SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) June 26, 1998
Partners First Receivables Funding, LLC
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(Exact Name of Registrant as Specified in its Charter)
Partners First Credit Card Master Trust
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(Issuer with respect to the Securities)
Delaware
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(State or Other Jurisdiction of Incorporation)
333-29495 and 333-29495-01 52-2072056
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(Commission File Numbers) (I.R.S. Employer Identification No.)
410-865-8700
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Index to Exhibits appears at page 5.
ITEM 5. OTHER EVENTS.
The Registrant is filing final forms of the exhibits listed in Item
7(c) below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT NO. DOCUMENT DESCRIPTION
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1.1 Underwriting Agreement, dated June 22, 1998, among Partners
First Receivables Funding, LLC, as Transferor (the
"Transferor"), Partners First Holdings, LLC, as Servicer
(the "Servicer"), and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representative of the several underwriters
named therein (the "Representative").
1.2 Terms Agreement, dated June 22, 1998, among the Transferor,
the Servicer, and the Representative, relating to Series
1998-2 Class A Floating Rate Asset Backed Securities.
1.3 Terms Agreement, dated June 22, 1998, among the Transferor,
the Servicer, and the Representative, relating to Series
1998-2 Class B Floating Rate Asset Backed Securities.
1.4 Terms Agreement, dated June 22, 1998, among the Transferor,
the Servicer, and the Representative, relating to Series
1998-3 Class A Floating Rate Asset Backed Securities.
1.5 Terms Agreement, dated June 22, 1998, among the Transferor,
the Servicer, and the Representative, relating to Series
1998-3 Class B Floating Rate Asset Backed Securities.
4.1 Amended and Restated Pooling and Servicing Agreement, dated
as of June 26, 1998, and related agreements as exhibits
thereto among the Transferor, the Servicer, and The Bank of
New York, as Trustee (the "Trustee").
4.2 Series 1998-2 Supplement to Amended and Restated Pooling and
Servicing Agreement, dated as of June 26, 1998, among the
Transferor, the Servicer, and the Trustee.
4.3 Series 1998-3 Supplement to Amended and Restated Pooling and
Servicing Agreement, dated as of June 26, 1998, among the
Transferor, the Servicer, and the Trustee.
4.5 Amended and Restated Receivables Purchase Agreement, dated as
of June 26, 1998, between Partners First Receivables, LLC and
the Transferor
8.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with
respect to tax matters (Series 1998-2).
8.3 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with
respect to tax matters (Series 1998-3).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf
by the undersigned hereunto duly authorized.
PARTNERS FIRST RECEIVABLES FUNDING, LLC
(REGISTRANT)
DATED: July 9, 1998 By: /s/ Mark J. Norwicz
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Name: Mark J. Norwicz
Title: Treasurer
PARTNERS FIRST CREDIT CARD MASTER TRUST
(CO-REGISTRANT)
DATED: July 9, 1998 By: PARTNERS FIRST RECEIVABLES FUNDING, LLC
(Originator of the Co-Registrant)
By: /s/ Mark J. Norwicz
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Name: Mark J. Norwicz
Title: Treasurer
INDEX TO EXHIBITS
Exhibit No. Document Description
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1.1 Underwriting Agreement, dated June 22, 1998, among Partners
First Receivables Funding, LLC, as Transferor (the
"Transferor"), Partners First Holdings, LLC, as Servicer
(the "Servicer"), and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representative of the several underwriters
named therein (the "Representative").
1.2 Terms Agreement, dated June 22, 1998, among the Transferor,
the Servicer, and the Representative, relating to Series
1998-2 Class A Floating Rate Asset Backed Securities.
1.3 Terms Agreement, dated June 22, 1998, among the Transferor,
the Servicer, and the Representative, relating to Series
1998-2 Class B Floating Rate Asset Backed Securities.
1.4 Terms Agreement, dated June 22, 1998, among the Transferor,
the Servicer, and the Representative, relating to Series
1998-3 Class A Floating Rate Asset Backed Securities.
1.5 Terms Agreement, dated June 22, 1998, among the Transferor,
the Servicer, and the Representative, relating to Series
1998-3 Class B Floating Rate Asset Backed Securities.
4.1 Amended and Restated Pooling and Servicing Agreement, dated
as of June 26, 1998, and related agreements as exhibits
thereto among the Transferor, the Servicer, and The Bank of
New York, as Trustee (the "Trustee").
4.2 Series 1998-2 Supplement to Amended and Restated Pooling and
Servicing Agreement, dated as of June 26, 1998, among the
Transferor, the Servicer, and the Trustee.
4.3 Series 1998-3 Supplement to Amended and Restated Pooling and
Servicing Agreement, dated as of June 26, 1998, among the
Transferor, the Servicer, and the Trustee.
4.5 Amended and Restated Receivables Purchase Agreement, dated as
of June 26, 1998, between Partners First Receivables, LLC and
the Transferor
8.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with
respect to tax matters (Series 1998-2).
8.3 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with
respect to tax matters (Series 1998-3).
PARTNERS FIRST CREDIT CARD MASTER TRUST
PARTNERS FIRST RECEIVABLES FUNDING, LLC
(Transferor)
PARTNERS FIRST HOLDINGS, LLC
(Servicer)
UNDERWRITING AGREEMENT
(Standard Terms)
June 22, 1998
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
As Representative of the Several Underwriters
Ladies and Gentlemen:
Partners First Receivables Funding, LLC, a Delaware limited
liability company (the "Company"), proposes to cause the Partners First
Credit Card Master Trust (the "Trust") to issue the Asset Backed Securities
designated in the applicable Terms Agreement (as hereinafter defined) (the
"Securities"). The Securities will be issued pursuant to an Amended and
Restated Pooling and Servicing Agreement dated as of June 26, 1998 (the
"Pooling and Servicing Agreement"), among the Company, as transferor (in
such capacity, the "Transferor"), Partners First Holdings, LLC, a Delaware
limited liability company ("Holdings"), as servicer (in such capacity, the
"Servicer"), and The Bank of New York, as trustee (in such capacity, the
"Trustee"), as supplemented by the applicable Series Supplement, having the
date stated in the applicable Terms Agreement, among the Transferor, the
Servicer and the Trustee (the "Supplement"). The Company is a wholly owned
subsidiary of Partners First Receivables, LLC ("PFR") and PFR is a wholly
owned subsidiary of Holdings. The Company, PFR and Holdings are referred to
collectively herein as the "Partners First Entities."
The assets of the Trust will include, among other things,
Receivables (as hereinafter defined) transferred by BankBoston (NH),
National Association and Harris Trust and Savings Bank to PFR and, in turn,
transferred by PFR to the Company and subsequently transferred by the
Company to the Trust pursuant to the Pooling and Servicing Agreement. The
Series of Securities designated in the applicable Terms Agreement will be
sold in a public offering through the underwriters listed on Schedule I to
the applicable Terms Agreement, one or more of which may act as
representative of such underwriters (any underwriter through which
Securities are sold shall be referred to herein as an "Underwriter" or,
collectively, all such Underwriters may be referred to as the
"Underwriters"; and you and any other representative of the Underwriters
may be referred to herein as a "Representative"). Securities of any Series
sold to the Underwriters shall be sold pursuant to a Terms Agreement by and
among the Transferor, the Servicer and the Underwriters, a form of which is
attached hereto as Exhibit A (a "Terms Agreement"), which incorporates by
reference this Underwriting Agreement (this "Agreement"). The term
"applicable Terms Agreement" means the Terms Agreement among the
Transferor, the Servicer and the Underwriters, executed in connection with
the sale to the Underwriters of a particular Series of Securities.
Any Series of Securities sold pursuant to any Terms Agreement
may include the benefits of a letter of credit, cash collateral guaranty or
account, collateral interest, surety bond, insurance policy, spread
account, reserve account, yield supplement account or other similar
arrangement for the benefit of the Securityholders of such Series (a
"Credit Enhancement"). With respect to any such Credit Enhancement, the
Company or Holdings, or both, may enter into an agreement (the "Credit
Enhancement Agreement") with the provider of the Credit Enhancement (the
"Credit Enhancement Provider").
Each Security will represent a specified percentage undivided
interest in the Trust. The assets of the Trust include, among other things,
certain amounts due on a portfolio of MasterCard(R) and VISA(R) revolving
credit card accounts (the "Receivables"), and the benefit of the Credit
Enhancement, if any.
To the extent not defined herein, capitalized terms used
herein have the meanings assigned to such terms in the Pooling and
Servicing Agreement. Unless otherwise stated herein or in the applicable
Terms Agreement, as the context otherwise requires or if such term is
otherwise defined in the Pooling and Servicing Agreement, each capitalized
term used or defined herein or in the applicable Terms Agreement shall
relate only to the Series of Securities designated in the applicable Terms
Agreement and no other Series of Asset Backed Securities issued by the
Trust.
Whenever the Company determines to make an offering of
Securities, the Company and Holdings will enter into a Terms Agreement
providing for the sale of the applicable Securities to, and the purchase
and offering thereof by, the Underwriters. The Terms Agreement relating to
the Securities shall specify the type of Securities to be issued, the names
of the Underwriters participating in such offering (subject to substitution
as provided in Section 10 hereof), the amount of Securities which each such
Underwriter severally agrees to purchase, the price at which the Securities
are to be purchased by the Underwriters from the Company, the initial
public offering price, the time and place of delivery and payment and other
specific terms. The Terms Agreement may take the form of an exchange of any
standard form of written telecommunication between the Underwriters and the
Company. Each offering of Securities will be governed by this Agreement, as
supplemented by the applicable Terms Agreement, and this Agreement and such
Terms Agreement shall inure to the benefit of and be binding upon the
Company, Holdings and each Underwriter participating in the offering of
such Securities.
Section 1. Representations and Warranties. (a) Each of the
Company and Holdings, only as to itself and not jointly, represents and
warrants to, and agrees with, each Underwriter that:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the "1933
Act"), a registration statement on Form S-3 (having the registration
number stated in the applicable Terms Agreement), including a form of
prospectus, relating to the Securities. Such registration statement,
as amended at the time it was declared effective by the Commission,
including all material incorporated by reference therein, and all
information contained in any Additional Registration Statement (as
hereinafter defined) and deemed to be part of such registration
statement as of the time such Additional Registration Statement (if
any), was declared effective by the Commission pursuant to the General
Instructions of the Form on which it was filed and, including all
information (if any) deemed to be a part of such registration
statement as of the time it was declared effective by the Commission
pursuant to Rule 430A(b) ("Rule 430A(b)") under the 1933 Act (such
registration statement, the "Initial Registration Statement"), has
been declared effective by the Commission. If any posteffective
amendment has been filed with respect to the Initial Registration
Statement prior to the execution and delivery of the applicable Terms
Agreement, the most recent such amendment has been declared effective
by the Commission. If (i) an additional registration statement,
including the contents of the Initial Registration Statement
incorporated by reference therein and including all information (if
any) deemed to be a part of such additional registration statement
pursuant to Rule 430A(b) (the "Additional Registration Statement")
relating to the Securities, has been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the 1933 Act and, if so
filed, has become effective upon filing pursuant to Rule 462(b), then
the Securities have been duly registered under the 1933 Act pursuant
to the Initial Registration Statement and such Additional Registration
Statement or (ii) an Additional Registration Statement is proposed to
be filed with the Commission pursuant to Rule 462(b) and will become
effective upon filing pursuant to Rule 462(b), then upon such filing
the Securities will have been duly registered under the 1933 Act
pursuant to the Initial Registration Statement and such Additional
Registration Statement. If the Company does not propose to amend the
Initial Registration Statement or if an Additional Registration
Statement has been filed and the Company does not propose to amend it
and if any posteffective amendment to either such registration
statement has been filed with the Commission prior to the execution
and delivery of the applicable Terms Agreement, the most recent
amendment (if any) to each such registration statement has been
declared effective by the Commission or has become effective upon
filing pursuant to Rule 462(c) under the 1933 Act or, in the case of
any Additional Registration Statement, Rule 462(b). The Initial
Registration Statement and any Additional Registration Statement are
hereinafter referred to collectively as the "Registration Statements"
and individually as a "Registration Statement." Copies of the
Registration Statements, together with any posteffective amendments,
have been furnished to the Underwriters. Holdings proposes to file
with the Commission pursuant to Rule 424 ("Rule 424") under the 1933
Act a supplement (the "Prospectus Supplement") to the form of
prospectus included in a Registration Statement (such prospectus, in
the form it appears in a Registration Statement or in the form most
recently revised and filed with the Commission pursuant to Rule 424,
is hereinafter referred to as the "Basic Prospectus") relating to the
Securities and the plan of distribution thereof. The Basic Prospectus
and the Prospectus Supplement, together with any amendment thereof or
supplement thereto, are hereinafter referred to collectively as the
"Final Prospectus." Except to the extent that the Representative shall
agree to a modification, the Final Prospectus shall be in all
substantial respects in the form furnished to the Underwriters prior
to the execution of the relevant Terms Agreement, or to the extent not
completed at such time, shall contain only such material changes as
the Company has advised the Representative, prior to such time, will
be included therein.
(ii) The Initial Registration Statement, including such amendments
thereto as may have been required on the date of the applicable Terms
Agreement, and the Additional Registration Statement (if any),
relating to the Securities, have been filed with the Commission and
such Initial Registration Statement, as amended, and the Additional
Registration Statement (if any) have become effective. No stop order
suspending the effectiveness of the Initial Registration Statement or
the Additional Registration Statement (if any) has been issued and no
proceeding for that purpose has been instituted or, to the knowledge
of any of the Partners First Entities, threatened by the Commission.
(iii) The Initial Registration Statement conforms, and any
amendments or supplements thereto and the Final Prospectus will
conform, in all material respects to the requirements of the 1933 Act,
and do not and will not, as of the applicable effective date as to the
Initial Registration Statement and any amendment thereto, as of the
applicable filing date as to the Final Prospectus and any supplement
thereto, and as of the Closing Date, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and the Additional Registration Statement (if any) and the Initial
Registration Statement conform in all material respects to the
requirements of the 1933 Act, and do not and will not, as of the
applicable effective date as to the Additional Registration Statement,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company or Holdings, as applicable, by or
on behalf of an Underwriter specifically for use in connection with
the preparation of a Registration Statement and the Final Prospectus.
(iv) Holdings is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware, with corporate power and authority under such laws to own,
lease and operate its properties and conduct its business as described
in the Final Prospectus, and is duly qualified as a foreign limited
liability company and duly authorized to transact business and is in
good standing under the laws of each jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of Holdings.
(v) The Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware, with corporate power and authority under such laws to own,
lease and operate its properties and conduct its business as described
in the Final Prospectus, and is duly qualified as a foreign limited
liability company and duly authorized to transact business and is in
good standing under the laws of each jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of the Company.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company and Holdings; and upon execution and delivery
of each Terms Agreement by the Company and Holdings, such Terms
Agreement shall have been duly authorized, executed and delivered by
the Company and Holdings.
(vii) As of the Closing Date (as defined in Section 2(b) hereof),
the representations and warranties of the Company, as Transferor, or
Holdings, as Servicer, as applicable, in the Pooling and Servicing
Agreement and the Supplement will be true and correct in all material
respects.
(viii) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
Trust is not required to be registered under the Investment Company
Act of 1940, as amended.
(ix) The Securities have been duly authorized, and, when issued
and delivered pursuant to the Pooling and Servicing Agreement and the
Supplement, duly authenticated by the Trustee and paid for by the
Underwriters in accordance with the terms of this Agreement and the
applicable Terms Agreement, will be duly and validly executed, issued
and delivered and entitled to the benefits provided by the Pooling and
Servicing Agreement and the Supplement; each of the Pooling and
Servicing Agreement and the Supplement have been duly authorized by
each of the Company and Holdings and, when executed and delivered by
the Company, as Transferor, and Holdings, as Servicer, each of the
Pooling and Servicing Agreement and the Supplement will (assuming due
execution and delivery by the Trustee) constitute a valid and binding
agreement of the Company or Holdings, as applicable; the Securities,
the Pooling and Servicing Agreement and the Supplement conform to the
descriptions thereof in the Final Prospectus in all material respects;
and, if applicable, the Credit Enhancement Agreement has been duly
authorized, and when executed and delivered by the Trustee and Credit
Enhancement Provider, the Credit Enhancement Agreement will constitute
a valid and binding agreement of the Company and Holdings, as
applicable.
(x) Each authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act and the securities or blue sky laws of
the various states), which is required for (A) the valid
authorization, issuance, sale and delivery of the Securities or (B)
the execution, delivery or performance of this Agreement, the
applicable Terms Agreement, the Pooling and Servicing Agreement, the
Supplement or the Credit Enhancement Agreement by the Company or
Holdings, as applicable, has been received.
(xi) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required to be
obtained or made by the Company or Holdings, as applicable, for the
consummation of the transactions contemplated by this Agreement, the
applicable Terms Agreement, the Pooling and Servicing Agreement or the
Supplement, except such as have been obtained and made under the 1933
Act, such as may be required under state securities laws and the
filing of any financing statements required to perfect the Trust's
interest in the Receivables.
(xii) The Company and Holdings, as applicable, are not in default
in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which
it is a party or by which it may be bound or to which any of its
properties may be subject, except for such defaults that would not
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company or Holdings, as applicable. The execution and delivery of this
Agreement, the applicable Terms Agreement, the Pooling and Servicing
Agreement, the Supplement and the Credit Enhancement Agreement by the
Company or Holdings, as applicable, the issuance and delivery of the
Securities, the consummation by the Company or Holdings, as
applicable, of the transactions contemplated in this Agreement, the
applicable Terms Agreement, the Pooling and Servicing Agreement, the
Supplement and the Registration Statement, and compliance by the
Company or Holdings with the terms of this Agreement, the applicable
Terms Agreement, the Pooling and Servicing Agreement, the Supplement
and the Credit Enhancement Agreement have been duly authorized by all
necessary corporate action on the part of the Company or Holdings, as
applicable, and do not and will not result in any violation of the
charter or bylaws of the Company or Holdings, as applicable, and do
not and will not conflict with, or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or Holdings, as applicable, under
(A) any indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Company or Holdings, as
applicable, is a party or by which it may be bound or to which any of
its properties may be subject or (B) any existing applicable law,
rule, regulation, judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or Holdings, as applicable, or any of
their respective properties except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company or
Holdings, as applicable.
(xiii) Except as disclosed in the Final Prospectus, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company or Holdings, as applicable, threatened
against or affecting the Company or Holdings, as applicable, that is
required to be disclosed in the Final Prospectus or that, in the final
outcome, could, in the judgment of the Company or Holdings, as
applicable, result in any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business
prospects of the Company or Holdings, as applicable, or that could
materially and adversely affect the properties or assets of the
Company or Holdings, as applicable, or that could adversely affect the
consummation of the transactions contemplated in this Agreement; the
aggregate liability or loss, if any, resulting from the final outcome
of all pending legal or governmental proceedings to which the Company
or Holdings, as applicable, is a party or which affect any of its
respective properties that are not described in the Final Prospectus,
including ordinary routine litigation incidental to its business,
would not have a material adverse effect on the condition (financial
or otherwise), earnings, business affairs or business prospects of the
Company or Holdings, as applicable.
(xiv) Since the respective dates as of which information is given
in the Final Prospectus, except as otherwise stated therein, there has
not been (A) any material adverse change in the condition (financial
or otherwise) or in earnings, business affairs or business prospects
of the Company or Holdings, as applicable, or (B) any transaction
entered into by the Trust, the Company or Holdings, other than in the
ordinary course of business, that is material to the Trust or the
Securityholders.
(xv) Neither the Company nor Holdings nor any of their respective
affiliates does business with the government of Cuba or with any
person or affiliate located in Cuba within the meaning of Section
517.075, Florida Statutes.
(b) Any certificate signed by any duly authorized officer of
the Company or Holdings, as applicable, and delivered to a Representative
or to counsel for the Underwriters shall be deemed a representation and
warranty by the Company or Holdings, as applicable, to each Underwriter as
to the matters covered thereby.
Section 2. Purchase and Sale. (a) The several commitments of
the Underwriters to purchase Securities pursuant to any Terms Agreement
shall be deemed to have been made on the basis of the representations and
warranties herein contained and shall be subject to the terms and
conditions herein set forth. It is understood that the several Underwriters
propose to offer the Securities for sale to the public, which may include
selected dealers, as set forth in the Final Prospectus.
(b) Unless otherwise provided in the applicable Terms
Agreement, payment for Securities shall be made to the Company or to its
order by wire transfer of same day funds at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP in New York, New York at 10:00 A.M., New York
City time, on the Closing Date specified in the Terms Agreement, or at such
other time on the same or such other date as the Representative and the
Company may agree upon. The time and date of such payment for the
Securities as specified in the applicable Terms Agreement are referred to
herein as the "Closing Date."
(c) Unless otherwise provided in the applicable Terms
Agreement, payment for the Securities shall be made against delivery to the
Representative for the respective accounts of the several Underwriters of
the Securities registered in the name of Cede & Co. as nominee of The
Depository Trust Company and in such denominations as the Representative
shall request in writing not later than two full Business Days (as
hereinafter defined) prior to the Closing Date. The Company shall make the
Securities available for inspection by the Representative in New York, New
York not later than one full Business Day prior to the Closing Date. As
used herein, the term "Business Day" means any day other than a day on
which banks are permitted or required to be closed in New York City.
Section 3. Certain Covenants of the Company. The Company
covenants with each Underwriter as follows:
(a) If reasonably requested by you in connection
with the offering of the Securities, the Company will prepare a
preliminary prospectus supplement containing such information
concerning the Securities as you and the Company deem appropriate,
and immediately following the execution of the Terms Agreement,
the Company will prepare a Prospectus Supplement that complies
with the 1933 Act and that sets forth the number or principal
amount of Securities covered thereby, the names of the
Underwriters participating in the offering and the number or
principal amount of Securities which each Underwriter severally
has agreed to purchase, the name of each Underwriter, if any,
acting as representative in connection with the offering, the
price at which the Securities are to be purchased by the
Underwriters from the Company, the initial public offering price,
the selling concession and reallowance, if any, and such other
information concerning the Securities as you and the Company deem
appropriate in connection with the offering of the Securities. The
Company will promptly transmit copies of the Prospectus Supplement
to the Commission for filing pursuant to Rule 424 under the 1933
Act and will furnish to the Underwriters named therein as many
copies of any preliminary prospectus supplement, the Basic
Prospectus and the Prospectus Supplement as you shall reasonably
request. In addition, to the extent that any Underwriter (i) has
provided to the Company Collateral Term Sheets or Series Term
Sheets (each as defined below) that such Underwriter has provided
to a prospective investor, the Company will file such Collateral
Term Sheets or Series Term Sheets as an exhibit to a report on
Form 8-K within two Business Days of its receipt thereof, or (ii)
has provided to the Company Structural Term Sheets or
Computational Materials (each as defined below) that such
Underwriter has provided to a prospective investor, the
Company will file or cause to be filed with the Commission a
report on Form 8-K containing such Structural Term Sheet and
Computational Materials, as soon as reasonably practicable after
the date of this Agreement, but in any event, not later than the
date on which the Final Prospectus is filed with the Commission
pursuant to Rule 424.
(b) If at any time when the Final Prospectus is
required by the 1933 Act to be delivered in connection with sales
of the Securities any event shall occur or condition exist as a
result of which it is necessary, in the opinion of counsel for the
Underwriters or counsel for the Company, to amend the Registration
Statement or amend or supplement the Final Prospectus in order
that the Final Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light
of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of either
such counsel, at any such time to amend any Registration Statement
or amend or supplement the Final Prospectus in order to comply
with the requirements of the 1933 Act, the Company will promptly
prepare and file with the Commission, subject to Section 3(d),
such amendment or supplement as may be necessary to correct such
untrue statement or omission or to make the Registration Statement
or the Final Prospectus comply with such requirements.
(c) During the period when the Final Prospectus
is required by the 1933 Act to be delivered in connection with
sales of the Securities or during the entire period that any Class
of Securities is outstanding which were expected to be publicly
offered securities for purposes of ERISA, the Company will,
subject to Section 3(d), file promptly all documents required to
be filed with the Commission pursuant to Section 13, 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "1934
Act").
(d) During the period between the date of the
applicable Terms Agreement and the Closing Date, the Company will
inform you of its intention to file any amendment to any
Registration Statement, any supplement to the Final Prospectus or
any document that would as a result thereof be incorporated by
reference in the Final Prospectus, will furnish you with copies of
any such amendment, supplement or other document and will not file
any such amendment, supplement or other document in a form to
which you or your counsel shall reasonably object.
(e) During the period when the Final Prospectus
is required by the 1933 Act to be delivered in connection with the
sales of the Securities, the Company will notify you immediately,
and confirm the notice in writing, (i) of the effectiveness of any
amendment to any Registration Statement, (ii) of the mailing or
the delivery to the Commission for filing of any supplement to the
Final Prospectus or any document that would as a result thereof be
incorporated by reference in the Final Prospectus, (iii) of the
receipt of any comments from the Commission with respect to any
Registration Statement or the Prospectus, (iv) of any request by
the Commission for any amendment to any Registration Statement or
any supplement to the Final Prospectus or for additional
information relating thereto or to any document incorporated by
reference in the Final Prospectus and (v) of the issuance by the
Commission of any stop order suspending any effectiveness of any
Registration Statement, of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
institution or threatening of any proceeding for any of such
purposes. The Company will use every reasonable effort to prevent
the issuance of any such stop order or of any order suspending
such qualification and, if any such order is issued, to obtain the
lifting thereof at the earliest possible moment.
(f) The Company will furnish to the
Representative, without charge, two copies of each Registration
Statement as originally filed and of all amendments thereto,
whether filed before or after the Registration Statement becomes
effective, copies of all exhibits and documents filed therewith
and copies of all consents and certificates of experts as you may
reasonably request, and has furnished or will furnish to you, for
each other Underwriter, one copy of each Registration Statement as
originally filed and of each amendment thereto.
(g) The Company will cause the Trust to make
generally available to Securityholders and to the Representative
as soon as practicable an earnings statement covering a period of
at least twelve months beginning with the first fiscal quarter of
the Trust occurring after the effective date of the Initial
Registration Statement (or, if later, the effective date of the
Additional Registration Statement), which shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 of the
Commission promulgated thereunder.
(h) The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such
states and other jurisdictions as you may designate and to
maintain such qualifications in effect for a period of not less
than one year from the effective date of the Terms Agreement
applicable to such Securities; provided, however, that the Company
shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or
to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The Company
will file such statements and reports as may be required by the
laws of each jurisdiction in which the Securities have been
qualified as provided above.
(i) To the extent, if any, that the rating
provided with respect to the Securities by the rating agency or
agencies that initially rate the Securities is conditional upon
the furnishing of documents or the taking of any other actions by
the Company or Holdings, the Company or Holdings, as applicable,
shall furnish such documents and take any such other actions.
(j) For a period from the date of this Agreement
until the retirement of the Securities, or until such time as the
Underwriters shall cease to maintain a secondary market in the
Securities, whichever first occurs, Holdings will deliver to the
Underwriters (i) the annual Servicer's Certificate, (ii) the
annual independent certified public accountants' reports furnished
to the Trustee, (iii) all documents required to be distributed to
Securityholders of the Trust and (iv) all documents filed with the
Commission pursuant to the 1934 Act or any order of the Commission
thereunder, in each case as provided to the Trustee or filed with
the Commission, as soon as such statements and reports are
furnished to the Trustee or filed or, if an affiliate of the
Company is not the Servicer, as soon thereafter as practicable.
(k) Between the date of the applicable Terms
Agreement and the Closing Date or such other date as is set forth
in such Terms Agreement, the Company will not, without your prior
written consent, directly or indirectly, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, the
Securities set forth in such Terms Agreement or any similar
securities, other than as set forth in such Terms Agreement.
Section 4. Payment of Expenses; Reimbursement. Each of the
Company and Holdings, only as to itself and not jointly, covenants and
agrees with the Underwriters that they will:
(a) pay or cause to be paid all expenses and
costs incident to the performance of its obligations under this
Agreement and any applicable Terms Agreement, including without
limitation: (i) the costs of preparing, printing, filing and
reproducing each Registration Statement (including financial
statements and exhibits), as originally filed and as amended, any
preliminary prospectus, any preliminary prospectus supplement and
the Final Prospectus and any amendments or supplements thereto
(including the cost of furnishing copies thereof to the
Underwriters), (ii) the costs of preparing, printing and
distributing this Agreement, the applicable Terms Agreement, the
Pooling and Servicing Agreement, the Supplement and the Credit
Enhancement Agreement, (iii) the costs of printing, issuing and
delivering the Securities to the Underwriters, (iv) the fees and
disbursements of counsel for the Company and Holdings, as
applicable, and any accountants, (v) the reasonable expenses and
costs (not to exceed the amount specified in the applicable Terms
Agreement) incurred in connection with "blue sky" qualification of
the Securities for sale in those states designated by the
Underwriters, including filing fees and reasonable fees and
disbursements of counsel for the Underwriters in such connection
and in connection with any "blue sky" survey or memoranda, (vi)
any fees charged by any of the rating agencies for rating any of
the Securities, and (vii) any fees and expenses incurred in
connection with the listing of the applicable Securities on one or
more domestic or foreign stock exchanges (it being understood
that, except as specified in this Section 4 and in Sections 7 and
8 hereof, the Underwriters will pay all their own costs and
expenses, including the cost of printing any Agreement among
Underwriters, the fees of counsel to any Underwriter, transfer
taxes on resale of any Securities by them and advertising expenses
connected with any offers that they may make); and
(b) reimburse the Underwriters named in the
applicable Terms Agreement for all of their out of pocket
expenses, including the reasonable fees and disbursements of
counsel for such Underwriters, if such Terms Agreement is
terminated by you in accordance with the provisions of Section 6
hereof.
Notwithstanding the foregoing, the Underwriters may agree to
reimburse the Company or Holdings, as applicable, for certain expenses
incurred in connection with the issuance and distribution of the Securities
of any Series if so specified in the applicable Terms Agreement.
Section 5. Representations and Warranties of the
Underwriters. Each Underwriter severally represents, warrants, covenants
and agrees with the Company or Holdings, as applicable, that:
(a) It either (A) has not provided any potential
investor with a Collateral Term Sheet (that is required to be
filed with the Commission within two business days of first use
under the Terms of the Public Securities Association Letter as
described below), or (B) has, substantially contemporaneously with
its first delivery of such Collateral Term Sheet to a potential
investor, delivered such Collateral Term Sheet to the Company,
which Collateral Term Sheet, if any, is attached to this Agreement
as Exhibit B.
(b) It either (A) has not provided any potential
investor with a Structural Term Sheet or Computational Materials,
or (B) has provided any such Structural Term Sheet or
Computational Materials to the Company, which Structural Term
Sheets and Computational Materials, if any, are attached to this
Agreement as Exhibit C.
(c) It either (A) has not provided any potential
investor with a Series Term Sheet or (B) has provided any Series
Term Sheet to the Company, which Series Term Sheets, if any, are
attached to this Agreement as Exhibit D.
(d) Each Collateral Term Sheet bears a legend
indicating that the information contained therein will be
superseded by the description of the collateral contained in the
Prospectus Supplement and, except in the case of the initial
Collateral Term Sheet, that such information supersedes the
information in all prior Collateral Term Sheets.
(e) Each Structural Term Sheet and Series Term
Sheet and all Computational Materials bear a legend substantially
as follows (or in such other form as may be agreed prior to the
date of this Agreement):
This information does not constitute either an offer to
sell or a solicitation of an offer to buy any of the
securities referred to herein. Information contained
herein is confidential and provided for information only,
does not purport to be complete and should not be relied
upon in connection with any decision to purchase the
securities. This information supersedes any prior
versions hereof and will be deemed to be superseded by
any subsequent versions including, with respect to any
description of the securities or the underlying assets,
the information contained in the final Prospectus and
accompanying Prospectus Supplement. Offers to sell and
solicitations of offers to buy the securities are made
only by the final Prospectus and the related Prospectus
Supplement.
(f) It has not, and will not, without the prior
written consent of the Company, provide any Collateral Term
Sheets, Structural Term Sheets, Series Term Sheets or
Computational Materials, other than any referred to in clauses
(a), (b), or (c) above, to any investor after the date of this
Agreement.
(g) It has only issued or passed on and shall
only issue or pass on in the United Kingdom any document received
by it in connection with the issue of the Securities to a person
who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements)(Exemptions) Order
1996 or who is a person to whom the document may otherwise
lawfully be issued or passed on, it has complied and shall comply
with all applicable provisions of the Financial Services Act 1986
of Great Britain with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United
Kingdom and if that Underwriter is an authorized person under the
Financial Services Act 1986, it has only promoted and shall only
promote (as that term is defined in Regulation 1.02 of the
Financial Services (Promotion of Unregulated Schemes) Regulations
1991) to any person in the United Kingdom the scheme described in
the Prospectus if that person is of a kind described either in
Section 76(2) of the Financial Services Act 1986 or in Regulation
1.04 of the Financial Services (Promotion of Unregulated Schemes)
Regulations 1991.
For purposes of this Agreement, "Collateral Term
Sheets" and "Structural Term Sheets" shall have the respective
meanings assigned to them in the February 13, 1995 letter of
Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's response
thereto, were publicly available February 17, 1995). The term
"Collateral Term Sheet" as used herein includes any subsequent
Collateral Term Sheet that reflects a substantive change in the
information presented. "Computational Materials" has the meaning
assigned to it in the May 17, 1994 letter of Brown & Wood on
behalf of Kidder, Peabody & Co., Inc. (which letter, and the SEC
staff's response thereto, were publicly available May 20, 1994).
"Series Term Sheet" has the meaning assigned to it in the April 4,
1996 letter of Latham & Watkins on behalf of Greenwood Trust
Company (which letter, and the SEC staff's response thereto, were
publicly available April 5, 1996).
Section 6. Conditions of Underwriters' Obligations. Except as
otherwise provided in the applicable Terms Agreement, the obligations of
the Underwriters to purchase and pay for the Securities pursuant to any
such Terms Agreement are subject to the accuracy of the representations and
warranties of the Company and Holdings contained herein at and as of the
date hereof, the date of the Terms Agreement and the applicable Closing
Date, or contained in certificates of any officer of the Company or
Holdings delivered pursuant to the provisions hereof, to the performance by
the Partners First Entities of each of their obligations hereunder and to
the following further conditions:
(a) At the applicable Closing Date, no stop
order suspending the effectiveness of the Registration Statement
and the Additional Registration Statement (if applicable) shall
have been issued under the 1933 Act and no proceedings for that
purpose shall have been instituted or shall be pending or, to your
knowledge or to the knowledge of any of the Partners First
Entities, shall be contemplated by the Commission, and any request
on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel
for the Underwriters.
(b) At the applicable Closing Date, you shall
have received a signed opinion of Morgan, Lewis & Bockius LLP,
counsel for Holdings, dated as of the Closing Date, together with
signed or reproduced copies for each of the other Underwriters, in
form and substance satisfactory to you and counsel for the
Underwriters, with respect to general corporate matters.
(c) At the applicable Closing Date, the
Underwriters shall have received from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Company, one or more opinions,
in form and substance satisfactory to you and counsel for the
Underwriters, each dated the Closing Date, with respect to the
validity of the Securities, the Initial Registration Statement,
the Additional Registration Statement (if any), the Final
Prospectus, certain matters of the Uniform Commercial Code as
adopted in the State of Delaware and such other related matters as
the Underwriters may reasonably require, and each of the Company
and Holdings shall have furnished to such counsel such documents
as they request for the purpose of enabling them to pass on such
matters.
(d) At the applicable Closing Date, you shall
have received the favorable opinion of Orrick, Herrington &
Sutcliffe LLP, counsel for the Underwriters, dated as of the
Closing Date, with respect to such matters as you may require. In
giving such opinion, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the
State of New York, the Limited Liability Company Law of the State
of Delaware and the federal law of the United States, upon the
opinions of counsel satisfactory to you. Such counsel may also
state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of
officers of the Company and Holdings and certificates of public
officials.
(e) At the applicable Closing Date, you shall
have received the favorable opinion of Emmett, Marvin & Martin,
LLP, counsel for the Trustee, dated as of the Closing Date,
together with signed or reproduced copies of such opinion for each
of the other Underwriters, with respect to such matters as the
Underwriters may require.
(f) At the applicable Closing Date, there shall
not have been, since the date of the applicable Terms Agreement or
since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the
condition (financial or otherwise) or in the earnings, business
affairs or business prospects of the Company or Holdings, whether
or not arising in the ordinary course of business, and you shall
have received separate certificates of an authorized officer of
the Company and Holdings, dated as of such Closing Date, to the
effect that (i) there has been no such material adverse change,
(ii) the representations and warranties of the Company or
Holdings, as applicable, contained in Section 1 hereof are true
and correct with the same force and effect as though expressly
made at and as of such Closing Date, (iii) the Company or
Holdings, as applicable, has complied with all agreements and
satisfied all conditions on its part to be complied with or
satisfied at or prior to such Closing Date, and (iv) no stop order
suspending the effectiveness of the Registration Statement has
been issued and, to the best knowledge of such person, no
proceedings for that purpose have been initiated or threatened by
the Commission.
(g) At the date of the Final Prospectus and at
the applicable Closing Date, Ernst & Young, L.L.P. (or such other
independent public accountants as shall be named in the applicable
Terms Agreement), certified independent public accountants for the
Partners First Entities, shall have furnished to the Underwriters
a letter or letters, dated respectively as of the date of the
Final Prospectus and as of the Closing Date, confirming that they
are certified independent public accountants within the meaning of
the 1933 Act and the 1934 Act and the respective applicable
published rules and regulations thereunder, and substantially in
the form heretofore agreed and otherwise in form and in substance
satisfactory to the Representative and counsel for the
Underwriters.
(h) Subsequent to the date of the Terms
Agreement relating to such Securities, none of the following shall
have occurred: (i) a material adverse change in the financial
markets in the United States or the United States shall have
become engaged in the outbreak or escalation of hostilities
involving the United States or there has been a declaration by the
United States of a national emergency or a declaration of war,
(ii) a banking moratorium shall have been declared by either
Federal or New York State authorities, or (iii) trading in any
securities of the Partners First Entities shall have been
suspended or materially limited by the Commission or the New York
Stock Exchange, or if trading generally on the New York Stock
Exchange shall have been suspended or materially limited, or
minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices shall have been required, by such
exchange or by order of the Commission or by any other
governmental authority, any of which events, in your reasonable
judgment, renders it inadvisable to proceed with the public
offering or the delivery of the Securities.
(i) The Underwriters shall have received
evidence satisfactory to them that, on or before the Closing Date,
UCC-1 financing statements have been or are being filed in the
office of the Secretary of State of the State of Delaware,
reflecting the interest of the Trustee in the Receivables and the
proceeds thereof.
(j) The Underwriters shall have received
evidence satisfactory to them that the Securities shall be rated
in accordance with the applicable Terms Agreements by the Rating
Agency and subsequent to the date of the applicable Terms
Agreement there shall not have occurred a downgrading in the
rating assigned to the Securities or any other securities issued
by the Company by any "nationally recognized statistical rating
agency", as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the 1933 Act, and no such organization shall
have publicly announced that it has under surveillance or review
its rating of the Securities or any of such other securities.
(k) Each other condition, if any, specified in
the applicable Terms Agreement to the obligation of the
Underwriters to purchase and pay for the Securities shall
have been satisfied.
If any condition specified in this Section shall
not have been fulfilled when and as required to be fulfilled, the
applicable Terms Agreement may be terminated by you by notice to
the Company at any time on or prior to the applicable Closing
Date, and such termination shall be without liability of any party
to any other party except as provided in Section 4 hereof.
Notwithstanding any such termination, the provisions of Sections
7, 8 and 9 shall remain in effect.
Section 7. Indemnification. (a) The Company and Holdings each
agree to jointly and severally indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in any
Registration Statement as originally filed (or any amendment thereto)
and all documents incorporated therein by reference, or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of an untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, or any
preliminary prospectus supplement, or the Final Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company or Holdings; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by the
indemnified party), reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that (A) this indemnity agreement does not apply to any
loss, liability, claim, damage or expense to the extent arising out of an
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company or Holdings by any Underwriter through you expressly for use in
any Registration Statement as originally filed (or any amendment thereto)
or any preliminary prospectus, or any preliminary prospectus supplement, or
the Final Prospectus (or any amendment or supplement thereto) and (B) such
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of the Underwriter (or any person controlling any of the
Underwriters) from whom the person asserting any such loss, claim, damage
or liability purchased the Securities which are the subject thereof if the
Company or Holdings, as applicable, shall sustain the burden of proving (I)
such person did not receive a copy of the Final Prospectus (or the Final
Prospectus as supplemented, excluding, in either case, documents
incorporated therein by reference) at or prior to the confirmation of the
sale of such Securities to such person in any case where such delivery is
required by the 1933 Act and (II) that the untrue statement or omission of
a material fact contained in such preliminary prospectus was corrected in
the Final Prospectus (or the Final Prospectus as supplemented). This
indemnity agreement will be in addition to any liability which the Company
or Holdings may otherwise have.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company and Holdings, their respective directors, each
officer of the Company who signed the Registration Statement and each
person, if any, who controls the Company or Holdings within the meaning of
Section 15 of the 1933 Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in Section 7(a), as
incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in any Registration Statement
as originally filed (or any amendment thereto) or any preliminary
prospectus, or any preliminary prospectus supplement or the Final
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company or Holdings by
such Underwriter through you expressly for use in any Registration
Statement as originally filed (or any amendment thereto) or any preliminary
prospectus, or any preliminary prospectus supplement or the Final
Prospectus (or any amendment or supplement thereto). This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have.
(c) Each indemnified party shall give notice as promptly
as reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought hereunder,
but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account
of this indemnity agreement. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event
shall the indemnifying parties be liable for fees and expenses of more than
one counsel (in addition to any local counsel and counsel to the
indemnifying parties) for all indemnified parties in connection with any
one action or similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances. No indemnifying party
shall, without the prior written consent of the indemnified parties, settle
or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever in respect of
which indemnification or contribution could be sought under this Section 7
or Section 8 hereof (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 7(a)(ii)
effected without its written consent if (i) such settlement is entered into
more than 45 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received notice of the
terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of
such settlement.
Section 8. Contribution. In order to provide for just and
equitable contribution in circumstances under which the indemnity provided
for in Section 7 is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and Holdings on the one hand and the Underwriters on the other
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by
the Company or Holdings on the one hand and one or more of the Underwriters
on the other, as incurred, in such proportions that (a) the Underwriters
are responsible for that portion represented by the percentage that results
from dividing the underwriting discount applicable to the Securities by the
net proceeds of the offering of the Securities (before deducting expenses)
received by the Company and (b) the Company and Holdings are responsible
for the balance; provided, however, that (i) in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Securities purchased by such
Underwriter hereunder and under the applicable Terms Agreement and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Company, Holdings and the Underwriters each agree that it would not be
equitable if the amount of such contribution were determined by pro rata or
per capita allocation. For purposes of this Section, each person, if any,
who controls an Underwriter within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as such Underwriter, and
each director of each of the Company and Holdings, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company or Holdings within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as the Company and
Holdings, respectively. The Underwriters respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
amount of Securities set opposite their respective names in Schedule I to
the applicable Terms Agreement.
Section 9. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements
and other statements of the Company, Holdings, the Underwriters and their
respective officers set forth in or made pursuant to this Agreement and any
Terms Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Company,
Holdings or any Underwriter or controlling person and shall survive
delivery of any payment for the Securities. The provisions of Sections 4, 7
and 8 hereof shall survive the termination or cancellation of this
Agreement.
Section 10. Default by One or More of the Underwriters. If
one or more of the Underwriters participating in an offering of Securities
shall fail at the applicable Closing Date to purchase the Securities which
it or they are obligated to purchase hereunder and under the applicable
Terms Agreement (the "Default Securities"), you shall have the right,
within 36 hours thereafter, to purchase all, but not less than all, of the
Default Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if however, you have not completed such arrangements
within such 36 hour period, then:
(a) if the amount of Default Securities does not
exceed 10% of the amount of Securities to be purchased pursuant to
such Terms Agreement, the nondefaulting Underwriters named in such
Terms Agreement shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting
obligations bear to the underwriting obligations of all
nondefaulting Underwriters, or
(b) if the amount of Default Securities exceeds
10% of the amount of Securities to be purchased pursuant to such
Terms Agreement, the applicable Terms Agreement shall terminate
without liability on the part of any nondefaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default under this
Agreement and the applicable Terms Agreement.
In the event of any such default that does not result in the
termination of the applicable Terms Agreement, either you or the Company
shall have the right to postpone the applicable Closing Date for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
Section 11. Notices. All notices and other communications
under this Agreement and any Terms Agreement shall be in writing and shall
be deemed to have been duly given if delivered, mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall
be directed to you at the address set forth on the first page hereof, or in
respect of any Terms Agreement, to such other person and place as may be
specified therein; notices to the Company shall be directed to it at
Partners First Receivables Funding, LLC, 900 Elkridge Landing Road, Suite
301, Linthicum, Maryland 21090; notices to Holdings shall be directed to it
at Partners First Holdings LLC, 900 Elkridge Landing Road, Suite 300,
Linthicum, Maryland 21090.
Section 12. Parties. This Agreement herein set forth and any
Terms Agreement is made solely for the benefit of any Underwriter which
becomes a party to a Terms Agreement, the Company, Holdings and, to the
extent expressed, any person controlling the Company or Holdings or any
such Underwriter, and the directors of the Company, its officers who have
signed the Registration Statement, and their respective executors,
administrators, successors and assigns and, subject to the provisions of
Section 10, no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not
include any purchaser of the Securities, as such purchaser, from any
Underwriter. All of the obligations of any Underwriters hereunder and under
any Terms Agreement are several and not joint.
Section 13. Governing Law and Time. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REFERENCE TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
Section 14. Counterparts. This Agreement may be executed in
one or more counterparts and when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and the
same agreement.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon
this instrument will become a binding agreement among the Company, Holdings
and each Underwriter in accordance with its terms.
Very truly yours,
PARTNERS FIRST HOLDINGS, LLC
By: /s/ Terence F. Browne
_____________________________
Name: Terence F. Browne
Title: Secretary
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: /s/ Mark J. Norwicz
_______________________________
Name: Mark J. Norwicz
Title: Treasurer
Confirmed and accepted as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Robert M. DiOrio
________________________
Name: Robert M. DiOrio
Title: Director
For themselves and the other several Underwriters named
in Schedule I to the applicable Terms Agreement
EXHIBIT A
PARTNERS FIRST CREDIT CARD MASTER TRUST
$_____________ CLASS __ SERIES ____-___ ASSET BACKED SECURITIES
TERMS AGREEMENT
Dated: __________, ____
To: Partners First Holdings, LLC
900 Elkridge Landing Road
Suite 300
Linthicum, Maryland 21090
Partners First Receivables Funding, LLC
900 Elkridge Landing Road
Suite 301
Linthicum, Maryland 21090
Re: Underwriting Agreement dated June 22, 1998
Ladies and Gentlemen:
We (the "Representative") understand that Partners First
Receivables Funding, LLC, a Delaware limited liability company (the
"Company"), proposes to cause $____________ of Class __ Series ____-__
Asset Backed Securities (the "Securities") to be issued by Partners First
Credit Card Master Trust. This Terms Agreement (this "Agreement") is a
"Terms Agreement" within the meaning of the Underwriting Agreement dated
June 22, 1998 (the "Underwriting Agreement"), among you and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as representative, which is hereby
incorporated by reference herein. Subject to the terms and conditions set
forth herein or incorporated by reference herein, the Underwriters named
below (the "Underwriters") offer to purchase, severally and not jointly,
the Securities.
Underwriters: The Underwriters named on Schedule I attached hereto are the
"Underwriters" for the purpose of this Agreement and for the purposes of
the above referenced Underwriting Agreement as such Underwriting Agreement
is incorporated herein and made a part hereof.
Terms of the Securities:
Initial Invested Interest Rate Price to
Class Amount or Formula Public(1)
- ----- ----------------- ------------- -----------
$ % ---------%
-----------------
(1) Plus accrued interest at the applicable rate from ____ __, ____.
Distribution Dates:
Security Ratings:
____ by [Standard & Poor's]
____ by [Fitch IBCA, Inc.]
____ by [Moody's Investors Service, Inc.]
____ by [Duff & Phelps Credit Rating Company]
Credit Enhancement:
Trustee: The Bank of New York
Pooling and Servicing Agreement: Amended and Restated Pooling and Servicing
Agreement, dated as of [June 26, 1998], among Partners First Receivables
Funding, LLC, as Transferor, Partners First Holdings, LLC, as Servicer, and
The Bank of New York, as Trustee.
Supplement: Series ____-__ Supplement, dated as of ________, ____, among
Partners First Receivables Funding, LLC, as Transferor, Partners First
Holdings, LLC, as Servicer, and The Bank of New York, as Trustee.
Purchase Price: The purchase price payable by the Underwriters for the
Securities covered by this Agreement will be the following percentage of
the initial invested amounts to be issued:
Per Security: __________%
Registration Statement: Registration Nos. ___________ and ____________
Underwriting Commissions, Concessions and Discounts: The Underwriters'
discount, the concessions that the Underwriters may allow to certain
dealers, and the discounts that such dealers may reallow to certain other
dealers, each expressed as a percentage of the initial invested amount of
the Securities, shall be as follows:
Underwriting Selling
Discount Concessions Reallowance
-----% -----% -----%
-----% -----% -----%
Closing Date: __________, _____, ____ a.m./p.m., New York City time
Location of Closing: Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York 10022
Payment for the Securities: Wire transfer of same day funds
Blue Sky Fees: Up to $__________
Opinion Modifications:
Other Securities Being Offered Concurrently:
Other Conditions to Closing Under Section 6(k):
Currency:
Redemption Provisions:
Listing Requirement:
Reimbursement of Expenses:
Other Terms and Conditions:
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
If the foregoing is in accordance with your understanding of
the agreement among the Underwriters, the Company and Holdings, please sign
and return to the undersigned a counterpart hereof, whereupon this
instrument, along with all counterparts and together with the Underwriting
Agreement, shall be a binding agreement among the Underwriters named
herein, the Company and Holdings in accordance with its terms and the terms
of the Underwriting Agreement.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-------------------------------------
Acting on behalf of themselves and the
other named Underwriters
Confirmed and accepted as of the
date first above written:
PARTNERS FIRST HOLDINGS, LLC
By: ________________________________________
Name:
Title:
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: ________________________________________
Name:
Title:
SCHEDULE I
UNDERWRITERS
$______________ Initial Invested Amount of Class __ Series
____-__ Asset Backed Securities
Underwriters Initial Invested Amount of Securities
$
TOTAL $
EXHIBIT B
Collateral Term Sheets
EXHIBIT C
Structural Term Sheets and Computational Materials
EXHIBIT D
Series Term Sheets
PARTNERS FIRST CREDIT CARD MASTER TRUST
$528,000,000 Class A Series 1998-2 Floating Rate Asset Backed Securities
TERMS AGREEMENT
Dated: June 22, 1998
To: Partners First Holdings, LLC
900 Elkridge Landing Road
Suite 300
Linthicum, Maryland 21090
Partners First Receivables Funding, LLC
900 Elkridge Landing Road
Suite 301
Linthicum, Maryland 21090
Re: Underwriting Agreement dated June 22, 1998
Ladies and Gentlemen:
We (the "Representative") understand that Partners First
Receivables Funding, LLC, a Delaware limited liability company (the
"Company"), proposes to cause $528,000,000 of Class A Series 1998-2
Floating Rate Asset Backed Securities (the "Securities") to be issued by
Partners First Credit Card Master Trust. This Terms Agreement (this
"Agreement") is a "Terms Agreement" within the meaning of the Underwriting
Agreement dated June 22, 1998 (the "Underwriting Agreement"), among you and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative,
which is hereby incorporated by reference herein. Subject to the terms and
conditions set forth herein or incorporated by reference herein, the
Underwriters named below (the "Underwriters") offer to purchase, severally
and not jointly, the Securities.
Underwriters: The Underwriters named on Schedule I attached hereto are the
"Underwriters" for the purpose of this Agreement and for the purposes of
the above referenced Underwriting Agreement as such Underwriting Agreement
is incorporated herein and made a part hereof.
Terms of the Securities:
Initial Invested Interest Rate Price to
Class Amount or Formula Public(1)
- ----- ---------------- ------------- ----------
Class A $528,000,000 LIBOR plus 0.10% 100%
-----------------
(1) Plus accrued interest, if any, at the applicable rate from June
26, 1998.
Distribution Dates: August 17, 1998 and the 15th day of each calendar month
thereafter (or if such 15th day is not a business day, the next succeeding
business day).
Security Ratings:
AAA by Standard & Poor's
AAA by Moody's Investors Service, Inc.
AAA by Fitch IBCA, Inc.
Credit Enhancement: Class B Securities, Collateral Interest and Class D
Securities
Trustee: The Bank of New York
Pooling and Servicing Agreement: Amended and Restated Pooling and Servicing
Agreement, dated as of June 26, 1998, among Partners First Receivables
Funding, LLC, as Transferor, Partners First Holdings, LLC, as Servicer, and
The Bank of New York, as Trustee.
Supplement: Series 1998-2 Supplement, dated as of June 26, 1998, among
Partners First Receivables Funding, LLC, as Transferor, Partners First
Holdings, LLC, as Servicer, and The Bank of New York, as Trustee.
Purchase Price: The purchase price payable by the Underwriters for the
Securities covered by this Agreement will be the following percentage of
the initial invested amount to be issued:
Per Security: 99.75%
Registration Statement: Registration Nos. 333-29495 and 333-29495-01
Underwriting Commissions, Concessions and Discounts: The Underwriters'
discount, the concessions that the Underwriters may allow to certain
dealers, and the discounts that such dealers may reallow to certain other
dealers, each expressed as a percentage of the initial invested amount of
the Securities, shall be as follows:
Underwriting Selling
Discount Concessions Reallowance
------------ ----------- -----------
0.25% 0.15% 0.10%
Closing Date: June 26, 1998, 10:00 a.m., New York City time
Location of Closing: Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York 10022
Payment for the Securities: Wire transfer of same day funds
Blue Sky Fees: Up to $15,000
Opinion Modifications: None
Other Securities Being Offered Concurrently: Class B Series 1998-2 Floating
Rate Asset Backed Securities in the initial invested amount of
$113,000,000; Class A Series 1998-3 Floating Rate Asset Backed Securities
in the initial invested amount of $528,000,000; and Class B Series 1998- 3
Floating Rate Asset Backed Securities in the initial invested amount of
$113,000,000. Additionally, Collateral Interests and Class D Securities of
Series 1998-2 and Series 1998-3 are being issued concurrently but not
offered publicly.
Other Conditions to Closing Under Section 6(Merrill Lynch, Pierce, Fenner &
Smith Incorporated shall have received payment in full of all amounts due
and owing to it as holder of the Series 1998-1 Securities, which shall be
paid and cancelled concurrently with the issuance of the Series 1998-2
Securities and the Series 1998-3 Securities.
Currency: U.S. Dollars
Redemption Provisions: None
Listing Requirement: None
Reimbursement of Expenses: None
Other Terms and Conditions: None
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
If the foregoing is in accordance with your understanding of
the agreement among the Underwriters, the Company and Holdings, please sign
and return to the undersigned a counterpart hereof, whereupon this
instrument, along with all counterparts and together with the Underwriting
Agreement, shall be a binding agreement among the Underwriters named
herein, the Company and Holdings in accordance with its terms and the terms
of the Underwriting Agreement.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Robert M. DiOrio
___________________________
Acting on behalf of themselves and the other
named Underwriters
Confirmed and accepted as of
the date first above written:
PARTNERS FIRST HOLDINGS, LLC
By: /s/ Terence F. Browne
__________________________
Name: Terence F. Browne
Title: Secretary
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: /s/ Mark J. Norwicz
________________________
Name: Mark J. Norwicz
Title: Treasurer
Class A Series 1998-2
SCHEDULE I
UNDERWRITERS
$528,000,000 Initial Invested Amount of Class A Series 1998-2 Floating Rate
Asset Backed Securities
Underwriters Initial Invested Amount of Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $105,600,000
BancBoston Securities Inc. 105,600,000
Credit Suisse First Boston Corporation 105,600,000
Nesbitt Burns Securities Inc. 105,600,000
Salomon Brothers Inc 105,600,000
-----------
TOTAL $528,000,000
PARTNERS FIRST CREDIT CARD MASTER TRUST
$113,000,000 CLASS B SERIES 1998-2 FLOATING RATE ASSET BACKED SECURITIES
TERMS AGREEMENT
Dated: June 22, 1998
To: Partners First Holdings, LLC
900 Elkridge Landing Road
Suite 300
Linthicum, Maryland 21090
Partners First Receivables Funding, LLC
900 Elkridge Landing Road
Suite 301
Linthicum, Maryland 21090
Re: Underwriting Agreement dated June 22, 1998
Ladies and Gentlemen:
We (the "Representative") understand that Partners First
Receivables Funding, LLC, a Delaware limited liability company (the
"Company"), proposes to cause $113,000,000 of Class B Series 1998-2
Floating Rate Asset Backed Securities (the "Securities") to be issued by
Partners First Credit Card Master Trust. This Terms Agreement (this
"Agreement") is a "Terms Agreement" within the meaning of the Underwriting
Agreement dated June 22, 1998 (the "Underwriting Agreement"), among you and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative,
which is hereby incorporated by reference herein. Subject to the terms and
conditions set forth herein or incorporated by reference herein, the
Underwriters named below (the "Underwriters") offer to purchase, severally
and not jointly, the Securities.
Underwriters: The Underwriters named on Schedule I attached hereto are the
"Underwriters" for the purpose of this Agreement and for the purposes of
the above referenced Underwriting Agreement as such Underwriting Agreement
is incorporated herein and made a part hereof.
Terms of the Securities:
Initial Invested Interest Rate Price to
Class Amount or Formula Public(1)
- ------ ----------------- -------------- ---------
Class B $113,000,000 LIBOR plus 0.31% 100%
-----------------
(1) Plus accrued interest, if any, at the applicable rate from June
26, 1998.
Distribution Dates: August 17, 1998 and the 15th day of each calendar month
thereafter (or if such 15th day is not a business day, the next succeeding
business day).
Security Ratings:
A by Standard & Poor's A1 by Moody's Investors Service, Inc.
A by Fitch IBCA, Inc.
Credit Enhancement: Collateral Interest and Class D Securities
Trustee: The Bank of New York
Pooling and Servicing Agreement: Amended and Restated Pooling and Servicing
Agreement, dated as of June 26, 1998, among Partners First Receivables
Funding, LLC, as Transferor, Partners First Holdings, LLC, as Servicer, and
The Bank of New York, as Trustee.
Supplement: Series 1998-2 Supplement, dated as of June 26, 1998, among
Partners First Receivables Funding, LLC, as Transferor, Partners First
Holdings, LLC, as Servicer, and The Bank of New York, as Trustee.
Purchase Price: The purchase price payable by the Underwriters for the
Securities covered by this Agreement will be the following percentage of
the initial invested amount to be issued:
Per Security: 99.70%
Registration Statement: Registration Nos. 333-29495 and 333-29495-01
Underwriting Commissions, Concessions and Discounts: The Underwriters'
discount, the concessions that the Underwriters may allow to certain
dealers, and the discounts that such dealers may reallow to certain other
dealers, each expressed as a percentage of the initial invested amount of
the Securities, shall be as follows:
Underwriting Selling
Discount Concessions Reallowance
------------ ----------- -----------
0.30% 0.20% 0.12%
Closing Date: June 26, 1998, 10:00 a.m., New York City time
Location of Closing: Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York 10022
Payment for the Securities: Wire transfer of same day funds
Blue Sky Fees: Up to $15,000
Opinion Modifications: None
Other Securities Being Offered Concurrently: Class A Series 1998-2 Floating
Rate Asset Backed Securities in the initial invested amount of
$528,000,000; Class A Series 1998-3 Floating Rate Asset Backed Securities
in the initial invested amount of $528,000,000; and Class B Series 1998-3
Floating Rate Asset Backed Securities in the initial invested amount of
$113,000,000. Additionally, Collateral Interests and Class D Securities of
Series 1998-2 and Series 1998-3 are being issued concurrently but not
offered publicly.
Other Conditions to Closing Under Section 6(k): Merrill Lynch, Pierce,
Fenner & Smith Incorporated shall have received payment in full of all
amounts due and owing to it as holder of the Series 1998-1 Securities,
which shall be paid and cancelled concurrently with the issuance of the
Series 1998-2 Securities and the Series 1998-3 Securities.
Currency: U.S. Dollars
Redemption Provisions: None
Listing Requirement: None
Reimbursement of Expenses: None
Other Terms and Conditions: None
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
If the foregoing is in accordance with your understanding of
the agreement among the Underwriters, the Company and Holdings, please sign
and return to the undersigned a counterpart hereof, whereupon this
instrument, along with all counterparts and together with the Underwriting
Agreement, shall be a binding agreement among the Underwriters named
herein, the Company and Holdings in accordance with its terms and the terms
of the Underwriting Agreement.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Peter Cerwin
____________________________
Acting on behalf of themselves and the other
named Underwriters
Confirmed and accepted as of
the date first above written:
PARTNERS FIRST HOLDINGS, LLC
By: /s/ Terence F. Browne
__________________________
Name: Terence F. Browne
Title: Secretary
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: /s/ Mark J. Norwicz
___________________________
Name: Mark J. Norwicz
Title: Treasurer
Class B Series 1998-2
SCHEDULE I
UNDERWRITERS
$113,000,000 Initial Invested Amount of Class B Series 1998-2 Floating Rate
Asset Backed Securities
Underwriters Initial Invested Amount of Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $28,250,000
Credit Suisse First Boston Corporation 28,250,000
Nesbitt Burns Securities Inc. 28,250,000
Salomon Brothers Inc. 28,250,000
----------
TOTAL $113,000,000
PARTNERS FIRST CREDIT CARD MASTER TRUST
$528,000,000 Class A Series 1998-3 Floating Rate Asset Backed Securities
TERMS AGREEMENT
Dated: June 22, 1998
To: Partners First Holdings, LLC
900 Elkridge Landing Road
Suite 300
Linthicum, Maryland 21090
Partners First Receivables Funding, LLC
900 Elkridge Landing Road
Suite 301
Linthicum, Maryland 21090
Re: Underwriting Agreement dated June 22, 1998
Ladies and Gentlemen:
We (the "Representative") understand that Partners First
Receivables Funding, LLC, a Delaware limited liability company (the
"Company"), proposes to cause $528,000,000 of Class A Series 1998-3
Floating Rate Asset Backed Securities (the "Securities") to be issued by
Partners First Credit Card Master Trust. This Terms Agreement (this
"Agreement") is a "Terms Agreement" within the meaning of the Underwriting
Agreement dated June 22, 1998 (the "Underwriting Agreement"), among you and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative,
which is hereby incorporated by reference herein. Subject to the terms and
conditions set forth herein or incorporated by reference herein, the
Underwriters named below (the "Underwriters") offer to purchase, severally
and not jointly, the Securities.
Underwriters: The Underwriters named on Schedule I attached hereto are the
"Underwriters" for the purpose of this Agreement and for the purposes of
the above referenced Underwriting Agreement as such Underwriting Agreement
is incorporated herein and made a part hereof.
Terms of the Securities:
Initial Invested Interest Rate Price to
Class Amount Or Formula Public(1)
- ------ ----------------- ------------- ----------
Class A $528,000,000 LIBOR plus 0.13% 100%
-----------------
(1) Plus accrued interest, if any, at the applicable rate from June
26, 1998.
Distribution Dates: August 17, 1998 and the 15th day of each calendar month
thereafter (or if such 15th day is not a business day, the next succeeding
business day).
Security Ratings:
AAA by Standard & Poor's
AAA by Moody's Investors Service, Inc.
AAA by Fitch IBCA, Inc.
Credit Enhancement: Class B Securities, Collateral Interest and Class D
Securities
Trustee: The Bank of New York
Pooling and Servicing Agreement: Amended and Restated Pooling and Servicing
Agreement, dated as of June 26, 1998, among Partners First Receivables
Funding, LLC, as Transferor, Partners First Holdings, LLC, as Servicer, and
The Bank of New York, as Trustee.
Supplement: Series 1998-3 Supplement, dated as of June 26, 1998, among
Partners First Receivables Funding, LLC, as Transferor, Partners First
Holdings, LLC, as Servicer, and The Bank of New York, as Trustee.
Purchase Price: The purchase price payable by the Underwriters for the
Securities covered by this Agreement will be the following percentage of
the initial invested amount to be issued:
Per Security: 99.70%
Registration Statement: Registration Nos. 333-29495 and 333-29495-01
Underwriting Commissions, Concessions and Discounts: The Underwriters'
discount, the concessions that the Underwriters may allow to certain
dealers, and the discounts that such dealers may reallow to certain other
dealers, each expressed as a percentage of the initial invested amount of
the Securities, shall be as follows:
Underwriting Selling
Discount Concessions Reallowance
------------ ----------- ------------
0.30% 0.18% 0.11%
Closing Date: June 26, 1998, 10:00 a.m., New York City time
Location of Closing: Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York 10022
Payment for the Securities: Wire transfer of same day funds
Blue Sky Fees: Up to $15,000
Opinion Modifications: None
Other Securities Being Offered Concurrently: Class B Series 1998-3 Floating
Rate Asset Backed Securities in the initial invested amount of
$113,000,000; Class A Series 1998-2 Floating Rate Asset Backed Securities
in the initial invested amount of $528,000,000; and Class B Series 1998-2
Floating Rate Asset Backed Securities in the initial invested amount of
$113,000,000. Additionally, Collateral Interests and Class D Securities of
Series 1998-2 and Series 1998-3 are being issued concurrently but not
offered publicly.
Other Conditions to Closing Under Section 6(k): Merrill Lynch, Pierce,
Fenner & Smith Incorporated shall have received payment in full of all
amounts due and owing to it as holder of the Series 1998-1 Securities,
which shall be paid and cancelled concurrently with the issuance of the
Series 1998-2 Securities and the Series 1998-3 Securities.
Currency: U.S. Dollars
Redemption Provisions: None
Listing Requirement: None
Reimbursement of Expenses: None
Other Terms and Conditions: None
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SAID STATE.
If the foregoing is in accordance with your understanding of
the agreement among the Underwriters, the Company and Holdings, please sign
and return to the undersigned a counterpart hereof, whereupon this
instrument, along with all counterparts and together with the Underwriting
Agreement, shall be a binding agreement among the Underwriters named
herein, the Company and Holdings in accordance with its terms and the terms
of the Underwriting Agreement.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Peter Cerwin
__________________________
Acting on behalf of themselves and the other
named Underwriters
Confirmed and accepted as of
the date first above written:
PARTNERS FIRST HOLDINGS, LLC
By: /s/ Terence F. Browne
__________________________
Name: Terence F. Browne
Title: Secretary
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: /s/ Mark J. Norwicz
__________________________
Name: Mark J. Norwicz
Title: Treasurer
Class A Series 1998-3
SCHEDULE I
UNDERWRITERS
$528,000,000 Initial Invested Amount of Class A Series 1998-3 Floating Rate
Asset Backed Securities
Underwriters Initial Invested Amount of Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $105,600,000
BancBoston Securities Inc. 105,600,000
Credit Suisse First Boston Corporation 105,600,000
Nesbitt Burns Securities Inc. 105,600,000
Salomon Brothers Inc 105,600,000
-----------
TOTAL $528,000,000
PARTNERS FIRST CREDIT CARD MASTER TRUST
$113,000,000 Class B Series 1998-3 Floating Rate
Asset Backed Securities
TERMS AGREEMENT
Dated: June 22, 1998
To: Partners First Holdings, LLC
900 Elkridge Landing Road
Suite 300
Linthicum, Maryland 21090
Partners First Receivables Funding, LLC
900 Elkridge Landing Road
Suite 301
Linthicum, Maryland 21090
Re: Underwriting Agreement dated June 22, 1998
Ladies and Gentlemen:
We (the "Representative") understand that Partners First
Receivables Funding, LLC, a Delaware limited liability company (the
"Company"), proposes to cause $113,000,000 of Class B Series 1998-3
Floating Rate Asset Backed Securities (the "Securities") to be issued by
Partners First Credit Card Master Trust. This Terms Agreement (this
"Agreement") is a "Terms Agreement" within the meaning of the Underwriting
Agreement dated June 22, 1998 (the "Underwriting Agreement"), among you and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative,
which is hereby incorporated by reference herein. Subject to the terms and
conditions set forth herein or incorporated by reference herein, the
Underwriters named below (the "Underwriters") offer to purchase, severally
and not jointly, the Securities.
Underwriters: The Underwriters named on Schedule I attached hereto are the
"Underwriters" for the purpose of this Agreement and for the purposes of
the above referenced Underwriting Agreement as such Underwriting Agreement
is incorporated herein and made a part hereof.
Terms of the Securities:
Initial Invested Interest Rate
Class Amount Or Formula Price to Public(1)
- ----- ---------------- ------------- ------------------
Class B $113,000,000 LIBOR plus 0.36% 100%
- -----------------
(1) Plus accrued interest, if any, at the applicable rate from June 26, 1998.
Distribution Dates: August 17, 1998 and the 15th day of each calendar month
thereafter (or if such 15th day is not a business day, the next succeeding
business day).
Security Ratings:
A by Standard & Poor's
A1 by Moody's Investors Service, Inc.
A by Fitch IBCA, Inc.
Credit Enhancement: Collateral Interest and Class D Securities
Trustee: The Bank of New York
Pooling and Servicing Agreement: Amended and Restated Pooling and Servicing
Agreement, dated as of June 26, 1998, among Partners First Receivables
Funding, LLC, as Transferor, Partners First Holdings, LLC, as Servicer, and
The Bank of New York, as Trustee.
Supplement: Series 1998-3 Supplement, dated as of June 26, 1998, among
Partners First Receivables Funding, LLC, as Transferor, Partners First
Holdings, LLC, as Servicer, and The Bank of New York, as Trustee.
Purchase Price: The purchase price payable by the Underwriters for the
Securities covered by this Agreement will be the following percentage of
the initial invested amount to be issued:
Per Security: 99.65%
Registration Statement: Registration Nos. 333-29495 and 333-29495-01
Underwriting Commissions, Concessions and Discounts: The Underwriters'
discount, the concessions that the Underwriters may allow to certain
dealers, and the discounts that such dealers may reallow to certain other
dealers, each expressed as a percentage of the initial invested amount of
the Securities, shall be as follows:
Underwriting Selling
Discount Concessions Reallowance
------------ ----------- -----------
0.35% 0.23% 0.14%
Closing Date: June 26, 1998, 10:00 a.m., New York City time
Location of Closing: Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York 10022
Payment for the Securities: Wire transfer of same day funds
Blue Sky Fees: Up to $15,000
Opinion Modifications: None
Other Securities Being Offered Concurrent: Class A Series 1998-3 Floating
Rate Asset Backed Securities in the initial invested amount of
$528,000,000; Class A Series 1998-2 Floating Rate Asset Backed Securities
in the initial invested amount of $528,000,000; and Class B Series 1998- 2
Floating Rate Asset Backed Securities in the initial invested amount of
$113,000,000. Additionally, Collateral Interests and Class D Securities of
Series 1998-2 and Series 1998-3 are being issued concurrently but not
offered publicly.
Other Conditions to Closing Under Section 6(k): Merrill Lynch, Pierce,
Fenner & Smith Incorporated shall have received payment in full of all
amounts due and owing to it as holder of the Series 1998-1 Securities,
which shall be paid and cancelled concurrently with the issuance of the
Series 1998-2 Securities and the Series 1998-3 Securities.
Currency: U.S. Dollars
Redemption Provisions: None
Listing Requirement: None
Reimbursement of Expenses: None
Other Terms and Conditions: None
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
If the foregoing is in accordance with your understanding of
the agreement among the Underwriters, the Company and Holdings, please sign
and return to the undersigned a counterpart hereof, whereupon this
instrument, along with all counterparts and together with the Underwriting
Agreement, shall be a binding agreement among the Underwriters named
herein, the Company and Holdings in accordance with its terms and the terms
of the Underwriting Agreement.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Peter Cerwin
----------------------------------
Acting on behalf of themselves and
the other named Underwriters
Confirmed and accepted as of
the date first above written:
PARTNERS FIRST HOLDINGS, LLC
By: /s/ Terence F. Browne
------------------------------------
Name: Terence F. Browne
Title: Secretary
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: /s/ Mark J. Norwicz
------------------------------------
Name: Mark J. Norwicz
Title: Treasurer
Class B Series 1998-3
SCHEDULE I
UNDERWRITERS
$113,000,000 Initial Invested Amount of Class B Series 1998-3
Floating Rate Asset Backed Securities
Underwriters Initial Invested Amount of Securities
- ------------ -------------------------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $ 28,250,000
Credit Suisse First Boston Corporation 28,250,000
Nesbitt Burns Securities Inc. 28,250,000
Salomon Brothers Inc 28,250,000
------------
TOTAL $113,000,000
PARTNERS FIRST RECEIVABLES FUNDING, LLC
Transferor,
PARTNERS FIRST HOLDINGS, LLC
Servicer,
and
THE BANK OF NEW YORK
Trustee
PARTNERS FIRST CREDIT CARD MASTER TRUST
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of June 26, 1998
amending and restating in its entirety
the Amended and Restated Pooling and Servicing Agreement
dated as of May 13, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . 34
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.1 Conveyance of Receivables . . . . . . . . . . . . . . . . 36
Section 2.2 Acceptance by Trustee . . . . . . . . . . . . . . . . . . 38
Section 2.3 Representations and Warranties of the
Transferor . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.4 Representations and Warranties of the
Transferor Relating to the Agreement and Any
Supplement and the Receivables. . . . . . . . . . . . . . 40
Section 2.5 Reassignment of Ineligible Receivables . . . . . . . . . 42
Section 2.6 Reassignment of Securityholders' Interest in
Trust Portfolio . . . . . . . . . . . . . . . . . . . . . 44
Section 2.7 Covenants of the Transferor . . . . . . . . . . . . . . . 45
Section 2.8 Covenants of the Transferor with Respect to
Receivables Purchase Agreement . . . . . . . . . . . . . 49
Section 2.9 Addition of Accounts . . . . . . . . . . . . . . . . . . 50
Section 2.10 Removal of Accounts and Participation Interests . . . . . 57
Section 2.11 Account Allocations . . . . . . . . . . . . . . . . . . . 59
Section 2.12 Discount Option . . . . . . . . . . . . . . . . . . . . . 60
Section 2.13 Premium Option . . . . . . . . . . . . . . . . . . . . . 61
Section 2.14 Covenant of Holdings with Respect to Account Owners . . . 61
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters
Relating to the Servicer . . . . . . . . . . . . . . . . 63
Section 3.2 Servicing Compensation . . . . . . . . . . . . . . . . . 65
Section 3.3 Representations, Warranties and Covenants of
the Servicer . . . . . . . . . . . . . . . . . . . . . . 66
Section 3.4 Reports and Records for the Trustee . . . . . . . . . . . 70
Section 3.5 Annual Certificate of Servicer . . . . . . . . . . . . . 70
Section 3.6 Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available . . . . . . . . 70
Section 3.7 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 71
Section 3.8 Notices to Holdings . . . . . . . . . . . . . . . . . . . 72
Section 3.9 Adjustments . . . . . . . . . . . . . . . . . . . . . . . 72
Section 3.10 Reports to the Commission . . . . . . . . . . . . . . . . 73
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Securityholders . . . . . . . . . . . . . . . . 74
Section 4.2 Establishment of Collection Account and Special
Funding Account . . . . . . . . . . . . . . . . . . . . . 74
Section 4.3 Collections and Allocations . . . . . . . . . . . . . . . 77
Section 4.4 Shared Principal Collections . . . . . . . . . . . . . . 79
Section 4.5 Additional Withdrawals from the Collection
Account . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 4.6 Allocation of Trust Assets to Series or Groups . . . . . 79
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
SECURITYHOLDERS
ARTICLE VI
THE SECURITIES
Section 6.1 The Securities . . . . . . . . . . . . . . . . . . . . . 82
Section 6.2 Authentication of Securities . . . . . . . . . . . . . . 82
Section 6.3 New Issuances . . . . . . . . . . . . . . . . . . . . . . 83
Section 6.4 Registration of Transfer and Exchange of
Securities . . . . . . . . . . . . . . . . . . . . . . . 85
Section 6.5 Mutilated, Destroyed, Lost or Stolen Securities . . . . . 89
Section 6.6 Persons Deemed Owners . . . . . . . . . . . . . . . . . . 89
Section 6.7 Appointment of Paying Agent . . . . . . . . . . . . . . . 90
Section 6.8 Access to List of Registered Securityholders'
Names and Addresses . . . . . . . . . . . . . . . . . . . 91
Section 6.9 Authenticating Agent . . . . . . . . . . . . . . . . . . 92
Section 6.10 Book-Entry Securities . . . . . . . . . . . . . . . . . . 93
Section 6.11 Notices to Clearing Agency . . . . . . . . . . . . . . . 94
Section 6.12 Definitive Securities . . . . . . . . . . . . . . . . . . 94
Section 6.13 Global Security; Exchange Date . . . . . . . . . . . . . 95
Section 6.14 Meetings of Securityholders . . . . . . . . . . . . . . . 97
Section 6.15 Uncertificated Classes . . . . . . . . . . . . . . . . . 100
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
Section 7.1 Liability of the Transferor . . . . . . . . . . . . . . . 101
Section 7.2 Merger or Consolidation of, or Assumption of
the Obligations of, the Transferor . . . . . . . . . . . 101
Section 7.3 Limitations on Liability of the Transferor . . . . . . . 102
Section 7.4 Transferor Authorized to Execute Registration
Statements and Reports on Behalf of the Trust . . . . . . 103
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.1 Liability of the Servicer . . . . . . . . . . . . . . . . 104
Section 8.2 Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer . . . . . . . . . . . . 104
Section 8.3 Limitation on Liability of the Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.4 Servicer Indemnification of the Trust and the
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.5 Resignation of the Servicer . . . . . . . . . . . . . . . 106
Section 8.6 Access to Certain Documentation and Information
Regarding the Receivables . . . . . . . . . . . . . . . . 106
Section 8.7 Delegation of Duties . . . . . . . . . . . . . . . . . . 107
Section 8.8 Examination of Records . . . . . . . . . . . . . . . . . 107
ARTICLE IX
INSOLVENCY EVENTS
Section 9.1 Rights upon the Occurrence of an Insolvency
Event . . . . . . . . . . . . . . . . . . . . . . . . . . 108
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults . . . . . . . . . . . . . . . . . . . . 110
Section 10.2 Trustee To Act; Appointment of Successor . . . . . . . . 113
Section 10.3 Notification to Securityholders . . . . . . . . . . . . . 115
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . 116
Section 11.2 Certain Matters Affecting the Trustee . . . . . . . . . 119
Section 11.3 Trustee Not Liable for Recitals in Securities . . . . . . 120
Section 11.4 Trustee May Own Securities . . . . . . . . . . . . . . . 120
Section 11.5 The Servicer To Pay Trustee's Fees and Expenses . . . . . 120
Section 11.6 Eligibility Requirements for Trustee . . . . . . . . . . 121
Section 11.7 Resignation or Removal of Trustee . . . . . . . . . . . . 121
Section 11.8 Successor Trustee . . . . . . . . . . . . . . . . . . . . 122
Section 11.9 Merger or Consolidation of Trustee . . . . . . . . . . . 123
Section 11.10 Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . . . . . . . . . 123
Section 11.11 Tax Returns . . . . . . . . . . . . . . . . . . . . . 125
Section 11.12 Trustee May Enforce Claims Without
Possession of Securities . . . . . . . . . . . . . . . 125
Section 11.13 Suits for Enforcement . . . . . . . . . . . . . . . . 126
Section 11.14 Rights of Securityholders To Direct
Trustee . . . . . . . . . . . . . . . . . . . . . . . 126
Section 11.15 Representations and Warranties of Trustee . . . . . . 126
Section 11.16 Maintenance of Office or Agency . . . . . . . . . . . 127
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust . . . . . . . . . . . . . . . . . . 128
Section 12.2 Final Distribution . . . . . . . . . . . . . . . . . . . 128
Section 12.3 The Transferor's Termination Rights . . . . . . . . . . . 130
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment; Waiver of Past Defaults . . . . . . . . . . . 131
Section 13.2 Protection of Right, Title and Interest to
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Section 13.3 Limitation on Rights of Securityholders . . . . . . . . . 134
Section 13.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . 135
Section 13.5 Notices; Payments . . . . . . . . . . . . . . . . . . . . 136
Section 13.6 Severability of Provisions . . . . . . . . . . . . . . . 137
Section 13.7 Securities Nonassessable and Fully Paid . . . . . . . . . 137
Section 13.8 Further Assurances . . . . . . . . . . . . . . . . . . . 137
Section 13.9 Nonpetition Covenant . . . . . . . . . . . . . . . . . . 137
Section 13.10 No Waiver; Cumulative Remedies . . . . . . . . . . . . 137
Section 13.11 Counterparts . . . . . . . . . . . . . . . . . . . . . 138
Section 13.12 Third-Party Beneficiaries . . . . . . . . . . . . . . 138
Section 13.13 Actions by Securityholders . . . . . . . . . . . . . . 138
Section 13.14 Rule 144A Information . . . . . . . . . . . . . . . . 138
Section 13.15 Merger and Integration . . . . . . . . . . . . . . . . 139
Section 13.16 Headings . . . . . . . . . . . . . . . . . . . . . . . 139
EXHIBITS
Exhibit A Form of Transferor Security
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]
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT dated as of
June 26, 1998, among PARTNERS FIRST RECEIVABLES FUNDING, LLC, a Delaware
limited liability company, as Transferor; PARTNERS FIRST HOLDINGS, LLC, a
Delaware limited liability company, as Servicer; and THE BANK OF NEW YORK,
a New York banking corporation, as Trustee.
WHEREAS, Partners First Receivables Funding, LLC, as Transferor,
Partners First Holdings, LLC, as Servicer, and The Bank of New York, as
Trustee entered into that certain Pooling and Servicing Agreement, dated as
of January 29, 1998 (the "Original Pooling and Servicing Agreement");
WHEREAS, Partners First Receivables Funding, LLC, as Transferor,
Partners First Holdings, LLC, as Servicer, and The Bank of New York, as
Trustee entered into that certain Amended and Restated Pooling and
Servicing Agreement, dated as of May 13, 1998 (the "Original Amended and
Restated Pooling and Servicing Agreement"); and
WHEREAS, Partners First Receivables Funding, LLC, as Transferor,
Partners First Holdings, LLC, as Servicer, and The Bank of New York, as
Trustee, desire to amend and restate the Original Amended and Restated
Pooling and Servicing Agreement in its entirety;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the Original Pooling and Servicing Agreement is hereby amended
and restated in its entirety as follows and each party agrees as follows
for the benefit of the other parties, the Securityholders 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 pursuant to a Credit Card Agreement, which has
sold the related Receivables to PFR or the Transferor pursuant to a
Receivables Purchase Agreement.
"Account Originator Purchase Agreement" shall mean a receivables
purchase agreement pursuant to which an Account Originator sells
Receivables to PFR or the Transferor.
"Account Owner" shall mean, with respect to any Account, the
entity which is either the Account Originator with respect to such Account
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.
"Account Owner Purchase Agreement" shall mean a receivables
purchase agreement, pursuant to which an Account Owner sells Receivables
to PFR or the Transferor.
"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), (iii) with respect to New Accounts, the date
on which such New Accounts are activated and (iv) with respect to each
Automatic Addition Account, the date from and after which such Automatic
Addition Account is to be included as an Account pursuant to subsection
2.9(h).
"Additional Account" shall mean each New Account, each Aggregate
Addition Account and each Automatic 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), (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) and (iii) with respect to each Automatic Addition Account, the date
on which such Automatic Addition Account is designated to be included as an
Account pursuant to subsection 2.9(h).
"Adjustment Payment" shall have the meaning specified in
subsection 3.9(a).
"Adjustment Payment Shortfall" shall mean, for any Monthly
Period, the amount by which the Transferor Amount would have been reduced
below zero as a result of adjustments to the aggregate amount of Principal
Receivables pursuant to subsection 3.9 of the Agreement and with respect to
which the Transferor was obligated but failed to make a deposit into the
Special Funding Account on the related Distribution Date.
"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 Securityholders 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
Securities 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.
"Annual Membership Fee" shall have the meaning specified in the
Credit Card Agreement applicable to each Account for annual membership fees
or similar terms.
"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 Securities 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.
"Automatic Addition Account" shall mean each Eligible Account
which is designated pursuant to subsection 2.9(h) to be included as an
Account.
"Automatic Addition Commencement Date" shall mean the date
specified in Section 2.9(h) hereof.
"Automatic Addition Suspension Date" shall mean the Business Day
specified in Section 2.9(h) hereof.
"Automatic Addition Termination Date" shall mean the Business Day
specified by the Transferor pursuant to Section 2.9(h) hereof.
"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 Security 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 Securities of such Series or Class and the
denominator of which is the aggregate unpaid principal amount of all
Investor Securities within such Group.
"Bearer Securities" shall have the meaning specified in Section
6.1.
"Benefit Plan" shall have the meaning specified in subsection
6.4(c).
"Book-Entry Securities" shall mean beneficial interests in the
Investor Securities, 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 Illinois, Massachusetts, New York or any other
State in which the principal executive offices of Holdings 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.
"Calculation Date" shall mean, with respect to any Monthly
Period, the 15th day of such Monthly Period (or if any such day is not a
Business Day, the next succeeding Business Day) and the last Business Day
of such Monthly Period.
"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.
"Cedel" shall mean Cedel Bank, sociEtE anonyme, a professional
depository incorporated under the laws of Luxembourg, and its successors.
"Class" shall mean, with respect to any Series, any one of the
classes of Investor Securities 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 Securities.
"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 and shall
include Recoveries, investment earnings on amounts on deposit in the
Collection Account, Special Funding Account and any Series Account to the
extent specified in any Series Supplement and all ancillary fee income
received by the Servicer in respect of the Accounts. 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
Securities 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, with respect to any Account
and the related Receivables, the respective policies and procedures of the
Account Owner (as of any date of determination, as such policies and
procedures may be amended from time to time), or of the Account Originator
(as of the date of origination of the Account), (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 Securities" shall have the meaning specified in
Section 6.10.
"Definitive Euro-Securities" 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 Securities, 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 Issuance 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 by the Servicer in its computer
files 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 an entity that has entered into a
Receivables Purchase Agreement;
(g) does not have outstanding receivables which have been sold
or pledged by the related Account Owner to any party other than 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 Originator at the time of creation of such
account;
(k) with respect to Additional Accounts, may, in 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, the Receivables with respect to which the Servicer believes
the related Obligor is bankrupt as of the Initial Issuance 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.
Notwithstanding the foregoing, for the purposes of subsection
2.9(h) "Eligible Account" shall mean a consumer revolving credit card
account which satisfies each of the criteria set forth in clauses (a)
through (j) above, and (i) the related Account Owner is the originator of
such revolving credit card account, (ii) the Account Originator is a direct
or indirect subsidiary of Holdings and notice of the designation of such
consumer revolving credit card account as an Account pursuant to subsection
2.9(h) shall have been given to the Rating Agency or (iii) the Rating
Agency Condition has been satisfied with respect to the inclusion in the
Trust of the Receivables arising in such consumer revolving credit card
account.
"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 which is
authorized to engage in trust activities and which is 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 acts
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 the 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 is a member of the FDIC and (i) whose short-term unsecured debt
obligations have the Highest Rating or (ii) which has 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 Securityholders, 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 securities 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 an entity which, at the time of
its appointment as Servicer, (a) is servicing or has the ability to service
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-Securities 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-Securities in bearer form.
"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, (iv) Late
Fees, (v) Overlimit Fees, (vi) Returned Check Fees, (vii) Discount Option
Receivables, if any, (viii) Miscellaneous Fees and Charges and (ix) 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, (b) Interchange as
calculated pursuant to the Supplement for any Series, and (c) payments in
respect of Adjustments Payment Shortfalls pursuant to the proviso in the
last sentence of subsection 3.9(a). Collections of Finance Charge
Receivables shall include (i) 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 and (ii) investment earnings on amounts on deposit in the
Collection Account, Special Funding Account and any Series Account to the
extent specified in any Series Supplement.
"FIRREA" shall mean the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, as amended.
"Fitch" shall mean Fitch IBCA, Inc., or its successors.
"Foreign Clearing Agency" shall mean Cedel and the Euroclear
Operator.
"Global Security" shall have the meaning specified in subsection
6.13(a).
"Global Security 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 Securities 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.
"Harris" shall mean Harris Trust and Savings Bank, an Illinois
state banking corporation.
"Highest Rating" shall mean, with respect to Moody's, P-1 or Aaa,
with respect to Standard & Poor's, A-1+ or AAA, and with respect to Fitch,
F-1+ or AAA or or any rating category that will not cause a Ratings Event.
"Holdings" shall mean Partners First Holdings, LLC, a Delaware
limited liability company.
"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 MasterCardregistered trademark
1
and VISAregistered trademark 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.
-----------------
1 MasterCard and VISA are registered trademarks of
MasterCard International Incorporated and VISA USA,
Inc., respectively.
"Initial Issuance Date" shall mean January 29, 1998, the date the
Transferor Security is issued by the Trust and delivered to the Transferor.
"Insolvency Event" shall have the meaning specified in subsection
9.1(a).
"Insolvency Proceeds" shall have the meaning specified in
subsection 9.1(b).
"Institutional Investor" shall mean an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act of 1933, as amended.
"Insurance Proceeds" shall mean any amounts received pursuant to
the payment of benefits under any credit life insurance policies, credit
disability or unemployment insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account or any other credit
insurance policy designated by the Transferor including, without
limitation, credit insurance coverage of Receivables on a pooled basis.
"Interchange" shall mean interchange fees payable to an Account
Owner, as partial compensation for taking credit risk, absorbing fraud
losses, and funding receivables for the period prior to the initial
billing. Any reference in this Agreement or any Supplement to Interchange
shall refer only to the interchange fees that are transferred by the
Account Owner 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 Securityholder" shall mean the Person in whose name a
Registered Security is registered in the Security Register or the bearer of
any Bearer Security (or the Global Security, as the case may be) or Coupon.
"Investor Securities" shall mean any certificated or
uncertificated interest in the Trust designated as, or deemed to be, an
"Investor Security" in the related Supplement.
"Investor Exchange" shall have the meaning specified in Section
6.3(b).
"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-Securities.
"Miscellaneous Fees and Charges" shall mean Receivables created
pursuant to any Credit Card Agreement in respect of any administrative fees
or service charges (including any portion of insurance premiums payable by
the Obligor which the Account Owner is not required to pay to the
applicable insurer) other than Late Fees, Overlimit Fees, Returned Check
Fees, Annual Membership Fees and Cash Advance Fees, including all ancillary
fee income received by the Servicer in respect of the Accounts.
"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.
"Original Pooling and Servicing Agreement" shall mean the Pooling
and Servicing Agreement, dated as of January 29, 1998, among PFRF, as
Transferor, Holdings, as Servicer, and The Bank of New York, as 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 Harris; 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 Holdings.
"PFRF" shall mean Partners First Receivables Funding, LLC, a
Delaware limited liability company and a wholly owned subsidiary of PFR.
"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 Security 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 Securityholders; (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 Securities of such Series may be exchanged for Investor Securities
of another Series, repurchased by the Transferor or remarketed to other
investors; (x) the Series Termination Date; (xi) the number of Classes of
Investor Securities of such Series and, if more than one Class, the rights
and priorities of each such Class; (xii) the extent to which the Investor
Securities of such Series will be issuable in temporary or permanent global
form (and, in such case, the depositary for such global security or
securities, the terms and conditions, if any, upon which such global
security may be exchanged, in whole or in part, for Definitive Securities,
and the manner in which any interest payable on a temporary or global
security will be paid); (xiii) whether the Investor Securities 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 Securities of
such Series or Class.
"Rating Agency Condition" shall mean, with respect to any action,
that the 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 Securities 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, (i)
the receivables purchase agreement between PFR and the Transferor, dated as
of January 29, 1998, as amended from time to time in accordance with the
terms thereof, (ii) any Account Owner Purchase Agreement, (iii) any
Account Originator Receivables Purchase Agreement, or (iv) any receivables
purchase agreement entered into by PFR or 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) PFR
or the Transferor, as applicable, shall have delivered to the Trustee (with
a copy to the Rating Agency) 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 Securityholder" shall mean the Holder of a Registered
Security.
"Registered Securities" 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 formation, certificate of incorporation and by-laws or other
organizational or governing documents of such Person.
"Responsible Officer" shall mean, when used with respect to (i)
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 or (ii)
the Transferor, a senior officer of the Transferor with oversight and
supervisory responsibilities over the Transferor's performance of its
obligations hereunder.
"Restart Date" shall mean the date specified in the notice
delivered by the Transferor to the Trustee pursuant to Section 2.9(h)
hereof.
"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.
"Security" shall mean any one of the Investor Securities or the
Transferor Securities.
"Securityholder" or "Holder" shall mean an Investor
Securityholder or a Person in whose name any one of the Transferor
Securities is registered.
"Securityholders' Interest" shall have the meaning specified in
Section 4.1. For purposes of determining whether Holders of Investor
Securities evidencing a specified percentage of the Securityholders'
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 Securities.
"Security Owner" shall mean, with respect to a Book-Entry
Security, the Person who is the owner of such Book-Entry Security, 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).
"Security Rate" shall mean, as of any particular date of
determination and with respect to any Series or Class, the security rate as
of such date specified therefor in the related Supplement.
"Security Register" shall mean the register maintained pursuant
to Section 6.4, providing for the registration of the Registered Securities
and transfers and exchanges thereof.
"Series" shall mean any series of Investor Securities issued
pursuant to Section 6.3.
"Series Account" shall mean any deposit, trust, escrow or similar
account maintained for the benefit of the Investor Securityholders 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 Securities 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 Securityholders 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
Securityholders 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 Securities 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 Holdings, 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 Securities 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 Security" shall have the meaning specified in
subsection 6.3(b).
"Supplemental Security Supplement" 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 Securities 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 Securityholder and (d) except as is otherwise provided in a
Supplement, in the case of subsection 6.3(b)(vi), the Investor Securities
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, LLC,
a Delaware limited liability company and a wholly owned special purpose
subsidiary of PFR or its successor under this Agreement.
"Transferor LLC Agreement" shall mean the Limited Liability
Company Agreement of PFRF, dated as of January 26, 1998.
"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 Security" shall mean the security executed by
Partners First Receivables Funding, LLC 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 Securities" shall mean, collectively, the Transferor
Security and any outstanding Supplemental Securities.
"Transferor Percentage" shall have, with respect to each Series,
the meaning specified in the related Supplement
"Transferor's Interest" shall have the meaning specified in
Section 4.1.
"Transferred Account" shall mean each account into which an
Account shall be transferred provided that (i) such transfer was made in
accordance with the Credit Card Guidelines and (ii) such account can be
traced or identified as an account into which an Account has been
transferred.
"Trust" shall mean the 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 PFRF and
Holdings in this Agreement in each of their respective capacities as
Transferor and Servicer shall be deemed to be the agreements,
representations and warranties of PFRF and Holdings solely in each such
capacity for so long as PFRF and Holdings act in each such capacity under
this Agreement.
(e) Any reference to the 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, PFRF does hereby transfer, assign, set over, and otherwise
convey to the Trustee, on behalf of the Trust, for the benefit of the
Securityholders, 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 Issuance 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) each 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 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 Securityholder 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 Securityholders (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, or cause to be delivered, to the Trustee, a copy of
the computer file or microfiche list delivered to the Transferor pursuant
to the related Receivables Purchase Agreement, containing a true and
complete list of all such Accounts specifying for each such Account, as of
the Initial Issuance 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 Securityholders, 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 Securities issued hereunder or to be
issued pursuant to this Agreement and the interest accrued at the related
Security 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 Securityholders. 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 Securityholders 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 Securities) that:
(a) Organization and Good Standing. The Transferor is a limited
liability company validly existing under the laws of the jurisdiction of
its organization 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 Securities.
(b) Due Qualification. The Transferor is duly qualified to do
business and is in good standing as a foreign limited liability company 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 Securityholders.
(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 Securities
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 Securities, 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 Securities, (ii) seeking to prevent the issuance of any of the
Securities or the consummation of any of the transactions contemplated by
this Agreement, each Receivables Purchase Agreement, each Supplement or the
Securities, (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 Securities 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
Securities 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 Issuance 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 Issuance 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 Issuance 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 Issuance 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 Issuance 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 Securities. 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
Securityholders' 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 Securityholders' 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 Securityholders (or the
Trustee on behalf of the Securityholders) 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 Securityholders' 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 Securityholders' 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 Securities evidencing not less than
50% of the aggregate unpaid principal amount of all outstanding Investor
Securities, by notice then given to the Transferor and the Servicer (and to
the Trustee if given by the Investor Securityholders), may direct the
Transferor to accept a reassignment of the Securityholders' 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 Securityholders on such Distribution Date in accordance with the
terms of each Supplement. If the Trustee or the Investor Securityholders
give notice directing the Transferor to accept a reassignment of the
Securityholders' 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 Securityholders (or the Trustee on behalf of the
Securityholders) 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 Security 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 with 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 Security 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 Trustee all such Collections and Recoveries as soon as practicable
after its receipt thereof but in no event later than two business days
after a Responsible Officer of the Transferor has obtained actual knowledge
of such receipt by the Transferor.
(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 Formation. The Transferor
will not amend in any material respect the Transferor LLC Agreement or its
certificate of formation 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 procedures required by its certificate of
formation, the Transferor LLC Agreement and the laws 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 Managers (as
such term is defined in the Transferor LLC Agreement);
(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
Securities 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;
(xiii) disclose in any 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;
(xiv) on or before December 31 of each year, commencing December
31, 1998, deliver to the Rating Agency a certificate of an auditor
(which may be an employee of Holdings or PFR) to the effect that the
Transferor has complied with all of the requirements of the foregoing
clauses (i) through (xiii) during the preceding year, or in the case
of the first such certificate, during the period commencing on the
Initial Series Issuance Date; provided, however, that the Transferor
shall not be required to deliver such certificate with respect to any
year, if the Transferor shall have delivered to the Rating Agency an
Officer's Certificate to the same effect on or after June 30 of the
applicable year in connection with the issuance of a Series.
(i) Interchange. The Transferor shall cause PFR to cause each
Account Originator and Account Owner to (i) pay all Interchange required to
be included by such Account Originator or Account Owner, as the case may
be, as Collections of Finance Charge Receivables with respect to the
preceding Business Day (or, if the Transferor cannot identify or cause to
be identified the amount of such Interchange, the amount reasonably
estimated by the Transferor as the amount of such Interchange) directly to
the Trustee for deposit into the Collection Account or (ii) deposit any
such Interchange directly into the Collection Account, in either case, in
immediately available funds on each Business Day, not later than 1:00 p.m.,
New York City time. The Trustee, upon receipt of any such Interchange,
shall deposit such amounts into the Collection Account.
Section 2.8 Covenants of the Transferor with Respect to
Receivables Purchase Agreement.
(a) 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:
(i) 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.
(ii) 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 Securityholders.
(b) 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, (y) the applicable conditions specified in paragraph (c)
below have been satisfied and (z) Moody's shall have received prior written
notice of any such designation of Additional Accounts or Participation
Interests pursuant to clauses (i) or (ii) above..
(b) Permitted Aggregate Additions. The Transferor may from time
to time, in 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 transfer of the Receivables in
Aggregate Addition Accounts (and such Aggregate Addition Accounts shall be
deemed to be Accounts for purposes of this Agreement) or Participation
Interests as of the close of business on the applicable Additional Cut-Off
Date, shall be 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 the 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,
the Servicer, 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 the
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, in 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 the 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 transfer of the Receivables in
such New Accounts as of the close of business on the applicable Additional
Cut-Off Date and the designation of such New Accounts as Accounts shall be
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,
the Servicer, PFR 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 Automatic 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 shall deliver to the Trustee (i) any
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 Securityholders),
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.
(h) The Transferor may determine, in its sole discretion, that
commencing on a specified date (the "Automatic Addition Commencement Date")
it shall designate that all Eligible Accounts, whether then in existence or
thereafter created, shall be included as Accounts subject to satisfaction
of the following conditions:
(i) the number of Accounts the Receivables of which are
designated to be included in the Trust pursuant to this subsection
2.9(h) since (x) the first day of the eleventh preceding Monthly
Period (or, in the case of any date on which Automatic Addition
Accounts are to be added to the Trust which occurs on or before the
last day of the eleventh Monthly Period following the Automatic
Addition Commencement Date, the Automatic Addition Commencement Date)
minus the number of Accounts of the type described in clause (iii) of
the last paragraph of the definition of "Eligible Account" which have
been added on the initial day of the addition of such type of Account
pursuant to such clause (iii) since the first day of such eleventh
preceding Monthly Period (or Automatic Addition Commencement Date, as
the case may be) shall not exceed 20% (or such other percentage as the
Rating Agency may require) of the number of Accounts on the first day
of such eleventh preceding Monthly Period (or Automatic Addition
Commencement Date, as the case may be), and (y) the first day of the
second preceding Monthly Period (or, in the case of any date on which
Automatic Addition Accounts are to be added to the Trust which occurs
on or before the last day of the second Monthly Period following the
Automatic Addition Commencement Date, the Automatic Addition
Commencement Date) minus the number of Accounts of the type described
in clause (iii) of the last paragraph of the definition of "Eligible
Accounts" which have been added on the initial day of the addition of
such type of Account pursuant to such clause (iii) since the first day
of such second preceding Monthly Period (or Automatic Addition
Commencement Date, as the case may be) shall not exceed 15% (or such
other percentage as the Rating Agency may require) of the number of
Accounts on the first day of such second preceding Monthly Period (or
Automatic Addition Commencement Date, as the case may be); and
(ii) on each Calculation Date, the aggregate Principal
Receivables in Accounts the Receivables of which are designated to be
included in the Trust pursuant to this subsection 2.9(h) since (x) the
corresponding Calculation Date occurring in the eleventh Monthly
Period preceding the Monthly Period in which such Calculation Date
occurs (or, in the case of any Calculation Date which occurs on or
before the last day of the eleventh Monthly Period following the
Automatic Addition Commencement Date, the Automatic Addition
Commencement Date) minus the aggregate Principal Receivables in
Accounts of the type described in clause (iii) of the last paragraph
of the definition of "Eligible Account" which have been added on the
initial day of the addition of such type of Account pursuant to such
clause (iii) since the corresponding Calculation Date occurring in
such eleventh preceding Monthly Period (or the Automatic Addition
Commencement Date, as the case may be) shall not exceed 20% (or such
other percentage as the Rating Agency may require) of the aggregate
Principal Receivables included in the Trust on the corresponding
Calculation Date occurring in such eleventh preceding Monthly Period
(or the Automatic Addition Commencement Date, as the case may be),
and (y) the corresponding Calculation Date occurring in the second
Monthly Period preceding the Monthly Period in which such Calculation
Date occurs (or, in the case of any Calculation Date which occurs on
or before the last day of the second Monthly Period following the
Automatic Addition Commencement Date, the Automatic Addition
Commencement Date) minus the aggregate Principal Receivables in
Accounts of the type described in clause (iii) of the last paragraph
of the definition of "Eligible Account" which have been added on the
initial day of the addition of such type of Account pursuant to such
clause (iii) since the corresponding Calculation Date occurring in
such second preceding Monthly Period (or the Automatic Addition
Commencement Date, as the case may be) shall not exceed 15% (or such
other percentage as the Rating Agency may require) of the aggregate
Principal Receivables included in the Trust on the corresponding
Calculation Date occurring in such second preceding Monthly Period (or
the Automatic Addition Commencement Date, as the case may be).
For all purposes of this Agreement, all receivables of such
Automatic Addition Accounts shall be treated as Receivables upon their
creation and shall be subject to the eligibility criteria specified in the
definitions of "Eligible Receivable" and "Eligible Account."
Notwithstanding the foregoing, the Transferor may elect at any time, or may
be required if the percentages described above are exceeded, to suspend
the automatic inclusion in Accounts of new accounts which would otherwise
be Automatic Addition Accounts as of any Business Day (the "Automatic
Addition Suspension Date"), or terminate any such inclusion as of any
Business Day (an "Automatic Addition Termination Date") until a date (the
"Restart Date") to be identified in writing by the Transferor to the
Trustee, the Servicer and the Rating Agency at least 10 days prior to such
Restart Date. Promptly after an Automatic Addition Suspension Date or an
Automatic Addition Restart Date, the Transferor shall deliver to the
Trustee a list indicating all Accounts then included in the Trust.
Promptly after an Automatic Addition Suspension Date or any Automatic
Addition Termination Date, or a Restart Date, the Transferor and the
Trustee agree to execute and the Transferor agrees to record and file at
its own expense an amendment to the financing statements referred to in
Section 2.1 hereof to specify the accounts then subject to this Agreement
(which specification may incorporate a list of accounts by reference) and
may, except in connection with any such filing made after a Restart Date,
release any security interest in any accounts created after the Automatic
Addition Suspension Date or any Automatic Addition Termination Date.
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), (v) and (vi) 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, with a copy to the Rating Agency, dated the
Removal Date, to the effect that the Transferor reasonably believes
that (a) such removal will not have an Adverse Effect, (b) (I) no
selection procedures believed by the Transferor to be materially
adverse to the interests of the Investor Securityholders 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 (c) the Transferor Amount as of the Removal Date (determined after
giving effect to such Removal and to the Principal Receivables or
Participation Interests transferred to the Trust on such date) is
greater than or equal to the Required Transferor Amount; and
(vi) if on the applicable Removal Date, the long-term unsecured
debt obligations of Holdings or PFR are not rated at least in the
third highest rating category by the Rating Agency, the Transferor
shall have delivered to the Trustee, with a copy to the Rating Agency,
an Officer's Certificate which shall have attached to it the relevant
fraudulent conveyance statute, if any, and set forth the factual basis
for a conclusion that such Removal would not constitute a fraudulent
conveyance of the Transferor.
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 the
Rating Agency but without the consent of Securityholders if such amendment
is required to comply with any accounting or regulatory restrictions to
which the Trust, Holdings, 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 the 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 the 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 the Rating Agency
(b) After the Premium Option Date, Premium Option Receivables
Collections shall be treated as Collections of Principal Receivables.
Section 2.14 Covenant of Holdings with Respect to Account
Owners. Holdings hereby covenants that upon the discovery by it of any
actions taken by an Account Owner which in Holdings' reasonable belief
will, with the passage of time, result in a breach by such Account Owner of
any of the covenants referred to in Section 2.8, Holdings will designate
another federally insured financial institution to be the Account Owner
with respect to the related Accounts.
[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) Holdings agrees to act as the Servicer under this Agreement
and the Securityholders by their acceptance of Securities consent to
Holdings acting as Servicer. Notwithstanding the foregoing or any other
provisions of this Agreement or any Supplement, the Investor
Securityholders consent to any Account Owner acting as Servicer hereunder,
in full substitution for Holdings; provided that such Account Owner acting
as Servicer shall (i) be an Eligible Servicer and (ii) 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 Securityholders
hereunder, PFRF 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 Securityholders, 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 Securityholders.
(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 Securities 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).
(f) The Servicer shall maintain all records and documents
relating to the Accounts on behalf of the Trust, in such a manner as shall
enable the Servicer to perform its duties hereunder, including without
limitation, the enforcement of the Accounts and the related Receivables.
The Servicer shall maintain or cause to be maintained such records and
documents for the period of time such records and documents are customarily
kept by servicers or originators of revolving consumer credit card accounts
and the Servicer shall not discard or destroy any such document or record
unless in the reasonable belief of the Servicer the destruction of any
such document or record would not result in an Adverse Effect.
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 Securityholders' 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 Securityholders' 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
Securityholders' Interest of any particular Series shall be paid by the
Holders of the Transferor Securities on the related Distribution Date and
in no event shall the Trust, the Trustee, the Investor Securityholders 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 Securities.
Section 3.3 Representations, Warranties and Covenants of the
Servicer. Holdings, 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 Securities:
(a) Organization and Good Standing. The Servicer is a limited
liability company, 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 limited liability company or
other foreign entity (or is exempt from such requirements) and has obtained
all licenses and approvals required under the laws of each jurisdiction in
which the ownership or lease of its property or the conduct of its business
(other than the performance of its obligations hereunder) requires such
qualification, standing, license or approval, except to the extent that the
failure to so qualify, maintain such standing or be so licensed or approved
would not, in the aggregate, adversely effect the enforceability of the
Receivables. Either the Servicer is qualified to do business as a foreign
limited liability company, corporation or other foreign entity, is in good
standing, and has obtained all licenses and approvals as required under the
laws of all jurisdictions in which the performance of its obligations
pursuant to this Agreement requires such qualification, standing, license
or approval or the Servicer will have delegated its duties hereunder (in
accordance with subsection 8.7) to subservicers which, when taken together
with the Servicer are, in the aggregate, qualified to do business as a
foreign limited liability company, corporation or other foreign entity, are
in good standing, and have obtained all licenses and approvals as required
under the laws of all jurisdictions in which the performance by the
Servicer of its obligations pursuant to this Agreement requires such
qualification, standing, license or approval, except to the extent that the
failure to so qualify, maintain such standing or be so licensed or approved
would not, in the aggregate, materially and adversely affect the ability of
the Servicer to comply with this Agreement or to perform its obligations
hereunder or adversely effect the enforceability of the Receivables.
(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 Securityholders' Rights. The Servicer shall
take no action which, nor omit to take any action the omission of which,
would impair the rights of Securityholders 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 Securities.
(m) Computer Records. The Servicer shall update its computer
files with respect the Accounts on a daily basis.
In the event (x) any of the representations, warranties or
covenants of the Servicer contained in subsection 3.3 (h), (i), (j) or (l)
with respect to any Receivable or the related Account is breached, and such
breach has a material adverse effect on the Securityholders' Interest in
such Receivable (which determination shall be made without regard to
whether funds are then available to any Investor Securityholders 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 Securityholders (or the Trustee on
behalf of Securityholders) 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 the 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, 1999, 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 the Rating Agency to the effect 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 this Agreement during the period covered by
such report (which shall be the period from January 1) or for the initial
period, the relevant Closing Date) of the preceding calendar year to and
including December 31 of such preceding 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.
(b) On or before March 31 of each calendar year, beginning with
March 31, 1999, 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 compared the
amounts set forth in the 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, or with respect to the initial period, from the Initial
Issuance Date until December 31, 1998) with the Servicer's computer
reports which were the source of 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 the Servicer may, upon written
confirmation by the Rating Agency, cause such accountants to furnish such
report with respect to a smaller number of months within such 12 month
period, which shall be randomly selected.
(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
Securityholder or Security 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 Securities 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 Securities (except any
Securities held by the Transferor) of each Series will qualify as debt
secured by the Receivables. The Transferor, by entering into this
Agreement, each Securityholder, by the acceptance of its Security (and each
Security Owner, by its acceptance of an interest in the applicable
Security), agree to treat the Investor Securities for Federal, state and
local income and franchise tax purposes as debt. Each Holder of an
Investor Security agrees that it will cause any Security Owner acquiring an
interest in an Investor Security 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 Holdings. In the event that Holdings is
no longer acting as Servicer, any Successor Servicer shall deliver or make
available to Holdings 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) (any such payment, an "Adjustment Payment"). Any amount
deposited into the Special Funding Account pursuant to the preceding
sentence shall be considered Collections of Principal Receivables and shall
be applied in accordance with Article IV and the terms of each Supplement;
provided, however, that any such amounts paid by the Transferor after the
time period specified in the preceding sentence, to the extent of any
related Adjustment Payment Shortfall, shall not be deposited in the Special
Funding Account but shall be considered Collections of Finance Charge
Receivables and shall be applied in accordance with Article IV and the
Supplement.
(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 SECURITYHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Securityholders. The Investor Securities
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 Securities of
such Series at the times and in the amounts specified in the related
Supplement, the portion of Collections allocable to Investor
Securityholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in the Collection Account and the Special
Funding Account allocable to Securityholders 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 "Securityholders'
Interest"), it being understood that, except as specifically set forth in
the Supplement with respect thereto, the Investor Securities 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
Securities shall represent the ownership interest in the Trust Assets not
allocated pursuant to this Agreement or any Supplement to the
Securityholders' 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 Securities (the "Transferor's Interest");
provided, however, that the Transferor Securities 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 Securityholders,
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
Securityholders (the "Collection Account"). The Collection Account shall
initially be established with Harris. 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 Securityholders.
The Collection Account shall be under the sole dominion and
control of the Trustee for the benefit of the Securityholders. 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 Securityholder or any Series Enhancer.
If, at any time, the Collection Account ceases to be an Eligible Deposit
Account, the Servicer shall provide written notice thereof to the Rating
Agency, and 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 the 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
Securityholders. The Trustee shall maintain for the benefit of the
Securityholders 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. 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 treated as Collections of Finance Charge Receivables with
respect to the last day of the related Monthly Period, 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 Securityholders, 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 Securityholders
(the "Special Funding Account"). The Special Funding Account shall
initially be established with Harris. 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
Securityholders. The Special Funding Account shall be under the sole
dominion and control of the Trustee for the benefit of the Securityholders.
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 Securityholder 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 the 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 Securityholders. The Trustee shall maintain
for the benefit of the Securityholders 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 next
succeeding Business Day. 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
Securities; 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)
Holdings remains the Servicer and Holdings or an Affiliate of Holdings,
which has guaranteed the obligation of Holdings to deposit Collections into
the Collection Account and is other wise acceptable to the Rating Agency,
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) Holdings 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 Holdings 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 Securityholders 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 Securityholders of any other Series. Allocations of the foregoing
amounts between the Securityholders' 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 Securities 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 Securities any such amounts
that otherwise would be distributed to the Holders of the Transferor
Securities, 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 Securities 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 the
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
SECURITYHOLDERS
Distributions shall be made to, and reports shall be provided to,
Securityholders as set forth in the applicable Supplement. The identity of
the Securityholders 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 Securities. The Investor Securities of any
Series or Class shall be issued in fully registered form (including any
uncertificated Series or Class which is registered in the Security
Register, the "Registered Securities") unless the applicable Supplement
provides, in accordance with then applicable laws, that such Securities be
issued in bearer form ("Bearer Securities") with attached interest coupons
and a special coupon (collectively the "Coupons"). Such Registered
Securities or Bearer Securities, as the case may be, shall be substantially
in the form of the exhibits with respect thereto attached to the applicable
Supplement. The Transferor Security 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 Securities of any Series or Class shall be issued upon initial
issuance as one or more securities evidencing the aggregate original
principal amount of such Series or Class as described in Section 6.10. The
Transferor Security shall be issued as a single security. Each Security
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 Security on behalf of any such
officer. Securities 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 Securities or does not hold such
office at the date of such Securities. No Securities shall be entitled to
any benefit under this Agreement, or be valid for any purpose, unless there
appears on such Security 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 Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Bearer
Securities shall be dated the Series Issuance Date. All Registered
Securities and Transferor's Securities shall be dated the date of their
authentication.
Section 6.2 Authentication of Securities. The Trustee shall,
at the written direction of the Transferor, authenticate and deliver the
Investor Securities 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 Security 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 Security 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
Securities. The Investor Securities 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 Securities of
such Series and deliver such Investor Securities to the Trustee for
authentication. In connection with the issuance of a new Series of
Investor Securities or at any other time, a Transferor may surrender its
Transferor Security to the Trustee in exchange for a newly issued
Transferor Security and a second security (a "Supplemental Security"), the
terms of which shall be defined in a supplement (a "Supplemental Security
Supplement") to this Agreement (which Supplemental Security 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. In addition, to the extent permitted for any Series of
Investor Securities as specified in the related Supplement, the Investor
Securityholders of such Series may tender their Investor Securities and the
Transferor may tender the Transferor Security to the Trustee pursuant to
the terms and conditions set forth in such Supplement in exchange for (i)
one or more newly issued Series of Investor Securities and (ii) a reissued
Transferor Security (an "Investor Exchange"). The issuance of any such
Investor Securities or Supplemental Security shall be subject to
satisfaction of the following conditions:
(i) on or before the fifth day immediately preceding the Series
Issuance Date or Transferor Security surrender and exchange, as the
case may be, the Transferor shall have given the Trustee, the Servicer
and the Rating Agency notice (unless such notice requirement is
otherwise waived) of such issuance and the Series Issuance Date or the
Transferor Security surrender and exchange, as the case may be;
(ii) the Transferor shall have delivered to the Trustee the
related Supplement or Supplemental Security Supplement, as applicable,
in form satisfactory to the Trustee, executed by each party hereto
(other than the Trustee and the Holder of the Supplemental Security,
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 the
Rating Agency that the Rating Agency Condition shall have been
satisfied with respect to such issuance or the Transferor Security
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 the 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 Security held by any Person, and any Investor
Security 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 Securities.
(a) The Trustee shall cause to be kept a register (the "Security
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 Securities and of transfers and exchanges of the Registered
Securities as herein provided. The Transfer Agent and Registrar shall
initially be Harris 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 Security at any office or agency
of the Transfer Agent and Registrar maintained for such purpose, one or
more new Registered Securities (of the same Series and Class) in authorized
denominations of like aggregate fractional undivided interests in the
Securityholders' Interest shall be executed, authenticated and delivered,
in the name of the designated transferee or transferees.
At the option of a Registered Securityholder, subject to
subsection (c) below and subject to the provisions of any Supplement or
other agreement establishing the terms of an instrument, Registered
Securities (of the same Series and Class) may be exchanged for other
Registered Securities of authorized denominations of like aggregate
fractional undivided interests in the Securityholders' Interest, upon
surrender of the Registered Securities to be exchanged at any such office
or agency; Registered Securities, including Registered Securities received
in exchange for Bearer Securities, may not be exchanged for Bearer
Securities. At the option of the Holder of a Bearer Security, subject to
applicable laws and regulations, Bearer Securities may be exchanged for
other Bearer Securities or Registered Securities (of the same Series and
Class) of authorized denominations of like aggregate fractional undivided
interests in the Securityholders' Interest, upon surrender of the Bearer
Securities to be exchanged at an office or agency of the Transfer Agent and
Registrar located outside the United States. Each Bearer Security
surrendered pursuant to this Section shall have attached thereto all
unmatured Coupons; provided that any Bearer Security 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 Security for a
period of 15 days preceding the due date for any payment with respect to
the Security.
Whenever any Investor Securities 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
Securities, outside the United States) the Investor Securities which the
Investor Securityholder making the exchange is entitled to receive. Every
Investor Security 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 Securityholder 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 Securities, 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 Securities (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 Security upon its exchange in full for
Definitive Euro-Securities 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
Security exchanged for Definitive Euro-Securities.
The Transferor shall execute and deliver to the Trustee Bearer
Securities and Registered Securities 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 Securities.
The interest of any Investor Securityholder in any Receivable
shall not be transferable other than through the transfer of an Investor
Security, and except as provided in this Article VI, a Security 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 Securities may be
surrendered for registration of transfer or exchange (except that Bearer
Securities 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 Securities
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 Securities issued upon registration or transfer of, or
Investor Securities issued in exchange for, Investor Securities
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 Security 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 Securities 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 Security, an Investor
Securityholder shall be deemed to have represented and warranted that
it is not a Benefit Plan. By acquiring any interest in a Book-Entry
Security which contains such legend, a Security 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 Securities 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 Securities. If
(a) any mutilated Security (together, in the case of Bearer Securities,
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 Security 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 Security 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 Securities,
outside the United States), in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Security, a new Security of like tenor
and aggregate fractional undivided interest. In connection with the
issuance of any new Security under this Section, the Trustee or the
Transfer Agent and Registrar may require the payment by the Securityholder
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 Security 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 Security
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
Security for registration of transfer, treat the Person in whose name any
Registered Security is registered as the owner of such Registered Security
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 Security or Coupon as the owner of such Bearer
Security 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 Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities
owned by any of the Transferor, the Servicer, any other Holder of the
Transferor Security 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 Securities which
a Responsible Officer of the Trustee actually knows to be so owned shall be
so disregarded. Securities 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 Securities and that the pledgee is not the
Transferor, the Servicer, any other Holder of the Transferor Security 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 Securities or for maintaining, supervising or reviewing records
relating thereto. The provisions of Sections 11.1, 11.2, 11.3, and 11.5
shall apply to the Transfer Agent and Registrar.
Section 6.7 Appointment of Paying Agent. The Paying Agent shall
make distributions to Investor Securityholders 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 Harris 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 Securityholders in trust for
the benefit of the Investor Securityholders entitled thereto until such
sums shall be paid to such Investor Securityholders. 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 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 Securityholders' 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 Securityholders. If
any Holder or group of Holders of Investor Securities 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 Securityholders with respect to their rights under this Agreement
or any Supplement or under the Investor Securities 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 Securityholders 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 Securities, every
Registered Securityholder, by receiving and holding a Registered Security,
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 Securityholders 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 Securities which shall be authorized to act on behalf
of the Trustee in authenticating the Securities in connection with the
issuance, delivery, registration of transfer, exchange or repayment of the
Securities. Whenever reference is made in this Agreement to the
authentication of Securities 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
Securities 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 Securities described in the Pooling and
Servicing Agreement.
____________________________
____________________________
as Authenticating Agent
for the Trustee,
By _________________________
Authorized Officer
Section 6.10 Book-Entry Securities. Unless otherwise specified
in the related Supplement for any Series or Class, the Investor Securities,
upon original issuance, shall be issued in the form of one or more master
Investor Securities representing the Book-Entry Securities, to be delivered
to the Clearing Agency, by, or on behalf of, the Transferor. The Investor
Securities shall initially be registered on the Security Register in the
name of the Clearing Agency or its nominee, and no Security Owner will
receive a definitive security representing such Security Owner's interest
in the Investor Securities, except as provided in Section 6.12. Unless and
until definitive, fully registered Investor Securities ("Definitive
Securities") have been issued to the applicable Security 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 Security 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 Security 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 Security Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Depository Agreement, unless
and until Definitive Securities 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 Securities 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
Securityholders evidencing a specified percentage of the aggregate unpaid
principal amount of Investor Securities, such direction or consent may be
given by Security Owners (acting through the Clearing Agency and the
Clearing Agency Participants) owning Investor Securities evidencing the
requisite percentage of principal amount of Investor Securities.
Section 6.11 Notices to Clearing Agency. Whenever any notice or
other communication is required to be given to Investor Securityholders of
any Series or Class with respect to which Book-Entry Securities have been
issued, unless and until Definitive Securities shall have been issued to
the related Security Owners, the Trustee shall give all such notices and
communications to the applicable Clearing Agency.
Section 6.12 Definitive Securities. If Book-Entry Securities
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, Security 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 Securities of such Series or Class
through the Clearing Agency is no longer in the best interests of the
Security Owners with respect to such Securities, then the Trustee shall
notify all Security Owners of such Securities, through the Clearing Agency,
of the occurrence of any such event and of the availability of Definitive
Securities to Security Owners requesting the same. Upon surrender to the
Trustee of any such Securities by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration, the
Trustee shall authenticate and deliver such Definitive Securities. 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
Securities 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 Securities and the Trustee shall recognize the Holders of such
Definitive Securities as Investor Securityholders hereunder.
Section 6.13 Global Security; Exchange Date.
(a) If specified in the related Supplement for any Series or
Class, the Investor Securities for such Series or Class initially will be
issued in the form of a single temporary global security (the "Global
Security") 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 Security 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- Securities in
definitive form substantially in the form set forth in the exhibit with
respect thereto attached to the related Supplement (the "Definitive Euro-
Securities"). The "Definitive-Euro-Securities" shall be Bearer Securities
for all purposes of this Agreement and the provisions of this Agreement and
the related Supplement relating to Definitive Euro-Securities shall apply
to the Definitive Euro-Securities in all respects. The Definitive Euro-
Securities 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 Securities and no exchange of an interest in the
Global Securities for a Definitive Euro- Security may occur until the
person entitled to receive such Definitive Euro- Security provides
certification as to non-U.S. beneficial ownership as provided in this
Section 6.13. Until the Global Security with respect to a Series or Class
is exchanged for a Definitive Euro-Security 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
Security 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 Security 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-
Securities in an aggregate principal amount equal to the entire Initial
Invested Amount of such Series or Class. All Definitive Euro- Securities so
issued and delivered will have Coupons attached. The Global Security may
be exchanged for an equal aggregate amount of Bearer Securities only on or
after the Global Security Exchange Date. Notwithstanding the foregoing, no
holder of an interest in a Global Security will have any right to receive a
Bearer Security in exchange for such interest prior to the Global Security
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 Securities shall be authenticated and delivered
by the Trustee or its agent in exchange for only that portion of the Global
Security, 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 Securities 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 Securities to be endorsed in accordance with subsection 6.13(d)
below.
(e) On an exchange of the whole of a Global Security, such
Global Security 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 Security, 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 Security, by
the Trust or its agent endorsing the schedule attached to the Global
Security previously issued to reflect a decrease in the aggregate principal
amount of the Global Security.
(f) Upon any such exchange of all or a portion of a Global
Security for a Bearer Security or Bearer Securities, such Global Security
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 Security or Bearer Securities. Until so exchanged in
full, the Global Securities will in all respects be entitled to the same
benefits under this Agreement and the related Supplement as Bearer
Securities authenticated and delivered pursuant to this Agreement and the
related Supplement except that the beneficial owners of such Global
Security will not be entitled to receive payments of interest until they
have exchanged their beneficial interests in such Global Security for
Bearer Securities.
(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 Securities to be delivered in exchange for the
Global Securities 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
Securities and to the beneficial owners of the Bearer Securities issued in
exchange, except that a person receiving a Bearer Security must bear the
cost of insurance, postage, transportation and the like in the event that
such person does not receive such Bearer Security in person at the offices
of the applicable Foreign Clearing Agency.
(j) Until the exchange of the Global Securities as aforesaid,
the bearer thereof shall in all respects be entitled to the same benefits
as if it were the bearer of Bearer Securities and the Coupons attached
thereto.
Section 6.14 Meetings of Securityholders.
(a) If at the time any Bearer Securities 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 Securityholders 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
Securities or of taking any other action permitted to be taken by Investor
Securityholders hereunder or under any Supplement. Notice of any meeting
of Investor Securityholders, 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 Securityholders a Person shall be (i) a Holder of one or more
Investor Securities 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 Securities. The only persons who shall be entitled to be
present or to speak at any meeting of Investor Securityholders 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 Securityholders, persons entitled
to vote Investor Securities 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 Securities 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 Securities which shall constitute a quorum.
(c) Any Investor Securityholder 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 Securityholder 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 Securityholders duly held in
accordance with this Section shall be binding on all Investor
Securityholders whether or not present or represented at the meeting.
(d) The holding of Bearer Securities shall be proved by the
production of such Bearer Securities 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 Security 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 Securities specified therein. The holding
by the Person named in any such certificate of any Bearer Security
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 Security shall be produced, (ii) the Bearer
Security specified in such certificate shall be produced by some other
Person or (iii) the Bearer Security 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 Securities evidencing a majority of the
aggregate unpaid principal amount of Investor Securities 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 Security 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 Securityholder or proxy. Any
meeting of Investor Securityholders 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 Securityholders shall be by written ballot on which shall be
subscribed the signatures of Investor Securityholders or proxies and on
which shall be inscribed the serial number or numbers of the Investor
Securities 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 Securityholders 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 Securities shall not be applicable to any uncertificated
Securities.
[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 entity or convey, transfer or sell its
properties and assets substantially as an entirety to any Person unless:
(i) (x) the entity 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 entity
whose powers and activities are limited to substantially the same
degree as provided in the Transferor LLC Agreement 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 the 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) and subsection
6.3(b), 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
Securityholders, 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 Security; 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 Securities and any periodic or annual reports prepared in
connection with the issuance of Investor Securities 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 entity or, except as provided herein, convey, transfer
or sell its properties and assets substantially as an entirety to any
Person, unless:
(a) the entity 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, an entity 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 entity 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 entity 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 managers, directors, officers, employees or agents of the
Servicer in its capacity as Servicer shall be under any liability to the
Trust, the Trustee, the Securityholders, 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 member, 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 Securityholders with respect to this Agreement and the
rights and duties of the parties hereto and the interests of the
Securityholders hereunder.
Section 8.4 Servicer Indemnification of the Trust and the
Trustee. The Servicer shall indemnify and hold harmless the Trust and the
Trustee, the Transfer Agent and Registrar and the 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, the Paying Agent or the Transfer
Agent and Registrar.
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 the Rating
Agency) each stating that such assignment by Holdings 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 the 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 Securityholders 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. The Servicer may enter into
servicing agreements with one or more subservicers (including any Affiliate
of the Servicer and any Account Originator) to perform all or a portion of
the servicing functions on behalf of the Servicer with respect to the
Accounts and the Receivables in accordance with the Credit Card Guidelines
and this Agreement; provided that the Servicer shall remain obligated and
be liable to the Trustee for the benefit of the Securityholders for
servicing and administering the Accounts and the Receivables in accordance
with the provisions of this Agreement without diminution of such obligation
and liability by virtue of the appointment of such subservicer, to the same
extent and under the same terms and conditions as if the Servicer alone
were servicing and administering such Receivables. The fees and expenses
of the subservicer (if any) will be as agreed between the Servicer and its
subservicer and neither the Trustee nor the Securityholders will have any
responsibility therefor. All actions of a subservicer taken pursuant to
such a subservicer agreement will be taken as an agent of the Servicer with
the same force and effect as though performed by the Servicer. Any
delegation of duties by the Servicer permitted hereunder shall not relieve
the Servicer of its liability and responsibility with respect to such
duties, and shall not constitute a resignation of the Servicer within the
meaning of subsection 8.5. 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").
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 Securityholders. 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 either PFR or PFRF 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 PFR or PFRF, as applicable, of or relating to all or substantially all
of PFR's or PFRF's property, as applicable, 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 PFR or PFRF, as
applicable, any such action shall have remained undischarged or unstayed
for a period of 60 days; or PFR or PFRF, as applicable, 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 Securityholders 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 Securities 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 Security 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 Securityholders 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 Securities evidencing not less than
10% of the aggregate unpaid principal amount of all Investor Securities
(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 Securityholders 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 Securities evidencing not less
than 10% of the aggregate unpaid principal amount of all Investor
Securities (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 Securities evidencing more than 50% of the aggregate unpaid
principal amount of all Investor Securities, by notice then given to the
Servicer (and to the Trustee if given by the Investor Securityholders) (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
Securityholders' Interest on the Distribution Date in the next calendar
month.
The purchase price for the Securityholders' 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 and the Rating Agency 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 Securityholders in accordance with the terms of
each Supplement. The Transferor shall provide notice to the Rating Agency
of the exercise by it of such right of first refusal.
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 its reasonable best 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 the 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
Securityholders of such Series which are payable to the Holders of the
Transferor Securities after payment of all amounts owing to the Investor
Securityholders 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 Securities 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 Securities agrees that, if Holdings (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
Holdings 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 Holdings information of any kind which the
Successor Servicer deems to be confidential, Holdings 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 Securityholders. Within five
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Trustee, the Rating Agency and
each Series Enhancer and the Trustee shall give notice to the Investor
Securityholders. Upon any termination or appointment of a Successor
Servicer pursuant to this Article, the Trustee shall give prompt notice
thereof to the Investor Securityholders.
[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 Securityholders 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 Securityholders.
(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. Consistent with the foregoing and for purposes of
clarification, it is understood and agreed by the parties hereto 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 Securities
evidencing more than 50% of the aggregate unpaid principal amount of
all Investor Securities (or, with respect to any such action that does
not relate to all Series, 50% of the aggregate unpaid principal amount
of the Investor Securities 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 Securities evidencing not less
than 10% of the aggregate unpaid principal amount of all Investor
Securities (or, with respect to any such failure that does not relate
to all Series, 10% of the aggregate unpaid principal amount of the
Investor Securities 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 Securityholders, pursuant to the
provisions of this Agreement, unless such Securityholders 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 Securities
evidencing more than 25% of the aggregate unpaid principal amount of all
Investor Securities (or, with respect to any such matters that do not
relate to all Series, 25% of the aggregate unpaid principal amount of the
Investor Securities 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 Securities. The
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Securities (other than the certificate of
authentication on the Securities). 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 Securities (other than the
certificate of authentication on the Securities) 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
Securities or of the proceeds of such Securities, 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 Securities. 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 Securities 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 Securityholders),
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, BBB- in the case of Standard & Poor's unless otherwise notified
and BBB- in the case of Fitch 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. The Trustee shall not be an Affiliate of the Transferor or
the Servicer.
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 Securityholders and the Servicer shall
provide such notice to the 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 Securityholders, 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 Securityholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.8; provided that the
Trustee, or the Servicer on behalf of the Trustee, shall provide written
notice to the Rating Agency of the appointment of any co-trustee or
separate trustee pursuant to the Section within five Business Days of any
such appointment.
(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 co-trustee or separate trustee hereunder shall be liable
by reason of any act or omission of any other trustee hereunder and
the Trustee shall not be liable by reason of any act or omission of
any co-trustee or separate trustee appointed by the Trustee with due
care; 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
Securityholders. 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 Securities 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
Securities. All rights of action and claims under this Agreement or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities 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 Securityholders 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
Securityholders 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 Securityholders.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Investor Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
Section 11.14 Rights of Securityholders To Direct Trustee.
Except as otherwise provided in the applicable Supplement, holders of
Investor Securities evidencing more than 50% of the aggregate unpaid
principal amount of all Investor Securities (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 Securities 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 Securityholders 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
Securityholders.
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
Securities 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 Securityholders of any change in the location of the
Security 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 Securityholders 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, 2059, (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 Securityholders of
any Series or Class may surrender their Investor Securities for payment of
the final distribution on and cancellation of such Investor Securities (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 Securityholders, the Trustee
shall provide notice to Investor Securityholders 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 Securities 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 Securities at the office
or offices therein specified (which, in the case of Bearer Securities,
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 Securityholders.
(b) Notwithstanding a final distribution to the Investor
Securityholders 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
Securityholders shall continue to be held in trust for the benefit of such
Investor Securityholders and the Paying Agent or the Trustee shall pay such
funds to such Investor Securityholders upon surrender of their Investor
Securities, if certificated (and any excess shall be paid in accordance
with the terms of any Enhancement Agreement). In the event that all such
Investor Securityholders shall not surrender their Investor Securities 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 Securityholders to surrender their
Investor Securities for cancellation and receive the final distribution
with respect thereto (which surrender and payment, in the case of Bearer
Securities, shall be outside the United States). If within one year after
the second notice all such Investor Securities 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 Securityholders concerning surrender of their Investor
Securities, 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 Securityholders. 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 Securityholders 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 fraction
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
denominator 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
Securityholders 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 Securities, the Trustee shall sell, assign and convey to the
Holders of the Transferor Securities 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 Securities 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 or any Supplement may be amended from time to
time (including in connection with the issuance of a Supplemental Security,
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 Securityholders, provided that (i) an Opinion of Counsel for the
Transferor (which Opinion of Counsel may, as to factual matters, rely upon
Officer's Securities 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
Security) by the Servicer, the Transferor and the Trustee, with the
consent of the Holders of Investor Securities evidencing not less than 66-
2/3% of the aggregate unpaid principal amount of the Investor Securities 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 Securityholders; 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 Securityholders or deposits of amounts to be so
distributed or the amount available under any Series Enhancement without
the consent of each affected Securityholder, (ii) change the definition of
or the manner of calculating the interest of any Investor Securityholder
without the consent of each affected Investor Securityholder, (iii) reduce
the aforesaid percentage required to consent to any such amendment without
the consent of each Investor Securityholder, or (iv) adversely affect the
rating of any Series or Class by any Rating Agency without the consent of
the Holders of Investor Securities of such Series or Class evidencing not
less than 66-2/3% of the aggregate unpaid principal amount of the Investor
Securities 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 Securityholder, and the Servicer shall furnish notification of the
substance of such amendment to the Rating Agency and each Series Enhancer.
(d) It shall not be necessary for the consent of Investor
Securityholders 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
Securityholders 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 Securities evidencing more than 66-
2/3% of the aggregate unpaid principal amount of the Investor Securities 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
Securities 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 Securityholders, 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
Securityholders 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. The Servicer shall
provide written notice to the Rating Agencies of any waiver pursuant to
this subsection 13.1(g).
(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 Securityholders' 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
Securityholders 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 Securityholders.
(a) The death or incapacity of any Investor Securityholder shall
not operate to terminate this Agreement or the Trust, nor shall such death
or incapacity entitle such Securityholder'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 Securityholder 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 Securityholder 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 Securityholder 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 Securityholder previously shall have made,
and unless the Holders of Investor Securities evidencing more than 50% of
the aggregate unpaid principal amount of all Investor Securities (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
Securities 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 Securityholder with every other Investor Securityholder and the
Trustee, that no one or more Investor Securityholders 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 Securities, or to obtain or seek
to obtain priority over or preference to any other such Investor
Securityholder, 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 Securityholders except as otherwise expressly provided in this
Agreement. For the protection and enforcement of the provisions of this
Section, each and every Investor Securityholder 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, LLC, at 900 Elkridge Landing Road, Suite 300,
Linthicum, Maryland 21090 -- Attention: John R. Soderlund (facsimile no.
(410) 855-8599), (ii) in the case of the Servicer, to Partners First
Holdings, LLC, at 900 Elkridge Landing Road, Suite 300, Linthicum, Maryland
21090 -- Attention: John R. Soderlund (facsimile no. (410) 855-8599), (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: Corporate Trust Department (facsimile no (212) 815-5544
), (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 Securities shall be given by first-class mail, postage prepaid,
at the address of such Holder as shown in the Security Register. No Notice
shall be required to be mailed to a Holder of Bearer Securities 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 Securityholder 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 Securityholders 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 Securities are outstanding, any Notice
required or permitted to be given to Investor Securityholders 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 Securities or the rights of the Securityholders.
Section 13.7 Securities Nonassessable and Fully Paid. It is
the intention of the parties to this Agreement that the Securityholders
shall not be personally liable for obligations of the Trust, that the
interests in the Trust represented by the Securities shall be nonassessable
for any losses or expenses of the Trust or for any reason whatsoever and
that the Securities 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 Securityholders, 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 Security 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
Securityholders, 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
Securityholders, 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 Securityholders.
(a) Wherever in this Agreement a provision is made that an
action may be taken or a Notice given by Securityholders, such action or
Notice may be taken or given by any Securityholder, unless such provision
requires a specific percentage of Securityholders.
(b) Any Notice, request, authorization, direction, consent,
waiver or other act by the Holder of a Security shall bind such Holder and
every subsequent Holder of such Security and of any Security 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 Security.
Section 13.14 Rule 144A Information. For so long as any of the
Investor Securities 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 Securityholders of such Series or
Class and to any prospective purchaser of Securities designated by such an
Investor Securityholder, upon the request of such Investor Securityholder
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 Amended and Restated Pooling and Servicing Agreement to be
duly executed by their respective officers as of the day and year first
above written.
PARTNERS FIRST RECEIVABLES
FUNDING, LLC,
Transferor,
by /s/ Mark J. Norwicz
--------------------------------
Name: Mark J. Norwicz
Title: Treasurer
PARTNERS FIRST HOLDINGS, LLC
Servicer,
by /s/ Terence F. Browne
--------------------------------
Name: Terence F. Browne
Title: Secretary
THE BANK OF NEW YORK,
Trustee
by /s/ Wuhan Dansby
--------------------------------
Name: Wuhan Dansby
Title: Assistant Vice President
EXHIBIT A
FORM OF TRANSFEROR SECURITY
THIS TRANSFEROR SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS TRANSFEROR SECURITY NOR
ANY PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM SUCH REGISTRATION PROVISIONS.
THIS TRANSFEROR SECURITY IS NOT PERMITTED TO BE TRANSFERRED,
ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE
WITH THE TERMS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
No. R-1 One Unit
PARTNERS FIRST CREDIT CARD MASTER TRUST
TRANSFEROR SECURITY
THIS SECURITY REPRESENTS AN INTEREST
IN CERTAIN ASSETS OF THE
PARTNERS FIRST CREDIT CARD MASTER TRUST
Evidencing an interest in 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 revolving credit card accounts
transferred by Partners First Receivables Funding, LLC (the "Transferor").
(Not an interest in or obligation of the Transferor
or any affiliate thereof)
This certifies that PARTNERS FIRST RECEIVABLES FUNDING, LLC
("PFRF") is the registered owner of a fractional interest in the assets of
Partners First Credit Card Master Trust, a trust organized under the laws
of Delaware (the "Trust") not allocated to the Securityholders' Interest or
the interest of any Holder of a Supplemental Security pursuant to the
Amended and Restated Pooling and Servicing Agreement dated as of June 26,
1998 (as amended and supplemented, the "Agreement"), among PFRF, a Delaware
limited liability company, as Transferor, Partners First Holdings, LLC, as
servicer (the "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 fractional undivided interest in a portfolio of
certain receivables (the "Receivables") existing in the revolving credit
card accounts identified under the Agreement from time to time (the
"Accounts"), (ii) certain Receivables generated under the Accounts from
time to time thereafter, (iii) certain funds collected or to be collected
from accountholders in respect of the Receivables, (iv) all funds which are
from time to time on deposit in the Collection Account, Special Funding
Account and in the Series Accounts, (v) the benefits of any Series
Enhancements issued and to be issued by Series Enhancers with respect to
one or more Series of Investor Securities and (vi) all other assets and
interests constituting the Trust, including Interchange and Recoveries
allocated to the Trust pursuant to the Agreement and any Supplement.
Although a summary of certain provisions of the Agreement is set forth
below, this Security does not purport to summarize the Agreement and
reference is made to the Agreement 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 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.
This Security is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended
and supplemented from time to time, the Transferor by virtue of the
acceptance hereof assents and is bound.
The Receivables consist of Principal Receivables which arise
generally from the purchase of merchandise and services and amounts
advanced to cardholders as cash advances and Finance Charge Receivables
which arise generally from Periodic Finance Charges, Late Fees and other
fees and charges with respect to the Accounts.
This Security is the Transferor Security, which represents the
Transferor's interest in certain assets of the Trust, including the right
to receive a portion of the Collections and other amounts at the times and
in the amounts specified in the Agreement. The aggregate interest
represented by the Transferor Security at any time in the Receivables in
the Trust shall not exceed the Transferor's Interest at such time. In
addition to the Transferor Security, (i) Investor Securities will be issued
to investors pursuant to the Agreement, which will represent the
Securityholders' Interest, and (ii) Supplemental Securities may be issued
pursuant to the Agreement, which will represent that portion of the
Transferor's Interest not allocated to the Transferor. This Transferor
Security shall not represent any interest in the Collection Account, the
Special Funding Account or the Series Accounts, except as expressly
provided in the Agreement, or any Series Enhancements.
Unless otherwise specified in a Supplement with respect to a
particular Series the Transferor has entered into the Agreement, and this
Security is issued, with the intention that, for federal, state and local
income and franchise tax purposes, (i) the Investor Securities of each
Series which are characterized as indebtedness at the time of their
issuance will qualify as indebtedness of the Transferor secured by the
Receivables and (ii) the Trust shall not be treated as an association
taxable as a corporation. The Transferor, by entering into the Agreement
and by the acceptance of this Transferor Security, agrees to treat the
Investor Securities for federal, state and local income and franchise tax
purposes as indebtedness of the Transferor.
Subject to certain conditions and exceptions specified in the
Agreement, the obligations created by the Agreement and the Trust created
thereby shall terminate upon the earlier of (i) December 31, 2059, (ii) the
day following the Distribution Date on which the Invested Amount and
Enhancement Invested Amount for each Series is zero (provided the
Transferor has delivered a written notice to the Trustee electing to
terminate the Trust) and (iii) the time provided in Section 12.1 of the
Agreement.
Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee, by manual signature, this Security shall
not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused this Security to be
duly executed.
PARTNERS FIRST RECEIVABLES
FUNDING, LLC
By ___________________________
Name:
Title:
Dated: [_________ __, ____]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Transferor Security described in the within-mentioned
Agreement.
The Bank of New York,
as Trustee,
By _______________________
Authorized Signatory
or
By [_______________________],
as Authenticating Agent
for the Trustee,
By ________________________
Authorized Signatory
EXHIBIT B
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.9 of
the Pooling and Servicing Agreement)
ASSIGNMENT No. OF RECEIVABLES IN ADDITIONAL ACCOUNTS dated
as of ,(1) , by and among PARTNERS FIRST RECEIVABLES FUNDING, LLC, a
Delaware limited liability company, as Transferor (the "Transferor"),
PARTNERS FIRST HOLDINGS, LLC, as servicer (the "Servicer"), and THE BANK OF
NEW YORK, a New York banking corporation not in its individual capacity but
solely as trustee (the "Trustee"), pursuant to the Pooling and Servicing
Agreement referred to below.
WITNESSETH
WHEREAS the Transferor and the Trustee are parties to the Amended
and Restated Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Transferor wishes to
designate Additional Accounts owned by the Transferor to be included as
Accounts and to convey the Receivables of such Additional Accounts, whether
now existing or hereafter created, to the Trust as part of the corpus of
the Trust (as each such term is defined in the Agreement); and
WHEREAS the Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein shall have
the meanings ascribed to them in the Agreement unless otherwise defined
herein.
"Addition Date" shall mean, with respect to the Additional
Accounts designated hereby, , .
"Addition Cut-Off Date" shall mean, with respect to the
Additional Accounts designated hereby, , .
2. Designation of Additional Accounts. On or before the
Document Delivery Date, the Transferor will deliver to the Trustee a
computer file, microfiche list or printed list containing a true and
complete schedule identifying all such Additional Accounts specifying for
each such Account, as of the Addition Cut-Off Date, its account number, the
aggregate amount outstanding in such Account and the aggregate amount of
Principal Receivables outstanding in such Account, which computer file,
microfiche list or printed list shall supplement Schedule I to the
Agreement.
___________________
(1) To be dated as of the applicable Addition Date.
3. Conveyance of Receivables. (a) The Transferor does hereby
sell, transfer, assign, set over and otherwise convey, without recourse
except as set forth in the Pooling and Servicing Agreement, to the Trustee,
on behalf of the Trust, for the benefit of the Securityholders, all its
right, title and interest in, to and under the Receivables of such
Additional Accounts existing at the close of business on the Addition Date
and thereafter created from time to time until the termination of the
Trust, 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. The foregoing does not constitute and is not intended to
result in the creation or assumption by the Trust, the Trustee, any
Investor Securityholder or any Series Enhancer of any obligation of the
Servicer, the Transferor or any other Person in connection with the
Accounts, the Receivables or under any agreement or instrument relating
thereto, including any obligation to Obligors, merchant banks, merchants
clearance systems, VISA, MasterCard or insurers.
(b) The Transferor agrees to record and file, at its own
expense, financing statements (and continuation statements when applicable)
with respect to the Receivables now in Additional Accounts, meeting the
requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect, and maintain perfection of, the
sale 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 on or prior to the Addition Date.
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 sale and assignment.
(c) In connection with such sale, the Transferor further
agrees, at its own expense, on or prior to the date of this Assignment, to
indicate in the appropriate computer files that Receivables created in
connection with the Additional Accounts and designated hereby have been
conveyed to the Trust pursuant to the Agreement and this Assignment for the
benefit of the Securityholders.
(d) The Transferor does hereby grant to the Trustee a
security interest in all of its right, title and interest, whether now
owned or hereafter acquired, in and to the Receivables now existing and
hereafter created in the Additional Accounts, 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. This Assignment
constitutes a security agreement under the UCC.
4. Acceptance by Trustee. 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 3(a) of this Assignment, and declares that it shall
maintain such right, title and interest, upon the trust set forth in the
Agreement for the benefit of all Securityholders. The Trustee further
acknowledges that, prior to or simultaneously with the execution and
delivery of this Assignment, the Transferor delivered to the Trustee the
computer file, microfiche list or printed list described in Section 2 of
this Assignment.
5. Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trustee, on behalf of the
Trust, as of the date of this Assignment and as of the Addition Date that:
(a) Legal Valid and Binding Obligation. This Assignment
constitutes a legal, valid and binding obligation of 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 now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity);
(b) Eligibility of Accounts. As of the Addition Cut-Off
Date, each Additional Account designated hereby is an Eligible
Account;
(c) Insolvency. As of each of the Addition Cut-Off Date
and the Addition Date, no Insolvency Event with respect to the
Transferor has occurred and the transfer by the Transferor of
Receivables arising in the Additional Accounts to the Trust has not
been made in contemplation of the occurrence thereof;
(d) Pay Out Event. The Transferor reasonably believes that
(A) the addition of the Receivables arising in the Additional Accounts
will not, based on the facts known to the Transferor, then or
thereafter cause a Pay Out Event to occur with respect to any Series
and (B) no selection procedure was utilized by the Transferor which
would result in the selection of Additional Accounts (from among the
available Eligible Accounts owned by the Transferor) that would be
materially adverse to the interests of the Investor Securityholders of
any Series as of the Addition Date;
(e) Security Interest. This Assignment constitutes a valid
sale, transfer and assignment to the Trust of all right, title and
interest, whether now owned or hereafter acquired, of the Transferor
in the Receivables now existing or hereafter created in the Additional
Accounts, all monies due or to become due and all amounts received
with respect thereto and the "proceeds" (including "proceeds" as
defined in the UCC as in effect in the State of Delaware and other
applicable states) thereof, or, if this Assignment does not constitute
a sale of such property, it constitutes a grant of a "security
interest" (as defined in the UCC as in effect in the State of
Delaware, and other applicable states) in such property to the Trust,
which, in the case of existing Receivables and the proceeds thereof,
is enforceable upon execution and delivery of this Assignment, and
which will be enforceable with respect to such Receivables hereafter
created and the proceeds thereof upon such creation. Upon the filing
of the financing statements described in Section 3 of this Assignment
and, in the case of the 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;
(f) No Conflict. The execution and delivery by the
Transferor of this Assignment, the performance of the transactions
contemplated by this Assignment and the fulfillment of the terms
hereof 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;
(g) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of the Transferor,
threatened against the Transferor before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Assignment, (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Assignment, (iii) seeking any determination or
ruling that, in the reasonable judgment of the Transferor, would
materially and adversely affect the performance by the Transferor of
its obligations under this Assignment or (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of this Assignment; and
(h) All Consents. All authorizations, consents, orders or
approvals of any court or other governmental authority required to be
obtained by the Transferor in connection with the execution and
delivery of this Assignment by the Transferor and the performance of
the transactions contemplated by this Assignment by the Transferor,
have been obtained.
(i) No Adverse Effect. The assignment by the Transfer will
not result in an Adverse Effect.
6. Ratification of Agreement. As supplemented by this
Assignment, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Assignment shall be read, taken and
construed as one and the same instrument.
7. Counterparts. This Assignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the
same instrument.
8. GOVERNING LAW. THIS ASSIGNMENT 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 Transferor and the Trustee have caused
this Assignment to be duly executed by their respective officers as of the
day and year first above written.
PARTNERS FIRST RECEIVABLES
FUNDING, LLC
Transferor,
By ________________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee,
By ________________________________
Name:
Title:
EXHIBIT C
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.10 of
the Pooling and Servicing Agreement)
REASSIGNMENT No. OF RECEIVABLES dated as of ,(1) by and
among PARTNERS FIRST RECEIVABLES FUNDING, LLC, a Delaware limited liability
company, as Transferor (the "Transferor"), and THE BANK OF NEW YORK, a New
York banking corporation not in its individual capacity but solely as
trustee (the "Trustee"), pursuant to the Pooling and Servicing Agreement
referred to below.
WITNESSETH:
WHEREAS the Transferor and the Trustee are parties to the Amended
and Restated Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Agreement");
WHEREAS pursuant to the Agreement, the Transferor wishes to
remove from the Trust all Receivables owned by the Trust in certain
designated Accounts owned by the Transferor (the "Removed Accounts") and to
cause the Trustee to reconvey the Receivables of such Removed Accounts,
whether now existing or hereafter created, from the Trust to the
Transferor; and
WHEREAS the Trustee on behalf of the Trust is willing to accept
such designation and to reconvey the Receivables in the Removed Accounts
subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
1. Defined Terms. All terms defined in the Agreement and used
herein shall have such defined meanings when used herein, unless otherwise
defined herein.
"Removal Date" shall mean, with respect to the Removed Accounts
designated hereby, , .
"Removal Notice Date" shall mean, with respect to the Removed
Accounts, , .
2. Designation of Removed Accounts. On or before the date that
is five Business Days after the Removal Date, the Transferor will deliver
to the Trustee a computer file, microfiche list or printed list containing
a true and complete schedule identifying all Accounts the Receivables of
which are being removed from the Trust, specifying for each such Account,
as of the Removal Notice Date, its account number, the aggregate amount
outstanding in such Account and the aggregate amount of Principal
Receivables in such Account, which computer file, microfiche list or
printed list shall supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Trustee does hereby
transfer, assign, set over and otherwise convey to the Transferor, without
recourse, on and after the Removal Date, all right, title and interest of
the Trust in, to and under the Receivables existing at the close of
business on the Removal Date and thereafter created from time to time in
the Removed Accounts designated hereby, all monies due or to become due and
all amounts received with respect thereto and all proceeds thereof.
_________________
(1) To be dated as of the Removal Date.
(b) In connection with such transfer, the Trustee agrees to
execute and deliver to the Transferor on or prior to the date this
Reassignment is delivered, applicable termination statements prepared by
the Transferor with respect to the Receivables existing at the close of
business on the Removal Date and thereafter created from time to time in
the Removed Accounts reassigned hereby and the proceeds thereof evidencing
the release by the Trust of its interest in the Receivables in the Removed
Accounts, and meeting the requirements of applicable state law, in such
manner and such jurisdictions as are necessary to terminate such interest.
4. Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trustee, on behalf of the
Trust, as of the Removal Date:
(a) Legal Valid and Binding Obligation. This Reassignment
constitutes a legal, valid and binding obligation of 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 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); and
(b) Pay Out Event. The Transferor reasonably believes that
(A) the removal of the Receivables existing in the Removed Accounts will
not, based on the facts known to the Transferor, then or thereafter cause a
Pay Out Event to occur with respect to any Series and (B) no selection
procedure was utilized by the Transferor which would result in a selection
of Removed Accounts that would be materially adverse to the interests of
the Investor Securityholders of any Series as of the Removal Date.
(c) List of Removed Accounts. The list of Removed Accounts
delivered pursuant to subsection 2.10(ii) of the Agreement, as of the
Removal Date, is true and complete in all material respects.
5. Ratification of Agreement. As supplemented by this
Reassignment, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Reassignment shall be read, taken
and construed as one and the same instrument.
6. Counterparts. This Reassignment may be executed in two or
more counterparts, and by different parties on separate counterparts, each
of which shall be an original, but all of which shall constitute one and
the same instrument.
7. GOVERNING LAW. THIS REASSIGNMENT SHALL BE 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 Transferor and the Trustee have caused
this Reassignment to be duly executed by their respective officers as of
the day and year first above written.
PARTNERS FIRST RECEIVABLES
FUNDING, LLC
Transferor
By ________________________________
Title:
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee,
By ________________________________
Title:
EXHIBIT D
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before June 30, of
each calendar year beginning with June 30, 1999,
pursuant to Section 3.5 of the Pooling and
Servicing Agreement referred to below)
PARTNERS FIRST HOLDINGS, LLC
PARTNERS FIRST CREDIT CARD MASTER TRUST
The undersigned, a duly authorized representative of Partners
First Holdings, LLC, as Servicer ("Holdings"), pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Agreement"), among Partners First
Receivables Funding, LLC, as Transferor, Holdings, as Servicer, and The
Bank of New York, as Trustee, does hereby certify that:
1. Holdings is, as of the date hereof, the Servicer under the
Agreement. Capitalized terms used in this Certificate have their
respective meanings as set forth in the Agreement.
2. The undersigned is a Servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the
Trustee.
3. A review of the activities of the Servicer during the year
ended December 31, ____, and of its performance under the Agreement was
conducted under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph
5 below.
5. The following is a description of each default in the
performance of the Servicer's obligations under the provisions of the
Agreement known to me to have been made by the Servicer during the year
ended December 31, ____ which sets forth in detail (i) the nature of each
such default, (ii) the action taken by the Servicer, if any, to remedy each
such default and (iii) the current status of each such default: [If
applicable, insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of ________, 19____.
PARTNERS FIRST HOLDINGS, LLC
Servicer,
By ___________________________
Name:
Title:
EXHIBIT E-1
FORM OF OPINION OF COUNSEL
WITH RESPECT TO AMENDMENTS
Provisions to be included in
Opinion of Counsel to be delivered pursuant
to Section 13.2(d)(i)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in
the Opinions of Counsel delivered on any applicable Closing Date.
(i) The amendment to the [Pooling and Servicing Agreement],
[Supplement], attached hereto as Schedule 1 (the "Amendment" ), has
been duly authorized, executed and delivered by the Transferor and
constitutes the legal, valid and binding agreement of the Transferor,
enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws from time to time in effect
affecting creditors' rights generally. The enforceability of the
Transferor's obligations is also subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law)
(ii) The Amendment has been entered into in accordance with the
terms and provisions of Section 13.1 of the Pooling and Servicing
Agreement.
EXHIBIT E-2
FORM OF OPINION OF COUNSEL
WITH RESPECT TO ACCOUNTS
Provisions to be included in
Opinion of Counsel to be
delivered pursuant to
subsection 13.2(d)(ii) or (iii)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in
the Opinions of Counsel delivered on any applicable Closing Date.
1. Except for any Receivable that is evidenced by an instrument,
the Receivables constitute either general intangibles or accounts under
Article 9 of the UCC.
2. The Pooling and Servicing Agreement creates in favor of the
Trustee a security interest in the rights of the relevant Transferor in
such of the Receivables identified in Schedule 1 to the Pooling and
Servicing Agreement as constitute accounts. To the extent that such
security interest is not an interest of a buyer of accounts, then the
Pooling and Servicing Agreement creates in favor of the Trustee a security
interest in the rights of such Transferor in the proceeds of such
Receivables.
3. To extent that transactions contemplated by the Pooling and
Servicing Agreement do not constitute a sale by the relevant Transferor to
the Trustee of such of the Receivables as constitute general intangibles or
the proceeds thereof, the Pooling and Servicing Agreement creates in favor
of the Trustee a security interest in the rights of such Transferor in such
of the Receivables as constitute general intangibles and the proceeds
thereof.
4. The Receivables Purchase Agreements create in favor of the
Transferor a security interest in the rights of the Account Owner in such
of the Receivables identified in Schedule 1 to the Receivables Purchase
Agreements as constitute accounts.
5. To the extent that transactions contemplated by the
Receivables Purchase Agreements do not constitute a sale by the Account
Owner to the Transferor of such of the Receivables as constitute general
intangibles or the proceeds thereof, the Receivables Purchase Agreements
create in favor of the Transferor a security interest in the rights of the
Account Owner in such of the Receivables as constitute general intangibles
and the proceeds thereof.
6. The security interests described in paragraphs 2, 3, 4 and 5
above are perfected and of first priority.
EXHIBIT E-3
PROVISIONS TO BE INCLUDED IN
ANNUAL OPINION OF COUNSEL
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in
the Opinions of Counsel delivered on any applicable Closing Date. Unless
otherwise indicated, all capitalized terms used herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement and in the
Assignment.
1. The Pooling and Servicing Agreement, together with the Assignments,
create in favor of the Trustee a security interest in the relevant
Transferor's rights in the Receivables identified in Schedule 1 to the
Pooling and Servicing Agreement. Such security interest is perfected and
of first priority.
EXHIBIT F-1
[FORM OF CLEARANCE SYSTEM CERTIFICATE
TO BE GIVEN TO THE TRUSTEE BY
EUROCLEAR OR CEDEL FOR
DELIVERY OF DEFINITIVE SECURITIES
IN EXCHANGE FOR A PORTION OF A
TEMPORARY GLOBAL SECURITY]
PARTNERS FIRST CREDIT CARD MASTER TRUST
Class [___] Series [199_-_] [Floating Rate [__%]
Asset Backed Securities
[Insert title or sufficient description of
Securities to be delivered]
We refer to that portion of the temporary Global Security in
respect of the above-captioned issue which is herewith submitted to be
exchanged for definitive Securities (the "Submitted Portion") as provided
in the Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Agreement") in respect of such issue. This
is to certify that (i) we have received a certificate or certificates, in
writing or by tested telex, with respect to each of the persons appearing
in our records as being entitled to a beneficial interest in the Submitted
Portion and with respect to such persons beneficial interest either (a)
from such person, substantially in the form of Exhibit G-2 to the
Agreement, or (b) from [ ], substantially in the
form of Exhibit G-3 to the Agreement, and (ii) the Submitted Portion
includes no part of the temporary Global Security excepted in such
certificates
We further certify that as of the date hereof we have not
received any notification from any of the persons giving such certificates
to the effect that the statements made by them with respect to any part of
the Submitted Portion are no longer true and cannot be relied on as of the
date hereof.
We understand that this certificate is required in connection
with certain securities and tax laws in the United States of America. If
administrative or legal proceedings are commenced or threatened in
connection with which this certificate is or would be relevant, we
irrevocably authorize you to produce this certificate or a copy thereof to
any interested party in such proceedings.
Dated:(1) [Morgan Guaranty Trust, Company of New York,
Brussels office, as operator of the
Euroclear Systems] (2)
[Centrale de Livraison de
Valeurs Mobiliere S. A.] (2)
By: _______________________________
- ---------------------
(1) To be dated on the Exchange Date.
(2) Delete the inappropriate reference.
EXHIBIT F-2
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL
BY [INSERT NAME OF MANAGER]
WITH RESPECT TO REGISTERED SECURITIES SOLD TO
QUALIFIED INSTITUTIONAL BUYERS]
PARTNERS FIRST CREDIT CARD MASTER TRUST,
Class [___] Series [199_-_] [Floating Rate] [_%]
Asset Backed Securities
In connection with the initial issuance and placement of the
above referenced Asset Backed Securities (the "Securities"), an
institutional investor in the United States ("institutional investor") is
purchasing U.S. $ aggregate principal amount of the Securities
held in our account at [Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System] [Cedel Bank] on behalf of such
investor.
We reasonably believe that such institutional investor is a
qualified institutional buyer as such term is defined under Rule 144A of
the Securities Act of 1933, as amended.
[We understand that this certificate is required in connection
with United States laws. We irrevocably authorize you to produce this
certificate or a copy hereof to any interested party in any administrative
or legal proceedings or official inquiry with respect to the matters
covered by this certificate.]
The Definitive Securities in respect of this certificate are to
be issued in registered form in the minimum denomination of U.S. $500,000
and such Definitive Securities (and, unless the Pooling and Servicing
Agreement or Supplement relating to the Securities otherwise provides, any
Securities issued in exchange or substitution for or on registration of
transfer of Securities) shall bear the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 NEITHER THIS SECURITY NOR ANY PORTION
HEREOF MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE
UNITED STATES OR TO U.S. PERSONS (EACH AS DEFINED HEREIN), EXCEPT
IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS SECURITY IS SUBJECT TO CERTAIN
CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. THIS SECURITY CANNOT BE EXCHANGED FOR A
BEARER SECURITY."
Dated: [ ],
By: __________________________
Authorized Officer
EXHIBIT F-3
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL BY A BENEFICIAL OWNER
OF SECURITIES, OTHER THAN A QUALIFIED INSTITUTIONAL BUYER]
PARTNERS FIRST CREDIT CARD MASTER TRUST,
Class [___] Series [199_-_] [Floating Rate] [_%]
Asset Backed Securities
This is to certify that as of the date hereof and except as
provided in the third paragraph hereof, the above-captioned Securities held
by you for our account (i) are owned by a person that is a United States
person, or (ii) are owned by a United States person that is (A) the foreign
branch of a United States financial institution (as defined in U.S.
Treasury Regulations Section 1.165-12(c)(1)(v)) (a "financial institution")
purchasing for its own account or for resale, or (B) a United States person
who acquired the Securities through the foreign branch of a financial
institution and who holds the Securities through the financial institution
on the date hereof (and in either case (A) or (B), the financial
institution hereby agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended,
and the regulations thereunder), or (iii) are owned by a financial
institution for purposes of resale during the Restricted Period (as defined
in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)). In addition,
financial institutions described in clause (iii) of the preceding sentence
(whether or not also described in clause (i) or (ii)) certify that they
have not acquired the Securities for purposes of resale directly or
indirectly to a United States person or to a person within the United
States or its possessions.
We undertake to advise you by tested telex if the above statement
as to beneficial ownership is not correct on the date of delivery of the
above-captioned Securities in bearer form with respect to such of said
Securities as then appear in your books as being held for our account.
This certificate excepts and does not relate to U.S.
$_______________ principal amount of Securities held by you for our
account, as to which we are not yet able to certify beneficial ownership.
We understand that delivery of Definitive Securities in such principal
amount cannot be made until we are able to so certify.
We understand that this certificate is required in connection
with certain securities and tax laws ln the United States of America. If
administrative or legal proceedings are commenced or threatened in
connection with which this certificate is or would be relevant, we
irrevocably authorize you to produce this certificate or a copy thereof to
any interested party in such proceedings. As used herein, "United States"
means the United States of America (including the States and the District
of Columbia), its territories, its possessions and other areas subject to
its jurisdiction; and "United States Person" means a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States, or any political
subdivision thereof, or an estate or trust the income of which is subject
to United States federal income taxation regardless of its source.
Dated: (1)
By: _________________________
As, or an agent for, the beneficial
owner(s) of the interest in the
Securities to which this
certificate relates.
------------------
(1) This Certificate must be dated on the earlier of the date of
the first actual payment of interest in respect of the
Securities and the date of the delivery of the Securities in
definitive form.
EXHIBIT G-1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). NEITHER THIS SECURITY NOR ANY PORTION
HEREOF MAY BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE 1933 ACT AND ANY
APPLICABLE PROVISIONS OF ANY STATE BLUE SKY OR SECURITIES LAWS OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS. THE TRANSFER
OF THIS SECURITY IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS SECURITY MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A BENEFIT
PLAN (AS DEFINED BELOW).
EXHIBIT G-2
[FORM OF UNDERTAKING LETTER]
[Date]
The Bank of New York
101 Barclay Street, 12E
New York, New York 10286
Attention:
Partners First Receivables Funding, LLC
900 Elkridge Landing Road
Suite 400
Linthicum, MD 21090
Attention:
Re: Purchase of $___________ (1) principal amount
of Partners First Credit Card Master Trust
Class [__] Series [199_-_] [Floating Rate]
[__%] Asset Backed Securities
Dear Sirs:
In connection with our purchase of the above-referenced Asset
Backed Securities (the "Securities") we confirm that:
(i) we understand that the Securities are not being registered
under the Securities Act of 1933, as amended (the "1933 Act"), and are
being sold to us in a transaction that is exempt from the registration
requirements of the 1933 Act;
(ii) any information we desire concerning the Securities or any
other matter relevant to our decision to purchase the Securities is or
has been made available to us;
(iii) we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks
of an investment in the Securities, and we (and any account for which
we are purchasing under paragraph (iv) below) are able to bear the
economic risk of an investment in the Securities; we (and any account
for which we are purchasing under paragraph (iv) below) are an
"accredited investor" (as such term is defined in Rule 501(a)(1), (2)
or (3) of Regulation D under the 1933 Act); and we are not, and none
of such accounts is, a Benefit Plan;
(iv) we are acquiring the Securities for our own account or for
accounts as to which we exercise sole investment discretion and not
with a view to any distribution of the Securities, subject,
nevertheless, to the understanding that the disposition of our
property shall at all times be and remain within our control;
__________________
(1) Not less than $250,000 minimum principal amount.
(v) we agree that the Securities must be held indefinitely by us
unless subsequently registered under the 1933 Act or an exemption from
any registration requirements of that Act and any applicable state
securities laws available;
(vi) we agree that in the event that at some future time we wish
to dispose of or exchange any of the Securities (such disposition or
exchange not being currently foreseen or contemplated), we will not
transfer or exchange any of the Securities unless
(A)(l) the sale is of at least U.S. $250,000 principal
amount of Securities to an Eligible Purchaser (as defined below),
(2) a letter to substantially the same effect as paragraphs (i),
(ii), (iii), (iv), (v) and (vi) of this letter is executed
promptly by the purchaser and (3) all offers or solicitations in
connection with the sale, whether directly or through any agent
acting on our behalf, are limited only to Eligible Purchasers and
are not made by means of any form of general solicitation or
general advertising whatsoever; or
(B) the Securities are transferred pursuant to Rule 144
under the 1933 Act by us after we have held them for more than
three years; or
(C) the Securities are sold in any other transaction that
does not require registration under the 1933 Act and, if the
Transferor, the Servicer, the Trustee or the Transfer Agent and
Registrar so requests, we theretofore have furnished to such
party an opinion of counsel satisfactory to such party, in form
and substance satisfactory to such party, to such effect; or
(D) the Securities are transferred pursuant to an exception
from the registration requirements of the 1933 Act under Rule
144A under the 1933 Act; and
(vii) we understand that the Securities will bear a legend to
substantially the following effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT") NEITHER THIS SECURITY NOR ANY PORTION
HEREOF MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE 1933 ACT AND ANY
APPLICABLE PROVISIONS OF ANY STATE BLUE SKY OR SECURITIES LAWS OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS. THE TRANSFER
OF THIS SECURITY IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN."
"THIS SECURITY MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A BENEFIT
PLAN (AS DEFINED BELOW)."
The first paragraph of this legend may be removed if the Transferor, the
Servicer, the Trustee and the Transfer Agent and Registrar have received an
opinion of counsel satisfactory to them, in form and substance satisfactory
to them, to the effect that such paragraph may be removed.
"Eligible Purchaser" means either an Eligible Dealer or a corporation,
partnership or other entity which we have reasonable grounds to believe and
do believe can make representations with respect to itself to substantially
the same effect as the representations set forth herein. "Eligible Dealer"
means any corporation or other entity the principal business of which is
acting as a broker and/or dealer in securities. "Benefit Plan" means 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.
Capitalized terms used but not defined herein shall have the meanings given
to such terms in the Amended and Restated Pooling and Servicing Agreement,
dated as of June 26, 1998, among Partners First Receivables Funding, LLC,
as transferor, Partners First Holdings, LLC, as servicer and The Bank of
New York, as trustee.
Very truly yours,
______________________________
(Name of Purchaser)
By: __________________________
(Authorized Officer)
EXHIBIT G-3
THIS SECURITY MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A BENEFIT PLAN
AS DEFINED BELOW). (1)
_______________
(1) The following text should be included in any Security in
which the above legend appears:
The [Securities] 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 Security, the Holder hereof shall
be deemed to have represented and warranted that it is not a
Benefit Plan. By acquiring any interest in this Security,
the applicable Security Owner or Owners shall be deemed to
have represented and warranted that it or they are not
Benefit Plans.
SCHEDULE 1
List of Accounts
[Original list delivered to Trustee]
==========================================================================
SERIES 1998-2 SUPPLEMENT
Dated as of June 26, 1998
to
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of June 26, 1998
$750,000,000
among
PARTNERS FIRST RECEIVABLES FUNDING, LLC
Transferor
PARTNERS FIRST HOLDINGS, LLC
Servicer
and
THE BANK OF NEW YORK
Trustee
on behalf of the Series 1998-2 Securityholders
______________________________
PARTNERS FIRST CREDIT CARD MASTER TRUST
Series 1998-2
______________________________
==========================================================================
TABLE OF CONTENTS
ARTICLE I
Creation of the Series 1998-2 Securities
Section 1.1. Designation . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Definitions
Section 2.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2. Form of Delivery of Series 1998-2 Securities;
Depositary. . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
Servicing Fee and Interchange
Section 3.1. Servicing Compensation; Interchange . . . . . . . . . . . 20
ARTICLE IV
Rights of Series 1998-2 Securityholders and
Allocation and Application of Collections
Section 4.1. Collections and Allocations . . . . . . . . . . . . . . 22
Section 4.2. Determination of Monthly Interest . . . . . . . . . . . 24
Section 4.3. Principal Funding Account; Controlled
Accumulation Period . . . . . . . . . . . . . . . . . . 26
Section 4.4. Required Amount . . . . . . . . . . . . . . . . . . . . 28
Section 4.5. Application of Class A Available Funds,
Class B Available Funds, Collateral Available
Funds, Class D Available Funds and Available
Principal Collections . . . . . . . . . . . . . . . . . 29
Section 4.6. Defaulted Amounts; Charge-Offs . . . . . . . . . . . . . 32
Section 4.7. Excess Spread; Excess Finance Charge Collections . . . . 34
Section 4.8. Redirected Principal Collections . . . . . . . . . . . . 36
Section 4.9. Excess Finance Charge Collections . . . . . . . . . . . 37
Section 4.10. Redirected Investor Finance Charge Collections . . . . . 38
Section 4.11. Shared Principal Collections . . . . . . . . . . . . . . 39
Section 4.12. Reserve Account . . . . . . . . . . . . . . . . . . . . 39
Section 4.13. Determination of LIBOR . . . . . . . . . . . . . . . . . 41
Section 4.14. Investment Instructions . . . . . . . . . . . . . . . . 41
Section 4.15. Yield Supplement Account . . . . . . . . . . . . . . . . 41
ARTICLE V
Distributions and Reports to Series 1998-2 Securityholders
Section 5.1. Distributions . . . . . . . . . . . . . . . . . . . . . 43
Section 5.2. Reports and Statements to Series 1998-2
Securityholders. . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
Pay Out Events
Section 6.1. Pay Out Events . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1. Optional Repurchase . . . . . . . . . . . . . . . . . . 46
Section 7.2. Series Termination . . . . . . . . . . . . . . . . . . . 47
Section 7.3. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.4. Constituent Class D Securities. . . . . . . . . . . . 47
Section 7.5 Legends; Transfer and Exchange; Restrictions on Transfer
of Series 1998-2 Securities; Tax Treatment. . . . . . . 48
Section 7.6 Defeasance . . . . . . . . . . . . . . . . . . .. . . . 48
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or Securityholders' Interest
pursuant to Section 2.6 or 10.1 of the Agreement an
Section 7.1 or 7.2 of this Supplement . . . . . . . . . 49
Section 8.2. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables pursuant to Section 9.1
of the Agreement . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Ratification of Agreement . . . . . . . . . . . . . . . 53
Section 9.2. Counterparts . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.3. Governing Law . . . . . . . . . . . . . . . . . . . . . 53
EXHIBITS
Exhibit A-1 - Form of Class A Security
Exhibit A-2 - Form of Class B Security
Exhibit B - Form of Monthly Payment Instructions and Notification
to the Trustee
Exhibit C - Form of Monthly Series 1998-2 Securityholders' Statement
Exhibit D - Form of Servicer's Certificate
SERIES 1998-2 SUPPLEMENT, dated as of June 26, 1998 (the
"Supplement"), between PARTNERS FIRST RECEIVABLES FUNDING, LLC, a
Delaware limited liability company, as Transferor, PARTNERS FIRST
HOLDINGS, LLC, as Servicer, and THE BANK OF NEW YORK, a New York
banking corporation, not in its individual capacity, but solely
as Trustee.
Pursuant to the Amended and Restated Pooling and Servicing
Agreement dated as of June 26, 1998 (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 Securities 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 Securities and specify the Principal Terms
thereof.
ARTICLE I
Creation of the Series 1998-2 Securities
Section 1.1. Designation.
(a) There is hereby created a Series of Investor Securities to
be issued pursuant to the Agreement and this Supplement to be known as
"Partners First Credit Card Master Trust, Series 1998-2." The Series 1998-
2 Securities shall be issued in three Classes, the first of which shall be
known as the "Class A Series 1998-2 Floating Rate Asset Backed Securities,"
the second of which shall be known as the "Class B Series 1998-2 Floating
Rate Asset Backed Securities" and the third of which shall be known as the
"Class D Series 1998-2 Asset Backed Securities." In addition, there is
hereby created a fourth Class of uncertificated interests in the Trust
which, except as expressly provided herein, shall be deemed to be "Investor
Securities" 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 1998-2." The Collateral Interest shall be considered a Class of
Series 1998-2 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 1998-2 shall be included in Group I and shall be a
Principal Sharing Series. Series 1998-2 shall be an Excess Allocation
Series. Series 1998-2 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 1998-2 shall
be the August 17, 1998 Distribution Date and the first Monthly Period shall
begin on and include June 26, 1998 and end on and include July 31, 1998.
(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 Securities shall not be applicable
to the Collateral Interest, (ii) the Opinion of Counsel specified in clause
(d) of the definition of Tax Opinion shall not be required pursuant to
Section 6.3(b)(vi) of the Agreement with respect to the Collateral Interest
and the Class D Securities 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 and the Class D Securities 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 or Class D Securityholder.
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, the Class B Additional Interest and
Collateral 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.
"Applicable Class A Spread" shall mean 0.10% per annum.
"Applicable Class B Spread" shall mean 0.31% per annum.
"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 1998-2 Allocable Principal
Collections received during such Monthly Period minus (ii) the amount of
Redirected Principal Collections with respect to such Monthly Period which
pursuant to subsection 4.8(a) , (b) or (c) 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 1998-
2 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
sum of the weighted average of the Class A Interest Rate, the Class B
Interest Rate, the Collateral Rate and the Class D Interest Rate as of the
last day of such Monthly Period (weighted based on the Class A Invested
Amount, the Class B Invested Amount, the Collateral Invested Amount and the
Class D Invested Amount, respectively, as of the last day of such Monthly
Period) plus the product of 2.00% and the percentage equivalent of a
fraction the numerator of which is the Adjusted Invested Amount and the
denominator of which is the Invested Amount each as of the last day of such
Monthly Period.
"Charge-Offs" shall mean Class A Charge-Offs, Class B Charge-
Offs, Collateral Charge-Offs and Class D Charge-Offs.
"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) 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 Redirected 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 Charge-Offs" shall have the meaning specified in
subsection 4.6(a).
"Class A Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Default
Amount for the related Monthly Period and (ii) the Class A Floating
Percentage for such Monthly Period.
"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 $528,000,000.
"Class A Interest Rate" shall mean, for any Interest Period with
respect to the Class A Securities, a per annum rate equal to LIBOR
determined on the related LIBOR Determination Date plus the Applicable
Class A Spread, calculated on the basis of actual days elapsed and a 360-
day year.
"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
Securityholders on or prior to such date, minus (c) the excess, if any, of
the aggregate amount of Class A Charge-Offs for all prior Distribution
Dates over Class A Charge-Offs reimbursed pursuant to subsection 4.7(b)
prior to such date; provided, however, that the Class A Invested Amount may
not be reduced below zero.
"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 Scheduled Payment Date" shall mean the June 2001
Distribution Date.
"Class A Securities" shall mean any one of the Securities
executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-1.
"Class A Securityholder" shall mean the Person in whose name a
Class A Security is registered in the Security Register.
"Class A Servicing Fee" shall have the meaning specified in
Section 3.1.
"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 sum of (a) following the payment in full of
the principal amount of the Class A Securities, the amount of Principal
Funding Investment Proceeds, if any, with respect to such Distribution
Date, (b) the Class B Floating Percentage of the sum of the Redirected
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
B Available Funds with respect to such Distribution Date.
"Class B Charge-Offs" shall have the meaning specified in
subsection 4.6(b).
"Class B Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Default
Amount for the related Monthly Period and (ii) the Class B Floating
Percentage for such Monthly Period.
"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 $113,000,000.
"Class B Interest Rate" shall mean, for any Interest Period with
respect to the Class B Securities, a per annum rate equal to LIBOR plus the
Applicable Class B Spread determined on the related LIBOR Determination
Date, calculated on the basis of actual days elapsed and a 360-day year.
"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
Securityholders on or prior to such date, minus (c) the aggregate amount of
Class B Charge-Offs for all prior Distribution Dates, minus (d) the
aggregate amount of Redirected Principal Collections allocated on all prior
Distribution Dates pursuant to subsection 4.8(a) (excluding any Redirected
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 aggregate
amount of Excess Spread and Excess Finance Charge Collections allocated and
available on all prior Distribution Dates pursuant to subsection 4.7(m) 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 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 Scheduled Payment Date" shall mean the June 2001
Distribution Date.
"Class B Securities" shall mean any one of the Securities
executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-2.
"Class B Securityholder" shall mean the Person in whose name a
Class B Security is registered in the Security Register.
"Class B Servicing Fee" shall have the meaning specified in
Section 3.1.
"Class D Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the product of (i) the Class D Floating
Percentage and (ii) the sum of the Redirected Investor Finance Charge
Collections and the Yield Supplement Draw Amount, if any, for the
Distribution Date related to such Monthly Period.
"Class D Charge-Offs" shall have the meaning specified in
subsection 4.6(d).
"Class D Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Default
Amount for the related Monthly Period and (ii) the Class D Floating
Percentage for such Monthly Period.
"Class D 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 D
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 D
Floating Percentage shall mean the percentage equivalent of a fraction, the
numerator of which is the Class D Initial Invested Amount and the
denominator of which is the Initial Invested Amount.
"Class D Initial Invested Amount" shall mean $42,000,000.
"Class D Interest Rate" shall mean, for any Interest Period with
respect to the Class D Securities, 0% per annum or such greater rate as may
be designated from time to time by the Servicer upon satisfaction of the
Rating Agency Condition.
"Class D Interest Shortfall" shall have the meaning specified in
subsection 4.2(d).
"Class D Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class D Initial Invested Amount,
minus (b) the aggregate amount of principal payments made to the Class D
Securityholders prior to such date, minus (c) the aggregate amount of Class
D Charge-Offs for all prior Distribution Dates, minus (d) the aggregate
amount of Redirected Principal Collections allocated on all prior
Distribution Dates pursuant to Section 4.8, minus (e) an amount equal to
the amount by which the Class D Invested Amount has been reduced on all
prior Distribution Dates pursuant to subsections 4.6(a), (b) and (c) 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(m) for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (c), (d) and (e); provided, however, that the
Class D Invested Amount may not be reduced below zero.
"Class D Monthly Interest" shall have the meaning specified in
subsection 4.2(d).
"Class D 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 D 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
D 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 D Principal Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Class D Initial Invested Amount and
the denominator of which is the Initial Invested Amount.
"Class D Securities" shall mean any one of the Securities
executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-3.
"Class D Securityholder" shall mean the Person in whose name a
Class D Security is registered in the Security Register.
"Class D Servicing Fee" shall have the meaning specified in
Section 3.1.
"Clearing System Certificate" shall mean a certificate in
substantially the form of Exhibit E hereto or such other form of
certificate as shall be satisfactory to the Trustee, Euroclear and Cedel.
"Closing Date" shall mean June 26, 1998.
"Collateral Additional Interest" shall have the meaning specified
in subsection 4.2(c).
"Collateral Available Funds" shall mean with respect to any
Monthly Period, the product of (i) the Collateral Floating Percentage and
(ii) an amount equal to the sum of the Redirected 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 (i) the Series Default Amount for the
related Monthly Period and (ii) the Collateral Floating Percentage.
"Collateral 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
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 $67,000,000.
"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 Redirected Principal
Collections allocated on all prior Distribution Dates pursuant to Section
4.8 allocable to the Collateral Invested Amount (excluding any Redirected
Principal Collections that have resulted in a reduction in the Class D
Invested Amount pursuant to Section 4.8), 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), plus
(f) the aggregate amount of Excess Spread and Excess Finance Charge
Collections 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, 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 Redirected Principal
Collections for which the Class D Invested Amount was not reduced on such
Distribution Date and after giving effect to any adjustments thereto for
the benefit of the holders of the Series 1998-2 Securities on such
Distribution Date) and the Class D Invested Amount (after giving effect to
all distributions and deposits to be made 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 Redirected Principal Collections on such
Distribution Date and after giving effect to any adjustments thereto for
the benefit of the holders of the Series 1998-2 Securities on such
Distribution Date) and the Class D Invested Amount (after giving effect to
all distributions and deposits to be made 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 Required Amount" shall have the meaning specified in
subsection 4.4(c).
"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, $53,416,667;
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 May 31, 2000 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 1998-2 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 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 1998-2) 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.
"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 and the Class B Invested
Amount are paid in full, an amount equal to the product of (i) a fraction,
the numerator of which is equal to the actual number of days in the related
Interest Period and the denominator of which is 360, and (ii) the sum of
(a) the product of (x) a fraction, the numerator of which is an amount
equal to the excess, if any, of the outstanding principal amount of the
Class A Securities over the Class A Adjusted Invested Amount, and the
denominator of which is an amount equal to the excess of the sum of the
outstanding principal amount of the Class A Securities and the outstanding
principal amount of the Class B Securities, over the sum of the Class A
Adjusted Invested Amount and the Class B Adjusted Invested Amount, in each
such case as of the preceding Distribution Date and (y) the Class A
Interest Rate in effect during such Interest Period and (b) the product of
(x) a fraction, the numerator of which is equal to the excess, if any, of
the outstanding principal amount of the Class B Securities over the Class B
Adjusted Invested Amount, and the denominator of which is an amount equal
to the excess of the sum of the outstanding principal amount of the Class A
Securities and the outstanding principal amount of the Class B Securities,
over the sum of the Class A Adjusted Invested Amount and the Class B
Adjusted Invested Amount, in each case as of the preceding Distribution
Date and (y) the Class B Interest Rate in effect during such Interest
Period, and (iii) the Principal Funding Account Balance (but not in excess
of the sum of the Class A Adjusted Invested Amount and the Class B Adjusted
Invested Amount), 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 August 17, 1998 and the 15th day
of each calendar month thereafter, or if such 15th 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 1998-2 is deemed to have
occurred, and ending on the first to occur of (i) the payment in full of
the Invested Amount and (ii) the Series 1998-2 Termination Date.
"Excess Finance Charge Collections" shall mean, with respect to
any Distribution Date, as the context requires, either (i) the amount set
forth in subsection 4.7(o) initially allocated to Series 1998-2 but which
is available to be allocated to other Excess Allocation Series and applied
in accordance with the terms of the related Supplement to cover amounts
payable with respect to such other Series from Collections of Finance
Charge Receivables or (ii) amounts allocated to other Excess Allocation
Series but which are available to cover Finance Charge Shortfalls with
respect to Series 1998-2 in accordance with subsection 4.9.
"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), 4.5(c)(ii) and 4.5(d)(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 1998-2 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 1998-2 and each other Series
specified in the related Supplement to be included in Group I.
"Group I Additional Amounts" shall mean, with respect to any
Distribution Date, the sum of (a) Series 1998-2 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 series 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 interest rates that
has accrued on the amounts described in the preceding clause (i) for such
Distribution Date.
"Group I 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 Monthly Fees" shall mean with respect to any
Distribution Date, the sum of (a) Series 1998-2 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 redirected investor finance charge
collections pursuant to the related Supplements, for all other Series
included in Group I for such Distribution Date.
"Group I Monthly Interest" shall mean, with respect to any
Distribution Date, the sum of (a) Series 1998-2 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 redirected investor finance
charge collections pursuant to the related Supplements, for all other
Series included in Group I for such Distribution Date.
"Group I Series Default Amount" shall mean, with respect to any
Distribution Date, the sum of (a) the Series Default Amount for such
Distribution Date and (b) the aggregate amount of the series default
amounts for all other Series included in Group I for such Distribution
Date.
"Harris" shall mean Harris Trust and Savings Bank, an Illinois
banking corporation.
"Initial Invested Amount" shall mean $750,000,000.
"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, (c) the Collateral
Invested Amount as of such date and (d) the Class D Invested Amount as of
such date.
"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 1998-2
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 (i) for the period from the
Closing Date through July 14, 1998, June 24, 1998, (ii) for the period from
July 15, 1998 through August 16, 1998, July 13, 1998, and (iii) for each
subsequent Interest Period, the second London Business Day prior to the
commencement of such Interest Period.
"Loan Agreement" shall mean the agreement among the Transferor,
the Trustee and the Collateral Interest Holder, dated June 26, 1998.
"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, Holdings or an Affiliate thereof is the
Servicer, 1.25% per annum and (b) if the Transferor, an Affiliate thereof,
Holdings or an Affiliate thereof is no longer the Servicer, 2% per annum.
"Pay Out Event" shall mean any Pay Out Event specified in Section
6.1.
"Percentage Allocation" shall have the meaning specified in
subsection 4.1(c)(ii)(y).
"Principal 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 (a) during the
Revolving Period, the Series Adjusted Invested Amount for Series 1998-2 as
of the last day of the immediately preceding Monthly Period (or, in the
case of the first Monthly Period, the Closing Date) and (b) during the
Controlled Accumulation Period or the Early Amortization Period, the Series
Adjusted Invested Amount for Series 1998-2 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 1998-2
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 1998-2, 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 1998-2.
"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.
"Rating Agency" shall mean, with respect to any date, each rating
agency which is then rating any of the Class A Securities, the Class B
Securities, the Collateral Interest or the Class D Securities at the
request of the Transferor.
"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 1998-2 Securityholders 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 1998-2 Securityholders on a prior Distribution
Date.
"Redirected Investor Finance Charge Collections" shall mean an
amount equal to that portion of Group I Finance Charge Collections
allocated to Series 1998-2 pursuant to Section 4.10.
"Redirected Principal Collections" shall mean, with respect to
any Monthly Period, the product of (a) the Series 1998-2 Allocable
Principal Collections deposited in the Collection Account for such Monthly
Period and (b) the sum of the Class B Principal Percentage, the Collateral
Principal Percentage and the Class D Principal Percentage.
"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 12
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, the Class B Required Amount and the
Collateral Required Amount.
"Required Enhancement Amount" shall mean (a) on the initial
Distribution Date, $109,000,000 and (b) on any Distribution Date
thereafter, an amount equal to the greater of (i) 14.5% of the sum of the
Class A Adjusted Invested Amount and the Class B Adjusted 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 and the Class
D Invested Amount on such Distribution Date after any adjustments made on
such Distribution Date and (ii) 5.0% of the Initial Invested Amount;
provided, however, (x) that 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
1998-2 Securities 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 Securities and (ii) the
Class B Securities, 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, minus all amounts on deposit
in the Principal Funding Account 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 sum of the Class A Invested Amount and the Class B
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 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 the Distribution Date
which occurs not later than the earliest of (a) the Distribution Date with
respect to the Monthly Period which commences 3 months prior to the
commencement of the Controlled Accumulation Period; (b) the first
Distribution Date for which the difference between (x) the Series Adjusted
Portfolio Yield and (y) the Base Rate is less than 2.00%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier
than the Distribution Date which commences 12 months prior to the
commencement of the Controlled Accumulation Period; (c) the first
Distribution Date for which the difference between (x) the Series Adjusted
Portfolio Yield and (y) the Base Rate is less than 3.00%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier
than the Distribution Date which commences 6 months prior to the
commencement of the Controlled Accumulation Period; or (d) the first
Distribution Date for which the difference between (x) the Series Adjusted
Portfolio Yield and (y) the Base Rate is less than 3.50%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier
than the Distribution Date which commences 4 months prior to the
commencement of the Controlled Accumulation Period.
"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 4.12(c).
"Revolving Period" shall mean the period from and including the
Closing Date to, but not including, the earlier of (a) the commencement of
the Controlled Accumulation Period and (b) the commencement of the Early
Amortization Period.
"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) Redirected 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 pursuant to clause (ii) of the definition
thereof that are allocated to Series 1998-2 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 or Class B Available Funds for the Distribution
Date with respect to such Monthly Period, plus (e) the Yield Supplement
Draw Amount for the Distribution Date with respect to such Monthly Period,
if any, and minus (f) the Series 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 Default Amount" shall mean, with respect to any Monthly
Period, an amount equal to the product of (a) the Series 1998-2 Allocable
Defaulted Amount for such Monthly Period and (b) the Floating Allocation
Percentage for such Monthly Period.
"Series Enhancement" with respect to Series 1998-2 shall mean (a)
with respect to the Class A Securities, the subordination of the Class B
Securities, the Collateral Interest and the Class D Securities, (b) with
respect to the Class B Securities, the subordination of the Collateral
Interest and the Class D Securities, and (c) with respect to the Collateral
Interest, the subordination of the Class D Securities.
"Series Invested Amount" shall mean the Initial Invested Amount.
"Series Required Transferor Amount" shall mean an amount equal to
7% of the Invested Amount.
"Series 1998-2" shall mean the Series of Securities the terms of
which are specified in this Supplement.
"Series 1998-2 Additional Amounts" shall mean, with respect to
any Distribution Date, the sum of the amounts determined pursuant to
subsections 4.7(b), (e), (i) and (o) for such Distribution Date.
"Series 1998-2 Allocable Defaulted Amount" shall mean the Series
Allocable Defaulted Amount with respect to Series 1998-2.
"Series 1998-2 Allocable Finance Charge Collections" shall mean
the Series Allocable Finance Charge Collections with respect to Series
1998-2.
"Series 1998-2 Allocable Principal Collections" shall mean the
Series Allocable Principal Collections with respect to Series 1998-2.
"Series 1998-2 Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series 1998-2.
"Series 1998-2 Security" shall mean a Class A Security, a Class B
Security, the Collateral Interest or a Class D Security.
"Series 1998-2 Securityholder" shall mean a Class A
Securityholder, a Class B Securityholder, the Collateral Interest Holder or
a Class D Securityholder.
"Series 1998-2 Securityholders' Interest" shall mean the
Securityholders' Interest for Series 1998-2, including the Collateral
Interest.
"Series 1998-2 Monthly Fees" shall mean, with respect to any
Distribution Date, the amount determined pursuant to subsection 4.5(a)(ii),
4.5(b)(ii), 4.5(c)(i) and 4.5(d)(i).
"Series 1998-2 Monthly Interest" shall mean the amounts
determined pursuant to subsections 4.2(a), (b), (c) and (d).
"Series 1998-2 Principal Shortfall" shall have the meaning
specified in Section 4.11.
"Series 1998-2 Termination Date" shall mean the November 2004
Distribution Date.
"Servicer Interchange" shall mean, for any Monthly Period, the
portion of Collections of Finance Charge Receivables allocated to the
Invested Amount with respect to such Monthly Period that is attributable to
Interchange; provided, however, that Servicer Interchange for a Monthly
Period shall not exceed one-twelfth of the product of (i) the Adjusted
Invested Amount as of the last day of such Monthly Period and (ii) 0.75%.
"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).
"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) (i) for the six Distribution Dates from and including the August
1998 Distribution Date through and including the January 1999 Distribution
Date, 1/9th of the Initial Yield Supplement Deposit, (ii) for the six
Distribution Dates from and including the February 1999 Distribution Date
through and including the July 1999 Distribution Date, 1/18th of the
Initial Yield Supplement Deposit and (iii) thereafter, zero and (b) with
respect to any such Distribution Date, the investment earnings on the
amounts on deposit in the Yield Supplement Account during the preceding
Interest Period.
(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 1998-2, 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 1998-2, "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 1998-2 Securities and no other Series of Securities 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."
Section 2.2. Form of Delivery of Series 1998-2 Securities;
Depositary.
(a) The Class A Securities and the Class B Securities shall be
delivered as Book-Entry Securities as provided in subsections 6.1 and 6.10
of the Agreement. The Collateral Interest shall be delivered as Registered
Securities, in uncertificated form, as provided in subsection 6.1 of the
Agreement. The Class D Securities shall be delivered as Definitive Securities
as provided in subsection 6.12 of the Agreement. The Class A Securities and
the Class B Securities shall be issuable and transferable in the minimum
denominations of $1,000 of original certificate balance and integral
multiples of $1,000 in excess thereof.
(b) The Depositary for Series 1998-2 shall be The Depository
Trust Company, and the Class A Securities and the Class B Securities shall
be initially registered in the name of Cede & Co., its nominee. The Class
A Securities and the Class B Securities will initially be held by the
Trustee as custodian for The Depository Trust Company.
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 1998-2 Securityholders 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 (A) 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 (B) the Series 1998-2 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 $1,458,333. On each Distribution Date
related to a Monthly Period for which Holdings or an Affiliate of Holdings
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 Securityholders 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 $641,667. The share of the Monthly Servicing Fee
allocable to the Class B Securityholders 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 $137,326. 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 $81,424.
The share of the Monthly Servicing Fee allocable to the Class D
Securityholders with respect to any Distribution Date (the "Class D
Servicing Fee") shall be equal to one-twelfth of the product of (a) the
Class D 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 D Servicing Fee shall be equal to $51,042.
The remainder of the Servicing Fee shall be paid by the Holder of the
Transferor Security or the investor securityholders of other Series (as
provided in the related Supplements) and in no event shall the Trust, the
Trustee or the Series 1998-2 Securityholders be liable for the share of the
Servicing Fee to be paid by the Holder of the Transferor Security or the
investor securityholders of any other Series.
(b) Interchange. On or before each Determination Date, the
Transferor shall notify the Servicer of the amount of Interchange to be
included as Series 1998-2 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 1998-2 Allocation
Percentage. On each Distribution 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 1998-2 Allocable Finance Charge Collections with respect to the
preceding Monthly Period and such Interchange shall be treated as a portion
of Series 1998-2 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 1998-2 Securityholders 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 1998-2
pursuant to Article IV of the Agreement (and, as described herein,
Collections of Finance Charge Receivables redirected from other Series in
Group I) shall be allocated and distributed or redirected as set forth in
this Article.
(b) Payments to the Transferor. The Servicer shall on Deposit
Dates pay to the Holder of the Transferor Security the following amounts:
(i) an amount equal to the Transferor Percentage for the related
Monthly Period of Series 1998-2 Allocable Finance Charge Collections;
and
(ii) an amount equal to the Transferor Percentage for the related
Monthly Period of Series 1998-2 Allocable Principal Collections, if
the Transferor Amount (determined after giving effect to any Principal
Receivables transferred to the Trust on such Deposit Date) exceeds the
Required Transferor Amount.
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 Securityholders' Interest pursuant to Section 2.6 or
10.1 of the Agreement, payment of the purchase price for the Series 1998-2
Securityholders' 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 1998-2 Securityholders. The
Servicer shall, prior to the close of business on any Deposit Date,
allocate to the Series 1998-2 Securityholders the following amounts as set
forth below:
(i) Allocations of Finance Charge Collections. The Servicer shall
allocate to the Series 1998-2 Securityholders 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 1998-2 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 1998-2 Securityholders 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, the Collateral Principal Percentage and the
Class D Principal Percentage and (II) the Principal Allocation
Percentage and (III) the Series 1998-2 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 1998-2 Securityholders 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 1998-2 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 1998-2 Securityholders and, to the
extent needed to make any distribution pursuant to subsection
4.5(e)(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
Holder of the Transferor Security; provided, however, that such amount
to be paid to the Holder of the Transferor Security 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, the
Collateral Principal Percentage and the Class D Principal Percentage
and (II) the Principal Allocation Percentage and (III) the Series
1998-2 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 1998-2
Securityholders 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 1998-2 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
1998-2 Securityholders 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 Holder of the
Transferor Security 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 1998-2 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 1998-2 Securityholders 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 1998-2 Securityholders,
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 Holder of the Transferor Security 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 Securities on any Distribution Date shall be an amount equal to the
product of (i) a fraction, the numerator of which is equal to the actual
number of days in the Interest Period preceding such Distribution Date and
the denominator of which is 360, (ii) the Class A Interest Rate and (iii)
the outstanding principal balance of the Class A Securities as of close of
business on the last day of the preceding Monthly Period (or with respect
to the initial Distribution Date, the Closing Date); provided, that in the
case of the first Distribution Date the Class A Monthly Interest shall be
an amount equal to $4,390,100.
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 the preceding
Distribution Date over (y) the aggregate amount of funds allocated and
available to pay such Class A Monthly Interest on such preceding
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
fraction, the numerator of which is the actual number of days in the
preceding Interest Period and the denominator of which is 360, (ii) the
Class A Interest Rate plus 2.0% per annum and (iii) such Class A Interest
Shortfall (or the portion thereof which has not been paid to the Class A
Securityholders) shall be payable as provided herein with respect to the
Class A Securities. Notwithstanding anything to the contrary herein, Class
A Additional Interest shall be payable or distributed to the Class A
Securityholders 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 Securities on any Distribution Date shall be an amount equal to the
product of (i) a fraction, the numerator of which is equal to the actual
number of days in the preceding Interest Period and the denominator of
which is 360, (ii) the Class B Interest Rate and (iii) the Class B Invested
Amount as of the close of business on the last day of the preceding Monthly
Period (or with respect to the initial Distribution Date, the Closing
Date); provided, that in the case of the first Distribution Date, Class B
Monthly Interest shall be an amount equal to $973,824.58.
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 the preceding
Distribution Date over (y) the aggregate amount of funds allocated and
available to pay such Class B Monthly Interest on such preceding
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
fraction, the numerator of which is the actual number of days in the
preceding Interest Period and the denominator of which is 360, (ii) the
Class B Interest Rate plus 2.0% per annum and (iii) such Class B Interest
Shortfall (or the portion thereof which has not been paid to the Class B
Securityholders) shall be payable as provided herein with respect to the
Class B Securities. Notwithstanding anything to the contrary herein, Class
B Additional Interest shall be payable or distributed to the Class B
Securityholders 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 fraction, the numerator of which is equal to
the actual number of days in the preceding Interest Period and the
denominator of which is 360, (ii) the Collateral Rate in effect with
respect to the applicable Interest Period, and (iii) 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 the excess, if any (the "Collateral Interest
Shortfall"), of (x) the aggregate Collateral Monthly Interest for the
preceding Distribution Date over (y) the aggregate amount of funds
allocated and available to pay such Collateral Monthly Interest on such
preceding 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 fraction, the numerator of which is the actual number of
days in the preceding Interest Period and the denominator of which is 360,
(ii) the Collateral Rate in effect with respect to the period from and
including the immediately preceding Distribution Date to but including such
Distribution Date, (iii) such Collateral Interest Shortfall (or the portion
thereof which has not been paid to the Collateral Interest Holder) and (iv)
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.
(d) The amount of monthly interest (the "Class D Monthly
Interest") distributable from the Collection Account with respect to the
Class D Securities on any Distribution Date shall be an amount equal to the
product of (i) a fraction, the numerator of which is the actual number of
days in the preceding Interest Period and the denominator of which is 360,
(ii) the Class D Interest Rate and (iii) the Class D 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 D Monthly
Interest shall be zero.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class D Interest
Shortfall"), of (x) the Class D Monthly Interest for the preceding
Distribution Date over (y) the aggregate amount of funds allocated and
available to pay such Class D Monthly Interest on such preceding
Distribution Date. If the Class D Interest Shortfall with respect to any
Distribution Date is greater than zero, on each subsequent Distribution
Date until such Class D Interest Shortfall is fully paid, an additional
amount ("Class D Additional Interest") equal to the product of (i) a
fraction, the numerator of which is the actual number of days in the
preceding Interest Period and the denominator of which is 360, (ii) the
Class D Interest Rate plus 2.0% per annum and (iii) such Class D Interest
Shortfall (or the portion thereof which has not been paid to the Class D
Securityholders) shall be payable as provided herein with respect to the
Class D Securities. Notwithstanding anything to the contrary herein, Class
D Additional Interest shall be payable or distributed to the Class D
Securityholders 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 1998-2
Securityholders, 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 1998-2 Securityholders. The Principal Funding Account shall
initially be established with Harris.
(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
1998-2 Securityholders; provided, that on each Distribution Date all
interest and other investment income (net of investment expenses and
losses earned on such income) ("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.
(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 1998-2 Securityholders. 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 1998-2
Securityholders.
(c) The Controlled Accumulation Period is scheduled to commence
at the close of business on May 31, 2000; 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. Beginning on the Determination
Date immediately preceding the February 2000 Distribution Date, and on each
Determination Date thereafter until 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 1998-2, the Controlled
Accumulation Period will commence on the earlier of (i) the date that such
Pay Out Event or Reinvestment Event shall have occurred with respect to
such Series and (ii) the date on which the Controlled Accumulation Period
is then scheduled to commence.
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 Securityholders on a prior
Distribution Date, (iii) any Class A Additional Interest for such
Distribution Date, (iv) any Class A Additional Interest previously due but
not paid to the Class A Securityholders on a prior Distribution Date, (v)
the Class A Servicing Fee for such Distribution Date, (vi) any Class A
Servicing Fee previously due but not paid to the Servicer, and (vii) the
Class A 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 Securityholders on a prior Distribution Date, (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
Securityholders on a prior Distribution Date, (v) the Class B Servicing Fee
for such Distribution Date and (vi) 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 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 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 on a prior Distribution Date, (iii) Collateral Additional
Interest, if any, for such Distribution Date, (iv) any Collateral
Additional Interest previously due but not paid to the Collateral Interest
Holder on a prior Distribution Date, and (v) the Collateral Default Amount
and (y) the amount, if any, by which (A) the Collateral Servicing Fee for
such Distribution Date and any Collateral Servicing Fee previously due but
not paid to the Servicer exceeds (B) the amount of Collateral Available
Funds. In the event that the difference between (x) the Collateral
Required Amount for such Distribution Date and (y) the amount of Excess
Spread and Excess Finance Charge Collections applied with respect thereto
pursuant to Section 4.7 on such Distribution Date is greater than zero, the
Servicer shall give written notice to the Trustee of such excess Collateral
Required Amount on the date of computation.
Section 4.5. Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds, Class D 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, Class D 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 Securityholders 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 Securityholders
on a prior Distribution Date, shall be distributed to the Paying Agent
for payment to Class A Securityholders;
(ii) 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 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 Securityholders 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 Securityholders
on a prior Distribution Date, shall be distributed to the Paying Agent
for payment to Class B Securityholders;
(ii) 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) 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, an amount equal to the Class D
Available Funds with respect to such Distribution Date will be distributed
or deposited in the following priority:
(i) an amount equal to the Class D Servicing Fee for such
Distribution Date, plus the amount of any Class D 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.
(e) 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.
(f) 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 before the Class B Invested
Amount is paid in full, if 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 to be
applied 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 to be applied in accordance with the
Loan Agreement;
(iv) for each Distribution Date beginning on the Distribution
Date on which the Collateral Invested Amount shall have been paid in
full, an amount up to the Class D Invested Amount shall be deposited
in the Principal Funding Account for distribution to the Class D
Securityholders; and
(v) for each Distribution Date, after giving effect to
paragraphs (i), (ii), (iii) and (iv) 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.
(g) 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 Securityholders;
(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 Securityholders;
(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;
(iv) for each Distribution Date beginning on the Distribution
Date on which the Collateral Invested Amount is paid in full, an
amount up to the Class D Invested Amount on such Distribution Date
shall be deposited in the Principal Funding Account for distribution
to the Class D Securityholders; and
(v) for each Distribution Date, after giving effect to
paragraphs (i), (ii), (iii) and (iv) 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; Charge-Offs.
(a) On each Determination Date, the Servicer shall calculate the
Class A 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 Redirected Principal
Collections allocated to Series 1998-2 with respect to such Monthly Period
and (y) the amount of Excess Spread and the Excess Finance Charge
Collections allocable to Series 1998-2 with respect to such Monthly Period,
then the Class D Invested Amount (after giving effect to any reductions for
any Redirected Principal Collections pursuant to Section 4.8 on such
Distribution Date) shall be reduced by the amount of such excess, but not
by more than the Class A Default Amount for such Distribution Date. In the
event that such reduction would cause the Class D Invested Amount to be a
negative number, the Class D Invested Amount will be reduced to zero and
the Collateral Invested Amount (after giving effect to reductions for any
Redirected Principal Collections pursuant to Section 4.8 for which the
Class D Invested Amount was not reduced on such Distribution Date) shall be
reduced by the amount by which the Class D Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Default Amount for such Distribution Date over the amount of the reduction,
if any, of the Class D Invested Amount in respect of the Class A Default
Amount on 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 Redirected 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 Default
Amount for such Distribution Date over the amount of the reductions, if
any, of the Collateral Invested Amount and the Class D Invested Amount in
respect of the Class A Default Amount on 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 would have been reduced below zero, but not by more
than the excess, if any, of the Class A Default Amount for such
Distribution Date over the aggregate amount of the reductions, if any, of
the Class D Invested Amount, the Collateral Invested Amount and the Class B
Invested Amount in respect of the Class A Default Amount for such
Distribution Date (a "Class A Charge-Off"). Class A 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 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 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 1998-2 with respect to the related
Monthly Period which are allocated and available to pay such amount
pursuant to subsection 4.7(c) and (y) the Redirected Principal Collections
not allocated to pay the Class A Required Amount pursuant to subsection
4.8(a) with respect to such Distribution Date, then the Class D Invested
Amount (after giving effect to any reductions for Redirected 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 Class D
Invested Amount (after giving effect to any reductions for Redirected
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 Class D Invested Amount shall be reduced to zero, and the Collateral
Invested Amount (after giving effect to any reductions for Redirected
Collateral Principal Collections pursuant to Section 4.8 for which the
Class D 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 Class D Invested Amount would have been reduced below
zero, but not by more than the excess, if any, of the Class B Default
Amount for such Distribution Date over the amount of the reductions, if
any, of the Class D Invested Amount in respect of the Class A Default
Amount and the Class B Default Amount on such Distribution Date. In the
event that such reduction would cause the Collateral Invested Amount (after
giving effect to any reductions for Redirected 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 any Redirected
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 Default
Amount for such Distribution Date over the amount of such reduction, if
any, of the Collateral Invested Amount and the Class D Invested Amount in
respect of the Class B Default Amount on such Distribution Date (a "Class B
Charge-Off"). Class B 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 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 any, for the related Distribution Date. If,
on any Distribution Date, the Collateral Default Amount for such
Distribution Date exceeds the sum of (x) the amount of Excess Spread and
Excess Finance Charge Collections allocated to Series 1998-2 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 Redirected Principal
Collections not allocated to pay the Class A Required Amount pursuant to
subsection 4.8(a) or the Class B Required Amount pursuant to subsection
4.8(b) with respect to such Distribution Date, then the Class D Invested
Amount (after giving effect to any reductions for Redirected Principal
Collections pursuant to Section 4.8 and any reductions pursuant to
subsections 4.6(a) and 4.6(b) on such Distribution Date) shall be reduced
by the amount of such excess. In the event that such reduction would cause
the Class D Invested Amount to be a negative number, the Class D Invested
Amount will be reduced to zero and the Collateral Invested Amount (after
giving effect to reductions for any Redirected Collateral Principal
Collections pursuant to Section 4.8 for which the Class D Invested Amount
was not reduced on such Distribution Date and for any reductions pursuant
to subsections 4.6(a) and 4.6(b)) shall be reduced by the amount by which
the Class D Invested Amount would have been reduced below zero, but not by
more than the excess, if any, of the Collateral Default Amount for such
Distribution Date over the amount of the reduction, if any, of the Class D
Invested Amount in respect of the Collateral Default Amount on such
Distribution Date (a "Collateral Charge-Off"). Collateral Charge-Offs
shall thereafter be reimbursed and the Collateral Invested Amount increased
(but not by an amount in excess of the aggregate unreimbursed Collateral
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(i).
(d) On each Determination Date, the Servicer shall calculate the
Class D Default Amount. If, on any Distribution Date the Class D Default
Amount for the previous Monthly Period exceeds the amount of Excess Spread
and Excess Finance Charge Collections allocated to Series 1998-2 with
respect to the related Monthly Period which are allocated and available to
pay such amount pursuant to subsection 4.7(l), the Class D Invested Amount
(after giving effect to any reductions for Redirected Principal Collections
pursuant to Section 4.8 on such Distribution Date and any reductions
pursuant to subsections 4.6(a), 4.6(b) and 4.6(c)) will be reduced by the
amount of such excess, but not by more than the lesser of the Class D
Default Amount and the Class D Invested Amount for such Distribution Date
(a "Class D Charge-Off"). The Class D 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(m).
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 1998-2 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 Monthly Period shall be distributed by the Trustee to fund
any deficiencies in 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 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 shall be (I) used to fund any
deficiencies in the Class B Required Amount in accordance with, and in the
priority set forth in, subsections 4.5(b)(i) and (ii) and then (II)
treated, up to the Class B Default Amount, as a portion of Available
Principal Collections for such Distribution Date;
(d) an amount equal to the difference, if any, between (x) the
sum of (A) the product of (i) a fraction, the numerator of which is equal
to the actual number of days in the Interest Period preceding such
Distribution Date (or in the case of the first Distribution Date, the
Closing Date) and the denominator of which is 360, (ii) the Class B
Interest Rate and (iii) the outstanding principal balance of the Class B
Securities as of the close of business on the last day of the preceding
Monthly Period, and (B) any amount in respect of the foregoing clause (A)
previously due but not distributed to the Class B Securityholders on a
prior Distribution Date, and (y) the amount distributed to the Paying Agent
for payment to the Class B Securityholders 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 the excess, if any, of the sum of the
Monthly Servicing Fee for such Distribution Date and the amount of any
Monthly Servicing Fee previously due but not distributed to the Servicer on
a prior Distribution Date, over the sum of the amounts distributed to the
Servicer on such Distribution Date pursuant to subsections 4.5(a)(ii),
(b)(ii), (c)(i) and (d)(i) shall be distributed to the Servicer;
(g) 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;
(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) on each Distribution Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account terminates
pursuant to subsection 4.12(f), an amount up to the excess, if any, of the
Required Reserve Account Amount over the Available Reserve Account Amount
shall be deposited into the Reserve Account;
(k) an amount equal to Class D Monthly Interest for such
Distribution Date, plus the amount of any Class D Monthly Interest
previously due but not distributed to the Class D Securityholders on a
prior Distribution Date, plus the amount of any Class D Additional Interest
for such Distribution Date and any Class D Additional Interest previously
due but not distributed to the Class D Securityholders on a prior
Distribution Date, shall be distributed to the Paying Agent for
distribution to the Class D Securityholders;
(l) an amount equal to the Class D Default Amount, if any, for
such Distribution Date shall be treated as a portion of Available Principal
Collections for such Distribution Date;
(m) an amount equal to the aggregate amount by which the Class D
Invested Amount has been reduced pursuant to clauses (c), (d) and (e) of
the definition of "Class D 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;
(n) 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
(o) the balance, if any, will be applied first to any other
amounts that the Trust may be liable for from time to time and not
otherwise provided for above and then will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and will be available
for allocation to other Excess Allocation Series or to the Holder of the
Transferor Security as described in Section 4.5 of the Agreement.
Section 4.8. Redirected Principal Collections. On each
Distribution Date, the Servicer shall apply, or shall cause the Trustee to
apply, Redirected 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 1998-2 with respect to the related Monthly Period
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);
(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
allocated and available to the Class B Securities pursuant to
subsection 4.7(c) 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); and
(c) an amount equal to the excess, if any, of (i) the Collateral
Required Amount, if any, with respect to such Distribution Date over
(ii) the amount of Excess Spread and Excess Finance Charge Collections
allocated and available to the Collateral Interest pursuant to
subsections 4.7(g), 4.7(h) and 4.7(i) on such Distribution Date shall
be applied to fund such deficiency pursuant to and in the priority set
forth in Section 4.7.
On each Distribution Date, the Class D Invested Amount shall be
reduced by the amount of Redirected Principal Collections for such
Distribution Date. In the event that such reduction would cause the Class
D Invested Amount to be a negative number, the Class D Invested Amount
(after giving effect to any Class D Charge-Offs for such Distribution Date)
shall be reduced to zero and the Collateral Invested Amount (after giving
effect to any Collateral Charge-Offs for such Distribution Date) shall be
reduced by the amount by which the Class D Invested Amount would have been
reduced below zero. In the event that such reduction would cause the
Collateral Invested Amount (after giving effect to any Collateral Charge-
Offs for such Distribution Date) to be a negative number, the Collateral
Invested Amount shall be reduced to zero and the Class B Invested Amount
shall be reduced by the amount by which the Collateral Invested Amount
would have been reduced below zero. In the event that the reallocation of
Redirected Principal Collections would cause the Class B Invested Amount
(after giving effect to any Class B Charge-Offs for such Distribution Date)
to be a negative number on any Distribution Date, Redirected Principal
Collections shall be redirected on such Distribution Date in an aggregate
amount not to exceed the amount which would cause the Class B Invested
Amount (after giving effect to any Class B 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 1998-2
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
1998-2 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 equal to the Finance Charge Shortfall for Series 1998-2 for such
Distribution Date and the denominator of which is equal to the aggregate
amount of Finance Charge Shortfalls for all the Excess Allocation Series
for such Distribution Date. The "Finance Charge Shortfall" for Series
1998-2 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), 4.5(c) and 4.5(d), subsections 4.7(a) through
(o) on such Distribution Date over (b) the sum of (i) the Redirected
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 and the Class B Available Funds with respect to such
Distribution Date.
Section 4.10. Redirected Investor Finance Charge Collections.
(a) That portion of Group I Finance Charge Collections for any
Distribution Date equal to the amount of Redirected Investor Finance Charge
Collections for such Distribution Date will be allocated to Series 1998-2
and will be distributed as set forth in this Supplement.
(b) Redirected Investor Finance Charge Collections with respect
to any Distribution Date shall equal the sum of (i) the aggregate amount of
Series 1998-2 Monthly Interest, Series Default Amount, Series 1998-2
Monthly Fees and Series 1998-2 Additional Amounts for such Distribution
Date and (ii) that portion of excess Group I Finance Charge Collections to
be included in Redirected Investor Finance Charge Collections pursuant to
subsection (c) hereof; provided, however, that if the amount of Group I
Finance Charge Collections for such Distribution Date is less than the sum
of (w) Group I Monthly Interest, (x) Group I Series Default Amount, (y)
Group I Monthly Fees and (z) Group I Additional Amounts, then Redirected
Investor Finance Charge Collections shall equal the sum of the following
amounts for such Distribution Date:
(A) The product of (I) Group I Finance Charge Collections (up to
the amount of Group I Monthly Interest) and (II) a fraction, the
numerator of which is Series 1998-2 Monthly Interest and the
denominator of which is Group I Monthly Interest;
(B) the product of (I) Group I Finance Charge Collections less
the amount of Group I Monthly Interest (up to the Group I Series
Default Amount) and (II) a fraction, the numerator of which is the
Series Default Amount and the denominator of which is the Group I
Series Default Amount;
(C) the product of (I) Group I Finance Charge Collections less
the amount of Group I Monthly Interest and the Group I Series Default
Amount (up to Group I Monthly Fees) and (II) a fraction, the numerator
of which is Series 1998-2 Monthly Fees and the denominator of which is
Group I Monthly Fees; and
(D) the product of (I) Group I Finance Charge Collections less
the sum of (i) Group I Monthly Interest, (ii) the Group I Series
Default Amount and (iii) Group I Monthly Fees and (II) a fraction, the
numerator of which is Series 1998-2 Additional Amounts and the
denominator of which is Group I Additional Amounts.
(c) If the amount of Group I Finance Charge Collections for such
Distribution Date exceeds the sum of (i) Group I Monthly Interest, (ii)
Group I Series Default Amount, (iii) Group I Monthly Fees and (iv) Group I
Additional Amounts, then Redirected 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
equal to the Invested Amount as of the last day of the second preceding
Monthly Period and the denominator of which is equal to 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 1998-2 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 1998-2 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 1998-2 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 Securityholders
an Eligible Deposit Account (the "Reserve Account") bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Series 1998-2 Securityholders. The Reserve Account shall
initially be established with Harris. 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 Series
1998-2 Securityholders. 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
Series 1998-2 Securityholders 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. 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 1998-2. 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,
prior to payment in full of the Class A Invested Amount, included in Class
A Available Funds for such Distribution Date, and thereafter included in
Class B 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 apply an
amount equal to such Reserve Account Surplus in accordance with the
priorities set forth in subsections 4.7(k) through (o).
(f) Upon the earliest to occur of (i) the day on which the
Invested Amount is paid in full to the Series 1998-2 Securityholders, (ii)
if the Controlled Accumulation Period has not commenced, the occurrence of
a Pay Out Event with respect to Series 1998-2, (iii) if the Controlled
Accumulation Period has commenced, the earlier of the first Distribution
Date with respect to the Early Amortization Period and the Class A
Scheduled Payment Date 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
Securityholders and the Class B Securityholders which are payable from the
Reserve Account as provided herein, shall withdraw from the Reserve Account
and apply all amounts, if any, on deposit in the Reserve Account in
accordance with the priorities set forth in subsections 4.7(k) through (o),
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 (commencing on
the first day of such Interest Period) which appears on Telerate Page 3750
as of 11:00 a.m., London time, on such date. 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 (commencing on the first day
of such 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 (commencing on the first day of such 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 Interest Rate and the Class B Interest Rate for the
applicable Interest Period. The Class A Interest Rate and Class B Interest
Rate applicable to the then current and the immediately preceding Interest
Periods may be obtained by any Investor Securityholder by telephoning the
Trustee at its Corporate Trust Office at (212) 815-8195.
(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 1998-2
Securityholders, 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 1998-2
Securityholders. The Yield Supplement Account shall initially be
established with Harris. 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 1998-2 Securityholders. 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, $11,250,000, in immediately available
funds, from the proceeds of the issuance and sale of the Series 1998-2
Securities shall be deposited into the Yield Supplement Account (the
"Initial Yield Supplement Deposit"). On each 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 1998-2 Securities and not deemed to be a part of Group I
Finance Charge Collections.
(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.
ARTICLE V
Distributions and Reports to
Series 1998-2 Securityholders
Section 5.1. Distributions.
(a) On each Distribution Date, the Paying Agent shall distribute
to each Class A Securityholder of record on the related Record Date (other
than as provided in Section 12.2 of the Agreement) such Class A
Securityholder'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, or if a Pay Out
Event has occurred, on each Distribution Date commencing with the
Distribution Date in the Monthly Period following the Monthly Period in
which such Pay Out Event occurs, the Paying Agent shall distribute to each
Class A Securityholder of record on the related Record Date (other than as
provided in Section 12.2 of the Agreement) such Class A Securityholder'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 Securities pursuant to
subsections 4.5(f)(i) or 4.5(g)(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 1998-2 Securityholders' 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 Securityholder of record on the related Record Date (other
than as provided in Section 12.2 of the Agreement) such Class B
Securityholder'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
Securities pursuant to subsections 4.5(b)(i) and 4.7(d).
(d) On the Class B Scheduled Final Payment Date, or if a Pay Out
Event has occurred, on each Distribution Date commencing with the
Distribution Date in the Monthly Period following the Monthly Period in
which such Pay Out Event occurs, the Paying Agent shall distribute to each
Class B Securityholder of record on the related Record Date (other than as
provided in Section 12.2 of the Agreement) such Class B Securityholder'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 Securities pursuant to
subsections 4.5(f)(i) or 4.5(g)(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 1998-2 Securityholders' Interest pursuant
to Section 10.1 of the Agreement, in which event the foregoing limitation
will not apply).
(e) On each Distribution Date on and after the Distribution Date
on which the Collateral Invested Amount is paid in full, the Paying Agent
shall distribute to each Class D Securityholder of record on the related
Record Date (other than as provided in Section 12.2 of the Agreement) such
Class D Securityholder'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 principal on the Class D
Securities pursuant to subsection 4.5(f)(iv) or 4.5(g)(iv).
(f) 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.
(g) Except as provided in Section 12.2 of the Agreement with
respect to a final distribution, distributions to Series 1998-2
Securityholders hereunder shall be made by check mailed to each Series
1998-2 Securityholder at such Series 1998-2 Securityholder's address
appearing in the Security Register without presentation or surrender of any
Series 1998-2 Security or the making of any notation thereon; provided,
however, that with respect to Series 1998-2 Securities registered in the
name of a Clearing Agency, such distributions shall be made to such
Clearing Agency in immediately available funds.
(h) The Transferor has appointed, and the Trustee has consented
to the appointment of Harris Trust and Savings Bank, an Illinois state
banking association, as Paying Agent, Registrar and Transfer Agent of the
Series 1998-2 Securities; the Collection Account shall also be maintained
at Harris Trust and Savings Bank.
Section 5.2. Reports and Statements to Series 1998-2
Securityholders.
(a) On each Distribution Date, the Paying Agent, on behalf of
the Trustee, shall forward to each Series 1998-2 Securityholder 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 1998-2 Securityholder or
any Security Owner thereof by a request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning
with calendar year 1999, 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 1998-2 Securityholder, a statement
prepared by the Servicer containing the information which is required to be
contained in the statement to Series 1998-2 Securityholders, as set forth
in paragraph (a) above aggregated for such calendar year or the applicable
portion thereof during which such Person was a Series 1998-2
Securityholder, 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 1998-2 Securities:
(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 Holdings or PFR from this subsection 6.1(a), the
occurrence of an Insolvency Event relating to Holdings or PFR;
(b) the Trust becomes an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(c) a failure on the part of the Transferor (i) to make any
payment or deposit required 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 1998-2 Securityholders 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 (with a copy to the Rating
Agency), or to the Transferor and the Trustee (which shall deliver a copy
of such notice to the Rating Agency) by any Holder of the Series 1998-2
Securities;
(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 1998-2
Securities and as a result of which the interests of the Series 1998-2
Securityholders 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
repurchased 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 of the Series Adjusted Portfolio Yields for any
three consecutive Monthly Periods is reduced to a rate which is less than
the average of the Base Rates for such three consecutive Monthly Periods;
(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 1998-2 Securities evidencing
more than 50% of the aggregate unpaid principal amount of Series 1998-2
Securities by notice then given in writing to the Transferor and the
Servicer (and to the Trustee if given by the Series 1998-2 Securityholders)
may declare that a Pay Out Event has occurred with respect to Series 1998-2
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 1998-2 without any notice or other action on the part of
the Trustee or the Series 1998-2 Securityholders immediately upon the
occurrence of such event. The Transferor shall deliver to the Rating
Agency a copy of any notice given or received by it pursuant to this
subsection 6.1(h).
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 1998-2
Securityholders' 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. If, on the date on which the
Transferor exercise such option, the long-term unsecured debt obligations
of Holdings and PFR are not rated at least in the third highest rating
category by the Rating Agency, the Transferor shall deliver to the Trustee,
with a copy to the Rating Agency, an Officer's Certificate which shall have
attached to it the relevant fraudulent conveyance statute, if any, and set
forth the factual basis for a conclusion that the exercise of such optional
repurchase would not constitute a fraudulent conveyance of the Transferor.
(b) The Transferor shall give the Servicer and the Trustee at
least 30 days prior written notice (with a copy to the Rating Agency) 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 1998-2 shall be reduced to zero and the Series
1998-2 Securityholders 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 September 2004 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 1998-2 Termination Date (after giving effect to all
distributions required to be made on the Series 1998-2 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 1998-2
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 1998-2 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 1998-2 Securityholders 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 September 2004
Distribution Date to the Series 1998-2 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.
Section 7.3. [Reserved]
Section 7.4. Constituent Class D Securities. (a) Subject to
the satisfaction of the conditions set forth in subsection 7.4(c), the
Class D Securityholders may at any time and from time to time (i) subdivide
the Class D Securities into two or more subsidiary securities, or (ii)
reallocate all or any portion of the amounts distributable to the Class D
Securityholders pursuant to Article IV and Section 5.1 to any other
Securityholder. In connection with such subdivision, the Transferor may
assign an interest rate to Class D Securities or a portion thereof. Upon
presentation to the Trustee and the Paying Agent of documentation
satisfactory to the Trustee, the Trustee shall pay amounts due hereunder to
the Class D Securityholders to the holders of such constituent securities
or such other Securityholder, as the case may be, pursuant to the terms of
such documentation.
(b) The documentation referred to in subsection 7.4(a) shall set
forth the rights of the holders of the securities or other interests issued
thereby with respect to the approval of amendments and waivers pursuant to
Section 13.1 of the Agreement.
(c) As a condition precedent to the subdivision of any Class D
Securities pursuant to this Section 7.4 or any transfer of the Class D
Securities, (i) the Trustee and the Transferor shall have received a Tax
Opinion (which shall not be required to include the opinion described in
clause (d) of the definition of "Tax Opinion" with respect to the
constituent securities, any outstanding Class A Securities, Class B
Securities, the Collateral Interest and any outstanding Class D
Securities), (ii) the Transferor shall deliver to the Trustee an Officers'
Certificate stating that in the reasonable belief of the Transferor such
subdivision would not cause a Pay Out Event with respect to Series 1998-2
to occur, or an event which, with notice or lapse of time or both, would
constitute a Pay Out Event with respect to Series 1998-2, and (iii) the
Rating Agency Condition shall have been satisfied.
Section 7.5 Legends; Transfer and Exchange; Restrictions on
Transfer of Series 1998-2 Securities; Tax Treatment.
(a) The Class A Securities and the Class B Securities will be
registered under the Securities Act.
(b) Each Class A Security will bear legends substantially in the
form set forth at Exhibit A-1.
(c) Each Class B Security will bear legends substantially in the
form set forth at Exhibit A-2.
(d) Each Class D Security will bear legends substantially in the
form set forth at Exhibit A-3.
(e) The Collateral Interest shall be subject to the restrictions
on transfer set forth in the Loan Agreement, including Section 8.09
thereof.
(f) It is the intention of the parties hereto that the
Collateral Interest be treated under applicable tax law as indebtedness.
In the event that the Collateral Interest is not so treated, it is the
intention of the parties that the Collateral Interest be treated under
applicable tax law as an interest in a partnership that owns the
Receivables. In the event that the Collateral Interest is treated under
applicable tax law as an interest in a partnership, it is the intention of
the parties that the Collateral Interest be treated as guaranteed payments
and, if for any reason it is not so treated, that the holder of the
Collateral Interest be specially allocated gross interest income equal to
the interest accrued during each Interest Period on the Collateral
Interest.
(g) It is the intention of the parties hereto that, until such
time as the Class D Securities are transferred or subdivided in accordance
with Section 7.4, the Class D Securities be treated under applicable tax
law as interests in a partnership that owns the Receivables.
Section 7.6 Defeasance. The Securities may be defeased in whole
or in part on the date that the following conditions shall have been
satisfied: (i) there shall have been deposited (x) in the Principal
Funding Account, an amount such that the amount on deposit in the Principal
Funding Account following such deposit is equal to the sum of the
outstanding principal amount of the Class A Securities, the outstanding
principal amount of the Class B Securities and the outstanding principal
amount of the Collateral Interest so defeased, and (y) in the Reserve
Account, an amount equal to or greater than the anticipated excess of the
Base Rate over the investment earnings on the amount deposited in the
Principal Funding Account pursuant to clause (x) of this Section 7.6, as
estimated by the Transferor, for the period from the date of such deposit
to the Principal Funding Account through the June 2001 Distribution Date;
(ii) the Transferor shall have delivered to the Trustee (a) an opinion of
counsel to the effect that such deposit will not result in the Trust being
required to register as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, (b) an opinion of counsel to
the effect that following such deposit none of the Trust, the Reserve
Account or the Principal Funding Account will be deemed to be an
association (or publicly traded partnership) taxable as a corporation, (c)
a certificate of an officer of the Transferor stating that the Transferor
reasonably believes that such deposits will not cause a Pay Out Event or
any event that, with the giving of notice or the lapse of time, would
constitute a Pay Out Event, to occur; (iii) the Rating Agency Condition
shall have been satisfied in connection with such events; and (iv) the
amounts deposited into the Principal Funding Account and the Reserve
Account pursuant to clauses (x) and (y) of this Section 7.6 are proceeds
from the issuance of a Series of Investor Securities. If the Securities
have been defeased in whole, the Series 1998-2 Securities will no longer be
entitled to the security interest of the Trust in the Receivables and,
except those set forth in clause (i) above, other Trust assets and the
percentages applicable to the allocation to the Series 1998-2
Securityholders of Collections of Principal Receivables, Collections of
Finance Charge Receivables and Collections of Defaulted Receivables will be
reduced to zero. Upon the satisfaction of the foregoing conditions, the
Class D Invested Amount will be reduced to zero.
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or Securityholders' Interest
pursuant to Section 2.6 or 10.1 of the Agreement and Section 7.1 or 7.2 of
this Supplement.
(1)(i) The amount to be paid by the Transferor with respect to
Series 1998-2 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 1998-2 in connection with a repurchase of the Securityholders'
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 Securities with a remaining maturity
approximately equal to the remaining maturity of the Class A
Securities and rated by each Rating Agency in the rating category
originally assigned to the Class A Securities over (II) the portion of
the Reassignment Amount attributable to the Class A Securities 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 Securities with a remaining maturity
approximately equal to the remaining maturity of the Class B
Securities and rated by each Rating Agency in the rating category
originally assigned to the Class B Securities over (II) the portion of
the Reassignment Amount attributable to the Class B Securities.
(2) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 7.1 or any amounts allocable to the
Series 1998-2 Securityholders' 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 Securityholders 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
Securityholders 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
Securityholders on any prior Distribution Date, will be distributed to the
Paying Agent for payment to the Class A Securityholders, (ii) (x) the Class
B Invested Amount on such Distribution Date will be distributed to the
Paying Agent for payment to the Class B Securityholders 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 Securityholders 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 Securityholders on any prior Distribution Date, will be
distributed to the Paying Agent for payment to the Class B Securityholders
and (iii) the balance, if any, will be distributed to the Collateral
Interest Holder for application in accordance with the Loan Agreement.
(3) 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 1998-2 Securityholders shall be
deemed distributed in full to the Series 1998-2 Securityholders 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.
(1) 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 1998-2 Allocable Principal Collections and
distribute such amount to the Paying Agent for payment to the Class A
Securityholders, provided that the amount of such distribution shall not
exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Series 1998-2 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 1998-2
Allocable Principal Collections and distribute such amount to the Paying
Agent for payment to the Class B Securityholders, provided that the amount
of such distribution shall not exceed (x) the product of (A) the portion of
such Insolvency Proceeds allocated to Series 1998-2 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 1998-2 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 1998-2 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 1998-2 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 Holder of the Transferor Security on
such Distribution Date.
(2) 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
Securityholders 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
Securityholders 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
Securityholders, provided that the amount of such distribution shall not
exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Series 1998-2 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; (ii)
deduct an amount equal to the sum of (w) Class B Monthly Interest for such
Distribution Date, (x) any Class B Monthly Interest previously due but not
distributed to the Class B Securityholders 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 Securityholders on a prior Distribution Date
from the portion of the Insolvency Proceeds allocated to Series 1998-2
Allocable Finance Charge Collections and distribute such amount to the
Paying Agent for payment to the Class B Securityholders, provided that the
amount of such distribution shall not exceed the product of (x) the portion
of the Insolvency Proceeds allocated to Series 1998-2 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; (iii) deduct an amount equal to the sum of
(w) Collateral Monthly Interest for such Distribution Date, (x) any
Collateral Monthly Interest previously due but not distributed to the
Collateral Interest Holder on a prior Distribution Date and (y) the amount
of Collateral Additional Interest, if any, for such Distribution Date and
any Collateral Additional Interest previously due but not distributed to
the Collateral Interest Holder on a prior Distribution Date from the
portion of the Insolvency Proceeds allocated to Series 1998-2 Allocable
Finance Charge Collections and distribute such amount to the Collateral
Interest Holder in accordance with the Loan Agreement, provided that the
amount of such distribution shall not exceed the product of (x) the portion
of the Insolvency Proceeds allocated to Series 1998-2 Allocable Finance
Charge Collections, (y) the Floating Allocation Percentage with respect to
the related Monthly Period and (z) the Collateral Floating Percentage with
respect to such Monthly Period; (iv) deduct an amount equal to the sum of
(w) Class D Monthly Interest for such Distribution Date, (x) Class D
Monthly Interest previously due but not distributed to the Class D
Securityholders on a prior Distribution Date and (y) the amount of Class D
Additional Interest, if any, for such Distribution Date and any Class D
Additional Interest previously due but not distributed to the Class D
Securityholders on a prior Distribution Date from the portion of the
Insolvency Proceeds allocated to Series 1998-2 Allocable Finance Charge
Collections and distribute such amount to the Paying Agent for payment to
the Class D Securityholders, provided that the amount of such distribution
shall not exceed the product of (x) the portion of the Insolvency Proceeds
allocated to Series 1998-2 Allocable Finance Charge Collections, (y) the
Floating Allocation Percentage with respect to the related Monthly Period
and (z) the Class D Floating Percentage with respect to such Monthly
Period; and (v) distribute any remaining insolvency proceeds to the
Transferor.
(3) 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 1998-2 Securityholders shall be
distributed in full to the Series 1998-2 Securityholders 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, LLC,
Transferor
By:/s/ Mark J. Norwicz
___________________________________
Name: Mark J. Norwicz
Title: Treasurer
PARTNERS FIRST HOLDINGS, LLC,
Servicer
By: /s/ Terence F. Browne
____________________________________
Name: Terence F. Browne
Title: Secretary
THE BANK OF NEW YORK,
not in its individual capacity, but solely as
Trustee,
By: /s/ Wuhan Dansby
___________________________________
Name: Wuhan Dansby
Title: Assistant Vice President
FORM OF CLASS A SECURITY EXHIBIT A-1
1/
REGISTERED $__________
No. R-_______ CUSIP No. _________
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY 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 1998-2
CLASS A FLOATING RATE ASSET BACKED SECURITY
Class A Scheduled Payment Date:
The June 2001 Distribution Date
Each $1,000 minimum denomination represents a
1/______ undivided interest
in Class A of the
PARTNERS FIRST CREDIT CARD MASTER TRUST, SERIES 1998-2
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 Holdings, LLC,
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, LLC or any of their respective affiliates)
--------------------------
1/ Denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
This certifies that ______________ (the "Class A Securityholder") is the
registered owner of a fractional undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of June 26, 1998 (as amended and
supplemented, the "Agreement"), as supplemented by the Series 1998-2
Supplement dated as of June 26, 1998 (as amended and supplemented, the
"Supplement"), among Partners First Receivables Funding, LLC, as
Transferor, Partners First Holdings, LLC, as Servicer, and The Bank of New
York, a New York banking corporation, as trustee (the "Trustee"). The
corpus of the Trust consists of (i) the Transferor's ownership interest in
a portfolio of receivables (the "Receivables") existing in the consumer
revolving credit card accounts identified under the Agreement from time to
time (the "Accounts"), (ii) all Receivables generated under the Accounts
from time to time thereafter, (iii) funds collected or to be collected from
cardmembers in respect of the Receivables, (iv) all funds which are from
time to time on deposit in the Collection Account, the Special Funding
Account, the Yield Supplement Account and any other Series Accounts and (v)
all other assets and interests constituting the Trust. The Holder of this
Security is entitled to the benefits of the subordination of the Class B
Securities, the Collateral Interest and the Class D Securities 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 Security 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 Security 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 Securityholder by virtue of the acceptance hereof
assents and is bound.
It is the intent of the Transferor and the Class A
Securityholders that, for federal, state and local income and franchise tax
purposes only, the Class A Securities will qualify as indebtedness of the
Transferor secured by the Receivables. The Class A Securityholder, by the
acceptance of this Class A Security, agrees to treat this Class A Security
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
Securities are limited to the Class A Invested Amount, which may be less
than the unpaid principal balance of the Class A Securities. The Class A
Scheduled Payment Distribution Date is the June 2001 Distribution Date, but
principal with respect to the Class A Securities 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
Securities 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 Security
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
Security to be duly executed.
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: ___________________________________
Name:
Title:
Dated: ______, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Securities described in the within-mentioned
Agreement and Supplement.
THE BANK OF NEW YORK,
as Trustee,
By: ________________________
Authorized Officer
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-2
CLASS A FLOATING RATE ASSET BACKED SECURITY
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
Security is one of a Series of Securities entitled Partners First Credit
Card Master Trust, Series 1998-2 (the "Series 1998-2 Securities"), and one
of a class thereof entitled Class A Series 1998-2 Floating Rate Asset
Backed Securities, (the "Class A Securities"), 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 securityholders of all
outstanding Series (the "Securityholders' Interest") with the remainder
allocated to the Holder of the Transferor Security. The aggregate interest
represented by the Class A Securities 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
$528,000,000. 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 Securityholders on or
prior to such date, minus (c) the excess, if any, of the aggregate amount
of Class A Charge-Offs for all prior Distribution Dates over Class A
Charge-Offs reimbursed pursuant to subsection 4.7(b) of the Supplement
prior to such date; provided, however, that the Class A 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 Securities, 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 Securityholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class A Securityholder's pro
rata share of such amounts (including amounts on deposit in the Collection
Account) as are payable to the Class A Securityholders pursuant to the
Agreement and the Supplement. Distributions with respect to this Class A
Security will be made by the Paying Agent by check mailed to the address of
the Class A Securityholder of record appearing in the Security Register
without the presentation or surrender of this Class A Security or the
making of any notation thereon (except for the final distribution in
respect of this Class A Security) except that with respect to Class A
Securities 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 Security will
be made only upon presentation and surrender of this Class A Security at
the office or agency specified in the notice of final distribution
delivered by the Trustee to the Series 1998-2 Securityholders 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 1998-2 Securityholders'
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 1998-2
Securityholders will not have any interest in the Receivables and the
Series 1998-2 Securities will represent only the right to receive such
Reassignment Amount.
THIS CLASS A SECURITY 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 SECURITY 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 Securities are issuable only in minimum denominations
of $1,000 and integral multiples of $1,000 in excess thereof. The transfer
of this Class A Security shall be registered in the Security Register upon
surrender of this Class A Security 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
Securityholder or such Class A Securityholder's attorney, and duly
authorized in writing with such signature guaranteed, and thereupon one or
more new Class A Securities 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 Securities are exchangeable for new Class A
Securities evidencing like aggregate fractional, undivided interests as
requested by the Class A Securityholder surrendering such Class A
Securities. 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 Security 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 SECURITY 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 security and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
security on the books kept for registration thereof, with full power of
substitution in the premises.
2/
Dated: ____________ ______________________
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 Security in every particular, without
alteration, enlargement or any change whatsoever.
EXHIBIT A-2
FORM OF CLASS B SECURITY
3/
REGISTERED $__________
No. R-_______ CUSIP No. _________
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY 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.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE
TRANSFEROR AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) A
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DEFINED IN 29 C.F.R.
SECTION 2510.3-101 OR OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S
INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY SUCH
PLAN (INCLUDING WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE (IV) AND THIS
CLAUSE (V), ANY INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
----------------------
3/ Denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-2
CLASS B FLOATING RATE ASSET BACKED SECURITY
Class B Scheduled Payment Date
The June 2001 Distribution Date
Each $1,000 minimum denomination represents a
1/________ undivided interest
in Class B of the
PARTNERS FIRST CREDIT CARD MASTER TRUST, SERIES 1998-2
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 Holdings, LLC,
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 Holdings, LLC, Partners
First Receivables Funding, LLC or any of their respective affiliates)
This certifies that ___________ (the "Class B Securityholder") is the
registered owner of a fractional, undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of June 26, 1998 (as amended and
supplemented, the "Agreement"), as supplemented by the Series 1998-2
Supplement dated as of June 26, 1998 (as amended and supplemented, the
"Supplement"), among Partners First Receivables Funding, LLC, as
Transferor, Partners First Holdings, LLC, 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
Security is entitled to the benefits of the subordination of the Collateral
Interest and the Class D Securities 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 Security
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 Security 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 Securityholder by virtue of the acceptance hereof
assents and is bound.
This Class B Security 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 Security, 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 Security, the applicable Security Owner or Owners
shall be deemed to have represented and warranted that it or they are not
Benefit Plans.
THIS CLASS B SECURITY IS SUBORDINATED TO THE EXTENT NECESSARY TO
FUND PAYMENTS ON THE CLASS A SECURITIES TO THE EXTENT SPECIFIED IN THE
SUPPLEMENT.
It is the intent of the Transferor and the Class B
Securityholders that, for federal, state and local income and franchise tax
purposes only, the Class B Securities will qualify as indebtedness of the
Transferor secured by the Receivables. The Class B Securityholder, by the
acceptance of this Class B Security, agrees to treat this Class B Security
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
Securities are limited to the Class B Invested Amount, which may be less
then the unpaid principal balance of the Class B Securities. The Class B
Scheduled Payment Date is the June 2001 Distribution Date, but principal
with respect to the Class B Securities 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 Securities 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 Security
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
Security to be duly executed.
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: ___________________________________
Name:
Title:
Dated: __________, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Securities 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 1998-2
CLASS B FLOATING RATE ASSET BACKED SECURITY
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
Security is one of a Series of Securities entitled Partners First Credit
Card Master Trust, Series 1998-2 (the "Series 1998-2 Securities"), and one
of a class thereof entitled Class B Series 1998-2 Floating Rate Asset
Backed Securities, (the "Class B Securities"), 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 securityholders of all
outstanding Series (the "Securityholders' Interest") with the remainder
allocated to the Holder of the Transferor Security. The aggregate interest
represented by the Class B Securities 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
$113,000,000. 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 Securityholders prior to
such date, minus (c) the aggregate amount of Class B Charge-Offs for all
prior Distribution Dates , minus (d) the amount of Redirected Principal
Collections allocated on all prior Distribution Dates pursuant to
subsection 4.8(a) of the Supplement (excluding any Redirected 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
Default Amount on all prior Distribution Dates, plus (f) the amount of
Excess Spread and Excess Finance Charge Collections allocated to Series
1998-2 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 Securities, 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 Securityholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class B Securityholder's pro
rata share of such amounts (including amounts on deposit in the Collection
Account) as are payable to the Class B Securityholders pursuant to the
Agreement and the Supplement. Distributions with respect to this Class B
Security will be made by the Paying Agent by check mailed to the address of
the Class B Securityholder of record appearing in the Security Register
without the presentation or surrender of this Class B Security or the
making of any notation thereon (except for the final distribution in
respect of this Class B Security) except that with respect to Class B
Securities 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 Security will
be made only upon presentation and surrender of this Class B Security at
the office or agency specified in the notice of final distribution
delivered by the Trustee to the Series 1998-2 Securityholders 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 1998-2 Securityholders'
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 1998-2
Securityholders will not have any interest in the Receivables and the
Series 1998-2 Securities will represent only the right to receive such
Reassignment Amount.
THIS CLASS B SECURITY 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 SECURITY 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 Securities are issuable only in minimum denominations
of $1,000 and integral multiples of $1,000 in excess thereof. The transfer
of this Class B Security shall be registered in the Security Register upon
surrender of this Class B Security 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
Securityholder or such Class B Securityholder's attorney, and duly
authorized in writing with such signature guaranteed, and thereupon one or
more new Class B Securities 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 Securities are exchangeable for new Class B
Securities evidencing like aggregate fractional undivided interests as
requested by the Class B Securityholder surrendering such Class B
Securities. 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 Security 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 SECURITY 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 security and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
security on the books kept for registration thereof, with full power of
substitution in the premises.
4/
Dated: ____________________
Signature Guaranteed:
____________________
____________________
-------------------------
the name of the registered owner as it appears on the face
of the within Security in every particular, without
alteration, enlargement or any change whatsoever.
EXHIBIT A-3
FORM OF CLASS D INVESTOR SECURITY
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE
TRANSFEROR AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) A
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DEFINED IN 29 C.F.R.
SECTION 2510.3-101 OR OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S
INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY SUCH
PLAN (INCLUDING WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE (IV) AND THIS
CLAUSE (V), ANY INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-2
CLASS D FLOATING RATE ASSET BACKED SECURITY
Each $1,000 minimum denomination represents a
1/_______ undivided interest
in Class D of the
PARTNERS FIRST CREDIT CARD MASTER TRUST, SERIES 1998-2
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 Holdings, LLC,
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 Receivables Funding,
LLC, Partners First Receivables, LLC or any of their respective affiliates)
This certifies that PARTNERS FIRST RECEIVABLES FUNDING, LLC (the "Class D
Securityholder") is the registered owner of a fractional, undivided
interest in certain assets of a trust (the "Trust") created pursuant to the
Amended and Restated Pooling and Servicing Agreement, dated as of June 26,
1998 (as amended and supplemented, the "Agreement"), as supplemented by the
Series 1998-2 Supplement, dated as of June 26, 1998 (as amended and
supplemented, the "Supplement"), among Partners First Receivables Funding,
LLC, as Transferor, Partners First Holdings, LLC, 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. 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 D Security 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 D Security 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 D Securityholder by virtue of the acceptance hereof
assents and is bound.
This Class D Security 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 D Security, 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 D Security, the applicable Security Owner or Owners
shall be deemed to have represented and warranted that it or they are not
Benefit Plans.
THIS CLASS D SECURITY IS SUBORDINATED TO THE EXTENT NECESSARY TO
FUND PAYMENTS ON THE CLASS A SECURITIES, THE CLASS B SECURITIES AND THE
COLLATERAL INTEREST TO THE EXTENT SPECIFIED IN THE SUPPLEMENT.
Subject to the satisfaction of the conditions set forth in the
Supplement, the Class D Securityholders may at any time and from time to
time (i) subdivide their Class D Securities into two or more subsidiary
securities, or (ii) reallocate all or any portion of the amounts
distributable to the Class D Securityholders to any other Securityholder.
In connection with such subdivision, the Transferor may assign an interest
rate to Class D Securities or a portion thereof. Upon presentation to the
Trustee and the Paying Agent of documentation satisfactory to the Trustee,
the Trustee shall pay amounts due hereunder to the Class D Securityholders
to the holders of such constituent securities or such other Securityholder,
as the case may be, pursuant to the terms of such documentation.
No principal will be payable to the Class D Securityholders until
the Class A Invested Amount, the Class B Invested Amount and the Collateral
Invested Amount have been paid in full. In general, payments of principal
with respect to the Class D Securities are limited to the Class D Invested
Amount, which may be less then the unpaid principal balance of the Class D
Securities.
IN WITNESS WHEREOF, the Transferor has caused this Class D
Security to be duly executed.
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By: ___________________________________
Name:
Title:
Dated: _________, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class D Securities 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 1998-2
CLASS D FLOATING RATE ASSET BACKED SECURITY
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 D
Security is one of a Series of Securities entitled Partners First Credit
Card Master Trust, Series 1998-2 (the "Series 1998-2 Securities"), and one
of a class thereof entitled Class D Series 1998-2 Floating Rate Asset
Backed Securities, (the "Class D Securities"), 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 securityholders of all
outstanding Series (the "Securityholders' Interest") with the remainder
allocated to the Holder of the Transferor Security. The aggregate interest
represented by the Class D Securities at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Class D
Invested Amount at such time. The Class D Initial Invested Amount is
$42,000,000. The Class D Invested Amount on any date will be an amount
equal to (a) the Class D Initial Invested Amount, minus (b) the aggregate
amount of principal payments made to the Class D Securityholders prior to
such date, minus (c) the aggregate amount of Class D Charge-Offs for all
prior Distribution Dates, minus (d) the amount of Redirected Principal
Collections allocated on all prior Distribution Dates pursuant to
subsection 4.8(a) of the Supplement, minus (e) an amount equal to the
amount by which the Class D Invested Amount has been reduced on all prior
Distribution Dates pursuant to subsections 4.6(a), (b) and (c) of the
Supplement 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(m) of the Supplement for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and
(e); provided, however, that the Class D 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 Securities, which will
represent fractional, undivided interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall distribute to
each Class D Securityholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class D Securityholder's pro
rata share of such amounts (including amounts on deposit in the Collection
Account) as are payable to the Class D Securityholders pursuant to the
Agreement and the Supplement. Distributions with respect to this Class D
Security will be made by the Paying Agent by check mailed to the address of
the Class D Securityholder of record appearing in the Security Register
without the presentation or surrender of this Class D Security or the
making of any notation thereon (except for the final distribution in
respect of this Class D Security), distributions will be made in the form
of immediately available funds. Final payment of this Class D Security
will be made only upon presentation and surrender of this Class D Security
at the office or agency specified in the notice of final distribution
delivered by the Trustee to the Series 1998-2 Securityholders 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 1998-2 Securityholders'
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 1998-2
Securityholders will not have any interest in the Receivables and the
Series 1998-2 Securities will represent only the right to receive such
Reassignment Amount.
THIS CLASS D SECURITY 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 D SECURITY 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 D Securities are issuable only in minimum denominations
of $1,000 and integral multiples of $1,000. The transfer of this Class D
Security shall be registered in the Security Register upon surrender of
this Class D Security 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 D Securityholder
or such Class D Securityholder's attorney, and duly authorized in writing
with such signature guaranteed, and thereupon one or more new Class D
Securities 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 D Securities are exchangeable for new Class D
Securities evidencing like aggregate fractional undivided interests as
requested by the Class D Securityholder surrendering such Class D
Securities. 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 D Security 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 D SECURITY 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 security and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
security on the books kept for registration thereof, with full power of
substitution in the premises.
5/
Dated: ____________________
Signature Guaranteed:
____________________
____________________
-------------------------
5/ NOTE: The signature to this Assignment must correspond with
the name of the registered owner as it appears on the face
of the within Security 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 1998-2
______________________________
The undersigned, a duly authorized representative of Partners
First Holdings, LLC, as Servicer (the "Servicer") pursuant to the Amended
and Restated Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Pooling and Servicing Agreement"), among the
Servicer, Partners First Receivables Funding, LLC ("PFRF"), as Transferor
and The Bank of New York, as trustee (the "Trustee"), does hereby certify
as follows:
a. Capitalized terms used in this Certificate have their
respective meanings set forth in the Pooling and Servicing Agreement or the
Series 1998-2 Supplement dated as of June 26, 1998, among the Services,
PFRF and the Trustee (as amended and supplemented, the "Supplement"), as
applicable.
b. Partnership Holdings, LLC is the Servicer.
c. The undersigned is a Servicing Officer.
I. INSTRUCTION TO MAKE A WITHDRAWAL.
Pursuant to subsections 4.5(a), (b), (c) and (d), 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, Collateral Available Funds and
Class D 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), (c) and (d):
With respect to the Class A Securities:
A) Pursuant to subsection 4.5(a)(i):
(1) Interest at the Class A Interest 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 . . . . . . . . . . . . . . . . . . . . . $_______
(2) Accrued and unpaid Class A Servicing Fees . . . . . $_______
C) Pursuant to subsection 4.5(a)(iii):
Class A Default Amount for the preceding Monthly
Period . . . . . . . . . . . . . . . . . . . . . . . . $_______
With respect to the Class B Securities:
A) Pursuant to subsection 4.5(b)(i):
(1) Interest at the Class B Interest 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 . . . . . . . . . . . . . . . . . . . . . $_______
(2) Accrued and unpaid Class B Servicing Fees . . . . $_______
With respect to the Collateral Interest
A) Pursuant to subsection 4.5(c)(i):
(1) The Collateral Servicing Fee for the
preceding Monthly Period . . . .. . . . . . . . . . . . $_______
(2) Accrued and unpaid Collateral Servicing Fee . . . . $_______
With respect to the Class D Securities
A) Pursuant to subsection 4.5(d)(i):
(1) The Class D Servicing Fee for the preceding
Monthly Period . . . . . . . . . . . . . . . . . . . . . $_______
(2) Accrued and unpaid Class D Servicing Fee . . . . . $_______
Pursuant to subsections 4.5(e), (f) and (g), 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(e), (f) and (g):
A) Pursuant to subsection 4.5(e):
(1) The Collateral Monthly Principal paid to the
Collateral Interest Holder for application in
accordance with the Loan Agreement . . . . . . . . . . . $_______
(2) Amount to be treated as Shared Principal
Collections . . . . . . . . . . . . . . . . .. . . . . $_______
B) Pursuant to subsection 4.5(f):
(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) Prior to the date the Class B Invested
Amount is paid in full, in which a reduction of
the Required Enhancement Amount has occurred, an
amount equal to the Collateral Monthly Principal
shall be paid to the Collateral Interest Holder . . . . . $_______
(3) After the Class B Invested Amount is paid in
full, in which a reduction of the Required
Enhancement Amount has occurred an amount paid
to the Collateral Interest Holder (up to the
Collateral Invested Amount) pursuant to the Loan
Agreement . . . . . . . . . . . . . . . . . . . . . . . $_______
(4) Prior to the date the Collateral Invested
Amount is paid in full, the amount paid to the
Class D Securityholders for application in
accordance with the Loan Agreement . . . . . . . . . . . $_______
C) Pursuant to subsection 4.5(g):
(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 and 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 . . . . . . . . . . . . . . . . . . . $_______
(4) On and after the Distribution Date on which
the Collateral Invested Amount is paid in full,
an amount up to Class D Invested Amount
deposited into the Principal Funding Account . . . . . $_______
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 1998-2 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 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
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 (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 Interest Rate and (ii) the outstanding
principal balance of the Class B Invested
Securities 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 Securityholders 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) The amount of the excess, if any, of the sum
of the Monthly Servicing Fee for such
Distribution and the amount of any Monthly
Serving Fee previously due but not distributed
on a prior Distribution Date, over the sum of
the amounts distributed to the pursuant Servicer
on such Distribution Date to subsections
4.5(a)(ii), (b)(ii), c(i) and d(i). . . . . . . . . . . $_______
G) Pursuant to subsection 4.7(g):
(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 . . . . . . . . . . . . . . . . . . . . . . $_______
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 Reserve Account
Amount over the Available Reserve Amount
deposited into the Reserve Account . . . . . . . . . . $_______
K) Pursuant to subsection 4.7(k):
(1) Class D Monthly Interest . . . . . . . . . . . . $_______
(2) Class D Monthly Interest previously due but not
paid . . . . . . . . . . . . . . . . . . . . . . $_______
(3) Class D Additional Interest and any Class D
Additional Interest previously due but not
paid . . . . . . . . . . . . . . . . . . . . . . $_______
L) Pursuant to subsection 4.7(l): $_______
The amount equal to the Class D Default Amount
allocated to Available Principal Collections . . . . . $_______
M) Pursuant to subsection 4.7(m):
The amount by which the "Class D Invested
Amount" has been reduced pursuant to clauses
(c), (d) and (e) of the definition thereof
allocated to Available Principal Collections . . . . . $_______
N) Pursuant to subsection 4.7 (n)
Paid to the Collateral Interest Holder pursuant to
the Loan Agreement . . . . . . . . . . . . . . . . . . $_______
O) Pursuant to subsection 4.7 (o)
Treated as Excess Finance Charge Collections and
allocated to other Series or paid to the Holder
of the Transferor Security . . . . . . . . . . . . . . $_______
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 Redirected
Principal Collections to fund any deficiencies in the Required
Amount after applying Class A Available Funds, Class B Available
Funds, Collateral 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
Securityholders . . . . . . . . . . . . . . . . . . . $_______
B) Pursuant to subsection 5.1(b):
On the Class A Scheduled Payment Date, principal
to be distributed to the Class A Securityholders . . $_______
C) Pursuant to subsection 5.1(c):
Interest to be distributed to Class B
Securityholders . . . . . . . . . . . . . . . . . . . $_______
D) Pursuant to subsection 5.1(d):
On the Class B Scheduled Final Payment Date, on
or after the date Class A Invested Amount is
paid in full, principal to be distributed to the
Class B Securityholders. . . . . . . . . . . . . . . $_______
E) Pursuant to subsection 5.1 (e):
On and after the Collateral Invested Amount is
paid in full, the amount to be paid to Class D
Securityholders . . . . . . . . . . . . . . . . . . $_______
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 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 . . . . . . . . . . . . . . . . . . . . . . $_______
4. Subsections 4.6(a), (b), (c) and (d) and 4.8(a),
(b) and (c):
The aggregate amount by which the "Class D
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 HOLDINGS, LLC
by ______________________________
Name:
Title:
EXHIBIT C
FORM OF MONTHLY STATEMENT
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-2
Pursuant to the Amended and Restated Pooling and Servicing
Agreement dated as of June 26, 1998 (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 Holdings, LLC (the
"Holdings"), as Servicer, Partners First Receivables Funding, LLC ("PFRF"),
as Transferor, and The Bank of New York, as trustee (the "Trustee"), as
supplemented by the Series 1998-2 Supplement dated as of June 26, 1998 (the
"Supplement") among the Holdings, PFRF and the Trustee, the Servicer is
required to prepare certain information each month regarding current
distributions to the Series 1998-2 Securityholders 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 1998-2 Security (a "Security").
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 Securities per $1,000 original
security principal amount:
(1) The total amount of the distribution in
respect of Class A Securities, per $1,000
original security principal amount . . . . . . . . . $_______
(2) The amount of the distribution set forth in
paragraph 1 above in respect of interest on the
Class A Securities, per $1,000 original security
principal amount . . . . . . . . . . . . . . . . . . $_______
(3) The amount of the distribution set forth in
paragraph 1 above in respect of principal of the
Class A Securities, per $1,000 original security
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 security 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 security principal amount . . . . . $_______
(5) The amount, if any, by which the outstanding
principal balance of the Class A Securities
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 Securities, per $1,000 original security
principal amount:
(1) The total amount of the distribution in respect of
Class B Securities, per $1,000 original security
principal amount . . . . . . . . . . . . . . . . . . . . $________
(2) The amount of the distribution set forth in
paragraph 1 above in respect of interest on the
Class B Securities, per $1,000 original security
principal amount . . . . . . . . . . . . . . . . . . . . $________
(3) The amount of the distribution set forth in
paragraph 1 above in respect of principal of the
Class B Securities, per $1,000 original security
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 security 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 security principal amount . . . . . . . . $________
(5) The amount, if any, by which the outstanding
principal balance of the Class B Securities
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 . . . . . . $_________
G) Information regarding certain distributions to
the Class D Securityholders:
(1) The amount distributed to the Class D
Securityholders in respect of interest on the
Class D Invested Amount . . . . . . . . . . . . . . . . . $__________
(2) The amount distributed to the Class D
Securityholders with respect to principal on the
Class D Invested Amount . . . . . . . . . . . . . . . . . $__________
H) Amount of reductions in Class D Invested Amount
pursuant to clauses (c), (d) and (e) of the definition
of Class D Invested Amount:
(1) The amount of reductions in the Class D
Invested Amount pursuant to clauses (c), (d) and
(e) of the definition of Class D Invested Amount . . . . . $___________
(2) The total amount reimbursed in respect of such
reduction in the Class D Invested Amount . . . . . . . . . $___________
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 . . $_________
Class D Initial Investment Amount . . $_________
INITIAL INVESTED AMOUNT . . . . . . . . . . . . . . . . . . . $_________
Class A Invested Amount . . . . . . . $_________
Class B Invested Amount . . . . . . . $_________
Collateral Invested Amount . . . . . . $_________
Class D Invested Amount . . . . . . . $_________
INVESTED AMOUNT . . . . . . . . . . . . . . . . . . . . . . . $_________
Class A Adjusted Invested Amount . . . . . . . . . . . . . $_________
Class B Adjusted Invested Amount . . . . . . . . . . . . . $_________
ADJUSTED INVESTED AMOUNT . . . . . . . . . . . . . . . . . . $_________
MONTHLY SERVICING FEE . . . . . . . . . . . . . . . . . . . . $_________
SERIES DEFAULT AMOUNT . . . . . . . . . . . . . . . . . . . . $_________
GROUP I INFORMATION
WEIGHTED AVERAGE INTEREST RATE FOR ALL
SERIES IN GROUP ONE . . . . . . . . . . . . . . . . . . . $_________
GROUP I FINANCE CHARGE COLLECTIONS . . . . . . . . . . . . $_________
GROUP I ADDITIONAL AMOUNTS . . . . . . . . . . . . . . . . $_________
GROUP I SERIES DEFAULT AMOUNT . . . . . . . . . . . . . . $_________
GROUP I MONTHLY FEES . . . . . . . . . . . . . . . . . . . $_________
GROUP I MONTHLY INTEREST . . . . . . . . . . . . . . . . $_________
SERIES 1998-2 INFORMATION
SERIES 1998-2 ALLOCATION PERCENTAGE . . . . . . . . . . . __________%
SERIES 1998-2 ALLOCABLE FINANCE CHARGE COLLECTIONS . . . . $_________
SERIES 1998-2 ADDITIONAL AMOUNTS . . . . . . . . . . . . . $_________
SERIES 1998-2 ALLOCABLE DEFAULTED AMOUNT . . . . . . . . . $_________
SERIES 1998-2 MONTHLY FEES . . . . . . . . . . . . . . . . $_________
SERIES 1998-2 ALLOCABLE PRINCIPAL COLLECTIONS . . . . . . $_________
SERIES 1998-2 REQUIRED TRANSFEROR AMOUNT . . . . . . . . . $_________
FLOATING ALLOCATION PERCENTAGE . . . . . . . . . . . . . . $_________
INVESTOR FINANCE CHARGE COLLECTIONS . . . . . . . . . . . __________%
SERIES DEFAULT AMOUNT . . . . . . . . . . . . . . . . . . $_________
REDIRECTED INVESTOR FINANCE CHARGE COLLECTIONS . . . . . . $_________
PRINCIPAL ALLOCATIONS PERCENTAGE . . . . . . . . . . . . . __________%
AVAILABLE PRINCIPAL COLLECTIONS . . . . . . . . . . . . . $_________
CLASS A AVAILABLE FUNDS --
CLASS A FLOATING PERCENTAGE . . . . . . . . . . . . . . . . . . _________%
Class A Floating Percentage of Redirected Investor Finance
Charge Collections . . . . . . . . . . $_________
Other Amounts . . . . . . . . . . . . $_________
TOTAL CLASS A AVAILABLE FUNDS . . . . . . . . . . . . . . . . $_________
Class A Monthly Interest . . . . . . . $_________
Class A Servicing Fee . . . . . . . . $_________
Class A 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 . . . . . . . . $_________
COLLATERAL AVAILABLE FUNDS COLLATERAL FLOATING
PERCENTAGE . . . . . . . . . . . . . . . . . . . . . . . . . . _________%
COLLATERAL AVAILABLE FUNDS . . . . . . . . . . . . . . . . . $_________
Collateral Interest Servicing Fee . . . . . . . . . . . . $_________
TOTAL COLLATERAL EXCESS SPREAD . . . . . . . . . . . . . . . . $_________
TOTAL CLASS B EXCESS SPREAD . . . . . . . . . . . . . . . . . . $_________
CLASS D FLOATING PERCENTAGE $_________
TOTAL CLASS A AVAILABLE FUNDS $_________
Class D Monthly Interest _________%
Class D Servicing Fee _________%
EXCESS SPREAD --
TOTAL EXCESS SPREAD . . . . . . . . . . . . . . . . . . . . . $_________
a) Excess Spread Applied to Class A Required Amount . . $__________
b) Excess Spread Applied to Class A Investor Charge
Offs . . . . . . . . . . . . . . . . . . . . . . . . $__________
c) Excess Spread Applied to Class B Required Amount . . $__________
d) Excess Spread Applied to Class B Interest . . . . . $__________
e) Excess Spread Applied to Reductions of Class B
Invested Amount pursuant to clauses (c), (d)
and (e) . . . . . . . . . . . . . . . . . . . . . . $__________
f) Excess Spread Applied to Monthly Servicing Fee $__________
g) Excess Spread Applied to Collateral Monthly Interest .$__________
h) Excess Spread Applied to Collateral Default Amount . .$__________
i) Excess Spread Applied to Reductions of Collateral
Invested Amount Pursuant to Clauses (c), (d) and (e) .$__________
j) Excess Spread Applied to Reserve Account . . . . . . .$__________
k) Excess Spread Applied to pay Class D Monthly
Interest . . . . . . . . . . . . . . . . . . . . . .$__________
l) Excess Spread Applied to Class D Default Amount . . .$__________
m) Excess Spread Applied to Reductions of Class D
Invested Amount pursuant to clauses (c), (d) and
(e) . . . . . . . . . . . . . . . . . . . . . . . . .$__________
n) 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 1998-2 EXCESS FINANCE CHARGE COLLECTIONS
EXCESS FINANCE CHARGE COLLECTIONS ALLOCATED TO
SERIES 1998-2 . . . . . . . . . . . . . . . . . . . . $__________
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 pay
Class D Monthly Interest . . . . . . . . . . . . . . $__________
Excess Finance Charge Collections Applied to Class
D Default Amount . . . . . . . . . . . . . . . . . . $__________
Excess Finance Charge Collections Applied to
Reductions of Class D Invested Amount pursuant to
clauses (c), (d), and (e) . . . . . . . . . . . . . $__________
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 . . . . . . . . . $_________
CLASS D PRINCIPAL PERCENTAGE . . . . . . . . . . . . . . . . . __________%
Class D Principal Collections . . . . . . . . . . $_________
AVAILABLE PRINCIPAL COLLECTIONS . . . . . . . . . . . . . . . . $_________
REDIRECTED PRINCIPAL COLLECTIONS . . . . . . . . . . . . . . . $_________
SERIES 1998-2 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) . . . . . . . . . . . . . . . .. . . . . $_________
REDUCTION IN CLASS D 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 . . . $_________
PREVIOUS CLASS D INVESTED AMOUNT REIMBURSED . . . . . . . . . . $_________
PARTNERS FIRST HOLDINGS, LLC,
as Servicer
By: ________________________
Name:
Title:
EXHIBIT D
FORM OF MONTHLY SERVICER'S CERTIFICATE
PARTNERS FIRST HOLDINGS, LLC
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-2
The undersigned, a duly authorized representative of PARTNERS
FIRST HOLDINGS, LLC, as Servicer (the "Servicer"), pursuant to the Amended
and Restated Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Agreement"), as supplemented by the Series
1998-2 Supplement (as amended and supplemented, the "Series Supplement"),
among the Partners First Holdings, LLC, as Servicer, Partners First
Receivables, Funding, LLC, 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. Partners First Holdings, LLC 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 HOLDINGS, LLC,
Servicer
By: _____________________________
Name:
Title:
SERIES 1998-3 SUPPLEMENT
Dated as of June 26, 1998
to
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of June 26, 1998
$750,000,000
among
PARTNERS FIRST RECEIVABLES FUNDING, LLC
Transferor
PARTNERS FIRST HOLDINGS, LLC
Servicer
and
THE BANK OF NEW YORK
Trustee
on behalf of the Series 1998-3 Securityholders
______________________________
PARTNERS FIRST CREDIT CARD MASTER TRUST
Series 1998-3
______________________________
TABLE OF CONTENTS
ARTICLE I
Creation of the Series 1998-3 Securities
Section 1.1. Designation . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Definitions
Section 2.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2. Form of Delivery of Series 1998-3 Securities;
Depositary . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
Servicing Fee and Interchange
Section 3.1. Servicing Compensation; Interchange . . . . . . . . . . . 20
ARTICLE IV
Rights of Series 1998-3 Securityholders and
Allocation and Application of Collections
Section 4.1. Collections and Allocations . . . . . . . . . . . . . . 22
Section 4.2. Determination of Monthly Interest . . . . . . . . . . . 24
Section 4.3. Principal Funding Account; Controlled Accumulation
Period . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.4. Required Amount . . . . . . . . . . . . . . . . . . . . 28
Section 4.5. Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds,
Class D Available Funds and Available Principal
Collections . . . . . . . . . . . . . . . . . . . . 29
Section 4.6. Defaulted Amounts; Charge-Offs . . . . . . . . . . . . . 32
Section 4.7. Excess Spread; Excess Finance Charge Collections . . . . 34
Section 4.8. Redirected Principal Collections . . . . . . . . . . . . 36
Section 4.9. Excess Finance Charge Collections . . . . . . . . . . . 37
Section 4.10. Redirected Investor Finance Charge Collections . . . . . 38
Section 4.11. Shared Principal Collections . . . . . . . . . . . . . . 39
Section 4.12. Reserve Account . . . . . . . . . . . . . . . . . . . . 39
Section 4.13. Determination of LIBOR . . . . . . . . . . . . . . . . . 41
Section 4.14. Investment Instructions . . . . . . . . . . . . . . . . 41
Section 4.15. Yield Supplement Account . . . . . . . . . . . . . . . . 41
ARTICLE V
Distributions and Reports to
Series 1998-3 Securityholders
Section 5.1. Distributions . . . . . . . . . . . . . . . . . . . . . 43
Section 5.2. Reports and Statements to Series 1998-3
Securityholders . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
Pay Out Events
Section 6.1. Pay Out Events . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1. Optional Repurchase . . . . . . . . . . . . . . . . . . 46
Section 7.2. Series Termination . . . . . . . . . . . . . . . . . . . 47
Section 7.3. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.4. Constituent Class D Securities . . . . . . . . . . . . . 47
Section 7.5 Legends; Transfer and Exchange; Restrictions on
Transfer of Series 1998-3 Securities; Tax
Treatment . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.6 Defeasance . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or Securityholders' Interest
pursuant to Section 2.6 or 10.1 of the Agreement
and Section 7.1 or 7.2 of this Supplement . . . . . . 49
Section 8.2. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables pursuant to
Section 9.1 of the Agreement . . . . . . . . . . . . . 51
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Ratification of Agreement . . . . . . . . . . . . . . . 53
Section 9.2. Counterparts . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.3. Governing Law . . . . . . . . . . . . . . . . . . . . . 53
EXHIBITS
Exhibit A-1 - Form of Class A Security
Exhibit A-2 - Form of Class B Security
Exhibit B - Form of Monthly Payment Instructions and Notification to
the Trustee
Exhibit C - Form of Monthly Series 1998-3 Securityholders' Statement
Exhibit D - Form of Servicer's Certificate
SERIES 1998-3 SUPPLEMENT, dated as of June 26, 1998 (the
"Supplement"), between PARTNERS FIRST RECEIVABLES FUNDING, LLC, a
Delaware limited liability company, as Transferor, PARTNERS FIRST
HOLDINGS, LLC, as Servicer, and THE BANK OF NEW YORK, a New York
banking corporation, not in its individual capacity, but solely
as Trustee.
Pursuant to the Amended and Restated Pooling and Servicing
Agreement dated as of June 26, 1998 (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 Securities 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 Securities and specify the Principal Terms
thereof.
ARTICLE I
Creation of the Series 1998-3 Securities
Section 1.1. Designation.
(a) There is hereby created a Series of Investor Securities to
be issued pursuant to the Agreement and this Supplement to be known as
"Partners First Credit Card Master Trust, Series 1998-3." The Series 1998-
3 Securities shall be issued in three Classes, the first of which shall be
known as the "Class A Series 1998-3 Floating Rate Asset Backed Securities,"
the second of which shall be known as the "Class B Series 1998-3 Floating
Rate Asset Backed Securities" and the third of which shall be known as the
"Class D Series 1998-3 Asset Backed Securities." In addition, there is
hereby created a fourth Class of uncertificated interests in the Trust
which, except as expressly provided herein, shall be deemed to be "Investor
Securities" 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 1998-3." The Collateral Interest shall be considered a Class of
Series 1998-3 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 1998-3 shall be included in Group I and shall be a
Principal Sharing Series. Series 1998-3 shall be an Excess Allocation
Series. Series 1998-3 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 1998-3 shall
be the August 17, 1998 Distribution Date and the first Monthly Period shall
begin on and include June 26, 1998 and end on and include July 31, 1998.
(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 Securities shall not be applicable
to the Collateral Interest, (ii) the Opinion of Counsel specified in clause
(d) of the definition of Tax Opinion shall not be required pursuant to
Section 6.3(b)(vi) of the Agreement with respect to the Collateral Interest
and the Class D Securities 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 and the Class D Securities 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 or Class D Securityholder.
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, the Class B Additional Interest and
Collateral 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.
"Applicable Class A Spread" shall mean 0.13% per annum.
"Applicable Class B Spread" shall mean 0.36% per annum.
"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 1998-3 Allocable Principal
Collections received during such Monthly Period minus (ii) the amount of
Redirected Principal Collections with respect to such Monthly Period which
pursuant to subsection 4.8(a) , (b) or (c) 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 1998-
3 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
sum of the weighted average of the Class A Interest Rate, the Class B
Interest Rate, the Collateral Rate and the Class D Interest Rate as of the
last day of such Monthly Period (weighted based on the Class A Invested
Amount, the Class B Invested Amount, the Collateral Invested Amount and the
Class D Invested Amount, respectively, as of the last day of such Monthly
Period) plus the product of 2.00% and the percentage equivalent of a
fraction the numerator of which is the Adjusted Invested Amount and the
denominator of which is the Invested Amount each as of the last day of such
Monthly Period.
"Charge-Offs" shall mean Class A Charge-Offs, Class B Charge-
Offs, Collateral Charge-Offs and Class D Charge-Offs.
"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) 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 Redirected 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 Charge-Offs" shall have the meaning specified in
subsection 4.6(a).
"Class A Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Default
Amount for the related Monthly Period and (ii) the Class A Floating
Percentage for such Monthly Period.
"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 $528,000,000.
"Class A Interest Rate" shall mean, for any Interest Period with
respect to the Class A Securities, a per annum rate equal to LIBOR
determined on the related LIBOR Determination Date plus the Applicable
Class A Spread, calculated on the basis of actual days elapsed and a 360-
day year.
"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
Securityholders on or prior to such date, minus (c) the excess, if any, of
the aggregate amount of Class A Charge-Offs for all prior Distribution
Dates over Class A Charge-Offs reimbursed pursuant to subsection 4.7(b)
prior to such date; provided, however, that the Class A Invested Amount may
not be reduced below zero.
"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 Scheduled Payment Date" shall mean the June 2003
Distribution Date.
"Class A Securities" shall mean any one of the Securities
executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-1.
"Class A Securityholder" shall mean the Person in whose name a
Class A Security is registered in the Security Register.
"Class A Servicing Fee" shall have the meaning specified in
Section 3.1.
"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 sum of (a) following the payment in full of
the principal amount of the Class A Securities, the amount of Principal
Funding Investment Proceeds, if any, with respect to such Distribution
Date, (b) the Class B Floating Percentage of the sum of the Redirected
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
B Available Funds with respect to such Distribution Date.
"Class B Charge-Offs" shall have the meaning specified in
subsection 4.6(b).
"Class B Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Default
Amount for the related Monthly Period and (ii) the Class B Floating
Percentage for such Monthly Period.
"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 $113,000,000.
"Class B Interest Rate" shall mean, for any Interest Period with
respect to the Class B Securities, a per annum rate equal to LIBOR plus the
Applicable Class B Spread determined on the related LIBOR Determination
Date, calculated on the basis of actual days elapsed and a 360-day year.
"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
Securityholders on or prior to such date, minus (c) the aggregate amount of
Class B Charge-Offs for all prior Distribution Dates, minus (d) the
aggregate amount of Redirected Principal Collections allocated on all prior
Distribution Dates pursuant to subsection 4.8(a) (excluding any Redirected
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 aggregate
amount of Excess Spread and Excess Finance Charge Collections allocated and
available on all prior Distribution Dates pursuant to subsection 4.7(m) 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 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 Scheduled Payment Date" shall mean the June 2003
Distribution Date.
"Class B Securities" shall mean any one of the Securities
executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-2.
"Class B Securityholder" shall mean the Person in whose name a
Class B Security is registered in the Security Register.
"Class B Servicing Fee" shall have the meaning specified in
Section 3.1.
"Class D Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the product of (i) the Class D Floating
Percentage and (ii) the sum of the Redirected Investor Finance Charge
Collections and the Yield Supplement Draw Amount, if any, for the
Distribution Date related to such Monthly Period.
"Class D Charge-Offs" shall have the meaning specified in
subsection 4.6(d).
"Class D Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Default
Amount for the related Monthly Period and (ii) the Class D Floating
Percentage for such Monthly Period.
"Class D 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 D
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 D
Floating Percentage shall mean the percentage equivalent of a fraction, the
numerator of which is the Class D Initial Invested Amount and the
denominator of which is the Initial Invested Amount.
"Class D Initial Invested Amount" shall mean $42,000,000.
"Class D Interest Rate" shall mean, for any Interest Period with
respect to the Class D Securities, 0% per annum or such greater rate as may
be designated from time to time by the Servicer upon satisfaction of the
Rating Agency Condition.
"Class D Interest Shortfall" shall have the meaning specified in
subsection 4.2(d).
"Class D Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class D Initial Invested Amount,
minus (b) the aggregate amount of principal payments made to the Class D
Securityholders prior to such date, minus (c) the aggregate amount of Class
D Charge-Offs for all prior Distribution Dates, minus (d) the aggregate
amount of Redirected Principal Collections allocated on all prior
Distribution Dates pursuant to Section 4.8, minus (e) an amount equal to
the amount by which the Class D Invested Amount has been reduced on all
prior Distribution Dates pursuant to subsections 4.6(a), (b) and (c) 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(m) for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (c), (d) and (e); provided, however, that the
Class D Invested Amount may not be reduced below zero.
"Class D Monthly Interest" shall have the meaning specified in
subsection 4.2(d).
"Class D 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 D 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
D 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 D Principal Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Class D Initial Invested Amount and
the denominator of which is the Initial Invested Amount.
"Class D Securities" shall mean any one of the Securities
executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-3.
"Class D Securityholder" shall mean the Person in whose name a
Class D Security is registered in the Security Register.
"Class D Servicing Fee" shall have the meaning specified in
Section 3.1.
"Clearing System Certificate" shall mean a certificate in
substantially the form of Exhibit E hereto or such other form of
certificate as shall be satisfactory to the Trustee, Euroclear and Cedel.
"Closing Date" shall mean June 26, 1998.
"Collateral Additional Interest" shall have the meaning specified
in subsection 4.2(c).
"Collateral Available Funds" shall mean with respect to any
Monthly Period, the product of (i) the Collateral Floating Percentage and
(ii) an amount equal to the sum of the Redirected 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 (i) the Series Default Amount for the
related Monthly Period and (ii) the Collateral Floating Percentage.
"Collateral 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
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 $67,000,000.
"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 Redirected Principal
Collections allocated on all prior Distribution Dates pursuant to Section
4.8 allocable to the Collateral Invested Amount (excluding any Redirected
Principal Collections that have resulted in a reduction in the Class D
Invested Amount pursuant to Section 4.8), 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), plus
(f) the aggregate amount of Excess Spread and Excess Finance Charge
Collections 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, 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 Redirected Principal
Collections for which the Class D Invested Amount was not reduced on such
Distribution Date and after giving effect to any adjustments thereto for
the benefit of the holders of the Series 1998-3 Securities on such
Distribution Date) and the Class D Invested Amount (after giving effect to
all distributions and deposits to be made 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 Redirected Principal Collections on such
Distribution Date and after giving effect to any adjustments thereto for
the benefit of the holders of the Series 1998-3 Securities on such
Distribution Date) and the Class D Invested Amount (after giving effect to
all distributions and deposits to be made 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 Required Amount" shall have the meaning specified in
subsection 4.4(c).
"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, $53,416,667;
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 May 31, 2002 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 1998-3 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 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 1998-3) 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.
"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 and the Class B Invested
Amount are paid in full, an amount equal to the product of (i) a fraction,
the numerator of which is equal to the actual number of days in the related
Interest Period and the denominator of which is 360, and (ii) the sum of
(a) the product of (x) a fraction, the numerator of which is an amount
equal to the excess, if any, of the outstanding principal amount of the
Class A Securities over the Class A Adjusted Invested Amount, and the
denominator of which is an amount equal to the excess of the sum of the
outstanding principal amount of the Class A Securities and the outstanding
principal amount of the Class B Securities, over the sum of the Class A
Adjusted Invested Amount and the Class B Adjusted Invested Amount, in each
such case as of the preceding Distribution Date and (y) the Class A
Interest Rate in effect during such Interest Period and (b) the product of
(x) a fraction, the numerator of which is equal to the excess, if any, of
the outstanding principal amount of the Class B Securities over the Class B
Adjusted Invested Amount, and the denominator of which is an amount equal
to the excess of the sum of the outstanding principal amount of the Class A
Securities and the outstanding principal amount of the Class B Securities,
over the sum of the Class A Adjusted Invested Amount and the Class B
Adjusted Invested Amount, in each case as of the preceding Distribution
Date and (y) the Class B Interest Rate in effect during such Interest
Period, and (iii) the Principal Funding Account Balance (but not in excess
of the sum of the Class A Adjusted Invested Amount and the Class B Adjusted
Invested Amount), 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 August 17, 1998 and the 15th day
of each calendar month thereafter, or if such 15th 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 1998-3 is deemed to have
occurred, and ending on the first to occur of (i) the payment in full of
the Invested Amount and (ii) the Series 1998-3 Termination Date.
"Excess Finance Charge Collections" shall mean, with respect to
any Distribution Date, as the context requires, either (i) the amount set
forth in subsection 4.7(o) initially allocated to Series 1998-3 but which
is available to be allocated to other Excess Allocation Series and applied
in accordance with the terms of the related Supplement to cover amounts
payable with respect to such other Series from Collections of Finance
Charge Receivables or (ii) amounts allocated to other Excess Allocation
Series but which are available to cover Finance Charge Shortfalls with
respect to Series 1998-3 in accordance with subsection 4.9.
"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), 4.5(c)(ii) and 4.5(d)(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 1998-3 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 1998-3 and each other Series
specified in the related Supplement to be included in Group I.
"Group I Additional Amounts" shall mean, with respect to any
Distribution Date, the sum of (a) Series 1998-3 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 series 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 interest rates that
has accrued on the amounts described in the preceding clause (i) for such
Distribution Date.
"Group I 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 Monthly Fees" shall mean with respect to any
Distribution Date, the sum of (a) Series 1998-3 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 redirected investor finance charge
collections pursuant to the related Supplements, for all other Series
included in Group I for such Distribution Date.
"Group I Monthly Interest" shall mean, with respect to any
Distribution Date, the sum of (a) Series 1998-3 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 redirected investor finance
charge collections pursuant to the related Supplements, for all other
Series included in Group I for such Distribution Date.
"Group I Series Default Amount" shall mean, with respect to any
Distribution Date, the sum of (a) the Series Default Amount for such
Distribution Date and (b) the aggregate amount of the series default
amounts for all other Series included in Group I for such Distribution
Date.
"Harris" shall mean Harris Trust and Savings Bank, an Illinois
banking corporation.
"Initial Invested Amount" shall mean $750,000,000.
"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, (c) the Collateral
Invested Amount as of such date and (d) the Class D Invested Amount as of
such date.
"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 1998-3
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 (i) for the period from the
Closing Date through July 14, 1998, June 24, 1998, (ii) for the period from
July 15, 1998 through August 16, 1998, July 13, 1998, and (iii) for each
subsequent Interest Period, the second London Business Day prior to the
commencement of such Interest Period.
"Loan Agreement" shall mean the agreement among the Transferor,
the Trustee and the Collateral Interest Holder, dated June 26, 1998.
"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, Holdings or an Affiliate thereof is the
Servicer, 1.25% per annum and (b) if the Transferor, an Affiliate thereof,
Holdings or an Affiliate thereof is no longer the Servicer, 2% per annum.
"Pay Out Event" shall mean any Pay Out Event specified in Section
6.1.
"Percentage Allocation" shall have the meaning specified in
subsection 4.1(c)(ii)(y).
"Principal 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 (a) during the
Revolving Period, the Series Adjusted Invested Amount for Series 1998-3 as
of the last day of the immediately preceding Monthly Period (or, in the
case of the first Monthly Period, the Closing Date) and (b) during the
Controlled Accumulation Period or the Early Amortization Period, the Series
Adjusted Invested Amount for Series 1998-3 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 1998-3
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 1998-3, 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 1998-3.
"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.
"Rating Agency" shall mean, with respect to any date, each rating
agency which is then rating any of the Class A Securities, the Class B
Securities, the Collateral Interest or the Class D Securities at the
request of the Transferor.
"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 1998-3 Securityholders 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 1998-3 Securityholders on a prior Distribution
Date.
"Redirected Investor Finance Charge Collections" shall mean an
amount equal to that portion of Group I Finance Charge Collections
allocated to Series 1998-3 pursuant to Section 4.10.
"Redirected Principal Collections" shall mean, with respect to
any Monthly Period, the product of (a) the Series 1998-3 Allocable
Principal Collections deposited in the Collection Account for such Monthly
Period and (b) the sum of the Class B Principal Percentage, the Collateral
Principal Percentage and the Class D Principal Percentage.
"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 12
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, the Class B Required Amount and the
Collateral Required Amount.
"Required Enhancement Amount" shall mean (a) on the initial
Distribution Date, $109,000,000 and (b) on any Distribution Date
thereafter, an amount equal to the greater of (i) 14.5% of the sum of the
Class A Adjusted Invested Amount and the Class B Adjusted 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 and the Class
D Invested Amount on such Distribution Date after any adjustments made on
such Distribution Date and (ii) 5.0% of the Initial Invested Amount;
provided, however, (x) that 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
1998-3 Securities 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 Securities and (ii) the
Class B Securities, 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, minus all amounts on deposit
in the Principal Funding Account 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 sum of the Class A Invested Amount and the Class B
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 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 the Distribution Date
which occurs not later than the earliest of (a) the Distribution Date with
respect to the Monthly Period which commences 3 months prior to the
commencement of the Controlled Accumulation Period; (b) the first
Distribution Date for which the difference between (x) the Series Adjusted
Portfolio Yield and (y) the Base Rate is less than 2.00%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier
than the Distribution Date which commences 12 months prior to the
commencement of the Controlled Accumulation Period; (c) the first
Distribution Date for which the difference between (x) the Series Adjusted
Portfolio Yield and (y) the Base Rate is less than 3.00%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier
than the Distribution Date which commences 6 months prior to the
commencement of the Controlled Accumulation Period; or (d) the first
Distribution Date for which the difference between (x) the Series Adjusted
Portfolio Yield and (y) the Base Rate is less than 3.50%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier
than the Distribution Date which commences 4 months prior to the
commencement of the Controlled Accumulation Period.
"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 4.12(c).
"Revolving Period" shall mean the period from and including the
Closing Date to, but not including, the earlier of (a) the commencement of
the Controlled Accumulation Period and (b) the commencement of the Early
Amortization Period.
"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) Redirected 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 pursuant to clause (ii) of the definition
thereof that are allocated to Series 1998-3 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 or Class B Available Funds for the Distribution
Date with respect to such Monthly Period, plus (e) the Yield Supplement
Draw Amount for the Distribution Date with respect to such Monthly Period,
if any, and minus (f) the Series 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 Default Amount" shall mean, with respect to any Monthly
Period, an amount equal to the product of (a) the Series 1998-3 Allocable
Defaulted Amount for such Monthly Period and (b) the Floating Allocation
Percentage for such Monthly Period.
"Series Enhancement" with respect to Series 1998-3 shall mean (a)
with respect to the Class A Securities, the subordination of the Class B
Securities, the Collateral Interest and the Class D Securities, (b) with
respect to the Class B Securities, the subordination of the Collateral
Interest and the Class D Securities, and (c) with respect to the Collateral
Interest, the subordination of the Class D Securities.
"Series Invested Amount" shall mean the Initial Invested Amount.
"Series Required Transferor Amount" shall mean an amount equal to
7% of the Invested Amount.
"Series 1998-3" shall mean the Series of Securities the terms of
which are specified in this Supplement.
"Series 1998-3 Additional Amounts" shall mean, with respect to
any Distribution Date, the sum of the amounts determined pursuant to
subsections 4.7(b), (e), (i) and (o) for such Distribution Date.
"Series 1998-3 Allocable Defaulted Amount" shall mean the Series
Allocable Defaulted Amount with respect to Series 1998-3.
"Series 1998-3 Allocable Finance Charge Collections" shall mean
the Series Allocable Finance Charge Collections with respect to Series
1998-3.
"Series 1998-3 Allocable Principal Collections" shall mean the
Series Allocable Principal Collections with respect to Series 1998-3.
"Series 1998-3 Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series 1998-3.
"Series 1998-3 Security" shall mean a Class A Security, a Class B
Security, the Collateral Interest or a Class D Security.
"Series 1998-3 Securityholder" shall mean a Class A
Securityholder, a Class B Securityholder, the Collateral Interest Holder or
a Class D Securityholder.
"Series 1998-3 Securityholders' Interest" shall mean the
Securityholders' Interest for Series 1998-3, including the Collateral
Interest.
"Series 1998-3 Monthly Fees" shall mean, with respect to any
Distribution Date, the amount determined pursuant to subsection 4.5(a)(ii),
4.5(b)(ii), 4.5(c)(i) and 4.5(d)(i).
"Series 1998-3 Monthly Interest" shall mean the amounts
determined pursuant to subsections 4.2(a), (b), (c) and (d).
"Series 1998-3 Principal Shortfall" shall have the meaning
specified in Section 4.11.
"Series 1998-3 Termination Date" shall mean the November 2006
Distribution Date.
"Servicer Interchange" shall mean, for any Monthly Period, the
portion of Collections of Finance Charge Receivables allocated to the
Invested Amount with respect to such Monthly Period that is attributable to
Interchange; provided, however, that Servicer Interchange for a Monthly
Period shall not exceed one-twelfth of the product of (i) the Adjusted
Invested Amount as of the last day of such Monthly Period and (ii) 0.75%.
"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).
"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) (i) for the six Distribution Dates from and including the August
1998 Distribution Date through and including the January 1999 Distribution
Date, 1/9th of the Initial Yield Supplement Deposit, (ii) for the six
Distribution Dates from and including the February 1999 Distribution Date
through and including the July 1999 Distribution Date, 1/18th of the
Initial Yield Supplement Deposit and (iii) thereafter, zero and (b) with
respect to any such Distribution Date, the investment earnings on the
amounts on deposit in the Yield Supplement Account during the preceding
Interest Period.
(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 1998-3, 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 1998-3, "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 1998-3 Securities and no other Series of Securities 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."
Section 2.2. Form of Delivery of Series 1998-3 Securities;
Depositary. (a) The Class A Securities and the Class B Securities shall
be delivered as Book-Entry Securities as provided in subsections 6.1 and
6.10 of the Agreement. The Collateral Interest shall be delivered as
Registered Securities, in uncertificated form, as provided in subsection
6.1 of the Agreement. The Class D Securities shall be delivered as
Definitive Securities as provided in subsection 6.12 of the Agreement.
The Class A Securities and the Class B Securities shall be issuable and
transferable in the minimum denominations of $1,000 of original
certificate balance and integral multiples of $1,000 in excess thereof.
(b) The Depositary for Series 1998-3 shall be The Depository
Trust Company, and the Class A Securities and the Class B Securities shall
be initially registered in the name of Cede & Co., its nominee. The Class
A Securities and the Class B Securities will initially be held by the
Trustee as custodian for The Depository Trust Company.
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 1998-3 Securityholders 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 (A) 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 (B) the Series 1998-3 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 $1,458,333. On each Distribution Date
related to a Monthly Period for which Holdings or an Affiliate of Holdings
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 Securityholders 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 $641,667. The share of the Monthly Servicing Fee
allocable to the Class B Securityholders 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 $137,326. 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 $81,424.
The share of the Monthly Servicing Fee allocable to the Class D
Securityholders with respect to any Distribution Date (the "Class D
Servicing Fee") shall be equal to one-twelfth of the product of (a) the
Class D 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 D Servicing Fee shall be equal to $51,042.
The remainder of the Servicing Fee shall be paid by the Holder of the
Transferor Security or the investor securityholders of other Series (as
provided in the related Supplements) and in no event shall the Trust, the
Trustee or the Series 1998-3 Securityholders be liable for the share of the
Servicing Fee to be paid by the Holder of the Transferor Security or the
investor securityholders of any other Series.
(b) Interchange. On or before each Determination Date, the
Transferor shall notify the Servicer of the amount of Interchange to be
included as Series 1998-3 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 1998-3 Allocation
Percentage. On each Distribution 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 1998-3 Allocable Finance Charge Collections with respect to the
preceding Monthly Period and such Interchange shall be treated as a portion
of Series 1998-3 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 1998-3 Securityholders 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 1998-3
pursuant to Article IV of the Agreement (and, as described herein,
Collections of Finance Charge Receivables redirected from other Series in
Group I) shall be allocated and distributed or redirected as set forth in
this Article.
(b) Payments to the Transferor. The Servicer shall on Deposit
Dates pay to the Holder of the Transferor Security the following amounts:
(i) an amount equal to the Transferor Percentage for the related
Monthly Period of Series 1998-3 Allocable Finance Charge Collections;
and
(ii) an amount equal to the Transferor Percentage for the related
Monthly Period of Series 1998-3 Allocable Principal Collections, if
the Transferor Amount (determined after giving effect to any Principal
Receivables transferred to the Trust on such Deposit Date) exceeds the
Required Transferor Amount.
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 Securityholders' Interest pursuant to Section 2.6 or
10.1 of the Agreement, payment of the purchase price for the Series 1998-3
Securityholders' 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 1998-3 Securityholders. The
Servicer shall, prior to the close of business on any Deposit Date,
allocate to the Series 1998-3 Securityholders the following amounts as set
forth below:
(i) Allocations of Finance Charge Collections. The Servicer shall
allocate to the Series 1998-3 Securityholders 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 1998-3 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 1998-3 Securityholders 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, the Collateral Principal Percentage and the
Class D Principal Percentage and (II) the Principal Allocation
Percentage and (III) the Series 1998-3 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 1998-3 Securityholders 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 1998-3 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 1998-3 Securityholders and, to the
extent needed to make any distribution pursuant to subsection
4.5(e)(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
Holder of the Transferor Security; provided, however, that such amount
to be paid to the Holder of the Transferor Security 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, the
Collateral Principal Percentage and the Class D Principal Percentage
and (II) the Principal Allocation Percentage and (III) the Series
1998-3 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 1998-3
Securityholders 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 1998-3 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
1998-3 Securityholders 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 Holder of the
Transferor Security 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 1998-3 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 1998-3 Securityholders 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 1998-3 Securityholders,
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 Holder of the Transferor Security 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 Securities on any Distribution Date shall be an amount equal to the
product of (i) a fraction, the numerator of which is equal to the actual
number of days in the Interest Period preceding such Distribution Date and
the denominator of which is 360, (ii) the Class A Interest Rate and (iii)
the outstanding principal balance of the Class A Securities as of close of
business on the last day of the preceding Monthly Period (or with respect
to the initial Distribution Date, the Closing Date); provided, that in the
case of the first Distribution Date the Class A Monthly Interest shall be
an amount equal to $4,412,980.
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 the preceding
Distribution Date over (y) the aggregate amount of funds allocated and
available to pay such Class A Monthly Interest on such preceding
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
fraction, the numerator of which is the actual number of days in the
preceding Interest Period and the denominator of which is 360, (ii) the
Class A Interest Rate plus 2.0% per annum and (iii) such Class A Interest
Shortfall (or the portion thereof which has not been paid to the Class A
Securityholders) shall be payable as provided herein with respect to the
Class A Securities. Notwithstanding anything to the contrary herein, Class
A Additional Interest shall be payable or distributed to the Class A
Securityholders 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 Securities on any Distribution Date shall be an amount equal to the
product of (i) a fraction, the numerator of which is equal to the actual
number of days in the preceding Interest Period and the denominator of
which is 360, (ii) the Class B Interest Rate and (iii) the Class B Invested
Amount as of the close of business on the last day of the preceding Monthly
Period (or with respect to the initial Distribution Date, the Closing
Date); provided, that in the case of the first Distribution Date, Class B
Monthly Interest shall be an amount equal to $981,985.69.
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 the preceding
Distribution Date over (y) the aggregate amount of funds allocated and
available to pay such Class B Monthly Interest on such preceding
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
fraction, the numerator of which is the actual number of days in the
preceding Interest Period and the denominator of which is 360, (ii) the
Class B Interest Rate plus 2.0% per annum and (iii) such Class B Interest
Shortfall (or the portion thereof which has not been paid to the Class B
Securityholders) shall be payable as provided herein with respect to the
Class B Securities. Notwithstanding anything to the contrary herein, Class
B Additional Interest shall be payable or distributed to the Class B
Securityholders 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 fraction, the numerator of which is equal to
the actual number of days in the preceding Interest Period and the
denominator of which is 360, (ii) the Collateral Rate in effect with
respect to the applicable Interest Period, and (iii) 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 the excess, if any (the "Collateral Interest
Shortfall"), of (x) the aggregate Collateral Monthly Interest for the
preceding Distribution Date over (y) the aggregate amount of funds
allocated and available to pay such Collateral Monthly Interest on such
preceding 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 fraction, the numerator of which is the actual number of
days in the preceding Interest Period and the denominator of which is 360,
(ii) the Collateral Rate in effect with respect to the period from and
including the immediately preceding Distribution Date to but including such
Distribution Date, (iii) such Collateral Interest Shortfall (or the portion
thereof which has not been paid to the Collateral Interest Holder) and (iv)
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.
(d) The amount of monthly interest (the "Class D Monthly
Interest") distributable from the Collection Account with respect to the
Class D Securities on any Distribution Date shall be an amount equal to the
product of (i) a fraction, the numerator of which is the actual number of
days in the preceding Interest Period and the denominator of which is 360,
(ii) the Class D Interest Rate and (iii) the Class D 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 D Monthly
Interest shall be zero.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class D Interest
Shortfall"), of (x) the Class D Monthly Interest for the preceding
Distribution Date over (y) the aggregate amount of funds allocated and
available to pay such Class D Monthly Interest on such preceding
Distribution Date. If the Class D Interest Shortfall with respect to any
Distribution Date is greater than zero, on each subsequent Distribution
Date until such Class D Interest Shortfall is fully paid, an additional
amount ("Class D Additional Interest") equal to the product of (i) a
fraction, the numerator of which is the actual number of days in the
preceding Interest Period and the denominator of which is 360, (ii) the
Class D Interest Rate plus 2.0% per annum and (iii) such Class D Interest
Shortfall (or the portion thereof which has not been paid to the Class D
Securityholders) shall be payable as provided herein with respect to the
Class D Securities. Notwithstanding anything to the contrary herein, Class
D Additional Interest shall be payable or distributed to the Class D
Securityholders 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 1998-3
Securityholders, 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 1998-3 Securityholders. The Principal Funding Account shall
initially be established with Harris.
(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
1998-3 Securityholders; provided, that on each Distribution Date all
interest and other investment income (net of investment expenses and
losses earned on such income) ("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.
(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 1998-3 Securityholders. 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 1998-3
Securityholders.
(c) The Controlled Accumulation Period is scheduled to commence
at the close of business on May 31, 2002; 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. Beginning on the Determination
Date immediately preceding the February 2002 Distribution Date, and on each
Determination Date thereafter until 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 1998-3, the Controlled
Accumulation Period will commence on the earlier of (i) the date that such
Pay Out Event or Reinvestment Event shall have occurred with respect to
such Series and (ii) the date on which the Controlled Accumulation Period
is then scheduled to commence.
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 Securityholders on a prior
Distribution Date, (iii) any Class A Additional Interest for such
Distribution Date, (iv) any Class A Additional Interest previously due but
not paid to the Class A Securityholders on a prior Distribution Date, (v)
the Class A Servicing Fee for such Distribution Date, (vi) any Class A
Servicing Fee previously due but not paid to the Servicer, and (vii) the
Class A 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 Securityholders on a prior Distribution Date, (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
Securityholders on a prior Distribution Date, (v) the Class B Servicing Fee
for such Distribution Date and (vi) 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 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 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 on a prior Distribution Date, (iii) Collateral Additional
Interest, if any, for such Distribution Date, (iv) any Collateral
Additional Interest previously due but not paid to the Collateral Interest
Holder on a prior Distribution Date, and (v) the Collateral Default Amount
and (y) the amount, if any, by which (A) the Collateral Servicing Fee for
such Distribution Date and any Collateral Servicing Fee previously due but
not paid to the Servicer exceeds (B) the amount of Collateral Available
Funds. In the event that the difference between (x) the Collateral
Required Amount for such Distribution Date and (y) the amount of Excess
Spread and Excess Finance Charge Collections applied with respect thereto
pursuant to Section 4.7 on such Distribution Date is greater than zero, the
Servicer shall give written notice to the Trustee of such excess Collateral
Required Amount on the date of computation.
Section 4.5. Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds, Class D 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, Class D 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 Securityholders 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 Securityholders
on a prior Distribution Date, shall be distributed to the Paying Agent
for payment to Class A Securityholders;
(ii) 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 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 Securityholders 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 Securityholders
on a prior Distribution Date, shall be distributed to the Paying Agent
for payment to Class B Securityholders;
(ii) 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) 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, an amount equal to the Class D
Available Funds with respect to such Distribution Date will be distributed
or deposited in the following priority:
(i) an amount equal to the Class D Servicing Fee for such
Distribution Date, plus the amount of any Class D 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.
(e) 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.
(f) 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 before the Class B Invested
Amount is paid in full, if 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 to be
applied 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 to be applied in accordance with the
Loan Agreement;
(iv) for each Distribution Date beginning on the Distribution
Date on which the Collateral Invested Amount shall have been paid in
full, an amount up to the Class D Invested Amount shall be deposited
in the Principal Funding Account for distribution to the Class D
Securityholders; and
(v) for each Distribution Date, after giving effect to
paragraphs (i), (ii), (iii) and (iv) 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.
(g) 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 Securityholders;
(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 Securityholders;
(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;
(iv) for each Distribution Date beginning on the Distribution
Date on which the Collateral Invested Amount is paid in full, an
amount up to the Class D Invested Amount on such Distribution Date
shall be deposited in the Principal Funding Account for distribution
to the Class D Securityholders; and
(v) for each Distribution Date, after giving effect to
paragraphs (i), (ii), (iii) and (iv) 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; Charge-Offs.
(a) On each Determination Date, the Servicer shall calculate the
Class A 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 Redirected Principal
Collections allocated to Series 1998-3 with respect to such Monthly Period
and (y) the amount of Excess Spread and the Excess Finance Charge
Collections allocable to Series 1998-3 with respect to such Monthly Period,
then the Class D Invested Amount (after giving effect to any reductions for
any Redirected Principal Collections pursuant to Section 4.8 on such
Distribution Date) shall be reduced by the amount of such excess, but not
by more than the Class A Default Amount for such Distribution Date. In the
event that such reduction would cause the Class D Invested Amount to be a
negative number, the Class D Invested Amount will be reduced to zero and
the Collateral Invested Amount (after giving effect to reductions for any
Redirected Principal Collections pursuant to Section 4.8 for which the
Class D Invested Amount was not reduced on such Distribution Date) shall be
reduced by the amount by which the Class D Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Default Amount for such Distribution Date over the amount of the reduction,
if any, of the Class D Invested Amount in respect of the Class A Default
Amount on 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 Redirected 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 Default
Amount for such Distribution Date over the amount of the reductions, if
any, of the Collateral Invested Amount and the Class D Invested Amount in
respect of the Class A Default Amount on 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 would have been reduced below zero, but not by more
than the excess, if any, of the Class A Default Amount for such
Distribution Date over the aggregate amount of the reductions, if any, of
the Class D Invested Amount, the Collateral Invested Amount and the Class B
Invested Amount in respect of the Class A Default Amount for such
Distribution Date (a "Class A Charge-Off"). Class A 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 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 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 1998-3 with respect to the related
Monthly Period which are allocated and available to pay such amount
pursuant to subsection 4.7(c) and (y) the Redirected Principal Collections
not allocated to pay the Class A Required Amount pursuant to subsection
4.8(a) with respect to such Distribution Date, then the Class D Invested
Amount (after giving effect to any reductions for Redirected 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 Class D
Invested Amount (after giving effect to any reductions for Redirected
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 Class D Invested Amount shall be reduced to zero, and the Collateral
Invested Amount (after giving effect to any reductions for Redirected
Collateral Principal Collections pursuant to Section 4.8 for which the
Class D 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 Class D Invested Amount would have been reduced below
zero, but not by more than the excess, if any, of the Class B Default
Amount for such Distribution Date over the amount of the reductions, if
any, of the Class D Invested Amount in respect of the Class A Default
Amount and the Class B Default Amount on such Distribution Date. In the
event that such reduction would cause the Collateral Invested Amount (after
giving effect to any reductions for Redirected 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 any Redirected
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 Default
Amount for such Distribution Date over the amount of such reduction, if
any, of the Collateral Invested Amount and the Class D Invested Amount in
respect of the Class B Default Amount on such Distribution Date (a "Class B
Charge-Off"). Class B 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 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 any, for the related Distribution Date. If,
on any Distribution Date, the Collateral Default Amount for such
Distribution Date exceeds the sum of (x) the amount of Excess Spread and
Excess Finance Charge Collections allocated to Series 1998-3 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 Redirected Principal
Collections not allocated to pay the Class A Required Amount pursuant to
subsection 4.8(a) or the Class B Required Amount pursuant to subsection
4.8(b) with respect to such Distribution Date, then the Class D Invested
Amount (after giving effect to any reductions for Redirected Principal
Collections pursuant to Section 4.8 and any reductions pursuant to
subsections 4.6(a) and 4.6(b) on such Distribution Date) shall be reduced
by the amount of such excess. In the event that such reduction would cause
the Class D Invested Amount to be a negative number, the Class D Invested
Amount will be reduced to zero and the Collateral Invested Amount (after
giving effect to reductions for any Redirected Collateral Principal
Collections pursuant to Section 4.8 for which the Class D Invested Amount
was not reduced on such Distribution Date and for any reductions pursuant
to subsections 4.6(a) and 4.6(b)) shall be reduced by the amount by which
the Class D Invested Amount would have been reduced below zero, but not by
more than the excess, if any, of the Collateral Default Amount for such
Distribution Date over the amount of the reduction, if any, of the Class D
Invested Amount in respect of the Collateral Default Amount on such
Distribution Date (a "Collateral Charge-Off"). Collateral Charge-Offs
shall thereafter be reimbursed and the Collateral Invested Amount increased
(but not by an amount in excess of the aggregate unreimbursed Collateral
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(i).
(d) On each Determination Date, the Servicer shall calculate the
Class D Default Amount. If, on any Distribution Date the Class D Default
Amount for the previous Monthly Period exceeds the amount of Excess Spread
and Excess Finance Charge Collections allocated to Series 1998-3 with
respect to the related Monthly Period which are allocated and available to
pay such amount pursuant to subsection 4.7(l), the Class D Invested Amount
(after giving effect to any reductions for Redirected Principal Collections
pursuant to Section 4.8 on such Distribution Date and any reductions
pursuant to subsections 4.6(a), 4.6(b) and 4.6(c)) will be reduced by the
amount of such excess, but not by more than the lesser of the Class D
Default Amount and the Class D Invested Amount for such Distribution Date
(a "Class D Charge-Off"). The Class D 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(m).
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 1998-3 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 Monthly Period shall be distributed by the Trustee to fund
any deficiencies in 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 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 shall be (I) used to fund any
deficiencies in the Class B Required Amount in accordance with, and in the
priority set forth in, subsections 4.5(b)(i) and (ii) and then (II)
treated, up to the Class B Default Amount, as a portion of Available
Principal Collections for such Distribution Date;
(d) an amount equal to the difference, if any, between (x) the
sum of (A) the product of (i) a fraction, the numerator of which is equal
to the actual number of days in the Interest Period preceding such
Distribution Date (or in the case of the first Distribution Date, the
Closing Date) and the denominator of which is 360, (ii) the Class B
Interest Rate and (iii) the outstanding principal balance of the Class B
Securities as of the close of business on the last day of the preceding
Monthly Period, and (B) any amount in respect of the foregoing clause (A)
previously due but not distributed to the Class B Securityholders on a
prior Distribution Date, and (y) the amount distributed to the Paying Agent
for payment to the Class B Securityholders 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 the excess, if any, of the sum of the
Monthly Servicing Fee for such Distribution Date and the amount of any
Monthly Servicing Fee previously due but not distributed to the Servicer on
a prior Distribution Date, over the sum of the amounts distributed to the
Servicer on such Distribution Date pursuant to subsections 4.5(a)(ii),
(b)(ii), (c)(i) and (d)(i) shall be distributed to the Servicer;
(g) 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;
(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) on each Distribution Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account terminates
pursuant to subsection 4.12(f), an amount up to the excess, if any, of the
Required Reserve Account Amount over the Available Reserve Account Amount
shall be deposited into the Reserve Account;
(k) an amount equal to Class D Monthly Interest for such
Distribution Date, plus the amount of any Class D Monthly Interest
previously due but not distributed to the Class D Securityholders on a
prior Distribution Date, plus the amount of any Class D Additional Interest
for such Distribution Date and any Class D Additional Interest previously
due but not distributed to the Class D Securityholders on a prior
Distribution Date, shall be distributed to the Paying Agent for
distribution to the Class D Securityholders;
(l) an amount equal to the Class D Default Amount, if any, for
such Distribution Date shall be treated as a portion of Available Principal
Collections for such Distribution Date;
(m) an amount equal to the aggregate amount by which the Class D
Invested Amount has been reduced pursuant to clauses (c), (d) and (e) of
the definition of "Class D 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;
(n) 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
(o) the balance, if any, will be applied first to any other
amounts that the Trust may be liable for from time to time and not
otherwise provided for above and then will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and will be available
for allocation to other Excess Allocation Series or to the Holder of the
Transferor Security as described in Section 4.5 of the Agreement.
Section 4.8. Redirected Principal Collections. On each
Distribution Date, the Servicer shall apply, or shall cause the Trustee to
apply, Redirected 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 1998-3 with respect to the related Monthly Period
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);
(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
allocated and available to the Class B Securities pursuant to
subsection 4.7(c) 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); and
(c) an amount equal to the excess, if any, of (i) the Collateral
Required Amount, if any, with respect to such Distribution Date over
(ii) the amount of Excess Spread and Excess Finance Charge Collections
allocated and available to the Collateral Interest pursuant to
subsections 4.7(g), 4.7(h) and 4.7(i) on such Distribution Date shall
be applied to fund such deficiency pursuant to and in the priority set
forth in Section 4.7.
On each Distribution Date, the Class D Invested Amount shall be
reduced by the amount of Redirected Principal Collections for such
Distribution Date. In the event that such reduction would cause the Class
D Invested Amount to be a negative number, the Class D Invested Amount
(after giving effect to any Class D Charge-Offs for such Distribution Date)
shall be reduced to zero and the Collateral Invested Amount (after giving
effect to any Collateral Charge-Offs for such Distribution Date) shall be
reduced by the amount by which the Class D Invested Amount would have been
reduced below zero. In the event that such reduction would cause the
Collateral Invested Amount (after giving effect to any Collateral Charge-
Offs for such Distribution Date) to be a negative number, the Collateral
Invested Amount shall be reduced to zero and the Class B Invested Amount
shall be reduced by the amount by which the Collateral Invested Amount
would have been reduced below zero. In the event that the reallocation of
Redirected Principal Collections would cause the Class B Invested Amount
(after giving effect to any Class B Charge-Offs for such Distribution Date)
to be a negative number on any Distribution Date, Redirected Principal
Collections shall be redirected on such Distribution Date in an aggregate
amount not to exceed the amount which would cause the Class B Invested
Amount (after giving effect to any Class B 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 1998-3
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
1998-3 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 equal to the Finance Charge Shortfall for Series 1998-3 for such
Distribution Date and the denominator of which is equal to the aggregate
amount of Finance Charge Shortfalls for all the Excess Allocation Series
for such Distribution Date. The "Finance Charge Shortfall" for Series
1998-3 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), 4.5(c) and 4.5(d), subsections 4.7(a) through
(o) on such Distribution Date over (b) the sum of (i) the Redirected
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 and the Class B Available Funds with respect to such
Distribution Date.
Section 4.10. Redirected Investor Finance Charge Collections.
(a) That portion of Group I Finance Charge Collections for any
Distribution Date equal to the amount of Redirected Investor Finance Charge
Collections for such Distribution Date will be allocated to Series 1998-3
and will be distributed as set forth in this Supplement.
(b) Redirected Investor Finance Charge Collections with respect
to any Distribution Date shall equal the sum of (i) the aggregate amount of
Series 1998-3 Monthly Interest, Series Default Amount, Series 1998-3
Monthly Fees and Series 1998-3 Additional Amounts for such Distribution
Date and (ii) that portion of excess Group I Finance Charge Collections to
be included in Redirected Investor Finance Charge Collections pursuant to
subsection (c) hereof; provided, however, that if the amount of Group I
Finance Charge Collections for such Distribution Date is less than the sum
of (w) Group I Monthly Interest, (x) Group I Series Default Amount, (y)
Group I Monthly Fees and (z) Group I Additional Amounts, then Redirected
Investor Finance Charge Collections shall equal the sum of the following
amounts for such Distribution Date:
(A) The product of (I) Group I Finance Charge Collections (up to
the amount of Group I Monthly Interest) and (II) a fraction, the
numerator of which is Series 1998-3 Monthly Interest and the
denominator of which is Group I Monthly Interest;
(B) the product of (I) Group I Finance Charge Collections less
the amount of Group I Monthly Interest (up to the Group I Series
Default Amount) and (II) a fraction, the numerator of which is the
Series Default Amount and the denominator of which is the Group I
Series Default Amount;
(C) the product of (I) Group I Finance Charge Collections less
the amount of Group I Monthly Interest and the Group I Series Default
Amount (up to Group I Monthly Fees) and (II) a fraction, the numerator
of which is Series 1998-3 Monthly Fees and the denominator of which is
Group I Monthly Fees; and
(D) the product of (I) Group I Finance Charge Collections less
the sum of (i) Group I Monthly Interest, (ii) the Group I Series
Default Amount and (iii) Group I Monthly Fees and (II) a fraction, the
numerator of which is Series 1998-3 Additional Amounts and the
denominator of which is Group I Additional Amounts.
(c) If the amount of Group I Finance Charge Collections for such
Distribution Date exceeds the sum of (i) Group I Monthly Interest, (ii)
Group I Series Default Amount, (iii) Group I Monthly Fees and (iv) Group I
Additional Amounts, then Redirected 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
equal to the Invested Amount as of the last day of the second preceding
Monthly Period and the denominator of which is equal to 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 1998-3 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 1998-3 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 1998-3 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 Securityholders
an Eligible Deposit Account (the "Reserve Account") bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Series 1998-3 Securityholders. The Reserve Account shall
initially be established with Harris. 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 Series
1998-3 Securityholders. 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
Series 1998-3 Securityholders 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. 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 1998-3. 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,
prior to payment in full of the Class A Invested Amount, included in Class
A Available Funds for such Distribution Date, and thereafter included in
Class B 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 apply an
amount equal to such Reserve Account Surplus in accordance with the
priorities set forth in subsections 4.7(k) through (o).
(f) Upon the earliest to occur of (i) the day on which the
Invested Amount is paid in full to the Series 1998-3 Securityholders, (ii)
if the Controlled Accumulation Period has not commenced, the occurrence of
a Pay Out Event with respect to Series 1998-3, (iii) if the Controlled
Accumulation Period has commenced, the earlier of the first Distribution
Date with respect to the Early Amortization Period and the Class A
Scheduled Payment Date 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
Securityholders and the Class B Securityholders which are payable from the
Reserve Account as provided herein, shall withdraw from the Reserve Account
and apply all amounts, if any, on deposit in the Reserve Account in
accordance with the priorities set forth in subsections 4.7(k) through (o),
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 (commencing on
the first day of such Interest Period) which appears on Telerate Page 3750
as of 11:00 a.m., London time, on such date. 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 (commencing on the first day
of such 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 (commencing on the first day of such 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 Interest Rate and the Class B Interest Rate for the
applicable Interest Period. The Class A Interest Rate and Class B Interest
Rate applicable to the then current and the immediately preceding Interest
Periods may be obtained by any Investor Securityholder by telephoning the
Trustee at its Corporate Trust Office at (212) 815-8195.
(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 1998-3
Securityholders, 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 1998-3
Securityholders. The Yield Supplement Account shall initially be
established with Harris. 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 1998-3 Securityholders. 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, $11,250,000, in immediately available
funds, from the proceeds of the issuance and sale of the Series 1998-3
Securities shall be deposited into the Yield Supplement Account (the
"Initial Yield Supplement Deposit"). On each 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 1998-3 Securities and not deemed to be a part of Group I
Finance Charge Collections.
(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.
ARTICLE V
Distributions and Reports to
Series 1998-3 Securityholders
Section 5.1. Distributions.
(a) On each Distribution Date, the Paying Agent shall distribute
to each Class A Securityholder of record on the related Record Date (other
than as provided in Section 12.2 of the Agreement) such Class A
Securityholder'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, or if a Pay Out
Event has occurred, on each Distribution Date commencing with the
Distribution Date in the Monthly Period following the Monthly Period in
which such Pay Out Event occurs, the Paying Agent shall distribute to each
Class A Securityholder of record on the related Record Date (other than as
provided in Section 12.2 of the Agreement) such Class A Securityholder'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 Securities pursuant to
subsections 4.5(f)(i) or 4.5(g)(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 1998-3 Securityholders' 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 Securityholder of record on the related Record Date (other
than as provided in Section 12.2 of the Agreement) such Class B
Securityholder'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
Securities pursuant to subsections 4.5(b)(i) and 4.7(d).
(d) On the Class B Scheduled Final Payment Date, or if a Pay Out
Event has occurred, on each Distribution Date commencing with the
Distribution Date in the Monthly Period following the Monthly Period in
which such Pay Out Event occurs, the Paying Agent shall distribute to each
Class B Securityholder of record on the related Record Date (other than as
provided in Section 12.2 of the Agreement) such Class B Securityholder'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 Securities pursuant to
subsections 4.5(f)(i) or 4.5(g)(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 1998-3 Securityholders' Interest pursuant
to Section 10.1 of the Agreement, in which event the foregoing limitation
will not apply).
(e) On each Distribution Date on and after the Distribution Date
on which the Collateral Invested Amount is paid in full, the Paying Agent
shall distribute to each Class D Securityholder of record on the related
Record Date (other than as provided in Section 12.2 of the Agreement) such
Class D Securityholder'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 principal on the Class D
Securities pursuant to subsection 4.5(f)(iv) or 4.5(g)(iv).
(f) 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.
(g) Except as provided in Section 12.2 of the Agreement with
respect to a final distribution, distributions to Series 1998-3
Securityholders hereunder shall be made by check mailed to each Series
1998-3 Securityholder at such Series 1998-3 Securityholder's address
appearing in the Security Register without presentation or surrender of any
Series 1998-3 Security or the making of any notation thereon; provided,
however, that with respect to Series 1998-3 Securities registered in the
name of a Clearing Agency, such distributions shall be made to such
Clearing Agency in immediately available funds.
(h) The Transferor has appointed, and the Trustee has consented
to the appointment of Harris Trust and Savings Bank, an Illinois state
banking association, as Paying Agent, Registrar and Transfer Agent of the
Series 1998-3 Securities; the Collection Account shall also be maintained
at Harris Trust and Savings Bank.
Section 5.2. Reports and Statements to Series 1998-3
Securityholders.
(a) On each Distribution Date, the Paying Agent, on behalf of
the Trustee, shall forward to each Series 1998-3 Securityholder 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 1998-3 Securityholder or
any Security Owner thereof by a request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning
with calendar year 1999, 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 1998-3 Securityholder, a statement
prepared by the Servicer containing the information which is required to be
contained in the statement to Series 1998-3 Securityholders, as set forth
in paragraph (a) above aggregated for such calendar year or the applicable
portion thereof during which such Person was a Series 1998-3
Securityholder, 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 1998-3 Securities:
(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 Holdings or PFR from this subsection 6.1(a), the
occurrence of an Insolvency Event relating to Holdings or PFR;
(b) the Trust becomes an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(c) a failure on the part of the Transferor (i) to make any
payment or deposit required 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 1998-3 Securityholders 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 (with a copy to the Rating
Agency), or to the Transferor and the Trustee (which shall deliver a copy
of such notice to the Rating Agency) by any Holder of the Series 1998-3
Securities;
(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 1998-3
Securities and as a result of which the interests of the Series 1998-3
Securityholders 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
repurchased 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 of the Series Adjusted Portfolio Yields for any
three consecutive Monthly Periods is reduced to a rate which is less than
the average of the Base Rates for such three consecutive Monthly Periods;
(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 1998-3 Securities evidencing
more than 50% of the aggregate unpaid principal amount of Series 1998-3
Securities by notice then given in writing to the Transferor and the
Servicer (and to the Trustee if given by the Series 1998-3 Securityholders)
may declare that a Pay Out Event has occurred with respect to Series 1998-3
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 1998-3 without any notice or other action on the part of
the Trustee or the Series 1998-3 Securityholders immediately upon the
occurrence of such event. The Transferor shall deliver to the Rating
Agency a copy of any notice given or received by it pursuant to this
subsection 6.1(h).
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 1998-3
Securityholders' 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. If, on the date on which the
Transferor exercise such option, the long-term unsecured debt obligations
of Holdings and PFR are not rated at least in the third highest rating
category by the Rating Agency, the Transferor shall deliver to the Trustee,
with a copy to the Rating Agency, an Officer's Certificate which shall have
attached to it the relevant fraudulent conveyance statute, if any, and set
forth the factual basis for a conclusion that the exercise of such optional
repurchase would not constitute a fraudulent conveyance of the Transferor.
(b) The Transferor shall give the Servicer and the Trustee at
least 30 days prior written notice (with a copy to the Rating Agency) 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 1998-3 shall be reduced to zero and the Series
1998-3 Securityholders 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 September 2006 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 1998-3 Termination Date (after giving effect to all
distributions required to be made on the Series 1998-3 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 1998-3
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 1998-3 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 1998-3 Securityholders 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 September 2006
Distribution Date to the Series 1998-3 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.
Section 7.3. [Reserved]
Section 7.4. Constituent Class D Securities. (a) Subject to
the satisfaction of the conditions set forth in subsection 7.4(c), the
Class D Securityholders may at any time and from time to time (i) subdivide
the Class D Securities into two or more subsidiary securities, or (ii)
reallocate all or any portion of the amounts distributable to the Class D
Securityholders pursuant to Article IV and Section 5.1 to any other
Securityholder. In connection with such subdivision, the Transferor may
assign an interest rate to Class D Securities or a portion thereof. Upon
presentation to the Trustee and the Paying Agent of documentation
satisfactory to the Trustee, the Trustee shall pay amounts due hereunder to
the Class D Securityholders to the holders of such constituent securities
or such other Securityholder, as the case may be, pursuant to the terms of
such documentation.
(b) The documentation referred to in subsection 7.4(a) shall set
forth the rights of the holders of the securities or other interests issued
thereby with respect to the approval of amendments and waivers pursuant to
Section 13.1 of the Agreement.
(c) As a condition precedent to the subdivision of any Class D
Securities pursuant to this Section 7.4 or any transfer of the Class D
Securities, (i) the Trustee and the Transferor shall have received a Tax
Opinion (which shall not be required to include the opinion described in
clause (d) of the definition of "Tax Opinion" with respect to the
constituent securities, any outstanding Class A Securities, Class B
Securities, the Collateral Interest and any outstanding Class D
Securities), (ii) the Transferor shall deliver to the Trustee an Officers'
Certificate stating that in the reasonable belief of the Transferor such
subdivision would not cause a Pay Out Event with respect to Series 1998-3
to occur, or an event which, with notice or lapse of time or both, would
constitute a Pay Out Event with respect to Series 1998-3, and (iii) the
Rating Agency Condition shall have been satisfied.
Section 7.5 Legends; Transfer and Exchange; Restrictions on
Transfer of Series 1998-3 Securities; Tax Treatment. (a) The Class A
Securities and the Class B Securities will be registered under the
Securities Act.
(b) Each Class A Security will bear legends substantially in the
form set forth at Exhibit A-1.
(c) Each Class B Security will bear legends substantially in the
form set forth at Exhibit A-2.
(d) Each Class D Security will bear legends substantially in the
form set forth at Exhibit A-3.
(e) The Collateral Interest shall be subject to the restrictions
on transfer set forth in the Loan Agreement, including Section 8.09
thereof.
(f) It is the intention of the parties hereto that the
Collateral Interest be treated under applicable tax law as indebtedness.
In the event that the Collateral Interest is not so treated, it is the
intention of the parties that the Collateral Interest be treated under
applicable tax law as an interest in a partnership that owns the
Receivables. In the event that the Collateral Interest is treated under
applicable tax law as an interest in a partnership, it is the intention of
the parties that the Collateral Interest be treated as guaranteed payments
and, if for any reason it is not so treated, that the holder of the
Collateral Interest be specially allocated gross interest income equal to
the interest accrued during each Interest Period on the Collateral
Interest.
(g) It is the intention of the parties hereto that, until such
time as the Class D Securities are transferred or subdivided in accordance
with Section 7.4, the Class D Securities be treated under applicable tax
law as interests in a partnership that owns the Receivables.
Section 7.6 Defeasance. The Securities may be defeased in whole
or in part on the date that the following conditions shall have been
satisfied: (i) there shall have been deposited (x) in the Principal
Funding Account, an amount such that the amount on deposit in the Principal
Funding Account following such deposit is equal to the sum of the
outstanding principal amount of the Class A Securities, the outstanding
principal amount of the Class B Securities and the outstanding principal
amount of the Collateral Interest so defeased, and (y) in the Reserve
Account, an amount equal to or greater than the anticipated excess of the
Base Rate over the investment earnings on the amount deposited in the
Principal Funding Account pursuant to clause (x) of this Section 7.6, as
estimated by the Transferor, for the period from the date of such deposit
to the Principal Funding Account through the June 2003 Distribution Date;
(ii) the Transferor shall have delivered to the Trustee (a) an opinion of
counsel to the effect that such deposit will not result in the Trust being
required to register as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, (b) an opinion of counsel to
the effect that following such deposit none of the Trust, the Reserve
Account or the Principal Funding Account will be deemed to be an
association (or publicly traded partnership) taxable as a corporation, (c)
a certificate of an officer of the Transferor stating that the Transferor
reasonably believes that such deposits will not cause a Pay Out Event or
any event that, with the giving of notice or the lapse of time, would
constitute a Pay Out Event, to occur; (iii) the Rating Agency Condition
shall have been satisfied in connection with such events; and (iv) the
amounts deposited into the Principal Funding Account and the Reserve
Account pursuant to clauses (x) and (y) of this Section 7.6 are proceeds
from the issuance of a Series of Investor Securities. If the Securities
have been defeased in whole, the Series 1998-3 Securities will no longer be
entitled to the security interest of the Trust in the Receivables and,
except those set forth in clause (i) above, other Trust assets and the
percentages applicable to the allocation to the Series 1998-3
Securityholders of Collections of Principal Receivables, Collections of
Finance Charge Receivables and Collections of Defaulted Receivables will be
reduced to zero. Upon the satisfaction of the foregoing conditions, the
Class D Invested Amount will be reduced to zero.
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or Securityholders' Interest
pursuant to Section 2.6 or 10.1 of the Agreement and Section 7.1 or 7.2 of
this Supplement.
(1)(i) The amount to be paid by the Transferor with respect to
Series 1998-3 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 1998-3 in connection with a repurchase of the Securityholders'
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 Securities with a remaining maturity
approximately equal to the remaining maturity of the Class A
Securities and rated by each Rating Agency in the rating category
originally assigned to the Class A Securities over (II) the portion of
the Reassignment Amount attributable to the Class A Securities 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 Securities with a remaining maturity
approximately equal to the remaining maturity of the Class B
Securities and rated by each Rating Agency in the rating category
originally assigned to the Class B Securities over (II) the portion of
the Reassignment Amount attributable to the Class B Securities.
(2) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 7.1 or any amounts allocable to the
Series 1998-3 Securityholders' 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 Securityholders 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
Securityholders 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
Securityholders on any prior Distribution Date, will be distributed to the
Paying Agent for payment to the Class A Securityholders, (ii) (x) the Class
B Invested Amount on such Distribution Date will be distributed to the
Paying Agent for payment to the Class B Securityholders 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 Securityholders 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 Securityholders on any prior Distribution Date, will be
distributed to the Paying Agent for payment to the Class B Securityholders
and (iii) the balance, if any, will be distributed to the Collateral
Interest Holder for application in accordance with the Loan Agreement.
(3) 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 1998-3 Securityholders shall be
deemed distributed in full to the Series 1998-3 Securityholders 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.
(1) 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 1998-3 Allocable Principal Collections and
distribute such amount to the Paying Agent for payment to the Class A
Securityholders, provided that the amount of such distribution shall not
exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Series 1998-3 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 1998-3
Allocable Principal Collections and distribute such amount to the Paying
Agent for payment to the Class B Securityholders, provided that the amount
of such distribution shall not exceed (x) the product of (A) the portion of
such Insolvency Proceeds allocated to Series 1998-3 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 1998-3 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 1998-3 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 1998-3 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 Holder of the Transferor Security on
such Distribution Date.
(2) 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
Securityholders 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
Securityholders 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
Securityholders, provided that the amount of such distribution shall not
exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Series 1998-3 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; (ii)
deduct an amount equal to the sum of (w) Class B Monthly Interest for such
Distribution Date, (x) any Class B Monthly Interest previously due but not
distributed to the Class B Securityholders 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 Securityholders on a prior Distribution Date
from the portion of the Insolvency Proceeds allocated to Series 1998-3
Allocable Finance Charge Collections and distribute such amount to the
Paying Agent for payment to the Class B Securityholders, provided that the
amount of such distribution shall not exceed the product of (x) the portion
of the Insolvency Proceeds allocated to Series 1998-3 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; (iii) deduct an amount equal to the sum of
(w) Collateral Monthly Interest for such Distribution Date, (x) any
Collateral Monthly Interest previously due but not distributed to the
Collateral Interest Holder on a prior Distribution Date and (y) the amount
of Collateral Additional Interest, if any, for such Distribution Date and
any Collateral Additional Interest previously due but not distributed to
the Collateral Interest Holder on a prior Distribution Date from the
portion of the Insolvency Proceeds allocated to Series 1998-3 Allocable
Finance Charge Collections and distribute such amount to the Collateral
Interest Holder in accordance with the Loan Agreement, provided that the
amount of such distribution shall not exceed the product of (x) the portion
of the Insolvency Proceeds allocated to Series 1998-3 Allocable Finance
Charge Collections, (y) the Floating Allocation Percentage with respect to
the related Monthly Period and (z) the Collateral Floating Percentage with
respect to such Monthly Period; (iv) deduct an amount equal to the sum of
(w) Class D Monthly Interest for such Distribution Date, (x) Class D
Monthly Interest previously due but not distributed to the Class D
Securityholders on a prior Distribution Date and (y) the amount of Class D
Additional Interest, if any, for such Distribution Date and any Class D
Additional Interest previously due but not distributed to the Class D
Securityholders on a prior Distribution Date from the portion of the
Insolvency Proceeds allocated to Series 1998-3 Allocable Finance Charge
Collections and distribute such amount to the Paying Agent for payment to
the Class D Securityholders, provided that the amount of such distribution
shall not exceed the product of (x) the portion of the Insolvency Proceeds
allocated to Series 1998-3 Allocable Finance Charge Collections, (y) the
Floating Allocation Percentage with respect to the related Monthly Period
and (z) the Class D Floating Percentage with respect to such Monthly
Period; and (v) distribute any remaining insolvency proceeds to the
Transferor.
(3) 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 1998-3 Securityholders shall be
distributed in full to the Series 1998-3 Securityholders 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, LLC,
Transferor
By: /s/ Mark J. Norwicz
---------------------------------
Name: Mark J. Norwicz
Title: Treasurer
PARTNERS FIRST HOLDINGS, LLC,
Servicer
By: /s/ Terence F. Browne
---------------------------------
Name: Terence F. Browne
Title: Secretary
THE BANK OF NEW YORK,
not in its individual capacity, but
solely as Trustee,
By: /s/ Wuhan Dansby
---------------------------------
Name: Wuhan Dansby
Title: Assistant Vice President
EXHIBIT A-1
FORM OF CLASS A SECURITY
REGISTERED $__________1/
No. R-_______ CUSIP No. _________
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY 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 1998-3
CLASS A FLOATING RATE ASSET BACKED SECURITY
Class A Scheduled Payment Date:
The June 2003 Distribution Date
Each $1,000 minimum denomination represents a
1/______ undivided interest
in Class A of the
PARTNERS FIRST CREDIT CARD MASTER TRUST, SERIES 1998-3
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 Holdings, LLC,
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, LLC or any of their respective affiliates)
- ---------------
1/ Denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
This certifies that ______________ (the "Class A Securityholder") is the
registered owner of a fractional undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of June 26, 1998 (as amended and
supplemented, the "Agreement"), as supplemented by the Series 1998-3
Supplement dated as of June 26, 1998 (as amended and supplemented, the
"Supplement"), among Partners First Receivables Funding, LLC, as
Transferor, Partners First Holdings, LLC, as Servicer, and The Bank of New
York, a New York banking corporation, as trustee (the "Trustee"). The
corpus of the Trust consists of (i) the Transferor's ownership interest in
a portfolio of receivables (the "Receivables") existing in the consumer
revolving credit card accounts identified under the Agreement from time to
time (the "Accounts"), (ii) all Receivables generated under the Accounts
from time to time thereafter, (iii) funds collected or to be collected from
cardmembers in respect of the Receivables, (iv) all funds which are from
time to time on deposit in the Collection Account, the Special Funding
Account, the Yield Supplement Account and any other Series Accounts and (v)
all other assets and interests constituting the Trust. The Holder of this
Security is entitled to the benefits of the subordination of the Class B
Securities, the Collateral Interest and the Class D Securities 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 Security 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 Security 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 Securityholder by virtue of the acceptance hereof
assents and is bound.
It is the intent of the Transferor and the Class A
Securityholders that, for federal, state and local income and franchise tax
purposes only, the Class A Securities will qualify as indebtedness of the
Transferor secured by the Receivables. The Class A Securityholder, by the
acceptance of this Class A Security, agrees to treat this Class A Security
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
Securities are limited to the Class A Invested Amount, which may be less
than the unpaid principal balance of the Class A Securities. The Class A
Scheduled Payment Distribution Date is the June 2003 Distribution Date, but
principal with respect to the Class A Securities 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
Securities 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 Security
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
Security to be duly executed.
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By:_____________________________________
Name:
Title:
Dated: ______, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Securities described in the within-mentioned
Agreement and Supplement.
THE BANK OF NEW YORK,
as Trustee,
By:_____________________________________
Authorized Officer
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-3
CLASS A FLOATING RATE ASSET BACKED SECURITY
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
Security is one of a Series of Securities entitled Partners First Credit
Card Master Trust, Series 1998-3 (the "Series 1998-3 Securities"), and one
of a class thereof entitled Class A Series 1998-3 Floating Rate Asset
Backed Securities, (the "Class A Securities"), 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 securityholders of all
outstanding Series (the "Securityholders' Interest") with the remainder
allocated to the Holder of the Transferor Security. The aggregate interest
represented by the Class A Securities 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
$528,000,000. 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 Securityholders on or
prior to such date, minus (c) the excess, if any, of the aggregate amount
of Class A Charge-Offs for all prior Distribution Dates over Class A
Charge-Offs reimbursed pursuant to subsection 4.7(b) of the Supplement
prior to such date; provided, however, that the Class A 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 Securities, 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 Securityholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class A Securityholder's pro
rata share of such amounts (including amounts on deposit in the Collection
Account) as are payable to the Class A Securityholders pursuant to the
Agreement and the Supplement. Distributions with respect to this Class A
Security will be made by the Paying Agent by check mailed to the address of
the Class A Securityholder of record appearing in the Security Register
without the presentation or surrender of this Class A Security or the
making of any notation thereon (except for the final distribution in
respect of this Class A Security) except that with respect to Class A
Securities 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 Security will
be made only upon presentation and surrender of this Class A Security at
the office or agency specified in the notice of final distribution
delivered by the Trustee to the Series 1998-3 Securityholders 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 1998-3 Securityholders'
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 1998-3
Securityholders will not have any interest in the Receivables and the
Series 1998-3 Securities will represent only the right to receive such
Reassignment Amount.
THIS CLASS A SECURITY 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 SECURITY 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 Securities are issuable only in minimum denominations
of $1,000 and integral multiples of $1,000 in excess thereof. The transfer
of this Class A Security shall be registered in the Security Register upon
surrender of this Class A Security 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
Securityholder or such Class A Securityholder's attorney, and duly
authorized in writing with such signature guaranteed, and thereupon one or
more new Class A Securities 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 Securities are exchangeable for new Class A
Securities evidencing like aggregate fractional, undivided interests as
requested by the Class A Securityholder surrendering such Class A
Securities. 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 Security 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 SECURITY 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 security and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
security 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
Security in every particular, without alteration, enlargement or any
change whatsoever.
EXHIBIT A-2
FORM OF CLASS B SECURITY
REGISTERED $__________3/
No. R-_______ CUSIP No. _________
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY 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.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE
TRANSFEROR AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) A
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DEFINED IN 29 C.F.R.
SECTION 2510.3-101 OR OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S
INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY SUCH
PLAN (INCLUDING WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE (IV) AND THIS
CLAUSE (V), ANY INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
- -----------------
3/ Denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-3
CLASS B FLOATING RATE ASSET BACKED SECURITY
Class B Scheduled Payment Date:
The June 2003 Distribution Date
Each $1,000 minimum denomination represents a
1/________ undivided interest
in Class B of the
PARTNERS FIRST CREDIT CARD MASTER TRUST, SERIES 1998-3
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 Holdings, LLC,
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 Holdings, LLC, Partners
First Receivables Funding, LLC or any of their respective affiliates)
This certifies that ___________ (the "Class B Securityholder") is the
registered owner of a fractional, undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of June 26, 1998 (as amended and
supplemented, the "Agreement"), as supplemented by the Series 1998-3
Supplement dated as of June 26, 1998 (as amended and supplemented, the
"Supplement"), among Partners First Receivables Funding, LLC, as
Transferor, Partners First Holdings, LLC, 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
Security is entitled to the benefits of the subordination of the Collateral
Interest and the Class D Securities 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 Security
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 Security 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 Securityholder by virtue of the acceptance hereof
assents and is bound.
This Class B Security 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 Security, 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 Security, the applicable Security Owner or Owners
shall be deemed to have represented and warranted that it or they are not
Benefit Plans.
THIS CLASS B SECURITY IS SUBORDINATED TO THE EXTENT NECESSARY TO
FUND PAYMENTS ON THE CLASS A SECURITIES TO THE EXTENT SPECIFIED IN THE
SUPPLEMENT.
It is the intent of the Transferor and the Class B
Securityholders that, for federal, state and local income and franchise tax
purposes only, the Class B Securities will qualify as indebtedness of the
Transferor secured by the Receivables. The Class B Securityholder, by the
acceptance of this Class B Security, agrees to treat this Class B Security
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
Securities are limited to the Class B Invested Amount, which may be less
then the unpaid principal balance of the Class B Securities. The Class B
Scheduled Payment Date is the June 2003 Distribution Date, but principal
with respect to the Class B Securities 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 Securities 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 Security
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
Security to be duly executed.
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By:_____________________________________
Name:
Title:
Dated: __________, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Securities 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 1998-3
CLASS B FLOATING RATE ASSET BACKED SECURITY
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
Security is one of a Series of Securities entitled Partners First Credit
Card Master Trust, Series 1998-3 (the "Series 1998-3 Securities"), and one
of a class thereof entitled Class B Series 1998-3 Floating Rate Asset
Backed Securities, (the "Class B Securities"), 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 securityholders of all
outstanding Series (the "Securityholders' Interest") with the remainder
allocated to the Holder of the Transferor Security. The aggregate interest
represented by the Class B Securities 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
$113,000,000. 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 Securityholders prior to
such date, minus (c) the aggregate amount of Class B Charge-Offs for all
prior Distribution Dates , minus (d) the amount of Redirected Principal
Collections allocated on all prior Distribution Dates pursuant to
subsection 4.8(a) of the Supplement (excluding any Redirected 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
Default Amount on all prior Distribution Dates, plus (f) the amount of
Excess Spread and Excess Finance Charge Collections allocated to Series
1998-3 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 Securities, 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 Securityholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class B Securityholder's pro
rata share of such amounts (including amounts on deposit in the Collection
Account) as are payable to the Class B Securityholders pursuant to the
Agreement and the Supplement. Distributions with respect to this Class B
Security will be made by the Paying Agent by check mailed to the address of
the Class B Securityholder of record appearing in the Security Register
without the presentation or surrender of this Class B Security or the
making of any notation thereon (except for the final distribution in
respect of this Class B Security) except that with respect to Class B
Securities 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 Security will
be made only upon presentation and surrender of this Class B Security at
the office or agency specified in the notice of final distribution
delivered by the Trustee to the Series 1998-3 Securityholders 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 1998-3 Securityholders'
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 1998-3
Securityholders will not have any interest in the Receivables and the
Series 1998-3 Securities will represent only the right to receive such
Reassignment Amount.
THIS CLASS B SECURITY 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 SECURITY 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 Securities are issuable only in minimum denominations
of $1,000 and integral multiples of $1,000 in excess thereof. The transfer
of this Class B Security shall be registered in the Security Register upon
surrender of this Class B Security 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
Securityholder or such Class B Securityholder's attorney, and duly
authorized in writing with such signature guaranteed, and thereupon one or
more new Class B Securities 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 Securities are exchangeable for new Class B
Securities evidencing like aggregate fractional undivided interests as
requested by the Class B Securityholder surrendering such Class B
Securities. 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 Security 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 SECURITY 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 security and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
security on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: _________________________4/
Signature Guaranteed:
_________________________
---------------------
4/ NOTE: The signature to this Assignment must correspond with the name
of the registered owner as it appears on the face of the within
Security in every particular, without alteration, enlargement or any
change whatsoever.
EXHIBIT A-3
FORM OF CLASS D INVESTOR SECURITY
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE
TRANSFEROR AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) A
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DEFINED IN 29 C.F.R.
SECTION 2510.3-101 OR OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S
INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY SUCH
PLAN (INCLUDING WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE (IV) AND THIS
CLAUSE (V), ANY INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-3
CLASS D FLOATING RATE ASSET BACKED SECURITY
Each $1,000 minimum denomination represents a
1/_______ undivided interest
in Class D of the
PARTNERS FIRST CREDIT CARD MASTER TRUST, SERIES 1998-3
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 Holdings, LLC,
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 Receivables Funding,
LLC, Partners First Receivables, LLC or any of their respective affiliates)
This certifies that PARTNERS FIRST RECEIVABLES FUNDING, LLC (the "Class D
Securityholder") is the registered owner of a fractional, undivided
interest in certain assets of a trust (the "Trust") created pursuant to the
Amended and Restated Pooling and Servicing Agreement, dated as of June 26,
1998 (as amended and supplemented, the "Agreement"), as supplemented by the
Series 1998-3 Supplement, dated as of June 26, 1998 (as amended and
supplemented, the "Supplement"), among Partners First Receivables Funding,
LLC, as Transferor, Partners First Holdings, LLC, 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. 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 D Security 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 D Security 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 D Securityholder by virtue of the acceptance hereof
assents and is bound.
This Class D Security 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 D Security, 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 D Security, the applicable Security Owner or Owners
shall be deemed to have represented and warranted that it or they are not
Benefit Plans.
THIS CLASS D SECURITY IS SUBORDINATED TO THE EXTENT NECESSARY TO
FUND PAYMENTS ON THE CLASS A SECURITIES, THE CLASS B SECURITIES AND THE
COLLATERAL INTEREST TO THE EXTENT SPECIFIED IN THE SUPPLEMENT.
Subject to the satisfaction of the conditions set forth in the
Supplement, the Class D Securityholders may at any time and from time to
time (i) subdivide their Class D Securities into two or more subsidiary
securities, or (ii) reallocate all or any portion of the amounts
distributable to the Class D Securityholders to any other Securityholder.
In connection with such subdivision, the Transferor may assign an interest
rate to Class D Securities or a portion thereof. Upon presentation to the
Trustee and the Paying Agent of documentation satisfactory to the Trustee,
the Trustee shall pay amounts due hereunder to the Class D Securityholders
to the holders of such constituent securities or such other Securityholder,
as the case may be, pursuant to the terms of such documentation.
No principal will be payable to the Class D Securityholders until
the Class A Invested Amount, the Class B Invested Amount and the Collateral
Invested Amount have been paid in full. In general, payments of principal
with respect to the Class D Securities are limited to the Class D Invested
Amount, which may be less then the unpaid principal balance of the Class D
Securities.
IN WITNESS WHEREOF, the Transferor has caused this Class D
Security to be duly executed.
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By:_____________________________________
Name:
Title:
Dated: _________, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class D Securities 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 1998-3
CLASS D FLOATING RATE ASSET BACKED SECURITY
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 D
Security is one of a Series of Securities entitled Partners First Credit
Card Master Trust, Series 1998-3 (the "Series 1998-3 Securities"), and one
of a class thereof entitled Class D Series 1998-3 Floating Rate Asset
Backed Securities, (the "Class D Securities"), 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 securityholders of all
outstanding Series (the "Securityholders' Interest") with the remainder
allocated to the Holder of the Transferor Security. The aggregate interest
represented by the Class D Securities at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Class D
Invested Amount at such time. The Class D Initial Invested Amount is
$42,000,000. The Class D Invested Amount on any date will be an amount
equal to (a) the Class D Initial Invested Amount, minus (b) the aggregate
amount of principal payments made to the Class D Securityholders prior to
such date, minus (c) the aggregate amount of Class D Charge-Offs for all
prior Distribution Dates, minus (d) the amount of Redirected Principal
Collections allocated on all prior Distribution Dates pursuant to
subsection 4.8(a) of the Supplement, minus (e) an amount equal to the
amount by which the Class D Invested Amount has been reduced on all prior
Distribution Dates pursuant to subsections 4.6(a), (b) and (c) of the
Supplement 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(m) of the Supplement for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and
(e); provided, however, that the Class D 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 Securities, which will
represent fractional, undivided interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall distribute to
each Class D Securityholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class D Securityholder's pro
rata share of such amounts (including amounts on deposit in the Collection
Account) as are payable to the Class D Securityholders pursuant to the
Agreement and the Supplement. Distributions with respect to this Class D
Security will be made by the Paying Agent by check mailed to the address of
the Class D Securityholder of record appearing in the Security Register
without the presentation or surrender of this Class D Security or the
making of any notation thereon (except for the final distribution in
respect of this Class D Security), distributions will be made in the form
of immediately available funds. Final payment of this Class D Security
will be made only upon presentation and surrender of this Class D Security
at the office or agency specified in the notice of final distribution
delivered by the Trustee to the Series 1998-3 Securityholders 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 1998-3 Securityholders'
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 1998-3
Securityholders will not have any interest in the Receivables and the
Series 1998-3 Securities will represent only the right to receive such
Reassignment Amount.
THIS CLASS D SECURITY 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 D SECURITY 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 D Securities are issuable only in minimum denominations
of $1,000 and integral multiples of $1,000. The transfer of this Class D
Security shall be registered in the Security Register upon surrender of
this Class D Security 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 D Securityholder
or such Class D Securityholder's attorney, and duly authorized in writing
with such signature guaranteed, and thereupon one or more new Class D
Securities 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 D Securities are exchangeable for new Class D
Securities evidencing like aggregate fractional undivided interests as
requested by the Class D Securityholder surrendering such Class D
Securities. 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 D Security 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 D SECURITY 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 security and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
security on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ______________________5/
Signature Guaranteed:
________________________
- -----------------
5/ NOTE: The signature to this Assignment must correspond with the name
of the registered owner as it appears on the face of the within
Security 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 1998-3
______________________________
The undersigned, a duly authorized representative of Partners
First Holdings, LLC, as Servicer (the "Servicer") pursuant to the Amended
and Restated Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Pooling and Servicing Agreement"), among the
Servicer, Partners First Receivables Funding, LLC ("PFRF"), as Transferor
and The Bank of New York, as trustee (the "Trustee"), does hereby certify
as follows:
a. Capitalized terms used in this Certificate have their
respective meanings set forth in the Pooling and Servicing Agreement or the
Series 1998-3 Supplement dated as of June 26, 1998, among the Services,
PFRF and the Trustee (as amended and supplemented, the "Supplement"), as
applicable.
b. Partnership Holdings, LLC is the Servicer.
c. The undersigned is a Servicing Officer.
I. INSTRUCTION TO MAKE A WITHDRAWAL.
Pursuant to subsections 4.5(a), (b), (c) and (d), 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, Collateral Available Funds and
Class D 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), (c) and (d):
With respect to the Class A Securities:
A) Pursuant to subsection 4.5(a)(i):
(1) Interest at the Class A Interest 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 . . . . . . . . . . . . . . . . $_______
(2) Accrued and unpaid Class A Servicing Fees . . . $_______
C) Pursuant to subsection 4.5(a)(iii):
Class A Default Amount for the preceding Monthly
Period . . . . . . . . . . . . . . . . . . . . . . . $_______
With respect to the Class B Securities:
A) Pursuant to subsection 4.5(b)(i):
(1) Interest at the Class B Interest 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 . . . . . . . . . . . . . . . . $_______
(2) Accrued and unpaid Class B Servicing Fees . . . $_______
With respect to the Collateral Interest
A) Pursuant to subsection 4.5(c)(i):
(1) The Collateral Servicing Fee for the
preceding Monthly Period . . . . . . . . . . . $_______
(2) Accrued and unpaid Collateral Servicing Fee . . $_______
With respect to the Class D Securities
A) Pursuant to subsection 4.5(d)(i):
(1) The Class D Servicing Fee for the preceding
Monthly Period . . . . . . . . . . . . . . . . $_______
(2) Accrued and unpaid Class D Servicing Fee . . . $_______
Pursuant to subsections 4.5(e), (f) and (g), 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(e), (f) and
(g):
A) Pursuant to subsection 4.5(e):
(1) The Collateral Monthly Principal paid to the
Collateral Interest Holder for application in
accordance with the Loan Agreement . . . . . . $_______
(2) Amount to be treated as Shared Principal
Collections . . . . . . . . . . . . . . . . . . $_______
B) Pursuant to subsection 4.5(f):
(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) Prior to the date the Class B Invested Amount
is paid in full, in which a reduction of the
Required Enhancement Amount has occurred, an
amount equal to the Collateral Monthly
Principal shall be paid to the Collateral
Interest Holder . . . . . . . . . . . . . . . . $_______
(3) After the Class B Invested Amount is paid in
full, in which a reduction of the Required
Enhancement Amount has occurred an amount
paid to the Collateral Interest Holder (up
to the Collateral Invested Amount) pursuant
to the Loan Agreement . . . . . . . . . . . . . $_______
(4) Prior to the date the Collateral Invested
Amount is paid in full, the amount paid to
the Class D Securityholders for application
in accordance with the Loan Agreement . . . . . $_______
C) Pursuant to subsection 4.5(g):
(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 and 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 . . . . . $_______
(4) On and after the Distribution Date on which
the Collateral Invested Amount is paid in
full, an amount up to Class D Invested
Amount deposited into the Principal Funding
Account . . . . . . . . . . . . . . . . . . . . $_______
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 1998-3 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 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
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 (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
Interest Rate and (ii) the outstanding principal
balance of the Class B Invested Securities 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 Securityholders 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) The amount of the excess, if any, of the
sum of the Monthly Servicing Fee for such
Distribution and the amount of any Monthly
Serving Fee previously due but not
distributed on a prior Distribution Date,
over the sum of the amounts distributed to
the pursuant Servicer on such Distribution
Date to subsections 4.5(a)(ii), (b)(ii),
c(i) and d(i) . . . . . . . . . . . . . . . . . $_______
G) Pursuant to subsection 4.7(g):
(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 . . . . . . . . . . . . . . . $_______
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 Reserve Account Amount
over the Available Reserve Amount deposited into
the Reserve Account . . . . . . . . . . . . . . . . $_______
K) Pursuant to subsection 4.7(k):
(1) Class D Monthly Interest . . . . . . . . . . . $_______
(2) Class D Monthly Interest previously due but
not paid . . . . . . . . . . . . . . . . . . . $_______
(3) Class D Additional Interest and any Class D
Additional Interest previously due but not
paid . . . . . . . . . . . . . . . . . . . . . $_______
L) Pursuant to subsection 4.7(l):
The amount equal to the Class D Default Amount
allocated to Available Principal Collections . . . . $_______
M) Pursuant to subsection 4.7(m):
The amount by which the "Class D Invested Amount"
has been reduced pursuant to clauses (c), (d) and
(e) of the definition thereof allocated to
Available Principal Collections . . . . . . . . . . $_______
N) Pursuant to subsection 4.7 (n)
Paid to the Collateral Interest Holder pursuant
to the Loan Agreement . . . . . . . . . . . . . . . $_______
O) Pursuant to subsection 4.7 (o)
Treated as Excess Finance Charge Collections and
allocated to other Series or paid to the Holder
of the Transferor Security . . . . . . . . . . . . . $_______
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 Redirected Principal
Collections to fund any deficiencies in the Required Amount after applying
Class A Available Funds, Class B Available Funds, Collateral 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
Securityholders . . . . . . . . . . . . . . . . . . . $_________
B) Pursuant to subsection 5.1(b):
On the Class A Scheduled Payment Date, principal to
be distributed to the Class A Securityholders . . . . $__________
C) Pursuant to subsection 5.1(c):
Interest to be distributed to Class B
Securityholders . . . . . . . . . . . . . . . . . . . $__________
D) Pursuant to subsection 5.1(d):
On the Class B Scheduled Final Payment Date, on or
after the date Class A Invested Amount is paid in
full, principal to be distributed to the Class B
Securityholders . . . . . . . . . . . . . . . . . . . $__________
E) Pursuant to subsection 5.1 (e):
On and after the Collateral Invested Amount is paid
in full, the amount to be paid to Class D
Securityholders . . . . . . . . . . . . . . . . . . . $__________
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
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 . . $__________
4. Subsections 4.6(a), (b), (c) and (d) and 4.8(a),
(b) and (c):
The aggregate amount by which the "Class D 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 HOLDINGS, LLC
By ______________________________
Name:
Title:
EXHIBIT C
FORM OF MONTHLY STATEMENT
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-3
Pursuant to the Amended and Restated Pooling and Servicing
Agreement dated as of June 26, 1998 (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 Holdings, LLC (the
"Holdings"), as Servicer, Partners First Receivables Funding, LLC ("PFRF"),
as Transferor, and The Bank of New York, as trustee (the "Trustee"), as
supplemented by the Series 1998-3 Supplement dated as of June 26, 1998 (the
"Supplement") among the Holdings, PFRF and the Trustee, the Servicer is
required to prepare certain information each month regarding current
distributions to the Series 1998-3 Securityholders 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 1998-3 Security (a "Security").
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 Securities per $1,000 original security
principal amount:
(1) The total amount of the distribution in respect
of Class A Securities, per $1,000 original
security principal amount . . . . . . . . . . . . $__________
(2) The amount of the distribution set forth in
paragraph 1 above in respect of interest on
the Class A Securities, per $1,000 original
security principal amount . . . . . . . . . . . . $__________
(3) The amount of the distribution set forth in
paragraph 1 above in respect of principal of
the Class A Securities, per $1,000 original
security 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 security 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 security principal amount . . $__________
(5) The amount, if any, by which the outstanding
principal balance of the Class A Securities
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 Securities, per $1,000 original security
principal amount:
(1) The total amount of the distribution in respect
of Class B Securities, per $1,000 original
security principal amount . . . . . . . . . . . . $__________
(2) The amount of the distribution set forth in
paragraph 1 above in respect of interest on
the Class B Securities, per $1,000 original
security principal amount . . . . . . . . . . . . $__________
(3) The amount of the distribution set forth in
paragraph 1 above in respect of principal of
the Class B Securities, per $1,000 original
security 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 security 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 security principal amount . . . . $__________
(5) The amount, if any, by which the outstanding
principal balance of the Class B Securities
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 . . $__________
G) Information regarding certain distributions to the
Class D Securityholders:
(1) The amount distributed to the Class D
Securityholders in respect of interest on the
Class D Invested Amount . . . . . . . . . . . . . $__________
(2) The amount distributed to the Class D
Securityholders with respect to principal on
the Class D Invested Amount . . . . . . . . . . . $__________
H) Amount of reductions in Class D Invested Amount
pursuant to clauses (c), (d) and (e) of the
definition of Class D Invested Amount:
(1) The amount of reductions in the Class D
Invested Amount pursuant to clauses (c), (d)
and (e) of the definition of Class D Invested
Amount . . . . . . . . . . . . . . . . . . . . . $__________
(2) The total amount reimbursed in respect of such
reduction in the Class D Invested Amount . . . . $__________
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 . . . . . $_________
Class D Initial Investment Amount . . . . . . $_________
INITIAL INVESTED AMOUNT . . . . . . . . . . . . . . . . . . . . $__________
Class A Invested Amount . . . . . . . . . . . $_________
Class B Invested Amount . . . . . . . . . . . $_________
Collateral Invested Amount . . . . . . . . . $_________
Class D Invested Amount . . . . . . . . . . . $_________
INVESTED AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . $_________
Class A Adjusted Invested Amount . . . . . . . . . . . . . $_________
Class B Adjusted Invested Amount . . . . . . . . . . . . . $_________
ADJUSTED INVESTED AMOUNT . . . . . . . . . . . . . . . . . . . $_________
MONTHLY SERVICING FEE . . . . . . . . . . . . . . . . . . . . . $_________
SERIES DEFAULT AMOUNT . . . . . . . . . . . . . . . . . . . . . $_________
GROUP I INFORMATION
WEIGHTED AVERAGE INTEREST RATE FOR ALL SERIES IN
GROUP ONE . . . . . . . . . . . . . . . . . . . . . . . . $_________
GROUP I FINANCE CHARGE COLLECTIONS . . . . . . . . . . . . $_________
GROUP I ADDITIONAL AMOUNTS . . . . . . . . . . . . . . . . $_________
GROUP I SERIES DEFAULT AMOUNT . . . . . . . . . . . . . . . $_________
GROUP I MONTHLY FEES . . . . . . . . . . . . . . . . . . . $_________
GROUP I MONTHLY INTEREST . . . . . . . . . . . . . . . . . $_________
SERIES 1998-3 INFORMATION
SERIES 1998-3 ALLOCATION PERCENTAGE . . . . . . . . . . . . _________%
SERIES 1998-3 ALLOCABLE FINANCE CHARGE COLLECTIONS . . . . $_________
SERIES 1998-3 ADDITIONAL AMOUNTS . . . . . . . . . . . . . $_________
SERIES 1998-3 ALLOCABLE DEFAULTED AMOUNT . . . . . . . . . $_________
SERIES 1998-3 MONTHLY FEES . . . . . . . . . . . . . . . . $_________
SERIES 1998-3 ALLOCABLE PRINCIPAL COLLECTIONS . . . . . . . $_________
SERIES 1998-3 REQUIRED TRANSFEROR AMOUNT . . . . . . . . . $_________
FLOATING ALLOCATION PERCENTAGE . . . . . . . . . . . . . . $_________
INVESTOR FINANCE CHARGE COLLECTIONS . . . . . . . . . . . . _________%
SERIES DEFAULT AMOUNT . . . . . . . . . . . . . . . . . . . $_________
REDIRECTED INVESTOR FINANCE CHARGE COLLECTIONS . . . . . . $_________
PRINCIPAL ALLOCATIONS PERCENTAGE . . . . . . . . . . . . . _________%
AVAILABLE PRINCIPAL COLLECTIONS . . . . . . . . . . . . . . $_________
CLASS A AVAILABLE FUNDS --
CLASS A FLOATING PERCENTAGE . . . . . . . . . . . . . . . . . . _________%
Class A Floating Percentage of Redirected
Investor Finance Charge Collections . . . . $_________
Other Amounts . . . . . . . . . . . . . . . . $_________
TOTAL CLASS A AVAILABLE FUNDS . . . . . . . . . . . . . . . . . $_________
Class A Monthly Interest . . . . . . . . . . $_________
Class A Servicing Fee . . . . . . . . . . . . $_________
Class A 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 . . . . . . . . . . . . $_________
COLLATERAL AVAILABLE FUNDS COLLATERAL FLOATING PERCENTAGE . . . _________%
COLLATERAL AVAILABLE FUNDS . . . . . . . . . . . . . . . . . . $_________
Collateral Interest Servicing Fee . . . . . . . . . . . . . $_________
TOTAL COLLATERAL EXCESS SPREAD . . . . . . . . . . . . . . . . $_________
TOTAL CLASS B EXCESS SPREAD . . . . . . . . . . . . . . . . . . $_________
CLASS D FLOATING PERCENTAGE . . . . . . . . . . . . . . . . . . $_________
TOTAL CLASS A AVAILABLE FUNDS . . . . . . . . . . . . . . . . . $_________
Class D Monthly Interest . . . . . . . . . . . . . . . . . _________%
Class D Servicing Fee . . . . . . . . . . . . . . . . . . . _________%
EXCESS SPREAD --
TOTAL EXCESS SPREAD . . . . . . . . . . . . . . . . . . . . . . $_________
a) Excess Spread Applied to Class A Required
Amount . . . . . . . . . . . . . . . . . . . $_________
b) Excess Spread Applied to Class A Investor
Charge Offs . . . . . . . . . . . . . . . . . $_________
c) Excess Spread Applied to Class B Required
Amount . . . . . . . . . . . . . . . . . . . $_________
d) Excess Spread Applied to Class B Interest . . $_________
e) Excess Spread Applied to Reductions of
Class B Invested Amount pursuant to
clauses (c), (d) and (e) . . . . . . . . . . $_________
f) Excess Spread Applied to Monthly
Servicing Fee . . . . . . . . . . . . . . . . $_________
g) Excess Spread Applied to Collateral
Monthly Interest . . . . . . . . . . . . . . $_________
h) Excess Spread Applied to Collateral
Default Amount . . . . . . . . . . . . . . . $_________
i) Excess Spread Applied to Reductions of
Collateral Invested Amount Pursuant to
Clauses (c), (d) and (e) . . . . . . . . . . $_________
j) Excess Spread Applied to Reserve Account . . $_________
k) Excess Spread Applied to pay Class D
Monthly Interest . . . . . . . . . . . . . . $_________
l) Excess Spread Applied to Class D Default
Amount . . . . . . . . . . . . . . . . . . . $_________
m) Excess Spread Applied to Reductions of
Class D Invested Amount pursuant to
clauses (c), (d) and (e) . . . . . . . . . . $_________
n) 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 1998-3 EXCESS FINANCE CHARGE COLLECTIONS
EXCESS FINANCE CHARGE COLLECTIONS ALLOCATED
TO SERIES 1998-3 . . . . . . . . . . . . . . . . $_________
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 pay Class D Monthly Interest . . . . . . . $__________
Excess Finance Charge Collections Applied
to Class D Default Amount . . . . . . . . . . $_________
Excess Finance Charge Collections Applied
to Reductions of Class D Invested Amount
pursuant to clauses (c), (d), and (e) . . . . $_________
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 . . . . . . $_________
CLASS D PRINCIPAL PERCENTAGE . . . . . . . . . . . . . . . . . _________%
Class D Principal Collections . . . . . . . . $_________
AVAILABLE PRINCIPAL COLLECTIONS . . . . . . . . . . . . . . . . $_________
REDIRECTED PRINCIPAL COLLECTIONS . . . . . . . . . . . . . . . $_________
SERIES 1998-3 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) . . . . . . . . . . . . . . . . . $_________
REDUCTION IN CLASS D 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 . . . $_________
PREVIOUS CLASS D INVESTED AMOUNT REIMBURSED . . . . . . . . . . $_________
PARTNERS FIRST HOLDINGS, LLC,
as Servicer
By: ____________________________
Name:
Title:
EXHIBIT D
FORM OF MONTHLY SERVICER'S CERTIFICATE
PARTNERS FIRST HOLDINGS, LLC
PARTNERS FIRST CREDIT CARD MASTER TRUST
SERIES 1998-3
The undersigned, a duly authorized representative of PARTNERS
FIRST HOLDINGS, LLC, as Servicer (the "Servicer"), pursuant to the Amended
and Restated Pooling and Servicing Agreement dated as of June 26, 1998 (as
amended and supplemented, the "Agreement"), as supplemented by the Series
1998-3 Supplement (as amended and supplemented, the "Series Supplement"),
among the Partners First Holdings, LLC, as Servicer, Partners First
Receivables, Funding, LLC, 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. Partners First Holdings, LLC 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 HOLDINGS, LLC,
Servicer
By: _____________________________
Name:
Title:
---------------------------------------------------------------------------
PARTNERS FIRST RECEIVABLES, LLC
and
PARTNERS FIRST RECEIVABLES FUNDING, LLC
-------------------------------------------------------------------------
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of June 26, 1998
amending and restating the
Receivables Purchase Agreement
dated as of May 13, 1998
--------------------------------------------------------------------------
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 . . . . . . . . . . . . . 9
Section 2.4. Representations and Warranties . . . . . . . . . . 10
Section 2.5. Delivery of Documents . . . . . . . . . . . . . . 10
Section 2.6. Automatic Addition Accounts . . . . . . . . . . . . 10
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1. Purchase Price . . . . . . . . . . . . . . . . . . 11
Section 3.2. Adjustments to Purchase Price . . . . . . . . . . 12
Section 3.3. Settlement and Ongoing Payment of Purchase
Price . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the
Seller Relating to the Seller . . . . . . . . . . 13
Section 4.2. Representations and Warranties of the
Seller Relating to the Agreement
and the Receivables . . . . . . . . . . . . . . . 14
Section 4.3. Representations and Warranties of the
Purchaser . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Seller . . . . . . . . . . . . . 17
Section 5.2. Covenants of the Seller with Respect to
Receivables Purchase Agreements . . . . . . . . . 19
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1. Reassignment of Ineligible Receivables . . . . . . 20
Section 6.2. Reassignment of Securityholders'
Interest in Trust Portfolio . . . . . . . . . . . 20
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1. Conditions to the Purchaser's Obligations
Regarding Initial Receivables . . . . . . . . . . 21
Section 7.2. Conditions Precedent to the Seller's
Obligations . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
TERM AND PURCHASE TERMINATION
Section 8.1. Term . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.2. Purchase Termination . . . . . . . . . . . . . . . 22
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. Amendment . . . . . . . . . . . . . . . . . . . . 23
Section 9.2. Governing Law . . . . . . . . . . . . . . . . . . 24
Section 9.3. Notices . . . . . . . . . . . . . . . . . . . . . 24
Section 9.4. Severability of Provisions . . . . . . . . . . . . 24
Section 9.5. Assignment . . . . . . . . . . . . . . . . . . . . 24
Section 9.6. Acknowledgment and Agreement of the
Seller . . . . . . . . . . . . . . . . . . . . . 24
Section 9.7. Further Assurances . . . . . . . . . . . . . . . . 25
Section 9.8. No Waiver; Cumulative Remedies . . . . . . . . . . 25
Section 9.9. Counterparts . . . . . . . . . . . . . . . . . . . 25
Section 9.10. Binding; Third-Party Beneficiaries . . . . . . . . 25
Section 9.11. Merger and Integration . . . . . . . . . . . . . . 26
Section 9.12. Headings . . . . . . . . . . . . . . . . . . . . . 26
Section 9.13. Schedules and Exhibits . . . . . . . . . . . . . . 26
Section 9.14. Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . 26
Section 9.15. Nonpetition Covenant . . . . . . . . . . . . . . . 26
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of
June 26, 1998, 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, LLC, a limited liability
company organized under the laws of the State of Delaware (the
"Purchaser").
W I T N E S S E T H
WHEREAS, the Purchaser and the Seller have entered into a
Receivables Purchase Agreement, dated as of January 29, 1998 (the "Original
Receivables Purchase Agreement"), which provides for the purchase by the
Purchaser from the Seller, and the sale from the Seller to the Purchaser,
from time to time, of certain Receivables (as hereinafter defined)
purchased by the Seller in the ordinary course of its business from one or
more owners of consumer revolving credit card accounts; and
WHEREAS, the Purchaser and the Seller desire to amend and restate
the Original Receivables Purchase Agreement in its entirety as provided
herein.
NOW, THEREFORE, it is hereby agreed by and between the Purchaser
and the Seller that the Original Receivables Purchase Agreement be amended
and restated 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(TM)(1) and VISA(TM)(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) as to which the right, title and interest of the Purchaser
in the related Receivables
are reassigned to the Seller pursuant to Section
6.1 or (iii) as to which the right, title and interest of the Trust in the
related Receivables 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 pursuant to a Credit Card Agreement or a
purchaser of such Account.
"Account Owner" shall mean with respect to any Account, the
related Account Originator, or if the Account Originator has assigned its
interest in the Account, the entity which has acquired such Account.
"Additional Account" shall mean each New Account, each Aggregate
Addition Account and each Automatic 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,(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 and (iii) with respect to
each Automatic Addition Account, the date from and after which such
Automatic Addition Account is to be included as an Account pursuant to
Section 2.6.
"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, (b) with respect to
New Accounts, the first Distribution Date following the calendar month in
which such New Accounts are originated and (c) with respect to each
Automatic Addition Account, the date from and after which such Automatic
Addition Account is to be included as an Account pursuant to Section 2.6.
"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.
"Automatic Addition Account" shall mean each Eligible Account
which is designated pursuant to Section 2.6 to be included as an account.
"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
Securities which have not been retained by the Purchaser as of such date.
"Closing Date" shall mean January 29, 1998.
"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.
"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 Security" shall have the meaning specified in the
Pooling and Serving Agreement.
"Minimum Capital Ratio" shall mean a percentage designated from
time to time by the Transferor.
"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.
"Original Receivables Purchase Agreement" shall mean the
Receivables Purchase Agreement, dated as of January 29, 1998, by and
between Partners First Receivables, LLC, as Seller, and PFRF, as Purchaser.
"PFRF" shall mean Partners First Receivables Funding, LLC, a
Delaware limited liability company, and its permitted successors and
assigns.
"Pooling and Servicing Agreement" shall mean the Amended and
Restated Pooling and Servicing Agreement, dated as of June 26, 1998, among
Holdings, as Servicer, PFRF, as Transferor, and the Trustee, and all
amendments and supplements thereto.
"Portfolio Reassignment Price" shall mean the portion of the
amount payable by PFRF 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.
"Transaction Documents" shall mean, the Pooling and Servicing
Agreement, the Series 1998-1 Supplement, this Agreement and each
Receivables Purchase Agreement.
"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 Closing Date and 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 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, (ii) the
right to receive Interchange and Recoveries with respect to such
Receivables and (iii) to the extent applicable to the Receivables, each
Account Owner Purchase Agreement (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 Securityholders 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 Closing 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; provided, that the selection method employed by the Seller shall
not have an Adverse Effect.
(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 or any Account
Owner 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 Seller 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 Seller, 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 Seller or 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)(iv) and (v) 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 (other than any Automatic Addition
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.
Section 2.6. Automatic Addition Accounts. Upon the mutual
agreement of the Purchaser and the Seller, subject to the compliance by the
Purchaser with the conditions specified in subsection 2.9(h) of the Pooling
and Servicing Agreement, the Seller may specify a date (the "Automatic
Addition Commencement Date") as of which all Eligible Accounts then in
existence or thereafter created shall be included as Accounts. For all
purposes of this Agreement, all receivables of such Automatic Addition
Accounts shall be treated as Receivables upon their creation.
Notwithstanding the foregoing, the Seller may elect at any time, or may be
required if the percentages described in Section 2.9(h) of the Pooling and
Servicing Agreement are exceeded, to suspend the automatic inclusion in
Accounts of new accounts which would otherwise be Automatic Addition
Accounts as of any Business Day (the "Automatic Addition Suspension Date"),
or terminate any such inclusion as of any Business Day (an "Automatic
Addition Termination Date") until a date (the "Restart Date") to be
identified in writing by the Seller to the Purchaser at least 10 days prior
to such Restart Date. Promptly after an Automatic Addition Suspension Date
or any Automatic Addition Termination Date, the Seller shall deliver to the
Purchaser a list of all Accounts which have been conveyed to the Purchaser
pursuant to this Agreement. Promptly after an Automatic Addition
Suspension Date or any Automatic Addition Termination Date, or a Restart
Date, the Seller and the Purchaser agree to execute and the Seller agrees
to record and file at its own expense either new UCC-1 financing statements
or UCC-3 amendments to the existing financing statements, in each case
covering all Automatic Addition Accounts.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1. Purchase Price.
(a) The "Purchase Price" for the Receivables in the Initial
Accounts as of the Closing 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 Closing 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.
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 Seller
Relating to the Seller. 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 as contemplated by the Transaction Documents,
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 render any credit card agreement relating to any Account or any
Receivables unenforceable by the Purchaser or the Trustee or (ii) have a
material adverse effect on the Purchaser or the Securityholders.
(c) Due Authorization. The execution, delivery and performance
of this Agreement, each Receivables Purchase Agreement and any other
document or instrument delivered pursuant hereto, including any
Supplemental Conveyance (such other documents or instruments, collectively,
the "Conveyance Papers"), and the consummation of the transactions provided
for in this Agreement and the Conveyance Papers have been duly authorized
by the Seller by all necessary corporate action on the part of the Seller.
(d) No Conflict. The execution and delivery of this Agreement,
each Receivables Purchase Agreement and the Conveyance Papers by the
Seller, the performance of the transactions contemplated by this Agreement,
each Receivables Purchase Agreement and the Conveyance Papers, and the
fulfillment of the terms of this Agreement, each Receivables Purchase
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, each Receivables Purchase 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 Seller 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, any Receivables Purchase Agreement or the Conveyance
Papers, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, any Receivables Purchase 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, any
Receivables Purchase Agreement or the Conveyance Papers, (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement, any Receivables Purchase
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,
each Receivables Purchase Agreement and the Conveyance Papers and the
performance of the transactions contemplated by this Agreement, each
Receivables Purchase 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 Closing 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 Closing 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 Closing Date or such applicable Additional Cut-Off Date,
as the case may be, and as of the December 31, 1997, the aggregate amount
of Receivables in all the Initial Accounts was $1,914,820,647, of which
$1,884,184,263 were Principal Receivables;
(iii) each Receivable has been conveyed to the Purchaser free
and clear of any Lien of any Person (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 Seller 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 Closing 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 Closing 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
Securityholders have been used in selecting such Accounts; and
(x) each Receivable is an "account" or a "general intangible"
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, the Trustee and to the Rating Agency
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, and on each Addition Date the Purchaser hereby
represents and warrants to, and agrees with, the Seller that:
(a) Organization and Good Standing. The Purchaser is a limited
liability company duly organized, validly existing and 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 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 Security and certain other rights of Purchaser as the Transferor
under the Pooling and Servicing 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 which the Purchaser is
required to allocate and pay to the Trust pursuant to Section 2.11 of the
Pooling and Servicing Agreement, and in the same as the Purchaser is
required to allocate pay such amounts to the Trust.
(d) Notice of Liens. The Seller shall notify the Purchaser
promptly after becoming aware of any Lien on any 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 Business Day, 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 Business Day or (ii) if at any time the
Seller 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 of the Seller will be
marked to evidence the sale or transfer of the Receivables to the Purchaser
and the transfer of the Receivables by the Purchaser to the Trust;
provided, however, that the Seller need not segregate the documents or
agreements relating to the Accounts and the Receivables from documents or
agreements relating to other credit card accounts and receivables.
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. 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
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 Sections 5.2(a), 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 Securityholders.
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. The Seller also further covenants that it will provide prompt
written notice to the Rating Agency of any amendment to a Receivables
Purchase Agreement to which it is a party.
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), (viii) or (x) 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 Securityholders' 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 Securityholders'
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 Closing 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 Closing 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 Seller'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 on the Closing Date
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 Seller 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 Seller 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 Securityholders, 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, to Partners First Receivables,
LLC, at 900 Elkridge Landing Road, Suite 300, Linthicum, Maryland 21090,
Attention: John R. Soderlund (facsimile no. (410) 855-8599), (b) in the
case of the Purchaser, to Partners First Receivables, LLC, at 900 Elkridge
Landing Road, Suite 300, Linthicum, Maryland 21090, Attention: John R.
Soderlund (facsimile no. (410) 855-8599), (c) in the case of the Trustee,
to The Bank of New York at 101 Barclay Street 12E, New York, NY 10286,
Attention: Corporate Trust Department (facsimile no. (212) [815-5544]); (d)
in the case of the Rating Agency, (i) to Moody's, at 99 Church Street, New
York, New York 10007, Attention: ABS Monitoring Department, 4th Floor
(facsimile no. (212) 553-4600), (ii) to Standard & Poor's, at 26 Broadway,
New York, New York 10004, Attention: Asset Backed Group, 15th Floor
(facsimile no. (212) 412-0323), or (iii) to Fitch, at One State Street
Plaza, New York, New York, Attention: Structured Finance Department
(facsimile no. (212) 480-4438), 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
Securityholders 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, 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)
to any other entity, provided that in either case the Rating Agency
Condition shall have been satisfied.
Section 9.6. Acknowledgment 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 Securityholders,
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 Securityholders 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 Securityholders 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 Securities 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 Amended and
Restated 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:____________________________________
Name: Harry G. Pappas
Title: Chief Financial Officer
PARTNERS FIRST RECEIVABLES FUNDING, LLC
By:____________________________________
Name: Mark J. Norwicz
Title: Treasurer
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, LLC (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 January 29, 1998 (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 or if
not defined therein, as defined in the Pooling and Servicing 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__.
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 (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
Securityholders 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
Seller, would materially and adversely affect the performance by the Seller
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.
9. 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 Securities 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 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 FUNDING, LLC
By:____________________________________
Name:_______________________________
Title:______________________________
Schedule I to
Supplemental
Conveyance
Additional Accounts
EXHIBIT B
FORM OF REVOLVING NOTE
REVOLVING NOTE
This Revolving Note, dated as of January 29, 1998, by PARTNERS FIRST
RECEIVABLES FUNDING, LLC, a Delaware limited liability company (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 January 29,
1998 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 900 Elkridge Landing Road,
Suite 700, Linthicum, MD 21640-2025, the principal amount of all Loans (as
hereinafter defined) made by the Lender to the Borrower from time to time
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. 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.
4. 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.
5. 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 15th 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, 1998. Interest is based on twelve 30-day months.
6. Payment. 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.
7. 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.
8. 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.
9. 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.
10. Upon Whom Binding. The provisions of this Note shall be binding
upon the Lender, its successors and assigns and upon the Borrower.
11. 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.
12. Cancellation. This Note shall not be subject to cancellation by
either party.
13. 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.
14. 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.
15. 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, LLC
By:____________________________
Title:_________________________
THE TERMS AND CONDITIONS HEREOF
ARE HEREBY ACKNOWLEDGED AND ACCEPTED:
PARTNER FIRST RECEIVABLES, LLC
By:____________________________
Title:_________________________
SCHEDULE
Principal Amount of Loan Date
Schedule I
LIST OF ACCOUNTS
DEEMED INCORPORATED BY REFERENCE
June 26, 1998
The Persons Listed on
Schedule I hereto
Re: Partners First Credit Card Master Trust
$528,000,000 Class A Series 1998-2 Floating Rate Asset Backe Securities
$113,000,000 Class B Series 1998-2 Floating Rate Asset Backed Securities
Ladies and Gentlemen:
You have requested our opinion as to certain federal and state
income tax consequences of the issuance of securities pursuant to the
Amended and Restated Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of June 26, 1998, among the Partners First
Receivables Funding, LLC, a Delaware limited liability company, as the
transferor (the "Transferor"), Partners First Holdings, LLC, a Delaware
limited liability company, as servicer ("Holdings") and The Bank of New
York, as trustee (the "Trustee") (the "Pooling and Servicing Agreement") of
the Partners First Credit Card Master Trust (the "Trust"), as supplemented
by the Series 1998-2 Supplement (the "Series 1998-2 Supplement"), dated as
of June 26, 1998, between the Transferor, Holdings and the Trustee (such
Pooling and Servicing Agreement, together with the Series 1998-2
Supplement, hereinafter collectively referred to as the "Agreement").(1)
Specifically, you have asked us whether the Class A Series 1998-2 Floating
Rate Asset Backed Securities (the "Class A Securities") and the Class B
Series 1998-2 Floating Rate Asset Backed Securities (the "Class B
Securities" and, together with the Class A Securities, the "Offered
Securities") purchased by investors will be characterized as indebtedness
for federal income tax purposes and for Delaware and New York state income
tax purposes and whether the Trust will be classified as an association (or
a publicly traded partnership) taxable as a corporation.
-------------------------
(1) Each capitalized term used and not otherwise defined herein shall
have the beaming assigned to such term in the Agreement.
In connection with your request, we have examined and relied upon (i)
the prospectus, dated June 22, 1998, and the prospectus supplement, dated
June 22, 1998, for the Securities (such prospectus and prospectus
supplement being hereinafter referred to as the "Prospectus"); (ii) the
Registration Statement on Form S-3 (Nos. 333-29495 and 333-29495-01)
relating to the Trust; (iii) the Agreement; and (iv) such other documents
as we have deemed material to the opinions set forth herein. Our opinions
are based on, among other things, the initial and continued accuracy of the
information, statements, representations, and covenants contained in the
Agreement, and the other documents referred to herein, and we have assumed
that all parties to such documents will comply with their obligations
thereunder and that all such documents are enforceable according to their
terms.
Our opinion is also based upon the Internal Revenue Code of 1986, as
amended (the "Code"), administrative rulings, judicial decisions, proposed,
temporary, and final Treasury regulations, and other applicable
authorities. The statutory provisions, regulations, and interpretations
upon which our opinions are based are subject to change, and such changes
could apply retroactively. In addition, there can be no assurance that
positions contrary to those stated in our opinion may not be asserted by
the Internal Revenue Service.
In our opinion, under current law as of the date hereof: (i) the
Offered Securities will constitute indebtedness for federal income tax
purposes and for Delaware and New York state income tax purposes and (ii)
the Trust will not be classified as an association (or a publicly traded
partnership) taxable as a corporation for federal income tax purposes.
I. Federal Income Tax Characterization of the Securities.
The Series 1998-2 Securities will consist of the Class A
Securities, having an initial principal amount of $528,000,000, the Class B
Securities having an initial principal amount of $113,000,000, the
Collateral Interest, having an initial principal amount of $67,000,000, and
the Class D Securities having an initial principal amount of $42,000,000.
The Class A Securities and the Class B Securities will be sold initially to
Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Collateral
Invested Amount (which is subordinate to the Class A Securities and Class B
Securities) will be purchased by Union Bank of Switzerland, New York Branch
and will be subject to transfer restrictions. In addition, the Trust will
issue the Transferor Security to the Transferor. The Transferor Security
represents an equity interest in the Receivables retained by the
Transferor. Because the Transferor and its immediate parent are both
single member LLCs, each of them will be disregarded for federal income tax
purposes and the Transferor Security will be treated as owned by Partners
First Holdings, LLC ("Holdings"). In addition, because Partners First
Funding LLC, ("Funding") is also a single member LLC owned by Holdings, any
interest in the Receivables held by Funding will be treated as held by
Holdings for federal income tax purposes.
A. Economic Substance of the Transaction. If the economic substance
of a transaction differs from the form in which it is cast, except in
certain limited circumstances (see discussion below), the substance, rather
than the form, governs the federal income tax consequences of the
transaction. Gregory v. Helvering, 293 U.S. 465 (1935); Helvering v. F. &
R. Lazarus & Co., 308 U.S. 252, aff'g, 101 F.2d 728 (6th Cir. 1939); Gatlin
v. Commissioner, 34 B.T.A. 50 (1936).
Whether the Offered Securities are in substance debt or ownership
interests in the Receivables is based on a determination of which party to
the transaction holds the "substantial incidents of ownership." The courts
have identified a variety of factors that must be considered in making that
determination. See, Town & Country Food Co. v. Commissioner, 51 T.C. 1049
(1969), acq., 1969-2 C.B. xxv; United Surgical Steel Co. v. Commissioner,
54 T.C. 1215 (1970), acq., 1971-2 C.B. 3; G.C.M. 39584 (December 3, 1986).
In the context of this transaction, the most important considerations are:
(i) whether the Transferor bears the burdens of ownership (i.e., the risk
of loss from the Receivables) and (ii) whether the Transferor retains the
benefits of ownership (i.e., the potential for gain from the Receivables).
The following discussion considers these as well as other relevant factors
and demonstrates that each factor supports characterization of the Offered
Securities as debt.
1. The Burdens of Ownership are Not Borne by holders of Offered
Securities. The principal burden of ownership with respect to the
Receivables is risk of loss arising from defaulted payments and changes in
interest rates. These risks, under all reasonable default scenarios, are
not borne by the holders of Offered Securities.
Defaults on the Receivables that are allocable to the Class A
Securityholders will first be absorbed by Excess Spread, Excess Finance
Charge Collections and Redirected Principal Collections. Based on the
historical performance of the assets, a present value calculation prepared
by Merrill Lynch, Pierce, Fenner & Smith Incorporated indicates that (i)
the net present value of the Excess Finance Charge Collections, discounted
at the weighted average of the Class A Interest Rate, the Class B Interest
Rate, and the Collateral Rate(2), and assuming that LIBOR remains at its rate
as of the date of such present value calculation (and including the cash
provided by the Yield Supplement Account), would be as much as 12.45% of
the sum of the Class A Invested Amount, the Class B Invested Amount, and
the Collateral Invested Amount and the Class D Invested Amount plus such
net present value. Redirected Principal Collections from the Collateral
Invested Amount and the Class D Securities would then be available to
protect the Class A Securityholders and Class B Securityholders against
default losses.
---------------------------
(2) Because the Class D Securities will not be characterized as debt
and is subordinated to the other classes, it seems appropriate to
describe the spread in terms of the Class A Securities, Class B
Securities and the collateral Invested Amount.
Defaults on the Receivables that are allocable to the Class B
Securityholders will be absorbed by Excess Spread, Excess Finance Charge
Collections and Redirected Principal Collections (to the extent available
after absorption of defaults allocated to the Class A Securityholders).
In reasonable interest rate scenarios, the Transferor bears the
risk that the interest rate on the Offered Securities will exceed the
interest income earned on the Receivables because the Transferor is
ultimately entitled to receive Excess Finance Charge Collections. A Payout
Event will occur if the average Portfolio Yield for any three consecutive
Monthly Periods is reduced to a rate that is less than the average Base
Rates for such three consecutive Monthly Periods.
The "Base Rate" is, in general terms, the rate that would be
necessary to fund interest on the Offered Securities, the Collateral
Interest, and the portion of the Servicing Fee allocable to investors, and
the "Portfolio Yield" is, in general terms, the yield allocable to the
Investor Interest for the month, calculated on a cash basis after taking
into account defaults. A Pay Out Event will occur automatically (without a
vote of the Securityholders) if the portfolio does not continue to provide
sufficient funds allocable to the Offered Securities and the Collateral
Interest to make payments on the Offered Securities and the Collateral
Interest, and pay the portion of the Servicing Fee allocable to investors,
for three consecutive Monthly Periods.
Finally, the likelihood of the Securityholders bearing any actual
loss is remote, since such losses would occur only if Excess Finance Charge
Collections as well as Redirected Principal Collections with respect to the
Class D Invested Amount and the Collateral Invested Amount were both
exhausted. Furthermore, the Class A Securities will be rated "Aaa" and the
Class B Securities will be rated "A1" by Moody's Investors Service, Inc.;
the Class A Securities will be rated "AAA" and the Class B Securities will
be rated "AAA" and the Class B Securities will be rated "A" by Standard &
Poor's Ratings Services; and the Class A Securities will be rated "A" by
Fitch IBCA, Inc. Such ratings indicate a strong likelihood that all
interest and principal will be paid and that the Securityholders do not
bear the risk of loss associated with ownership of the Receivables.
2. The Benefits of Ownership are not Transferred to
Securityholders. If market interest rates for comparable receivables
decrease in relation to the yield on the Receivables, the Receivables will
increase in value. If interest rates remain constant, but customers take a
longer period of time to pay their principal balances, the value of the
Receivables will also increase because the Transferor will continue to
receive the yield on the Receivables over a longer period of time.
Regardless of interest rates, a change in customer payment patterns
resulting in fewer defaults than expected based on historical experience
will also increase the value of the Receivables. Any increase (to the
extent permitted by applicable law and the terms of the Agreement) in the
rate at which interest is assessed on the Accounts will also increase the
value of the Receivables and the amount of Excess Finance Charge
Collections.
The Agreement provides that the rate of return to the
Securityholders (0.10% over LIBOR in the case of the Class A Securities and
0.31% over LIBOR in the case of the Class B Securities) is set at the time
of the issuance of the Offered Securities; in contrast, finance charges
payable with respect to certain Receivables will adjust periodically
according to an index while finance charges payable with respect to the
balance of the Receivables will be determined at a fixed rate which is
expected to exceed the interest rate on the Securities. Holdings, as the
owner for tax purposes of the assets of the Transferor and Funding,
receives the remaining proceeds from the Receivables (after payment of
fixed costs); consequently, all of the benefit of any increase in the value
of the Receivables or in the Excess Finance Charge Collections will inure
to the Transferor rather than to the holders of the Offered Securities.
3. Other Factors. A number of other factors support the
conclusion that the Offered Securities are in substance debt. The terms of
the Receivables differ materially from the terms of the Offered Securities
with regard to their respective interest rates and maturity dates. The
Transferor will retain control and possession of the Receivables.
Holdings, as Servicer, is responsible for servicing, management, collection
and administration of the Receivables and will bear all costs and expenses
incurred in connection with such activities, although an amount to
compensate the Servicer for collection activity is permitted by the
Agreement to be periodically withdrawn by the Servicer from the assets held
by the Trust to secure the Offered Securities. The obligors on the
Receivables will not be notified of the transfer of the Receivables to the
Trust. The Trustee, on behalf of the Securityholders, has the right to
inspect the Servicer's documentation on the Receivables, a right which is
common in loan transactions. In addition, Holdings, as Servicer, collects
the Receivables without significant supervision by the Trustee or
Securityholders. The foregoing additional factors support the conclusion
that the transactions described in the Agreement constitute loans made by
the Securityholders.
B. Form versus Economic Substance. There is a series of cases that
have been interpreted to stand for the proposition that the Internal
Revenue Service may require a taxpayer to be bound by the form of a
transaction and which preclude the taxpayer from arguing that the form of a
transaction should be disregarded in favor of the economic substance of the
transaction. See, e.g., Commissioner v. Danielson, 378 F.2d 771 (3rd
Cir.), cert. denied, 389 U.S. 858 (1967)(purchase agreement expressly
allocated consideration to a covenant not to compete; however, taxpayer
reported the entire amount as proceeds from the sale of capital assets;
held: the taxpayer could not contradict the form of the agreement and
attack the allocation to the covenant not to compete except in cases of
fraud, duress or undue influence); Spector v. U.S., 641 F.2d 376 (5th Cir.
1981)(pursuant to a written agreement, a partnership deducted Section 736
guarantee payments to a withdrawing partner but the partner, contrary to
the terms of the agreement treated such payments as Section 741 capital
gain payments realized upon the sale of the partnership interest; held:
payments were Section 736 ordinary income); Sullivan v. U.S., 618 F.2d 1001
(3d Cir. 1980)(taxpayer disavowed original allocation of purchase price
between land and agreements to lease space in a shopping mall to be built
on the land when, upon audit, the gain on the sale of the leases was held
to be short-term capital gain; held: contract allocations must be
respected).
The Danielson line of cases covers diverse transactions that are
highly fact specific and difficult to summarize. In general, these cases
involve taxpayers who, contrary to the written documents, later adopt
inconsistent positions regarding (i) the allocation of purchase price, (ii)
the valuation of assets or (iii) the character of income or gain to the
detriment of the Treasury. None of these cases is directly applicable,
however, to the facts of the transactions described in the Agreement.
Unlike the Danielson line of cases, the Securityholders, the Servicer, and
the Transferor do not have adverse economic interests with respect to the
Offered Securities.
In addition, the form of the transaction is consistent with
characterization of the Offered Securities as debt. Accordingly, these
authorities are not applicable to the transaction and will not cause the
transaction to be treated as a sale of an interest in the Receivables to
the holders of the Offered Securities. An analysis of the following
demonstrates that the form of the transaction is consistent with the
characterization of the transaction as an issuance of debt not as a sale of
the Receivables to Securityholders.
1. The Prospectus, the Agreement and the Offered Securities
state that the Securityholders, Security Owners and the Transferor will
treat the transaction as a financing for federal and state income tax
purposes.
2. The Offered Securities will state that they represent an
"undivided interest" in the Trust. However, the rights of a Securityholder
are only to receive payments of interest at the applicable Interest Rate on
the outstanding amount of the Offered Securities and repayment of the par
amount of the Offered Securities on or prior to their maturity dates. The
Offered Securities will not provide the Securityholders with any specific
rights in any Receivable, but rather will provide only for rights to cash
flow from the Receivables pool. Moreover, upon fulfillment of certain
conditions, the Transferor may add additional accounts to, or remove
accounts from, the pool of accounts the Receivables in which secure the
Offered Securities.
3. Although the Offered Securities state that they represent an
"undivided interest" in the Trust, during the Amortization Period, the
allocation of Principal Receivables to the Offered Securities will be
disproportionately large in comparison to the Floating Percentage. In
addition, certain collections of principal allocable to other Series of
securities may be available to make payments of principal on the Offered
Securities.
Furthermore it is difficult to distinguish clearly between
"form," "substance," and nomenclature. The language in the Agreement that
could be read to suggest that a sale to the Trust is intended has no effect
on the contractual rights of the parties. Regardless of whether "sale"
language or "pledge" language is employed in the Agreement, the economic
rights of the Securityholders are not affected. See Frank Lyon Co. v.
U.S., 435 U.S. 561, 583-84 (1978)(form is the structure of the underlying
economic transaction); Freesen v. Commissioner, 798 F.2d 195 (7th Cir.
1986), rev'g 84 T.C. 920("form" must be distinguished from nomenclature);
Coulter Electronics, Inc. v. Commissioner, 59 T.C.M. 350 (1990), aff'd, 943
F.2d 1318 (11th Cir. 1991).
If certain aspects of the transaction should be determined to be
inconsistent with treatment of the Offered Securities as debt and the form
of the transaction is therefore ambiguous, numerous cases hold that the
economic substance of the transaction controls the transaction's
characterization. Elrod v. Commissioner, 87 T.C. 1046, 1065 (1986); Smith
v. Commissioner, 82 T.C. 705, 713 (1984); Morrison v. Commissioner, 59 T.C.
248, 256 (1972), acq., 1973-2 C.B. 3; Kreider v.Commissioner, 762 F.2d.
580, 588 (7th Cir. 1985); Comdisco, Inc. v. U.S., 756 F.2d. 569, 578 (7th
Cir. 1985). In such circumstance, it would be inappropriate to restrict
taxpayers to the "four corners" of their document, since the written
instrument by its own terms, is unclear. "The Danielson rule . . . [is
not] applicable to exclude parol evidence offered with respect to an
ambiguous document." Elrod, supra at 1066. Accordingly, if the form of the
transaction is deemed to be ambiguous, a court would look to evidence of
the transaction's economic substance to determine its character.
C. Divergent Accounting Treatment. In Notice 94-47, 1994-1 C.B.
357, the Internal Revenue Service has taken the position that the fact that
an instrument is intended to be treated differently for tax purposes than
for other purposes, including regulatory accounting purposes, is a key
factor to be considered in determining whether the instrument should be
characterized as debt or equity for federal income tax purposes. That
factor, however, does not by itself determine the classification of the
instrument for tax purposes; accordingly, the fact that the Transferor
intends to report the transaction as a sale of the Receivables to
Securityholders for certain regulatory and financial accounting purposes
does not by itself control the result for tax purposes.
Indeed, the Supreme Court has frequently rejected the proposition
that the financial accounting treatment of a transaction controls its tax
treatment. For example, in Cottage Savings Ass'n v. Commissioner, 499 U.S.
554 (1991), rev'g 890 F.2d 848 (6th Cir. 1989), rev'g 90 T.C. 372 (1988),
reciprocal "sales" of mortgage loans were respected as sales for federal
income tax purposes (permitting thrifts to realize losses that produced
loss carrybacks and tax refunds) even though such transactions were not
treated as sales for regulatory accounting purposes. Thus, thrifts were
able to generate tax losses without such losses being reflected on their
financial statements for regulatory accounting purposes.(3)
-----------------------
(3) It should be noted that in Cottage Savings the legal form of the
transaction (which was a sale) was respected. Thus, the taxpayer
was not asserting a tax position inconsistent with the form of the
transaction. Here, the language describing the transfer of the
Receivables to the Trust is ambiguous.
Several other Supreme Court cases demonstrate that divergence
between tax and financial accounting is not uncommon. Thor Power Tool Co.
v. Commissioner, 439 U.S. 552, 538-44 (1979)(company's inventory deductions
for financial accounting purposes were disallowed for federal income tax
purposes--"any presumptive equivalency between tax and financial accounting
would be unacceptable"); Commissioner v. Hansen, 360 U.S. 446
(1959)(reserve to cover contingent liability in event of nonperformance of
guaranty); Lucas v. American Code Co., 280 U.S. 445 (1930)(reserve to cover
expected liability on contested lawsuit). See also Frank Lyon Co. v.
United States, supra, at 577 (financial accounting treatment of a mortgage
reflected the taxpayer's proper tax treatment of a sale-leaseback
transaction although tax and accounting treatment "need not necessarily be
the same").
*
Based on the foregoing, although there is no authority directly
applicable to the facts of this transaction, in our opinion the substance
of the transaction is consistent with the characterization of the Offered
Securities as debt, and the Offered Securities will properly be treated as
debt for federal income tax purposes.
II. Characterization of the Trust.
The use of a trust form of issuer raises a number of issues
regarding its proper characterization for federal income tax purposes. In
many respects, the Trust is similar to trusts established to hold
collateral pledged as security in connection with lending transactions. If
interests in the Trust which are not held by the Transferor are treated as
debt for federal income tax purposes, the Trust will be disregarded for
federal income tax purposes, and will be characterized instead, as a mere
security arrangement. Treas. Reg. section 1.61-13(b); Rev. Rul. 76-265,
1976-2 C.B. 448; see also Rev. Rul. 73-100, 1973-1 C.B. 613 (domestic
corporation's transfer of securities to Canadian security holder, to secure
liabilities to policyholders in Canada, does not create a trust where
discretionary powers retained by corporation); Rev. Rul. 71-119, 1971 C.B.
163 (settlement fund administered by "trustee" not a trust).
The Trust will, however, also issue the Collateral Interest to
third parties concurrently with the issuance of the Offered Securities. If
the Collateral Interest was ultimately not characterized as debt, it would
be characterized as an interest in a partnership based on the following
analysis.
If the Collateral Interest is viewed as an equity interest in the
Trust, the Trust would be subject to the rules of entity classification
under Section 7701 of the Code and the Treasury regulations thereunder.
Under these rules, a "business entity" with at least two members is
classified as a partnership unless (i) it is required to be classified as a
corporation or (ii) it affirmatively elects to be classified as an
association taxable as a corporation. Treas. Reg. section 301.7701-3(a).
In this case, the Trust would have at least two members: The Transferor
and the holder of any interest in the Trust not characterized as
indebtedness for federal tax purposes. In addition, the Trust is not one
of the kind of entities which are required to be classified as a
corporation under Treas. Reg. section 301.7701-2(b). Thus, assuming the
Trust would not elect to be classified as an association taxable as a
corporation, it would be classified as a partnership.(4)
-------------------------
(4) This discussion also assumes that the Trust is a "business entity."
Generally, the term "business entity" means an entity recognized
for federal tax purposes as a separate entity which is not classified
as a trust under the Code. Treas. Reg. section 301.7701-2(a).
*
Accordingly, based on the foregoing and assuming the Trust does
not elect to be classified as an association taxable as a corporation, the
Trust would be characterized as a partnership for federal income tax
purposes.
Publicly Traded Partnership.
Under Section 7704 of the Code, a partnership will constitute a
"publicly traded partnership" taxable as a corporation if interests in the
partnership are traded on an established securities market or are readily
tradable on a secondary market (or the substantial equivalent thereof).
Treas. Reg. section 1.7704-1 provides a "safe harbor" from
treatment as a publicly traded partnership if (i) no interest in the
partnership is "traded on an established securities market," (ii) (subject
to certain exceptions) all interests in the partnership were issued in a
transaction (or transactions) that was not required to be registered under
the Securities Act of 1933 and (iii)(subject to certain exceptions) the
partnership does not have more than one hundred partners at any time during
the taxable year of the partnership. Based on a representation of the
Transferor, it is our understanding that there are not today, and have not
been at any time during the currrent taxable year, more than one hundred
holders of the Transferor Interest, or any interests in the foregoing or of
other interests in the Trust, or securities secured by interests in the
Trust, with respect to which an opinion was not rendered that such
interests will be treated as debt for federal income tax purposes, nor are
such interests "traded on an established securities market." Moreover, the
Loan Agreement, contains provisions intended to limit the total number of
holders of the Collateral Interests and similar interests in the Trust to
less than 100, and the CA Investors covenant to restrict transfers of such
interests in a manner so as to prevent such interests from being "traded on
an established securities market." Accordingly, as of the date hereof, the
Trust is not a "publicly traded partnership" taxable as a corporation.
There is no assurance that the Trust would not be treated as a publicly
traded partnership taxable as a corporation in the future if the total
number of holders of interests in the Trust that are not properly
classified as debt were to exceed one hundred, or if any of such interests
were deemed to be "traded on an established securities market."
III. Delaware and New York Income Tax Characterization of the Offered
Securities.
In rendering the following opinion regarding state taxation in
Delaware and New York, we have considered and relied upon the applicable
provisions of the tax laws of Delaware and New York, the regulations
promulgated thereunder, cases and administrative rulings and such other
authorities as we have deemed appropriate.
Based on the foregoing, although there is no authority directly
applicable to the facts of this transaction, in our opinion the substance
of the transaction is consistent with the characterization of the Offered
Securities as debt, and the Offered Securities will properly be treated as
debt for Delaware income tax and New York Franchise Tax purposes.
* * *
This opinion is being furnished to you solely for your benefit
and is not to be used, circulated, quoted, or otherwise referred to for any
purpose without our express written permission.
Very truly yours,
Skadden, Arps, Slate, Meagher & Flom LLP
SCHEDULE A TO OPINION DATED JUNE 26, 1998
FOR PARTNERS FIRST CREDIT CARD MASTER TRUST, SERIES 1998-2
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
The Bank of New York,
as Trustee
101 Barclay Street 12E
New York, New York 10286
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as Representative of the several Underwriters
World Financial Center - North Tower
250 Vesey Street
New York, New York 10281-1352
Moody's Investors Service, Inc.
99 Church Street, 4th Floor
New York, New York 10007
Standard & Poor's Rating Service, Inc.
25 Broadway, 15th Floor
New York, New York 10004
June 26, 1998
The Persons Listed on
Schedule I hereto
Re: Partners First Credit Card Master Trust
$528,000,000 Class A Series 1998-3 Floating Rate Asset Backed Securities
$113,000,000 Class B Series 1998-3 Floating Rate Asset Backed Securities
Ladies and Gentlemen:
You have requested our opinion as to certain federal and state
income tax consequences of the issuance of securities pursuant to the
Amended and Restated Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of June 26, 1998, among the Partners First
Receivables Funding, LLC, a Delaware limited liability company, as the
transferor (the "Transferor"), Partners First Holdings, LLC, a Delaware
limited liability company, as servicer ("Holdings") and The Bank of New
York, as trustee (the "Trustee") (the "Pooling and Servicing Agreement") of
the Partners First Credit Card Master Trust (the "Trust"), as supplemented
by the Series 1998-3 Supplement (the "Series 1998-3 Supplement"), dated as
of June 26, 1998, between the Transferor, Holdings and the Trustee (such
Pooling and Servicing Agreement, together with the Series 1998-3
Supplement, hereinafter collectively referred to as the "Agreement").(5)
Specifically, you have asked us whether the Class A Series 1998-3 Floating
Rate Asset Backed Securities (the "Class A Securities") and the Class B
Series 1998-3 Floating Rate Asset Backed Securities (the "Class B
Securities" and, together with the Class A Securities, the "Offered
Securities") purchased by investors will be characterized as indebtedness
for federal income tax purposes and for Delaware and New York state income
tax purposes and whether the Trust will be classified as an association (or
a publicly traded partnership) taxable as a corporation.
------------------------
(5) Each capitalized term used and not otherwise defined herein shall have
the beaming assigned to such term in the Agreement.
In connection with your request, we have examined and relied upon (i)
the prospectus, dated June 22, 1998, and the prospectus supplement, dated
June 22, 1998, for the Securities (such prospectus and prospectus
supplement being hereinafter referred to as the "Prospectus"); (ii) the
Registration Statement on Form S-3 (Nos. 333-29495 and 333-29495-01)
relating to the Trust; (iii) the Agreement; and (iv) such other documents
as we have deemed material to the opinions set forth herein. Our opinions
are based on, among other things, the initial and continued accuracy of the
information, statements, representations, and covenants contained in the
Agreement, and the other documents referred to herein, and we have assumed
that all parties to such documents will comply with their obligations
thereunder and that all such documents are enforceable according to their
terms.
Our opinion is also based upon the Internal Revenue Code of 1986, as
amended (the "Code"), administrative rulings, judicial decisions, proposed,
temporary, and final Treasury regulations, and other applicable
authorities. The statutory provisions, regulations, and interpretations
upon which our opinions are based are subject to change, and such changes
could apply retroactively. In addition, there can be no assurance that
positions contrary to those stated in our opinion may not be asserted by
the Internal Revenue Service.
In our opinion, under current law as of the date hereof: (i) the
Offered Securities will constitute indebtedness for federal income tax
purposes and for Delaware and New York state income tax purposes and (ii)
the Trust will not be classified as an association (or a publicly traded
partnership) taxable as a corporation for federal income tax purposes.
III. Federal Income Tax Characterization of the Securities.
The Series 1998-3 Securities will consist of the Class A
Securities, having an initial principal amount of $528,000,000, the Class B
Securities having an initial principal amount of $113,000,000, the
Collateral Interest, having an initial principal amount of $67,000,000, and
the Class D Securities having an initial principal amount of $42,000,000.
The Class A Securities and the Class B Securities will be sold initially to
Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Collateral
Invested Amount (which is subordinate to the Class A Securities and Class B
Securities) will be purchased by Union Bank of Switzerland, New York Branch
and will be subject to transfer restrictions. In addition, the Trust will
issue the Transferor Security to the Transferor. The Transferor Security
represents an equity interest in the Receivables retained by the
Transferor. Because the Transferor and its immediate parent are both
single member LLCs, each of them will be disregarded for federal income tax
purposes and the Transferor Security will be treated as owned by Partners
First Holdings, LLC ("Holdings"). In addition, because Partners First
Funding LLC, ("Funding") is also a single member LLC owned by Holdings, any
interest in the Receivables held by Funding will be treated as held by
Holdings for federal income tax purposes.
A. Economic Substance of the Transaction. If the economic substance
of a transaction differs from the form in which it is cast, except in
certain limited circumstances (see discussion below), the substance, rather
than the form, governs the federal income tax consequences of the
transaction. Gregory v. Helvering, 293 U.S. 465 (1935); Helvering v. F. &
R. Lazarus & Co., 308 U.S. 252, aff'g, 101 F.2d 728 (6th Cir. 1939); Gatlin
v. Commissioner, 34 B.T.A. 50 (1936).
Whether the Offered Securities are in substance debt or ownership
interests in the Receivables is based on a determination of which party to
the transaction holds the "substantial incidents of ownership." The courts
have identified a variety of factors that must be considered in making that
determination. See, Town & Country Food Co. v. Commissioner, 51 T.C. 1049
(1969), acq., 1969-2 C.B. xxv; United Surgical Steel Co. v. Commissioner,
54 T.C. 1215 (1970), acq., 1971-2 C.B. 3; G.C.M. 39584 (December 3, 1986).
In the context of this transaction, the most important considerations are:
(i) whether the Transferor bears the burdens of ownership (i.e., the risk
of loss from the Receivables) and (ii) whether the Transferor retains the
benefits of ownership (i.e., the potential for gain from the Receivables).
The following discussion considers these as well as other relevant factors
and demonstrates that each factor supports characterization of the Offered
Securities as debt.
1. The Burdens of Ownership are Not Borne by holders of Offered
Securities. The principal burden of ownership with respect to the
Receivables is risk of loss arising from defaulted payments and changes in
interest rates. These risks, under all reasonable default scenarios, are
not borne by the holders of Offered Securities.
Defaults on the Receivables that are allocable to the Class A
Securityholders will first be absorbed by Excess Spread, Excess Finance
Charge Collections and Redirected Principal Collections. Based on the
historical performance of the assets, a present value calculation prepared
by Merrill Lynch, Pierce, Fenner & Smith Incorporated indicates that (i)
the net present value of the Excess Finance Charge Collections, discounted
at the weighted average of the Class A Interest Rate, the Class B Interest
Rate, and the Collateral Rate(6), and assuming that LIBOR remains at its rate
as of the date of such present value calculation (and including the cash
provided by the Yield Supplement Account), would be as much as 17.91% of
the sum of the Class A Invested Amount, the Class B Invested Amount, and
the Collateral Invested Amount and the Class D Invested Amount plus such
net present value. Redirected Principal Collections from the Collateral
Invested Amount and the Class D Securities would then be available to
protect the Class A Securityholders and Class B Securityholders against
default losses.
---------------------------
(6) Because the Class D Securities will not be characterized as debt
and is subordinated to the other classes, it seems appropriate to
describe the spread in terms of the Class A Securities, Class B
Securities and the collateral Invested Amount.
Defaults on the Receivables that are allocable to the Class B
Securityholders will be absorbed by Excess Spread, Excess Finance Charge
Collections and Redirected Principal Collections (to the extent available
after absorption of defaults allocated to the Class A Securityholders).
In reasonable interest rate scenarios, the Transferor bears the
risk that the interest rate on the Offered Securities will exceed the
interest income earned on the Receivables because the Transferor is
ultimately entitled to receive Excess Finance Charge Collections. A Payout
Event will occur if the average Portfolio Yield for any three consecutive
Monthly Periods is reduced to a rate that is less than the average Base
Rates for such three consecutive Monthly Periods.
The "Base Rate" is, in general terms, the rate that would be
necessary to fund interest on the Offered Securities, the Collateral
Interest, and the portion of the Servicing Fee allocable to investors, and
the "Portfolio Yield" is, in general terms, the yield allocable to the
Investor Interest for the month, calculated on a cash basis after taking
into account defaults. A Pay Out Event will occur automatically (without a
vote of the Securityholders) if the portfolio does not continue to provide
sufficient funds allocable to the Offered Securities and the Collateral
Interest to make payments on the Offered Securities and the Collateral
Interest, and pay the portion of the Servicing Fee allocable to investors,
for three consecutive Monthly Periods.
Finally, the likelihood of the Securityholders bearing any actual
loss is remote, since such losses would occur only if Excess Finance Charge
Collections as well as Redirected Principal Collections with respect to the
Class D Invested Amount and the Collateral Invested Amount were both
exhausted. Furthermore, the Class A Securities will be rated "Aaa" and the
Class B Securities will be rated "A1" by Moody's Investors Service, Inc.;
the Class A Securities will be rated "AAA" and the Class B Securities will
be rated "AAA" and the Class B Securities will be rated "A" by Standard &
Poor's Ratings Services; and the Class A Securities will be rated "A" by
Fitch IBCA, Inc. Such ratings indicate a strong likelihood that all
interest and principal will be paid and that the Securityholders do not
bear the risk of loss associated with ownership of the Receivables.
2. The Benefits of Ownership are not Transferred to
Securityholders. If market interest rates for comparable receivables
decrease in relation to the yield on the Receivables, the Receivables will
increase in value. If interest rates remain constant, but customers take a
longer period of time to pay their principal balances, the value of the
Receivables will also increase because the Transferor will continue to
receive the yield on the Receivables over a longer period of time.
Regardless of interest rates, a change in customer payment patterns
resulting in fewer defaults than expected based on historical experience
will also increase the value of the Receivables. Any increase (to the
extent permitted by applicable law and the terms of the Agreement) in the
rate at which interest is assessed on the Accounts will also increase the
value of the Receivables and the amount of Excess Finance Charge
Collections.
The Agreement provides that the rate of return to the
Securityholders (0.13% over LIBOR in the case of the Class A Securities and
0.36% over LIBOR in the case of the Class B Securities) is set at the time
of the issuance of the Offered Securities; in contrast, finance charges
payable with respect to certain Receivables will adjust periodically
according to an index while finance charges payable with respect to the
balance of the Receivables will be determined at a fixed rate which is
expected to exceed the interest rate on the Securities. Holdings, as the
owner for tax purposes of the assets of the Transferor and Funding,
receives the remaining proceeds from the Receivables (after payment of
fixed costs); consequently, all of the benefit of any increase in the value
of the Receivables or in the Excess Finance Charge Collections will inure
to the Transferor rather than to the holders of the Offered Securities.
3. Other Factors. A number of other factors support the
conclusion that the Offered Securities are in substance debt. The terms of
the Receivables differ materially from the terms of the Offered Securities
with regard to their respective interest rates and maturity dates. The
Transferor will retain control and possession of the Receivables.
Holdings, as Servicer, is responsible for servicing, management, collection
and administration of the Receivables and will bear all costs and expenses
incurred in connection with such activities, although an amount to
compensate the Servicer for collection activity is permitted by the
Agreement to be periodically withdrawn by the Servicer from the assets held
by the Trust to secure the Offered Securities. The obligors on the
Receivables will not be notified of the transfer of the Receivables to the
Trust. The Trustee, on behalf of the Securityholders, has the right to
inspect the Servicer's documentation on the Receivables, a right which is
common in loan transactions. In addition, Holdings, as Servicer, collects
the Receivables without significant supervision by the Trustee or
Securityholders. The foregoing additional factors support the conclusion
that the transactions described in the Agreement constitute loans made by
the Securityholders.
B. Form versus Economic Substance. There is a series of cases that
have been interpreted to stand for the proposition that the Internal
Revenue Service may require a taxpayer to be bound by the form of a
transaction and which preclude the taxpayer from arguing that the form of a
transaction should be disregarded in favor of the economic substance of the
transaction. See, e.g., Commissioner v. Danielson, 378 F.2d 771 (3rd
Cir.), cert. denied, 389 U.S. 858 (1967)(purchase agreement expressly
allocated consideration to a covenant not to compete; however, taxpayer
reported the entire amount as proceeds from the sale of capital assets;
held: the taxpayer could not contradict the form of the agreement and
attack the allocation to the covenant not to compete except in cases of
fraud, duress or undue influence); Spector v. U.S., 641 F.2d 376 (5th Cir.
1981)(pursuant to a written agreement, a partnership deducted Section 736
guarantee payments to a withdrawing partner but the partner, contrary to
the terms of the agreement treated such payments as Section 741 capital
gain payments realized upon the sale of the partnership interest; held:
payments were Section 736 ordinary income); Sullivan v. U.S., 618 F.2d 1001
(3d Cir. 1980)(taxpayer disavowed original allocation of purchase price
between land and agreements to lease space in a shopping mall to be built
on the land when, upon audit, the gain on the sale of the leases was held
to be short-term capital gain; held: contract allocations must be
respected).
The Danielson line of cases covers diverse transactions that are
highly fact specific and difficult to summarize. In general, these cases
involve taxpayers who, contrary to the written documents, later adopt
inconsistent positions regarding (i) the allocation of purchase price, (ii)
the valuation of assets or (iii) the character of income or gain to the
detriment of the Treasury. None of these cases is directly applicable,
however, to the facts of the transactions described in the Agreement.
Unlike the Danielson line of cases, the Securityholders, the Servicer, and
the Transferor do not have adverse economic interests with respect to the
Offered Securities.
In addition, the form of the transaction is consistent with
characterization of the Offered Securities as debt. Accordingly, these
authorities are not applicable to the transaction and will not cause the
transaction to be treated as a sale of an interest in the Receivables to
the holders of the Offered Securities. An analysis of the following
demonstrates that the form of the transaction is consistent with the
characterization of the transaction as an issuance of debt not as a sale of
the Receivables to Securityholders.
1. The Prospectus, the Agreement and the Offered Securities
state that the Securityholders, Security Owners and the Transferor will
treat the transaction as a financing for federal and state income tax
purposes.
2. The Offered Securities will state that they represent an
"undivided interest" in the Trust. However, the rights of a Securityholder
are only to receive payments of interest at the applicable Interest Rate on
the outstanding amount of the Offered Securities and repayment of the par
amount of the Offered Securities on or prior to their maturity dates. The
Offered Securities will not provide the Securityholders with any specific
rights in any Receivable, but rather will provide only for rights to cash
flow from the Receivables pool. Moreover, upon fulfillment of certain
conditions, the Transferor may add additional accounts to, or remove
accounts from, the pool of accounts the Receivables in which secure the
Offered Securities.
3. Although the Offered Securities state that they represent an
"undivided interest" in the Trust, during the Amortization Period, the
allocation of Principal Receivables to the Offered Securities will be
disproportionately large in comparison to the Floating Percentage. In
addition, certain collections of principal allocable to other Series of
securities may be available to make payments of principal on the Offered
Securities.
Furthermore it is difficult to distinguish clearly between
"form," "substance," and nomenclature. The language in the Agreement that
could be read to suggest that a sale to the Trust is intended has no effect
on the contractual rights of the parties. Regardless of whether "sale"
language or "pledge" language is employed in the Agreement, the economic
rights of the Securityholders are not affected. See Frank Lyon Co. v.
U.S., 435 U.S. 561, 583-84 (1978)(form is the structure of the underlying
economic transaction); Freesen v. Commissioner, 798 F.2d 195 (7th Cir.
1986), rev'g 84 T.C. 920("form" must be distinguished from nomenclature);
Coulter Electronics, Inc. v. Commissioner, 59 T.C.M. 350 (1990), aff'd, 943
F.2d 1318 (11th Cir. 1991).
If certain aspects of the transaction should be determined to be
inconsistent with treatment of the Offered Securities as debt and the form
of the transaction is therefore ambiguous, numerous cases hold that the
economic substance of the transaction controls the transaction's
characterization. Elrod v. Commissioner, 87 T.C. 1046, 1065 (1986); Smith
v. Commissioner, 82 T.C. 705, 713 (1984); Morrison v. Commissioner, 59 T.C.
248, 256 (1972), acq., 1973-2 C.B. 3; Kreider v.Commissioner, 762 F.2d.
580, 588 (7th Cir. 1985); Comdisco, Inc. v. U.S., 756 F.2d. 569, 578 (7th
Cir. 1985). In such circumstance, it would be inappropriate to restrict
taxpayers to the "four corners" of their document, since the written
instrument by its own terms, is unclear. "The Danielson rule . . . [is
not] applicable to exclude parol evidence offered with respect to an
ambiguous document." Elrod, supra at 1066. Accordingly, if the form of the
transaction is deemed to be ambiguous, a court would look to evidence of
the transaction's economic substance to determine its character.
C. Divergent Accounting Treatment. In Notice 94-47, 1994-1 C.B.
357, the Internal Revenue Service has taken the position that the fact that
an instrument is intended to be treated differently for tax purposes than
for other purposes, including regulatory accounting purposes, is a key
factor to be considered in determining whether the instrument should be
characterized as debt or equity for federal income tax purposes. That
factor, however, does not by itself determine the classification of the
instrument for tax purposes; accordingly, the fact that the Transferor
intends to report the transaction as a sale of the Receivables to
Securityholders for certain regulatory and financial accounting purposes
does not by itself control the result for tax purposes.
Indeed, the Supreme Court has frequently rejected the proposition
that the financial accounting treatment of a transaction controls its tax
treatment. For example, in Cottage Savings Ass'n v. Commissioner, 499 U.S.
554 (1991), rev'g 890 F.2d 848 (6th Cir. 1989), rev'g 90 T.C. 372 (1988),
reciprocal "sales" of mortgage loans were respected as sales for federal
income tax purposes (permitting thrifts to realize losses that produced
loss carrybacks and tax refunds) even though such transactions were not
treated as sales for regulatory accounting purposes. Thus, thrifts were
able to generate tax losses without such losses being reflected on their
financial statements for regulatory accounting purposes.(7)
----------------------------
(7) It should be noted that in Cottage Savings the legal form of the
transaction (which was a sale) was respected. Thus, the taxpayer
was not asserting a tax position inconsistent with the form of the
transaction. Here, the language describing the transfer of the
Receivables to the Trust is ambiguous.
Several other Supreme Court cases demonstrate that divergence
between tax and financial accounting is not uncommon. Thor Power Tool Co.
v. Commissioner, 439 U.S. 552, 538-44 (1979)(company's inventory deductions
for financial accounting purposes were disallowed for federal income tax
purposes--"any presumptive equivalency between tax and financial accounting
would be unacceptable"); Commissioner v. Hansen, 360 U.S. 446
(1959)(reserve to cover contingent liability in event of nonperformance of
guaranty); Lucas v. American Code Co., 280 U.S. 445 (1930)(reserve to cover
expected liability on contested lawsuit). See also Frank Lyon Co. v.
United States, supra, at 577 (financial accounting treatment of a mortgage
reflected the taxpayer's proper tax treatment of a sale-leaseback
transaction although tax and accounting treatment "need not necessarily be
the same").
*
Based on the foregoing, although there is no authority directly
applicable to the facts of this transaction, in our opinion the substance
of the transaction is consistent with the characterization of the Offered
Securities as debt, and the Offered Securities will properly be treated as
debt for federal income tax purposes.
IV. Characterization of the Trust.
The use of a trust form of issuer raises a number of issues
regarding its proper characterization for federal income tax purposes. In
many respects, the Trust is similar to trusts established to hold
collateral pledged as security in connection with lending transactions. If
interests in the Trust which are not held by the Transferor are treated as
debt for federal income tax purposes, the Trust will be disregarded for
federal income tax purposes, and will be characterized instead, as a mere
security arrangement. Treas. Reg. section 1.61-13(b); Rev. Rul. 76-265,
1976-2 C.B. 448; see also Rev. Rul. 73-100, 1973-1 C.B. 613 (domestic
corporation's transfer of securities to Canadian security holder, to secure
liabilities to policyholders in Canada, does not create a trust where
discretionary powers retained by corporation); Rev. Rul. 71-119, 1971 C.B.
163 (settlement fund administered by "trustee" not a trust).
The Trust will, however, also issue the Collateral Interest to
third parties concurrently with the issuance of the Offered Securities. If
the Collateral Interest was ultimately not characterized as debt, it would
be characterized as an interest in a partnership based on the following
analysis.
If the Collateral Interest is viewed as an equity interest in the
Trust, the Trust would be subject to the rules of entity classification
under Section 7701 of the Code and the Treasury regulations thereunder.
Under these rules, a "business entity" with at least two members is
classified as a partnership unless (i) it is required to be classified as a
corporation or (ii) it affirmatively elects to be classified as an
association taxable as a corporation. Treas. Reg. section 301.7701-3(a).
In this case, the Trust would have at least two members: The Transferor
and the holder of any interest in the Trust not characterized as
indebtedness for federal tax purposes. In addition, the Trust is not one
of the kind of entities which are required to be classified as a
corporation under Treas. Reg. section 301.7701-2(b). Thus, assuming the
Trust would not elect to be classified as an association taxable as a
corporation, it would be classified as a partnership.(8)
-------------------------
(8) This discussion also assumes that the Trust is a "business entity."
Generally, the term "business entity" means an entity recognized
for federal tax purposes as a separate entity which is not classified
as a trust under the Code. Treas. Reg. section 301.7701-2(a).
*
Accordingly, based on the foregoing and assuming the Trust does
not elect to be classified as an association taxable as a corporation, the
Trust would be characterized as a partnership for federal income tax
purposes.
Publicly Traded Partnership.
Under Section 7704 of the Code, a partnership will constitute a
"publicly traded partnership" taxable as a corporation if interests in the
partnership are traded on an established securities market or are readily
tradable on a secondary market (or the substantial equivalent thereof).
Treas. Reg. section 1.7704-1 provides a "safe harbor" from
treatment as a publicly traded partnership if (i) no interest in the
partnership is "traded on an established securities market," (ii) (subject
to certain exceptions) all interests in the partnership were issued in a
transaction (or transactions) that was not required to be registered under
the Securities Act of 1933 and (iii)(subject to certain exceptions) the
partnership does not have more than one hundred partners at any time during
the taxable year of the partnership. Based on a representation of the
Transferor, it is our understanding that there are not today, and have not
been at any time during the currrent taxable year, more than one hundred
holders of the Transferor Interest, or any interests in the foregoing or of
other interests in the Trust, or securities secured by interests in the
Trust, with respect to which an opinion was not rendered that such
interests will be treated as debt for federal income tax purposes, nor are
such interests "traded on an established securities market." Moreover, the
Loan Agreement, contains provisions intended to limit the total number of
holders of the Collateral Interests and similar interests in the Trust to
less than 100, and the CA Investors covenant to restrict transfers of such
interests in a manner so as to prevent such interests from being "traded on
an established securities market." Accordingly, as of the date hereof, the
Trust is not a "publicly traded partnership" taxable as a corporation.
There is no assurance that the Trust would not be treated as a publicly
traded partnership taxable as a corporation in the future if the total
number of holders of interests in the Trust that are not properly
classified as debt were to exceed one hundred, or if any of such interests
were deemed to be "traded on an established securities market."
III. Delaware and New York Income Tax Characterization of the Offered
Securities.
In rendering the following opinion regarding state taxation in
Delaware and New York, we have considered and relied upon the applicable
provisions of the tax laws of Delaware and New York, the regulations
promulgated thereunder, cases and administrative rulings and such other
authorities as we have deemed appropriate.
Based on the foregoing, although there is no authority directly
applicable to the facts of this transaction, in our opinion the substance
of the transaction is consistent with the characterization of the Offered
Securities as debt, and the Offered Securities will properly be treated as
debt for Delaware income tax and New York Franchise Tax purposes.
* * *
This opinion is being furnished to you solely for your benefit
and is not to be used, circulated, quoted, or otherwise referred to for any
purpose without our express written permission.
Very truly yours,
Skadden, Arps, Slate, Meagher & Flom LLP
SCHEDULE A TO OPINION DATED JUNE 26, 1998
FOR PARTNERS FIRST CREDIT CARD MASTER TRUST, SERIES 1998-3
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
The Bank of New York,
as Trustee
101 Barclay Street 12E
New York, New York 10286
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as Representative of the several Underwriters
World Financial Center - North Tower
250 Vesey Street
New York, New York 10281-1352
Moody's Investors Service, Inc.
99 Church Street, 4th Floor
New York, New York 10007
Standard & Poor's Rating Service, Inc.
25 Broadway, 15th Floor
New York, New York 10004
