of which there shall have been
presented to the Trustee by the applicable Foreign
Clearing Agency, a certificate, substantially in the form
set forth in the exhibit with respect thereto attached to
the related Supplement, that the Trustee does not know to
be false, to the effect that such Foreign Clearing Agency
has received from or in respect of a person entitled to a
particular principal amount of the Investor Certificates
of the applicable Series or Class (as shown by its
records), a certificate from such person in or
substantially in the form set forth in the exhibit with
respect thereto attached to the related Supplement. Upon
receipt of such certification, the Trustee shall cause
the Global Certificates to be endorsed in accordance with
subsection 6.13(d) below.
(e) On an exchange of the whole of a Global
Certificate, such Global Certificate shall be surrendered
to the Trustee or its agent at its office in London,
England for cancellation and shall be returned by the
Trustee or its agent to the Transferor. On an exchange
of only part of a Global Certificate, details of such
exchange shall be entered by the Paying Agent with
respect to the Series on behalf of the Trust, and further
exchanges may be effected, without the issue of a new
Global Certificate, by the Trust or its agent endorsing
the schedule attached to the Global Certificate
previously issued to reflect a decrease in the aggregate
principal amount of the Global Certificate.
(f) Upon any such exchange of all or a portion
of a Global Certificate for a Bearer Certificate or
Bearer Certificates, such Global Certificate shall be
endorsed by or on behalf of the Trustee to reflect the
reduction in the principal amount by an amount equal to
the aggregate principal amount of such Bearer Certificate
or Bearer Certificates. Until so exchanged in full, the
Global Certificates will in all respects be entitled to
the same benefits under this Agreement and the related
Supplement as Bearer Certificates authenticated and
delivered pursuant to this Agreement and the related
Supplement except that the beneficial owners of such
Global Certificate will not be entitled to receive
payments of interest until they have exchanged their
beneficial interests in such Global Certificate for
Bearer Certificates.
(g) 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 the related Supplement.
(h) The Bearer Certificates to be delivered in
exchange for the Global Certificates shall be delivered
only outside the United States.
(i) Any exchange as provided for in this
Section shall be made free of charge to the holders and
the beneficial owners of the Global Certificates and to
the beneficial owners of the Bearer Certificates issued
in exchange, except that a person receiving a Bearer
Certificate must bear the cost of insurance, postage,
transportation and the like in the event that such person
does not receive such Bearer Certificate in person at the
offices of the applicable Foreign Clearing Agency.
(j) Until the exchange of the Global
Certificates as aforesaid, the bearer thereof shall in
all respects be entitled to the same benefits as if it
were the bearer of Bearer Certificates and the Coupons
attached thereto.
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 PFRFC 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, except as provided herein, 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 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 PFRFC 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 PFRFC of or relating to all or substantially
all of PFRFC'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
PFRFC any such action shall have remained undischarged or
unstayed for a period of 60 days; or PFRFC 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 Investor
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 any tax
returns required to be filed by the Trust and shall remit
such returns to the Trustee for signature (if it is
determined that the Trustee is required to sign such
returns) at least five days before such returns are due
to be filed; the Trustee shall promptly sign such returns
and deliver such returns after signature to the Servicer
and such returns shall be filed by the Servicer. 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. 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. In
no event shall the Trustee or the Servicer (except as
provided in Section 8.4) be liable for any liabilities,
costs or expenses of the Trust or the Holders of Investor
Certificates arising under any tax law, including without
limitation Federal, state, local or foreign income or
excise taxes or any other tax imposed or measured by
income (or any interest or penalty with respect thereto
or arising from a failure to comply therewith).
Section 11.12 Trustee May Enforce Claims
Without Possession of Certificates. All rights of action
and claims under this Agreement or 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) December 31, 2029, (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
110% 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 product of (i) the
aggregate Principal Receivables on such Series
Termination Date and (ii) a fracton the numerator of
which is the product of (x) the Adjusted Invested Amount
for such Series and (y) the Transferor's Percentage for
such Series and the demoniator of which is the sum of the
numerators with respect to all Series. 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 any 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; provided, further however, that the
Transferor shall have delivered to the Trustee a Tax
Opinion to the Trustee with respect to any such amendment
prior to the effectiveness thereof.
(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 keeps records
concerning the Receivables or of its principal executive
office and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or
continuation statement or of any new financing statement
and shall file such financing statements or amendments as
may be necessary to 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 Investor
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 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 Partners First Receivables Funding
Corporation, at ______________________-- Attention:
_________ (facsimile no. ___________), with a copy to:
______________________, Attention: ________________
(facsimile no. _____________), (ii) in the case of the
Servicer, to Partners First National Bank, at
_________________________--, 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:
PARTNERS FIRST NATIONAL
BANK
Servicer,
by _____________________________
Name:
Title:
THE BANK OF NEW YORK,
Trustee
by ____________________________
Name:
Title:
EXHIBIT 4.2
SERIES 1997-1 SUPPLEMENT
Dated as of _______, 1997
to
POOLING AND SERVICING AGREEMENT
Dated as of _______, 1997
$_______________
among
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION
Transferor
PARTNERS FIRST NATIONAL BANK
Servicer
and
THE BANK OF NEW YORK
Trustee
on behalf of the Series 1997-1 Certificateholders
_______________________________
PARTNERS FIRST CREDIT CARD MASTER TRUST
Series 1997-1
______________________________
TABLE OF CONTENTS
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 . . . . . . . 20
Section 4.2. Determination of Monthly Interest . . . . 22
Section 4.3. Principal Funding Account; Controlled
Accumulation Period . . . . . . . . . . . 24
Section 4.4. Required Amount . . . . . . . . . . . . . 26
Section 4.5. Application of Class A Available Funds,
Class B Available Funds, Collateral
Available Funds and Available Principal
Collections . . . . . . . . . . . . . . . 27
Section 4.6. Defaulted Amounts; Investor Charge-Offs . 29
Section 4.7. Excess Spread; Excess Finance Charge
Collections . . . . . . . . . . . . . . . 31
Section 4.8. Reallocated Principal Collections . . . . 33
Section 4.9. Excess Finance Charge Collections . . . . 33
Section 4.10. Reallocated Investor Finance Charge
Collections . . . . . . . . . . . . . . . 34
Section 4.11. Shared Principal Collections . . . . . . 35
Section 4.12. Reserve Account . . . . . . . . . . . . . 35
Section 4.13. Determination of LIBOR . . . . . . . . . 37
Section 4.14. Investment Instructions . . . . . . . . . 38
Section 4.15. Yield Supplement Account . . . . . . . . 38
Section 4.16. Cash Collateral Account . . . . . . . . . 39
ARTICLE V
Distributions and Reports to
Series 1997-1 Certificateholders
Section 5.1. Distributions . . . . . . . . . . . . . . 41
Section 5.2. Reports and Statements to Series 1997-1
Certificateholders . . . . . . . . . . . 42
ARTICLE VI
Pay Out Events
Section 6.1. Pay Out Events . . . . . . . . . . . . . . 43
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1. Optional Repurchase . . . . . . . . . . . 44
Section 7.2. Series Termination . . . . . . . . . . . . 44
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 . . 45
Section 8.2. Distribution of Proceeds of Sale,
Disposition or Liquidation of
the Receivables pursuant to Section 9.1 of
the Agreement . . . . . . . . . . . . . . 46
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Ratification of Agreement . . . . . . . . 48
Section 9.2. Counterparts . . . . . . . . . . . . . . . 48
Section 9.3. Governing Law . . . . . . . . . . . . . . 48
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 PARTNERS FIRST RECEIVABLES
FUNDING CORPORATION, a Delaware corporation, as
Transferor, PARTNERS FIRST NATIONAL BANK, 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 Partners First 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 "Partners First 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, for any Interest
Period with respect to the Class A Certificates, a per annum rate
of ___% above LIBOR determined on the related LIBOR Determination
Date, calculated on the basis of actual days elapsed and a
360-day year.
"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, for any Interest
Period with respect to the Class B Certificates, a per annum rate
of ___% above LIBOR determined on the related LIBOR Determination
Date, calculated on the basis of actual days elapsed and a
360-day year.
"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(e) for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (c), (d) and (e); provided, however,
that the Class B Invested Amount may not be reduced below zero.
"Class B Investor Charge-Offs" shall have the meaning
specified in subsection 4.6(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(i), for the purpose
of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided, however, that the Collateral Invested
Amount may not be reduced below zero.
"Collateral 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, 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 the product of (i) a
fraction, the numerator of which is the actual number of days in
the related Interest Period and the denominator of which is 360,
times (ii) the Class A Certificate Rate in effect during such
Interest Period, and (iii) 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 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; 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 1997-1
shall mean (a) with respect to the Class A Certificates, amounts
available on deposit in 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), (e) and (i) 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(g).
"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
Distribution Date, the sum of the Available Cash Collateral
Amount and the Collateral Interest as of the 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.
"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.
"Yield Supplement Account" shall have the meaning
specified in subsection 4.15(a).
"Yield Supplement Draw Amount" shall mean an amount
equal to the sum of (a) ___% of the Initial Yield Supplement
Deposit for the six Distribution Dates from and including the
January __, 1998 Distribution Date through and including the June
__, 1998 Distribution Date, (b) ___% of the Initial Yield
Supplement Deposit for the six Distribution Dates from and
including the July __ 1998 Distribution Date through and
including the December __ 1998 Distribution Date, (c) zero,
thereafter and (d) with respect to any such Distribution Date,
the investment earnings on the amounts on deposit in the Yield
Supplement Account for the period from and including the prior
Distribution Date (or in the case of the January __, 1998
Distribution Date, from and including the Closing Date), to but
excluding such Distribution Date.
(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."
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 the product of (i) (A) a fraction,
the numerator of which is the actual number of days in 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 and the denominator of
which is 360, times (B) the Class A Certificate Rate and (ii) the
outstanding principal balance of the Class A Certificates as of
close of business on the last day of the preceding Monthly
Period; provided that, in the case of the first Distribution Date
the 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 the product of (i) (A) a fraction,
the numerator of which is the actual number of days in the period
from (and including) the immediately preceding Distribution Date
to (but excluding) such Distribution Date and the denominator of
which is 360, times (B) 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 the product of (i) (A) a fraction,
the numerator of which is the actual number of days in 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 and the denominator of
which is 360, times (B) 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 Monthly Period, 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 the product of (i) (A) a fraction,
the numerator of which is the actual number of days in the period
from (and including) the immediately preceding Distribution Date
to (but excluding) such Distribution Date and the denominator of
which is 360, times (B) 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.
(c) With respect to each Distribution Date, on the
related Determination Date, the Servicer shall determine the
amount (the "Collateral Required Amount"), if any, equal to the
sum of (x) the amount, if any, by which (A) the sum of (i) the
Collateral Monthly Interest for such Distribution Date, (ii) any
Collateral Monthly Interest previously due but not paid to the
Collateral Interest Holder, (iii) Collateral Additional Interest,
if any, for such Distribution Date, (iv) any Collateral Monthly
Interest previously due but not paid to the Collateral Interests
Holder on a prior Distribution Date, exceeds (B) the amount of
Excess Spread and Excess Finance Charge Collections applied to
pay such amounts pursuant to subsection 4.7(f) and (y) the
amount, if any, by which (A) the Collateral Default Amount, if
any, for such Distribution Date, exceeds (B) the amount of Excess
Spread and Excess Finance Charge Collections applied to pay such
amount pursuant to subsection 4.7(h) on such Distribution Date.
In the event that the Collateral Required Amount for any
Distribution Date is greater than zero, the Servicer shall give
written notice thereof to the Trustee 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(e).
(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(h) 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(i).
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 difference, if any, between
(x) the product of (i) (A) a fraction, the numerator of which is
the actual number of days in 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 and the denominator of which is 360, times
(B) the Class B Certificate Rate and (ii) the outstanding
principal balance of the Class B Invested Certificates as of the
close of business on the last day of the preceding Monthly Period
and (y) the amount distributed to the Paying Agent for payment to
the Class B Certificateholders pursuant to subsection 4.5(b)(i)
(e) an amount equal to the aggregate amount by which
the Class B Invested Amount has been reduced pursuant to clauses
(c), (d) and (e) of the definition of "Class B Invested Amount"
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;
(f) 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;
(g) 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;
(h) 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;
(i) 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;
(j) 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;
(k) 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;
(l) 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
(m) 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(j).
(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(j) 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 on the basis of the rate for deposits in United
States dollars for a period equal to the relevant Interest Period
which appears on Telerate Page 3750 as of 11:00 a.m., London
time, on such date. If such rate does not appear on Telerate
Page 3750, the rate for that LIBOR Determination Date shall 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. The Trustee 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 shall 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.
Upon such determination, the Trustee shall notify the
Servicer of LIBOR for such LIBOR Determination Date.
(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 from the Yield Supplement Account and deposit to the
Collection Account an amount equal to the Yield Supplement Draw
Amount. The Yield Supplement Draw Amount so deposited on any
such Distribution Date 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 each Determination 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 that
order of priority in respect of (i) the Class A Required Amount
pursuant to subsection 4.7(a), (ii) the Class B Required Amount
pursuant to subsection 4.7(c), or (iii) the Collateral Required
Amount pursuant to subsections 4.7 (f) and (h) .
(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 that order of priority in
accordance with subsections 4.7(a), (c), (f) and (h).
(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; or
(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.
PARTNERS FIRST RECEIVABLES FUNDING
CORPORATION,
Transferor
By:_________________________
Name:
Title:
PARTNERS FIRST NATIONAL BANK,
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 Partners First 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.
PARTNERS FIRST 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
PARTNERS FIRST 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
PARTNERS FIRST NATIONAL BANK,
and other assets and interests constituting the Trust under the
Pooling and Servicing Agreement referred to below.
(Not an interest in or obligation of Partners First National
Bank, Partners First 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 Partners First
Receivables Funding Corporation, as Transferor, Partners First
National Bank, as Servicer, and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee"). The corpus of
------------------------------
1/ Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
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.
PARTNERS FIRST 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
PARTNERS FIRST 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 Partners First 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 Partners First 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.
PARTNERS FIRST 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
PARTNERS FIRST 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
PARTNERS FIRST NATIONAL BANK,
and other assets and interests constituting the Trust under the
Pooling and Servicing Agreement referred to below.
(Not an interest in or obligation of Partners First National
Bank, Partners First 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
--------------------------
1/ Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
amended and supplemented, the "Agreement"), as supplemented by
the Series 1997-1 Supplement dated as of _______, 1997 (as
amended and supplemented, the "Supplement"), among Partners First
Receivables Funding Corporation, as Transferor, Partners First
National Bank, 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.
PARTNERS FIRST 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
PARTNERS FIRST 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 Partners First 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
______________________________
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1997-1
______________________________
The undersigned, a duly authorized representative of
Partners First National Bank (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, Partners First Receivables Funding
Corporation ("PFRFC"), 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, PFRFC 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 equal to the difference
between (x) the product of the
Class B Certificate Rate for such
Distribution Date and the
outstanding principal balance of
the Class B Certificates and (y)
the amount distributed to the
Paying Agent for payment to the
Class B Certificateholder pursuant
to subsection 4.5(b)(i) . . . . . $_______
E) Pursuant to subsection 4.7(e):
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 . . . . . . . . . . . $_______
F) Pursuant to subsection 4.7(f):
(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 . . . . . . . . . . . $_______
G) Pursuant to subsection 4.7(g):
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 . $_______
H) Pursuant to subsection 4.7(h):
Collateral Default Amount
allocated to Available Principal
Collections . . . . . . . . . . . $_______
I) Pursuant to subsection 4.7(i):
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 . . . . . . $_______
J) Pursuant to subsection 4.7(j)
The excess of the Required Cash
Collateral Amount over the amount
that would otherwise remain in the
Cash Collateral Account deposited
in the Cash Collateral Account . . $_______
K) Pursuant to subsection 4.7(k):
The excess of the Required Reserve
Account Amount over the Available
Reserve Amount deposited into the
Reserve Account . . . . . . . . . $_______
L) Pursuant to subsection 4.7(l):
Paid to the Collateral Interest
Holder pursuant to the Loan
Agreement . . . . . . . . . . . . $_______
M) Pursuant to subsection 4.7(m):
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 __________, ____.
PARTNERS FIRST NATIONAL BANK
by ________________________
Name:
Title:
EXHIBIT C
FORM OF MONTHLY STATEMENT
PARTNERS FIRST 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 Partners First National
Bank (the "Bank"), as Servicer, Partners First Receivables
Funding Corporation ("PFRFC"), 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, PFRFC 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 Partners First 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 . . . . . $__________
PARTNERS FIRST NATIONAL BANK,
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 . . . . . . . . . . $_________
PARTNERS FIRST NATIONAL BANK,
as Servicer
By: ________________________
Name:
Title:
EXHIBIT D
FORM OF MONTHLY SERVICER'S CERTIFICATE
PARTNERS FIRST NATIONAL BANK
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1997-1
The undersigned, a duly authorized representative of
PARTNERS FIRST NATIONAL BANK, 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, Partners First
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 __________, ____.
PARTNERS FIRST NATIONAL BANK,
Servicer
By: ________________________
Name:
Title:
EXHIBIT 4.3
PARTNERS FIRST RECEIVABLES, LLC
and
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION
RECEIVABLES PURCHASE AGREEMENT
Dated as of , 1997
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . 1
Section 1.2. Other Definitional Provisions . . . . . . . . 5
ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES
Section 2.1. Purchase . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Addition of Aggregate Addition Accounts . . . . 7
Section 2.3. Addition of New Accounts . . . . . . . . . . . . 8
Section 2.4. Representations and Warranties . . . . . . . . . 9
Section 2.5. Delivery of Documents . . . . . . . . . . . . . 9
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1. Purchase Price . . . . . . . . . . . . . . . . 10
Section 3.2. Adjustments to Purchase Price . . . . . . . . 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the
Bank Relating to the Bank . . . . . . . . 11
Section 4.2. Representations and Warranties of the
Bank Relating to the Agreement
and the Receivables . . . . . . . . . . . 12
Section 4.3. Representations and Warranties of the
Purchaser . . . . . . . . . . . . . . . . 14
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Bank . . . . . . . . . . . . 15
Section 5.2. Covenants of the Purchaser with Respect to
Receivables Purchase Agreements . . . . . 17
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1. Reassignment of Ineligible Receivables . . . . 18
Section 6.2. Reassignment of Certificateholders'
Interest in Trust Portfolio . . . . . . . 19
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1. Conditions to the Purchaser's Obligations
Regarding Initial Receivables . . . . . . 19
Section 7.2. Conditions Precedent to the Bank's
Obligations . . . . . . . . . . . . . . . 20
ARTICLE VIII
TERM AND PURCHASE TERMINATION
Section 8.1. Term . . . . . . . . . . . . . . . . . . . . . 20
Section 8.2. Purchase Termination . . . . . . . . . . . . . 20
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. Amendment . . . . . . . . . . . . . . . . . . 21
Section 9.2. Governing Law . . . . . . . . . . . . . . . . 22
Section 9.3. Notices . . . . . . . . . . . . . . . . . . . 22
Section 9.4. Severability of Provisions . . . . . . . . . . 22
Section 9.5. Assignment . . . . . . . . . . . . . . . . . . 22
Section 9.6. Acknowledgement and Agreement of the Bank . . 22
Section 9.7. Further Assurances . . . . . . . . . . . . . . 23
Section 9.8. No Waiver; Cumulative Remedies . . . . . . . . 23
Section 9.9. 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 PARTNERS FIRST RECEIVABLES, LLC, a limited liability
company organized under the laws of the State of Delaware (the
"Seller"), and PARTNERS FIRST RECEIVABLES FUNDING CORPORATION, a
Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser desires to purchase, from time to
time, certain Receivables (hereinafter defined) purchased by the
Seller and arising under certain credit card accounts originated or
purchased by the Partners First National Bank;
WHEREAS, the Seller desires to sell from time to time
certain Receivables purchased by the Seller to the Purchaser upon
the terms and conditions hereinafter set forth;
WHEREAS, it is contemplated that the Receivables
purchased hereunder will be transferred by the Purchaser to the
Trust (hereinafter defined) in connection with the issuance of
certain Certificates (hereinafter defined); and
WHEREAS, the Seller agrees that all covenants and
agreements made by the Seller 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 the
Purchaser and the Seller as follows:
ARTICLE I
DEFINITIONS
Section 1.1. 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 1/ and VISA 1/
account established pursuant to a Credit Card Agreement between an
Account Originator 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 the Purchaser by the
Seller 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 Transferred Account, but shall
exclude (e) any Account that (i) after the Removal Date, the newly
generated Receivables in which shall not be assigned to the
Purchaser hereunder, (ii) the right, title and interest of the
Purchaser in the Receivables in which are reassigned to the Seller
pursuant to Section 6.1 or (iii) 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 Originator" shall mean the original issuer of
the credit card relating to an Account, including the Bank,
pursuant to a Credit Card Agreement or a purchaser of such Account,
in either case which has sold such Account to the Bank.
"Account Owner" shall mean, the Bank or another entity
which is either 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, and in either case has sold the related
Receivables pursuant to a Receivables Purchase Agreement.
"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, the date specified as such in the
notice delivered with respect thereto pursuant to Section 2.2, and
(ii) with respect to New Accounts, the later of the dates on which
such New Accounts are originated or designated pursuant to Section
2.3.
"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 2.2 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 2.2 of this Agreement.
"Aggregate Addition Account" shall mean each Eligible
Account that is designated pursuant to Section 2.2 to be included
as an Account and is identified in the computer file or microfiche
list delivered to the Purchaser by the Seller pursuant to Sections
2.1 and 2.5.
"Agreement" shall mean this Receivables Purchase
Agreement and all amendments hereof and supplements hereto.
"Bank" shall mean Partners First National Bank, a
national banking association incorporated under the laws of the
United States.
"Capital Ratio" shall mean, as of any date, the ratio
(expressed as a percentage) computed by dividing (a) shareholder's
equity in the Purchaser by (b) total assets (as shown on the
Purchaser's balance sheet prepared in accordance with GAAP) plus
the aggregate Invested Amount of Certificates which have not been
retained by the Purchaser as of such date.
"Closing Date" shall mean , 1997.
"Conveyance" shall have the meaning specified in
subsection 2.1(a).
"Conveyance Papers" shall have the meaning specified in
subsection 4.1(c).
"Credit Adjustment" shall have the meaning specified in
Section 3.2.
"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 "Initial Account" under the Pooling
and Servicing Agreement on the Closing Date.
"Initial Cut-Off Date" shall mean , 1997.
"Insolvency Event" shall have the meaning specified in
Section 8.2.
"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.
"Minimum Capital Ratio" shall mean ___%, which percentage
may be adjusted from time to time at the option of the Purchaser if
the Rating Agency Condition has been satisfied.
"Monthly Period" shall mean the period from and including
the first day of a calendar month to and including the last day of
such calendar month.
"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 2.3 to be included as an Account and is identified in the
computer file or microfiche list delivered to the Purchaser by the
Seller pursuant to Sections 2.1 and 2.5.
"New Principal Receivables" shall have the meaning set
forth in Section 3.1.
"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.
"PFRFC" shall mean Partners First Receivables Financing
Corporation, a Delaware corporation, and its permitted successors
and assigns.
"Pooling and Servicing Agreement" shall mean the Pooling
and Servicing Agreement, dated as of , 1997, among the
Bank, as Servicer, PFRFC, as Transferor, and the Trustee, and all
amendments and supplements thereto.
"Portfolio Reassignment Price" shall mean the portion of
the amount payable by PFRFC 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 5.2.
"Purchase Price" shall have the meaning set forth in
Section 3.1.
"Purchased Assets" shall have the meaning set forth in
Section 2.1.
"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. A Receivable shall be deemed to have been created at
the end of the Date of Processing of such Receivable.
"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 6.1(b).
"Seller" shall mean Partners First Receivables, LLC, a
limited liability company organized under the laws of the State of
Delaware, and its successor and assigns.
"Servicer" shall have the meaning set forth in the
Pooling and Services Agreement.
"Settlement Statement" shall have the meaning set forth
in Section 3.3.
"Supplemental Conveyance" shall have the meaning set
forth in Section 2.5.
"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 trust created by the Pooling and
Servicing Agreement.
"Trustee" shall mean The Bank of New York, 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 1.2. 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 2.1. Purchase.
(a) By execution of this Agreement, the Seller does
hereby sell, transfer, assign, set over and otherwise convey to the
Purchaser (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 and all of the
Receivables created in such Accounts following the initial Series
Closing Date and upon origination or acquisition 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 Seller
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 Seller to the
Purchaser, (ii) that such financing statements shall name the
Seller, as seller, and the Purchaser, 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
the Purchaser as soon as is practicable after filing.
(c) In connection with such Conveyance, the Seller
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 the Purchaser
in accordance with this Agreement and have been conveyed by the
Purchaser 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 the
Purchaser 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 the Purchaser, and is hereby incorporated
into and made a part of this Agreement. The Seller 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
Seller'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 Seller
to the Purchaser. 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
Seller shall be deemed to have granted and does hereby grant to the
Purchaser a first priority perfected security interest, in all of
the Seller'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 the Purchaser hereunder
and the obligations of the Seller hereunder.
Section 2.2. Addition of Aggregate Addition Accounts.
(a) If, from time to time, the Purchaser 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 the
Purchaser may, at its option, give the Seller 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 Seller shall on or before the Addition Date,
designate sufficient Eligible Accounts to be included as Additional
Accounts so that after the inclusion thereof the Purchaser 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 2.2(b), from time to time
Eligible Accounts may be designated to be included as Aggregate
Addition Accounts, upon the mutual agreement of the Purchaser and
the Seller. In either event, the Seller shall have sole
responsibility for selecting the Aggregate Addition Accounts.
(b) On the Addition Date with respect to any designation
of Aggregate Addition Accounts, the Purchaser shall purchase the
Seller'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 Seller shall have delivered to the Purchaser
copies of UCC-1 financing statements covering such Aggregate
Addition Accounts, if necessary to perfect the Purchaser's
undivided interest in the Receivables arising therein;
(iii) to the extent required of the Purchaser by Section
4.3 of the Pooling and Servicing Agreement, the Seller 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 Seller
shall have occurred nor shall the transfer of the Receivables
arising in the Aggregate Addition Accounts to the Purchaser
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
2.2(a), the Rating Agency Condition shall have been satisfied;
(vi) the Bank shall have delivered to the Purchaser 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 the Purchaser and by the
Purchaser to the Trust will not result in an Adverse Effect
and, in the case of Aggregate Addition Accounts, the Seller
shall have delivered to the Purchaser an Officer's
Certificate, dated the Addition Date, stating that the Seller
reasonably believes that the addition of the Receivables
arising in the Aggregate Addition Accounts to the Purchaser
and by the Purchaser to the Trust will not have an Adverse
Effect.
Section 2.3. Addition of New Accounts.
(a) Upon the mutual agreement of the Purchaser and the
Bank, subject to compliance by the Purchaser with the conditions
specified in subsections 2.9(d) and (e) of the Pooling and
Servicing Agreement and compliance by the Seller with subsection
2.3(b), the Seller 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 Seller
shall take all actions necessary to comply, or to enable the
Purchaser to comply, with the requirements of Section 2.9 of the
Pooling and Servicing Agreement and shall cooperate with the
Purchaser 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, the Purchaser shall purchase the Seller'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 Seller shall have delivered to the Purchaser
copies of UCC-1 financing statements covering such New
Accounts, if necessary to perfect the Purchaser's interest in
the Receivables arising therein;
(iii) to the extent required of the Purchaser by Section
4.3 of the Pooling and Servicing Agreement, the Seller 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 the Purchaser
have been made in contemplation of the occurrence thereof; and
(v) the transfer of the Receivables arising in the New
Accounts to the Purchaser and by the Purchaser to the Trust
will not result in the occurrence of a Pay Out Event or a
Reinvestment Event.
Section 2.4. Representations and Warranties. The Seller
hereby represents and warrants to the Purchaser as of the related
Addition Date as to the matters set forth in Sections 2.2(b)(v) and
(vi) above and that, in the case of Additional Accounts, the list
delivered pursuant to Section 2.5 below is, as of the applicable
Additional Cut-Off Date, true and complete in all material
respects.
Section 2.5. Delivery of Documents. In the case of the
designation of Additional Accounts, the Seller shall deliver to the
Purchaser (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
Purchaser, 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
Seller shall deliver to the Purchaser 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 2.3(b)
above.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1. Purchase Price.
(a) The "Purchase Price" for the Receivables in the
Initial Accounts as of the Initial Cut-Off Date conveyed to the
Purchaser 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 Seller and the
Purchaser 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 the Purchaser
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 Seller
to the Purchaser 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
Seller and the Purchaser 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 the Purchaser with
respect to the Receivables on the Closing Date and with respect to
each Receivable created thereafter shall be paid (i) in cash, (ii)
with the consent of the Purchaser, by means of capital contributed
by the Seller to the Purchaser in the form of a contribution of the
Receivables, (iii) with the consent of the Purchaser, by issuance
to the Seller of a subordinated note in or substantially in the
form of Exhibit B (the "Subordinated Note") or by increase in the
amount outstanding thereunder, or (iv) any combination of the
foregoing, in each case in accordance with Section 3.3.
(c) To the extent that the Purchaser shall not have paid
before, or shall not have available to it, cash in U.S. dollars in
same day funds sufficient to pay (or cause to be paid) to the
Seller the Purchase Price for Receivables that have been newly
created during any Monthly Period, the remainder of the Purchase
Price shall be paid on each Distribution Date by increasing the
principal amount of the Subordinated Note by an amount equal to
such insufficiency; provided, however, that to the extent that any
such increase in the principal amount of the Subordinated Note
would cause the Capital Ratio as of the end of the preceding
Monthly Period to be less than the Minimum Capital Ratio as of the
end of the preceding Monthly Period, Receivables having an
outstanding balance of Principal Receivables sufficient to avoid
the Capital Ratio being less than the Minimum Capital Ratio shall
be deemed contributed to the capital of the Purchaser by the
Seller; provided, further, that the portion of the Purchase Price
paid on such Distribution Date with a Subordinated Note as of the
end of the preceding Monthly Period shall not cause (a) the sum of
(i) the principal amount of the Subordinated Note and (ii) the
outstanding principal amount of all certificates issued by the
Trust that are or may be classified as debt for federal income tax
purposes to exceed (b) 80% of (x) the aggregate amount of Principal
Receivables and amounts on deposit in the Special Funding Account
minus (y) the principal amount of any Supplemental Certificate,
Participation Interest and any other interest in the Transferor's
Interest not held by the Purchaser
Section 3.2. 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 the Purchaser by the Seller which has since been
reversed by the Seller 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 3.9 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 3.1 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 3.2 causes the
Purchase Price to be a negative number, the Seller agrees that, not
later than 1:00 P.M. New York City time on such Distribution Date,
the Seller shall pay to the Purchaser an amount equal to the amount
by which the Purchase Price minus the Credit Adjustment would be a
negative number.
Section 3.3. Settlement and Ongoing Payment of Purchase
Price. On each Distribution Date under the Pooling and Servicing
Agreement, the Seller shall deliver, or cause to be delivered, a
settlement statement (the "Settlement Statement") to the Purchaser,
showing the aggregate Purchase Price of Receivables conveyed to the
Purchaser during the prior Monthly Period, the portion thereof paid
in cash, the portion represented by an increase in the Subordinated
Note and the portion represented by a capital contribution, and the
amount which remains unpaid as Credit Adjustments made with respect
to such prior Monthly Period pursuant to Section 3.2 hereof and any
adjustment to the Purchase Price of Receivables with respect to
such Monthly Period pursuant to Section 6.1 hereof. Any cash
balance due from the Purchaser to the Seller shall be paid in cash
in immediately available funds to the Seller or the Seller shall
convey such amount as a capital contribution to the Purchaser or
the outstanding balance of the Subordinated Note shall be increased
to reflect such unpaid balance or a combination of the foregoing
shall occur, and any balance due from the Purchaser to the Seller
be paid in immediately available funds to the Purchaser. To the
extent that the Seller has received an amount greater than the
Purchase Price of such Receivables, the Seller shall first apply
such amount to the payment of the unpaid principal of the
Subordinated Note, if any. If, after giving effect to any such
payment in respect of the Subordinated Note, the Seller has
received an amount greater than the Purchase Price, the Seller
shall retain such amounts and, at the option of the Purchaser (x)
issue its note to the Purchaser with terms substantially similar to
the terms of the Subordinated Note or (y) subject to applicable
legal restrictions and the Minimum Capital Ratio, elect to treat
such amounts as a dividend or return of capital to the Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Bank
Relating to the Bank. The Seller hereby represents and warrants
to, and agrees with, the Purchaser as of the Closing Date and on
each Addition Date, that:
(a) Organization and Good Standing. The Seller is a
limited liability company duly organized and validly existing in
good standing 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 presently owned or
conducted, and to execute, deliver and perform its obligations
under this Agreement.
(b) Due Qualification. The Seller is duly qualified to
do business and is in good standing as a foreign limited liability
company (or is exempt from such requirements) and has obtained all
necessary licenses and approvals, in each jurisdiction which
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 Seller under
this Agreement.
(c) Due Authorization. The execution, delivery and
performance of this 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 Seller by all necessary corporate action on the part of the
Seller.
(d) No Conflict. The execution and delivery of this
Agreement and the Conveyance Papers by the Seller, 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 terms and provisions of, or
constitute (with or without notice or lapse of time or both) a
default under, any indenture, contract, agreement, mortgage, deed
of trust, or other instrument to which the Seller is a party or by
which it or any of its properties are bound which would have an
Adverse Effect.
(e) No Violation. The execution, delivery and
performance of this Agreement and the Conveyance Papers by the
Seller and the fulfillment of the terms contemplated herein and
therein applicable to the Seller will not conflict with or violate
any Requirements of Law applicable to the Bank in a manner which
would have an Adverse Effect.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Seller,
threatened against the Seller, 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 Seller, would materially and adversely
affect the performance by the Seller 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 Delaware 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 Seller in connection with the execution and delivery by the
Seller of this Agreement and the Conveyance Papers and the
performance of the transactions contemplated by this Agreement or
the Conveyance Papers by the Seller have been duly obtained,
effected or given and are in full force and effect.
The representations and warranties set forth in this
Section 4.1 shall survive the transfer and assignment of the
Receivables to the Purchaser. Upon discovery by the Seller or the
Purchaser 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 4.2. Representations and Warranties of the
Seller Relating to the Agreement and the Receivables.
(a) Representations and Warranties. The Seller hereby
represents and warrants to the Purchaser 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 Seller enforceable
against the Seller 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 the Purchaser
free and clear of any Lien of any Person claiming through or under
the Seller 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 the Purchaser 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 the Purchaser of all right, title
and interest of the Seller 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 the
Purchaser, 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
Purchaser 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 Seller to
be materially adverse to the interests of the Purchaser 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 4.2 shall survive the transfer and
assignment of the Receivables to the Purchaser. Upon discovery by
either the Seller or the Purchaser of a breach of any of the
representations and warranties set forth in this Section 4.2, 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
Seller hereby acknowledges that the Purchaser intends to rely on
the representations hereunder in connection with representations
made by the Purchaser to secured parties, assignees or subsequent
transferees including but not limited to transfers made by the
Purchaser to the Trust pursuant to the Pooling and Servicing
Agreement and that the Trustee may enforce such representations
directly against the Seller.
Section 4.3. Representations and Warranties of the
Purchaser. As of the Closing Date, the Purchaser hereby represents
and warrants to, and agrees with, the Seller that:
(a) Organization and Good Standing. The Purchaser 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
presently owned or conducted and to execute, deliver and perform
its obligations under this Agreement and the Conveyance Papers.
(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 the Purchaser by all necessary
corporate action on the part of the Purchaser.
(c) No Conflict. The execution and delivery of this
Agreement and the Conveyance Papers by the Purchaser, 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 the Purchaser,
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 Purchaser 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 the
Purchaser and the fulfillment of the terms contemplated herein and
therein applicable to the Purchaser will not conflict with or
violate any Requirements of Law applicable to the Purchaser.
(e) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Purchaser,
threatened against the Purchaser, 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 the Purchaser, would materially and
adversely affect the performance by the Purchaser 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 the Purchaser in connection with the execution and delivery by
the Purchaser 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 4.3 shall survive the Conveyance of the Receivables to the
Purchaser. Upon discovery by the Purchaser or the Seller 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 5.1. Covenants of the Seller. The Seller hereby
covenants and agrees with the Purchaser as follows:
(a) Receivables Not To Be Evidenced by Promissory
Notes. Except in connection with its enforcement or collection of
an Account, the Seller 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
(or underlying receivable) is so evidenced as a result of any
action by the Seller it shall be deemed to be an Ineligible
Receivable in accordance with Section 6.1(a) and shall be
reassigned to the Seller in accordance with Section 6.1(b)
(b) Security Interests. Except for the conveyances
hereunder, the Seller will not sell, pledge, assign or transfer to
any other Person, or take any other action inconsistent with the
Purchaser's ownership of the Receivables or grant, create, incur,
assume or suffer to exist any Lien on, any Receivable, whether now
existing or hereafter created, or any interest therein, and the
Seller shall not claim any ownership interest in the Receivables
and shall defend the right, title and interest of the Purchaser in,
to and under the Receivables, whether now existing or hereafter
created, against all claims of third parties claiming through or
under the Seller; provided, however, that nothing in this section
shall prevent or be deemed to prohibit the Seller 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 Seller 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
Transferor Certificate and certain other rights of Purchaser as the
Transferor under the Pooling and Servicng Agreement in accordance
with the terms of this Agreement and any related Supplement.
(c) Account Allocations. In the event that the Seller
is unable for any reason to transfer Receivables to the Purchaser
in accordance with the provisions of this Agreement (including,
without limitation, by reason of the application of the provisions
of Section 8.2 or any order of any Governmental Authority), then,
in any such event, the Seller agrees (except as prohibited by any
such order) to allocate and pay to the Purchaser, after the date of
such inability, all amounts in the manner by which the Purchaser
will allocate and pay to the Trust after such inability by the
Purchaser pursuant to Section 2.11 of the Pooling and Servicing
Agreement.
(d) Notice of Liens. The Seller shall notify the
Purchaser 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.
(e) Interchange. Not later than 1:00 p.m., New York
City time, on each Transfer Date, the Seller shall deposit or cause
to be deposited 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 or cause to be identified the amount of such Interchange,
the amount reasonably estimated by the Seller as the amount of such
Interchange.
(f) Documentation of Transfer. The Seller shall
undertake to file the documents which would be necessary to perfect
and maintain the transfer of the Purchased Assets to the Purchaser.
(g) Segregation of Accounts. The records and agreements
relating to the Accounts and Receivables may not be segregated by
the applicable Account Owner 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 Purchaser or the transfer of the Receivables by
the Purchaser to the Trust, but the records of the applicable
Account Owner will be marked to evidence such sale or transfer.
Section 5.2. Covenants of the Seller with Respect to
Receivables Purchase Agreements. The Seller, in its capacity as
purchaser of Receivables from any 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 the Seller will at all times enforce the covenants
and agreements of the applicable 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,
the related 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 5.2(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.
The Seller 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.
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1. Reassignment of Ineligible Receivables
(a) In the event any representation or warranty under
Section 4.2(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 the Purchaser is required to accept
reassignment of Ineligible Receivables previously sold by the
Seller to the Purchaser pursuant to Section 2.5(a) of the Pooling
and Servicing Agreement, the Seller shall accept reassignment of
the Purchaser's interest in such Ineligible Receivables on the
terms and conditions set forth in Section 6.1(b).
(b) The Seller shall accept reassignment of any
Ineligible Receivables previously sold by the Seller to the
Purchaser from the Purchaser on the date on which such reassignment
obligation arises, and shall pay for such reassigned Ineligible
Receivables by paying to the Purchaser 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, the Purchaser shall
automatically and without further action be deemed to sell,
transfer, assign, set-over and otherwise convey to the Seller,
without recourse, representation or warranty, all the right, title
and interest of the Purchaser 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 the Purchaser as collected in full
as of the date on which they were transferred. The Purchaser shall
execute such documents and instruments of transfer or assignment
and take such other actions as shall reasonably be requested by the
Seller to effect the conveyance of such Ineligible Receivables
pursuant to this subsection.
Section 6.2. Reassignment of Certificateholders'
Interest in Trust Portfolio. In the event any representation or
warranty set forth in Section 4.1(a) or (c) or Section 4.2(a)(i) or
(a)(v) is not true and correct in any material respect and as a
result of such breach the Purchaser is required to accept a
reassignment of the Certificateholders' Interest in the Receivables
previously sold by the Seller to the Purchaser pursuant to Section
2.6 of the Pooling and Servicing Agreement, the Seller shall be
obligated to accept a reassignment of the Purchaser's interest in
such Receivables on the terms set forth below.
The Seller shall pay to the Purchaser 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 2.6 of the Pooling and Servicing
Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1. Conditions to the Purchaser's Obligations
Regarding Initial Receivables. The obligations of the Purchaser 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 Seller
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 the Purchaser shall be true and correct as of the
Initial Cut-Off Date in all material respects;
(c) The Seller shall have (i) delivered to the Purchaser
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 Seller 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 Seller to the
Purchaser, and shall deliver a file-stamped copy of such financing
statements or other evidence of such filings to the Purchaser;
(e) On or before the Closing Date, the Purchaser 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 the
Purchaser, and the Purchaser shall have received from the Seller
copies of all documents (including, without limitation, records of
corporate proceedings) relevant to the transactions herein
contemplated as the Purchaser may reasonably have requested.
Section 7.2. Conditions Precedent to the Bank's
Obligations. The obligations of the Seller 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 the Purchaser
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 3.1 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
Seller, and the Seller shall have received from the Purchaser
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 8.1. 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 8.2. Purchase Termination. If the Seller 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 Seller 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 Seller or for any substantial part of the Seller's property, or
for the winding-up or liquidation of the Seller's affairs and, if
instituted against the Seller, 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 Seller shall commence a voluntary case under
any Debtor Relief Law, or if the Seller 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
Seller shall have taken any corporate action in furtherance of any
of the foregoing actions (each an "Insolvency Event"); then the
Seller shall immediately cease to transfer Principal Receivables to
the Purchaser and shall promptly give notice to the Purchaser and
the Trustee of such Insolvency Event. Notwithstanding any
cessation of the transfer to the Purchaser of additional Principal
Receivables, Principal Receivables transferred to the Purchaser
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 the Purchaser
available for transfer by the Purchaser the Trust pursuant to the
Pooling and Servicing Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. 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 the Purchaser and the Seller in accordance with
this Section 9.1. This Agreement and any Conveyance Papers may be
amended from time to time by the Purchaser and the Seller (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 Seller or the
Purchaser; provided, however, that no amendment pursuant to
clause (iv) or (v) of this Section 9.1 shall be effective unless
the Seller and the Purchaser 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 9.2. 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 9.3. 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 Seller, , Attention:
(facsimile no. ), (b) in the case of the
Purchaser, 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 9.4. 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 9.5. Assignment. Notwithstanding anything to
the contrary contained herein, other than the Purchaser'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 9.6 hereof, this
Agreement and all other Conveyance Papers may not be assigned by
the parties hereto; provided, however, that the Seller 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 or (ii) any affiliate owned directly or indirectly by the
Purchaser to any entity provided that each Rating Agency has
advised the Purchaser and the Seller that the Rating Agency
Condition has been satisfied.
Section 9.6. Acknowledgement and Agreement of the
Seller. By execution below, the Seller expressly acknowledges and
agrees that all of the Purchaser's right, title, and interest in,
to, and under this Agreement, including, without limitation, all of
the Purchaser's right, title, and interest in and to the
Receivables purchased pursuant to this Agreement, shall be assigned
by the Purchaser to the Trustee for the benefit of the
beneficiaries of the Trust, including the Certificateholders, and
the Seller consents to such assignment. The Seller further agrees
that notwithstanding any claim, counterclaim, right or setoff or
defense which it may have against the Purchaser, due to a breach by
the Purchaser of this Agreement or for any other reason, and
notwithstanding the bankruptcy of the Purchaser or any other event
whatsoever, the Seller's sole remedy shall be a claim against the
Purchaser for money damages and, then only to the extent of funds
received by the Purchaser pursuant to the Pooling and Servicing
Agreement, and in no event shall the Seller 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
Seller agrees for the benefit of the Trustee that any amounts
payable by the Seller to the Purchaser hereunder which are to be
paid by the Purchaser to the Trustee for the benefit of the
Certificateholders shall be paid by the Seller on behalf of the
Purchaser, directly to the Trustee.
Section 9.7. Further Assurances. The Purchaser and the
Seller 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 9.8. No Waiver; Cumulative Remedies. No failure
to exercise and no delay in exercising, on the part of the
Purchaser or the Seller, 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 9.6, the rights, remedies, powers and privileges herein
provided are cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
Section 9.9. 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 the Purchaser to the
Trustee pursuant to the Pooling and Servicing Agreement.
Section 9.15. Nonpetition Covenant. The Seller 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 the Purchaser 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.
PARTNERS FIRST RECEIVABLES, LLC
By: _____________________________
Title: __________________________
PARTNERS FIRST RECEIVABLES FUNDING
CORPORATION
By: _____________________________
Title: __________________________
EXHIBIT A
FORM OF SUPPLEMENTAL CONVEYANCE
(As required by Section 2.5 of the Receivables Purchase Agreement)
SUPPLEMENTAL CONVEYANCE No. dated as of , 19
, by and between PARTNERS FIRST RECEIVABLES, LLC, as Seller (the
"Seller"), and PARTNERS FIRST RECEIVABLES FUNDING (the
"Purchaser"), pursuant to the Receivables Purchase Agreement
referred to below.
WITNESSETH:
WHEREAS, the Seller and the Purchaser 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 Seller wishes to designate Additional Accounts to be included
as Accounts and the Seller wishes to convey its right, title and
interest in the Receivables of such Additional Accounts, whether
now existing or hereafter created, to the Purchaser pursuant to the
Receivables Purchase Agreement (as each such term is defined in the
Receivables Purchase Agreement); and
WHEREAS, the Purchaser is willing to accept such
designation and conveyance subject to the terms and conditions
hereof.
NOW, THEREFORE, the Seller and the Purchaser 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__.
"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 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.
2. Designation of Additional Accounts. The Seller
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 Seller does hereby sell, transfer, assign, set
over and otherwise convey to the Purchaser, 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 Seller 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 the Purchaser, and to
deliver a file-stamped copy of such financing statement or other
evidence of such filing to the Purchaser.
(c) In connection with such sale, the Seller 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 the Purchaser pursuant to this Supplemental Conveyance.
4. Acceptance by the Purchaser. The Purchaser hereby
acknowledges its acceptance of all right, title and interest to the
property, now existing and hereafter created, conveyed to the
Purchaser pursuant to Section 3(a) of this Supplemental Conveyance,
and declares that it shall maintain such right, title and interest.
The Purchaser further acknowledges that, prior to or simultaneously
with the execution and delivery of this Supplemental Conveyance,
the Seller delivered to the Purchaser the computer file or
microfiche list described in Section 2 of this Supplemental
Conveyance.
5. Representations and Warranties of the Seller. The
Seller hereby represents and warrants to the Purchaser 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 Seller enforceable against the Seller 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 the Purchaser 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 Seller to be adverse to the interests of the
Purchaser 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 the
Seller of all right, title and interest of the Seller 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 Seller 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 Seller, the performance of the
transactions contemplated by this Supplemental Conveyance and the
fulfillment of the terms hereof applicable to the Seller will not
conflict with or violate any Requirements of Law applicable to the
Seller;
(i) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of the Seller,
threatened against the Seller 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 Seller in connection with the execution and
delivery of this Supplemental Conveyance by the Seller and the
performance of the transactions contemplated by this Supplemental
Conveyance by the Seller, 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.
PARTNERS FIRST RECEIVABLES, LLC
By:
--------------------------------
Name:
Title:
PARTNERS FIRST RECEIVABLES FINANCING
CORPORATION
By:
--------------------------------
Name:
Title:
Schedule I to
Supplemental
Conveyance
Additional Accounts
EXHIBIT B
FORM OF REVOLVING NOTE
REVOLVING NOTE
This Revolving Note, dated as of December __, 1997, by
PARTNERS FIRST RECEIVABLES FUNDING CORPORATION, a Delaware
corporation (the "Borrower") to PARTNERS FIRST RECEIVABLES, LLC, a
Delaware limited liability company (the "Lender").
The Lender and the Borrower have entered into a Receivables
Purchase Agreement (the "Receivables Purchase Agreement") dated as
of December __, 1997 providing for the purchase from time to time
by the Borrower of certain receivables generated from time to time
in a portfolio of consumer open end credit card accounts (the
"Receivables"). Except as otherwise expressly provided herein or
unless the context otherwise requires, capitalized terms not
otherwise defined herein shall have the meanings assigned to such
terms in the Receivables Purchase Agreement.
1. The Note. For value received, the Borrower hereby
promises to pay to the order of the Lender at its offices at
_________________________, the principal amount of $________ (the
"Initial Loan") or so much of the aggregate principal amount of all
Loans (as hereinafter defined) made by the Lender to the Borrower
under the terms of this Note as remains unpaid, as shown in the
schedule attached hereto and any continuations thereof, on the day
which is one year and a day after the payment in full of the
Transferor Amount and all Invested Amounts of each Series issued
pursuant to the Pooling and Servicing Agreement (the "Maturity
Date"). The Borrower shall pay interest on the unpaid principal
amount of the Loans as provided herein.
2. The Loans. a From time to time between the date of this
Note and the Maturity Date, and subject to the restrictions on
lending under this Note contained in the Receivables Purchase
Agreement, the Lender may lend to the Borrower additional sums
(each a "Loan" and, together with the Initial Loan, the "Loans"),
as provided herein.
3. The obligation of the Borrower to repay the aggregate
unpaid principal amount of the Loans outstanding shall be evidenced
by this Note and the schedule attached hereto. The Lender is
hereby authorized to endorse on the schedule or on a continuation
of such schedule, appropriate notations regarding each Loan
evidenced by this Note; provided, however, that the failure to
make, or error in making, any notation shall not limit or otherwise
affect the obligation of the Borrower hereunder.
4. When the Borrower requests a Loan in connection with the
acquisition of any Receivables, the Borrower shall notify the
Lender by telephone specifying the amount and the date on which
such Loan is requested. Unless otherwise specified, the maturity
of each such Loan shall be the Maturity Date.
5. The Lender agrees that on each Distribution Date, the
Lender shall determine whether the Capital Ratio as of the end of
the preceding Monthly Period equaled or exceeded the Minimum
Capital Ratio. If, as of any such date, the Capital Ratio was less
than the Minimum Capital Ratio, from and after the date of such
determination the Lender shall not increase the principal amount of
this Revolving Note until the Capital Ratio is at least equal to
the Minimum Capital Ratio.
6. The Lender agrees that the portion of the Purchase
Price paid with this Revolving Note shall not cause (a) the sum of
(i) the principal amount of this Revolving Note and (ii) the
outstanding principal amount of all certificates issued by the
Trust that are or may be classified as debt for federal income tax
purposes to exceed (b) 80% of (x) the aggregate amount of Principal
Receivables and amounts on deposit in the Special Funding Account
minus (y) the principal amount of any Supplemental Certificate,
Participation Interest and any other interest in the Transferor's
Interest not held by the Purchaser.
7. Interest. Each Loan shall bear interest which shall be
calculated as the arithmetic mean of the beginning and ending
principal balances for such month, from the date hereof until this
Revolving Note is fully paid, at a monthly rate equal to one-
twelfth of the Federal Funds rate near closing bid as published in
the Wall Street Journal on the ________th of that month, or the
next Business Day if the fifteenth is not a Business Day. Interest
shall be due and payable semi-annually on the last day of June and
December of each year (each, an "Interest Payment Date"),
commencing on June 30, 1997. Interest is based on twelve 30-day
months.
8. Payment. Subject to the limitations on payment set forth
in Section 5 hereof, the Lender shall be entitled to and may
require the Borrower to, make a payment of the loans, in whole or
in part, on any day upon providing one Business Day's written
notice to the Borrower.
9. Subordination of Obligations. The Lender irrevocably
agrees that the obligations of the Borrower under this Note with
respect to the payment of principal and interest are and shall be
fully and irrevocably subordinate in right of payment and subject
to the prior payment or provision for payment in full of all Senior
Indebtedness, that such obligations may only be satisfied to the
extent of cash or other assets of the Borrower then available for
such purpose after giving effect to all required payments in
respect of Senior Indebtedness, and that such obligations shall not
constitute a claim against the Borrower at any time that, and for
so long as, cash or such other assets available therefor are
insufficient. "Senior Indebtedness" means the principal of and
interest, including post-default interest, on any indebtedness of
or guaranteed by the Borrower, whether outstanding or guaranteed on
the date hereof or thereafter created, incurred, assumed or
guaranteed for money borrowed or for the deferred purchase price of
property purchased by any person including, for this purpose, all
obligations of the Borrower under capitalized leases or purchase
money mortgages, and, in each such case, all renewals, extensions
and refundings thereof including, without limitation, all
obligations of the Borrower arising under or in respect of the
Pooling and Servicing Agreement; provided, however, that Senior
Indebtedness shall not include any obligation of or guarantee by
the Borrower, whether outstanding or guaranteed on the date hereof
of thereafter created, incurred, assumed or guaranteed that by
agreement, operation of law or by its terms is subordinate in right
of payment to this Note. In the event of the appointment of a
receiver or trustee of the Borrower or in the event of its
insolvency, bankruptcy, assignment for the benefit of creditors or
reorganization, whether or not pursuant to the bankruptcy laws, or
any other marshalling of the assets and liabilities of the
Borrower, the Lender shall not be entitled to participate or share,
ratably or otherwise, in the distribution of the assets of the
Borrower until all claims of all other present and future creditors
of the Borrower, whose claims are senior hereto, have been fully
satisfied, or provisions have been made therefor.
10. Acceleration Upon Certain Events. The Borrower's
obligation to pay the unpaid principal amount hereof shall
forthwith mature, together with interest accrued thereon, in the
event of any receivership, insolvency, liquidation, bankruptcy,
assignment for the benefit of creditors, reorganization whether or
not pursuant to bankruptcy laws, or any other marshalling of the
assets and liabilities of the Borrower, but payment of the same
shall remain subordinate as hereinabove set forth.
11. Effect of Default. Default in any payment hereunder,
including the payment of interest, shall not accelerate the
maturity hereof except as herein specifically provided, and the
obligation to make payments shall remain subordinated as
hereinabove set forth.
12. Upon Whom Binding. The provisions of this Note shall be
binding upon the Lender, its successors and assigns and upon the
Borrower.
13. GOVERNING LAW. THIS NOTE SHALL BE DEEMED TO HAVE BEEN
MADE UNDER, AND SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF
DELAWARE IN ALL RESPECTS.
14. Cancellation. This Note shall not be subject to
cancellation by either party.
15. No Security. The Lender agrees that it is not taking and
will not take or assert as security for the payment of this Note
any security interest in or lien upon, whether created by contract,
statute or otherwise, any property of the Borrower or any property
in which the Borrower may have an interest, which is or at any time
may be in possession or subject to the control of the Lender. The
Lender hereby waives, and further agrees that it will not seek to
obtain payment of this Note in whole or in any part by exercising
any right of set-off it may assert or possess whether created by
contract, statute or otherwise. Any agreement between the Borrower
and the Lender (whether in the nature of a general loan and
collateral agreement, a security or pledge agreement or otherwise),
shall be deemed amended hereby to the extent necessary so as not to
be inconsistent with the provisions of this Note.
16. Assignment. This Note shall inure to the benefit of and
be binding upon the parties hereto and each of their respective
successors and assigns. The Borrower may not assign or transfer
any of its rights or obligations hereunder without the prior
written consent of the Lender.
17. No Bankruptcy Petition Against the Borrower. The Lender
(in its capacity as Lender, but in no other capacity), by its
acceptance of this Note, hereby covenants and agrees that, prior to
the date which is one year and one day after the payment in full of
the Transferor Amount and all Invested Amounts of all Series issued
pursuant to the Pooling and Servicing Agreement, it will not
institute against or join any other Person in instituting against
the Borrower 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 has caused this Note to be
executed by its officers or employees thereunto duly authorized and
directed by appropriate corporate authority.
PARTNERS FIRST RECEIVABLES
FUNDING CORPORATION
By:________________________
Title:_____________________
THE TERMS AND CONDITIONS
HEREOF ARE HEREBY ACKNOWLEDGED
AND ACCEPTED:
PARTNER FIRST RECEIVABLES, LLC
By:____________________________
Title:_________________________
Schedule I
LIST OF ACCOUNTS
DEEMED INCORPORATED BY REFERENCE
