<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 9, 1998
REGISTRATION NO. 333-40381
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TRAVELERS BANK CREDIT CARD MASTER TRUST I
(Issuer of Securities)
CC CREDIT CARD CORPORATION
(Originator of the Trust described herein)
(Exact Name of Registrant as Specified in Its Certificate of Incorporation)
<TABLE>
<S> <C>
DELAWARE 52-2069082
(State or Other Jurisdiction (I.R.S. Employer
of Organization) Identification Number)
</TABLE>
CC CREDIT CARD CORPORATION
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(212) 816-0300
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
STEPHANIE B. MUDICK, ESQ.
DEPUTY GENERAL COUNSEL
TRAVELERS GROUP INC.
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(212) 816-8000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
COPIES TO:
CAMERON L. COWAN, ESQ.
ORRICK, HERRINGTON & SUTCLIFFE LLP
WASHINGTON HARBOUR
3050 K STREET, N.W.
WASHINGTON, D.C. 20007
(202) 339-8400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
If any of the securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. / / ________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. / / ________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT* OFFERING PRICE* REGISTRATION FEE
<S> <C> <C> <C> <C>
Asset Backed Certificates................... $1,000,000 100% $1,000,000 $304
</TABLE>
* Estimated solely for the purpose of calculating the registration fee.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE AND WITHOUT DELIVERY OF A FINAL PROSPECTUS SUPPLEMENT AND ACCOMPANYING
PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED , 199
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 199 )
TRAVELERS BANK CREDIT CARD MASTER TRUST I
$ CLASS A [FLOATING-RATE] [ %]
ASSET-BACKED CERTIFICATES,
SERIES 19 -
$ CLASS B [FLOATING-RATE] [ %]
ASSET-BACKED CERTIFICATES,
SERIES 199 -
CC CREDIT CARD CORPORATION
TRANSFEROR
TRAVELERS BANK & TRUST, FSB,
SERVICER
---------------------
Each Class A [Floating-Rate] [ %] Asset-Backed Certificate, Series 199 -
(collectively, the "Class A Certificates") and each Class B [Floating-Rate]
[ %] Asset-Backed Certificate, Series 199 - (collectively, the "Class B
Certificates" and, together with the Class A Certificates, the "Certificates")
will represent an undivided interest in the assets of the Travelers Bank Credit
Card Master Trust I (the "Trust") formed pursuant to a Pooling and Servicing
Agreement among CC Credit Card Corporation, as Transferor (the "Transferor"),
Travelers Bank & Trust, fsb, as Servicer (the "Servicer"), and The Bank of New
York, as Trustee (the "Trustee").
(CONTINUED ON NEXT PAGE)
------------------------------
THERE CURRENTLY IS NO SECONDARY MARKET FOR THE CERTIFICATES, AND THERE IS NO
ASSURANCE THAT ONE WILL DEVELOP. THE UNDERWRITER[S] EXPECT, BUT ARE NOT
OBLIGATED, TO MAKE A MARKET IN THE CERTIFICATES. THERE IS NO ASSURANCE THAT ANY
SUCH MARKET WILL DEVELOP OR CONTINUE. POTENTIAL INVESTORS SHOULD CONSIDER, AMONG
OTHER THINGS, THE INFORMATION SET FORTH IN "RISK FACTORS" COMMENCING ON PAGE
HEREIN AND ON PAGE IN THE PROSPECTUS.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF CC CREDIT CARD CORPORATION, TRAVELERS BANK &
TRUST, FSB, THE TRAVELERS BANK USA OR ANY AFFILIATE THEREOF, EXCEPT TO THE
LIMITED EXTENT DESCRIBED HEREIN. A CERTIFICATE IS NOT A DEPOSIT AND IS NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC"). THE
RECEIVABLES ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT THE TRUST(1)
<S> <C> <C> <C>
Per Class A Certificate.................................. % % %
Per Class B Certificate.................................. % % %
Total.................................................... $ $ $
</TABLE>
(1) Plus accrued interest, if any, at the rate of , as applicable, from
, .
--------------------------
The Certificates are offered by the Underwriter[s] when, as and if issued by
the Trust and accepted by the Underwriter[s] and subject to the
Underwriter['s][s'] right to reject orders in whole or in part. It is expected
that the Certificates will be offered globally and delivered in book-entry form
on or about , 1997, through the facilities of The Depository Trust
Company, [Cedel Bank, societe anonyme and the Euroclear System.]
------------------------
[UNDERWRITER[S]]
The date of this Prospectus Supplement is , 199
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The property of the Trust includes a portfolio of
VISA-Registered Trademark-* and MasterCard-Registered Trademark- credit card
receivables (the "Receivables") generated or to be generated from time to time
in the ordinary course of business in a portfolio of consumer revolving credit
card accounts (the "Accounts"), all monies due in payment of the Receivables and
certain other property which may include participation interests in pools of
assets primarily consisting of revolving credit card receivables, consumer loan
receivables and other self-liquidating financial assets, all as more fully
described herein, [including the benefits of monies on deposit in certain
accounts of the Trust and earnings thereon.] The Accounts to be designated will
be selected from the total portfolio of consumer credit card accounts of
Travelers Bank & Trust, fsb and The Travelers Bank USA (the "Travelers Consumer
Credit Card Portfolio"). Concurrently with the issuance of the Certificates, the
Trust will issue $ Class C Asset-Backed Interests, Series 199 (the
"Class C Interests"), which will be subordinated to the Certificates as
described herein. Only the Class A Certificates and the Class B Certificates are
offered hereby. [The Transferor will initially retain the Class C Interest.].
The Certificates offered hereby constitute a separate Series of Certificates
being offered by the Transferor from time to time pursuant to the Prospectus
dated , 199 . This Prospectus Supplement does not contain complete
information about the offering of the Certificates. Additional information is
contained in the Prospectus and investors are urged to read both this Prospectus
Supplement and the Prospectus in full. Sales of the Certificates may not be
consummated unless the purchaser has received both this Prospectus Supplement
and the Prospectus. The Receivables arise in accounts which are owned either by
Travelers Bank & Trust, fsb or The Travelers Bank USA. Travelers Bank & Trust,
fsb will service the Receivables. The Certificateholders will be entitled to
certain assets of the Trust, including the right to receive a varying percentage
of each month's collections with respect to the Receivables at the times and in
the manner described herein. The Transferor owns the remaining undivided
interest in the Trust not represented by the Certificates, the Class C Interest
or the certificates of any other Series and any other certificated or
uncertificated interests in the Trust issued as Series Enhancement. The Trust
[has offered and may offer from time to time] [may offer from time to time]
other Series of certificates that represent undivided interests in certain
assets of the Trust, which may have terms significantly different from the
Certificates.
Interest on the Class A Certificates will accrue from [at the rate
of %] [at a floating-rate determined as follows ]. Interest will be
distributed on the Class A Certificates on the day of each month, commencing
, 199 . Interest on the Class B Certificates will accrue from
[at the rate of %] [at a floating-rate determined as follows
]. Interest will be distributed on the Class B Certificates on the
day of each month, commencing , 199 .
The Certificates initially will be represented by certificates which will be
registered in the name of Cede & Co., the nominee of The Depository Trust
Company. The interests of holders of beneficial interests in the Certificates
("Certificate Owners") will be represented by book-entries on the records of The
Depository Trust Company and participating members thereof. Definitive
Certificates will be available to Certificate Owners only under the limited
circumstances described in the Prospectus. See "Description of the
Certificates--Definitive Certificates" in the Prospectus.
[Application will be made to list the Certificates on the [Luxembourg Stock
Exchange; however, no assurance can be given that such listing will be obtained.
Certificateholders should consult with , the Luxembourg listing agent
for the Certificates , phone number , for the status of such
listing.] [other exchanges].]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SERIES
199 - CERTIFICATES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE
OF THE SERIES 199 - CERTIFICATES TO COVER SYDICATE SHORT POSITIONS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING" HEREIN.
- ------------------------
* VISA-Registered Trademark- and MasterCard-Registered Trademark- are
federally registered servicemarks of Visa U.S.A., Inc. and MasterCard
International Inc., respectively.
S-2
<PAGE>
The Certificates offered hereby constitute a separate Series of Certificates
being offered by the Transferor from time to time pursuant to the Prospectus
dated , 199 . This Prospectus Supplement does not contain complete
information about the offering of the Certificates. Additional information is
contained in the Prospectus and investors are urged to read both this Prospectus
Supplement and the Prospectus in full. Sales of the Certificates may not be
consummated unless the purchaser has received both this Prospectus Supplement
and the Prospectus.
S-3
<PAGE>
SUMMARY OF TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus Supplement and the accompanying Prospectus. A
listing of the pages on which some of such terms are defined is found in the
"Index of Defined Terms" in this Prospectus Supplement and the accompanying
Prospectus. Other Series which may be issued pursuant to other similar
prospectus supplements and prospectuses or disclosure documents may also use
such capitalized terms in such prospectuses or documents. However, in such
cases, reference to such terms will, unless the context otherwise requires, only
be made in the context of such other Series.
<TABLE>
<S> <C>
TRUST........................ Travelers Bank Credit Card Master Trust I (the "Trust").
THE CERTIFICATES AND THE
CLASS C INTEREST............. Each of the Class A [Floating-Rate] [ %] Asset-Backed
Certificates, Series 199 (the "Class A Certificates") and
the Class B [Floating-Rate] [ %] Asset-Backed Certificates,
Series 199 (the "Class B Certificates," together with the
Class A Certificates, the "Certificates") offered hereby,
together with the Class C Asset-Backed Interests, Series
199 (the "Class C Interests") represent a specified undi-
vided interest in the Trust Assets allocated to the
Certificates (the "Investor Interest"). The term "Class A
Certificateholders" refers to holders of the Class A
Certificates, the term "Class B Certificateholders" refers
to holders of the Class B Certificates, the term "Cer-
tificateholders" refers to holders of the Certificates, and
the term "Series" refers to any series of certificates
issued by the Trust, including the series designated as
Series 199 ("Series 199 ") of which the Certificates form a
part. The Certificates will be issued pursuant to the
Pooling and Servicing Agreement dated as of ,
1998 (the "Master Pooling and Servicing Agreement"), among
CC Credit Card Corporation (the "Corporation"), as
Transferor (in such capacity, the "Transferor"), Travelers
Bank & Trust, fsb, as servicer (in such capacity, the
"Servicer"), and The Bank of New York as trustee (the
"Trustee"), and a related supplement thereto (the
"Supplement" and, together with the Master Pooling and
Servicing Agreement, the "Pooling and Servicing Agreement"
(unless the context otherwise requires)). See "Description
of the Certificates." The Class C Interests will initially
be retained by the Transferor and will constitute the Series
Enhancement for the Certificates.
The Certificates will be available for purchase in minimum
denominations of $1,000 and in integral multiples of $1,000
in excess thereof. Except in certain limited circumstances
as described in the Prospectus under "Description of the
Certificates-- Definitive Certificates," the Certificates
will only be available in book-entry form.
The Trust Assets will be allocated among the Investor
Interest, the interests of the holders of other Series and
the interest of the holders of the Transferor Certificates
(the "Transferor's Interest"), as described below. The
aggregate amount of Principal Receivables and amounts, if
any, on deposit in the Excess Funding Account allocated to
the Certificateholders and the Class C Interest (the
"Invested Amount") will be $ on the Closing Date
(the "Initial
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
Invested Amount"). The Invested Amount will, except as
otherwise provided herein, [increase up to a maximum amount
of $ during the Funding Period,] remain fixed during
the remainder of the Revolving Period and decline thereafter
during the Controlled Accumulation Period or Rapid
Amortization Period as principal is deposited into the
Principal Funding Account or paid on the Certificates. [The
Invested Amount is subject to increase during the Funding
Period to the extent amounts are withdrawn from the
Pre-Funding Account and paid to the Transferor in connection
with an increase in the amount of Principal Receivables in
the Trust.] The aggregate amount of Principal Receivables
and amounts, if any, on deposit in the Excess Funding
Account allocated to the Class A Certificateholders (the
"Class A Invested Amount") will be $ on the Closing
Date (the "Class A Initial Invested Amount"). The aggregate
amount of Principal Receivables and amounts, if any, on
deposit in the Excess Funding Account allocated to the Class
B Certificateholders (the "Class B Invested Amount") will be
$ on the Closing Date (the "Class B Initial Invested
Amount"). The aggregate amount of Principal Receivables and
amounts, if any, on deposit in the Excess Funding Account
allocated to the Class C Interest (the "Class C Invested
Amount") will be $ on the Closing Date (the "Class C
Initial Invested Amount"). [During the Funding Period, the
Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount may increase under certain
conditions as the Transferor's Interest is increased until
the Class A Invested Amount is equal to $ , the
Class B Invested Amount is equal to $ and the Class
C Invested Amount is equal to $ .]
Thereafter, the Class A Invested Amount will remain, prior
to the commencement of the Controlled Accumulation Period or
Rapid Amortization Period, fixed at [the Class A Initial
Invested Amount] [such] Class A Invested Amount, except if
there are unreimbursed Class A Investor Charge-Offs or if a
Pay Out Event for Series 199 or a Pay Out Event for all
Series occurs. In addition, the Class B Invested Amount will
decline in certain circumstances as a result of (a) the
allocation to the Class B Certificates of Defaulted Amounts,
including such amounts otherwise allocable to the Class A
Certificates, and (b) the reallocation of collections of
Principal Receivables otherwise allocable to the Class B
Certificates to fund certain payments in respect of the
Class A Certificates. Any such reductions in the Class B
Invested Amount may be reimbursed out of Excess Spread, if
any, Excess Finance Charges allocable to Series 199 , the
reallocation of certain amounts allocable to the Class C
Interest.
The Transferor Amount will fluctuate as the amount of
Principal Receivables in the Trust, the invested amount of
each Series, the Discount Percentage and the amounts on
deposit in the Excess Funding Account and the Principal
Funding Account change from time to time. The Transferor's
Interest will represent the right to the assets of the Trust
not allocated to the Investor Interest, the Class C Interest
or the holders of investor certificates of other Series (the
Investor Interest, the Class C Interest and the interest in
the assets of the Trust held
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
by the holders of investor certificates of other Series is
referred to herein as the "Certificateholders' Interest").
The Class A Certificates will represent the right to receive
from the Trust Assets allocated to the Investor Interest and
the Class C Interest funds up to (but not in excess of) the
amounts required to make payments of interest on the Class A
Certificates from the Closing Date at [the rate of %] [a
floating-rate determined as follows ] (such rate,
the "Class A Certificate Rate"), and payment of principal on
the Distribution Date or, in certain limited
circumstances, monthly payments of principal during the
Rapid Amortization Period, to the extent of the Class A
Invested Amount. See "Description of the
Certificates--General," "--Interest Payments" and
"--Principal Payments."
The Class B Certificates will represent the right to receive
from the Trust Assets allocated to the Investor Interest and
the Class C Interest funds up to (but not in excess of) the
amounts required to make payments of interest on the Class B
Certificates from the Closing Date at the [rate of %] [a
floating-rate determined as follows ] (such rate,
the "Class B Certificate Rate"), and [monthly payments of
principal,] following the payment in full of the Class A
Investor Amount, during the Class B Accumulation Period or
the Rapid Amortization Period to the extent of the Class B
Invested Amount. See "Description of the
Certificates--General," "--Interest Payments" and
"--Principal Payments."
The Certificates represent beneficial interests in the Trust
Assets only and do not represent interests in or obligations
of CC Credit Corporation, either of the Banks or any
affiliate thereof except to the limited extent provided
herein. None of the Certificates, the Class C Interest, the
Accounts or the Receivables are insured or guaranteed by the
Federal Deposit Insurance Corporation (the "FDIC") or any
other governmental agency or instrumentality.
RECEIVABLES.................. The aggregate amount of Principal Receivables and Finance
Charge Receivables in the Accounts as of , 199
equaled $ and $ , respectively. The
aggregate undivided interest in the Principal Receivables
and amounts on deposit in the Excess Funding Account, if
any, evidenced by the Certificates and the Class C Interest
will never exceed the sum of the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested Amount,
regardless of the total amount of Principal Receivables in
the Trust and amounts on deposit in the Excess Funding
Account, if any, at any time. See "The Receivables."
REGISTRATION OF
CERTIFICATES................. The Certificates initially will be represented by
certificates registered in the name of Cede & Co. ("Cede"),
as the nominee of The Depository Trust Company ("DTC"). No
person acquiring a beneficial interest in the Certificates
(a "Certificate Owner") will be entitled to receive a
definitive certificate representing such person's interest
(a "Definitive Certificate"), except in the event that
Definitive Certificates are issued under the limited
circumstances described herein. Certificateholders may elect
to hold their Certificates through DTC
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
(in the United States) or Cedel or Euroclear (in Europe).
See "Description of the Certificates-- Definitive
Certificates" in the Prospectus.
TRANSFEROR................... CC Credit Card Corporation a Delaware corporation and a
wholly-owned subsidiary of Commercial Credit Company.
SERVICER..................... Travelers Bank & Trust, fsb. The principal executive offices
of the Servicer are located at Christiana Corporate Center,
100 Commerce Drive, Newark, Delaware 19713.
ACCOUNT OWNERS............... Travelers Bank & Trust, fsb and The Travelers Bank USA.
COLLECTIONS.................. All collections of Receivables will be allocated by the
Servicer between amounts collected on Principal Receivables
and amounts collected on Finance Charge Receivables. All
such amounts will then be allocated in accordance with the
respective interests of the Class A Certificateholders, the
Class B Certificateholders, the Class C Interest Holder, the
holders of the Transferor Certificates and the holders of
certificates and uncertificated interests of other Series,
if any, in the Principal Receivables and in the Finance
Charge Receivables. Subject to certain exceptions, the
Servicer will deposit all collections of Receivables
distributable to Certificateholders, the Class C Interest
Holder and to holders of certificates and uncertificated
interests of other Series, if any, in the Collection Account
no later than the day prior to the applicable Distribution
Date. See "Description of the Certificates-- Allocation
Percentages." The Transferor may from time to time elect
that a certain percentage of the collections of Principal
Receivables will be designated as "Discount Option
Collections" and such Discount Option Collections will be
treated as Finance Charge collections.
See "The Pooling and Servicing Agreement Generally--Discount
Option" in the Prospectus.
INTEREST..................... Interest on the Certificates for each Interest Period will
be distributed on the day of each month or, if any such
day is not a Business Day, on the next succeeding Business
Day (each, a "Distribution Date"), commencing ,
199 in an amount equal to [one-twelfth of] the product of
(i) [(a) the actual number of days in the related Interest
Period divided by [360][365], times (b)] the Class A
Certificate Rate or Class B Certificate Rate, as applicable,
and (ii) the outstanding principal amount of the Class A
Certificates or the outstanding principal amount of the
Class B Certificates, as applicable, as of the preceding
Record Date (or, in the case of the Distribution
Date, as of the Closing Date). The "Interest Period," with
respect to any Distribution Date, will be the period from
the previous Distribution Date through the day preceding
such Distribution Date, except the initial Interest Period
will be the period from the Closing Date through
, 199 , the day preceding the initial
Distribution Date. The term "Business Day" means any day
other than a Saturday, Sunday or a day on which banking
institutions in New York, New York , , or
Delaware, (or, with respect to the determination of LIBOR,
London, England) or any other state in which the principal
executive offices of CC Credit Card Corporation or any
Additional Transferor or the Trustee are located,
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
are authorized or obligated by law, executive order or
governmental decree to be closed. The "Monthly Period," with
respect to any Distribution Date will be the period from and
including the first day of the preceding calendar month to
and including the last day of such calendar month (other
than the initial Monthly Period, which will commence on the
Closing Date and end on , 199 ). See "Description
of the Certificates --Interest Payments."
ADDITIONAL AMOUNTS
AVAILABLE TO
CERTIFICATEHOLDERS........... If Class A Available Funds are less than the sum of (i)
current and overdue Class A Monthly Interest, (ii) current
and overdue Class A Additional Interest, (iii) current and
overdue Class A Servicing Fee and (iv) the Class A Investor
Default Amount, with respect to the related Distribution
Date, Excess Spread and Excess Finance Charges [and Excess
Transferor Finance Charge Collections] allocable to Series
199 will be applied to fund the deficiency (the "Class A
Required Amount"). "Excess Spread" for any Distribution Date
will equal the sum of (a) the excess of Class A Available
Funds over the sum of the amounts referred to in clauses
(i), (ii), (iii) and (iv) above, (b) the excess of Class B
Available Funds over the sum of (i) current and overdue
Class B Monthly Interest, (ii) current and overdue Class B
Additional Interest and (iii) current and overdue Class B
Servicing Fee and (c) the Class C Available Funds not used,
if Travelers Bank & Trust, fsb or the Trustee is no longer
the Servicer, to pay current and overdue Class C Servicing
Fee. If Excess Spread and Excess Finance Charges and Excess
Transferor Finance Charge Collections allocable to Series
199 with respect to such Distribution Date are less than the
Class A Required Amount, Reallocated Principal Collections
allocable first to the Class C Invested Amount and then the
Class B Invested Amount with respect to the related Monthly
Period will be used to fund the remaining Class A Required
Amount.
If Reallocated Principal Collections with respect to such
Monthly Period are insufficient to fund the remaining Class
A Required Amount for the related Distribution Date, then a
portion of the Class C Invested Amount will be reduced by
the amount of such deficiency (but not by more than the
Class A Investor Default Amount for such Monthly Period). If
such reduction would cause the Class C Invested Amount to be
reduced below zero, the Class B Invested Amount will be
reduced by the amount by which the Class C Invested Amount
would have been reduced below zero (but not by more than the
excess of the Class A Investor Default Amount for such
Monthly Period over the amount of such reduction in the
Class C Invested Amount) to avoid a charge-off with respect
to the Class A Certificates. If the Class B Invested Amount
is reduced to zero, the Class A Invested Amount will be
reduced by the amount by which the Class A Required Amount
for any Distribution Date exceeds the sum of (i) Excess
Spread and Excess Finance Charges and Excess Transferor
Finance Charge Collections allocated to Series 199 , and
(ii) Reallocated Principal Collections for the related
Monthly Period, but not by more than the excess of the Class
A Investor Default Amount for such Monthly Period over the
aggregate reductions in the Class C Invested Amount and the
Class B Invested Amount with respect to such
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
Monthly Period, and the Class A Certificateholders will bear
directly the credit and other risks associated with their
undivided interest in the Trust. See "Description of the
Certificates-- Reallocation of Cash Flows" and "--
Allocation of Investor Default Amount."
If Class B Available Funds are less than the sum of (i)
current and overdue Class B Monthly Interest, (ii) current
and overdue Class B Additional Interest and (iii) current
and overdue Class B Servicing Fee and (iv) the Class B
Investor Default Amount, if any, with respect to the related
Distribution Date, Excess Spread and Excess Finance Charges
and Excess Transferor Finance Charge Collections allocable
to Series 199 and not required to pay the Class A Required
Amount will be applied to fund the deficiency (the "Class B
Required Amount"). If Excess Spread and Excess Finance
Charges and Excess Transferor Finance Charge Collections
allocable to Series 199 with respect to such Distribution
Date not required to pay the Class A Required Amount are
less than the Class B Required Amount, Reallocated Principal
Collections allocable to the Class C Invested Amount for the
related Monthly Period not required to fund the Class A
Required Amount will then be used to fund the remaining
Class B Required Amount. If Reallocated Principal
Collections allocable to the Class C Invested Amount with
respect to such Monthly Period are insufficient to fund the
remaining Class B Required Amount for the related
Distribution Date, then the Class C Invested Amount will be
reduced by the amount of such deficiency (but not by more
than the Class B Investor Default Amount for such Monthly
Period). If such reduction would cause the Class C Invested
Amount to be reduced below zero, the Class B Invested Amount
will be reduced by the amount by which the Class B Required
Amount for any Distribution Date exceeds the sum of Excess
Spread and Excess Finance Charges and Excess Transferor
Finance Charge Collections allocated to Series 199 and not
required to pay the Class A Required Amount and Reallocated
Principal Collections not required to pay the Class A
Required Amount for the related Monthly Period, but not by
more than the excess of the Class B Investor Default Amount
for such Monthly Period over the reduction in the Class C
Invested Amount with respect thereto, for such Monthly
Period. In the event of a reduction of the Class A Invested
Amount, the Class B Invested Amount or the Class C Invested
Amount, the amount of principal and interest available to
fund payments with respect to the Class A Certificates and
the Class B Certificates will be decreased. See "Description
of the Certificates-- Reallocation of Cash Flows" and "--
Allocation of Investor Default Amount."
EXCESS FINANCE CHARGES....... "Excess Finance Charges" means amounts designated by another
Series for allocation to Series within [Group One] and
which, pursuant to the Master Pooling and Servicing
Agreement and any related supplement, are allocable to
Series 199 . [Series 199 will be included in a group of
Series ("Group One") expected to be issued by the Trust from
time to time.]
REQUIRED CLASS C
INVESTOR AMOUNT.............. The "Required Class C Investor Amount" with respect to any
Distribution Date means, subject to certain limitations more
fully described
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herein, the greater of (i) the product of (a) the sum of (I)
[the sum of] the Class A Invested Amount [and the Class A
Floating Percentage of the Pre-Funded Amount] and (II) [the
sum of] the Class B Invested Amount [and the Class B
Floating Percentage of the Pre-Funded Amount], each as of
such Distribution Date after taking into account
distributions made on such Distribution Date, and (b) a
fraction, the numerator of which is % and the denominator
of which is the excess of 100% over % and (ii) the product
of (I) $ and (II) %. With respect to any
Distribution Date, if the Class C Investor Amount is less
than the Required Class C Investor Amount, certain Excess
Spread and Excess Finance Charges allocable to Series 199
will be used to increase the Class C Invested Amount to the
extent of any prior unreimbursed reductions in the Class C
Invested Amount. See "Description of the Certificates--
Application of Collections-- Excess Spread; Excess Finance
Charges." On any Distribution Date, to the extent that the
Class C Investor Amount exceeds the Required Class C
Investor Amount, such excess may be paid to the Class C
Interest Holder and if paid will not be available to the
Certificateholders.
[FUNDING PERIOD.............. During the period from and including the Closing Date to but
excluding the earlier of (i) the commencement of the Rapid
Amortization Period, (ii) the date on which the Invested
Amount first equals $ and (iii) ,
(the "Funding Period"), the Pre-Funded Amount will be
maintained in a trust account to be established with the
Trustee (the "Pre-Funding Account"). The "Pre-Funded Amount"
means the principal amount on deposit in the Pre-Funding
Account, which initially will equal $ or % of the
initial Investor Amount of the Certificates and the Class C
Interest. Funds on deposit in the Pre-Funding Account will
be invested by the Trustee in Eligible Investments.]
[During the Funding Period, funds on deposit in the
Pre-Funding Account will be withdrawn on a monthly basis to
the extent of any increases in the Invested Amount as a
result of an increase in the amount of Principal Receivables
in the Trust to the extent that the Transferor Amount on the
last day of a Monthly Period during the Funding Period
exceeds the product of (A) the sum of % and the Required
Transferor Percentage on such date and (B) the sum of the
aggregate amount of Principal Receivables in the Trust and
amounts on deposit in the Excess Funding Account on such
day; PROVIDED, HOWEVER, that the Invested Amount will in no
event exceed $ or increase by an amount in excess of
the Pre-Funded Amount immediately prior to giving effect to
such increase. Certificateholders will have no further right
to or interest in such funds upon their withdrawal from the
Pre-Funding Account in connection with such increases in the
Invested Amount. Should the Pre-Funded Amount be greater
than zero at the end of the Funding Period, the amounts
remaining on deposit in the Pre-Funding Account will be
payable pro rata to the Class A Certificateholders, the
Class B Certificateholders and the Class C Interest Holder
on the next succeeding Distribution Date and result in a
reduction of the Class A Investor Amount, the Class B
Investor Amount and the Class C Investor Amount. See
"Description of the Certificates--Pre-Funding Account."]
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REVOLVING PERIOD............. No principal will be payable to or for the benefit of
Certificateholders during the period (the "Revolving
Period") from and including the Closing Date to but not
including the earlier of (i) the commencement of the
controlled accumulation period and (ii) the commencement of
the Rapid Amortization Period. The controlled accumulation
period with respect to the Certificates (the "Controlled
Accumulation Period"), which includes separate controlled
accumulation periods for Class B Certificates, is scheduled
to begin at the close of business on , .
Subject to the conditions set forth herein under
"Description of the Certificates-- Postponement of
Controlled Accumulation Period," the day on which the
Revolving Period ends and the Controlled Accumulation Period
begins may be delayed to no later than the end of the day on
, . During the Revolving Period, collections
of Principal Receivables allocated to the Certificates and
the Class C Interest (other than Reallocated Principal
Collections that are used to pay any deficiency in the Class
A Required Amount or the Class B Required Amount) will
generally be paid from the Trust to the holders of the
Transferor Certificates or to amortizing or accumulating
Series in [Group One] or deposited into the Excess Funding
Account. See "Description of the Certificates-- Principal
Payments."
CONTROLLED ACCUMULATION
PERIOD; PRINCIPAL PAYMENTS... Unless a Pay Out Event shall have occurred, (a) the Class A
controlled accumulation period (the "Class A Accumulation
Period") will begin at the end of the day on the last day of
the Revolving Period and will end on the earliest of (i) the
commencement of the Rapid Amortization Period, (ii) the
payment in full to the Class A Certificateholders of the
Class A Investor Amount, and (iii) the Series 199
Termination Date, and (b) the Class B controlled
accumulation period (the "Class B Accumulation Period") will
commence on the first day of the Monthly Period immediately
preceding the Class B Principal Commencement Date and end on
the earliest of (i) the commencement of the Rapid
Amortization Period, (ii) the payment in full to the Class B
Certificateholders of the Class B Invested Amount and (iii)
the Series 199 Termination Date. During the Controlled
Accumulation Period, the Available Investor Principal
Collections will no longer be paid to the holders of the
Transferor Certificates or to amortizing or accumulating
Series in [Group One] or deposited into the Excess Funding
Account as described above but instead will be deposited
monthly, along with certain other amounts constituting
Available Investor Principal Collections, on each
Distribution Date beginning with the Distribution Date in
the month following the commencement of the Controlled
Accumulation Period in a trust account established by the
Servicer for the benefit of Certificateholders (the
"Principal Funding Account") to be accumulated for payment
to the Certificateholders as provided herein, first to the
Class A Certificateholders, which payment is anticipated to
be on the Class A Expected Final Distribution Date, and then
(following payment in full of the Class A Investor Amount)
to the Class B Certificateholders, which payment is
anticipated to be on the Class B Expected Final Distribution
Date. With respect to any Distribution Date, during either
the Rapid Amortization Period or the Controlled Accumulation
Period, until the Class
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B Invested Amount is paid in full and subject to certain
other exceptions, "Class C Monthly Principal" shall mean an
amount equal to the lesser of (A) Available Investor
Principal Collections not applied to Class A Monthly
Principal or Class B Monthly Principal and (B) the excess of
(i) the Class C Investor Amount over (ii) the Required Class
C Investor Amount. During the Controlled Accumulation Period
or the Rapid Amortization Period, collections of Principal
Receivables generally will be allocated to the Invested
Amount in a ratio the numerator of which is the Invested
Amount as of the last day of the Revolving Period and the
denominator of which is the greater of (x) the sum of (I)
the product of the aggregate amount of Principal Receivables
and one minus the Discount Percentage and (II) the principal
amount on deposit in the Excess Funding Account as of the
last day of the prior Monthly Period and (y) the sum of the
numerators used to calculate the Series Percentages
applicable to Principal Receivables for all Series
outstanding; PROVIDED, HOWEVER, that such ratio is subject
to adjustment to give effect to designations of Additional
Accounts. See "Description of the Certificates--Allocation
Percentages," "--Application of Collections" and
"--Principal Payments."
With respect to any Distribution Date relating to the
Controlled Accumulation Period, if Available Investor
Principal Collections in the prior Monthly Period are equal
to or greater than the sum of (i) the Controlled
Accumulation Amount on such Distribution Date and (ii) the
existing Deficit Controlled Accumulation Amount (as defined
below), if any, from the immediately preceding Distribution
Date (such sum for such Distribution Date, the "Controlled
Deposit Amount," provided that the Controlled Deposit Amount
on any Distribution Date after the payment in full of the
Class A Certificates shall not exceed the Class B Invested
Amount), then the Controlled Deposit Amount will be
deposited into the Principal Funding Account, and the excess
of such Available Investor Principal Collections over the
Controlled Deposit Amount and any amounts thereof applied as
Class C Monthly Principal will be paid from the Trust to the
holders of the Transferor Certificates or to other
amortizing or accumulating Series in [Group One] or
deposited into the Excess Funding Account. The existing
"Deficit Controlled Accumulation Amount" means, on any
Distribution Date, the excess, if any, of the Controlled
Deposit Amount from the prior Distribution Date over the
Available Investor Principal Collections.
If the Available Investor Principal Collections in the prior
Monthly Period are less than the Controlled Deposit Amount,
such remaining Available Investor Principal Collections will
be deposited into the Principal Funding Account, and the
excess of the Controlled Deposit Amount over such Available
Investor Principal Collections will be the Deficit
Controlled Accumulation Amount for the succeeding Monthly
Period. See "Description of the Certificates--Application of
Collections."
All amounts in the Principal Funding Account will be
invested at the direction of the Servicer by the Trustee in
certain Eligible Investments. Investment earnings (net of
investment losses and expenses)
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on funds on deposit in the Principal Funding Account (the
"Principal Funding Investment Proceeds") during the
Controlled Accumulation Period will be included in Class A
Available Funds with respect to each Distribution Date.
Funds on deposit in the Principal Funding Account will be
available to pay the Class A Certificateholders in respect
of the Class A Investor Amount on the Class A Expected Final
Distribution Date. If the aggregate principal amount of
deposits made to the Principal Funding Account are
insufficient to pay in full the Class A Investor Amount on
the Class A Expected Final Distribution Date, the Rapid
Amortization Period will commence as described below and on
each Distribution Date thereafter until the Class A Investor
Amount is paid in full the Class A Certificateholders will
receive distributions of Class A Monthly Principal. Although
it is anticipated that during the Class A Accumulation
Period, funds will be deposited in the Principal Funding
Account in an amount equal to the applicable Controlled
Accumulation Amount with respect to each Distribution Date
and that scheduled principal will be available for
distribution to the Class A Certificateholders on the Class
A Expected Final Distribution Date, no assurance can be
given in that regard. See "Maturity Assumptions" herein.
On the Class B Expected Final Distribution Date, provided
that the Class A Investor Amount is paid in full on the
Class A Expected Final Distribution Date and the Rapid
Amortization Period has not commenced, Available Investor
Principal Collections will be used to pay the Class B
Invested Amount as described herein. If the Available
Investor Principal Collections are insufficient to pay the
Class B Invested Amount on the Class B Expected Final
Distribution Date, the Rapid Amortization Period will
commence as described below and on each Distribution Date
thereafter following the payment in the Class A Certificates
until the Class B Invested Amount is paid in full, the Class
B Certificateholders will receive distributions of Class B
Monthly Principal. Although it is anticipated that scheduled
principal will be available for distribution to the Class B
Certificateholders on the Class B Expected Final
Distribution Date, no assurance can be given in that regard.
See "Maturity Assumptions" herein.
If a Pay Out Event occurs during the Controlled Accumulation
Period, the Rapid Amortization Period will commence and any
amount on deposit in the Principal Funding Account will be
paid to the Class A Certificateholders on the Distribution
Date following the Monthly Period in which the Rapid
Amortization Period commences.
CLASS A EXPECTED FINAL
DISTRIBUTION DATE............ The Distribution Date.
CLASS B EXPECTED FINAL
DISTRIBUTION DATE............ The Distribution Date.
RAPID AMORTIZATION PERIOD;
PRINCIPAL PAYMENTS........... During the period beginning with the occurrence of any Pay
Out Event and ending on the earlier of (i) the payment in
full to the Certificateholders of the Class A Investor
Amount and the Class B Invested Amount and payment in full
to the Class C Interest Holder
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of the Class C Invested Amount and (ii) the Series 199
Termination Date (the "Rapid Amortization Period"),
Available Investor Principal Collections will no longer be
paid from the Trust to the holders of the Transferor
Certificates or to amortizing or accumulating Series in
[Group One] or deposited into the Excess Funding Account as
described above but instead will be distributed on each
Distribution Date, first to the Class A Certificateholders
until the Class A Investor Amount has been paid in full,
then to the Class B Certificateholders until the Class B
Invested Amount is paid in full and then to the Class C
Interest Holder until the Class C Invested Amount is paid in
full. See "Description of the Certificates-- Pay Out Events"
for a discussion of the events which might lead to the
commencement of the Rapid Amortization Period. See
"Description of the Certificates-- Application of
Collections."
SUBORDINATION OF THE CLASS B
CERTIFICATES AND THE CLASS C
INTEREST..................... The Class B Certificates will be subordinated as described
herein to the extent necessary to fund payments with respect
to the Class A Certificates as described herein. In
addition, the Class C Interest will be subordinated to the
extent necessary to fund certain payments with respect to
the Certificates. If the principal amount of the Class C
Interests is reduced to zero, the Class B Certificateholders
will bear directly the credit and other risks associated
with their undivided interest in the Trust. To the extent
the Class B Invested Amount is reduced, and is not
reinstated, the amount of principal distributable to the
Class B Certificateholders will be reduced. See "Description
of the Certificates-- Subordination."
SHARED COLLECTIONS OF
PRINCIPAL RECEIVABLES........ To the extent that collections of Principal Receivables
allocated to the Certificates or the Class C Interest are
not needed to make payments to or for the benefit of
Certificateholders or the Class C Interest Holders, such
collections may be applied to cover principal payments due
to or for the benefit of other Series, if any, in [Group
One]. Any such application of collections will not result in
a reduction of the Class A Invested Amount, the Class B
Invested Amount or the Class C Invested Amount. In addition,
during the Controlled Accumulation Period, certain
collections of Principal Receivables allocated to other
Series in [Group One], and certain Shared Transferor
Principal Collections, to the extent such collections are
not needed to make payments in respect of such other Series,
may be applied to cover principal amounts payable to or for
the benefit of the Certificateholders or the Class C
Interest Holder. See "Description of the
Certificates--Shared Collections of Principal Receivables
and Transferor Principal Collections."
REQUIRED TRANSFEROR
PERCENTAGE................... The Required Transferor Percentage applicable to Series 199
is currently %, provided that the Required Transferor
Percentage may be reduced to as low as 2% if the Transferor
delivers an officer's certificate stating that such
reduction will not have an Adverse Effect and the Rating
Agency Condition is satisfied.
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RECORD DATE.................. With respect to any Distribution Date, the last Business Day
of the month preceding such Distribution Date.
OPTIONAL REPURCHASE.......... The Certificates will be subject to optional repurchase by
the Transferor on any Distribution Date after the Investor
Amount is less than or equal to % of the Initial Investor
Amount, unless certain events as specified in the Pooling
and Servicing Agreement have occurred. The repurchase price
on the Distribution Date on which such purchase occurs will
be equal to the Investor Amount plus accrued and unpaid
interest on the Certificates and the Class C Interest as
described herein. If such optional repurchase occurs it may
result in an early return of the investor's investment and
no premium will be paid as a result of any such optional
repurchase and there can be no assurance that a
Certificateholder will be able to invest such early
repayment amount at a similar rate of return. See
"Description of the Certificates--Optional Repurchase."
FINAL PAYMENT OF PRINCIPAL
AND INTEREST; TERMINATION OF
TRUST........................ The interest of the Certificateholders in the Trust will
terminate following the earlier of (i) the day after the
Distribution Date on which the Investor Amount is paid in
full and (ii) the earlier of the Distribution Date
and the termination of the Trust (the "Series 199
Termination Date"). All principal and interest will be due
and payable no later than the Series 199 Termination Date.
See "Description of the Certificates--Final Payment
Principal and Interest; Termination" in the Prospectus.
TRUSTEE...................... The Bank of New York, a New York banking corporation.
TAX STATUS................... Subject to the matters discussed under "Federal Income Tax
Consequences" herein and in the Prospectus, Special Tax
Counsel to the Transferor will deliver its opinion to the
effect that, under existing law, the Class A Certificates
and the Class B Certificates will properly be characterized
as debt for Federal income tax purposes on the date of
issuance. Under the Pooling and Servicing Agreement, the
Certificate Owners will agree to treat the Certificates as
indebtedness for income tax purposes. See "Federal Income
Tax Consequences" herein and in the Prospectus for
additional information concerning the application of Federal
income tax laws.
ERISA CONSIDERATIONS......... Subject to the considerations described below, the Class A
Certificates are eligible for purchase by employee benefit
plan investors. Under a regulation issued by the Department
of Labor, the Trust Assets would not be deemed "plan assets"
of an employee benefit plan holding the Certificates if
certain conditions are met, including that each Class of the
Certificates must be held, upon completion of the public
offering made hereby, by at least 100 investors who are
independent of the Transferor and of one another. The
Underwriter[s] expect that the Class A Certificates will be
held by at least 100 independent investors at the conclusion
of the offering, although no assurance can be given, and no
monitoring or other measures will be taken to ensure that
such condition will be met. The Transferor anticipates that
the other conditions of the regulation will be met. If the
Trust Assets were deemed to be "plan assets" of an employee
benefit plan investor (e.g., if the 100
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independent investor criterion is not satisfied) violation
of the "prohibited transaction" rules of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), could result and generate excise tax and other
liabilities under ERISA and Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"), unless a
statutory, regulatory or administrative exemption is
available. It is uncertain whether existing exemptions from
the "prohibited transaction" rules of ERISA would apply to
all transactions involving the Trust Assets. Accordingly,
employee benefit plan fiduciaries or other persons
contemplating purchasing the Class A Certificates on behalf
or with "plan assets" of any employee benefit plan should
consult their counsel before making a purchase. The
Underwriter[s] currently do not expect that the Class B
Certificates will be held by at least 100 such persons and,
therefore, do not expect that such Class B Certificates will
qualify as publicly-offered securities under the regulation
referred to in the preceding paragraph. Accordingly, the
Class B Certificates may not be acquired or held by (a) any
employee benefit plan that is subject to ERISA, (b) any plan
or other arrangement (including an individual retirement
account or Keogh plan) that is subject to section 4975 of
the Code, or (c) any entity whose underlying assets include
"plan assets" under the regulation by reason of any such
plan's investment in the entity. By its acceptance of a
Class B Certificate, each Class B Certificateholder will be
deemed to have represented and warranted that it is not and
will not be subject to the foregoing limitation.
See "ERISA Considerations" in the Prospectus.
CERTIFICATE RATINGS.......... It is a condition to the issuance of the Class A
Certificates that they be rated in the rating category
by at least nationally recognized rating
[agency][agencies].
It is a condition to the issuance of the Class B
Certificates that they be rated in the rating category
by at least nationally recognized rating
[agency][agencies].
The rating agency or rating agencies rating the Certificates
or any other Series are collectively referred to herein as
the "Rating Agencies" or individually as a "Rating Agency."
The Certificates offered hereby are investment grade
asset-backed securities within the meaning of the Act and
the rules promulgated thereunder.
[LISTING..................... Application will be made to list the Certificates on the
Luxembourg Stock Exchange; however, no assurance can be
given that such listing will be obtained. Certificateholders
should consult with , the Luxembourg listing agent
for the Certificates , phone number , for the
status of such listing.]
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RISK FACTORS
LIMITED LIQUIDITY. There is currently no market for the Certificates. The
Underwriters expect to make a secondary market in the Certificates, but are not
obligated to do so. There can be no assurance that a secondary market will
develop or, if it does develop, that such market will provide Certificateholders
with liquidity of investment or that it will continue for the life of the
Certificates.
LIMITED AMOUNTS OF CREDIT ENHANCEMENT. Although credit enhancement with
respect to the Certificates will be provided by the subordination of the Class C
Interest, such amounts are limited. If the Class C Invested Amount is reduced to
zero, the Class B Certificateholders will bear directly the credit and other
risks associated with their undivided interest in the Trust and the Class B
Invested Amount may be reduced. If the Class B Invested Amount is reduced to
zero, Class A Certificateholders will bear directly the credit and other risks
associated with their undivided interest in the Trust. See "Description of the
Certificates--Allocation Percentages," "-- Allocation of Investor Default
Amount."
EFFECT OF SUBORDINATION OF CLASS B CERTIFICATES; PRINCIPAL PAYMENTS. The
Class B Certificates are subordinated in right of payment of principal to the
Class A Certificates. Payments of principal in respect of the Class B
Certificates will not commence until after the final principal payment with
respect to the Class A Investor Amount has been made as described herein.
Moreover, the Class B Invested Amount is subject to reduction if the Class A
Required Amount for any Monthly Period is greater than zero and is not funded
from Excess Spread, Excess Finance Charges [and Excess Transferor Finance Charge
Collections] allocated to Series 199_, Reallocated Principal Collections with
respect to the Class C Invested Amount, and reductions in the Class C Invested
Amount. To the extent the Class B Invested Amount is reduced, the percentage of
collections of Finance Charge Receivables allocable to the Class B
Certificateholders will be reduced. See "Description of the
Certificates--Allocation Percentages" and "--Reallocation of Cash Flows." If the
Class B Invested Amount is reduced to zero, the Class A Certificateholders will
bear directly the credit and other risks associated with their undivided
interest in the Trust. See "Description of the Certificates--Subordination."
DISCOUNT OPTION. The Pooling and Servicing Agreement provides that a
percentage (the "Discount Percentage") (which on the Closing Date will be %)
of collections of Principal Receivables will be treated as collections of
Finance Charge Receivables ("Discount Option Collections"). Pursuant to the
Pooling and Servicing Agreement, the Transferor may, without notice to or
consent of the Certificateholders, from time to time, increase, reduce or
eliminate (subject to the limitations described below) the Discount Percentage
for all or any specified portion of collections of Principal Receivables on or
after the date of such change (each a "Discount Option Date"). The Transferor
must provide 30 days' prior written notice to the Trustee and each Rating Agency
of any such change and such change will become effective only if (i) in the
reasonable belief of the Transferor such designation would not cause to occur a
Pay Out Event (or "Reinvestment Event") with respect to any Series or an event
which with notice or the lapse of time or both would constitute a Pay Out Event
(or Reinvestment Event) with respect to any Series and (ii) if such change would
cause the Discount Percentage to be greater than [3%] or less than [1%] the
Rating Agency Condition is satisfied. See "Description of the
Certificates--Discount Option" in the Prospectus. Any such change that raises
the Discount Percentage would result in an increase in the amount of collections
of Finance Charge Receivables and a lower payment rate of collections of
Principal Receivables and will reduce the Transferor Amount (which is calculated
after applying the Discount Percentage to the aggregate amount of Principal
Receivables), thereby decreasing the likelihood that certain Pay Out Events or
Reinvestment Events based in part on the amount of collections of Finance Charge
Receivables will occur and increasing the likelihood that the Transferor will be
required to designate Additional Accounts. Any such change that reduces the
Discount Percentage will have the opposite effect.
RATING OF THE CERTIFICATES. It is a condition to the issuance of the Class
A Certificates that they be rated by at least nationally recognized
rating [agency][agencies]. It is a condition to the issuance of the Class B
Certificates that they be rated by at least nationally recognized rating
[agency][agencies]. The rating of the Certificates is based primarily on the
value of the Receivables and, in the case of the Class A Certificates, the
subordination of the Class B Certificates and the Class C Interest and, in the
case of the Class B Certificates, the subordination of the Class C Interest. The
ratings of the
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Certificates are not a recommendation to purchase, hold or sell Certificates,
and such ratings do not comment as to the marketability of the Certificates, any
market price or suitability for a particular investor. There is no assurance
that any rating will remain for any given period of time or that any rating will
not be lowered or withdrawn entirely by any such rating agency, if in its
judgment circumstances so warrant.
BOOK-ENTRY REGISTRATION. The Certificates initially will be represented by
certificates registered in the name of Cede, the nominee for DTC, and will not
be registered in the names of the Certificate Owners or their nominees. As a
result, unless and until Definitive Certificates are issued, Certificate Owners
will not be recognized by the Trustee as Certificateholders, as that term is
used in the Pooling and Servicing Agreement. Until such time, Certificate Owners
will only be able to exercise the rights of Certificateholders indirectly
through DTC and its participating members (in the United States) [or Cedel or
Euroclear (in Europe).] See "Description of the Certificates-- Book-Entry
Registration" and "--Definitive Certificates" in the Prospectus.
THE BANKS' CREDIT CARD ACTIVITIES
BILLING AND PAYMENT
Nearly all of the accounts in the Travelers Consumer Credit Card Portfolio
are subject to finance charges at variable rates determined on the basis of
ranging from % to % for purchases and cash advances. For more information,
see "The Banks' Credit Card Activities--Billing and Payments" in the Prospectus.
DELINQUENCIES AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience for each
of the periods shown for the Travelers Consumer Credit Card Portfolio.
[Additional Accounts have been designated for inclusion in the Trust from time
to time as set forth in Annex II.] The Accounts in the Trust Portfolio have been
selected from accounts in the Travelers Consumer Credit Card Portfolio which
meet the requirements set forth in the definition of Eligible Accounts as set
forth in the Pooling and Servicing Agreement. See "The Receivables" in this
Supplement and "The Pooling and Servicing Agreement Generally--Representations,
Warranties and Covenants" in the Prospectus. There can be no assurance that the
delinquency and loss experience for the Receivables will be similar to the
historical experience set forth below.
DELINQUENCY EXPERIENCE
TRAVELERS CONSUMER CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Receivables Outstanding......................
Receivables Contractually Delinquent.........
Outstanding:
30-59 Days.................................
60-89 Days.................................
90 or more days............................
Total..................................
</TABLE>
LOSS EXPERIENCE
TRAVELERS CONSUMER CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Average Receivables
Outstanding................................
Gross Losses.................................
Recoveries...................................
Net Losses...................................
Net Losses as a Percentage of Average
Receivables Outstanding...................
</TABLE>
S-18
<PAGE>
INTERCHANGE
The Interchange attributed to the cardholder charges for merchandise and
services in the Accounts, is not transferred from the Banks and does not
constitute a portion of the Receivables.
THE RECEIVABLES
The Receivables in the Initial Accounts as of the Initial Cut-Off Date will
be conveyed to the Trust on , 1998 (the "Initial Closing Date"). The
Initial Accounts were selected from the Travelers Consumer Credit Card Portfolio
satisfying criteria set forth in the Pooling and Servicing Agreement (the
"Criteria") as applied on , 1998 (the "Initial Cut-Off Date").
[Receivables in Additional Accounts will be conveyed to the Trust from time to
time after the Initial Closing Date.] [Receivables in Additional Accounts have
been conveyed to the Trust from time to time since the Initial Closing Date as
set forth in Annex II.] Additional Accounts [will be] [have been and will be]
selected from the Travelers Consumer Credit Card Portfolio satisfying the
Criteria as applied on the Addition Cut-Off Date. The Initial Accounts and all
Additional Accounts conveyed to the Trust are hereinafter referred to as the
"Trust Portfolio." The Account Owners have broad discretion in selecting
accounts which will be designated as Additional Accounts. The "Criteria" refers
to the requirements to qualify as an "Eligible Account" which requirements are
described in the Prospectus. In order to meet the Criteria, each Account must,
on the Initial Cut-Off Date or Addition Cut-Off Date, among other things, have
been in existence and maintained by the Bank that owns such Account, have a
cardholder with a billing address in the United States, its territories or
possessions or a military address, and, except under certain circumstances, not
be an account the credit card or cards with respect to which have been reported
to the Bank that owns such Account as having been lost or stolen. See "The
Pooling and Servicing Agreement Generally-- Representations, Warranties and
Covenants" in the Prospectus. Cardholders whose accounts are included in the
Travelers Consumer Credit Card Portfolio have billing addresses in all states,
the District of Columbia, Puerto Rico, Guam and the Virgin Islands. Pursuant to
the Pooling and Servicing Agreement, the Transferor may be obligated (subject to
certain limitations and conditions) to designate Additional Accounts to be
included as Accounts and to convey to the Trust all Receivables of such
Additional Accounts, or may elect to automatically designate Additional Accounts
and convey the Receivables therein whether such Receivables are then existing or
thereafter created. See "The Pooling and Servicing Agreement Generally--Addition
of Accounts or Participation Interests" in the Prospectus. If the Transferor is
required to designate Additional Accounts under the Pooling and Servicing
Agreement, each Account Owner, under its respective Receivables Transfer
Agreement, agrees that it will designate sufficient Eligible Accounts which,
together with Additional Accounts designated by any other Account Owners, will
cause the Transferor to be in compliance with the Requirements of the Pooling
and Servicing Agreement. These accounts must meet the Criteria set forth above
as of the relevant Addition Cut-Off Date. Throughout the term of the Trust, the
Accounts from which the Receivables arise will be the same VISA and MasterCard
accounts designated by the respective Account Owner on the Initial Cut-Off Date
and each Addition Cut-Off Date (plus any Additional Accounts subsequently
designated as described above). In addition, as of the Initial Cut-Off Date and
each Addition Cut-Off Date and on the date any new Receivables are created, the
Transferor will represent and warrant to the Trust that the Receivables meet the
eligibility requirements specified in the Pooling and Servicing Agreement. See
"The Pooling and Servicing Agreement Generally-- Representations, Warranties and
Covenants" in the Prospectus.
The following tables summarize the Trust Portfolio by various criteria as of
the close of business on , 199 . Because the future composition of the
Trust Portfolio may change over time, these tables are not necessarily
indicative of future results.
S-19
<PAGE>
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF PERCENTAGE
TOTAL OF
NUMBER OF NUMBER OF TOTAL
ACCOUNT BALANCE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------------------------------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Credit balance.............................................. % $ %
Over $......................................................
Total....................................................... $ %
-----------
-----------
</TABLE>
COMPOSITION BY CREDIT LIMIT TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
CREDIT LIMIT BALANCE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------------------------------------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
% $ %
Over $.......................................................
Total........................................................ % $ %
-----------
-----------
</TABLE>
S-20
<PAGE>
COMPOSITION BY PERIOD OF DELINQUENCY TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
PERIOD OF DELINQUENCY (DAYS NUMBER OF NUMBER OF OF TOTAL
CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------------------------------------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Not Delinquent............................................... % $ %
1 to 29 days.................................................
30 to 59 days................................................
60 to 89 days................................................
90 to 119 days...............................................
120 to 149 days..............................................
150 to 179 days..............................................
180 or more..................................................
Total........................................................ % $ %
-----------
-----------
</TABLE>
COMPOSITION BY ACCOUNT AGE TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
AGE (IN MONTHS) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ---------------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
0 to 6 months................................................... % $ %
Over 6 to 12 months.............................................
Over 12 to 24 months............................................
Over 24 to 36 months............................................
Over 36 to 48 months............................................
Over 48 to 60 months............................................
Over 60 to 84 months............................................
Over 84 months..................................................
Total........................................................... % $ %
-----------
-----------
</TABLE>
S-21
<PAGE>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS AND RECEIVABLES
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE OF
NUMBER OF TOTAL
STATE NUMBER OF ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----------------------------------------- ------------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Alabama..................................
Alaska...................................
Arizona..................................
Arkansas.................................
California...............................
Colorado.................................
Connecticut..............................
Delaware.................................
District of Columbia.....................
Florida..................................
Georgia..................................
Hawaii...................................
Idaho....................................
Illinois.................................
Indiana..................................
Iowa.....................................
Kansas...................................
Kentucky.................................
Louisiana................................
Maine....................................
Maryland.................................
Massachusetts............................
Michigan.................................
Minnesota................................
Mississippi..............................
Missouri.................................
Montana..................................
Nebraska.................................
Nevada...................................
New Hampshire............................
New Jersey...............................
New Mexico...............................
New York.................................
North Carolina...........................
North Dakota.............................
Ohio.....................................
Oklahoma.................................
Oregon...................................
Pennsylvania.............................
Rhode Island.............................
South Carolina...........................
South Dakota.............................
Tennessee................................
Texas....................................
Utah.....................................
Vermont..................................
Virginia.................................
Washington...............................
West Virginia............................
Wisconsin................................
Wyoming..................................
All Others...............................
Total....................................
</TABLE>
S-22
<PAGE>
MATURITY ASSUMPTIONS
The Pooling and Servicing Agreement provides that Class A Certificateholders
will not begin to receive payments of principal until the Class A Expected Final
Distribution Date or following the occurrence of a Pay Out Event which results
in the commencement of the Rapid Amortization Period. Class B Certificateholders
will not receive payments of principal until the payment in full of the Class A
Investor Amount. Unless and until a Pay Out Event occurs, on each Distribution
Date during the Controlled Accumulation Period, monthly deposits of principal
equal to the lesser of (a) Available Investor Principal Collections and (b) the
Controlled Deposit Amount will be made into the Principal Funding Account.
Although it is anticipated that a single principal payment will be made to
Class A Certificateholders in an amount equal to the Class A Investor Amount on
the , Distribution Date (the "Class A Expected Final Distribution
Date") and that a single principal payment will be made to Class B
Certificateholders in an amount equal to the Class B Invested Amount on the
, Distribution Date (the "Class B Expected Final Distribution
Date"), no assurance can be given in that regard.
A Pay Out Event occurs, with respect to Series 199 only, either
automatically or after specified notice, upon (a) failure of the Transferor to
make certain payments or transfers of funds for the benefit of the
Certificateholders within the time periods stated in the Pooling and Servicing
Agreement, (b) material breaches of certain representations, warranties or
covenants of the Transferor, (c) (i) with respect to the end of any Monthly
Period, as determined on the third Business Day preceding the related
Distribution Date (the "Determination Date"), with respect to which the
Transferor Amount is less than the Required Transferor Amount as of the last day
of such Monthly Period, the failure of the Transferor to convey Receivables in
Additional Accounts to the Trust such that the Transferor Amount is at least
equal to the Required Transferor Amount on or prior to the tenth Business Day
following such Determination Date or (ii) with respect to the end of any Monthly
Period with respect to which the aggregate Principal Receivables in the Trust
are not at least equal to the Required Principal Balance as of the last day of
such Monthly Period, the failure of the Transferor to convey Receivables in
Additional Accounts to the Trust such that the aggregate Principal Receivables
in the Trust are at least equal to the Required Principal Balance on or prior to
the tenth Business Day following such Determination Date, (d) the [average of
the Net Portfolio Yield for three consecutive Monthly Periods being a rate which
is less than for such period], (e) the occurrence of a Servicer
Default having a material adverse effect on the Certificateholders, or (f)
failure to pay in full (i) the Class A Investor Amount on the Class A Expected
Final Distribution Date or (ii) the Class B Invested Amount on the Class B
Expected Final Distribution Date.
A Pay Out Event occurs, with respect to the Certificates and each other
Series, automatically upon (a) an Insolvency Event relating to any Transferor
[or an Account Owner], (b) the Trust becoming an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), or (c) the inability of any Transferor to transfer Receivables to
the Trust in accordance with the Pooling and Servicing Agreement. Although the
Transferor believes that the likelihood of a Pay Out Event occurring is remote,
there can be no assurance that a Pay Out Event will not occur. See "Description
of the Certificates--Pay Out Events."
In the event of the occurrence of a Pay Out Event, the Rapid Amortization
Period will begin. During the Rapid Amortization Period, first the Class A
Certificateholders and then, following the payment in full of the Class A
Investor Amount, the Class B Certificateholders will be entitled to receive
monthly payments of principal equal to the Available Investor Principal
Collections received by the Trust during the related Monthly Period (plus the
principal amount on deposit in the Principal Funding Account) until the Class A
Investor Amount or Class B Invested Amount, as applicable, are paid in full.
Allocations of Principal Receivables will be based on the Principal Allocation
Percentage. See "Description of the Certificates--Allocation Percentages."
S-23
<PAGE>
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Travelers Consumer Credit Card Portfolio during any month
in the periods shown and the average of the cardholder monthly payment rates for
all months during the period shown, in each case calculated as a percentage of
total opening monthly account balances during the periods shown. Payments shown
in the table include amounts which would be deemed payments of Principal
Receivables and Finance Charge Receivables with respect to the Accounts.
MONTHLY PAYMENT RATES
TRAVELERS CONSUMER CREDIT CARD PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C>
Lowest...............................................................
Highest..............................................................
Monthly Average......................................................
</TABLE>
The amount of collections on Receivables may vary from month to month due to
seasonal variations, general economic conditions, changes in tax law and payment
habits of individual cardholders. There can be no assurance that collections of
Principal Receivables with respect to the Trust Portfolio, and thus the rate at
which Certificateholders could expect to accumulate or receive payments of
principal on their Certificates during the Controlled Accumulation Period or the
Rapid Amortization Period, will be similar to the historical experience set
forth above. In addition, the ability of the Certificateholders to be paid the
applicable Class A Investor Amount or the Class B Invested Amount on the Class A
Expected Final Distribution Date and the Class B Expected Final Distribution
Date, respectively, may be dependent upon the availability of Shared Principal
Collections and Shared Transferor Principal Collections. Since the Trust, as a
master trust, may issue additional Series from time to time, there can be no
assurance that the issuance of additional Series or the terms of any additional
Series might not have an impact on the timing of payments received by
Certificateholders. Further, if a Pay Out Event occurs, the average life and
maturity of the Certificates could be significantly reduced.
RECEIVABLE YIELD CONSIDERATIONS
The yield on the Travelers Consumer Credit Card Portfolio for the period
ended , and for each of the years in the period ended ,
is set forth in the following table. Yield, on both an accrual and a cash
basis will be affected by numerous factors, including the finance charges on the
Receivables, the amount of the annual cardholder fees and other fees and
charges, changes in the delinquency rate on the Receivables and the percentage
of cardholders who pay their balances in full each month and do not incur
finance charges. There can be no assurance that the revenue from finance charges
and fees for the Receivables will be similar to the historical experience set
forth below. See "Risk Factors" in the Prospectus.
REVENUE FROM FINANCE CHARGES
TRAVELERS CONSUMER CREDIT CARD PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED ,
-------------------------
<S> <C>
Average Monthly Accrued Fees and Charges.............................
Average Account Balance..............................................
Yield From Fees and Charges..........................................
</TABLE>
The yield for the Travelers Consumer Credit Card Portfolio shown in the
above table is comprised of the following components: , , [The
yield related to annual cardholder fees (on those
S-24
<PAGE>
accounts which assess such fees) and other service charges varies with the type
and volume of activity in, and the balance of each account.] [Information
concerning annual cardholder fees, if any, to be discussed.]
[Variances from Travelers Consumer Credit Card Portfolio to the Trust
Portfolio, if any, to be discussed.]
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement entered into among CC Credit Card Corporation, as Transferor,
Travelers Bank & Trust, fsb, as Servicer of the Accounts and the Receivables,
and The Bank of New York, as Trustee for the Certificateholders, substantially
in the form filed as an exhibit to the Registration Statement of which the
Prospectus is a part. Pursuant to the Master Pooling and Servicing Agreement,
the Transferor may execute further supplements thereto among each of the
Transferor and the Trustee in order to issue additional Series. See "Description
of the Certificates-- New Issuances" in the Prospectus. The Trustee will provide
a copy of the Master Pooling and Servicing Agreement (without exhibits or
schedules), including any Supplements, to Certificateholders without charge upon
written request. The following summary together with information contained
elsewhere in this Prospectus Supplement and information contained in the
Prospectus describes the material terms of the Certificates contained in the
Pooling and Servicing Agreement. The following summary is qualified in its
entirety by reference to the Pooling and Servicing Agreement.
GENERAL
The Certificates will represent undivided interests in the Trust Assets,
including the right to a floating percentage (in the case of collections of
Principal Receivables during the Revolving Period, such collections will be
allocated to the Certificates and paid to the holders of the Transferor
Certificates, to amortizing or accumulating Series in [Group One] or, in certain
limited circumstances described herein, to the holder of the Class C Interest,
or deposited into the Excess Funding Account, and in the case of collections of
Finance Charge Receivables and Defaulted Receivables at all times) or a
resettable fixed/ floating percentage (in the case of collections of Principal
Receivables during the Controlled Accumulation Period or the Rapid Amortization
Period) (each, the "Series Percentage") of all cardholder payments on the
Receivables; PROVIDED, HOWEVER, that on any Distribution Date during the
Controlled Accumulation Period, the amount to be deposited in the Principal
Funding Account in respect of collections of Principal Receivables will be
limited to the Controlled Deposit Amount on such Distribution Date. See "--
Allocation Percentages." For any Monthly Period, the portion of the Principal
Receivables and any amounts on deposit in the Excess Funding Account represented
by the Certificates and the Class C Interest (the "Invested Amount") will be
equal to the Initial Invested Amount, [plus the amount of any increases in the
Invested Amount during the Funding Period as a result of withdrawals from the
Pre-Funding Account in connection with any increases in the amount of Principal
Receivables in the Trust,] minus the amount of principal deposits into the
Principal Funding Account, minus (without duplication of the amount of principal
deposits into the Principal Funding Account) the amount of principal payments
paid to the Certificateholders and the Class C Interest Holder (other than any
principal payments made from any amounts on deposit in the Pre-Funding Account
at the end of the Funding Period) and minus any unreimbursed reductions in the
Invested Amount. See "The Pooling and Servicing Agreement Generally-- Defaulted
Receivables; Rebates and Fraudulent Charges" in the Prospectus and "Description
of the Certificates--Allocation of Investor Default Amount" herein. Each
Certificate represents the right to receive monthly payments of interest for the
related Interest Periods at the applicable Certificate Rate for such Interest
Periods from collections of Finance Charge Receivables and, in certain
circumstances Reallocated Principal Collections, and deposits or payments of
principal during the Controlled Accumulation Period or the Rapid Amortization
Period funded from collections of Principal Receivables allocated to the Class A
Invested Amount and the Class B Invested Amount (plus certain other amounts
specified herein, including, during the Controlled Accumulation Period, certain
collections of Principal Receivables
S-25
<PAGE>
otherwise allocable to other Series or to the Transferor, to the extent such
collections are not needed to make payments to or for the benefit of such other
Series).
The Transferor holds the interest in the Principal Receivables and the
amounts on deposit in the Excess Funding Account, if any (the "Transferor
Amount"), not represented by the Certificates, the Class C Interest and the
certificates of and uncertificated interests in other Series, if any. The
Transferor holds an undivided interest in the Trust (the "Transferor's
Interest"), including the right to a percentage (the "Transferor Percentage") of
all cardholder payments on the Receivables.
During the Revolving Period, the Investor Amount will remain constant except
in certain limited circumstances [(including the circumstance where there are
amounts remaining in the Pre-Funding Account at the end of the Funding Period
that are paid to Certificateholders)]. See "The Pooling and Servicing Agreement
Generally--Defaulted Receivables; Rebates and Fraudulent Charges" in the
Prospectus and "Description of the Certificates ["--Pre-Funding Account"] and
"--Allocation of Investor Default Amounts" herein. The amount of Principal
Receivables, however, will vary each day as new Principal Receivables are
created and others are paid. The Transferor Amount will fluctuate daily,
therefore, to reflect the changes in the amount of the Principal Receivables.
During the Controlled Accumulation Period or the Rapid Amortization Period, the
Invested Amount will decline for each Monthly Period as cardholder payments of
Principal Receivables are collected and deposited in the Principal Funding
Account or paid to the Certificateholders.
INTEREST PAYMENTS
Interest will accrue on the Certificates at the applicable Class A
Certificate Rate or Class B Certificate Rate from the date of the initial
issuance of the Certificates (the "Closing Date"). Interest at such applicable
rate will be paid to the Certificateholders on each Distribution Date beginning
on , .
Interest payments on the Certificates on any Distribution Date will be
calculated on the outstanding principal amount of the Class A Certificates or
the Class B Certificates, as applicable, as of the preceding Record Date (or, in
the case of the first Distribution Date, as of the Closing Date) based upon the
applicable Certificate Rate for the related Interest Period. Interest due but
not paid on any Distribution Date will be payable on the next succeeding
Distribution Date together with additional interest on such amount at the
applicable Certificate Rate plus %.----
Interest on the Class A Certificates and the Class B Certificates will be
calculated on the basis of [the actual number of days in the related Interest
Period and a [360] [365] day year.] [a 360-day year of twelve 30-day months.]
The Class A Certificates will bear interest from the Closing Date at [the rate
of %] [a Floating-Rate determined as follows .]
On each Distribution Date, Class A Monthly Interest and Class A Monthly
Interest previously due but not distributed to the Class A Certificateholders
will be paid to the Class A Certificateholders from Class A Available Funds for
the related Monthly Period. To the extent Class A Available Funds for such
Monthly Period are insufficient to pay such interest, Excess Spread, Excess
Finance Charges and Excess Transferor Finance Charge Collections allocated to
Series 199 , and Reallocated Principal Collections allocable first to the Class
C Invested Amount and then the Class B Invested Amount will be used to make such
payments. "Class A Available Funds" means, with respect to any Monthly Period,
an amount equal to the sum of (a) the Class A Floating Percentage of collections
of Finance Charge Receivables allocated to the Series 199 Certificates with
respect to such Monthly Period (including [any investment earnings on amounts on
deposit in the Pre-Funding Account and] certain other amounts that are to be
treated as collections of Finance Charge Receivables in accordance with the
Pooling and Servicing Agreement), (b) the amount of Principal Funding Investment
Proceeds, if any, with respect to such Distribution Date [and (c) the amount of
funds, if any, to be withdrawn from the Reserve Account that, pursuant to the
S-26
<PAGE>
Supplement, are required to be included in Class A Available Funds with respect
to such Distribution Date.]
On each Distribution Date, Class B Monthly Interest and Class B Monthly
Interest previously due but not distributed to the Class B Certificateholders
will be paid to the Class B Certificateholders from Class B Available Funds for
the related Monthly Period. To the extent Class B Available Funds for such
Monthly Period are insufficient to pay such interest, Excess Spread, Excess
Finance Charges and Excess Transferor Finance Charge Collections allocated to
Series 199 , and Reallocated Principal Collections allocable to the Class C
Invested Amount will be used to make such payment. "Class B Available Funds"
means, with respect to any Monthly Period, an amount equal to the Class B
Floating Percentage of collections of Finance Charge Receivables allocated to
the Series 199 Certificates with respect to such Monthly Period (including [any
investment earnings on amounts on deposit in the Pre-Funding Account and]
certain other amounts that are to be treated as collections of Finance Charge
Receivables in accordance with the Pooling and Servicing Agreement).
"Class A Monthly Interest" means, with respect to any Distribution Date, an
amount equal to [one-twelfth of] the product of (i) [(A) a fraction, the
numerator of which is the actual number of days in the period from and including
the preceding Distribution Date to but excluding such Distribution Date and the
denominator of which is [360] [365], times (B)] the Class A Certificate Rate and
(ii) the outstanding principal amount of the Class A Certificates as of the
preceding Record Date; PROVIDED, HOWEVER, with respect to the first Distribution
Date, Class A Monthly Interest shall be equal to the interest accrued on the
outstanding principal amount of the Class A Certificates at the applicable Class
A Certificate Rate for the period from the Closing Date through ,
.
"Class B Monthly Interest" means, with respect to any Distribution Date, an
amount equal to [one-twelfth of] the product of (i) [(A) a fraction, the
numerator of which is the actual number of days in the period from and including
the preceding Distribution Date to but excluding such Distribution Date and the
denominator of which is [360] [365], times (B)] the Class B Certificate Rate and
(ii) the outstanding principal amount of the Class B Certificates as of the
preceding Record Date; PROVIDED, HOWEVER, with respect to the first Distribution
Date, Class B Monthly Interest shall be equal to the interest accrued on the
outstanding principal amount of the Class B Certificates at the applicable Class
B Certificate Rate for the period from the Closing Date through
, .
"Class C Monthly Interest" means, initially zero. However, the Transferor
may, subsequent to the issuance of the Series 199 Certificates, set an interest
rate for the Class C Interest without the consent of the Certificateholders. See
"--Transfer of the Class C Interest."
[PRE-FUNDING ACCOUNT]
[The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Certificateholders and the Class C Interest Holder, the
Pre-Funding Account with an Eligible Institution. Funds on deposit in the
Pre-Funding Account will be withdrawn on a monthly basis to the extent of any
increases in the Invested Amount during the Funding Period as a result of an
increase in the amount of Principal Receivables in the Trust to the extent that
the Transferor Amount on the last day of any Monthly Period during the Funding
Period exceeds the product of (A) the sum of % and the Required Transferor
Percentage on such date and (B) the sum of the aggregate amount of Principal
Receivables in the Trust and amounts on deposit in the Excess Funding Account on
such day; PROVIDED, HOWEVER, that the Invested Amount will in no event exceed
$ or increase by an amount in excess of the Pre-Funded Amount
immediately prior to giving effect to such increase. Should the Pre-Funded
Amount be greater than zero at the end of the Funding Period, any principal
amounts remaining on deposit in the Pre-Funding Account will be withdrawn for
pro rata distribution to Certificateholders and the Class C Interest Holder on
the next succeeding Distribution Date.]
S-27
<PAGE>
[All amounts on deposit in the Pre-Funding Account will be invested by the
Trustee in Eligible Investments. On each Distribution Date with respect to the
Funding Period, all net investment income earned on amounts in the Pre-Funding
Account during the preceding Monthly Period will be withdrawn from the
Pre-Funding Account and deposited into the Collection Account for distribution
as collections of Finance Charge Receivables allocable to the Certificateholders
and the Class C Interest Holder. Such investment income will be deemed to be
collections of Finance Charge Receivables allocable to the Certificates and the
Class C Interest for such Monthly Period.]
PRINCIPAL PAYMENTS
During the Revolving Period (which begins on the Closing Date and ends on
the day before the commencement of the Accumulation Period or, if earlier, the
Rapid Amortization Period), no principal payments will be made to the
Certificateholders [(other than any principal payment made from any amount on
deposit in the Pre-Funding Account at the end of the Funding Period)]. On each
Distribution Date during the Revolving Period, collections of Principal
Receivables allocable to the Certificateholders' Interest and the Class C
Interest will, subject to certain limitations, including the allocation of any
Reallocated Principal Collections with respect to the related Monthly Period to
pay the Class A Required Amount and the Class B Required Amount and payments of
Class C Monthly Principal, be treated as Shared Principal Collections; provided
that, certain collections of Principal Receivables allocable to the Series
199 Certificateholders' Interest may be applied to reduce the Class C Invested
Amount if the Rating Agency Condition has been met.
The first principal payment [(other than any principal payment made from any
amount on deposit in the Pre-Funding Account at the end of the Funding Period)]
will be made to the Certificateholders on the earlier of the Class A Expected
Final Distribution Date or on the Distribution Date in the month following the
month in which the Rapid Amortization Period commences. On each Distribution
Date with respect to the Class A Accumulation Period, an amount equal to the
least of (a) Available Investor Principal Collections on deposit in the
Collection Account with respect to such Distribution Date, (b) the applicable
Controlled Deposit Amount for such Distribution Date and (c) the Class A
Invested Amount, will be deposited in the Principal Funding Account for payment
to the Class A Certificateholders on the Class A Expected Final Payment Date or
on the first Distribution Date with respect to the Rapid Amortization Period.
After the Class A Investor Amount has been paid in full, on each Distribution
Date with respect to the Class B Accumulation Period, amounts equal to the least
of (a) Available Investor Principal Collections on deposit in the Collection
Account with respect to such Distribution Date (minus the portion of such
Available Investor Principal Collections applied to Class A Monthly Principal on
such Distribution Date), (b) the applicable Controlled Deposit Amount for such
Distribution Date and (c) the Class B Invested Amount will be paid to the Class
B Certificateholders until the Class B Invested Amount has been paid in full.
"Available Investor Principal Collections" means, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) an amount equal to the
Principal Allocation Percentage of all collections of Principal Receivables
received during such Monthly Period, minus (ii) the amount of Reallocated
Principal Collections with respect to such Monthly Period used to fund the Class
A Required Amount or the Class B Required Amount, plus (b) any Shared Principal
Collections with respect to other Series in [Group One] that are allocated to
Series 199 , plus (c) any other amounts which pursuant to the Supplement are to
be treated as Available Investor Principal Collections with respect to the
related Distribution Date.
On each Distribution Date during the Rapid Amortization Period until the
Class A Investor Amount has been paid in full or the Series 199 Termination
Date occurs, the Class A Certificateholders will be entitled to receive
Available Investor Principal Collections in an amount up to the Class A Investor
Amount. After payment in full of the Class A Investor Amount, the Class B
Certificateholders will be entitled to receive, on each such Distribution Date,
Available Investor Principal Collections until the earlier of the date the Class
B Invested Amount is paid in full and the Series 199 Termination Date.
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"Class A Monthly Principal" with respect to any Distribution Date relating
to the Class A Accumulation Period or the Rapid Amortization Period will equal
the least of (i) the Available Investor Principal Collections on deposit in the
Collection Account with respect to such Distribution Date, (ii) for each
Distribution Date with respect to the Class A Accumulation Period (and on or
prior to the Class A Expected Final Distribution Date), the Controlled Deposit
Amount for such Distribution Date and (iii) the Class A Invested Amount on such
Distribution Date.
"Class B Monthly Principal" with respect to any Distribution Date, beginning
with the Class B Principal Commencement Date, will equal the least of (i) the
Available Investor Principal Collections on deposit in the Collection Account
with respect to such Distribution Date (minus the portion of such Available
Principal Collections applied to Class A Monthly Principal on such Distribution
Date), (ii) for each Distribution Date with respect to the Class B Accumulation
Period, the Controlled Deposit Amount for such Distribution Date and (iii) the
Class B Invested Amount on such Distribution Date.
"Controlled Accumulation Amount" means (a) for any Distribution Date with
respect to the Class A Accumulation Period, the maximum Class A Invested Amount
during the Revolving Period divided by twelve, subject to upward adjustment in
connection with the postponement of the Class A Accumulation Period, and (b) for
any Distribution Date with respect to the Class B Accumulation Period, the
maximum Class B Invested Amount during the Revolving Period.
"Deficit Controlled Accumulation Amount" means (a) on the first Distribution
Date with respect to the Class A Accumulation Period or the Class B Accumulation
Period, the excess, if any, of the Controlled Accumulation Amount for such
Distribution Date over the amount distributed from the Collection Account as
Class A Monthly Principal or Class B Monthly Principal, as the case may be, for
such Distribution Date and (b) on each subsequent Distribution Date with respect
to the Class A Accumulation Period or the Class B Accumulation Period, the
excess, if any, of the Controlled Deposit Amount for such subsequent
Distribution Date over the amount distributed from the Collection Account as
Class A Monthly Principal or Class B Monthly Principal, as the case may be, for
such subsequent Distribution Date.
[POSTPONEMENT OF ACCUMULATION PERIOD
Upon written notice to the Trustee, the Servicer may elect to postpone the
commencement of the Class A Accumulation Period, and extend the length of the
Revolving Period, subject to certain conditions including those set forth below.
The Servicer may make such election only if the Accumulation Period Length
(determined as described below) is less than twelve months. On each
Determination Date, until the Class A Accumulation Period begins, the Servicer
will determine the "Accumulation Period Length," which is the number of months
expected to be required to fully fund the Principal Funding Account no later
than the Class A Expected Final Distribution Date, based on (a) the monthly
collections of Principal Receivables expected to be distributable to the
Certificateholders of all Series, assuming a principal payment rate no greater
than the lowest monthly principal payment rate on the Receivables for the
preceding twelve months and (b) the amount of principal expected to be
distributable to certificateholders of Series which are not expected to be in
their revolving periods during the Class A Accumulation Period. If the
Accumulation Period Length is less than twelve months, the Servicer may, at its
option, postpone the commencement of the Class A Accumulation Period such that
the number of months included in the Class A Accumulation Period will be equal
to or exceed the Accumulation Period Length. The effect of the foregoing
calculation is to permit the reduction of the length of the Class A Accumulation
Period based on the investor interest of certain other Series which are
scheduled to be in their revolving periods during the Class A Accumulation
Period and on increases in the principal payment rate occurring after the
Closing Date. The length of the Class A Accumulation Period will not be less
than one month.]
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SUBORDINATION
The Class B Certificateholders' Interest and the Class C Interest will be
subordinated to the extent necessary to fund certain payments with respect to
the Class A Certificates. In addition, the Class C Interest will be subordinated
to the extent necessary to fund certain payments with respect to the Class B
Certificates. Certain principal payments otherwise allocable to the Class B
Certificateholders may be reallocated to the Class A Certificateholders and the
Class B Invested Amount may be reduced. Similarly, certain principal payments
allocable to the Class C Interest may be reallocated to the Class A
Certificateholders and the Class B Certificateholders and the Class C Invested
Amount may be reduced. To the extent the Class B Invested Amount is reduced, the
percentage of collections of Finance Charge Receivables allocated to the Class B
Certificateholders in subsequent Monthly Periods will be reduced. Moreover, to
the extent the amount of such reduction in the Class B Invested Amount is not
reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced. See "--Allocation Percentages,"
"--Reallocation of Cash Flows," and "--Application of Collections--Excess
Spread; Excess Finance Charges."
[TRANSFER OF THE CLASS C INTEREST
The Certificates will have the benefit of the subordination of the Class C
Interest which will be retained initially by the Transferor. The Transferor may
at any time, without consent of the Certificateholders, sell or transfer all or
a portion of the Class C Interest and, in connection with any such sale or
transfer, enter into a supplemental agreement with the Trustee pursuant to which
the Transferor may provide that the Class C Interest will bear interest at a
specified rate, set forth the amount of monthly interest due to Class C Interest
Holder, provide for the payment of additional amounts with respect to any
shortfall of such amount and provide for such other terms with respect to the
Class C Interest as may be specified therein, provided that in each case (i) the
Transferor shall have given notice to the Trustee, the Servicer and the Rating
Agencies of the proposed sale or transfer of the Class C Interest and such
supplemental agreement at least five Business Days prior to the consummation of
such transfer or sale and the execution of such supplemental agreement; (ii) the
Trustee shall have been notified in writing that the Rating Agency Condition has
been satisfied; (iii) no Pay Out Event shall have occurred prior to the proposed
sale or transfer or the execution of such supplemental agreement; (iv) the
Transferor shall have delivered to the Trustee a certificate of an authorized
officer, dated the date of such sale or transfer and the execution of such
supplemental agreement, to the effect that, in the reasonable belief of the
Transferor, such sale or transfer and the effectiveness of such supplemental
agreement will not, based on the facts known to such officer at the time of such
certification, cause a Pay Out Event to occur with respect to any Series,
including Series 199 ; and (v) the Transferor will have delivered a Tax Opinion
(as defined in the Prospectus), dated the date of such sale or transfer, with
respect to such action.]
ALLOCATION PERCENTAGES
Pursuant to the Pooling and Servicing Agreement, with respect to each
Monthly Period the Servicer will allocate among the Class A Certificates, the
Class B Certificates and the Class C Interest, the certificateholders' interest
for all other Series issued and outstanding and the Transferor's Interest in all
collections of Finance Charge Receivables and Principal Receivables and the
Defaulted Amount with respect to such Monthly Period.
Collections of Finance Charge Receivables and the Defaulted Amount with
respect to any Monthly Period will be allocated to Series 199 based on the
Floating Allocation Percentage. The "Floating Allocation Percentage" means, with
respect to any Monthly Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the 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
greater of (1) the sum of (x) the total amount of the Principal Receivables in
the Trust as of such day (or with respect to the first Monthly Period, the total
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amount of Principal Receivables in the Trust on the Closing Date) and (y) the
principal amount on deposit in the Excess Funding Account as of such day and (2)
the sum of the numerators used to calculate the Series Percentages with respect
to Finance Charge Receivables or Defaulted Receivables, as applicable, for all
Series of certificates then outstanding; PROVIDED, HOWEVER, that such ratio is
subject to adjustment to give effect to additions of Additional Accounts. Such
amounts so allocated will be further allocated between the Class A
Certificateholders, the Class B Certificateholders and the Class C Interest
Holder in accordance with the Class A Floating Percentage, the Class B Floating
Percentage and the Class C Floating Percentage, respectively.
The "Class A Floating Percentage" means, with respect to any Monthly Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is equal to the Class A Invested Amount as of
the close of business on the last day of the preceding Monthly Period (or with
respect to the first Monthly Period, the Class A Initial Invested Amount) and
the denominator of which is equal to the Invested Amount as of the close of
business on such day (or with respect to the first Monthly Period, the Initial
Invested Amount).
The "Class B Floating Percentage" means, with respect to any Monthly Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is equal to the Class B Invested Amount as of
the close of business on the last day of the preceding Monthly Period (or with
respect to the first Monthly Period, the Class B Initial Invested Amount) and
the denominator of which is equal to the Invested Amount at the close of
business on such day (or with respect to the first Monthly Period, the Initial
Invested Amount).
The "Class C Floating Percentage" means, with respect to any Monthly Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class C Invested Amount as of the close
of business on the last day of the preceding Monthly Period (or with respect to
the first Monthly Period, the Class C Initial Invested Amount) and the
denominator of which is equal to the Invested Amount as of the close of business
on such day (or with respect to the first Monthly Period, the Initial Invested
Amount).
Collections of Principal Receivables will be allocated to Series 199 based
on the Principal Allocation Percentage. The "Principal Allocation Percentage"
means, with respect to any Monthly Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is (a)
during the Revolving Period, the Invested Amount 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 Rapid Amortization Period, the Invested Amount as of the last day of the
Revolving Period, and the denominator of which is the greater of (i) the sum of
the total amount of Principal Receivables in the Trust as of the last day of the
immediately preceding Monthly Period and the principal amount on deposit in the
Excess Funding Account as of such last day (or, in the case of the first Monthly
Period, the Closing Date) and (ii) the sum of the numerators used to calculate
the Series Percentages applicable to Principal Receivables for all Series
outstanding as of the date as to which such determination is being made;
PROVIDED, HOWEVER, that such ratio is subject to adjustment to give effect to
additions of Additional Accounts.
Such amounts allocated to the Certificateholders will be further allocated
between the Class A Certificateholders, the Class B Certificateholders and the
Class C Interest based on the Class A Principal Percentage, the Class B
Principal Percentage, and the Class C Principal Percentage, respectively. The
"Class A Principal Percentage" means, with respect to any Monthly Period, (a)
during the Revolving Period, the percentage equivalent (which shall never exceed
100%) of a fraction, the numerator of which is equal to the Class A Invested
Amount as of the last day of the immediately preceding Monthly Period (or, in
the case of the first Monthly Period, the Closing Date), and the denominator of
which is equal to the Invested Amount as of such day (or, in the case of the
first Monthly Period, the Closing Date) and (b) during the Accumulation Period
or the Rapid Amortization Period, the percentage equivalent (which shall
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never exceed 100%) of a fraction, the numerator of which is the Class A Invested
Amount as of the last day of the Revolving Period, and the denominator of which
is the Invested Amount as of such last day. The "Class B Principal Percentage"
means, with respect to any Monthly Period, (i) during the Revolving Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Class B Invested Amount as of the last day of the
immediately preceding Monthly Period (or, in the case of the first Monthly
Period, the Closing Date) and the denominator of which is the Invested Amount as
of such day (or, in the case of the first Monthly Period, the Closing Date) and
(ii) during the Accumulation Period or the Rapid 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 last day of the
Revolving Period, and the denominator of which is the Invested Amount as of such
last day. The "Class C Principal Percentage" means, for any Monthly Period, a
percentage (which shall never exceed 100% or be less than 0%) equal to the
difference between 100% and the sum of the Class A Principal Percentage and the
Class B Principal Percentage. As used herein, the following terms have the
meanings indicated:
"Class A Invested Amount" for any date means an amount equal to (i) the
Class A Initial Invested Amount, [plus (ii) the amount of any increases in the
Class A Invested Amount during the Funding Period on or prior to such date,]
minus (iii) the amount of principal payments [(other than principal payments
made from amounts on deposit in the Pre-Funding Account on the first
Distribution Date following the end of the Funding Period)] made to the Class A
Certificateholders on or prior to such date, minus (iv) the excess, if any, of
the aggregate amount of Class A Investor Charge-Offs for all prior Distribution
Dates over the aggregate amount of any reimbursements of Class A Investor
Charge-Offs for all Distribution Dates prior to such date and minus (v) the
principal amount on deposit in the Principal Funding Account (the "Principal
Funding Account Balance").
"Class B Invested Amount" for any date means an amount equal to (i) the
Class B Initial Invested Amount, [plus (ii) the amount of any increases in the
Class B Invested Amount during the Funding Period on or prior to such date,]
minus (iii) the amount of principal payments [(other than principal payments
made from amounts on deposit in the Pre-Funding Account on the first
Distribution Date following the end of the Funding Period)] made to Class B
Certificateholders on or prior to such date, minus (iv) the excess, if any, of
the aggregate amount of Class B Investor Charge-Offs for all prior Distribution
Dates over the aggregate amount of any reimbursement of Class B Investor
Charge-Offs for all Distribution Dates preceding such date, minus (v) the
aggregate amount of Reallocated Principal Collections for all prior Distribution
Dates which have been used to fund the Class A Required Amount with respect to
such Distribution Dates (excluding any Reallocated Principal Collections that
have resulted in a reduction of the Class C Invested Amount), minus (vi) an
amount equal to the amount by which the Class B Invested Amount has been reduced
to fund the Class A Investor Default Amount on all prior Distribution Dates as
described under "--Allocation of Investor Default Amount," and plus (vii) the
aggregate amount of Excess Spread and Excess Finance Charges allocated to Series
199 and applied on all prior Distribution Dates for the purpose of reimbursing
amounts deducted pursuant to the foregoing clauses (iv), (v) and (vi) PROVIDED,
HOWEVER, that the Class B Invested Amount may not be reduced below zero.
"Class C Invested Amount" means an amount equal to (i) the Class C Initial
Invested Amount, [plus (ii) the amount of any increases in the Class C Invested
Amount during the Funding Period on or prior to such date,] minus (iii) the
aggregate amount of principal payments [(other than principal payments made from
amounts on deposit in the Pre-Funding Account on the first Distribution Date
following the end of the Funding Period)] made with respect to the Class C
Interest prior to the date of determination, minus (iv) the aggregate amount of
Reallocated Principal Collections allocable to the Class C Invested Amount for
all prior Distribution Dates which have been used to fund the Class A Required
Amount or the Class B Required Amount, minus (v) an amount equal to the
aggregate amount by which the Class C Invested Amount has been reduced to fund
the Class A Investor Default Amount and the Class B Investor Default Amount on
all prior Distribution Dates as described under "--Allocation of Investor
Default Amount,"
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minus (vi) an amount equal to the product of the Class C Floating Percentage and
the Investor Default Amount (the "Class C Default Amount") with respect to any
Distribution Date that is not funded out of Excess Spread and Excess Finance
Charges allocated to Series 199 - and available for such purpose on such
Distribution Date, and plus (vi) the aggregate amount of Excess Spread and
Excess Finance Charges allocated and available to reimburse amounts deducted
pursuant to the foregoing clauses (iv), (v) and (vi); PROVIDED, HOWEVER, that
the Class C Invested Amount may not be reduced below zero.
"Invested Amount," for any date means an amount equal to the sum of the
Class A Invested Amount, the Class B Invested Amount and the Class C Invested
Amount.
"Class A Investor Amount" for any date means an amount equal to the sum of
the Class A Invested Amount, plus the Class A Floating Percentage of the
Pre-Funded Amount, plus the Principal Funding Account Balance.
["Class B Investor Amount" for any date means an amount equal to the sum of
the Class B Invested Amount plus the Class B Floating Percentage of the
Pre-Funded Amount.]
["Class C Investor Amount" for any date means an amount equal to the sum of
the Class C Invested Amount plus the Class C Floating Percentage of the
Pre-Funded Amount.]
"Investor Amount," for any date means an amount equal to the sum of the
Class A Investor Amount, the Class B Investor Amount and Class C Investor
Amount.
"Series Investor Amount" for any date means an amount equal to the numerator
of the Principal Allocation Percentage on such date.
REALLOCATION OF CASH FLOWS
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the "Class A Required Amount"), which will
be equal to the amount, if any, by which (a) the sum of (i) Class A Monthly
Interest for such Distribution Date, (ii) any Class A Monthly Interest
previously due but not paid to Class A Certificateholders on a prior
Distribution Date, (iii) any Class A Additional Interest and any Class A
Additional Interest previously due but not paid to the Class A
Certificateholders on a prior Distribution Date, (iv) the Class A Servicing Fee
for such Distribution Date and any unpaid Class A Servicing Fee and (v) the
Class A Investor Default Amount, if any, for such Distribution Date exceeds (b)
the Class A Available Funds. If the Class A Required Amount is greater than
zero, Excess Spread, Excess Finance Charges and Excess Transferor Finance Charge
Collections allocated to Series 199 and available for such purpose will be used
to fund the Class A Required Amount with respect to such Distribution Date. If
such Excess Spread, Excess Finance Charges and Excess Transferor Finance Charge
Collections are insufficient to fund the Class A Required Amount, collections of
Principal Receivables allocable first to the Class C Interest and then to the
Class B Certificates for the related Monthly Period ("Reallocated Principal
Collections") will then be used to fund the remaining Class A Required Amount.
If Reallocated Principal Collections with respect to the related Monthly Period,
together with Excess Spread, Excess Finance Charges and Excess Transferor
Finance Charge Collections allocated to Series 199 are insufficient to fund the
Class A Required Amount for such related Monthly Period, then the Class C
Invested Amount will be reduced by the amount of such excess (but not by more
than the Class A Investor Default Amount for such Distribution Date). In the
event that such reduction would cause the Class A Invested Amount to be a
negative number, the Class C Invested Amount will be reduced to zero, and the
Class B Invested Amount will be reduced by the amount by which the Class C
Invested Amount would have been reduced below zero (but not by more than the
excess of the Class A Investor Default Amount, if any, for such Distribution
Date over the amount of such reduction, if any, of the Class C Invested Amount
with respect to such Distribution Date). In the event that such reduction would
cause the Class B Invested Amount to be a negative number, the Class B Invested
Amount will be reduced to zero, and the Class A Invested Amount will be reduced
by the amount by which the Class B
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Invested Amount would have been reduced below zero, but not by more than the
excess, if any, of the Class A Investor Default Amount for such Distribution
Date over the amount of the reductions, if any, of the Class C Invested Amount
and the Class B Invested Amount with respect to such Distribution Date as
described above. Any such reduction in the Class A Invested Amount will have the
effect of slowing or reducing the return of principal and interest to the Class
A Certificateholders. In such case, the Class A Certificateholders will bear
directly the credit and other risks associated with their interest in the Trust.
See "--Allocation of Investor Default Amount."
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the "Class B Required Amount"), which will
be equal to the amount, if any, by which the sum of (i) Class B Monthly Interest
for such Distribution Date, (ii) any Class B Monthly Interest previously due but
not paid to the Class B Certificateholders on a prior Distribution Date, (iii)
any Class B Additional Interest and any Class B Additional Interest previously
due but not paid to Class B Certificateholders on a prior Distribution Date,
(iv) the Class B Servicing Fee for such Distribution Date and any unpaid Class B
Servicing Fee and (v) the Class B Investor Default Amount, if any, for such
Distribution Date exceeds the Class B Available Funds. If the Class B Required
Amount is greater than zero, Excess Spread and Excess Finance Charges allocated
to Series 199 not required to pay the Class A Required Amount or reimburse Class
A Investor Charge-Offs will be used to fund the Class B Required Amount with
respect to such Distribution Date. If such Excess Spread, Excess Finance Charges
and Excess Transferor Finance Charge Collections available to fund the remaining
Class B Required Amount with respect to such Distribution Date are less than the
Class B Required Amount, Reallocated Principal Collections allocable to the
Class C Interest not required to pay the Class A Required Amount for the related
Monthly Period will then be used to fund the remaining Class B Required Amount.
If such Reallocated Principal Collections allocable to the Class C Interest with
respect to the related Monthly Period are insufficient to fund the remaining
Class B Required Amount, then the Class C Invested Amount remaining after any
adjustments made thereto for the benefit of the Class A Certificateholders will
be reduced by the amount of such insufficiency (but not by more than the Class B
Investor Default Amount for such Distribution Date). In the event that such a
reduction would cause the Class C Invested Amount to be a negative number, the
Class C Invested Amount will be reduced to zero, and the Class B Invested Amount
will be reduced by the amount by which the Class C Invested Amount would have
been reduced below zero (but not by more than the excess of the Class B Investor
Default Amount for such Distribution Date over the amount of such reduction of
the Class C Invested Amount), and the Class B Certificateholders will bear
directly the credit and other risks associated with their interests in the
Trust. See "--Allocation of Investor Default Amount."
Reductions of the Class A Invested Amount or Class B Invested Amount shall
thereafter be reimbursed and the Class A Invested Amount or Class B Invested
Amount increased to the extent of Excess Spread, Excess Finance Charges, Excess
Transferor Finance Charge Collections and Reallocated Principal Collections
available for such purposes on each Distribution Date. See "--Application of
Collections--Excess Spread; Excess Finance Charges; Excess Transferor Finance
Charge Collections." When such reductions of the Class A Invested Amount and
Class B Invested Amount have been fully reimbursed, reductions of the Class C
Invested Amount shall be reimbursed until reimbursed in full in a similar
manner.
APPLICATION OF COLLECTIONS
APPLICATION OF COLLECTIONS TO THE COLLECTION ACCOUNT. The Servicer will
apply, or will instruct the Trustee to apply, on or prior to the close of
business on the second Business Day following the date of processing of any
collections, all collections and other funds to be deposited into the Collection
Account that are allocated to the Certificates and the Class C Interest as
follows:
(1) during the Revolving Period, an amount equal to the Floating
Allocation Percentage of the collections of Finance Charge Receivables
processed on such date will be allocated to the Certificates
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and the Class C Interest, and of that allocation, the following amounts will
be deposited and retained in the Collection Account: [an amount equal to the
Monthly Interest for the related Distribution Date less amounts previously
deposited in the Collection Account for such Monthly Interest] [prior to the
day, the entire amount of such allocation and on and after the day the
difference between the amount required to pay the Monthly Interest and
amounts previously deposited for such Monthly Interest];
(2) during the Controlled Accumulation Period or Rapid Amortization
Period, an amount equal to the Floating Allocation Percentage of the
collections of Finance Charge Receivables processed on such date will be
allocated to the Certificates and the Class C Interest and deposited and
retained in the Collection Account;
(3) during the Revolving Period, an amount equal to the Principal
Allocation Percentage of collections of Principal Receivables processed on
such date will be allocated to the Certificates and the Class C Interest and
paid to the holders of the Transferor Certificates; provided that such
amount will be paid to the holders of the Transferor Certificates only if
the Transferor Amount is greater than the Required Transferor Amount and the
product of (x) the aggregate amount of Principal Receivables and (y) one
minus the Discount Percentage is greater than the Required Principal Balance
and otherwise will be deposited in the Excess Funding Account until the
Transferor Amount is greater than the Required Transferor Amount and the
product of (x) the aggregate amount of Principal Receivables and (y) one
minus the Discount Percentage is greater than the Required Principal Balance
and the remainder will be paid to the holders of the Transferor
Certificates; provided further, that if the Class C Investor Amount is less
than the Required Class C Investor Amount, an amount equal to the sum of (x)
the Class C Principal Percentage of the product of the Principal Allocation
Percentage and the collections of Principal Receivables and (y) the Class B
Principal Percentage of the product of the Principal Allocation Percentage
and the collections of Principal Receivables ("Subordinate Principal
Collections") will be deposited and retained in the Collection Account;
(4) during the Controlled Accumulation Period, an amount equal to the
Principal Allocation Percentage of collections of Principal Receivables
processed on such date (for any such date, a "Percentage Allocation") will
be allocated to the Certificates and the Class C Interest and deposited and
retained in the Collection Account; provided, however, that if the sum of
such 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 paid to
the holders of the Transferor Certificates only if the Transferor Amount on
such Date of Processing is greater than the Required Transferor Amount and
the product of (x) the aggregate amount of Principal Receivables and (y) one
minus the Discount Percentage is greater than the Required Principal Balance
and otherwise will be deposited in the Excess Funding Account until the
Transferor Amount is greater than the Required Transferor Amount and the
product of (x) the aggregate amount of Principal Receivables and (y) one
minus the Discount Percentage is greater than the Required Principal Balance
and the remainder will be paid to the holders of the Transferor
Certificates; provided further, however, that if the Class C Investor Amount
is less than the Required Class C Investor Amount, Subordinate Principal
Collections will be retained in the Collection Account; and
(5) during the Rapid Amortization Period, an amount equal to the
Principal Allocation Percentage of the collections of Principal Receivables
processed on such date will be allocated to the Certificates and the Class C
Interest and deposited and retained in the Collection Account; provided,
however, that after the date on which an amount of such Collections equal to
the Investor Amount has been deposited into the Collection Account and
allocated to the Certificates and the Class C Interest, such amount in
excess of the Investor Amount will be paid to the holders of the Transferor
Certificates only if the Transferor Amount is greater than the Required
Transferor Amount and the product of (x) the aggregate amount of Principal
Receivables and (y) one minus the Discount
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Percentage is greater than the Required Principal Balance and otherwise will
be deposited in the Excess Funding Account until the Transferor Amount is
greater than the Required Transferor Amount and the product of (x) the
aggregate amount of Principal Receivables and (y) one minus the Discount
Percentage is greater than the Required Principal Balance and the remainder
will be paid to the holders of the Transferor Certificates.
WITHDRAWALS FROM SERIES ACCOUNTS. On or before each Distribution Date, the
Servicer will direct the Trustee to make the following withdrawals from the
following Series Accounts: [(1) on the Business Day preceding each Transfer Date
with respect to the Funding Period, all net investment income earned on amounts
in the Pre-Funding Account during the preceding Monthly Period will be withdrawn
from the Pre-Funding Account and deposited into the Collection Account for
distribution as collections of Finance Charge Receivables allocable to the
Certificateholders and the Class C Interest Holder;]
(2) on each Distribution Date with respect to the Class A Accumulation
Period beginning on the second such Distribution Date and on the first
Distribution Date with respect to the Rapid Amortization Period, if
applicable, all Principal Funding Investment Proceeds then on deposit in the
Principal Funding Account will be withdrawn from the Principal Funding
Account and deposited into the Collection Account for distribution as a
portion of Class A Available Funds for such Distribution Date.
PAYMENT OF INTEREST, FEES AND OTHER ITEMS. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class A
Available Funds, Class B Available Funds (see "-- Interest Payments" above) and
Class C Available Funds in the following priority:
(A) On each Distribution Date, an amount equal to the Class A Available
Funds with respect to such Distribution Date will be withdrawn from the
Collection Account and distributed in the following priority:
(1) 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 paid to
the Class A Certificateholders on a prior Distribution Date, plus any additional
interest with respect to interest amounts that were due but not paid to the
Class A Certificateholders on a prior Distribution Date at a rate equal to the
Class A Certificate Rate plus % per annum ("Class A Additional Interest"),
will be distributed to the Class A Certificateholders;
(2) an amount equal to the Class A Servicing Fee for such Distribution Date,
plus the amount of any Class A Servicing Fee previously due but not distributed
to the Servicer on a prior Distribution Date, will be distributed to the
Servicer (unless such amount has been netted against deposits to the Collection
Account);
(3) an amount equal to the Class A Investor Default Amount for such
Distribution Date will be treated as a portion of Available Investor Principal
Collections for such Distribution Date; and
(4) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread; Excess Finance
Charges; Excess Transferor Finance Charge Collections" below.
(B) On each Distribution Date, an amount equal to the Class B Available
Funds with respect to such Distribution Date will be withdrawn from the
Collection Account and distributed in the following priority:
(1) 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 paid to
the Class B Certificateholders on a prior Distribution Date, plus any additional
interest with respect to interest amounts that were due but not paid to the
Class B Certificateholders on a prior Distribution Date at a rate equal to the
Class B Certificate Rate plus % per annum ("Class B Additional Interest"),
will be distributed to the Class B Certificateholders;
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(2) an amount equal to the Class B Servicing Fee for such Distribution Date,
plus the amount of any Class B Servicing Fee previously due but not distributed
to the Servicer on a prior Distribution Date, will be distributed to the
Servicer (unless such amount has been netted against deposits to the Collection
Account); and
(3) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread; Excess Finance
Charges; Excess Transferor Finance Charge Collections" below.
(C) On each Distribution Date, an amount equal to the Class C Available
Funds with respect to such Distribution Date will be withdrawn from the
Collection Account and distributed in the following priority:
(1) if Travelers Bank & Trust, fsb or the Trustee is no longer the Servicer,
an amount equal to the Class C Servicing Fee for such Distribution Date, plus
the amount of any Class C Servicing Fee previously due but not distributed to
the Servicer on a prior Distribution Date, will be distributed to the Servicer
(unless such amount has been netted against deposits to the Collection Account);
and
(2) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread; Excess Finance
Charges; Excess Transferor Finance Charge Collection" below.
"Excess Spread" means, with respect to any Distribution Date, an amount
equal to the sum of the amounts described in clause (A) (4) above, clause (B)
(3) above and clause (C) (2) above under "-- Payment of Interest, Fees and Other
Items."
EXCESS SPREAD; EXCESS FINANCE CHARGES; EXCESS TRANSFEROR FINANCE CHARGE
COLLECTIONS. On each Distribution Date, the Trustee, acting pursuant to the
Servicer's instructions, will apply Excess Spread, Excess Finance Charges and
Excess Transferor Finance Charge Collections allocated to Series 199 with
respect to the related Monthly Period to make the following distributions in the
following priority:
(1) an amount equal to any deficiency pursuant to clauses (A) (1), (2)
and (3) above under "-- Payment of Interest, Fees and Other Items" will be
used to fund such deficiency, provided that, in the event such deficiency
exceeds the amount of Excess Spread, Excess Finance Charges; and Excess
Transferor Finance Charge Collections allocated to Series 199 , such Excess
Spread, Excess Finance Charges and Excess Transferor Finance Charge
Collections shall be applied first to pay amounts due with respect to such
Distribution Date pursuant to clause (A)(1) above under "-- Payment of
Interest, Fees and Other Items," second to pay the Class A Servicing Fee
pursuant to clause (A)(2) above under "--Payment of Interest, Fees and Other
Items" and third to pay the Class A Investor Default Amount for such
Distribution Date pursuant to clause (A)(3) above under "-- Payment of
Interest, Fees and Other Items;"
(2) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated as a
portion of Available Investor Principal Collections for such Distribution
Date as described under "--Payments of Principal" below;
(3) an amount equal to any deficiency pursuant to clauses (B)(1) and (2)
above under "-- Payment of Interest, Fees and Other Items" will be used to
fund such deficiency, provided that, in the event such deficiency for such
Distribution Date exceeds the remaining amount of Excess Spread, Excess
Finance Charges and Excess Transferor Finance Charge Collections allocated
to Series 199 , such Excess Spread, Excess Finance Charges and Excess
Transferor Finance Charge Collections shall be applied first to pay amounts
due with respect to such Distribution Date pursuant to clause (B)(1) above
under "--Payment of Interest, Fees and Other Items," and second to pay the
Class B Servicing Fee pursuant to clause (B)(2) above under "-- Payment of
Interest, Fees and Other Items;"
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(4) an amount equal to the Class B Investor Default Amount for such
Distribution Date will be treated as a portion of Available Investor
Principal Collections for such Distribution Date as described under
"--Payments of Principal" below;
(5) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (iv), (v) and (vi) of
the definition of "Class B Invested Amount" under "--Allocation Percentages"
above (but not in excess of the aggregate amount of such reductions which
have not been previously reimbursed) shall be treated as a portion of
Available Investor Principal Collections for such Distribution Date;
(6) an amount equal to Class C Monthly Interest, if any, for such
Distribution Date, plus the amount of any Class C Monthly Interest
previously due but not paid to the Class C Interest Holder on a prior
Distribution Date, plus any additional interest with respect to amounts that
were due but not paid to the Class C Interest Holder on a prior Distribution
Date at a rate equal to the Class C Rate ("Class C Additional Interest"),
will be distributed to the Class C Interest Holder in accordance with the
supplement entered into upon the transfer of the Class C Interest from the
Transferor;
(7) an amount equal to the Class C Servicing Fee due but not paid to the
Servicer on such Distribution Date or a prior Distribution Date shall be
paid to the Servicer;
(8) an amount equal to the Class C Default Amount for such Distribution
Date shall be treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date;
(9) an amount equal to the aggregate amount by which the Class C
Invested Amount has been reduced pursuant to clauses (iv), (v) and (vi) of
the definition of "Class C Invested Amount" under "--Allocation Percentages"
above (but not in excess of the aggregate amount of such reductions which
have not been previously reimbursed) shall be treated as a portion of
Available Investor Principal Collections for such Distribution Date;
(10) the balance, if any, will constitute a portion of Excess Finance
Charges for such Distribution Date and will be available for allocation to
other Series in [Group One] or to the holders of the Transferor Certificates
as described in "Description of the Certificates--Sharing of Excess Finance
Charges" in the Prospectus.
REALLOCATED PRINCIPAL COLLECTIONS. On or before each Distribution Date
after giving effect to the distributions above under "--Excess Spread, Excess
Finance Charges; Excess Transferor Finance Charge Collections," the Trustee,
acting pursuant to the Servicer's instructions, will apply the Reallocated
Principal Collections for the related Monthly Period to make the following
distributions in the following priority:
(1) if the amount of Excess Spread, Excess Finance Charges and Excess
Transferor Finance Charge Collections allocated to Series 199 for the
related Monthly Period is less than the Class A Required Amount, Reallocated
Principal Collections, up to the amount of such deficiency, will be
withdrawn from the Collection Account and distributed to fund such
deficiency in the order of priority set forth in clause (1) above under
"--Excess Spread, Excess Finance Charges; Excess Transferor Finance Charge
Collections"; and
(2) if the amount of Excess Spread, Excess Finance Charges and Excess
Transferor Finance Charge Collections allocated to Series 199 for the
related Monthly Period not required to fund the Class A Required Amount or
reimburse Class A Investor Charge-Offs is less than the Class B Required
Amount, Reallocated Principal Collections allocable to the Class C Interest
not required to fund the Class A Required Amount, up to the amount of such
deficiency, will be withdrawn from the Collection Account and distributed to
fund such deficiency in the order of priority set forth in clauses (3) and
(4) above under "--Excess Spread; Excess Finance Charges; Excess Transferor
Finance Charge Collections."
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PAYMENTS OF PRINCIPAL. On each Distribution Date, the Trustee, acting
pursuant to the Servicer's instructions, will distribute Available Investor
Principal Collections (see "--Principal Payments" above) in the following
priority:
(1) on each Distribution Date with respect to the Revolving Period, all
such Available Investor Principal Collections, in the following order of
priority:
(i) an amount equal to the excess, if any, of the Class C Investor Amount
over the Required Class C Investor Amount will be paid to the Class C Interest
Holder; and (ii) the balance will be treated as Shared Principal Collections and
applied as described under "Description of the Certificates --Shared Principal
Collections and Transferor Principal Collections" in the Prospectus;
(2) on each Distribution Date with respect to the Controlled
Accumulation Period or the Rapid Amortization Period, all such Available
Investor Principal Collections will be distributed or deposited in the
following priority:
(i) an amount equal to Class A Monthly Principal will be deposited in the
Principal Funding Account for payment to the Class A Certificateholders on the
earlier to occur of the Class A Expected Final Distribution Date or the first
Distribution Date with respect to the Rapid Amortization Period;
(ii) for each Distribution Date beginning on the Distribution Date on which
the Class A Investor Amount is paid in full (the "Class B Principal Commencement
Date"); PROVIDED, that if the Class A Investor Amount is paid in full on the
Class A Expected Final Distribution Date and the Rapid Amortization Period has
not commenced, the Class B Principal Commencement Date will be the Class B
Expected Final Distribution Date, an amount equal to Class B Monthly Principal
for such Distribution Date will be paid to the Class B Certificateholders;
(iii) for each Distribution Date prior to the Distribution Date on which the
Class B Invested Amount is paid in full, an amount equal to the excess, if any,
of the Class C Invested Amount over the Required Class C Invested Amount will be
paid to the Class C Interest Holder;
(iv) for each Distribution Date on or after the Distribution Date on which
the Class B Invested Amount is paid in full, an amount up to the Class C
Invested Amount will be paid to the Class C Interest Holder; and
(v) the balance, if any, will be treated as Shared Principal Collections and
applied as described under "Description of the Certificates--Shared Principal
Collections and Transferor Principal Collections" in the Prospectus.
PRINCIPAL FUNDING ACCOUNT
Pursuant to the Supplement, the Servicer will establish and maintain the
principal funding account as a segregated trust account held for the benefit of
the Certificateholders (the "Principal Funding Account"). During the Class A
Accumulation Period, the Trustee at the direction of the Servicer will transfer
Available Investor Principal Collections to the Principal Funding Account as
described under "-- Application of Collections-- Payments of Principal."
Funds on deposit in the Principal Funding Account will be invested by the
Trustee at the direction of the Servicer in Eligible Investments. Investment
earnings (net of investment losses and expenses) on funds on deposit in the
Principal Funding Account (the "Principal Funding Investment Proceeds") will be
included in Class A Available Funds with respect to each Distribution Date.
[RESERVE ACCOUNT
Pursuant to the Supplement, the Servicer will establish and maintain the
reserve account as a segregated trust account held for the benefit of the
Certificateholders (the "Reserve Account"). The
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Reserve Account is established to assist with the subsequent distribution of
interest on the Certificates during the Class A Accumulation Period. With
respect to each Distribution Date from and after the Reserve Account Funding
Date, but prior to the termination of the Reserve Account, the Trustee, acting
pursuant to the Servicer's instructions, will apply Excess Spread and Excess
Finance Charges allocated to the Certificates (to the extent described above
under "--Application of Collections--Excess Spread; Excess Finance Charges;
Excess Transfer Finance Charge Collections") to increase the amount on deposit
in the Reserve Account (to the extent such amount is less than the Required
Reserve Account Amount). The "Reserve Account Funding Date" will be the
Distribution Date with respect to the Monthly Period which commences no later
than three months prior to the Monthly Period in which, as of the related
Determination Date, the Class A Accumulation Period is scheduled to commence, or
such earlier date as the Servicer may determine. The "Required Reserve Account
Amount" with respect to any Distribution Date on or after the Reserve Account
Funding Date will be equal to (a) the product of (i) % of the Class A Investor
Amount as of the preceding Distribution Date (after giving effect to all changes
therein on such date) and (ii) a fraction, the numerator of which is the number
of Monthly Periods scheduled to be included in the Class A Accumulation Period
as of such date, and the denominator of which is twelve, provided that if such
numerator is one, the Required Reserve Account Amount will be zero, or (b) any
other amount designated by the Transferor, PROVIDED, that if such designation is
of a lesser amount, the Transferor shall have provided the Servicer and the
Trustee with evidence that the Rating Agency Condition has been satisfied and
the Transferor shall have delivered to the Trustee a certificate of an
authorized officer to the effect that, based on the facts known to such officer
at such time, in the reasonable belief of the Transferor, such designation will
not cause a Pay Out Event or an event that, after the giving of notice or the
lapse of time, would cause a Pay Out Event to occur. On each Distribution Date,
after giving effect to any deposit to be made to, and any withdrawal to be made
from the Reserve Account, the Trustee will withdraw from the Reserve Account an
amount equal to the excess, if any, of the amount on deposit in the Reserve
Account an amount equal to the excess, if any, of the amount on deposit in the
Reserve Account over the Required Reserve Account Amount and will pay such
amount to the Class C Interest Holder.
Provided that the Reserve Account has not terminated as described below, all
amounts on deposit in the Reserve Account with respect to any Distribution Date
(after giving effect to any deposits to or withdrawals from, the Reserve Account
to be made on such Distribution Date) will be invested by the Trustee at the
direction of the Servicer in Eligible Investments. The interest and other
investment income (net of investment expenses and losses) earned on such
investments will be retained in the Reserve Account (to the extent the amount on
deposit is less than the Required Reserve Account Amount) or deposited in the
Collection Account and treated as collections of Finance Charge Receivables
allocable to Series 199 .
On or before each Distribution Date with respect to the Class A Accumulation
Period and on the first Distribution Date with respect to the Rapid Amortization
Period, a withdrawal will be made from the Reserve Account, and the amount of
such withdrawal will be deposited in the Collection Account and included in
Class A Available Funds in an amount equal to the lesser of (a) the Available
Reserve Account Amount with respect to such Distribution Date and (b) the
excess, if any, of a portion of the Class A Monthly Interest determined in
accordance with the Pooling and Servicing Agreement over the Principal Funding
Investment Proceeds with respect to such Distribution Date; provided, that the
amount of such withdrawal shall be reduced to the extent that funds otherwise
would be available to be deposited in the Reserve Account on such Distribution
Date. On each Distribution Date, the amount available to be withdrawn from the
Reserve Account (the "Available Reserve Account Amount") will be equal to the
lesser of the amount on deposit in the Reserve Account (before giving effect to
any deposit to be made to the Reserve Account on such Distribution Date) and the
Required Reserve Account Amount for such Distribution Date.
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The Reserve Account will be terminated following the earlier to occur of (a)
the termination of the Trust pursuant to the Pooling and Servicing Agreement,
(b) the date on which the Class A Investor Amount is paid in full and (c) if the
Class A Accumulation Period has not commenced, the occurrence of a Pay Out Event
or, if the Class A Accumulation Period has commenced, the earlier of the first
Distribution Date with respect to the Rapid Amortization Period and the Class A
Expected Final Distribution Date. Upon the termination of the Reserve Account,
all amounts on deposit therein (after giving effect to any withdrawal from the
Reserve Account on such date as described above) will be distributed to the
Class C Interest Holder. Any amounts withdrawn from the Reserve Account and
distributed to the Class C Interest Holder as described above will not be
available for distribution to the Certificateholders.]
[COMPANION SERIES
The Certificates are subject to being paired with one or more later issued
Series (each, a "Companion Series") on or after the commencement of the
Controlled Accumulation Period or the Rapid Amortization Period. A Companion
Series will be pre-funded with an initial deposit to a funding account or may
have a variable principal amount. Any such funding account will be held for the
benefit of such Companion Series and not for the benefit of the
Certificateholders. Upon payment in full of the Certificates, assuming that
there have been no unreimbursed charge-offs with respect to any related
Companion Series, the aggregate investor amount of such Companion Series will
have been increased by an amount up to an aggregate amount equal to the Investor
Amount. The issuance of a Companion Series will be subject to the conditions
described under "Description of the Certificates-- New Issuances" in the
Prospectus.
There can be no assurance that the terms of any Companion Series might not
have an impact on the calculation of the Series Percentage or the timing or
amount of payments received by a Certificateholder. The full extent by which the
timing or amount of payments received by a Certificateholder may be affected
will be dependent on a number of factors and will not be readily determinable by
the change which may occur in the Series Percentage.]
SHARED COLLECTIONS OF PRINCIPAL RECEIVABLES AND TRANSFEROR PRINCIPAL COLLECTIONS
To the extent that collections of Principal Receivables allocated to the
Certificates or the Class C Interest are not needed to make payments to or for
the benefit of the Certificateholders or the Class C Interest Holder, such
collections may be applied to cover principal payments due to or for the benefit
of other Principal Sharing Series. Any such application of collections will not
result in a reduction of the Invested Amount of the Certificates and the Class C
Interest.
Similarly, certain collections of Principal Receivables allocated to other
Principal Sharing Series, to the extent such collections are not needed to make
payments to or for the benefit of Certificateholders of such other Series
("Shared Principal Collections"), will be applied, if necessary, to cover
payments of principal due to Certificateholders during the Controlled
Accumulation Period and the Rapid Amortization Period. In addition, the Servicer
will, under the terms of the Pooling and Servicing Agreement, determine the
amount of collections of Principal Receivables for any Monthly Period allocated
to the Transferor's Interest but not due to the holder of any Supplemental
Certificate and other amounts payable to the Transferor with respect to
collections of Principal Receivables plus the amount of Excess Transferor
Finance Charge Collections remaining after application to amounts payable from
collections of Finances Charge Receivables ("Shared Transferor Principal
Collections"). Such Shared Transferor Principal Collections, to the extent not
needed to make payments for the benefit of Certificateholders of other Series
will be applied, if necessary, to cover payments of principal due to
Certificateholders during the Controlled Accumulation Period and the Rapid
Amortization Period. There can be no assurance that such Shared Principal
Collections or Shared Transferor Principal Collections will be available to
cover payments of principal or deposits due on any Distribution Date during the
Controlled Accumulation Period and the Rapid Amortization Period. If no such
Shared Principal Collections or Shared Transferor Principal Collections were
available to the Certificates, the Class A Investor Amount might not be paid in
full by the
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Class A Expected Final Distribution Date and the Class B Invested Amount might
not be paid in full by the Class B Expected Final Distribution Date. Such Shared
Principal Collections or Shared Transferor Principal Collections may also be
allocated to other Series either currently outstanding or to be issued by the
Trust in the future. To the extent such Shared Principal Collections or Shared
Transferor Principal Collections are allocated to other Series, the pro rata
share of such Shared Principal Collections or Shared Transferor Principal
Collections allocated to Certificateholders will be reduced.
REQUIRED CLASS C INVESTOR AMOUNT
The "Required Class C Invested Amount" for any Distribution Date means the
greater of (i) the product of (a) the sum of (I) [the sum of] the Class A
Invested Amount [and the Class A Floating Percentage of the Pre-Funded Amount]
and (II) [the sum of] the Class B Invested Amount [and the Class B Floating
Percentage of the Pre-Funded Amount], each as of such Distribution Date after
taking into account distributions made on such Distribution Date, and (b) a
fraction, the numerator of which is % and the denominator of which is the
excess of 100% over % and (ii) the product of (A) $ and (B) %;
PROVIDED, HOWEVER, that (i) if a Pay Out Event with respect to Series 199 occurs
or if there are certain reductions in the Class C Invested Amount, the Required
Class C Investor Amount for such Distribution Date shall equal the Required
Class C Investor Amount for the Distribution Date immediately preceding the
occurrence of such Pay Out Event or reduction in the Class C Investor Amount,
(ii) in no event shall the Required Class C Investor Amount exceed the sum of
the Class A Invested Amount and the Class B Invested Amount on such date, and
(iii) the Required Class C Investor Amount may be reduced without the consent of
the Certificateholders, if the Transferor shall have received written notice
that the Rating Agency Condition has been satisfied for such reduction and the
Transferor shall have delivered a certificate of an authorized officer to the
effect that, based on the facts known to such officer at such time, in the
reasonable belief of the Transferor, such reduction will not cause a Pay Out
Event with respect to Series 199 or an event that, after the giving of notice or
the lapse of time, would constitute a Pay Out Event with respect to Series 199 .
ALLOCATION OF INVESTOR DEFAULT AMOUNT
On each Determination Date, the Servicer will calculate the Investor Default
Amount for the preceding Monthly Period. The term "Investor Default Amount"
means, for any Monthly Period, the product of (i) the Floating Allocation
Percentage with respect to such Monthly Period and (ii) the Defaulted Amount for
such Monthly Period. A portion of the Investor Default Amount will be allocated
to the Class A Certificateholders (the "Class A Investor Default Amount") on
each Distribution Date in an amount equal to the product of the Class A Floating
Percentage applicable during the related Monthly Period and the Investor Default
Amount for such Monthly Period. A portion of the Investor Default Amount will be
allocated to the Class B Certificateholders (the "Class B Investor Default
Amount") in an amount equal to the product of the Class B Floating Percentage
applicable during the related Monthly Period and the Investor Default Amount for
such Monthly Period. A portion of the Investor Default Amount will be allocated
to the Class C Interest Holder in an amount equal to the Class C Default Amount.
An amount equal to the Class A Investor Default Amount for each Monthly Period
will be paid from Class A Available Funds, Excess Spread and Excess Finance
Charges and Excess Transferor Finance Charge Collections allocated to Series
199 or from Reallocated Principal Collections and applied as described above in
"--Application of Collections--Payment of Interest, Fees and Other Items," "--
Application of Collections--Excess Spread; Excess Finance Charges; Excess
Transferor Finance Charge Collections" and "-- Reallocation of Cash Flows." An
amount equal to the Class B Investor Default Amount for each Monthly Period will
be paid from Excess Spread and Excess Finance Charges and Excess Transferor
Finance Charge Collections allocated to Series 199 or from Reallocated
Principal Collections allocable to the Class C Invested Amount and applied as
described above in "--Application of Collections--Excess Spread; Excess Finance
Charges; Excess Transferor Finance Charge Collections" and "-- Reallocation of
Cash Flows;"
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On each Distribution Date, if the Class A Required Amount for such
Distribution Date exceeds the sum of Excess Spread, Excess Finance Charges and
Excess Transferor Finance Charge Collections allocable to Series ,
Reallocated Principal Collections, the Class C Invested Amount will be reduced
by the amount of such excess, but not by more than the Class A Investor Default
Amount for such Distribution Date. In the event that such reduction would cause
the Class C Invested Amount to be a negative number, the Class C Invested Amount
will be reduced to zero, and the Class B Invested Amount will be reduced by the
amount by which the Class C Invested Amount would have been reduced below zero,
but not by more than the excess, if any, of the Class A Investor Default Amount
for such Distribution Date over the amount of such reduction, if any, of the
Class C Invested Amount with respect to such Distribution Date. In the event
that such reduction would cause the Class B Invested Amount to be a negative
number, the Class B Invested Amount will be reduced to zero, and the Class A
Invested Amount will be reduced by the amount by which the Class B Invested
Amount would have been reduced below zero, but not by more than the excess, if
any, of the Class A Investor Default Amount for such Distribution Date over the
amount of the reductions, if any, of the Class C Invested Amount and the Class B
Invested Amount with respect to such Distribution Date as described above (a
"Class A Investor Charge-Off"), which will have the effect of slowing or
reducing the return of principal to the Class A Certificateholders. If the Class
A Invested Amount has been reduced by the amount of any Class A Investor
Charge-Offs, it will thereafter be increased on any Distribution Date (but not
by an amount in excess of the aggregate Class A Investor Charge-Offs) by the
amount of Excess Spread, and Excess Transferor Finance Charge Collections and
Excess Finance Charges allocated to Series 199 and available for such purpose
as described under "--Application of Collections--Excess Spread; Excess Finance
Charges; Excess Transferor Finance Charge Collections."
On each Distribution Date, if the Class B Required Amount for such
Distribution Date exceeds the sum of Excess Spread, Excess Finance Charges and
Excess Transferor Finance Charge Collections allocable to Series 199 and not
required to pay the Class A Required Amount and Reallocated Principal
Collections allocable to the Class C Interest and not required to pay the Class
A Required Amount, then the Class C Invested Amount will be reduced by the
amount of such excess. In the event that such reduction would cause the Class C
Invested Amount to be a negative number, the Class C Invested Amount will be
reduced to zero, and the Class B Invested Amount will be reduced by the amount
by which the Class C Invested Amount would have been reduced below zero, but not
by more than the excess, if any, of the Class B Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of the Class C
Invested Amount with respect to such Distribution Date (a "Class B Investor
Charge-Off"). If the Class B Invested Amount has been reduced by the amount of
any Class B Investor Charge-Offs, it will thereafter be increased on any
Distribution Date (but not by an amount in excess of the aggregate Class B
Investor Charge-Offs) by the amount of Excess Spread, Excess Finance Charges and
Excess Transferor Finance Charge Collections allocated to Series 199 and
available for such purpose as described under "--Application of
Collections--Excess Spread; Excess Finance Charges; Excess Transferor Finance
Charge Collections."
OPTIONAL REPURCHASE
On the Distribution Date occurring on or after the date that the Investor
Amount is reduced to % or less of the Initial Investor Amount, the Transferor
will have the option (to be exercised in its sole discretion) to repurchase the
Certificates. The purchase price of the Certificates and the Class C Interest
will be equal to the Investor Amount as of the last day of the Monthly Period
preceding the Distribution Date on which such purchase occurs plus accrued and
unpaid interest on the unpaid principal amount of the Certificates plus accrued
and unpaid interest, if any on the Class C Interest. Following any such
repurchase, the Certificateholders will have no further rights with respect to
the Receivables.
Any such optional repurchase may result in an early repayment of the
Certificateholders' investment without any prepayment penalty and there can be
no assurance that a Certificateholder will be able to invest such early
repayment amount at a similar rate of return.
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PAY OUT EVENTS
The Revolving Period will continue through, (or such later date resulting
from postponement of the Class A Accumulation Period), unless a Pay Out Event
occurs prior to such date. A "Pay Out Event" for Series 199 refers to any of
the following events, which are applicable only to Series 199 (although other
Series may have similar or identical pay out events):
(a) failure on the part of the Transferor (i) to make any payment or deposit
on the date required under the Pooling and Servicing Agreement on or before the
date occurring five Business Days after the date such payment or deposit is
required to be made; or (ii) duly to observe or perform in any material respect
any other covenants or agreements of the Transferor in the Pooling and Servicing
Agreement, which failure has a material adverse effect on the
Certificateholders;
(b) any representation or warranty made by the Transferor in the Pooling and
Servicing Agreement or any information required to be given by the Servicer on
behalf of the Transferor to identify the Accounts proves to have been incorrect
in any material respect when made or delivered and continues to be incorrect in
any material respect for a period of 60 days after written notice of such
failure shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the holders of Certificates aggregating not less
than 50% of the outstanding principal balance of the Certificates and as a
result the interests of the Certificateholders are materially and adversely
affected;
(c) with respect to the end of any Monthly Period (i) with respect to which
the Transferor Amount is less than the Required Transferor Amount, the failure
of the Transferor to convey on or prior to the tenth Business Day following the
related Determination Date Receivables in Additional Accounts to the Trust such
that the Transferor Amount is at least equal to the Required Transferor Amount
or (ii) with respect to which the aggregate Principal Receivables are less than
the Required Principal Balance, the failure of the Transferor to convey on or
prior to the tenth Business Day following the related Determination Date
Receivables in Additional Accounts to the Trust such that the aggregate
Principal Receivables are at least equal to the Required Principal Balance;
(d) the Net Portfolio Yield averaged over three consecutive Monthly Periods
is less than the Base Rate averaged over such period;
(e) any Servicer Default occurs which would have a material adverse effect
on the Certificateholders; or
(f) the Class A Investor Amount shall not be paid in full on the Class A
Expected Final Distribution Date or the Class B Invested Amount shall not be
paid in full on the Class B Expected Final Distribution Date.
A Pay Out Event for all Series refers to any of the following events, which
are applicable to the Certificates and other Series:
(g) an Insolvency Event relating to the Transferor or an Account Owner;
(h) the Trust becomes an "investment company" within the meaning of the
Investment Company Act; or
(i) the inability of the Transferor for any reason to transfer Receivables
to the Trust in accordance with the provisions of the Pooling and Servicing
Agreement.
In the case of any event described in subparagraphs (a), (b) or (e), a Pay
Out Event will be deemed to have occurred only if, after any applicable grace
period described in such clauses, the Trustee or Certificateholders and the
Class C Interest Holder evidencing undivided interests aggregating not less than
50% of the aggregate unpaid principal amount of the Certificates and the Class C
Interest, by written notice to the Transferor and the Servicer (and to the
Trustee if given by the Certificateholders and the Class C Interest Holder),
declare that a Pay Out Event has occurred with respect to the Certificates and
the Class C Interest and is continuing as of the date of such notice, and in the
case of any event described
S-44
<PAGE>
in subparagraphs (c), (d), (f), (g), (h) or (i), a Pay Out Event for Series 199
or a Pay Out Event for all Series will be deemed to have occurred without any
notice or other action on the part of the Trustee, or the Certificateholders and
the Class C Interest Holder immediately upon the occurrence of such event. Upon
the occurrence of a Pay Out Event, the Rapid Amortization Period will commence.
In such event, distributions of principal to the Certificateholders in the
priority provided for above will begin on the first Distribution Date following
the month in which the Pay Out Event occurred.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the Servicing Fee allocable to the Certificates and the Class C
Interest with respect to any Distribution Date (the "Monthly Servicing Fee")
will be equal to one-twelfth of the product of (a) % (the "Servicing Fee Rate")
and (b) the Invested Amount as of the last day of the Monthly Period preceding
such Distribution Date (the amount calculated pursuant to this clause (b) is
referred to as the "Servicing Base Amount"); PROVIDED, HOWEVER, with respect to
the first Distribution Date, the Monthly Servicing Fee will be $ . On
the Business Day immediately preceding each Distribution Date (the "Transfer
Date") for which Travelers Bank & Trust, fsb or the Trustee is the Servicer, an
amount equal to one-twelfth the product of (i) % and (ii) the Servicing Base
Amount with respect to the related Monthly Period that is 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.
The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders with respect to any Distribution Date (the "Class A Servicing
Fee") will 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 will be $ . The share of the Monthly Servicing Fee
allocable to the Class B Certificateholders with respect to any Distribution
Date (the "Class B Servicing Fee") will 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 will be equal to $ . "Net
Servicing Fee Rate" shall mean (a) so long as Travelers Bank & Trust, fsb is the
Servicer, % per annum, (b) so long as the Trustee is the Servicer, % per annum
and (c) if Travelers Bank & Trust, fsb or the Trustee is no longer the Servicer,
% per annum. The Class A Servicing Fee and the Class B Servicing Fee shall be
payable to the Servicer solely to the extent amounts are available for
distribution in respect thereof as described under "--Application of Collections
Payment of Interest, Fees and Other Items" above.
FEDERAL INCOME TAX CONSEQUENCES
Based on the application of existing law to the facts as set forth in the
Pooling and Servicing Agreement and other relevant documents, Orrick, Herrington
& Sutcliffe LLP, special counsel to the Banks ("Special Tax Counsel"), will
deliver its opinion to the effect that the Certificates will properly be treated
as indebtedness for Federal income tax purposes. See "Federal Income Tax
Consequences" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreements
relating to the [Class A Certificates] [and the Class B
Certificates](collectively, the "Underwriting Agreement"), the Transferor has
agreed to sell to the underwriter[s] named below:
<TABLE>
<CAPTION>
UNDERWRITER CLASS A CERTIFICATES CLASS B CERTIFICATES
- ---------------------------------------------- --------------------- -------------------------------
<S> <C> <C>
.............................................. $ $
.............................................. $ $
.............................................. $ $
.............................................. $ $
</TABLE>
S-45
<PAGE>
If the Underwriters create a short position in the Series 199_ Certificates
in connection with the offering, I.E., if they sell more Series 199_
Certificates than are set forth on the cover page of this Prospectus Supplement,
the Underwriters may reduce that short position by purchasing Series 199_
Certificates in the open market.
In general, the purchase of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchase.
None of the Transferor, the Servicer, nor the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the prices of the Series 199_
Certificates. In addition, none of the Transferor, the Servicer, nor the
Underwriters makes any representation that the Underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
The Transferor has been advised by the Underwriters[s] that the
Underwriter[s] propose initially to offer the [Class A Certificates] [Class B
Certificates] to the public at the prices set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession not
in excess of % of the principal amount of the [Class A Certificates] [Class B
Certificates]. The Underwriter[s] may allow and such dealers may reallow a
concession not in excess of % of the principal amount of the [Class A
Certificates] [Class B Certificates] to certain other dealers. After the initial
public offering, the public offering price and such concessions may be changed.
The Transferor has agreed that it will indemnify the Underwriter[s] against
certain liabilities, including liabilities under the Act, or contribute to
payments the Underwriter[s] may be required to make in respect thereof. The
Underwriter[s] have agreed to reimburse the Transferor for certain expenses of
the issuance and distribution of the Certificates.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Certificates will be
passed upon for the Transferor and the Banks by . Certain legal
matters relating to the issuance of the Certificates under the laws of the State
of Delaware will be passed upon for the Transferor by Richards, Layton & Finger,
Wilmington, Delaware and, with respect to the federal tax consequences of such
issuance, by Orrick, Herrington & Sutcliffe LLP, Washington, D.C. Certain
matters relating to the issuance of the Certificates and ERISA matters will be
passed upon for the Underwriter[s] by Orrick, Herrington & Sutcliffe LLP.
S-46
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE NO.
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
Accounts.................................................................................... S-2
Accumulation Period Length.................................................................. S-29
Available Investor Principal Collections.................................................... S-28
Available Reserve Account Amount............................................................ S-40
Business Day................................................................................ S-7
Cede........................................................................................ S-6
Certificate Owner........................................................................... S-6
Certificate Owners.......................................................................... S-2
Certificateholders.......................................................................... S-4
Certificateholders' Interest................................................................ S-6
Certificates................................................................................ S-1, S-4
Class A Accumulation Period................................................................. S-11
Class A Additional Interest................................................................. S-36
Class A Available Funds..................................................................... S-26
Class A Certificate Rate.................................................................... S-6
Class A Certificateholders.................................................................. S-4
Class A Certificates........................................................................ S-1, S-4
Class A Expected Final Distribution Date.................................................... S-23
Class A Floating Percentage................................................................. S-31
Class A Initial Invested Amount............................................................. S-5
Class A Invested Amount..................................................................... S-5, S-32
Class A Investor Amount..................................................................... S-33
Class A Investor Charge-Off................................................................. S-43
Class A Investor Default Amount............................................................. S-42
Class A Monthly Interest.................................................................... S-27
Class A Monthly Principal................................................................... S-29
Class A Principal Percentage................................................................ S-31
Class A Required Amount..................................................................... S-8, S-33
Class A Servicing Fee....................................................................... S-45
Class B Accumulation Period................................................................. S-11
Class B Additional Interest................................................................. S-36
Class B Available Funds..................................................................... S-27
Class B Certificate Rate.................................................................... S-6
Class B Certificateholders.................................................................. S-4
Class B Certificates........................................................................ S-1, S-4
Class B Expected Final Distribution Date.................................................... S-23
Class B Floating Percentage................................................................. S-31
Class B Initial Invested Amount............................................................. S-5
Class B Invested Amount..................................................................... S-5, S-32
Class B Investor Amount..................................................................... S-33
Class B Investor Charge-Off................................................................. S-43
Class B Investor Default Amount............................................................. S-42
Class B Monthly Interest.................................................................... S-27
Class B Monthly Principal................................................................... S-29
Class B Principal Commencement Date......................................................... S-39
Class B Principal Percentage................................................................ S-32
Class B Required Amount..................................................................... S-9, S-34
</TABLE>
S-47
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE NO.
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
Class B Servicing Fee....................................................................... S-45
Class C Additional Interest................................................................. S-38
Class C Default Amount...................................................................... S-33
Class C Floating Percentage................................................................. S-31
Class C Initial Invested Amount............................................................. S-5
Class C Interests........................................................................... S-4
Class C Invested Amount..................................................................... S-5, S-32
Class C Investor Amount..................................................................... S-33
Class C Monthly Interest.................................................................... S-27
Class C Monthly Principal................................................................... S-12
Class C Principal Percentage................................................................ S-32
Closing Date................................................................................ S-26
Code........................................................................................ S-16
Companion Series............................................................................ S-41
Controlled Accumulation Amount.............................................................. S-29
Controlled Accumulation Period.............................................................. S-11
Controlled Deposit Amount................................................................... S-12
Corporation................................................................................. S-4
Criteria.................................................................................... S-19
Deficit Controlled Accumulation Amount...................................................... S-12, S-29
Definitive Certificate...................................................................... S-6
Determination Date.......................................................................... S-23
Discount Option Collections................................................................. S-7, S-17
Discount Option Date........................................................................ S-17
Discount Percentage......................................................................... S-17
Distribution Date........................................................................... S-7
DTC......................................................................................... S-6
ERISA....................................................................................... S-16
Excess Finance Charges...................................................................... S-9
Excess Spread............................................................................... S-8, S-37
FDIC........................................................................................ S-6
Floating Allocation Percentage.............................................................. S-30
Funding Period.............................................................................. S-10
Group One................................................................................... S-9
Initial Closing Date........................................................................ S-19
Initial Cut-Off Date........................................................................ S-19
Initial Invested Amount..................................................................... S-4
Interest Period............................................................................. S-7
Invested Amount............................................................................. S-4, S-25, S-33
Investment Company Act...................................................................... S-23
Investor Amount............................................................................. S-33
Investor Default Amount..................................................................... S-42
Investor Interest........................................................................... S-4
Master Pooling and Servicing Agreement...................................................... S-4
Monthly Period.............................................................................. S-8
Monthly Servicing Fee....................................................................... S-45
Net Servicing Fee Rate...................................................................... S-45
Pay Out Event............................................................................... S-44
Percentage Allocation....................................................................... S-35
Pooling and Servicing Agreement............................................................. S-4
</TABLE>
S-48
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE NO.
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
Pre-Funded Amount........................................................................... S-10
Pre-Funding Account......................................................................... S-10
Principal Allocation Percentage............................................................. S-31
Principal Funding Account................................................................... S-11, S-39
Principal Funding Account Balance........................................................... S-32
Principal Funding Investment Proceeds....................................................... S-13, S-39
Rapid Amortization Period................................................................... S-14
Rating Agencies............................................................................. S-16
Rating Agency............................................................................... S-16
Reallocated Principal Collections........................................................... S-33
Receivables................................................................................. S-2
Reinvestment Event.......................................................................... S-17
Required Class C Invested Amount............................................................ S-42
Required Class C Investor Amount............................................................ S-9
Required Reserve Account Amount............................................................. S-40
Reserve Account............................................................................. S-39
Reserve Account Funding Date................................................................ S-40
Revolving Period............................................................................ S-11
Series...................................................................................... S-4
Series 199 Termination Date................................................................. S-15
Series 199 ................................................................................. S-4
Series Investor Amount...................................................................... S-33
Series Percentage........................................................................... S-25
Servicer.................................................................................... S-1, S-4
Servicing Base Amount....................................................................... S-45
Servicing Fee Rate.......................................................................... S-45
Shared Principal Collections................................................................ S-41
Shared Transferor Principal Collections..................................................... S-41
Special Tax Counsel......................................................................... S-45
Subordinate Principal Collections........................................................... S-35
Supplement.................................................................................. S-4
Transfer Date............................................................................... S-45
Transferor.................................................................................. S-1, S-4
Transferor Amount........................................................................... S-26
Transferor Percentage....................................................................... S-26
Transferor's Interest....................................................................... S-4, S-26
Travelers Consumer Credit Card Portfolio.................................................... S-2
Trust....................................................................................... S-1, S-4
Trust Portfolio............................................................................. S-19
Trustee..................................................................................... S-1, S-4
Underwriting Agreement...................................................................... S-45
</TABLE>
S-49
<PAGE>
ANNEX I
OTHER SERIES ISSUED
The Certificates will be the Series to be issued by the Trust. The table
below sets forth the principal characteristics of the other Series
heretofore issued by the Trust and currently outstanding.
[LISTING OF OTHER SERIES]
I-1
<PAGE>
ANNEX II
RECEIVABLES IN ADDITIONAL ACCOUNTS
CONVEYED TO THE TRUST
[LISTING OF INFORMATION ABOUT ADDITIONAL ACCOUNTS]
II-1
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY , 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
TRAVELERS BANK CREDIT CARD MASTER TRUST I
ASSET BACKED CERTIFICATES, ISSUABLE IN SERIES
CC CREDIT CARD CORPORATION
TRANSFEROR
TRAVELERS BANK & TRUST, FSB
SERVICER
This Prospectus relates to certain Asset Backed Certificates (the
"Certificates") which may be issued from time to time by the Travelers Bank
Credit Card Master Trust I (the "Trust") in one or more series (each a
"Series"). The Trust will be formed pursuant to a pooling and servicing
agreement among CC Credit Card Corporation, as Transferor, Travelers Bank &
Trust, fsb, as Servicer (the "Servicer"), and The Bank of New York, as Trustee
(the "Trustee"). The property of the Trust (the "Trust Assets") includes and
will include the Transferor's interest in receivables described herein (the
"Receivables") or generated from time to time in the ordinary course of business
in a portfolio of consumer revolving credit card accounts (the "Accounts") owned
by Travelers Bank & Trust, fsb and The Travelers Bank USA (each a "Bank" and,
collectively, the "Banks") and all monies due in payment of the Receivables and
certain other property, which may include participation interests in pools of
assets primarily consisting of revolving credit card receivables, consumer loan
receivables and other self-liquidating financial assets, all as more fully
described herein and, with respect to any Series, in the related Prospectus
Supplement. The Receivables in the Accounts will be first sold by the Banks to
the Transferor and then transferred by the Transferor to the Trust as more fully
described herein.
The Certificates will be offered from time to time under this Prospectus on
terms determined for each Series at the time of the sale and as described in the
related prospectus supplement (each, a "Prospectus Supplement"). Each Series
will consist of one or more classes of Certificates (each, a "Class"), one or
more of which may be fixed-rate Certificates, floating-rate Certificates or
other types of Certificates as specified in the related Prospectus Supplement.
Payments of interest on each Class will be made on each Distribution Date
specified in the related Prospectus Supplement. Principal payments on each Class
will be made as specified in the related Prospectus Supplement. Any Series may
include one or more Classes that are subordinated in right and priority to the
extent described in the related Prospectus Supplement to payment of principal or
interest to one or more other Classes of such Series.
Each Certificate will represent an undivided interest in the Trust Assets and
each Certificateholder will be entitled to receive a varying percentage of each
month's collections with respect to the Receivables at the times and in the
manner described herein and, with respect to any Series, in the related
Prospectus Supplement. One or more Classes of a Series may be entitled to the
benefits of a cash collateral guaranty or account, letter of credit, surety
bond, insurance policy or other form of enhancement as specified in the
Prospectus Supplement relating to such Series.
THE CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST ASSETS AND WILL NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF CC CREDIT CARD CORPORATION,
TRAVELERS BANK & TRUST, FSB, THE TRAVELERS BANK USA OR ANY AFFILIATE THEREOF. A
CERTIFICATE IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (THE "FDIC"). THE RECEIVABLES ARE NOT INSURED OR GUARANTEED BY THE
FDIC OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
POTENTIAL INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH IN "RISK FACTORS"
COMMENCING ON PAGE 18 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
The Certificates offered by this Prospectus and by the related Prospectus
Supplement are offered by the underwriters, if any, subject to prior sale, to
withdrawal, cancellation or modification of the offer without notice, to
delivery to and acceptance by the underwriters, if any, and certain further
conditions. Retain this Prospectus for future reference.
Certain capitalized terms used herein are defined elsewhere in the Prospectus. A
listing of the pages on which such terms are defined can be found in "Index of
Defined Terms" beginning on page 75 herein.
Each Series of Certificates or Class of Certificates offered hereby will be
rated in one of the four highest rating categories by at least one nationally
recognized statistical rating organization.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE SECURITIES OFFERED
HEREBY UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT.................. 2
REPORTS TO CERTIFICATEHOLDERS.......... 2
AVAILABLE INFORMATION.................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE............................ 3
PROSPECTUS SUMMARY..................... 4
RISK FACTORS........................... 18
USE OF PROCEEDS........................ 24
THE TRUST.............................. 24
THE BANKS' CREDIT CARD ACTIVITIES...... 25
General................................ 25
Acquisition and Use of Credit Cards.... 25
Billing and Payments................... 26
Delinquencies.......................... 26
Interchange............................ 27
Competition............................ 27
THE BANKS.............................. 28
THE TRANSFEROR......................... 28
THE ACCOUNTS........................... 28
DESCRIPTION OF THE
CERTIFICATES......................... 29
General................................ 30
Book-Entry Registration................ 31
Definitive Certificates................ 34
The Transferor Certificate; Additional
Transferors.......................... 34
Interest Payments...................... 35
Principal Payments..................... 36
Shared Principal Collections and
Transferor Principal Collections..... 36
Sharing of Excess Finance Charge
Collections.......................... 37
Companion Series....................... 37
Groups................................. 38
New Issuances.......................... 38
THE RECEIVABLES TRANSFER
AGREEMENTS........................... 39
Sale of Receivables.................... 39
Addition of Accounts................... 39
Purchase Price of Receivables.......... 40
Representations and Warranties......... 40
THE POOLING AND SERVICING AGREEMENT
GENERALLY............................ 40
Trust Assets........................... 40
Transfer and Assignment of
Receivables.......................... 40
Additional Transferors................. 41
Cessation of Transfer of Receivables... 41
Representations, Warranties and
Covenants............................ 41
Addition of Accounts or Participation
Interests............................ 46
Automatic Account Additions............ 47
Removal of Accounts.................... 48
Servicing Procedures................... 49
Discount Option........................ 49
Trust Accounts......................... 50
Series Percentage and Transferor
Percentage........................... 51
Application of Collections............. 51
Operation of Excess Funding Account.... 51
Defaulted Receivables; Rebates and
Fraudulent Charges................... 52
Final Payment of Principal and
Interest; Termination................ 52
Pay Out Events and Reinvestment
Events............................... 53
Servicing Compensation and Payment of
Expenses............................. 54
Certain Matters Regarding the
Servicer............................. 54
Indemnification........................ 55
Servicer Default....................... 55
Reports to Certificateholders.......... 57
Evidence as to Compliance.............. 57
Amendments............................. 58
Interest Rate Swaps and Related Caps,
Floors and Collars................... 59
Defeasance............................. 59
List of Certificateholders............. 60
The Trustee............................ 60
SERIES ENHANCEMENT..................... 60
General................................ 60
Subordination.......................... 61
Letter of Credit....................... 61
Cash Collateral Guaranty or Account.... 61
Collateral Interest.................... 61
Surety Bond or Insurance Policy........ 62
Spread Account......................... 62
CERTAIN LEGAL ASPECTS OF THE
RECEIVABLES.......................... 62
Transfer of Receivables................ 62
Certain Matters Relating to
Insolvency........................... 63
Consumer Protection Laws............... 64
Proposed Legislation................... 65
Recent Litigation...................... 65
FEDERAL INCOME TAX
CONSEQUENCES......................... 66
General................................ 66
Treatment of the Certificates as
Debt................................. 66
Treatment of the Trust................. 67
Taxation of Interest Income of U.S.
Certificate Owners................... 69
Sale or Exchange of Certificates....... 69
Non-U.S. Certificate Owners............ 70
Information Reporting and Backup
Withholding.......................... 70
State and Local Taxation............... 71
ERISA CONSIDERATIONS................... 72
PLAN OF DISTRIBUTION................... 74
LEGAL MATTERS.......................... 74
</TABLE>
i
<PAGE>
PROSPECTUS SUPPLEMENT
Each Prospectus Supplement relating to a Series to be offered thereby and
hereby will, among other things, set forth with respect to such Series: (a) the
initial aggregate principal amount, the certificate interest rate (or method for
determining it) of each Class of such Series; (b) certain information concerning
the Receivables and other property, if any, allocated to such Series; (c) the
expected date or dates on which the principal amount of the Certificates will be
paid to Certificateholders; (d) the extent to which any Class within a Series is
subordinated to any other Class of such Series or any other Series; (e) the
identity of each Class of floating-rate Certificates and fixed-rate Certificates
included in such Series, if any, or such other type of Class of Certificates;
(f) the Distribution Dates for the respective Classes; (g) relevant financial
information with respect to the Receivables and other property, if any; (h)
additional information with respect to any Series Enhancement, guaranteed
investment contract or other agreement relating to such Series; and (i) the plan
of distribution of such Series.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports, containing information concerning the Trust and prepared by
the Servicer, will be sent on behalf of the Trust to Cede & Co., as registered
holder of the Certificates, pursuant to the Pooling and Servicing Agreement. See
"Description of the Certificates--Book Entry Registration," and "The Pooling and
Servicing Agreement Generally--Reports to Certificateholders" and "--Evidence as
to Compliance." Such reports will not constitute financial statements prepared
in accordance with generally accepted accounting principles. None of CC Credit
Card Corporation, Travelers Bank & Trust, fsb, The Travelers Bank USA or any of
their affiliates intend to send any of their financial reports to
Certificateholders. Travelers Bank & Trust, fsb, as Servicer will file with the
Securities and Exchange Commission (the "Commission") such reports with respect
to the Trust as are required under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations of the Commission
thereunder.
AVAILABLE INFORMATION
CC Credit Card Corporation, as Transferor (in such capacity, the
"Transferor") and as originator of the Trust, has filed a Registration Statement
under the Securities Act of 1933, as amended (the "Act"), with the Commission on
behalf of the Trust with respect to the Certificates offered pursuant to this
Prospectus. This Prospectus, which forms part of the Registration Statement,
does not contain all of the information contained in the Registration Statement
and amendments thereof and exhibits thereto. For further information, reference
is made to the Registration Statement and amendments thereof and exhibits
thereto, which are available for inspection without charge at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; the Commission's regional offices at Seven World Trade
Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of the
Registration Statement and amendments thereof and exhibits thereto may be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Commission
maintains a public access site on the Internet through the World Wide Web at
which site reports, proxy and information statements and other information
regarding registrants, including all electronic filing, may be viewed. The
Internet address of the Commission's World Wide Web site is http:// www.sec.gov.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed with the Commission by the Servicer
with respect to the Trust pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Certificates offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be part hereof. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Servicer will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference, except
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to the Servicer at Christiana Corporate Center, 100 Commerce
Drive, Newark, Delaware, 19713 Attention: Chief Financial Officer. Telephone
requests for such copies should be directed to Travelers Bank & Trust, fsb, as
the Servicer at (302) 454-5500.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS AND IN THE
PROSPECTUS SUPPLEMENT WITH RESPECT TO THE SERIES OFFERED THEREBY. CERTAIN
CAPITALIZED TERMS USED HEREIN ARE DEFINED ELSEWHERE IN THIS PROSPECTUS. A
LISTING OF THE PAGES ON WHICH SUCH TERMS ARE DEFINED IS FOUND IN THE "INDEX OF
DEFINED TERMS." OTHER SERIES THAT MAY BE ISSUED PURSUANT TO OTHER SIMILAR
PROSPECTUSES OR DISCLOSURE DOCUMENTS MAY ALSO USE SUCH CAPITALIZED TERMS IN SUCH
PROSPECTUSES OR DOCUMENTS. HOWEVER, IN SUCH CASES, REFERENCE TO SUCH TERMS WILL,
UNLESS THE CONTEXT OTHERWISE REQUIRES, ONLY BE MADE IN THE CONTEXT OF SUCH OTHER
SERIES.
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TRUST............................. The Travelers Bank Credit Card Master Trust I (the
"Trust") will be formed pursuant to the pooling and
servicing agreement (the "Pooling and Servicing
Agreement") among CC Credit Card Corporation, as
Transferor, Travelers Bank & Trust, fsb, as Servicer
(the "Servicer") and The Bank of New York, as Trustee
(the "Trustee").
TRUST ASSETS...................... The assets of the Trust (the "Trust Assets") will
include a portfolio of receivables (the "Receivables")
arising under selected consumer revolving credit card
accounts (the "Accounts") in portfolios of consumer
revolving credit card accounts originated by Travelers
Bank & Trust, fsb, The Travelers Bank USA or
affiliates of one of the Banks, which accounts are
currently MasterCard-Registered Trademark-* and
VISA-Registered Trademark-* credit card accounts but
may include consumer revolving credit card accounts
affiliated with other programs or private-label credit
card accounts, all monies due or to become due and all
amounts received with respect thereto, all proceeds of
the Receivables (not including, however, amounts
recovered from Accounts in which the Receivables have
been written off as uncollectible), proceeds of credit
insurance policies relating to the Receivables, all
monies on deposit in certain bank accounts of the
Trust and, if applicable, the benefits of any type of
enhancement ("Series Enhancement") issued with respect
to any Series (the drawing on or payment of such
Series Enhancement being available only to
Certificateholders of a specified Series or Class
unless otherwise indicated in the related Prospectus
Supplement). The subordination of any Series or Class
of Certificates to another Series or Class of
Certificates will be deemed to be a Series
Enhancement. The Trust Assets may also include
participations (including 100% participations)
representing undivided interests in a pool of assets
consisting of revolving consumer credit card
receivables or consumer loan receivables (secured and
unsecured), and any interests in both such types of
receivables, including securities representing or
backed by both such types of receivables, and other
self-liquidating financial assets (meaning any
financial assets that, by their terms, convert into
cash within a finite time period) owned by Travelers
Bank & Trust, fsb or The Travelers Bank USA or any
affiliate of a
</TABLE>
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* MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.
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Bank and collections thereon (collectively,
"Participation Interests"). At the time of formation
of the Trust, each of the Banks will convey to the
Transferor all Receivables existing under certain
designated Accounts and all Receivables arising under
such Accounts from time to time thereafter and the
Transferor will convey such Receivables to the Trust.
In addition, in the future Additional Accounts
(including Automatic Additional Accounts) may be
designated and the Receivables in such Additional
Accounts as of the cut-off date with respect to such
Additional Accounts and all Receivables arising
thereafter in such Additional Accounts will be
conveyed by an Account Owner to the Transferor and by
the Transferor to the Trust.
ACCOUNT OWNERS.................... On the date of formation of the Trust, Travelers Bank &
Trust, fsb, and The Travelers Bank USA. Each Bank will
enter into a separate Receivables Transfer Agreement
with the Transferor and, pursuant to such respective
Receivables Transfer Agreements, convey Receivables to
the Transferor. In the future, affiliates of the Banks
may enter into receivables transfer agreements and
transfer Receivables to the Transferor. Each of the
Banks and each affiliate that owns an Account and
transfers the Receivables therein to the Transferor is
an "Account Owner."
TRANSFEROR........................ CC Credit Card Corporation, a Delaware corporation and a
wholly-owned subsidiary of Commercial Credit Company.
Subject to certain conditions described herein under
"The Pooling and Servicing Agreement
Generally--Additional Transferors," the Transferor may
designate one or more of its affiliates to transfer
Receivables or Participation Interests to the Trust
from time to time, whereupon any such affiliate will
become a "Transferor" for purposes of the Pooling and
Servicing Agreement.
SERVICER.......................... Travelers Bank & Trust, fsb, a federally-chartered
savings bank, is the servicer (in such capacity, the
"Servicer") and is a wholly-owned subsidiary of
Commercial Credit Company.
TRUSTEE........................... The Bank of New York, a New York banking corporation.
THE CERTIFICATES.................. The investor certificates issued by the Trust, including
any investor certificates offered pursuant to this
Prospectus and any Prospectus Supplement (the
"Certificates"), represent undivided interests in the
Trust Assets, 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 Certificates of such Series at the times and in
the amounts specified in the series supplement to the
Pooling and Servicing Agreement for such Series (each,
a "Series Supplement," and collectively with the
Pooling and Servicing Agreement sometimes referred to
herein as the "Pooling and Servicing Agreement"), the
portion of collections allocable to Certificateholders
of such Series pursuant to the Pooling and Servicing
Agreement and the related Series Supplement,
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funds on deposit in the Collection Account and the
Excess Funding Account allocable to Certificateholders
of such Series pursuant to the Pooling and Servicing
Agreement and the related Series Supplement, funds on
deposit in any deposit, trust, escrow or similar
account maintained for the benefit of such Series or
any Class of such Series (each, a "Series Account")
and, if specified in the related Prospectus
Supplement, funds available pursuant to any related
Series Enhancement (collectively, with respect to all
Series, the "Certificateholders' Interest"), it being
understood that the Certificates of any Series or
Class shall not represent any interest in any Series
Account or Series Enhancement for the benefit of any
other Series or Class. The Certificates may be issued
from time to time pursuant to the Pooling and
Servicing Agreement and a related Series Supplement.
Each Series will consist of one or more classes (each
a "Class"), one or more of which may be Classes of
fixed-rate Certificates or floating-rate Certificates
or other types of Certificates. Each Class may differ
in, among other things, the priority of principal
payments, the maturity date, distribution dates and
rate of interest. Additionally, the Certificates of
one or more Classes may be subordinated to the
Certificates of one or more other Classes with respect
to the right to receive payments of principal,
interest, or both under the circumstances and in such
amounts as described herein and in the related
Prospectus Supplement. The Transferor may, with
respect to any Series, retain one or more subordinated
Classes of the Certificates. The term
"Certificateholders" refers to holders of the
Certificates (including, if applicable, the
Transferor), and the term "Series" refers to any
series of Certificates issued by the Trust. See
"Description of the Certificates."
Unless otherwise specified in the related Prospectus
Supplement, the Certificates of a Series will be
available for purchase in minimum denominations of
$1,000 and in integral multiples of $1,000 in excess
thereof and will be available only in book-entry form,
except in certain limited circumstances. The Trust
Assets will be allocated among the Certificateholders'
Interest of each Series, including, if applicable,
certain providers of Series Enhancement holding
certificated or uncertificated subordinated interests,
and the interest of the holders of the Transferor
Certificates (the "Transferor's Interest"). The
Transferor's Interest represents the right to the
assets of the Trust not allocated to the
Certificateholders' Interest. The term "Transferor
Amount" refers to, at any time of determination, an
amount equal to the sum of (a) the product of the
aggregate amount of Principal Receivables in the Trust
at such time and one minus the Discount Percentage in
effect at such time and (b) the principal amount on
deposit in the Excess Funding Account at such time,
minus the sum of the amount of Principal
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Receivables and the amount on deposit in the Excess
Funding Account allocated to each Series then
outstanding (for each Series, its "Invested Amount").
The Transferor Amount will fluctuate as the amount of
Principal Receivables in the Trust changes from time
to time. The term "Investor Amount" for a Series will
be set forth in the Series Supplement for such Series
and, for a Series offered hereby, the related
Prospectus Supplement, and generally refers to the
principal amount of the Certificateholders' Interest
in the assets of the Trust.
The Certificates of a Class offered hereby and pursuant
to a Prospectus Supplement will represent the right to
receive, from the assets of the Trust allocated to the
applicable Series, funds up to (but not in excess of)
the amounts required to make payments of interest on
the Certificates of such Class at the rate specified
in the related Prospectus Supplement, and payments of
principal during any related Amortization Period to
the extent specified in the related Prospectus
Supplement.
Each Class of Certificates will include the right to
receive (but only to the extent needed to make
required payments under the Pooling and Servicing
Agreement) varying percentages of collections of
Finance Charge Receivables and Principal Receivables
for the related Monthly Period. During the Revolving
Period relating to a Class, subject to certain
limitations, collections of Principal Receivables
allocable to the Certificates of such Class will
generally be allocated and paid to the holders of the
Transferor Certificates or to other Series. During any
Amortization Period relating to such Class,
collections of Principal Receivables will be allocated
to such Class as provided herein and in the related
Prospectus Supplement.
The Certificates of each Series represent the right to
receive payments from the Trust only and do not
represent interests in or recourse obligations of CC
Credit Card Corporation, either of the Banks or any
affiliate thereof. None of the Certificates, the
Accounts, the Receivables or the Participation
Interests are insured or guaranteed by the Federal
Deposit Insurance Corporation (the "FDIC") or any
other governmental agency or instrumentality.
NEW ISSUANCES..................... The Pooling and Servicing Agreement authorizes the
Trustee to issue three types of certificates: (i) one
or more Series of Certificates which will have the
characteristics described below, (ii) a certificate
evidencing the Transferor's interest in the Trust (the
"Transferor Certificate"), which will initially be
held by the Transferor, and (iii) Supplemental
Certificates delivered in exchange for a portion of
the Transferor Certificate under certain circumstances
described in the Pooling and Servicing Agreement
(each, a "Supplemental Certificate" and, together with
the Transferor Certificate, the "Transferor
Certificates").
Following the issuance of the initial Series of
Certificates, a new issuance of Certificates (a "New
Issuance") may occur only
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upon satisfaction of the following conditions: (i) on
or before the fifth day immediately preceding the date
of such New Issuance, the Transferor shall have given
notice of such issuance and its date to the Trustee
and the Servicer; and on or before the tenth day
immediately preceding the date of such New Issuance,
the Transferor shall have given each Rating Agency
notice of such issuance and (ii) the Transferor shall
have delivered to the Trustee (a) the related Series
Supplement specifying the Principal Terms of the new
Series, (b) if applicable, the agreement relating to
the Series Enhancement, (c) written confirmation from
each Rating Agency that the New Issuance will not
result in the Rating Agency reducing or withdrawing
its rating of any outstanding Series or Class (with
the respect to any action or proposed series of
actions, the "Rating Agency Condition"), (d) an
officer's certificate from the Transferor stating that
the Transferor reasonably believes that such New
Issuance will not cause a Pay Out Event or a
Reinvestment Event to occur with respect to any
Series, and (e) an opinion of counsel to the effect
that, for Federal income tax purposes, (i) the New
Issuance will not adversely affect the tax
characterization of Certificates of any outstanding
Series or Class that were characterized as debt at the
time of their issuance, (ii) the New Issuance will not
cause the Trust to be deemed to be an association (or
publicly traded partnership) taxable as a corporation
and (iii) such New Issuance will not cause an event in
which gain or loss would be recognized by any
Certificateholder or the Trust (an opinion of counsel
to the effect referred to in clauses (i), (ii) and
(iii) with respect to any action is referred to herein
as a "Tax Opinion"). The Transferor may offer a Series
to the public or other investors under a prospectus or
other disclosure document (a "Disclosure Document") in
transactions either registered under the Act or exempt
from registration thereunder, directly or through one
or more underwriters or placement agents, in
fixed-price offerings or in negotiated transactions or
otherwise.
THE ACCOUNTS...................... The Accounts consist of consumer revolving credit card
accounts owned by one of the Banks, or under certain
conditions described in the Pooling and Servicing
Agreement, an affiliate of one of the Banks (in each
case, each Bank and any such affiliate, an "Account
Owner"). The Accounts are not being sold or
transferred to the Trust and will continue to be
controlled and held by the applicable Account Owner.
At the time of formation of the Trust, each Bank will
enter into a receivables transfer agreement and any
additional Account Owners will enter into a
substantially similar agreement (each a "Receivables
Transfer Agreement") with the Transferor. Pursuant to
the applicable Receivables Transfer Agreement, the
Account Owner will, from time to time, sell to the
Transferor all of the Account Owner's right, title and
interest
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in the Receivables in designated Accounts. The
Transferor, in turn, from time to time, will transfer
such Receivables to the Trust pursuant to the Pooling
and Servicing Agreement.
THE RECEIVABLES................... The Receivables arise in the Accounts and consist of
amounts charged by cardholders for merchandise and
services, cash advances and check advances
(collectively, the "Principal Receivables"), plus the
related periodic finance charges, annual membership
fees and annual service charges, late fees, overlimit
fees, cash advance fees, all other fees and charges
with respect to Accounts designated by the Transferor
to be included as Finance Charge Receivables
(collectively, the "Finance Charge Receivables");
provided, however, that an amount equal to the product
of the Discount Percentage and the amount of
collections of Principal Receivables will be treated
as collections of Finance Charge Receivables. See "The
Pooling and Servicing Agreement Generally--Discount
Option." All new Receivables arising in Accounts will
be conveyed to the Trust, except as described herein,
but will not affect the amount of the initial Investor
Amount of a Series. The total amount of Receivables
will fluctuate from day to day, because the amount of
new Receivables arising in the Accounts and the amount
of payments collected on existing Receivables will
usually differ each day. Because the Transferor's
Interest represents the interest in the Principal
Receivables not represented by the Certificates of any
Series, the amount of the Transferor's Interest in
Principal Receivables will fluctuate daily as
Receivables are collected and new Receivables are
conveyed to the Trust. See "The Receivables" in the
Prospectus Supplement.
REGISTRATION OF CERTIFICATES...... Unless otherwise specified in the related Prospectus
Supplement, the Certificates of each Series initially
will be represented by certificates registered in the
name of Cede & Co. ("Cede"), as the nominee of The
Depository Trust Company ("DTC"). No person acquiring
a beneficial interest in the Certificates of a Series
(a "Certificate Owner") will be entitled to receive a
definitive certificate representing such person's
interest (a "Definitive Certificate"), except in the
event that Definitive Certificates of such Series are
issued under the limited circumstances described
herein and in the related Prospectus Supplement. See
"Description of the Certificates--Definitive
Certificates."
CLEARANCE AND SETTLEMENT.......... Unless otherwise provided in the related Prospectus
Supplement, Certificate Owners of each Series offered
hereby may elect to hold their Certificates through
any of (i) DTC (in the United States) or (ii) Cedel or
Euroclear (in Europe). Transfers within DTC, Cedel or
Euroclear, as the case may be, will be made in
accordance with the usual rules and operating
procedures of the relevant system. Cross-market
transfers between persons holding directly or
indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly through
Cedel or Euroclear, on the other, will be
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effected in DTC through the relevant Depositaries of
Cedel or Euroclear. See "Description of the
Certificates--Book-Entry Registration."
COLLECTIONS....................... All collections of Receivables and Participation
Interests, if any, will be allocated by the Servicer
between amounts collected on Principal Receivables and
amounts collected on Finance Charge Receivables;
provided, however, that the Transferor has the option
(the "Discount Option") to designate from time to
time, subject to certain conditions, a percentage
(which initially will be %) of all or a portion of
the amount of Principal Receivables collected that
will instead be treated as collections of Finance
Charge Receivables. See "The Pooling and Servicing
Agreement Generally--Discount Option." All such
amounts will then be allocated in accordance with the
respective interests of the Certificateholders of each
Class of each Series as described in the related
Prospectus Supplement. The Servicer will deposit all
collections of Receivables and Participation
Interests, if any, distributable to Certificateholders
in an eligible account established for such purpose
(the "Collection Account") no later than the day prior
to the applicable Distribution Date. The "Distribution
Date" for a Series will usually be the fifteenth day
of each month (or, if such day is not a business day,
the next business day) or such other date specified in
the Series Supplement for a Series. See "The Pooling
and Servicing Agreement Generally--Series Percentage
and Transferor Percentage" herein and "Description of
the Certificates--Allocation Percentages" in the
Prospectus Supplement.
INTEREST.......................... Interest on the Certificates for each Interest Period
with respect to a Series will be distributed as set
forth in the related Prospectus Supplement. Interest
payments in respect of a Series will generally be
funded from the portion of Finance Charge Receivables
collected during the related Monthly Period allocable
to such Series and, if necessary and if specified in
the related Prospectus Supplement, from any Series
Enhancement available for such Series. The terms
"Interest Period" and "Monthly Period" have the
meanings specified in the Prospectus Supplement
relating to each Series. See "Description of the
Certificates--Interest Payments" and "Risk
Factors--Payments and Maturity."
REVOLVING PERIOD.................. During the period from the closing date with respect to
a Series (the "Relevant Closing Date") and ending on
the day immediately preceding the commencement of an
Amortization Period with respect to such Series (the
"Revolving Period"), collections of Principal
Receivables allocated to the Certificates of such
Series will be paid from the Trust to the holders of
the Transferor Certificates, to other Series or
deposited in the Excess Funding Account (except in
certain limited circumstances).
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AMORTIZATION PERIODS; PRINCIPAL
PAYMENTS OR ACCUMULATION........ Unless otherwise specified in the Prospectus Supplement
relating to any Class, at the end of any Revolving
Period for a Class, collections of Principal
Receivables that had been allocated to
Certificateholders of such Class but had been paid to
the holders of the Transferor Certificates, to other
Series or deposited in the Excess Funding Account
shall instead be either paid directly to such
Certificateholders or accumulated for payment to such
Certificateholders, in each case as specified in the
Prospectus Supplement relating to such Class. The
Revolving Period for a Series shall end and an
amortization period shall commence either upon the
occurrence of a Pay Out Event with respect to such
Series (a "Rapid Amortization Period"), a Reinvestment
Event with respect to such Series (a "Rapid
Accumulation Period") or at a scheduled date (a
"Scheduled Amortization Date") set forth in the
Prospectus Supplement applicable to such Series (a
"Controlled Amortization Period," "Limited
Amortization Period," "Principal Amortization Period,"
"Optional Amortization Period," "Controlled
Accumulation Period" or other like period,
collectively referred to herein as an "Amortization
Period," in each case as described in the related
Prospectus Supplement). In the event of a Rapid
Amortization Period, collections of Principal
Receivables allocated to Certificateholders will
generally be paid directly to such Certificateholders,
subject to any subordination provisions specified in
the related Prospectus Supplement. In the event of a
Rapid Accumulation Period, collections of Principal
Receivables allocated to Certificateholders will
generally be accumulated in the Principal Funding
Account and paid to the Certificateholders on the
expected final payment date. See "The Pooling and
Servicing Agreement Generally--Pay Out Events and
Reinvestment Events" for a discussion of the events
which might lead to a Rapid Amortization Period or a
Rapid Accumulation Period. In the event of another
Amortization Period with respect to a Class,
collections of Principal Receivables will either be
paid directly to Certificateholders in specified
amounts on a monthly or other periodic basis or
accumulated in a Series Account for the benefit of
Certificateholders or otherwise applied, in each case,
as set forth in the Prospectus Supplement relating to
such Class.
Funds on deposit in the Collection Account shall, at the
direction of the Servicer, be invested by the Trustee
in Eligible Investments selected by the Servicer.
SHARED PRINCIPAL COLLECTIONS AND
TRANSFEROR PRINCIPAL
COLLECTIONS..................... On each Distribution Date, (a) the Servicer shall
allocate Shared Principal Collections to each Series
entitled thereto (each, a "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
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Collection Account and pay to the holders of the
Transferor Certificates an amount equal to the excess,
if any, of (x) the aggregate amount for all
outstanding Series of collections of Principal
Receivables which the related Series Supplements
specify are to be treated as "Shared Principal
Collections" for such Distribution Date over (y) the
aggregate amount for all outstanding Principal Sharing
Series which the related Series Supplements specify
are "Principal Shortfalls" for such Distribution Date;
provided, however, that if on any Distribution Date
the Transferor Amount is less than or equal to the
Required Transferor Amount, the Servicer will not
distribute to the holders of the Transferor
Certificates any Shared Principal Collections that
otherwise would be distributed to the holders of the
Transferor Certificates, but shall deposit such funds
in the Excess Funding Account. Any such reallocation
will not result in a reduction in the Invested Amount
of the Series to which such collections were initially
allocated. In addition, if so specified in the related
Prospectus Supplement, collections otherwise payable
to the Transferor may be designated to be paid to the
Certificateholders of the applicable Series.
SHARING OF EXCESS COLLECTIONS OF
FINANCE CHARGE RECEIVABLES...... Collections of Finance Charge Receivables allocable to
any Class in excess of the amounts necessary to make
required payments with respect to such Class may, if
specified in the related Series Supplement, be applied
to cover shortfalls, if any, with respect to amounts
payable from collections of Finance Charge Receivables
allocable to any other Class or Series then
outstanding, pro rata based upon the amount of the
shortfall as provided in the related Series
Supplement. In addition, if so specified in the
related Prospectus Supplement, collections of Finance
Charge Receivables otherwise payable to the Transferor
may be designated to be paid to the Certificateholders
of the applicable Series.
COMPANION SERIES.................. If specified in the Prospectus Supplement relating to a
Series, a Series of Certificates may be issued (each,
a "Companion Series"), that is paired with one or more
other Series or a portion of one or more other Series
previously issued by the Trust (a "Prior Series"),
such that a reduction in the Invested Amount of the
Prior Series results in an increase in the Invested
Amount of the Companion Series. If a Pay Out Event or
Reinvestment Event occurs with respect to the Prior
Series or the Companion Series when the Prior Series
is in an Amortization Period, the percentage specified
in the applicable Prospectus Supplement for the
allocation of collections of Principal Receivables for
the Prior Series may be reset to a lower percentage as
set forth in the Prospectus Supplement for the Prior
Series and the Amortization Period for the Prior
Series may be lengthened.
GROUPS............................ If specified in the Prospectus Supplements relating to
any group of Series (each, a "Group"), such Series may
be
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allocated all collections with respect to certain
portions of the Receivables and any Participation
Interests may be allocated to such Series, provided
that the Rating Agency Condition is satisfied and that
such grouping will not result in the occurrence of a
Pay Out Event or Reinvestment Event with respect to
any Series or materially adversely affect the amount
or timing of distributions to be made to any Series or
Class (an "Adverse Effect").
FUNDING PERIOD.................... The Prospectus Supplement relating to a Series of
Certificates may specify that for a period beginning
on the Relevant Closing Date for such Series and
ending on a specified date before the commencement of
an Amortization Period with respect to such Series
(the "Funding Period"), the aggregate amount of
Principal Receivables in the Trust allocable to such
Series may be less than the aggregate principal amount
of the Certificates of such Series and an amount equal
to the amount of such deficiency (the "Pre-Funding
Amount") will be held in a trust account established
with the Trustee for the benefit of Certificateholders
of such Series (the "Pre-Funding Account") pending the
transfer of additional Principal Receivables to the
Trust or pending the reduction of the Invested Amounts
of other Series issued by the Trust. The related
Prospectus Supplement will specify the initial
Invested Amount on the Relevant Closing Date, the
aggregate principal amount of the Certificates of such
Series (the "Full Invested Amount") and the date by
which the Invested Amount is expected to equal the
Full Invested Amount. The Invested Amount will
increase as Principal Receivables are delivered to the
Trust or as the Invested Amount of other Series of the
Trust are reduced. The Invested Amount may also
decrease due to the occurrence of a Pay Out Event or
Reinvestment Event as specified in the related
Prospectus Supplement.
During the Funding Period, funds on deposit in the
Pre-Funding Account for a Series of Certificates will
be withdrawn and paid to the Transferor to the extent
of any increases in the Invested Amount. In the event
that the Invested Amount does not, for any reason,
equal the Full Invested Amount by the end of the
Funding Period, any amount remaining in the Pre-
Funding Account and any additional amount specified in
the related Prospectus Supplement will be payable to
the Certificateholders of such Series in a manner and
at such time as set forth in the related Prospectus
Supplement.
If so specified in the related Prospectus Supplement,
monies in the Pre-Funding Account with respect to any
Series will be invested by the Trustee in Eligible
Investments or will be subject to a guaranteed rate or
investment agreement or other similar arrangement, and
investment earnings and any applicable payment under
any such investment arrangement will be applied to pay
interest on the Certificates of such Series.
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SERIES ENHANCEMENT................ Enhancement with respect to one or more Classes of a
Series ("Series Enhancement") may be provided in the
form of subordination, a letter of credit, a cash
collateral guaranty, a cash collateral account, a
collateral interest, a surety bond, insurance policy
or other form of support or any combination of the
above as specified in the related Prospectus
Supplement. Series Enhancement may also be provided to
a Class or Classes of different Series by a
cross-support feature which requires that
distributions of principal or interest be made with
respect to Certificates of one or more Classes of a
particular Series before distributions are made to one
or more Classes of another Series.
The type, characteristics and amount of the Series
Enhancement will be determined based on several
factors, including the characteristics of the
Receivables and Accounts and other property underlying
or comprising the Trust assets as of the Relevant
Closing Date with respect to any Series, and will be
established on the basis of requirements of each
Rating Agency rating the Certificates of such Series.
The terms of the Series Enhancement with respect to
any Series offered hereby will be described in the
related Prospectus Supplement. If so specified in the
Prospectus Supplement for a Series, the level of
Series Enhancement for such Series may be reduced if
such reduction satisfies the Rating Agency Condition.
If so specified in the related Prospectus Supplement,
any such Series Enhancement may apply only in the
event of certain types of losses and the protection
against losses provided by such Series Enhancement
will be limited. See "Series Enhancement" and "Risk
Factors--Limited Nature of Rating."
A. SUBORDINATION................ A Series of Certificates may include one or more Classes
of Certificates which are subordinate to one or more
other Classes of such Series. The rights of the
holders of any such subordinated Certificates to
receive distributions on any Distribution Date for
such Series will be subordinate in right and priority
to the rights of the holders of Certificates which are
senior to such subordinated Certificates, but only to
the extent set forth in the related Prospectus
Supplement. If so specified in the related Prospectus
Supplement, subordination may apply only in the event
of certain types of losses not covered by another
Series Enhancement. The related Prospectus Supplement
will also set forth information concerning the amount
of subordination of a Class or Classes of subordinated
Certificates in a Series, the circumstances in which
such subordination will be applicable, the manner, if
any, in which the amount of subordination will
decrease over time, and the conditions under which
amounts available from payments that would otherwise
be made to holders of such subordinated Certificates
will be distributed to holders of Certificates which
are senior to such subordinated Certificates. If cash
flows otherwise distributable to holders of
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a subordinated Class of a Series will be used as
support for a Class of another Series, the related
Prospectus Supplement will specify the manner and
conditions for applying such a cross-support feature.
See "Series Enhancement-- Subordination."
B. LETTER OF CREDIT............. If so specified in the related Prospectus Supplement,
support for a Series or one or more Classes of a
Series may be provided by one or more letters of
credit. A letter of credit may provide limited
protection against certain losses in addition to or in
lieu of another Series Enhancement. The issuer of the
letter of credit (the "L/C Bank") will be obligated to
honor demands with respect to such letter of credit,
to the extent of the amount available thereunder, to
provide funds under the circumstances and subject to
such conditions as are specified in the related
Prospectus Supplement. The liability of the L/C Bank
under its letter of credit may be reduced by the
amount of unreimbursed payments thereunder.
The maximum liability of a L/C Bank under its letter of
credit will generally be an amount equal to a
percentage specified in the related Prospectus
Supplement of the initial Investor Amount of a Series
or a Class of such Series. The maximum amount
available at any time to be paid under a letter of
credit will be determined in the manner specified
therein and in the related Prospectus Supplement. See
"Series Enhancement--Letter of Credit."
C. CASH COLLATERAL
GUARANTY OR ACCOUNT........... If so specified in the related Prospectus Supplement,
support for a Series or one or more Classes of a
Series may be provided by a guaranty (the "Cash
Collateral Guaranty") secured by the deposit of cash
or certain permitted investments in an account (the
"Cash Collateral Account") reserved for the
beneficiaries of the Cash Collateral Guaranty or by a
Cash Collateral Account alone. The amount available
pursuant to the Cash Collateral Guaranty or the Cash
Collateral Account will be the lesser of the amounts
on deposit in the Cash Collateral Account and an
amount specified in the related Prospectus Supplement.
The related Prospectus Supplement will set forth the
circumstances under which payments are made to
beneficiaries of the Cash Collateral Guaranty from the
Cash Collateral Account or from the Cash Collateral
Account directly.
D. COLLATERAL INTEREST.......... If so specified in the related Prospectus Supplement,
support for a Series or one or more Classes of a
Series may be provided initially by an uncertificated,
subordinated interest in the Trust (the "Collateral
Interest") in an amount initially equal to a
percentage specified in the related Prospectus
Supplement of the initial Investor Amount.
E. SURETY BOND OR INSURANCE
POLICY........................ If so specified in the related Prospectus Supplement,
support for a Series or one or more Classes of a
Series may be
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provided by the posting of a surety bond or the
issuance of insurance by an insurance company, in each
instance designed to assure the distribution of
interest or principal on the Certificates of such
Class or Series in the manner and amount specified in
the related Prospectus Supplement.
F. SPREAD ACCOUNT............... If so specified in the related Prospectus Supplement,
support for a Series or one or more Classes of a
Series may be provided by the periodic deposit of
certain available excess cash flow from the Trust
assets into an account (the "Spread Account") intended
to assure the subsequent distribution of interest or
principal on the Certificates of such Class or Series
in the manner specified in the related Prospectus
Supplement.
RECORD DATE....................... The last day of the month preceding any Distribution
Date, except as otherwise specified with respect to a
Series in the related Prospectus Supplement.
OPTIONAL REPURCHASE............... If specified in a Prospectus Supplement, the Investor
Amount of a Series may be subject to optional
repurchase by the Transferor on any Distribution Date
after such Investor Amount is less than or equal to a
certain specified level, unless certain events as
specified in the Pooling and Servicing Agreement have
occurred. The purchase price on the Distribution Date
on which such repurchase occurs will be as specified
in the related Prospectus Supplement and, together
with any amounts on deposit in any Series Accounts
held for the benefit of the Certificateholders of such
Series, will be not less than an amount equal to the
Investor Amount plus accrued and unpaid interest on
the applicable Certificates. See "Description of the
Certificates--Optional Repurchase" in the Prospectus
Supplement.
FINAL PAYMENT OF PRINCIPAL AND
INTEREST; TERMINATION OF
TRUST........................... The interest of the Certificateholders of a Series in
the Trust will terminate following the earliest of (i)
the day after the Distribution Date on which the
Investor Amount of such Series is paid in full, (ii) a
date specified in the Series Supplement for such
Series (the "Stated Series Termination Date") and
(iii) the termination of the Trust (the "Trust
Termination Date"). All principal and interest will be
due and payable no later than the Stated Series
Termination Date.
RISK FACTORS...................... There are material risks associated with investment in
the Certificates. Investors should consider the factors
set forth under the caption "Risk Factors" beginning
on page .
TAX STATUS........................ Except to the extent otherwise specified in the related
Prospectus Supplement, Special Tax Counsel to the
Transferor is of the opinion that the Certificates of
each Series (or certain Classes thereof) will be
properly characterized as indebtedness for Federal
income tax purposes. Except as otherwise specified in
the related Prospectus Supplement, the Certificate
Owners of each Class as to which such opinion is
rendered will be deemed to agree to treat the
Certificates as indebtedness for tax purposes. See
"Federal Income Tax
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Consequences" for additional information concerning
the application of Federal income tax laws.
ERISA CONSIDERATIONS.............. Under a regulation issued by the Department of Labor,
the Trust Assets would not be deemed "plan assets" of
any employee benefit plan holding interests in a Class
of the Certificates of a Series if certain conditions
are met. If the Trust Assets were deemed to be "plan
assets" of an employee benefit plan, there is
uncertainty as to whether existing exemptions from the
"prohibited transaction" rules of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), would apply to all transactions involving
the Trust Assets. No assurance can be made with
respect to any offering of any Class of the
Certificates of any Series that the conditions which
would allow the Trust Assets not to be "plan assets"
will be met, although the intention of the
Underwriters (but not their assurance) as to whether
any Class of the Certificates of a particular Series
will be "publicly-offered securities," and therefore
eligible for an ERISA exemption, will be set forth in
the related Prospectus Supplement. Accordingly,
fiduciaries or other persons contemplating purchasing
interests in the Certificates of any Series with "plan
assets" of any employee benefit plan should consult
their counsel before making a purchase. See "ERISA
Considerations."
CERTIFICATE RATING................ It will be a condition to the issuance of the
Certificates offered by this Prospectus and the
related Prospectus Supplement that they be rated in
one of the four highest applicable rating categories
by at least one nationally recognized statistical
rating organization selected by the Transferor (each
such rating organization rating any Series, a "Rating
Agency"). The rating or ratings applicable to the
Certificates of each Class will be as set forth in the
related Prospectus Supplement. The Certificates
offered pursuant to this Prospectus and the related
Prospectus Supplement must be investment grade
asset-backed securities within the meaning of the Act
and the rules promulgated thereunder.
A security rating should be evaluated independently of
similar ratings of different types of securities. A
rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning rating
organization. Each rating should be evaluated
independently of any other rating. See "Risk Factors--
Limited Nature of Rating."
LISTING........................... If so specified in the Prospectus Supplement for a
Series, application will be made to list the
Certificates of such Series, or all or a portion of
any Class thereof, on the Luxembourg Stock Exchange or
any other specified exchange.
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RISK FACTORS
INVESTORS SHOULD CONSIDER THE FOLLOWING FACTORS IN CONNECTION WITH THE
PURCHASE OF CERTIFICATES.
LIMITED LIQUIDITY. There can be no assurance that a secondary market for
the Certificates of any Series will develop or, if it does develop, that such
market will provide Certificateholders with liquidity of investment or that it
will continue for the life of the Certificates of such Series. It is anticipated
that, to the extent permitted, the underwriters of any Series of Certificates
offered hereby will make a market in such Certificates, but in no event will any
such underwriter be under an obligation to do so.
CHARACTERISTICS AS A SALE; POTENTIAL EFFECT OF INSOLVENCY AND RECEIVERSHIP
OF THE ACCOUNT OWNERS. Each Account Owner will represent and warrant in its
respective Receivables Transfer Agreement that the transfer of the Receivables
to the Transferor pursuant thereto will be a valid sale and assignment of all of
the Account Owner's right, title and interest in the Receivables and all
proceeds thereof to the Transferor. Each Account Owner will take certain actions
required to perfect the Transferor's Interest in the Receivables. While each
Account Owner and the Transferor will treat the Transactions described in the
respective Receivables Transfer Agreement as a sale of the Receivables to the
Transferor, under applicable state law, nevertheless a tax, government lien or
other nonconsensual lien on property of an Account Owner arising before
Receivables come into existence or are transferred to the Transferor may have
priority over the Transferor's and, therefore, the Trust's interest in such
Receivables, and if the Federal Deposit Insurance Corporation ("FDIC") were
appointed conservator or receiver of an Account Owner, certain administrative
expenses of the conservator or receiver or the Delaware State Bank Commissioner
and certain borrowings made by the conservator or receiver may also have
priority over the Transferor's interest and, therefore, the Trust's interest in
such Receivables. If a conservatorship or receivership proceeding were to be
commenced involving an Account Owner and the conservator or receiver of the
Account Owner were to take the position that the transfer of the Receivables
from the Account Owner to the Transferor should be characterized as a pledge of
such Receivables, then delays in distributions on the Certificates and
reductions in such distributions could result. In addition, while Travelers Bank
& Trust, fsb is the Servicer, cash collections held by the Servicer may, subject
to certain conditions, be commingled and used for the benefit of Travelers Bank
& Trust, fsb prior to the date on which such collections are required to be
deposited in the Collection Account as described under "The Pooling and
Servicing Agreement Generally--Application of Collections." In the event of the
conservatorship or receivership of Travelers Bank & Trust, fsb or, in certain
circumstances, the lapse of certain time periods, the Transferor (and therefore
the Trust) may not have a perfected interest in such collections and, in such
event, the Trust may suffer a loss of all or part of such collections which may
result in a loss to Certificateholders. See "Certain Legal Aspects of the
Receivables--Transfer of Receivables."
To the extent that the Account Owners have granted a security interest in
the Receivables to the Transferor and that security interest was validly
perfected before the insolvency of an Account Owner and was not granted or taken
in contemplation of insolvency or with the intent to hinder, delay or defraud
the relevant Account Owner or its creditors, the Federal Deposit Insurance Act
("FDIA"), as amended by the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended ("FIRREA"), provides that such security
interest should not be subject to avoidance by the FDIC, as conservator or
receiver for the relevant Account Owner. Positions taken by the FDIC staff prior
to the passage of FIRREA do not suggest that the FDIC, as conservator or
receiver for the relevant Account Owner, would interfere with the timely
transfer to the Transferor (and, therefore, to the Trust) of payments collected
on the Receivables. If, however, the FDIC were to assert a contrary position,
such as requiring the Transferor to establish its right to those payments by
submitting to and completing the administrative claims procedure under the FDIA,
or the conservator or receiver were to request a stay of proceedings with
respect to such Account Owner as provided under the FDIA, delays in payments on
the related Series of Certificates and possible reductions in the amount of
those payments could occur. In addition, the FDIC, if appointed as conservator
or receiver for an Account Owner, has the power under the FDIA to repudiate
contracts, including secured contracts of the Account Owners. The FDIA provides
that a claim for damages arising from the
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repudiation of a contract is limited to "actual direct compensatory damages." In
the event the FDIC were to be appointed as conservator or receiver of an Account
Owner and were to repudiate the Receivables Transfer Agreement entered into by
such Account Owner, then the amount payable out of available collateral to the
Certificateholders could be lower than the outstanding principal and accrued
interest on the Certificates. In the event of a Servicer Default, if a
conservator or receiver is appointed for the Servicer, and no Servicer Default
other than such conservatorship or receivership or insolvency of the Servicer
exists, the conservator or receiver may have the power to prevent either the
Trustee or Certificateholders from effecting a transfer of servicing to a
successor Servicer.
The Transferor represents and warrants in the Pooling and Servicing
Agreement that the transfer of the Receivables by it to the Trust pursuant to
the Pooling and Servicing Agreement is either a valid sale and assignment of
such Receivables to the Trust or the grant to the Trust of a security interest
in such Receivables. The Transferor will file appropriate UCC financing
statements to evidence this sale and perfect the Trust's right, title and
interest in such Receivables. Nevertheless, a tax or government lien or other
nonconsensual lien on property of the Transferor arising before a receivable is
transferred to the Trust may have priority over the Trust's ownership or
security interest in such Receivable. If the Transferor were to become a debtor
in a bankruptcy case and a bankruptcy trustee or a creditor of the Transferor
were to take the position that the transfer of the Receivables from the
Transferor to the trust should be characterized as a pledge of such Receivables,
then delays in distributions on the Certificates and possible reductions in such
distributions could result. See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Insolvency."
ABILITY TO CHANGE TERMS OF THE RECEIVABLES; DECREASE IN FINANCE
CHARGES. Pursuant to the Receivables Transfer Agreements, the Account Owners
are not transferring to the Transferor and, therefore, the Transferor is not and
cannot transfer to the Trust, the Accounts, but only the Receivables arising in
the Accounts. As owner of the Accounts, the Account Owners have the right to
determine the finance charges and the other fees and charges which will be
applicable from time to time on the Accounts, to alter the minimum monthly
payment required under the Accounts and to change various other terms of their
respective agreements with cardholders with respect to the Accounts. A decrease
in the finance charges and the other fees and charges assessed on the Accounts
would decrease the effective yield on the Accounts and could result in the
occurrence of a Pay Out Event or Reinvestment Event for one or more Series and
commencement of the Rapid Amortization Period or Rapid Accumulation Period for
each such Series. Under the Receivables Transfer Agreement, each Account Owner
will agree that, unless required by law or as is otherwise necessary, in its
sole discretion, to maintain its lending business on a competitive basis based
on a good faith assessment by such Account Owner of the nature of its
competition in the lending business, it will not reduce the annual percentage
rate at which finance charges are assessed on the Receivables or the other fees
and charges assessed on any of the Accounts owned by it, if, as a result of such
reduction, either (i) such Account Owner's reasonable expectation is that such
reduction will cause a Pay Out Event or Reinvestment Event to occur, or (ii)
such reduction is not also applied to any comparable segments of consumer
revolving credit card accounts owned by such Account Owner which have
characteristics the same as, or substantially similar to, such Accounts. Each
Account Owner also covenants that it will change the terms relating to any of
the accounts owned by it only if the change is made applicable to the comparable
segment of the consumer revolving credit card accounts owned by such Account
Owner with characteristics the same as or substantially similar to such
Accounts, subject to compliance with all requirements of law. In servicing the
Accounts, the Servicer will be required to exercise the same care and apply the
same policies that it exercises in handling similar matters for its own
comparable accounts. Except as set forth above, neither the Pooling and
Servicing Agreement nor any Receivables Transfer Agreement contains any
restrictions on the ability of an Account Owner to change the terms of the
Accounts or the Receivables. See "The Pooling and Servicing Agreement
Generally--Representations, Warranties and Covenants." There can be no assurance
that changes in applicable law, changes in the marketplace or prudent business
practice might not result in a determination by an Account Owner to decrease
finance charges or other fees and charges for existing accounts, or take actions
which would
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otherwise change the terms of the Accounts. In addition, there can be no
assurance that a change made in the terms of the Accounts would not result in
the downgrade of the rating of the Certificates.
EFFECTS OF CONSUMER PROTECTION LAWS ON CERTIFICATEHOLDERS. The Accounts and
the Receivables are subject to numerous federal and state consumer protection
laws and regulations that impose requirements on the making and collection of
consumer loans. Such laws, as well as any new laws or rulings which may be
adopted (including, but not limited to, federal or state interest rate or fee
caps on credit cards), may adversely affect the Servicer's ability to collect on
the Receivables or maintain previous levels of finance charges, annual
cardholder fees and other fees, and failure by the Servicer to comply with such
requirements also could adversely affect the Servicer's ability to collect on
the Receivables. Pursuant to the Pooling and Servicing Agreement, the Transferor
will covenant to accept the transfer of all Receivables in an Account upon the
breach of certain representations and warranties relating to requirements of law
applicable to the Account, if any Receivable in such Account becomes a Defaulted
Receivable or the Trust's rights in, to or under such Receivables are impaired
or the proceeds thereof are not available to the Trust free and clear of any
lien (subject to certain cure periods). The Transferor also will make certain
other representations and warranties relating to the validity and enforceability
of the Accounts and the Receivables. The Account Owners will make similar
covenants and representations and warranties in the respective Receivables
Transfer Agreements. However, the Trustee will not make any examination of the
Receivables or the records relating thereto for the purpose of establishing the
presence or absence of defects, compliance with such representations and
warranties, or for any other purpose. The sole remedy if any such representation
or warranty is breached and such breach continues beyond the applicable cure
period, if any, is that the Transferor will generally be obligated to accept the
transfer of all Receivables in the Account affected thereby (for transfer to the
applicable Account Owner under its Receivables Transfer Agreement). In addition,
in the event of a breach of certain representations and warranties, the Servicer
may be obligated to accept the reassignment and transfer of the Receivables
transferred by it to the Trust, which reassignment will constitute the sole
remedy available to Certificateholders with respect to any such breach. See "The
Pooling and Servicing Agreement Generally--Representations, Warranties and
Covenants" and "Certain Legal Aspects of the Receivables--Consumer Protection
Laws."
Application of federal and state bankruptcy and debtor relief laws would
affect the interests of the Certificateholders in the Receivables, if such laws
result in any Receivables being written off as uncollectible. See "Description
of the Certificates--Defaulted Receivables; Rebates and Fraudulent Charges."
COMPETITION IN THE BANK CREDIT CARD INDUSTRY. The bank credit card industry
is highly competitive. There is increased competitive use of advertising, target
marketing and pricing competition in interest rates and annual cardholder fees
as both traditional and new credit card issuers seek to expand or to enter the
market. As a result of this competition, the industry is undergoing significant
consolidation. This consolidation may have the effect of making some of the
largest credit card issuers more cost efficient. In addition, the competition
for high credit quality individuals results in a significant number of
solicitations for a finite number of prospects. The use of introductory or
"teaser" rates has lead to an increased number of individuals shopping among
credit cards and, therefore, a lowered loyalty to any one credit card. The
Account Owners' ability to compete in the credit card industry will affect their
ability to generate new Receivables. If the rate at which new Receivables are
generated declines significantly and the Account Owners do not designate
Additional Accounts, a Pay Out Event or Reinvestment Event could occur, in which
event a Rapid Amortization Period or Rapid Accumulation Period would commence.
See "The Banks' Credit Card Activities--Competition."
TIMING OF PRINICPAL PAYMENTS OTHER THAN AT EXPECTED MATURITY. The
Receivables in the Trust may be paid at any time and there is no assurance that
there will be additional Receivables created in the Accounts the Receivables of
which are included in the Trust or that any particular pattern of cardholder
repayments will occur. The continuation of the Revolving Period of a Series will
be dependent upon the continued generation of new Receivables for the Trust. The
Pooling and Servicing Agreement provides that the
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Transferor will be required and the Receivables Transfer Agreements provide that
the applicable Account Owner will be required (subject to certain conditions) to
designate Additional Accounts, the Receivables of which will be added to the
Trust in the event that the Transferor Amount or the amount of the Principal
Receivables is not maintained at a certain minimum amount. If Additional
Accounts are not designated by the Transferor and the Account Owners when
required, a Pay Out Event or Reinvestment Event for one or more Series may occur
and result in the commencement of a Rapid Amortization Period or Rapid
Accumulation Period for such Series. See "The Pooling and Servicing Agreement
Generally--Pay Out Events and Reinvestment Events" herein and "Description of
the Certificates--Pay Out Events and Reinvestment Events" in the Prospectus
Supplement for a discussion of other events which might lead to the commencement
of the Rapid Amortization Period or Rapid Accumulation Period for a Series. If
the rate of reborrowing by credit card holders declines significantly, resulting
in a significant decline in the amount of Receivables generated in the Accounts,
and the Transferor does not designate sufficient Additional Accounts, a Pay Out
Event or Reinvestment Event for one or more Series could result causing the
commencement of the Rapid Amortization Period or Rapid Accumulation Period for
each such Series. In addition, increased convenience use, where cardholders pay
their Account balances in full on or prior to the due date and thus avoid all
finance charges on purchases, would decrease the effective yield on the
Accounts, and could cause the commencement of the Rapid Amortization Period or
Rapid Accumulation Period for one or more Series, as well as decreased
protection to holders of Certificates against defaults under the Accounts.
Convenience use is more common among cardholders who are not assessed any annual
cardholder fee than among those who pay such fees, and a substantial majority of
the cardholders on the Accounts are not charged an annual cardholder fee. A
decrease in the rate of payment by cardholders or a decline in reborrowing could
delay the return of principal to the Certificateholders during the Amortization
Periods for each Series. See "Receivable Yield Considerations" in the Prospectus
Supplement. A significant portion of the Receivables which will be transferred
to the Trust exist or will arise in Accounts resulting from two large affinity
and co-branded credit card programs. See "The Receivables--Affinity Groups" in
the Prospectus Supplement. While the Banks have enjoyed a long relationship with
such groups, the possibility exists that the groups could move their endorsement
to another institution. In such case, the Banks would expect to reissue credit
cards to the cardholders; however, it is not possible to predict how many of the
Accounts would be closed. This could affect the amount of Receivables in the
Trust and, if the Transferor failed to designate Additional Accounts when
required, could result in the occurrence of a Pay Out Event or Reinvestment
Event for one or more Series.
PROPOSED LEGISLATION--LIMITATION ON FINANCE CHARGES. Congress and the
states may enact new laws and amendments to existing laws to regulate further
the credit card industry or to reduce finance charges or other fees or charges
applicable to credit card accounts. The potential effect of any such legislation
could be to reduce the yield on the Accounts. If such yield is reduced, a Pay
Out Event or Reinvestment Event could occur, and a Rapid Amortization Period or
Rapid Accumulation Period may commence. See "The Pooling and Servicing Agreement
Generally--Pay Out Events and Reinvestment Events."
RISKS PRESENTED BY SOCIAL, GEOGRAPHIC AND ECONOMIC FACTORS. Changes in card
use, payment patterns and the rate of defaults by cardholders may result from a
variety of social, economic and geographic factors. Social factors include
changes in consumer confidence levels and attitudes regarding incurring debt,
the public's perception of the use of credit cards, and changing attitudes
regarding the stigma of personal bankruptcy. Economic factors include the rate
of inflation, the unemployment rates and relative interest rates offered for
various types of loans. Adverse changes in economic conditions in any states
where cardholders are located could have a direct impact on the timing and
amount of payments on the Certificates of any Series. See "The Banks' Credit
Card Activities" herein and in the Prospectus Supplement. For a detailed
discussion of geographic factors, see "Risk Factors--Risks Associated with
Geographic Concentration" herein. Neither the Account Owners nor the Transferor
are able to determine and have no basis to predict whether, or to what extent,
economic, social or geographic factors will affect future card use or repayment
patterns.
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EFFECT OF ADDITION OF TRUST ASSETS ON CREDIT QUALITY. The Transferor and
the Account Owners expect, and in some cases will be obligated (subject to
certain exceptions) to designate Additional Accounts, the Receivables of which
will be conveyed to the Trust. Such Additional Accounts may include accounts
originated using criteria different from those that were applied to the Accounts
designated on an earlier date, because such accounts were originated at a
different date or were acquired from another institution. Consequently, there
can be no assurance that Additional Accounts designated in the future will be of
the same credit quality as Accounts designated on an earlier date. In addition,
the Pooling and Servicing Agreement provides that the Transferor may add
Participation Interests to the Trust. The designation of Additional Accounts and
Participation Interests will be subject to the satisfaction of certain
conditions described herein under "The Pooling and Servicing Agreement
Generally--Addition of Accounts or Participation Interests."
BASIS RISK. The Accounts generally have finance charges set at a variable
rate above the prime rate or other specified index. Any Class of Certificates
offered hereby may bear interest at a fixed-rate or a floating-rate based on a
different floating-rate index. If there is a decline in the prime rate or such
other specified index, the amount of collections of Finance Charge Receivables
on the Accounts may be reduced, whereas the amounts payable as interest with
respect to the Certificates and other amounts required to be funded out of
collections of Finance Charge Receivables may not be similarly reduced.
IMPACT OF DISCOUNT OPTION; SLOWER PAYMENT RATE. Pursuant to the Pooling and
Servicing Agreement, the Transferor will designate a percentage of collections
of Principal Receivables to be treated as collections of Finance Charge
Receivables. Such designation will result in an increase in the amount of
collections of Finance Charge Receivables and a lower amount of collections in
respect of Principal Receivables than otherwise would occur. The Transferor may,
without notice to or the consent of Certificateholders, increase, reduce or
eliminate the percentage of collections of Principal Receivables treated as
collections of Finance Charge Receivables. See "The Pooling and Servicing
Agreement Generally--Discount Option." Any such change that raises the Discount
Percentage would result in an increase in the amount of collections of Finance
Charge Receivables and a lower payment rate of collections of Principal
Receivables and will reduce the Transferor Amount (which is calculated after
applying the Discount Percentage to the aggregate amount of Principal
Receivables), thereby making certain Pay Out Events or Reinvestment Events based
in part on the amount of collections of Finance Charge Receivables less likely
to occur and increasing the likelihood that the Transferor will be required to
designate Additional Accounts. Any such change that reduces or eliminates the
Discount Percentage will have the opposite effect.
LIMITED NATURE OF RATING. Any rating assigned to the Certificates of a
Series or a Class of a Series by a Rating Agency will reflect such Rating
Agency's assessment solely of the likelihood that Certificateholders will
receive the payments of interest and principal required to be made under the
Pooling and Servicing Agreement and will be based primarily on the value of the
Receivables in the Trust and the availability of any Series Enhancement with
respect to such Series or Class of such Series. Any such rating will therefore
generally address credit risk and will not, unless otherwise specified in the
related Prospectus Supplement with respect to any Class or Series offered
hereby, address the likelihood that the principal of, or interest on, any
certificates of such Class or Series will be prepaid, paid on a scheduled date
or paid on any particular date before the applicable Stated Series Termination
Date. In addition, any such rating will not address the possibility of the
occurrence of a Pay Out Event or Reinvestment Event with respect to such Class
or Series or the possibility of the imposition of United States withholding tax
with respect to non-U.S. Certificateholders. Further, the available amount of
any Series Enhancement for any such Series or Class may be limited and may be
subject to reduction from time to time as described in the related Prospectus
Supplement. The rating will not be a recommendation to purchase, hold or sell
Certificates of such Series or Class of such Series, and such rating will not
comment as to the marketability of such Certificates, any market price or
suitability for a particular investor. There is no assurance that any rating
will remain for any given period of time or that any rating will not be lowered
or withdrawn entirely
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by a Rating Agency based upon the risk factors described herein or, if in such
Rating Agency's judgment, any other circumstances or combination thereof so
warrant.
OPTIONAL REPURCHASE. The terms of any Series of Certificates may provide
that, at such time as the amount of the Certificates has been reduced to a
stated percentage of the original Investor Amount of such Series, the Transferor
will be entitled to repurchase the remaining Certificates of such Series. The
amount of the Certificates of a Series which may remain outstanding at the time
of a repurchase will be specified on a Series by Series basis and, with respect
to any given Series, subject to the specific terms of such Series, it is
possible that the repurchase option could be exercised when 10% or more of the
principal amount of the Certificates of such Series remained outstanding. Such
repurchase may result in an early return of the Certificateholder's investment.
It is not expected that any premium will be paid to the Certificateholders in
the event of the exercise of the repurchase option and there can be no assurance
that a Certificateholder will be able to invest such early repayment amount at a
similar rate of return.
ISSUANCE OF NEW SERIES; EFFECT ON TIMING OR AMOUNT OF PAYMENTS TO
CERTIFICATEHOLDERS AND VOTING RIGHTS. The Trust, as a master trust, is expected
to issue an initial Series of Certificates and to issue additional Series from
time to time thereafter. While the Principal Terms of any Series will be
specified in a Series Supplement, the provisions of a Series Supplement and,
therefore, the terms of any additional Series, will not be subject to the prior
review or consent of holders of the Certificates of any previously issued
Series. Such Principal Terms may include methods for determining applicable
investor percentages and allocating collections, provisions creating different
or additional security or other Series Enhancement, provisions subordinating
such Series to another Series or other Series (if the Series Supplement relating
to such Series so permits) to such Series, and any other amendment or supplement
to the Pooling and Servicing Agreement which is made applicable only to such
Series. Such Principal Terms, including any subordination or other relationship
of a Series to other subsequently or previously issued Series, will be described
in the Prospectus Supplement relating to such Series. The issuance of any
additional Series is subject to the Rating Agency Condition and, if any Series
outstanding was characterized as debt at the time of its issuance, the delivery
of a Tax Opinion. There can be no assurance, however, that the Principal Terms
of any Series issued from time to time might not have an impact on the timing
and amount of payments received by a Certificateholder of any other Series. No
Series Supplement relating to a Series may change the terms of the Pooling and
Servicing Agreement applicable to the Certificates of any other Series, whether
such other Series have been issued before or after the Series to which such
Series Supplement relates. However, the Certificateholders of any Series issued
in addition to outstanding Series will have voting rights which, with respect to
certain votes, waivers or consents under the Pooling and Servicing Agreement,
will reduce the percentage interest represented by the Certificates of the
outstanding Series of the aggregate unpaid principal amount of the Certificates
of all Series that are entitled to vote. Such votes, waivers and consents
include directing the appointment of a successor Servicer following a Servicer
Default, amending the Pooling and Servicing Agreement and directing a
reassignment of the entire portfolio of Accounts. See "Description of the
Certificates--New Issuances."
RISKS ASSOCIATED WITH GEOGRAPHIC CONCENTRATION. If the Trust contains a
high concentration of Receivables relating to cardholders located within a
single state or region in the United States, events in that state or region may
have a magnified effect on the Trust due to such concentration. The Prospectus
Supplement relating to a Series to be offered thereby and hereby will set forth
a then-current detailed geographic breakdown of the number of Receivables and
the amount of Receivables, each relating to cardholders with addresses in each
applicable state containing a concentration of cardholders. See "The
Receivables--Geographic Distribution of Accounts and Receivables" in the related
Prospectus Supplement. The Transferor, however, is unable to determine and has
no basis to predict, with respect to any state or region, whether any such
events have occurred or may occur, or to what extent such events may affect the
Receivables or the payment of the Certificates, or what effect a change in the
geographic distribution of the Receivables in the future may have on the
Certificates.
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ALLOCATIONS OF TRUST ASSETS AMONG ONE OR MORE SERIES OR GROUPS. To the
extent provided in any Series Supplement, or any amendment to the Pooling and
Servicing Agreement, portions of the Receivables or Participation Interests
conveyed to the Trust and all collections received with respect thereto may be
allocated to one or more Series or Groups as long as the Rating Agency Condition
is satisfied for such allocation and the Servicer shall have delivered an
officer's certificate to the Trustee to the effect that the Servicer reasonably
believes that such allocation will not have an Adverse Effect.
USE OF PROCEEDS
The net proceeds from the sale of each Series offered hereby and by the
related Prospectus Supplement will be paid to the Transferor. Unless otherwise
specified in the related Prospectus Supplement, the Transferor will use such
proceeds to purchase additional Receivables and repay loans made by Commercial
Credit Company or its affiliates.
THE TRUST
The Trust will be formed, in accordance with the laws of the State of
Delaware, pursuant to the Pooling and Servicing Agreement. The Trust will not
engage in any activity other than acquiring and holding the Receivables and any
other assets of the Trust and proceeds therefrom, issuing Certificates with
respect to each Series issued by the Trust, the Transferor Certificate and any
Supplemental Certificates and making payments thereon, obtaining Series
Enhancement applicable to any Series and activities related thereto. As a
consequence, the Trust does not have and is not expected to have any source of
capital resources other than the Trust Assets.
The Transferor will convey to the Trust, without recourse, its interest in
all Receivables existing on a date designated prior to the issuance of the first
Series of Certificates (the "Initial Cut-Off Date") in certain VISA and
MasterCard consumer revolving credit card Accounts (the "Initial Accounts") that
meet the criteria provided in the Pooling and Servicing Agreement for an
Eligible Account as of the Initial Cut-Off Date, and will convey to the Trust,
without recourse, its interest in all Receivables arising under such Initial
Accounts thereafter, in exchange for the net cash proceeds from the sale of such
first Series of Certificates plus the Transferor Certificate representing the
Transferor's Interest. In addition, the Transferor may convey from time to time
to the Trust, without recourse, except as provided in the Pooling and Servicing
Agreement, its interest in all Receivables existing in designated accounts
("Additional Accounts"), if any, at the close of business on the applicable
cut-off date and Receivables thereafter arising in such Additional Accounts, and
the Transferor may, from time to time, convey Participation Interests to the
Trust. The Trust Assets consist of the Receivables arising under selected credit
card accounts or other consumer revolving credit card accounts originated by
Travelers Bank & Trust, fsb, The Travelers Bank USA or affiliates of the Banks,
all monies due or to become due and all amounts received with respect thereto,
all proceeds of the Receivables, proceeds of credit insurance policies relating
to the Receivables, all monies on deposit in certain bank accounts of the Trust
and the benefits of any type of Series Enhancement. The Receivables, the
proceeds thereof and the Trust Assets do not, however, include amounts recovered
("Recoveries") from Accounts in which the Receivables have been written off as
uncollectable. The Trust Assets may also include Participation Interests. Under
the Receivables Transfer Agreements, the Transferor will have the right (subject
to certain limitations and restrictions) and, in some circumstances, under the
Pooling and Servicing Agreement will be obligated to require the Account Owners
to designate Additional Accounts to be included as Accounts and the Transferor
will convey to the Trust, pursuant to the Pooling and Servicing Agreement, its
interest in all Receivables of such Additional Accounts. See "The Pooling and
Servicing Agreement Generally--Addition of Accounts or Participation Interests."
In addition, the Transferor may, but is not obligated to, designate, from time
to time, Participation Interests or Receivables be removed from the Trust. See
"The Pooling and Servicing Agreement Generally--Removal of Accounts."
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THE BANKS' CREDIT CARD ACTIVITIES
GENERAL
The Receivables which the Banks have conveyed or will convey to the
Transferor pursuant to the respective Receivables Transfer Agreements have been
or will be, except as otherwise described in the Prospectus Supplement,
generated from transactions made by holders of selected VISA and MasterCard
credit card accounts, including regular and premium accounts, from the Travelers
Consumer Credit Card Portfolio. Both premium and regular accounts undergo the
same credit analysis, but premium accounts have higher initial credit limits
because of the higher incomes of the cardholders. In addition, premium accounts
generally offer a wider variety of services to the cardholders. Servicing of the
Travelers Consumer Credit Card Portfolio is performed primarily by the Banks;
however, certain data processing and administrative functions associated with
the servicing of the Travelers Consumer Credit Card Portfolio are currently
performed on behalf of the Banks by First Data Resources, Inc. ("FDR"). See
"Description of FDR." If FDR were to fail or become insolvent, delays in
processing and recovery of information with respect to charges incurred by
cardholders could occur, and the replacement of the services that FDR currently
provides to the Banks could be time consuming. As a result, delays in payments
to Certificateholders of any Series outstanding at such time could occur.
Set forth below is certain information relating to the activities of the
Banks. The Prospectus Supplement may amend, modify or supplement such
information. To the extent the Trust assets include any Participation Interests
or Receivables other than those of the type described herein, the Prospectus
Supplement will describe the nature and characteristics of such Participation
Interests or Receivables.
ACQUISITION AND USE OF CREDIT CARDS
Substantially all of the Banks' new accounts are generated through direct
mail and telemarketing solicitations of potential cardholders. The Banks
marketing efforts are directed towards affinity groups (such as nationwide
professional associations, fraternal organizations and affiliates of Travelers)
and individuals. The Banks utilize a number of methods to identify potential
cardholders who meet their respective credit and demographic criteria, including
acquiring lists of potential cardholders from credit bureaus and other various
sources.
Since 1995, the criteria applied by the Banks to evaluate potential
cardholders have included credit scoring using a custom model developed by the
Fair, Isaac's Companies, an independent firm experienced in developing credit
scoring models. Credit scoring evaluates a potential cardholder's credit profile
to arrive at an estimate of the associated credit risk. Credit scoring models
are developed by statistically evaluating common characteristics and their
correlation with credit risk. Prior to 1995, the Banks used generic scorecards
to evaluate applicant credit risk.
Potential cardholders must meet minimum credit and income level standards
established by the Banks to receive a specific credit limit. Cardholders not
meeting the minimum standards for the initial product offer are offered a
reduced credit limit for which they qualify or their application is declined.
Cardholders may request to have their credit line increased upon completion of a
full application. After a review of the full application and credit bureau
report, the Banks decide whether to extend additional credit. Also, the Banks
periodically initiate credit line increases for cardholders meeting minimum
standards for usage and payment history established by the Banks.
Accounts are opened with an initial term of three years. At the anniversary
date, accounts which meet certain criteria for usage and payment history are
reissued for three year terms.
Each cardholder is subject to an agreement governing the terms and
conditions of the related VISA or MasterCard account. Pursuant to each such
agreement, the Bank that owns the Account reserves the right, upon advance
notice to the cardholders to change or terminate any terms, conditions, services
or features of its VISA and MasterCard accounts at any time, including
increasing or decreasing finance charges,
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other fees and charges or minimum payment terms. The agreement with each
cardholder provides that the relevant Bank may apply such changes, when
applicable, to current outstanding balances as well as to future transactions.
However, the laws of the state in which particular cardholders reside may impact
the ability of the relevant Bank to apply changes. Under state law certain fees
and charges may be limited. See "Risk Factors--Consumer Protection Loans" and
"Certain Legal Aspects of the Receivables--Consumer Protection Laws."
A cardholder may use the credit card for either purchases, cash advances or
to transfer balances from other credit card accounts. Cardholders make purchases
when using the credit card to buy goods or services. A cash advance is made when
a credit card is used to obtain cash from a financial institution or an
automated teller machine or when the cardholder uses special drafts issued by
the relevant Bank to draw against the cardholder's credit line. The Banks do not
generally limit the amount of credit available for cash advances on new accounts
other than the total credit line available for such account.
When a cardholder uses the credit card issued by a bank under contract with
VISA or MasterCard (a "member bank"), the seller of goods or services or the
provider of cash advances generally sells the resulting receivable to a merchant
bank, which in turn sells the receivable (usually indirectly, through a clearing
corporation and its agent bank) to the member bank for its face amount less
interchange and other fees. The member bank is usually required by its contracts
with VISA and MasterCard to purchase and pay daily for all receivables generated
by use of credit cards issued by the member bank. If the member bank were to
fail to perform such obligations, VISA or MasterCard would have the right to
cancel the credit cards issued by the member bank.
BILLING AND PAYMENTS
Each Bank, using FDR as its service bureau, generates and mails to
cardholders monthly statements summarizing account activity. Cardholders receive
a grace period on purchases of 20 to 25 days. Cardholders must make a minimum
monthly payment equal to 1/50th of their total account balance (which includes
their principal balance and finance and other charges). If such amount is less
than a stated minimum monthly payment (generally $15), the stated minimum
monthly payment is due.
All fees, charges and credit insurance premiums assessed by the Banks are
automatically charged to an account and are included in the account balance at
the end of each billing cycle. The finance charges assessed by the Banks are
calculated by multiplying the average daily balances of cash advances and
previously billed unpaid purchases in an account by the applicable periodic
rate. Finance charges are not assessed in most circumstances on purchases if all
balances shown in the billing statement are paid by the due date. Under certain
conditions related to customer performance, the Banks may immediately convert
the Annual Percentage Rate applicable to existing and future balances to a
higher rate.
The Banks primarily offer cards to customers without an annual fee. The
Banks also assess miscellaneous transaction fees, including cash advance and
draft fees, late and over limit charges, and returned check, returned draft, and
draft stop payment charges. Such miscellaneous fees are not expected to
constitute a material portion of Finance Charge Receivables.
Certain data processing and administrative functions associated with the
servicing of the Travelers Consumer Credit Card Portfolio are currently being
performed on behalf of the Banks by FDR. FDR is located in Omaha, Nebraska and
provides computer data processing services primarily to the bankcard industry.
FDR is a subsidiary of First Data Corp.
DELINQUENCIES
Each account is billed monthly on or about the same day of the month. An
account is "contractually delinquent" if the minimum payment indicated on the
cardholder's statement is not received by the due date. For purposes of
determining the delinquency of an account, the period from one monthly billing
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statement to the next is considered a period of 30 days, regardless of the
actual number of days elapsed. Efforts to collect contractually delinquent
credit card receivables currently are made by the personnel of Commercial Credit
Corporation, on behalf of the Banks, who are dedicated to the servicing of the
portfolios of the Banks. Collection activities include statement messages,
formal collection letters and telephone calls. Collection personnel initiate
telephone contact with cardholders as early as 5 days contractually delinquent.
The intensity at which collection activity is pursued depends on the risk the
account presents to the Bank that owns such account which is determined by
credit bureau scoring, behavioral scoring and adaptive control techniques. In
the event that initial telephone contact fails to resolve the delinquency, the
Bank that owns such account continues to contact the cardholder by telephone and
by mail. Although such arrangements are made infrequently, the Banks may also
enter into arrangements with cardholders to extend or otherwise change payment
schedules based on demonstrated financial need. Delinquency levels are regularly
monitored by management of the Banks. Accounts are charged off in the month
following the date in which they bill 180 days contractually delinquent. Non-
bankrupt accounts are scored using a custom recovery score. Accounts with a low
collectibility score are assigned to outside collection agencies within 30 days.
Each of the Banks may continue to employ its standard collection procedures for
up to one year for those accounts which do not receive a low collectibility
score. The Banks charge-off accounts within 30 days after receipt of official
notice that the customer has died (a death certificate) or of discharge in
bankruptcy, and within 90 days after receipt of any notice of fraudulent charges
within such account. The credit evaluation, servicing and charge-off policies
and collection practices of the Banks may change from time to time in accordance
with each Bank's business judgment and applicable laws and regulations.
Information with respect to the delinquency and loss experience of the
consumer credit card portfolio of the Account Owners is contained in the
Prospectus Supplement. Such information sets forth delinquencies grouped by the
number of days Receivables are delinquent and the percentage of the portfolio
which is delinquent. The loss experience information will show the Receivables
outstanding, the charge-offs in dollars and as a percentage of the Receivables
outstanding. In addition, the Prospectus Supplement will include information on
the composition of the Trust Portfolio by period of delinquency.
INTERCHANGE
Creditors participating in VISA and MasterCard systems receive certain fees
("Interchange") as partial compensation for processing transactions, taking
credit risk, absorbing fraud losses and funding receivables for a limited period
prior to initial billing. Under the VISA and MasterCard systems, a portion of
the Interchange in connection with cardholder charges for merchandise and
services is passed from banks which clear the transactions for merchants to
credit card-issuing banks. Interchange approximates 1.4% of the transaction
amount. VISA and MasterCard may from time to time change the amount of
Interchange reimbursed to banks issuing their credit cards. The Finance Charge
Receivables transferred to the Trust do not and are currently not anticipated to
include Interchange.
COMPETITION
The bank credit card industry is highly competitive. There is increased
competitive use of advertising, target marketing and pricing competition in
interest rates and annual cardholder fees as both traditional and new credit
card issuers seek to expand or to enter the market. The Banks issue VISA and
MasterCard credit cards to customers nationwide competing with certain money
center banks and other large nationwide issuers, as well as with regional and
local banks, savings and loan associations, and other depository institutions,
many of whom have sizable branch systems through which credit cards are marketed
to the institutions' customer bases. Many of these competitors have larger
credit card portfolios than either Bank. Certain major credit card issuers are
more aggressive than the Banks regarding the solicitation of new accounts
through direct mail and telemarketing. The Banks have primarily responded to
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the increased competition by marketing cards to affinity groups (including
affiliates of Travelers) and by offering promotional rates on new accounts and
on balance transfers from existing accounts.
The Trust will be dependent upon the Banks' continued ability to generate
new Receivables. The Banks' ability to compete in the credit card industry will
directly affect its ability to generate new Receivables. If the rate at which
new Receivables are generated declines significantly, a Pay Out or Reinvestment
Event with respect to a Series could occur and the Rapid Amortization Period or
Rapid Accumulation Period with respect to such Series could commence.
THE BANKS
Each of the Banks is a wholly-owned subsidiary of Commercial Credit Company
("Commercial Credit"), which is a wholly-owned subsidiary of Travelers Group
Inc. ("Travelers"). Travelers Bank & Trust, fsb is a federally-chartered savings
bank granted a charter as such on November 25, 1997 by conversion of The
Travelers Bank, a state-chartered bank whose predecessor had been initially
formed in February 1963. The Travelers Bank USA is a Delaware state-chartered
bank formed in September 1989.
The Travelers Bank USA must undergo periodic examination, by the Delaware
State Bank Commissioner and [each] Bank must undergo periodic examination by the
FDIC and is subject to regulations relating to capitalization, leverage,
reporting, dividends and permitted assets and liability products. Travelers Bank
& Trust, fsb, is subject to regulation and examination by the Office of Thrift
Supervision. The Travelers Bank USA is a credit card bank. The Banks are also
subject to the Community Reinvestment Act, which assesses the records of the
Banks in helping to meet the credit needs in the delineated community of the
Banks including low and moderate income neighborhoods, consistent with a safe
and sound banking operation. In addition, a number of federal and state consumer
protection laws and regulations are applicable to the Banks including the Truth
in Lending Act, which requires consumer disclosure of the cost of credit and
governs billing dispute resolution, the Equal Credit Opportunity Act which
prohibits discrimination in any aspect of a credit transaction based on race,
color, national origin, sex, marital status, age, income from public assistance
programs and exercise of rights under the Consumer Protection Act and the Fair
Credit Reporting Act, which is aimed at ensuring the accuracy and fairness of
the mechanism by which consumer credit and other information on consumers is
assembled and evaluated. Each Bank's deposits are insured by the FDIC.
The principal executive office of Travelers Bank & Trust, fsb is located at
Christiana Corporate Center, 100 Commerce Drive, Newark, Delaware 19713
(telephone: (302) 454-5500). The principal executive office of The Travelers
Bank USA is located at Christiana Corporate Center, 100 Commerce Drive, Newark,
Delaware 19713 (telephone: (302) 454-5500).
THE TRANSFEROR
CC Credit Card Corporation is a Delaware corporation incorporated on
November 7, 1997. Its principal executive office is located at 388 Greenwich
Street, New York, New York 10013 and its telephone number is (212) 816-0300. The
Transferor is a subsidiary of Commercial Credit Company. The Prospectus
Supplement for each Series will provide additional information relating to the
Transferor.
THE ACCOUNTS
The Receivables will arise in certain credit card accounts designated by the
Banks pursuant to the respective Receivables Transfer Agreements (the "Trust
Portfolio") and selected from the total portfolio of VISA and MasterCard
accounts of Travelers Bank & Trust, fsb and The Travelers Bank USA (the
"Travelers Consumer Credit Card Portfolio"). An account in the Travelers
Consumer Credit Card Portfolio must be an Eligible Account to be selected for
inclusion in the Trust Portfolio.
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For information concerning the origination of accounts in the Travelers
Consumer Credit Card Portfolio see "The Banks' Credit Card Activities." For
Information concerning the designation of Accounts and the representations and
warranties made by the Account Owners, see "The Receivables Transfer
Agreements." Under the Receivables Transfer Agreements, the Account Owners have
broad discretion in selecting accounts to be designated as accounts from which
Receivables will be transferred. The primary restriction is that the accounts
qualify as "Eligible Accounts." See "The Pooling and Servicing Agreement
Generally--Representations, Warranties and Covenants" for a description of
Eligible Accounts.
The Prospectus Supplement relating to a Series will provide certain
information about the Trust Portfolio as of the date specified. Such information
will include the amount of Principal Receivables, the amount of Finance Charge
Receivables, the range of principal balances of the Accounts and the average
thereof, the range of credit lines of the Accounts and the average thereof, the
range of ages of the Accounts and the average thereof, information with respect
to the geographic distribution of the Accounts, the types of Accounts and
delinquency statistics relating to the Accounts. The Prospectus Supplement will
also include information concerning the Travelers Consumer Credit Card Portfolio
including delinquency and loss experience for the Travelers Consumer Credit Card
Portfolio.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued in Series pursuant to the Pooling and
Servicing Agreement (as supplemented by a Series Supplement relating to such
Series) entered into among CC Credit Card Corporation, as Transferor, Travelers
Bank & Trust, fsb, as Servicer of the Accounts and the Receivables, and The Bank
of New York, as Trustee for the Certificateholders of each Series. Pursuant to
the Pooling and Servicing Agreement, the Transferor may execute further Series
Supplements among the Transferor, the Servicer and the Trustee in order to issue
additional Series. See "--New Issuances." The Trustee will provide a copy of the
Pooling and Servicing Agreement (without exhibits or schedules), including any
Series Supplements, to Certificateholders of any Series without charge upon
written request. A copy of the form of Pooling and Servicing Agreement has been
filed with the Commission as an exhibit to the Registration Statement of which
this Prospectus forms a part.
The following summaries describe certain provisions common to each Series.
Information specific to a Series will be contained in the related Prospectus
Supplement. The following summaries together with information included elsewhere
in this Prospectus and the information with respect to a specific Series
contained in the related Prospectus Supplement describes the material terms of
the Certificates. Such summaries do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, the provisions of the
Pooling and Servicing Agreement and the Series Supplement relating to each
Series. When particular provisions or terms used in the Pooling and Servicing
Agreement or any Series Supplement are referred to herein, such provisions or
terms shall be as specified in the Pooling and Servicing Agreement or Series
Supplement.
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GENERAL
The Pooling and Servicing Agreement does not limit the amount of
Certificates that can be issued thereunder and provides that any Series may be
issued thereunder up to the aggregate principal amount specified in the related
Series Supplement that may be entered into among the Transferor, the Servicer
and the Trustee. Each Series will consist of one or more Classes, one or more of
which may be floating-rate Certificates or fixed-rate Certificates or other type
of Certificates as specified in the related Prospectus Supplement. A Series may
include a Class or Classes that are subordinated in right of payment of
principal and/or interest to another Class or other Classes of such Series or
any other Series. If so specified in a related Prospectus Supplement, such
subordinated Class or Classes may be offered hereby and by the related
Prospectus Supplement or may be retained by the Transferor or an affiliate of
the Transferor.
The Certificates of any Series will generally represent the right to
receive, to the extent of amounts then payable on the applicable Series of
Certificates, from the Trust Assets, a floating percentage (in the case of
Principal Receivables during the Revolving Period of a Series and Finance Charge
Receivables and Defaulted Receivables during the Revolving Period and the
Amortization Period of a Series) or a percentage calculated as a fraction with a
fixed numerator, subject to certain exceptions (in the case of Principal
Receivables during any Amortization Period for a Series) (each, the "Series
Percentage") of all cardholder payments on the Receivables.
The Transferor holds the interest in the Principal Receivables (the
"Transferor Amount") not represented by the Certificates of all outstanding
Series. The Transferor holds an undivided interest in the Trust (the
"Transferor's Interest"), including the right to a percentage (the "Transferor
Percentage") of all cardholder payments on the Receivables.
During the Revolving Period for any Series, the Invested Amount for such
Series will generally remain constant except in certain limited circumstances
(such as a Series with a Pre-Funding Account) as specified in the related
Prospectus Supplement. See "The Pooling and Servicing Agreement
Generally--Defaulted Receivables; Rebates and Fraudulent Charges." The amount of
Principal Receivables, however, will vary each day as new Principal Receivables
are created and others are paid. The Transferor Amount will fluctuate daily,
therefore, to reflect the changes in the amount of the Principal Receivables. In
addition, the Transferor Amount will be reduced by the effect of the Discount
Percentage in effect from time to time. When a Series is amortizing, the
Invested Amount for such Series will generally decline for each Monthly Period
as cardholder payments of Principal Receivables allocated to such Series are
collected and held for distribution to the Certificateholders or deposited in a
Series Account for the benefit of such Series or a Class of such Series for
payment to the applicable Certificateholders when due. As a result, the
Transferor Amount will generally increase each month to reflect the reductions
in the Invested Amount of a Series and will also change to reflect the
variations in the amount of Principal Receivables.
Unless otherwise specified in the related Prospectus Supplement,
Certificates of each Series initially will be represented by certificates
registered in the name of the nominee of DTC (together with any successor
depository selected by the Transferor, the "Depository") except as set forth
below. Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, beneficial interests in the Certificates
will be available for purchase in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof in book-entry form only. The Transferor
has been informed by DTC that DTC's nominee will be Cede & Co. ("Cede").
Accordingly, Cede is expected to be the holder of record of each Series of
Certificates. No Certificate Owner acquiring an interest in the Certificates
will be entitled to receive a certificate representing such person's interest in
the Certificates. Unless and until Definitive Certificates are issued for any
Series under the limited circumstances described herein, all references herein
to actions by Certificateholders shall refer to actions taken by DTC upon
instructions from its Participants (as defined below), and all references herein
to distributions, notices, reports and statements to Certificateholders shall
refer to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Certificates, as the case may be, for distribution to
Certificate
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Owners in accordance with DTC procedures. See "--Book-Entry Registration" and
"--Definitive Certificates."
If so specified in the Prospectus Supplement relating to a Series,
application will be made to list the Certificates of such Series, or all or a
portion of any Class thereof, on the Luxembourg Stock Exchange or any other
specified exchange.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, Certificateholders may hold their
Certificates through DTC (in the United States) or Cedel or Euroclear (in
Europe) if they are participants of such systems.
Cede, as nominee for DTC, will hold the global Certificates. Cedel and
Euroclear will hold omnibus positions on behalf of the Cedel Participants and
the Euroclear Participants, respectively, through customers' securities accounts
in Cedel's and Euroclear's names on the books of their respective depositaries
(collectively, the "Depositaries") which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of DTC.
Unless and until Definitive Certificates are issued, it is anticipated that
the only Certificateholder of the Certificates will be Cede as nominee of DTC.
No Certificate Owner acquiring an interest in Certificates of a Series which
have been issued in book-entry form will be entitled to receive a certificate
representing such person's interest in the Certificates of such Series unless
and until Definitive Certificates are issued under the limited circumstances
described herein. All references herein to actions by Certificateholders of a
Series shall refer (unless Definitive Certificates are so issued with respect to
such Series) to actions taken by DTC, Cedel or Euroclear upon instructions from
DTC Participants, Cedel Participants or Euroclear Participants, respectively,
and all references herein to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports and statements
to DTC or Cede, as the registered holder of the Certificates of such Series, as
the case may be, for distribution to Certificate Owners of such Series in
accordance with DTC procedures. See "--Definitive Certificates." Distributions
will be made to DTC in immediately available funds.
DTC is a limited-purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York UCC, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. DTC was created to hold securities for its participating
organizations ("Participants") and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers (including the Underwriters), banks, trust companies and clearing
corporations and may include certain other organizations. Indirect access to the
DTC system also is available to others ("Indirect Participants") such as banks,
brokers, dealers and trust companies that clear through, or maintain a custodial
relationship with, Participants, either directly or indirectly.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC (other than Cedel Participants and Euroclear Participants), on the
one hand, and directly or indirectly through Cedel Participants or Euroclear
Participants, on the other, will be effected in DTC in accordance with DTC rules
on behalf of the relevant European international clearing system by its
Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international
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clearing system by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its Depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Cedel Participants
and Euroclear Participants may not deliver instructions directly to the
Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participant or Euroclear Participant on such business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC.
Certificate Owners of a Series that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Certificates of such Series may do so only through
Participants and Indirect Participants. In addition, Certificate Owners of a
Series will receive all distributions of principal of and interest on the
Certificates of such Series from the Paying Agent through the Participants who
in turn will receive them from DTC. Under a book-entry system, Certificate
Owners of a Series may experience some delay in their receipt of payments, since
such payments will be forwarded by the Trustee to Cede, as nominee for DTC. DTC
will forward such payments to its Participants, which thereafter will forward
the payments to Indirect Participants or Certificate Owners of such Series.
Certificate Owners of a Series will not be recognized by the Trustee as
Certificateholders of such Series, as such term is used in the Pooling and
Servicing Agreement, and Certificate Owners of a Series will only be permitted
to exercise the rights of Certificateholders of such Series indirectly through
DTC and its Participants, who in turn will exercise the rights of
Certificateholders of such Series through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Certificates of a Series and is
required to receive and transmit distributions of principal of and interest on
the Certificates of such Series. Participants and Indirect Participants with
which Certificate Owners of a Series have accounts with respect to the
Certificates of such Series similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective Certificate
Owners. Accordingly, although Certificate Owners of a Series will not possess
Certificates of such Series, such Certificate Owners will receive payments and
will be able to transfer their interests.
Because DTC may only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Certificate
Owner of a Series to pledge Certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Servicer that it will take any action permitted to be
taken by a Certificateholder of a Series under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose account
with DTC the Certificates of such Series are credited. Additionally, DTC has
advised the Servicer that it will take such actions with respect to specified
percentages of the applicable Investor Amount only at the direction of and on
behalf of Participants whose holdings include undivided interests that
constitute such specified percentages. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are taken
on behalf of Participants whose holdings include such undivided interests.
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Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the clearance
and settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters of any Series
of Certificates. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for participants
of the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 32 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangement for
cross-market transfers with DTC described above. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office
(the "Euroclear Operator" or "Euroclear"), under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the underwriters of
any Series of Certificates. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial relationship
with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Federal Income Tax Consequences."
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Cedel or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Certificateholder under a related agreement on behalf
of a Cedel Participant or Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depositary's ability to effect
such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Certificates among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
Book-entry Certificates of a Series will be re-issued in fully registered,
certificated form ("Definitive Certificates") to Certificate Owners of such
Series or their respective nominees rather than to DTC or its nominee only if
(i) the Transferor advises the Trustee in writing that DTC is no longer willing
or able properly to discharge its responsibilities as Depository with respect to
any Class of Certificates of such Series, and the Trustee or the Transferor is
unable to locate a qualified successor, (ii) 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 DTC, or (iii) after the occurrence of a
Servicer Default, Certificate Owners of such Series or Class evidencing more
than 50% of the aggregate unpaid principal amount of such Series or Class advise
the Trustee and DTC through Participants in writing that the continuation of a
book-entry system with respect to the Certificates of such Series or Class
through DTC (or a successor thereto) is no longer in the best interest of the
Certificate Owners of such Certificates.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates of such Series. Upon
surrender by DTC of the definitive certificates representing the Certificates of
such Series or Class and instructions for re-registration, the Transferor will
execute and the Trustee will authenticate and deliver such Certificates as
Definitive Certificates, and thereafter the Trustee will recognize the holders
of such Definitive Certificates as holders under the Pooling and Servicing
Agreement ("Holders").
Distribution of principal and interest on the Definitive Certificates of a
Series will be made by the Paying Agent for such Series directly to Holders of
such Series in accordance with the procedures set forth herein and in the
Pooling and Servicing Agreement. Interest payments and any principal payments on
each Distribution Date will be made to Holders in whose names the Definitive
Certificates were registered at the close of business on the related Record Date
for a Series. Distributions will be made by check mailed to the address of such
Holder as it appears on the register maintained by the Trustee. The final
payment on any Certificate (whether Definitive Certificates or the Certificates
registered in the name of Cede representing the Certificates), however, will be
made only upon presentation and surrender of such Certificate at the office or
agency specified in the notice of final distribution to respective
Certificateholders. The Trustee will provide such notice to registered
Certificateholders of such Series not later than the fifth day of the month of
such final distribution.
Definitive Certificates of a Series will be transferable and exchangeable at
the offices of the Transfer Agent and Registrar for such Series. No service
charge will be imposed for any registration of transfer or exchange, but the
Transfer Agent and Registrar of such Series may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
THE TRANSFEROR CERTIFICATE; ADDITIONAL TRANSFERORS
The Pooling and Servicing Agreement provides that the Transferor may
surrender the Transferor Certificate to the Trustee in exchange for a newly
issued Transferor Certificate and one or more additional certificates (each, a
"Supplemental Certificate") for transfer or assignment to a person designated by
the Transferor upon the execution and delivery of a supplement to the Pooling
and Servicing Agreement
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(which supplement will be subject to the amendment section of the Pooling and
Servicing Agreement to the extent that it amends any of the terms of the Pooling
and Servicing Agreement; see "The Pooling and Servicing Agreement Generally --
Amendments"); provided, that (a) the Transferor shall have given written notice
to each Rating Agency of such exchange, (b) the Transferor Amount (excluding the
interest represented by any Supplemental Certificate) shall not be less than 2%
of the total amount of Principal Receivables as of the date of, and after giving
effect to, such exchange and (c) if any Series of Certificates are outstanding
that were characterized as debt at the time of their issuance, the Transferor
shall have delivered to the Trustee and each Rating Agency a Tax Opinion, dated
the date of such exchange (or transfer or exchange as provided below), with
respect thereto. Any transfer or exchange of a Supplemental Certificate is
subject to the conditions set forth in clauses (b) and (c) above.
The Transferor Certificate (or any interest therein) may be transferred to
an entity that is a member of the "affiliated group" of which Travelers Group
Inc. is the "common parent" (as such terms are defined in Section 1504(a) of the
Code); provided, that (i) the Transferor shall have delivered to the Trustee and
each Rating Agency a Tax Opinion, and (ii) any such transferee will be deemed to
be a "Transferor" for all purposes of the provisions of the Pooling and
Servicing Agreement.
The Transferor may designate affiliates of Commercial Credit Company to be
included as a Transferor ("Additional Transferors") under the Pooling and
Servicing Agreement (by means of an amendment to the Pooling and Servicing
Agreement that will not require the consent of any Certificateholder; see "The
Pooling and Servicing Agreement Generally --Amendments") and, in connection with
such designation, the Transferor shall surrender the Transferor Certificate to
the Trustee in exchange for a newly issued Transferor Certificate modified to
reflect such Additional Transferor's interest in the Transferor's Interest;
provided, however, that (i) the conditions set forth in the preceding two
paragraphs with respect to the issuance of a Supplemental Certificate or the
transfer of the Transferor Certificate, as applicable, shall have been satisfied
with respect thereto prior to such designation and exchange and (ii) any
applicable conditions described in "The Pooling and Servicing Agreement
Generally -- Addition of Accounts" shall have been satisfied with respect to the
transfer of Receivables or Participation Interests by any Additional Transferor
to the Trust. Following the inclusion of an Additional Transferor, the
Additional Transferor will be treated in the same manner as a Transferor and
each Additional Transferor generally will have the same obligations and rights
as the initial Transferor described herein.
INTEREST PAYMENTS
Each Class of a Series will accrue interest at the rate per annum specified
in, or in the manner determined in, the related Prospectus Supplement
(calculated on the basis specified in the related Prospectus Supplement).
Interest on all Certificates will be due and payable on the Distribution Dates
specified in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, interest for a Class of a Series will be
calculated based on the outstanding principal balance of such Class at the end
of the rate determination period preceding the applicable Distribution Date.
To the extent provided in the related Prospectus Supplement, a Series may
include one or more Classes of floating-rate Certificates. The interest rate on
floating-rate Certificates will be a variable or adjustable rate. It is the
Transferor's present intention, subject to changing market conditions, that the
floating interest rate formula or index be based on an established financial
index in the national or international financial markets. The Distribution Dates
for floating-rate Certificates will be set forth in the related Prospectus
Supplement and need not be the same as the Distribution Dates for the other
Certificates of such Series, but may be either more or less frequent. For each
Class of floating-rate Certificates, the related Prospectus Supplement will set
forth the initial floating-rate certificate interest rate (or the method of
determining it), the dates or the method for determining the dates on which the
floating-rate certificate interest rate is adjusted, and the formula, index or
other method by which such interest rate is determined on such dates.
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PRINCIPAL PAYMENTS
Unless otherwise specified in the related Prospectus Supplement, the
Revolving Period for a Class of Certificates begins on the Relevant Closing Date
and ends on the day before an Amortization Period begins for such Class. On each
Distribution Date with respect to the Revolving Period, collections of Principal
Receivables allocable to the Certificateholders' Interest of a Series will,
subject to certain limitations, be paid to the holders of the Transferor
Certificates, to amortizing or accumulating Series or deposited in the Excess
Funding Account. After an Amortization Period begins with respect to any Class
of Certificates, collections of Principal Receivables allocable to such Class
will no longer be paid to the holders of the Transferor Certificates, to
amortizing or accumulating Series or deposited in the Excess Funding Account but
will generally either be deposited in the Collection Account or a Series Account
to be distributed to Certificateholders on a date or dates specified in the
related Prospectus Supplement or paid to such Certificateholders on the
Distribution Dates specified in the related Prospectus Supplement following the
commencement of the Amortization Period. To the extent that collections of
Principal Receivables are available, subject to any controlled distribution
amount or controlled deposit amount or other limitation set forth in the related
Prospectus Supplement, payments of principal will be paid to Certificateholders
of a Class until the Investor Amount of such Class has been paid in full;
provided, that if one or more Classes is subordinated in right of payment of
principal to another Class or Classes, the Certificateholders of such
subordinated Class or Classes will, to the extent provided in the related
Prospectus Supplement, receive payment only after the Investor Amount of the
senior Class or Classes has been paid in part or in full. The extent of
subordination of a Class of subordinated Certificates may be limited as
described in the related Prospectus Supplement.
Funds on deposit in the Collection Account or Series Account may be subject
to a guaranteed rate agreement or guaranteed investment contract or other
mechanism specified in the related Prospectus Supplement intended to assure a
minimum rate of return on the investment of such funds. In order to enhance the
likelihood of the payment in full of the principal amount of a Class of
Certificates at the end of an Accumulation Period, such Class of Certificates
may be subject to a maturity guaranty or other similar mechanism specified in
the related Prospectus Supplement.
SHARED PRINCIPAL COLLECTIONS AND TRANSFEROR PRINCIPAL COLLECTIONS
On each Distribution Date, (a) the Servicer will allocate Shared Principal
Collections 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 will withdraw from the Collection Account and pay to the holders of the
Transferor Certificates an amount equal to the excess, if any, of (x) the
aggregate amount for all outstanding Series of collections of Principal
Receivables which the related Series Supplements specify are to be treated as
"Shared Principal Collections" for such Distribution Date over (y) the aggregate
amount for all outstanding Principal Sharing Series which the related Series
Supplements specify are "Principal Shortfalls" for such Distribution Date;
provided, however, that if on any Distribution Date the Transferor Amount is
less than or equal to the Required Transferor Amount or if the aggregate amount
of Principal Receivables is less than the Required Principal Balance, the
Servicer will not distribute to the holders of the Transferor Certificates any
Shared Principal Collections that otherwise would be distributed to the holders
of the Transferor Certificates, but will deposit such funds in the Excess
Funding Account. There can be no assurance that there will be any Shared
Principal Collections with respect to any Monthly Period.
The Servicer will determine the amount of collections of Principal
Receivables for any Monthly Period allocated to the Transferor's Interest but
not due to the holder of any Supplemental Certificate and other amounts payable
to the Transferor with respect to collections of Principal Receivables,
regardless of whether such Collections were initially allocated to the
Transferor or any Series, plus the amount of Excess Transferor Finance Charge
Collections, if applicable, remaining after application to amounts payable from
collections of Finance Charge Receivables (collectively, "Shared Transferor
Principal Collections"). The Servicer will allocate the Shared Transferor
Principal Collections to cover any Principal Shortfalls that have
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not been covered out of the Shared Principal Collections allocated to each
Series that has been designated in the applicable Series Supplement as being
entitled to receive Shared Transferor Principal Collections. If Principal
Shortfalls remaining after the application of Shared Principal Collections
exceed Shared Transferor Principal Collections for any Monthly Period, Shared
Transferor Principal Collections will be allocated pro rata among each Series
which in accordance with the Series Supplement for such Series is designated as
being entitled to receive Shared Transferor Principal Collections. Shared
Transferor Principal Collections permit coverage of Principal Shortfalls
remaining after the application of Shared Principal Collections by using
collections that would have been paid to the Transferor and in certain
circumstances may allow an Amortization Period to be shortened. There can be no
assurance that there will be any Shared Transferor Principal Collections with
respect to any Monthly Period.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
Collections of Finance Charge Receivables allocable to any Series in excess
of the amounts necessary to make required payments with respect to such Series
may, if specified in the related Series Supplement, be applied to cover
shortfalls, if any, with respect to amounts payable from collections of Finance
Charge Receivables allocable to any other Series then outstanding as provided in
the related Series Supplement.
If specified in the Prospectus Supplement for a Series, collections of
Finance Charge Receivables allocable to the Transferor's Interest in excess of
the amounts necessary to make required payments with respect to any Supplemental
Certificates and all other amounts otherwise payable to the Transferor with
respect to collections of Finance Charge Receivables regardless of whether such
collections were initially allocated to the Transferor or any Series (the
"Excess Transferor Finance Charge Collections") will be applied to cover any
shortfalls (after giving effect to the application of Excess Finance Charge
Collections) with respect to amounts payable from collections of Finance Charge
Receivables allocable to each Series designated in the applicable Series
Supplement as being entitled to receive Excess Transferor Finance Charge
Collections, pro rata based upon the amount of the shortfall (after giving
effect to the application of Excess Finance Charge Collections), if any, with
respect to each other Series designated in the applicable Series Supplement as
being entitled to receive Excess Transferor Finance Charge Collections. In all
cases, any Excess Transferor Finance Charge Collections remaining after covering
shortfalls with respect to all designated Series will be treated as Shared
Transferor Principal Collections. Excess Transferor Finance Charge Collections
permit coverage of shortfalls with respect to amounts payable from collections
of Finance Charge Receivables and Excess Finance Charge Collections allocable to
a Series by using collections of Finance Charge Receivables which would
otherwise be paid to the Transferor.
COMPANION SERIES
If specified in the Prospectus Supplement relating to a Series, a Prior
Series may be paired with a later issued Series (each, a "Companion Series"),
such that a reduction in the Invested Amount of the Prior Series results in an
increase in the Invested Amount of the Companion Series. In general, a Series
may be issued as a Companion Series to enable the Trust to fund the amount by
which the Prior Series has amortized and will amortize in the future. If a Pay
Out Event or Reinvestment Event occurs with respect to the Prior Series or the
Companion Series when the Prior Series is in an Amortization Period, the Series
Percentage for the allocation of collections of Principal Receivables for the
Prior Series may be reset to a lower percentage as set forth in the Prospectus
Supplement for the Prior Series and the Amortization Period for the Prior Series
may be lengthened. The full extent by which the Amortization Period for the
Prior Series may be lengthened will be dependent on a variety of factors and
will not be readily determinable by the extent by which the Series Percentage
has been changed. See "Risk Factors--Timing of Principal Payments Other Than at
Expected Maturity" in the Prospectus and "Maturity Assumptions" in the
Prospectus Supplement for a discussion of such factors.
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GROUPS
Any Series offered hereby may be included in a group of Series (together, a
"Group"). The Prospectus Supplement relating to a Series will specify whether
such Series will be included in a Group and will identify any previously issued
Series included in such Group. If specified in the related Prospectus
Supplement, the Certificateholders of a Series within a Group or any Class
thereof may be entitled to share in their pro rata portion of excess collections
of Finance Charge Receivables generated by other Series within such Group to
cover certain shortfalls in amounts payable from collections of Finance Charge
Receivables allocated to such Group.
NEW ISSUANCES
The Pooling and Servicing Agreement authorizes the Transferor to execute and
direct the Trustee to authenticate and deliver three types of certificates: (i)
one or more Series of Certificates which are transferable and have the
characteristics described below, (ii) a Transferor Certificate, evidencing the
Transferor's Interest in the Trust, which will initially be held by the
Transferor and which is transferable in certain circumstances to members of the
affiliated group of which Travelers Group Inc. is the ultimate common parent and
(iii) Supplemental Certificates delivered in exchange for a portion of the
Transferor Certificate under certain circumstances described in the Pooling and
Servicing Agreement (each, a "Supplemental Certificate," and, together with the
Transferor Certificate, the "Transferor Certificates"). The Transferor
Certificate and the Supplemental Certificates represent the ownership interest
in the remainder of the Trust Assets not allocated pursuant to the Pooling and
Servicing Agreement to the Certificateholders' Interest, including certain
rights to receive collections with respect to the Receivables and other amounts
pursuant to the Pooling and Servicing Agreement (the "Transferor's Interest").
The Series Supplement for a Series will specify the following principal terms
with respect to any new Series: (i) its name or designation, (ii) its initial
Investor Amount and Series Investor Amount (or method for calculating such
amounts), (iii) its certificate rate (or method for the determination thereof),
(iv) the payment date or dates and the date or dates from which interest shall
accrue, (v) the method for allocating collections to Certificateholders of such
Series, (vi) the designation of any Series Accounts to be used by such Series
and the terms governing the operation of any such Series Accounts, (vii) the
method of calculating the servicing fee with respect thereto, (viii) the terms
of any form of Series Enhancement with respect thereto, (ix) the terms on which
the Certificates of such Series may be exchanged for Certificates of another
Series, repurchased by the Transferor or remarketed to other investors, (x) the
Stated Series Termination Date of such Series, (xi) the number of Classes of
such Series and, if such Series consists of more than one Class, the rights and
priorities of each such Class, (xii) the extent to which the Certificates of
such Series will be issuable in temporary or permanent global form (and, in such
case, the depositary for such global Certificate or Certificates, the terms and
conditions, if any, upon which such global Certificate may be exchanged, in
whole or in part, for Definitive Certificates, and the manner in which any
interest payable on a temporary or global Certificate will be paid), (xiii)
whether such Certificates may be issued as bearer certificates and any
limitations imposed thereon, (xiv) the priority of such Series with respect to
any other Series, (xv) the Group, if any, to which such Series belongs, (xvi)
whether or not such Series is a Principal Sharing Series, and (xvii) any other
terms of such Series (all such terms the "Principal Terms" of such Series). None
of the Transferor, the Servicer, the Trustee or the Trust is required or intends
to obtain the consent of any Certificateholder of any outstanding Series to
issue any additional Series. However, as a condition of a New Issuance, the
Rating Agency Condition must be satisfied and if any outstanding Series was
characterized as debt at the time of its issuance, the Transferor must deliver a
Tax Opinion. The Transferor may offer any Series under a Disclosure Document in
transactions either registered under the Act, or exempt from registration
thereunder, directly, through one or more underwriters or placement agents, in
fixed-price offerings or in negotiated transactions or otherwise. Any such
Series may be issued in fully registered or book-entry form in minimum
denominations determined by the Transferor.
The Pooling and Servicing Agreement permits New Issuances such that each
Series has a period during which amortization or accumulation of the principal
amount thereof is intended to occur which may
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have a different length and begin on a different date than such periods for any
other Series. Further, one or more Series may be in their Amortization Periods
while other Series are not. Thus, certain Series may not be amortizing or
accumulating, while other Series are amortizing or accumulating. Moreover, one
or more Series, or Classes of a Series, may have the benefits of forms of Series
Enhancement different from the forms of Series Enhancement available with
respect to another Class or Classes of any other Series. Under the Pooling and
Servicing Agreement, the Trustee will hold any form of Series Enhancement only
on behalf of the Certificateholders of the Series (or Class) with respect to
which it relates. Collections allocated to Finance Charge Receivables not used
to pay interest on the Certificates will be allocated as provided in the related
Series Supplement. There is no limit to the number of New Issuances that the
Transferor may perform under the Pooling and Servicing Agreement. The Trust will
terminate only as provided in the Pooling and Servicing Agreement.
Under the Pooling and Servicing Agreement and pursuant to a Series
Supplement, a New Issuance may occur only upon satisfaction of the following
conditions: (i) on or before the fifth day immediately preceding the Relevant
Closing Date, the Transferor shall have given the Trustee and the Servicer
notice of such issuance and its date; and on or before the tenth day immediately
preceding the Relevant Closing Date, the Transferor shall have given each Rating
Agency notice of such issuance and its date and (ii) the Transferor shall have
delivered to the Trustee (a) a related Series Supplement specifying the
Principal Terms of the new Series, (b) any agreement relating to the Series
Enhancement, (c) written confirmation from each Rating Agency that the New
Issuance will not result in the Rating Agency reducing or withdrawing its rating
of any outstanding Series or Class (the "Rating Agency Condition"), (d) an
officer's certificate from the Transferor stating that the Transferor reasonably
believes that such issuance will not cause a Pay Out Event or Reinvestment Event
to occur with respect to any Series, and (e) a Tax Opinion. Upon satisfaction of
such conditions, the Trustee will execute the related Series Supplement and
authenticate the Certificates of the new Series upon execution thereof by the
Transferor.
THE RECEIVABLES TRANSFER AGREEMENTS
The following summary as well other pertinent information included elsewhere
in this Prospectus and the related Prospectus Supplement describes the material
terms of the Receivables Transfer Agreements to be entered into by each of the
Banks at the time of formation of the Trust and by any additional Account Owners
at the time any such additional Account Owner commences transfers to the
Transferor. A form of the Receivables Transfer Agreement has been filed as an
Exhibit to the Registration Statement of which this Prospectus forms a part.
This summary does not purport to be complete and is subject to and is qualified
in its entirety by reference to, the provisions of the respective Receivables
Transfer Agreement. When particular provisions or terms used in a Receivables
Transfer Agreement are referred to herein, such provisions or terms shall be as
specified in the respective Receivables Transfer Agreement.
SALE OF RECEIVABLES
At the time of formation of the Trust, each Bank will enter into a
Receivables Transfer Agreement and will, pursuant to the terms thereof, sell,
transfer, assign, set over and otherwise convey to the Transferor all of such
Bank's right, title and interest in, to and under (i) the Receivables existing
at the close of business on the Initial Cut-Off Date, in the case of Receivables
arising in the Initial Accounts and on each Addition Cut-Off Date, in the case
of Receivables arising in Additional Accounts and, in each case, Receivables
thereafter created from time to time in such Accounts and all monies due and or
to become due and all amounts received with respect thereto and all proceeds
thereof, and (ii) the right to receive Recoveries with respect to such
Receivables.
ADDITION OF ACCOUNTS
In each Receivables Transfer Agreement, the Account Owner agrees that, if
the Transferor becomes obligated to designate Additional Accounts pursuant to
the Pooling and Servicing Agreement, then the Transferor may, at its option,
give the Account Owner written notice thereof and upon receipt of such
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notice the Account Owner shall on or before the Addition Date, designate
sufficient Eligible Accounts which, together with Additional Accounts designated
by any other Account Owners will cause the Transferor to be in compliance with
the requirements of the Pooling and Servicing Agreement and, from time to time,
Additional Accounts may be designated to be included as Additional Accounts upon
the mutual agreement of the Transferor and the respective Account Owner. In any
such event, the Account Owner shall have the sole responsibility for selecting
the Additional Accounts.
PURCHASE PRICE OF RECEIVABLES
The purchase price for the Receivables in the Initial Accounts as of the
Initial Cut-Off Date conveyed to the Transferor under the Receivables Transfer
Agreement, shall be an amount equal to a percentage of the aggregate balance of
the Principal Receivables in those Accounts as of the Initial Cut-Off Date,
adjusted to reflect such factors as the respective Bank and the Transferor
mutually agree will result in a purchase price determined to be not less than
the fair market value of such Receivables. The purchase price for receivables to
be conveyed to the Transferor after the initial closing, shall be an amount
equal to a percentage of the aggregate balance of the Principal Receivables so
conveyed adjusted to reflect such factors as the Bank and the Transferor
mutually agree will result in a purchase price determined to be not less than
the fair market value of such new Principal Receivables.
REPRESENTATIONS AND WARRANTIES
The Account Owners represent and warrant, among other things, that (i) each
Receivable has been conveyed to the Transferor free and clear of any lien (with
an exception for certain permitted liens); (ii) on the Initial Cut-Off Date,
each Account is an Eligible Account and, in the case of each Additional Account,
on the Addition Cut-Off Date, each related Additional Account is an Eligible
Account, (iii) on the Initial Cut-Off Date, each Receivable conveyed to the
Transferor is an Eligible Receivable and, in the case of Additional Accounts, on
the applicable Addition Cut-Off Date, each Receivable contained in such Account
and conveyed to the Transferor is an Eligible Receivable and as of the date of
the creation of any new Receivable, such Receivable is an Eligible Receivable
and (iv) no selection procedures believed by the Account Owner to be materially
adverse to the interests of the Transferor or the Certificateholders have been
used in selecting the Accounts.
THE POOLING AND SERVICING AGREEMENT GENERALLY
The following summary, as well as other pertinent information included
elsewhere in this Prospectus and the related Prospectus Supplement, describes
the material terms of the Pooling and Servicing Agreement. A form of the Pooling
and Servicing Agreement has been filed as an Exhibit to the Registration
Statement of which this Prospectus forms a part. This summary does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, the provisions of the Pooling and Servicing Agreement. When particular
provisions or terms used in the Pooling and Servicing Agreement are referred to
herein, such provisions or terms shall be as specified in the Pooling and
Servicing Agreement.
TRUST ASSETS
The Trust Assets will include the Receivables, all monies due or to become
due thereunder and all amounts received with respect thereto, all proceeds of
the Receivables, the right to receive certain Recoveries, proceeds of credit
insurance policies relating to the Receivables, all monies on deposit in certain
bank accounts of the Trust and the benefits of any Series Enhancement issued
with respect to any Series (the drawing on or payment of such Series Enhancement
being available only to Certificateholders of such Series or Class of such
Series). The Trust Assets may also include Participation Interests.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
Pursuant to the Pooling and Servicing Agreement, the Transferor will
transfer and assign to the Trust all of its right, title and interest in and to
specifically identified Receivables existing in the designated
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Accounts owned by the Account Owners on the day of the relevant transfer and
assignment and in and to all Receivables created in such Accounts thereafter and
all proceeds thereof.
In connection with a transfer of the Receivables to the Trust, the
Transferor will indicate in its computer files that the Receivables have been
conveyed to the Trust for the benefit of the Certificateholders. In addition,
the Transferor will provide to the Trustee a computer file or a microfiche list
containing a true and complete list of all Accounts the Receivables of which
have been designated for inclusion in the Trust which specifies for each such
Account, its account number, the aggregate amount outstanding and the aggregate
amount of Principal Receivables outstanding as of the Initial Cut-Off Date or
Addition Cut-Off Date, as applicable. The Transferor will not deliver to the
Trustee any other records or agreements relating to such Accounts or the
Receivables. The records and agreements relating to such Accounts and the
Receivables maintained by the Account Owners, the Transferor or the Servicer
will not be segregated from other documents and agreements relating to other
credit card accounts and receivables and will not be stamped or marked to
reflect the transfer of the Receivables to the Trust. The Transferor will file
UCC financing statements meeting the requirements of applicable state law with
respect to the Receivables. See "Risk Factors -- Characteristics as a Sale;
Insolvency and Receivership Risks" and "Certain Legal Aspects of the
Receivables."
ADDITIONAL TRANSFERORS
As described under the caption "Description of the Certificates--The
Transferor Certificate; Additional Transferors," the Transferor may designate
affiliates of Commercial Credit Company to be included as Transferors
("Additional Transferors") under the Pooling and Servicing Agreement. An
additional Transferor may be added by amendment to the Pooling and Servicing
Agreement without the consent of any Certificateholder. If an Additional
Transferor or Additional Transferors are added, references herein to the
Transferor shall refer, collectively, to the initial and all Additional
Transferors.
CESSATION OF TRANSFER OF RECEIVABLES
If an Insolvency Event occurs with respect to the Transferor, the Transferor
will immediately cease to transfer Principal Receivables to the Trust and
promptly notify 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 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 a part of the Trust.
The collections from the Receivables shall be immediately deposited in the
Collection Account, and shall be allocated and distributed to Certificateholders
in accordance with the terms of each Series Supplement.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Transferor makes representations and warranties relating to the
Receivables as of the Relevant Closing Date and, with respect to Receivables in
Additional Accounts, as of the related Addition Date, to the effect, among other
things, that (i) the Pooling and Servicing Agreement, each Series Supplement
and, in the case of Additional Accounts, the related assignment document, each
constitute legal, valid and binding obligations of the Transferor enforceable
against the Transferor in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability
relating to or affecting the enforcement of creditors' rights in general and the
rights of creditors of national banks under United States law and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity), (ii) the schedule of Accounts
referred to in the Pooling and Servicing Agreement is an accurate and complete
listing in all material respects of the Accounts designated as an Account as of
the Initial Cut-Off Date or Addition Cut-Off Date, as applicable, and the
information contained therein with respect to the identity of such Accounts and
the Receivables existing thereunder is true and correct in all material respects
as of the Initial Cut-Off Date or Addition
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Cut-Off Date, as applicable, (iii) each Receivable conveyed to the Trust by the
Transferor has been conveyed to the Trust free and clear of any lien other than
liens permitted by 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
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 the Pooling and Servicing Agreement and, in the case of
Additional Accounts, the related assignment document, each constitute 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 by the Transferor and
the proceeds thereof or, if the transfer pursuant to the Pooling and Servicing
Agreement or the related assignment document does not constitute a sale of such
property, it constitutes a grant of a "security interest" (as defined in the
UCC) in such property to the Trust, which, in the case of Receivables then
existing and the proceeds thereof, is enforceable upon execution and delivery of
the Pooling and Servicing Agreement or the related assignment document as of the
applicable date and which will be enforceable with respect to such Receivables
thereafter created and the proceeds thereof upon such creation and that upon the
filing of financing statements required pursuant to the Pooling and Servicing
Agreement, the Trust shall have a first priority perfected security or ownership
interest in such property and proceeds except for (x) liens permitted under the
Pooling and Servicing Agreement, (y) the interest of the Transferor as holder of
the Transferor Certificate or any Supplemental Certificate and (z) the
Transferor's right to receive interest accruing on and investment earnings, if
any, in respect of the Collection Account or any Series Account, as provided in
the Pooling and Servicing Agreement or the related Series Supplement, (vi)
except as otherwise expressly provided in the Pooling and Servicing Agreement or
the related Series Supplement, neither the Transferor nor any person claiming
through or under the Transferor has any claim to or interest in the Collection
Account, the Excess Funding Account, any Series Account or any Series
Enhancement, (vii) as of the Initial Cut-Off Date or Addition Cut-Off Date, as
applicable, each Initial Account or Additional Account is an Eligible Account,
(viii) as of the Initial Cut-Off Date or Addition Cut-Off Date, as applicable,
each Receivable contained in any related Account owned by the Transferor and
being designated on such date is an Eligible Receivable, (ix) as of the date of
the creation of any new Receivable in an Account, such Receivable is an Eligible
Receivable, and (x) no selection procedure has been utilized by the Transferor
which it reasonably believes would result in the selection of an Account that
would be materially adverse to the interests of Certificateholders of any
Series.
In the event (i) any representation or warranty of the Transferor contained
in clause (ii), (iii), (iv), (vii), (viii), (ix) or (x) above is not true and
correct in any material respect as of the date specified therein with respect to
any Receivable transferred to the Trust by the Transferor or an Account and as a
result of such breach any Receivables in the related Account become Defaulted
Receivables or the Trust's rights in, to or under such Receivables or the
proceeds of such Receivables are impaired or such proceeds are not for any
reason available to the Trust free and clear of any lien, unless cured within 60
days (or such longer period, not in excess of 150 days, as may be agreed to by
the Trustee) after the earlier to occur of the discovery thereof by the
Transferor or receipt by the Transferor of notice thereof given by the Trustee,
or (ii) a Receivable is evidenced by an instrument or chattel paper to the
extent (and subject to the limitations) provided in the Pooling and Servicing
Agreement with respect to any Receivables transferred to the Trust by the
Transferor, then the Transferor shall accept reassignment of all Receivables in
the related Account ("Ineligible Receivables") on the terms and conditions set
forth below; provided, however, that such Receivables will not be deemed to be
Ineligible Receivables and will not be reassigned to the Transferor if, on any
day prior to the end of such 60-day or longer period, (x) either (A) in the case
of an event described in clause (i) above the relevant representation and
warranty shall be true and correct in all material respects as if made on such
day or (B) in the case of an event described in clause (ii) above the
circumstances causing such Receivable to become an Ineligible Receivable shall
no longer exist and (y) the Transferor shall have delivered to the Trustee an
officer's certificate describing the nature of such breach and the manner in
which the relevant representation and warranty became true and correct. Such
Ineligible Receivables shall be automatically removed from the Trust by the
Servicer deducting the portion
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of the Ineligible Receivables reassigned to the Transferor which are Principal
Receivables from the aggregate amount of Principal Receivables used to calculate
the Transferor Amount, the Series Percentages and any other percentage used to
allocate within or among Series that is applicable to any Series. 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 12:00 noon, 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 Excess Funding
Account in immediately available funds in an amount equal to the amount by which
the Transferor Amount would be reduced below the Required Transferor Amount (up
to the amount of such Principal Receivables).
Upon the deposit, if any, required to be made to the Excess Funding Account
as provided in the Pooling and Servicing Agreement and the reassignment of
Ineligible Receivables, the Trustee, on behalf of the Trust, shall automatically
and without further action be deemed to sell, transfer, assign, set over and
otherwise convey to the Transferor or its designee, without recourse,
representation or warranty, all the right, title and interest of the Trust in
and to such Ineligible 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 reasonably be requested by the Transferor to effect
the conveyance of Ineligible Receivables. The obligation of the Transferor to
accept reassignment of any Ineligible Receivables, and to make the deposits, if
any, required to be made to the Excess Funding Account as provided in the
Pooling and Servicing Agreement, shall constitute the sole remedy respecting the
event giving rise to such obligation available to Certificateholders (or the
Trustee on behalf of the Certificateholders.) The obligations of the Transferor
(including any Additional Transferor) to accept reassignment of the Receivables
will be several and not joint with respect to the Receivables transferred by
such Transferor to the Trust. Under the Receivables Transfer Agreements, each
Bank will covenant to repurchase from the Transferor Receivables purchased by
the Transferor in accordance with the second preceding paragraph if such Bank
breaches certain of its similar representations and warranties under its
respective Receivable Transfer Agreement.
The Transferor also makes representations and warranties to the Trust to the
effect, among other things, that as of the Relevant Closing Date with respect to
each Series (i) it is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization or incorporation
and has full corporate power, authority and legal right to own its property and
conduct its consumer revolving lending business as such properties are presently
owned and such business is presently conducted, and to execute, deliver and
perform its obligations under the Pooling and Servicing Agreement, each
Receivables Transfer Agreement and each Series Supplement and to execute and
deliver to the Trustee the Certificates pursuant thereto; (ii) it is duly
qualified to do business and is in good standing as a foreign corporation (or is
exempt from such requirements), and has obtained all necessary licenses and
approvals in each jurisdiction in which failure to so qualify or to obtain such
licenses and approvals would have a material adverse effect on the
Certificateholders of any Series; provided, however, that no representation or
warranty will be made with respect to any qualification, licenses or approvals
which the Trustee has or may be required at any time to obtain, if any, in
connection with the transactions contemplated by the Pooling and Servicing
Agreement; (iii) the execution and delivery of the Pooling and Servicing
Agreement, each Receivables Transfer Agreement and each Series Supplement by the
Transferor and the execution and delivery to the Trustee of the Certificates,
and the consummation of the transactions provided for in the Pooling and
Servicing Agreement, each Receivables Transfer Agreement and each Series
Supplement have been duly authorized by the Transferor by all necessary
corporate action on the part of the Transferor and the Pooling and Servicing
Agreement, each Receivables Transfer Agreement and each Series Supplement will
remain, from the time of its execution, an official record of the Transferor;
(iv) the execution and delivery by the Transferor of the Pooling and Servicing
Agreement, each Receivables Transfer Agreement each Series Supplement, the
Certificates, the performance by the Transferor of the transactions contemplated
by the Pooling and Servicing Agreement, each Receivables Transfer Agreement and
each Series Supplement and the fulfillment by the Transferor of the terms
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thereof, 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 Transferor is a party or by which
it or any of its properties are bound; (v) the execution and delivery by it of
the Pooling and Servicing Agreement, each Receivables Transfer Agreement each
Series Supplement and the Certificates, the performance by the Transferor of the
transactions contemplated by the Pooling and Servicing Agreement, each
Receivables Transfer Agreement and each Series Supplement and the fulfillment by
the Transferor of the terms thereof will not conflict with or violate any
requirements of law applicable to the Transferor, (vi) there are no proceedings
or investigations, pending or, to the best knowledge of the Transferor,
threatened against it, before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality (a) asserting the invalidity
of the Pooling and Servicing Agreement, each Receivables Transfer Agreement or
any Series Supplement or the Certificates, (b) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions contemplated
by the Pooling and Servicing Agreement each Receivables Transfer Agreement or,
any Series Supplement or the Certificates, (c) seeking any determination or
ruling that, in the reasonable judgment of the Transferor, would materially and
adversely affect the performance by it of its obligations with respect to any
Series under the Pooling and Servicing Agreement, Receivables Transfer Agreement
or any Series Supplement, (d) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of the Pooling
and Servicing Agreement, each Receivables Transfer Agreement, any Series
Supplement or the Certificates, or (e) seeking to affect adversely the income
tax attributes of the Trust or the Certificates of any Series under the United
States federal or Delaware state income or franchise tax systems; (vii) all
approvals, authorizations, consents, orders or other actions of any person or of
any governmental body or official required in connection with the execution and
delivery by the Transferor of the Pooling and Servicing Agreement, each
Receivables Transfer Agreement, each Series Supplement and the Certificates, the
performance by the Transferor of the transactions contemplated by the Pooling
and Servicing Agreement, each Receivables Transfer Agreement and each Series
Supplement and the fulfillment by it of the terms thereof, have been obtained,
except such as may be required by state securities or "blue sky" laws in
connection with the distribution of the Certificates; (viii) no Insolvency Event
with respect to the Transferor has occurred and the transfer of the Receivables
by the Transferor to the Trust has not been made in contemplation of the
occurrence thereof; and (ix) the Transferor is a bankruptcy-remote entity.
The Pooling and Servicing Agreement provides that the representations and
warranties set forth in the immediately preceding paragraph will survive the
transfer and assignment by the Transferor of the Receivables to the Trust. Upon
discovery by the Transferor, the Servicer or the Trustee of a breach of any of
the representations and warranties by the Transferor set forth in the preceding
paragraph, the party discovering such breach will give prompt written notice to
the others and the Transferor will cooperate with the Servicer and the Trustee
in attempting to cure the breach.
An "Eligible Account" is defined in the Pooling and Servicing Agreement to
mean a consumer revolving credit card account owned by Travelers Bank & Trust,
fsb or The Travelers Bank USA, in the case of the Initial Accounts, or Travelers
Bank & Trust, fsb, The Travelers Bank USA, or any additional Account Owner, in
the case of Additional Accounts, which account is identified by the relevant
Account Owner as of the Initial Cut-Off Date or Addition Cut-Off Date, as
applicable, as having the following characteristics (a) is in existence and
maintained by Travelers Bank & Trust, fsb or The Travelers Bank USA, in the case
of the Initial Accounts, or Travelers Bank & Trust, fsb, The Travelers Bank USA
or any additional Account Owner, in the case of Additional Accounts; (b) is
payable in United States dollars; (c) is not a corporate account; (d) except as
provided below, has not been identified as an account the credit card or cards
with respect to which have been reported as having been lost or stolen; (e) the
obligor of which has provided, as his or her billing address, an address located
in the United States (or its territories or possession or military address); (f)
has an obligor who has not been identified by the applicable Account Owner as an
employee of such Account Owner or any affiliate of either thereof; (g) except as
provided below, does not have any Receivables which are Defaulted Receivables;
and (h) except as provided below, does not have any
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Receivables which have been identified as having been incurred as a result of
fraudulent use of any related credit card.
The Pooling and Servicing Agreement provides that Eligible Accounts may
include Accounts, the Receivables of which have been written off, or with
respect to which the Transferor believes the related obligor is bankrupt, or as
to which certain Receivables have been identified by the obligor as having been
incurred as a result of fraudulent use of any credit cards, or as to which any
credit cards have been reported as lost or stolen, in each case as of the
Initial Cut-Off Date or Addition Cut-Off Date, as applicable; provided that (a)
the balance of all Receivables included in such Accounts is treated for purposes
of the Pooling and Servicing Agreement as "zero," and (b) charging privileges
with respect to all such Accounts have been canceled in accordance with the
relevant credit card guidelines.
An "Eligible Receivable" is defined in the Pooling and Servicing Agreement
to mean each Receivable (a) which has arisen under an Eligible Account, (b)
which was created in compliance with all requirements of law applicable to the
Account Owner that transferred such Receivable to the Transferor, the failure to
comply with which would have a material adverse effect upon Certificateholders
and pursuant to a credit card agreement which complies with all requirements of
law applicable to such Account Owner, the failure to comply with which would
have a material adverse effect upon Certificateholders, (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 or given by the relevant Account Owner in connection with the creation
of such Receivable or the execution, delivery and performance by the relevant
Account Owner of its obligations, if any, under the related credit card
agreement have been duly obtained or given and are in full force and effect as
of such date of creation of such Receivable, (d) as to which, at the time of its
transfer to the Trust, the Transferor or the Trust will have good and marketable
title, free and clear of all liens, encumbrances, charges and security interests
(except for certain tax liens permitted by the Pooling and Servicing Agreement),
(e) which has been the subject of either (i) a valid transfer and assignment
from the Transferor to the Trust of all of the Transferor's right, title and
interest therein or (ii) the grant of a first priority perfected security
interest therein (and in the proceeds thereof), effective until the termination
of the Trust, (f) which at and after the time of transfer to the Trust is the
legal, valid and binding payment obligation of the obligor thereon, legally
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); (g) which constitutes either an
"account" or a "general intangible" under and as defined in Article 9 of the
UCC; (h) which, at the time of its transfer to the Trust, has not been waived or
modified except as permitted in accordance with the credit card guidelines and
which waiver or modification is reflected in the Servicer's computer file of
revolving credit card accounts; (i) which, at the time of its transfer to the
Trust, is not subject to any right of rescission, setoff, counterclaim or any
other defense of the obligor (including the defense of usury), other than
defenses arising out of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws 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 equity) or as to
which the Servicer is required by the Pooling and Servicing Agreement to make an
adjustment; (j) as to which, at the time of its transfer to the Trust, the
Transferor has satisfied all obligations to be fulfilled by the Transferor at
the time it is transferred to the Trust; and (k) as to which, at the time of its
transfer to the Trust, the Transferor has not taken any action which, or failed
to take any action the omission of which, would, at the time of its transfer to
the Trust, impair the rights of the Trust or the Certificateholders therein.
The Trustee will not make any initial or periodic general examination of the
Receivables or any records relating to the Receivables for the purpose of
establishing the presence or absence of defects, compliance with the
Transferor's representations and warranties or for any other purpose. The
Servicer, however, has agreed to deliver to the Trustee on or before March 31 of
each year an opinion of counsel
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with respect to the validity of the security interest of the Trust in and to the
Receivables and certain other components of the Trust.
The Transferor covenants in the Pooling and Servicing Agreement that it will
at all times enforce the covenants and agreements of the Account Owners under
the terms of the Receivables Transfer Agreements, including the covenants on the
part of the Account Owners, that except as otherwise required by any requirement
of law, or as is deemed by the Account Owner in its sole discretion to be
necessary in order for the Account Owner to maintain its lending business on a
competitive basis, based on a good faith assessment by the Account Owner of the
nature of the competition in the lending business, the Account Owner will not at
any time reduce the annual percentage rate at which periodic finance charges are
assessed on any Receivable or the other fees and charges assessed on the
Accounts owned by it if, as a result of such reduction, either (i) the Account
Owner's reasonable expectation is that such reduction would cause a Pay Out
Event or Reinvestment Event to occur or (ii) such reduction is not also applied
to any comparable segments of consumer revolving credit card accounts owned by
the Account Owner which have characteristics the same as, or substantially
similar to, such Accounts.
ADDITION OF ACCOUNTS OR PARTICIPATION INTERESTS
The Transferor has the right under each of the Receivables Transfer
Agreements (subject to certain exceptions) to require the Account Owner
thereunder to designate from time to time additional Eligible Accounts to be
included as Accounts ("Additional Accounts"). The Account Owners will, in their
sole discretion, select those Accounts which will be designated as Additional
Accounts and will convey to the Transferor, who, in turn, will convey to the
Trust, its interest in all Receivables arising from such Additional Accounts,
whether such Receivables are then existing or thereafter created. Each
Additional Account must be an Eligible Account as of the date such Additional
Accounts were selected (the "Addition Cut-Off Date"). No selection procedures
believed by an Account Owner to be adverse to the interests of the
Certificateholders will be utilized in selecting Additional Accounts from the
available Eligible Accounts in such Account Owner's portfolio. However, since
Additional Accounts may not have been part of the Travelers Consumer Credit Card
Portfolio at the time of the initial transfer of Receivables in the Initial
Accounts to the Trust, Receivables in the Additional Accounts may not be of the
same credit quality as the Initial Accounts. Additional Accounts may have been
originated by the Account Owners at a later date using credit criteria different
from those that were applied to the Initial Accounts or may have been acquired
by the Account Owners from another credit card issuer that had different credit
criteria. Each date on which Receivables in Additional Accounts are first
transferred to the Trust is referred to herein as an "Addition Date."
REQUIRED ADDITIONS. Generally, if either (x) the Transferor Amount is less
than the Required Transferor Amount or (y) the product of (x) the aggregate
amount of Principal Receivables and (y) one minus the Discount Percentage is
less than the Required Principal Balance, the Transferor will be required to
cause the Account Owners to designate additional Eligible Accounts to be
included as Accounts in a sufficient amount such that, after giving effect to
such addition, the Transferor Amount as of the close of business on the
applicable Addition Date is at least equal to the Required Transferor Amount on
such date and the aggregate amount of Principal Receivables exceeds the Required
Principal Balance. In lieu of, or in addition to, so designating Additional
Accounts, the Transferor may, subject to the conditions specified below and in
the Pooling and Servicing Agreement, 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), and any interests in both such types of
receivables, including securities representing or backed by both such types of
receivables, and other self-liquidating financial assets (meaning any financial
assets that by their terms, convert into cash within a finite time period) owned
by the Transferor or any affiliate of the Transferor and collections thereon
("Participation Interests").
"Required Transferor Amount" means, with respect to any date, (i) the
product of the Required Transferor Percentage and (ii)(a) the aggregate amount
of Principal Receivables times (b) one minus the Discount Percentage.
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"Required Transferor Percentage" currently means 5%, provided the Required
Transferor Percentage may be reduced to as low as 2% if the Transferor delivers
an officer's certificate stating that such reduction will not have an Adverse
Effect and the Rating Agency Condition is satisfied.
"Required Principal Balance" means, with respect to any date, the sum of the
Series Investor Amounts for each Series minus the amount on deposit in the
Excess Funding Account.
"Series Investor Amount" means, for any Series, the amount set forth in the
related Series Supplement and, for each Series offered hereby, in the Prospectus
Supplement for such Series, but will generally be an amount equal to the
numerator of the Series Percentage for allocating collections of Principal
Receivables for such Series. That numerator for the majority of Series of
Certificates offered hereby will generally be the initial Investor Amount.
RESTRICTED ADDITIONS. The Transferor may from time to time, at its sole
discretion, subject to the conditions specified below, designate additional
Eligible Accounts to be included as Accounts or Participation Interests to be
included as Trust assets, in either case as of the applicable Addition Date.
CONDITIONS TO REQUIRED AND RESTRICTED ADDITIONS. On the Addition Date with
respect to any Additional Accounts or Participation Interests, the Trust shall
purchase the Receivables in such Additional Accounts or shall purchase such
Participation Interests, in each case as of the close of business on the
applicable Addition Date, subject to the satisfaction of the following
conditions: (i) on or before the tenth business day immediately preceding the
Addition Date, the Transferor shall have given the Trustee and each Rating
Agency written notice that the Additional Accounts or Participation Interests
will be included and specifying the applicable Addition Date, the Addition
Cut-Off Date, and the approximate number of accounts expected to be added and
the approximate aggregate balances expected to be outstanding in the accounts to
be added (in case of Additional Accounts); (ii) in the case of Additional
Accounts, the Transferor shall have delivered to the Trustee copies of UCC-1
financing statements covering such Additional Accounts, if necessary to perfect
the Trust's interest in the Receivables arising therein; (iii) as of each of the
Addition Cut-Off Date and the Addition Date, no Insolvency Event with respect to
Transferor or the Account Owner of the Additional Accounts shall have occurred
nor shall the transfer of the Receivables arising in the Additional Accounts or
of the Participation Interests to the Trust have been made in contemplation of
the occurrence thereof; (iv) except in the case of certain required Additions,
the Rating Agency Condition shall have been satisfied; (v) the Transferor shall
have delivered to the Trustee an officer's certificate, dated the Addition Date,
stating that (x) in the case of Additional Accounts, as of the applicable
Addition Cut-Off Date, the Additional Accounts are all Eligible Accounts, (y) to
the extent applicable, the conditions set forth in clauses (ii) through (iv)
above have been satisfied and (z) the Transferor reasonably believes that the
addition by the Transferor of the Receivables arising in the Additional Accounts
or of the Participation Interests to the Trust will not, based on the facts
known to such officer at the time of such addition, then or thereafter cause a
Pay Out Event or Reinvestment Event to occur with respect to any Series; (vi)
the Transferor shall have delivered to the Trustee and each Rating Agency an
opinion of counsel stating the validity and perfection of the transfer of the
Collections received in such Additional Accounts to the Trustee; (vii) in the
case of designation of Additional Accounts, the Transferor shall have delivered
to the Trustee (x) the computer file or microfiche list containing a true and
complete list of such Additional Accounts and (y) a duly executed, written
assignment; and (viii) unless each Rating Agency otherwise consents, the number
of Additional Accounts so designated with respect to a required addition with
respect to any of the three consecutive Monthly Periods commencing in January,
April, July and October of each calendar year, commencing in January 1998, shall
not exceed 15% of the number of Accounts as of the first day of the calendar
year during which such Monthly Periods commence and the number of Additional
Accounts so designated during any calendar year shall not exceed 20% of the
number of Accounts as of the first day of such calendar year.
AUTOMATIC ACCOUNT ADDITIONS
(i) The Transferor may from time to time, at its sole discretion, subject to
and in compliance with the limitations specified in clause (ii) below and the
applicable conditions specified in clauses (iii) through
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(vii) below, designate Eligible Accounts ("Automatic Additional Accounts") to be
included as Accounts as of the applicable Addition Date. For purposes of this
paragraph, Eligible Accounts are deemed to include only consumer revolving
credit card accounts that are originated by one of the Banks or any affiliate of
one of the Banks.
(ii) Unless each Rating Agency otherwise consents, the number of Automatic
Additional Accounts designated with respect to any of the three consecutive
Monthly Periods commencing in January, April, July and October of each calendar
year, commencing in January 1998, shall not exceed 15% of the number of Accounts
as of the first day of the calendar year during which such Monthly Periods
commence and the number of Automatic Additional Accounts designated during any
such calendar year will not exceed 20% of the number of Accounts as of the first
day of such calendar year.
(iii) Within 30 days after the Addition Date with respect to any Automatic
Additional Accounts, the Transferor will deliver to the Trustee and each Rating
Agency an opinion of counsel with respect to the Automatic Additional Accounts
included as Accounts on such Addition Date, confirming the validity and
perfection of the transfer of such Automatic Additional Accounts. If such
opinion of counsel with respect to any Automatic Additional Accounts is not so
received, the ability of the Transferor to designate Automatic Additional
Accounts will be suspended until such time as each Rating Agency otherwise
consents in writing. If the Transferor is unable to deliver an opinion of
counsel with respect to any Automatic Additional Account, such inability shall
be deemed to be a breach of the representation with respect to the Receivables
in such Automatic Additional Account, provided that the cure period for such
breach will not exceed 30 days.
(iv) The Transferor shall have delivered to the Trustee copies of UCC-1
financing statements covering such Automatic Additional Accounts, if necessary
to perfect the Trust's interest in the Receivables arising therein.
(v) As of each of the Addition Cut-Off Date and the Addition Date, no
Insolvency Event with respect to the Transferor or any Account Owner shall have
occurred nor shall the transfer of the Receivables arising in the Automatic
Additional Accounts to the Trust have been made in contemplation of the
occurrence thereof.
(vi) The Transferor shall have delivered to the Trustee an officer's
certificate, dated the Addition Date, stating that (x) as of the applicable
Addition Cut-Off Date, such Automatic Additional Accounts are all Eligible
Accounts, (y) to the extent applicable, the conditions set forth in clauses (ii)
through (v) above have been satisfied and (z) the Transferor reasonably believes
that the addition of the Receivables arising in such Automatic Additional
Accounts will not, based on the facts known to such officer at the time of such
addition, then or thereafter cause a Pay Out Event or Reinvestment Event to
occur with respect to any Series.
(vii) The Transferor shall have delivered to the Trustee (x) a computer file
or microfiche list containing a true and complete list of such Automatic
Additional Accounts and (y) a duly executed assignment of the Receivables
arising in such Automatic Additional Accounts.
REMOVAL OF ACCOUNTS
Unless otherwise specified in the Prospectus Supplement relating to a Series
of Certificates, subject to the conditions set forth below, on any day of any
Monthly Period (unless the exercise of such right is restricted to certain
periods specified in the related Prospectus Supplement), the Transferor shall
have the right to designate certain Accounts to be removed as Accounts and 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 in such removed Accounts, all monies due or to become due and all
amounts received with respect thereto and all proceeds thereof in or with
respect to such Accounts. The Accounts specified for removal shall be set forth
in a Receivables Transfer Agreement (the "Removed Accounts"). The following
conditions apply to the removal of Accounts and the removal of Participation
Interests designated by the Transferor:
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(a) on or before the fifth business day immediately preceding the
Removal Date (the "Removal Notice Date"), the Transferor shall have given
the Trustee, the Servicer, each Rating Agency and the provider of any Series
Enhancement written notice of such removal, specifying the date for removal
of the Removed Accounts or Participation Interests (the "Removal Date");
(b) with respect to Removed Accounts, on or prior to the date that is
ten business days after the Removal Date, the Transferor will deliver 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
last day of the Monthly Period preceding the Removal Notice Date (the
"Removal Cut-Off Date"), its account number, the aggregate amount
outstanding in such Account and the aggregate amount of Principal
Receivables outstanding in such Account;
(c) with respect to Removed Accounts, the Transferor shall have
represented and warranted as of the Removal Date that the list of Removed
Accounts delivered pursuant to paragraph (b) above, as of the Removal
Cut-Off Date, is true and complete in all material respects;
(d) the Rating Agency Condition shall have been satisfied with respect
to such removal;
(e) the Transferor shall have delivered to the Trustee an officer's
certificate, dated the Removal Date, to the effect that the Transferor
reasonably believes that (i) such removal will not, based on the facts known
to such officer at the time of such certification, then or thereafter cause
a Pay Out Event or Reinvestment Event to occur with respect to any Series
and (ii) no selection procedure was utilized which would result in a
selection of Removed Accounts or Participation Interests that would be
materially adverse to the interests of the Certificateholders of any Series
as of the Removal Date;
(f) as of the Removal Cut-Off Date, no more than 10% of the Receivables
outstanding are more than thirty days contractually delinquent; and
(g) such other conditions as are specified in the related Prospectus
Supplement.
Upon satisfaction of the above conditions, the Trustee will execute and
deliver to the Transferor or its designee a written reassignment and will,
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 Participation Interests or Receivables
arising in the Removed Accounts, all monies due and to become due and all
amounts received with respect thereto and all proceeds thereof.
SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer will be
responsible for servicing and administering the Receivables in accordance with
the Servicer's customary and usual servicing procedures for servicing credit
card receivables comparable to the Receivables and in accordance with its credit
card guidelines.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that a percentage (the
"Discount Percentage") (which on the Relevant Closing Date for the first Series
of Certificates issued by the Trust will be %) of collections of Principal
Receivables will be treated as collections of Finance Charge Receivables (the
"Discount Option Collections"). The Transferor may, without notice to or consent
of the Certificateholders, from time to time, increase, reduce or eliminate
(subject to the limitations described below) the Discount Percentage for all or
any specified portion of collections of Principal Receivables on or after the
date of such change (each, a "Discount Option Date"). The Pooling and Servicing
Agreement requires the Transferor to provide to the Trustee and any Rating
Agency 30 days' prior written notice of the Discount Option Date and such
designation will become effective on such Discount Option Date (i) unless such
designation, in the reasonable belief of the Transferor based on facts known to
the Transferor at such time, would cause a Pay Out Event or Reinvestment Event
with respect to any Series to occur, or an event which, with notice or the lapse
of time or both, would constitute a Pay Out Event or Reinvestment Event with
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respect to any Series and (ii) if such designation would cause the Discount
Percentage to be greater than [3]% or less than [1]%, if the Rating Agency
Condition is satisfied. On the date of processing of any collections, the
product of the Discount Percentage and collections that otherwise would be
collections of Principal Receivables will be deemed Discount Option Collections.
An amount equal to the product of (i) the Series Percentage with respect to
Finance Charge Receivables for each Series of Certificates issued and
outstanding and (ii) the amount of such Discount Option Collections will be
deposited by the Servicer into the Collection Account and an amount equal to the
product of (iii) the Transferor Percentage and (iv) the amount of the Discount
Option Collections will be paid to the holders of the Transferor Certificates
or, if applicable, applied as Excess Transferor Finance Charge Collections. The
former amount deposited into the Collection Account will be applied as provided
below regarding collections of Finance Charge Receivables. Any such designation
that raises the Discount Percentage will result in an increase in the amount of
collections of Finance Charge Receivables and a lower payment rate of
collections of Principal Receivables and will reduce the Transferor Amount
(which is calculated after applying the Discount Percentage to the aggregate
amount of Principal Receivables), thereby decreasing the likelihood that certain
Pay Out Events or Reinvestment Events based in part on the amount of collections
of Finance Charge Receivables will occur and increasing the likelihood that the
Transferor will be required to designate Additional Accounts. Any such
designation that reduces the Discount Percentage will have the opposite effect.
Unless otherwise specified, all references herein and in any Prospectus
Supplement to collections of Principal Receivables or Finance Charge Receivables
are references to such collections as defined above.
TRUST ACCOUNTS
The Servicer will cause to be established and maintained, in the name of the
Trustee, for the benefit of Certificateholders of all Series, a "Collection
Account," which at all times is required to be either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating Agency in one
of its generic credit rating categories which signifies investment grade (an
"Eligible Deposit Account"). The Servicer will also cause to be established and
maintained, in the name of the Trustee, an "Excess Funding Account," which also
is required to be an Eligible Deposit Account. An "Eligible Institution" is
defined as (I) a 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 at all
times (a) has either (i) long-term unsecured debt rating of A-1 or better by
Moody's Investors Service Inc. ("Moody's") or (ii) a certificate of deposit
rating of P-1 by Moody's, (b) has either (i) a long-term unsecured debt rating
of AAA by Standard & Poor's Ratings Group ("Standard & Poor's") or (ii) a
certificate of deposit rating of A-1+ by Standard & Poor's and (c) is a member
of the FDIC or (II) any other institution that is acceptable to each Rating
Agency. If so qualified, the Trustee or the Servicer may be considered an
Eligible Institution.
Funds in the Collection Account and the Excess Funding Account will be
assets of the Trust and will be invested, at the direction of the Servicer, in
"Eligible Investments" consisting of book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence: (a) direct obligations of, and obligations fully guaranteed
as to timely payment of principal and interest by, 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 (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 short-term debt rating of such depository
institution or trust company shall be in the highest investment category of each
Rating Agency; (c) commercial paper or other short-term obligations having, at
the time of the Trust's investment or contractual commitment to invest therein,
a rating from
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each Rating Agency in its highest investment category; (d) notes or bankers'
acceptances (having original maturities of no more than 365 days) issued by any
depository institution or trust company referred to in (b) above; (e)
investments in money market funds rated in the highest investment category by
each Rating Agency or otherwise approved in writing by each Rating Agency; (f)
time deposits, other than as referred to in clause (e) above, with a person the
commercial paper of which has a credit rating from each Rating Agency in its
highest investment category; or (g) any other investments approved in writing by
each Rating Agency. The Trustee, acting as the initial paying agent (together
with any successor thereto in such capacity and any entity specified in a Series
Supplement to act in such capacity for the related Series, collectively, the
"Paying Agent"), shall have the revocable power to withdraw funds from the
Collection Account for the purpose of making distributions to the
Certificateholders of any Series pursuant to the related Series Supplement.
SERIES PERCENTAGE AND TRANSFEROR PERCENTAGE
Pursuant to the Pooling and Servicing Agreement, the Servicer will allocate
among the Series, including each Class of each Series, and the Transferor's
Interest all amounts collected with respect to Finance Charge Receivables,
Principal Receivables and all Defaulted Receivables. The Servicer will make each
allocation by reference to the applicable Series Percentage for each Series and
the Transferor Percentage in each case. The Series Percentages for each Series
will be as set forth in the related Series Supplement and, with respect to each
Series offered hereby, in each Prospectus Supplement.
The Transferor Percentage in all cases means the excess of 100% over the
aggregate Series Percentages of all Series then outstanding for each category of
Receivables.
APPLICATION OF COLLECTIONS
Except as provided below or in a Series Supplement, the Servicer will
deposit into the Collection Account, no later than the second business day
following the date of processing, any payment collected by the Servicer on the
Receivables; provided, however, that the Servicer need not deposit amounts
allocated to the Transferor Certificates and certain amounts allocated to
Certificateholders of a Series, as specified in the related Series Supplement,
into the Collection Account, and provided, further, that for so long as
Travelers Bank & Trust, fsb remains the Servicer and (x) Travelers Bank & Trust,
fsb maintains a certificate of deposit rating of A-1 or better by Standard &
Poor's and P-1 by Moody's (or such other rating below A-1 or P-1, as the case
may be, that is satisfactory to each Rating Agency), (y) Commercial Credit
Company has a commercial paper rating of at least A-1 and P-1 by Standard &
Poor's and Moody's, Travelers Bank & Trust, fsb remains a direct or indirect
majority-owned Travelers Group Inc. subsidiary and certain other arrangements
are made satisfactory to each Rating Agency or (z) any other arrangement that
satisfies the Rating Agency Condition, the Servicer need not make daily deposits
of collections into the Collection Account, but may make a single monthly
deposit into the Collection Account in immediately available funds.
OPERATION OF EXCESS FUNDING ACCOUNT
On any Distribution Date on which the Transferor Amount is less than the
Required Transferor Amount or on which the aggregate amount of Principal
Receivables is less than the Required Principal Balance, the Servicer will
deposit any Shared Principal Collections that would otherwise be distributed to
the holders of the Transferor Certificates into the Excess Funding Account. The
Servicer will determine, with respect to each Distribution Date on which no
Series is in an Amortization Period, the lesser of (x) the amount by which the
Transferor Amount exceeds the Required Transferor Amount and (y) the amount by
which the aggregate amount of Principal Receivables exceeds the Required
Principal Balance, and will instruct the Trustee to withdraw such amount from
the Excess Funding Account, to the extent of the principal amount of funds on
deposit therein, and pay such amount to the holders of the Transferor
Certificates. The Servicer will determine, with respect to each Distribution
Date on which one or more Series is in an Amortization Period, the aggregate
amount of Principal Shortfalls, if any, with respect to each Series that is a
Principal Sharing Series and will instruct the Trustee to withdraw such amount
from
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the Excess Funding Account, to the extent of the principal amount of funds on
deposit therein, and allocate such amount among each such Series as Shared
Principal Collections.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
The term "Defaulted Receivables" means, for any Monthly Period, all
Principal Receivables which are charged off as uncollectible in such Monthly
Period in accordance with the Servicer's credit card guidelines and customary
and usual servicing procedures for servicing consumer revolving credit card and
other revolving credit account receivables comparable to the Receivables. 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
master file of consumer revolving credit card accounts but, in any event, shall
be deemed a Defaulted Receivable no later than the day the related Account
becomes 180 days contractually delinquent unless the obligor cures such default
by making a partial payment which satisfies the criteria for curing
delinquencies set forth in the Servicer's applicable credit card guidelines. The
term "Defaulted Amount" means, with respect to any Monthly Period, an amount
(which shall not be less than zero) equal to (a) the amount of Principal
Receivables which became Defaulted Receivables in such Monthly Period, minus (b)
the amount of any Defaulted Receivables included in any Account the Receivables
in which the Transferor or the Servicer became obligated to accept reassignment
or assignment in accordance with the terms of the Pooling and Servicing
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 the Pooling and Servicing Agreement shall not be added to the
sum so subtracted and, if certain events involving insolvency 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 the
Pooling and Servicing Agreement shall not be added to the sum so subtracted.
On each day that the Servicer adjusts downward the amount of any Receivable
because of a rebate, refund, unauthorized charge or billing error to a
cardholder, or 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
Series Percentages and any other percentages used to allocate within or among
Series will be reduced by the amount of the adjustment. Similarly, the amount of
Principal Receivables used to calculate the Transferor Amount, the Series
Percentages and any other percentage used to allocate within or among Series
will be reduced by the amount of any Receivable discovered to have been created
through a fraudulent or counterfeit charge. Furthermore, in the event that the
exclusion of such Principal Receivables from the calculation of the Transferor
Amount at such time would cause the Transferor Amount to be less than the
Required Transferor Amount or the aggregate amount of Principal Receivables to
be less than the Required Principal Balance, the Transferor shall be required to
pay an amount equal to such deficiency into the Excess Funding Account (up to
the amount of such Principal Receivables).
FINAL PAYMENT OF PRINCIPAL AND INTEREST; TERMINATION
Subject to prior termination as described herein and in the Prospectus
Supplement, the interest of the Certificateholders of a Series in the Trust will
terminate following the earliest of (i) the day after the Distribution Date on
which the final payment of principal and interest is made to the
Certificateholders of such Series, (ii) the date specified for termination in
the applicable Series Supplement ("Stated Series Termination Date" for such
Series) and (iii) the Trust Termination Date. In the event the Investor Amount
of any Series would be greater than zero on the Stated Series Termination Date
for such Series or such earlier date specified in the related Series Supplement,
the Trustee will sell or cause to be sold Principal Receivables and the related
Finance Charge Receivables (or interests therein), as specified in the Pooling
and Servicing Agreement and the related Series Supplement, in an amount equal to
100% of the Investor Amount of the Certificates of such Series and accrued and
unpaid interest thereon on such date (but not more than the applicable Series
Percentages of Receivables on such date for the Certificates of such Series).
The proceeds of such sale will be allocated and distributed in accordance with
the applicable Series Supplement.
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The Trust will terminate only on the earliest to occur of (a) the day
following the payment date on which the aggregate Investor Amount and Series
Enhancement investor amounts, if any, of each Series is zero (provided that the
Transferor has delivered a written notice to the Trustee electing to terminate
the Trust), (b) January 1, 2044, or (c) if the Receivables are sold, disposed of
or liquidated following the occurrence of an Insolvency Event as described under
"--Pay Out Events and Reinvestment Events," immediately following such sale,
disposition or liquidation (the "Trust Termination Date"). Upon termination of
the Trust, all right, title and interest in the Receivables and other funds of
the Trust (other than amounts in accounts maintained by the Trust for the final
payment of principal and interest to Certificateholders) will be conveyed and
transferred to the Transferor.
PAY OUT EVENTS AND REINVESTMENT EVENTS
The Revolving Period for a Series will continue through the date specified
in the applicable Prospectus Supplement and the Amortization Period will begin
at such time, unless a Pay Out Event or Reinvestment Event occurs prior to such
time. All Series will commence either a Rapid Amortization Period or (if so
provided in the Series Supplement) a Rapid Accumulation Period upon the
occurrence of a Pay Out Event with respect to all Series. If so provided in the
related Series Supplement, a Pay Out Event with respect to such Series may be
treated as a Reinvestment Event. With respect to each Series, additional events
described in the Prospectus Supplement may constitute a Pay Out Event or
Reinvestment Event. The Rapid Amortization Period for a Series will commence
when a Pay Out Event for such Series occurs and the Rapid Accumulation Period
for a Series will commence when a Pay Out Event with respect to all Series
deemed to constitute a "Reinvestment Event" with respect to such Series or a
Reinvestment Event for such Series as described in the Prospectus Supplement
occurs. A "Pay Out Event" with respect to all Series happens upon the occurrence
of any of the following:
(a) an Insolvency Event relating to the Transferor or an Account Owner;
(b) the Trust shall become subject to regulation by the Commission as an
"investment company" within the meaning of the Investment Company Act of
1940, as amended; or
(c) the Transferor is unable for any reason to transfer Receivables to
the Trust in accordance with the provisions of the Pooling and Servicing
Agreement.
In addition, a Pay Out Event or Reinvestment Event may occur with respect to
a specific Series if a Pay Out Event or Reinvestment Event affecting such
Series, as specified in the related Series Supplement and described in the
related Prospectus Supplement, occurs with respect to such Series. On the date
on which a Pay Out Event with respect to a Series is deemed to have occurred,
the Rapid Amortization Period with respect to such Series will commence, and on
the date on which a Reinvestment Event with respect to a Series is deemed to
have occurred, the Rapid Accumulation Period with respect to such Series will
commence. If a Rapid Amortization Period commences with respect to a Series,
distributions of principal will be made to the Certificateholders of such Series
in the priority provided for in the related Series Supplement and described in
the related Prospectus Supplement. If, because of the occurrence of a Pay Out
Event, the Rapid Amortization Period begins earlier than the Scheduled
Amortization Date or the expected final payment date of such Series,
Certificateholders of such Series will begin receiving distributions of
principal earlier than they otherwise would have, which may shorten the final
maturity of the Certificates of such Series. If a Rapid Accumulation Period
commences with respect to a Series, collections of Principal Receivables will be
deposited into the Principal Funding Account and used to make distributions of
principal to the Certificateholders of such Series or a Class of such Series on
the expected final payment date for such Series or Class unless a Rapid
Amortization Event subsequently occurs with respect to such Series.
An "Insolvency Event" shall occur if the Transferor, any Additional
Transferor, any Account Owner (including any Additional Account Owner) shall
consent to the appointment of a conservator or receiver
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or liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to such Transferor or Account
Owner or of or relating to all or substantially all of its property, or a decree
or order of a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Transferor or Account Owner; or the Transferor or
an Account Owner shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make any assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations.
If an Insolvency Event occurs with respect to the Transferor, the Transferor
will immediately cease to transfer Principal Receivables to the Trust and
promptly notify the Trustee thereof as provided under "--Liquidation of
Receivables."
If the portion of such proceeds allocated to the Certificateholders and the
proceeds of any collections on the Receivables in the Collection Account and the
amounts available under any Series Enhancement are not sufficient to pay in full
the remaining amount due on the Certificates, the Certificateholders will suffer
a corresponding loss. See "Certain Legal Aspects of the Receivables--Certain
Matters Relating to Insolvency" for a discussion of the impact of Federal
legislation on the Trustee's ability to liquidate the Receivables.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses for any Monthly Period will be a servicing fee (the "Servicing
Fee") payable monthly on the related Distribution Date in an amount equal to
one-twelfth of the product of (a) the weighted average of the applicable
servicing fee rates with respect to each Series outstanding (based upon the
applicable servicing fee rate for each Series and the Investor Amount of such
Series or other amount specified in the applicable Series Supplement) and (b)
the amount of Principal Receivables outstanding on the last day of the prior
Monthly Period. The Servicing Fee will be allocated among the Transferor's
Interest and the Certificateholders' Interests of all Series. The share of the
Servicing Fee allocable to the Certificateholders' Interest of a particular
Series (the "Monthly Servicing Fee") will be determined in accordance with the
applicable Series Supplement. The remainder of the Servicing Fee shall be paid
by the Certificateholders of other Series and by the holders of the Transferor
Certificates and in no event shall the Trust, the Trustee or the
Certificateholders of any Series be liable for the share of the Servicing Fee to
be paid by the holders of the Transferor Certificates. Unless otherwise provided
in any Series Supplement, in the case of the first Monthly Period with respect
to any Series, the Monthly Servicing Fee will accrue from the Relevant Closing
Date.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables including, without
limitation, payment of the fees and disbursements of the Trustee, any Paying
Agent and transfer agent and registrar and independent accountants and other
fees which are not expressly stated in the Pooling and Servicing Agreement to be
payable by the Trust or the Certificateholders of a Series other than Federal,
state, local and foreign income, franchise or other taxes, if any, or any
interest or penalties with respect thereto, imposed upon the Trust.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that (i) the
performance of its duties under the Pooling and Servicing Agreement 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 thereunder
permissible under
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applicable law. Any such determination permitting the resignation of the
Servicer will be evidenced by an opinion of counsel to such effect delivered to
the Trustee. No such resignation will become effective until the Trustee or a
successor Servicer that is an Eligible Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with the Pooling
and Servicing Agreement.
"Eligible Servicer" means the Trustee, or if the Trustee is not acting as
Servicer, an entity which, at the time of its appointment as Servicer, (i) is
servicing a portfolio of revolving credit card accounts, (ii) is legally
qualified and has the capacity to service the Accounts, (iii) has demonstrated
the ability to professionally and completely service a portfolio of similar
accounts in accordance with high standards of skill and care, (iv) 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 the Pooling and Servicing Agreement, and (v) has a net worth or
capital and surplus of at least $50,000,000 as of the end of its most recent
fiscal quarter.
Pursuant to the Pooling and Servicing Agreement, Travelers Bank & Trust,
fsb, as Servicer has the right to delegate any of its responsibilities and
obligations as Servicer to any entity that agrees to conduct such duties in
accordance with the Pooling and Servicing Agreement and the Account Owners'
credit card guidelines; provided, that in the case of a significant delegation
to an entity other than an Account Owner, or any affiliate of an Account Owner,
(i) at least 30 days' prior written notice must be given to the Trustee and each
Rating Agency of such delegation and (ii) at or prior to the end of such 30-day
period the Servicer must determine that the Rating Agency Condition has been
met.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the Servicer will
indemnify and hold harmless the Trust and the Trustee from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of any acts
or omissions of the Servicer with respect to the Trust pursuant to the Pooling
and Servicing Agreement, 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; provided, however, that the Servicer
will not indemnify: (i) the Trustee if such acts or omissions constitute or are
caused by fraud, negligence, or willful misconduct by the Trustee; (ii) the
Trust, the Certificateholders or the Certificate Owners for any liabilities,
costs or expenses of the Trust with respect to any action taken by the Trustee
at the request of the Certificateholders; (iii) the Trust, the
Certificateholders or the Certificate Owners as to any losses, claims or damages
incurred by any of them in their capacities as investors, including without
limitation losses incurred as a result of Defaulted Receivables; or (iv) the
Trust, Certificateholders or Certificate Owners for any liabilities, costs or
expenses of the Trust, the Certificateholders or the Certificate Owners arising
under any tax law, including without limitation, any Federal, state, local or
foreign income or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto) required to be paid
by the Trust, the Certificateholders or the Certificate Owners in connection
herewith to any taxing authority. Any such indemnifications will not be payable
from the Trust Assets; provided further, however, that the Servicer shall
indemnify the Trust for any property, sales, excise or similar taxes imposed on
or with respect to the Receivables.
SERVICER DEFAULT
In the event of any Servicer Default, so long as the Servicer Default shall
not have been remedied, the Trustee, or Certificateholders evidencing more than
50% of the aggregate Investor Amount of the Certificates of all Series, by
notice to the Servicer (and to the Trustee if given by Certificateholders) (a
"Termination Notice"), may terminate all but not less than all of the rights and
obligations of the Servicer as Servicer under the Pooling and Servicing
Agreement and in and to the Receivables and the proceeds thereof. The rights and
interest of the Transferor under the Pooling and Servicing Agreement and in the
Transferor Certificates will not be affected by such termination; provided,
however, if within 60 days of
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receipt of a Termination Notice, the Trustee does not receive any bids from
Eligible Servicers in accordance with the Pooling and Servicing Agreement to act
as a successor Servicer and receives an officer's certificate of the Servicer to
the effect that the Servicer cannot in good faith cure the Servicer Default
which gave rise to the Termination Notice, then the Trustee will offer the
Transferor the right at its option to purchase the Certificateholders' Interest
on the next succeeding Distribution Date. The purchase price for the
Certificateholders' Interest will be equal to the sum of the amounts specified
therefor in the related Series Supplements. The Transferor will notify the
Trustee in writing prior to the Record Date for the Distribution Date of the
purchase if it is exercising such option. If the Transferor exercises such
option, the Transferor will (i) if the Transferor's short-term deposits or
long-term unsecured debt obligations are not rated at the time at least P-3 or
Baa3, respectively, by Moody's, deliver to the Trustee an opinion of counsel
(which must be an independent outside counsel), to the effect that the purchase
would not be considered a fraudulent conveyance and (ii) deposit the purchase
price into the Collection Account on such Distribution Date in immediately
available funds.
A "Servicer Default" refers to any of the following events:
(a) any failure by the Servicer to make any payment, transfer or deposit
or to give instructions or notice to the Trustee pursuant to the Pooling and
Servicing Agreement or any Series Supplement on or before the date occurring
five business days after the date such payment, transfer, deposit or such
instruction or notice is required to be made or given, as the case may be,
under the terms of the Pooling and Servicing Agreement or any Series
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 the Pooling and Servicing Agreement or any Series Supplement, which
has a material adverse effect on the Certificateholders of any Series or
Class and which failure 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 Servicer by the Trustee, or to the
Servicer and the Trustee by Certificateholders evidencing more than 50% of
the aggregate Investor Amount of all Series then outstanding (or, with
respect to any failure that does not relate to all Series, the Series to
which such failure relates); or the Servicer shall delegate its duties under
the Pooling and Servicing Agreement except as permitted under the terms
thereof, a responsible officer of the Trustee has actual knowledge of such
delegation and such delegation continues unremedied for 15 days after the
date on which written 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 Certificateholders evidencing more than 50% of the aggregate
Investor Amount of all Series;
(c) any representation, warranty or certification made by the Servicer
in the Pooling and Servicing Agreement or any Series Supplement or in any
certificate delivered pursuant to the Pooling and Servicing Agreement or any
Series Supplement shall prove to have been incorrect when made, which has a
material adverse effect on the Certificateholders of any Series or Class and
which continues to be incorrect in any material respect for a period of 60
days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the Trustee,
or to the Servicer and the Trustee by Certificateholders evidencing more
than 50% of the aggregate Investor Amount of all Series then outstanding
(or, with respect to any such representation, warranty or certification that
does not relate to all Series, the Series to which such representation,
warranty or certification relates); or
(d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any 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 of its property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been
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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 insolvency
or reorganization statute, make any assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations.
Notwithstanding the foregoing, a delay in or failure of performance under
clauses (a), (b) or (c), will not, for certain limited periods, constitute a
Servicer Default if such delay or failure (i) could not be prevented by the
exercise of reasonable diligence by the Servicer and (ii) was caused by an act
of God or the public enemy, acts of declared or undeclared war, terrorism,
public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence will
not relieve the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of the Pooling and
Servicing Agreement and any Series Supplement and the Servicer will provide the
Trustee, each Rating Agency, the holders of the Transferor Certificates and the
Certificateholders of all Series with an officer's certificate giving prompt
notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations.
REPORTS TO CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, on each
Distribution Date of a Series, the Paying Agent will forward to each
Certificateholder of record of such Series a statement prepared by the Servicer
setting forth, among other things, (a) the total amount distributed to
Certificateholders of each Class of such Series, (b) the amount of any
distribution allocable to principal on such Certificates, (c) the amount of such
distribution allocable to interest on such Certificates, (d) the aggregate
amount of collections processed during the prior Monthly Period and allocated in
respect of the Certificates, (e) the amount of collections of Principal
Receivables processed during the prior Monthly Period and allocated in respect
of the Certificates, (f) the amount of collections of Finance Charge Receivables
processed during the prior Monthly Period and allocated in respect of the
Certificates, (g) the Series Percentage with respect to each Class of
Certificates with respect to Principal Receivables and Finance Charge
Receivables, each as of the end of the last day of the prior Monthly Period, (h)
the aggregate outstanding balance of Accounts which are 30 or more days
contractually delinquent, by class of delinquency, as of the end of the last day
of the prior Monthly Period, (i) the Defaulted Amount for the prior Monthly
Period, (j) the amount of the Monthly Servicing Fee for each Class for the prior
Monthly Period, and (k) the amount of any Series Enhancement, if any, available
with respect to each Class as of the close of business on such Distribution
Date.
On or before a date of each calendar year specified in the related
Prospectus Supplement, ending in the year following the date a Series
terminates, the Paying Agent will furnish to each person who at any time during
the preceding calendar year was a Certificateholder of record of such Series a
statement prepared by the Servicer containing the information required to be
contained in the regular monthly report to Certificateholders of such Series, as
set forth in clauses (a), (b) and (c) above, aggregated for such calendar year
or the applicable portion thereof during which such person was a
Certificateholder, together with such other customary information (consistent
with the treatment of the Certificates as debt) as the Trustee or the Servicer
deems necessary or desirable to enable the Certificateholders of such Series to
prepare their tax returns.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before March 31 of
each calendar year, the Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer, the Transferor or any Account Owner) to furnish a report (addressed to
the Trustee) to the effect that such firm has applied certain agreed-upon
procedures to certain documents and
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records relating to the servicing of the Receivables for the prior calendar year
and that, based upon such agreed-upon procedures, no matters came to their
attention that caused them to believe that such servicing (including the
allocations of collections) was not conducted in compliance with certain
applicable terms and conditions set forth in the Pooling and Servicing Agreement
and any Series Supplements except for such exceptions as such firm shall believe
to be immaterial and such other exceptions as shall be set forth in such
statement. Such report will set forth the agreed-upon procedures performed.
The Pooling and Servicing Agreement provides for delivery to the Trustee on
or before March 31 of each calendar year of a statement signed by an authorized
officer of the Servicer to the effect that the Servicer has, or has caused to
be, fully performed its obligations in all material respects under the Pooling
and Servicing Agreement and any Series Supplements throughout the preceding year
or, if there has been a default in the performance of any such obligations,
specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by a request in writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement or any Series Supplement may be amended
from time to time (including, among other things, in connection with the
provision of additional Series Enhancement for the benefit of the
Certificateholders of any Series or the reduction of such Series Enhancement,
the issuance of a Supplemental Certificate, the addition of a Participation
Interest to the Trust or the designation of an Additional Transferor) by the
Transferor, the Servicer and the Trustee, without Certificateholder consent,
provided that the Transferor has delivered to the Trustee an officer's
certificate to the effect that the Transferor reasonably believes that such
amendment will not have an Adverse Effect and that the Rating Agency Condition
has been satisfied. In addition, the Pooling and Servicing Agreement or any
Series Supplement may be amended from time to time without notice to or consent
of the Certificateholders and without satisfaction of the Rating Agency
Condition to (i) enable all or a portion of the Trust to qualify as a "financial
asset securitization investment trust" under the Code or (ii) to enable the
trust to qualify as a partnership for purposes of any state tax laws.
The Pooling and Servicing Agreement or any Series Supplement may also be
amended by the Transferor, the Servicer and the Trustee with the consent of the
holders of Certificates evidencing not less than 66 2/3% of the aggregate
Investor Amount of all adversely affected Series of Certificates for the purpose
of adding any provisions to, changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or any Series Supplement or of
modifying in any manner the rights of Certificateholders. No such amendment,
however, may (a) reduce in any manner the amount of or delay the timing of
distributions to be made to Certificateholders or deposits of amounts to be so
distributed or the amount available under any Series Enhancement without the
consent of each affected Certificateholder, (b) change the definition of or the
manner of calculating the interest of any Certificateholder without the consent
of each affected Certificateholder, (c) reduce the aforesaid percentage required
to consent to any such amendment without the consent of each Certificateholder
or (d) adversely affect the rating of any Series or Class by any Rating Agency
without the consent of Certificateholders of such Series or Class evidencing not
less than 66 2/3% of the aggregate Investor Amount of such Series or Class. Any
amendment shall be deemed not to adversely affect any outstanding Series with
respect to which the Transferor deliver an opinion of counsel that such
amendment will not have an Adverse Effect with respect to such Series. Promptly
following the execution of any such amendment, the Trustee will furnish written
notice (provided to the Trustee by the Servicer) of the substance of such
amendment to each Certificateholder.
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INTEREST RATE SWAPS AND RELATED CAPS, FLOORS AND COLLARS
The Trustee on behalf of the Trust may enter into interest rate swaps and
related caps, floors and collars to minimize the risk to Certificateholders from
adverse changes in interest rates (collectively, "Swaps").
An interest rate Swap is an agreement between two parties ("Counterparties")
to exchange a stream of interest payments on an agreed hypothetical or
"notional" principal amount. No principal amount is exchanged between the
counterparties to an interest rate Swap. In the typical Swap, one party agrees
to pay a fixed rate on a notional principal amount, while the counterparty pays
a floating rate based on one or more reference interest rates such as the London
Interbank Offered Rate ("LIBOR"), a specified bank's prime rate, or U.S.
Treasury Bill rates. Interest rate Swaps also permit counterparties to exchange
a floating-rate obligation based upon one reference interest rate (such as
LIBOR) for a floating-rate obligation based upon another referenced interest
rate (such as U.S. Treasury Bill rates).
The Swap market has grown substantially in recent years with a significant
number of banks and financial service firms acting both as principals and as
agents utilizing standardized Swap documentation. Caps, floors and collars are
more recent innovations, and they are less liquid than other Swaps. There can be
no assurance that the Trust will be able to enter into or offset Swaps at any
specific time or at prices or on other terms that are advantageous. In addition,
although the terms of Swaps may provide for termination under certain
circumstances, there can be no assurance that the Trust will be able to
terminate or offset a Swap on favorable terms.
DEFEASANCE
Pursuant to the Pooling and Servicing Agreement, the Transferor may
terminate its substantive obligations in respect of any Series or all
outstanding Series (the "Defeased Series") by depositing with the Trustee (such
deposit to be made from other than the Transferor's or any affiliate of the
Transferor's funds), under the terms of an irrevocable trust agreement
satisfactory to the Trustee, monies or Eligible Investments (or a combination
thereof) sufficient to make all remaining scheduled interest and principal
payments on the Defeased Series on the dates scheduled for such payments and to
pay all amounts owing to any provider of Series Enhancement with respect to such
Defeased Series. To achieve that end, the Transferor has the right to use
collections on Receivables allocated to the Defeased Series and available to
purchase additional Receivables to be applied to purchase Eligible Investments
rather than additional Receivables. Prior to the first exercise of the right to
substitute monies or Eligible Investments for Receivables, the Transferor shall
deliver to the Trustee an opinion of counsel to the effect that such deposit and
termination of obligations will not cause the Trust to be an association or
publicly traded partnership taxable as a corporation, and shall deliver to the
Servicer and the Trustee written notice from each Rating Agency that the Rating
Agency Condition shall have been satisfied. In addition, the Transferor must
comply with certain other requirements set forth in the Pooling and Servicing
Agreement, including requirements that the Transferor deliver to the Trustee an
opinion of counsel to the effect that the deposit and termination of obligations
will not require the Trust to register as an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and that the
Transferor deliver to the Trustee and certain providers of Series Enhancement a
certificate of an authorized officer stating that, based on the facts known to
such officer at the time, in the reasonable opinion of the Transferor, such
deposit and termination of obligations will not at the time of its occurrence
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 any Series.
If the Transferor discharges its substantive obligations in respect of the
Defeased Series, any Series Enhancement for the affected Series might no longer
be available to make payments with respect thereto.
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LIST OF CERTIFICATEHOLDERS
Upon application of Certificateholders of record representing undivided
interests in the Trust aggregating not less than 10% of the aggregate unpaid
principal amount of any Series or all Series, as applicable, the Trustee will,
having been adequately indemnified by such Certificateholders, within five
business days of such request, afford such Certificateholders access during
business hours to the current list of registered Certificateholders of such
Series or all Series, as applicable, for purposes of communicating with other
Certificateholders with respect to their rights under the Pooling and Servicing
Agreement or any Series Supplement or the Certificates.
THE TRUSTEE
The Bank of New York, a New York banking corporation, will be Trustee under
the Pooling and Servicing Agreement. The Transferor, the Servicer and their
respective affiliates may from time to time enter into normal banking and
trustee relationships with the Trustee and its affiliates. The Trustee, the
Transferor, the Servicer and any of their respective affiliates may hold
Certificates in their own names. In addition, for purposes of meeting the legal
requirements of certain local jurisdictions, the Trustee shall have the power to
appoint a co-trustee or separate trustees of all or any part of the Trust. In
the event of such appointment, all rights, powers, duties and obligations
conferred or imposed upon the Trustee by the Pooling and Servicing Agreement
shall be conferred or imposed upon the Trustee and such separate trustee or
co-trustee jointly, or, in any jurisdiction in which the Trustee shall be
incompetent or unqualified to perform certain acts, singly upon such separate
trustee or co-trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor Trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement, is legally unable to act or if the Trustee
becomes bankrupt or insolvent. In such circumstances, the Servicer will be
obligated to appoint a successor Trustee. Any resignation or removal of the
Trustee and appointment of a successor Trustee does not become effective until
acceptance of the appointment by the successor Trustee.
SERIES ENHANCEMENT
GENERAL
For any Series, Series Enhancement may be provided with respect to one or
more Classes thereof. Series Enhancement may be in the form of the subordination
of one or more Classes of the Certificates of such Series, a letter of credit,
the establishment of a cash collateral guaranty or account, a collateral
interest, a surety bond, insurance, the use of cross support features or another
method of Series Enhancement described in the related Prospectus Supplement, or
any combination of the foregoing. If so specified in the related Prospectus
Supplement, any form of Series Enhancement may be structured so as to be drawn
upon by more than one Class to the extent described therein.
Unless otherwise specified in the related Prospectus Supplement for a
Series, the Series Enhancement will not provide protection against all risks of
loss and will not guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur which exceed the amount
covered by the Series Enhancement or which are not covered by the Series
Enhancement, Certificateholders will bear their allocable share of deficiencies.
If Series Enhancement is provided with respect to a Series, the related
Prospectus Supplement will include a description of (a) the amount payable under
such Series Enhancement, (b) any conditions to payment thereunder not otherwise
described herein, (c) the conditions (if any) under which the amount payable
under such Series Enhancement may be reduced and under which such Series
Enhancement may
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be terminated or replaced and (d) any provisions of any agreement relating to
such Series Enhancement material to the Certificateholders of such Series.
Additionally, the related Prospectus Supplement may set forth certain
information with respect to the issuer of any third-party Series Enhancement,
including (i) a brief description of its principal business activities, (ii) its
principal place of business, place of incorporation and the jurisdiction under
which it is chartered or licensed to do business, (iii) if applicable, the
identity of regulatory agencies which exercise primary jurisdiction over the
conduct of its business and (iv) its total assets, and its stockholders' or
policyholders' surplus, if applicable, as of the date specified in the
Prospectus Supplement.
SUBORDINATION
If so specified in the related Prospectus Supplement, one or more Classes of
a Series may be subordinated to one or more other Classes of a Series. If so
specified in the related Prospectus Supplement, the rights of the holders of the
subordinated Certificates to receive distributions of principal and/or interest
on any Distribution Date will be subordinated to such rights of the holders of
the Certificates which are senior to such subordinated Certificates to the
extent set forth in the related Prospectus Supplement. The amount of
subordination may decrease whenever certain amounts otherwise payable to the
holders of subordinated Certificates are paid to the holders of the Certificates
that are senior to such subordinated Certificates.
LETTER OF CREDIT
If so specified in the related Prospectus Supplement, a letter of credit
with respect to a Series or Class of Certificates may be issued by the bank or
financial institution specified in the related Prospectus Supplement (the "L/C
Bank"). Under the letter of credit, the L/C Bank will be obligated to honor
drawings thereunder in an aggregate fixed dollar amount, net of unreimbursed
payments thereunder, equal to the amount described in the related Prospectus
Supplement. The amount available under the letter of credit will be reduced to
the extent of the unreimbursed payments thereunder.
CASH COLLATERAL GUARANTY OR ACCOUNT
If specified in the related Prospectus Supplement, the Certificates of any
Class or Series may have the benefit of a Cash Collateral Guaranty issued
pursuant to a trust agreement between a cash collateral depositor, a cash
collateral trustee and the Transferor and the Servicer or a Cash Collateral
Account directly. The Cash Collateral Guaranty will generally be an obligation
of the cash collateral trust and not of the cash collateral depositor, the cash
collateral trustee (except to the extent of amounts on deposit in the cash
collateral account), the Trustee, the Transferor, the Servicer or any Account
Owner.
The Servicer will determine on each Determination Date with respect to the
Series enhanced by the Cash Collateral Guaranty or the Cash Collateral Account
whether a deficiency exists with respect to the payment of interest and/or
principal on the Certificates so enhanced. If the Servicer determines that a
deficiency exists, it shall instruct the Trustee to draw an amount equal to such
deficiency from the Cash Collateral Guaranty or the Cash Collateral Account, up
to the maximum amount available thereunder.
COLLATERAL INTEREST
If so specified in the Prospectus Supplement, support for a Series of
Certificates or one or more Classes thereof may be provided initially by a
certificated or uncertificated, subordinated interest in the Trust (the
"Collateral Interest") in an amount initially equal to a percentage of the
Certificates of such Series specified in the Prospectus Supplement.
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SURETY BOND OR INSURANCE POLICY
If so specified in the related Prospectus Supplement, insurance with respect
to a Series or Class of Certificates may be provided by one or more insurance
companies. Such insurance will guarantee, with respect to one or more Classes of
the related Series, distributions of interest or principal in the manner and
amount specified in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, a surety bond may be
purchased for the benefit of the holders of any Series or Class of such Series
to assure distributions of interest or principal with respect to such Series or
Class of Certificates in the manner and amount specified in the related
Prospectus Supplement.
SPREAD ACCOUNT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes of a Series may be provided by the periodic deposit of
certain available excess cash flow from the Trust Assets into an account (the
"Spread Account") intended to assure the subsequent distribution of interest and
principal on the Certificates of such Class or Series in the manner specified in
the related Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
Under the Receivables Transfer Agreements, the Banks, and any Additional
Account Owners, will sell the Receivables to the Transferor and the Transferor,
in turn, will transfer the Receivables to the Trust. Each Account Owner and the
Transferor represents and warrants that its respective transfer constitutes a
valid sale and assignment of all of its respective right, title and interest in
and to the Receivables. The Transferor also represents and warrants that, if the
transfer of Receivables by the Transferor to the Trust is deemed to create a
security interest under the Uniform Commercial Code ("UCC"), there exists a
valid, subsisting and enforceable first priority perfected security interest in
the Receivables in existence at the time of the formation of the Trust or at the
date of any designation of Additional Accounts, as the case may be, in favor of
the Trust and a valid, subsisting and enforceable first priority perfected
security interest in the Receivables created thereafter in favor of the Trust on
and after their creation, in each case, until termination of the Trust.
Each Account Owner and the Transferor represents and warrants that the
Receivables are "accounts" or "general intangibles" for purposes of the UCC.
Both the sale of accounts and the transfer of accounts as security for an
obligation are treated under Article 9 of the UCC as creating a security
interest therein and are subject to its provisions, and the filing of
appropriate financing statements is required to perfect the security interest of
the Trust. If a transfer of general intangibles is deemed to create a security
interest, the UCC applies and filing of an appropriate financing statement is
also required in order to perfect the Trust's security interest in the
Receivables. Financing statements covering the Receivables will be filed with
the appropriate governmental authority to protect the interests of the Trust in
the Receivables. If a transfer of general intangibles is deemed not to create a
security interest, the filing of a financing statement is not required to
protect the Trust's interest from third parties.
There are certain limited circumstances under the UCC in which a prior or
subsequent transferee of Receivables coming into existence after the date on
which such Receivables are transferred to the Trust could have an interest in
such Receivables with priority over the Trust's interest. Under the Receivables
Transfer Agreement, each Account Owner warrants, and under the Pooling and
Servicing Agreement, the Transferor warrants, that it has transferred the
Receivables free and clear of the lien of any third party, except for certain
tax and governmental liens and other nonconsensual liens. In addition, each of
the Account Owners and the Transferor covenants that, except as permitted by the
Pooling and Servicing
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Agreement, it will not sell, pledge, assign, transfer or grant any lien on any
Receivable (or any interest therein) other than to the Transferor on the Trust.
A tax or other government lien or other nonconsensual lien on property of the
Transferor arising prior to the time a Receivable comes into existence may,
however, have priority over the interest of the Trust in such Receivable. In
addition, if the FDIC were appointed as receiver or conservator of one of the
Banks, certain administrative expenses of the receiver or conservator or, with
respect to The Travelers Bank USA, the Delaware State Bank Commissioner and
certain borrowings made by the receiver or conservator may also have priority
over the interest of the Trust in the Receivables arising from the Accounts
owned by such Bank.
CERTAIN MATTERS RELATING TO INSOLVENCY
The Travelers Bank USA is chartered as a Delaware banking corporation and is
subject to regulation and supervision by the Delaware State Bank Commissioner.
If The Travelers Bank USA becomes insolvent or is in an unsound condition or if
certain other circumstances occur, the Delaware State Bank Commissioner may
request the Attorney General of Delaware to apply to the Delaware Court of
Chancery for an order appointing a receiver for such Bank. Since The Travelers
Bank USA is a FDIC-insured bank, Delaware law would require that the FDIC be
appointed receiver and, as a matter of federal law, the FDIC would be
authorized, but not obligated, to accept such appointment.
Travelers Bank & Trust, fsb is a federally-chartered savings bank and is
subject to regulation and examination by the Office of Thrift Supervision, If
Travelers Bank & Trust, fsb were to become insolvent or if certain other
circumstances were to occur, the Director of the Office of Thrift Supervision is
empowered to appoint a conservator or receiver. The FDIC could be appointed as a
conservator or receiver of Travelers Bank & Trust, fsb.
The FDIA, as amended by FIRREA, sets forth certain powers that the FDIC
could exercise if it were appointed as receiver or conservator of a Bank.
Positions taken by the FDIC staff prior to the passage of FIRREA do not suggest
that the FDIC, as conservator or receiver for the relevant Bank, would interfere
with the timely transfer to a Trust of payments collected on the related
Receivables. If, however, the FDIC were to assert a contrary position, such as
requiring the Transferor or the Trustee to establish its right to those payments
by submitting to and completing the administrative claims procedure under the
FDIA, or the conservator or receiver were to request a stay of proceedings with
respect to the Transferor or the Trust as provided under the FDIA, delays in
payments on the related Series of Certificates and possible reductions in the
amount of those payments could occur. In addition, the FDIC, if appointed as
conservator or receiver for a Bank, has the power under the FDIA to repudiate
contracts, including secured contracts of such Bank. The FDIA provides that a
claim for damages arising from the repudiation of a contract is limited to
"actual direct compensatory damages." In the event the FDIC were to be appointed
as conservator or receiver of a Bank and were to repudiate the Receivables
Transfer Agreement, then the amount payable out of available collateral to the
Certificateholders could be lower than the outstanding principal and accrued
interest on the Certificates.
The U.S. Court of Appeals for the Tenth Circuit, in OCTAGON GAS SYSTEM, INC.
V. RIMMER decided May 27, 1993, concluded that "accounts," as defined under the
UCC, and which could include the Receivables, may properly be included in the
bankruptcy estate of a transferor regardless of whether the transfer of such
Receivables is treated as a sale or a secured loan. The circumstances under
which the OCTAGON ruling would apply are not fully known and the extent to which
the OCTAGON decision will be followed in other courts or outside of the Tenth
Circuit is not certain. If the findings in the OCTAGON case were applied in a
bankruptcy of the Transferor, the Receivables would be part of its bankruptcy
estate, would be subject to claims of certain creditors and would be subject to
the potential delays and reductions in payments to the Trust and the
Certificateholders even if the transfer is treated as a sale.
The Transferor will take all actions that are required under the UCC to
perfect the Trust's interest in the Receivables and the Transferor has warranted
to the Trust that the Trust will have a first priority
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security interest therein and, with certain exceptions, in the proceeds thereof.
Nevertheless, a tax or government lien or other nonconsensual lien on property
of the Transferor arising prior to the time a Receivable is conveyed to the
Trust may have priority over the interest of the Trust in such Receivable. The
Transferor has been structured such that (i) the voluntary or involuntary
application for relief under the Bankruptcy Code or similar applicable state
laws, and (ii) the substantive consolidation of the Transferor and Commercial
Credit Company are unlikely. The Transferor is a separate, limited purpose
subsidiary, the certificate of incorporation of which provides that it shall not
file a voluntary petition for relief under the Bankruptcy Code without the
unanimous affirmative vote of all of its directors. Pursuant to the Pooling and
Servicing Agreement, the Trustee covenants that it will not at any time
institute against the Transferor any bankruptcy, reorganization or other
proceedings under any federal or state bankruptcy or similar law. In addition,
certain other steps will be taken to avoid the Transferor's becoming a debtor in
a bankruptcy case. Notwithstanding such steps, if the Transferor were to become
a debtor in a bankruptcy case, and a bankruptcy trustee for the Transferor or a
creditor of the Transferor or the Transferor itself were to take the position
that the transfer of the Receivables from the Transferor to the Trust should be
recharacterized as a pledge of such Receivables, then delays in payments on the
Certificates and possible reductions in the amount of such payments could
result.
While Travelers Bank & Trust, fsb is the Servicer, cash collections held by
the Servicer may, subject to certain conditions, be commingled and used for the
benefit of Travelers Bank & Trust, fsb prior to each Distribution Date and, in
the event of the bankruptcy, insolvency or receivership of Travelers Bank &
Trust, fsb or, in certain circumstances, the lapse of certain time periods, the
Trust may not have a perfected interest in such collections and accordingly, not
be entitled to such collections. The Servicer will be allowed to make monthly
rather than daily deposits of collections to the Collection Account if any of
the following conditions are satisfied: (i) Travelers Bank & Trust, fsb
maintains a commercial paper rating of at least A-1 and P-1 by Standard & Poor's
and Moody's, as applicable, (for such other rating below A-1 or P-1, as the case
may be, that is acceptable to each Rating Agency), (ii) Commercial Credit
Company has a commercial paper rating of at least A-1 and P-1 by Standard &
Poor's and Moody's, Travelers Bank & Trust, fsb remains a direct or indirect
majority-owned Travelers Group Inc. subsidiary and certain other arrangements
are made satisfactory to each Rating Agency or (iii) any other arrangement that
satisfies the Rating Agency Condition. If none of the foregoing conditions are
satisfied, then Travelers Bank & Trust, fsb will, within five business days,
commence the deposit of collections directly into the Collection Account within
two business days of the Date of Processing.
The Pooling and Servicing Agreement provides that, upon the commencement of
an Insolvency Event with respect to the Transferor, the Transferor will promptly
give notice thereof to the Trustee, and a Pay Out Event with respect to all
Series will occur. Under the Pooling and Servicing Agreement, no new Principal
Receivables will be transferred to the Trust. Upon the occurrence of a Pay Out
Event or a Reinvestment Event, if a conservator or receiver is appointed for the
Transferor and no Pay Out Event or Reinvestment Event other than such
conservatorship or receivership or insolvency of the Transferor exists, the
conservator or receiver may have the power to prevent the commencement of a
Rapid Amortization Period or Rapid Accumulation Period with respect to any
outstanding Series. In addition, a conservator or receiver for the Transferor
may have the power to cause early sale of the Receivables and the early payment
of the Certificates or to prohibit the continued transfer of Principal
Receivables to the Trust.
In the event of a Servicer Default, if a conservator or receiver is
appointed for the Servicer, and no Servicer Default other than such
conservatorship or receivership or insolvency of the Servicer exists, the
conservator or receiver may have the power to prevent either the Trustee or
Certificateholders from effecting a transfer of servicing to a successor
Servicer.
CONSUMER PROTECTION LAWS
The relationship of the cardholder and credit card issuer is extensively
regulated by federal and state consumer protection laws. With respect to credit
cards issued by the Banks, the most significant of these
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laws include the Federal Truth-in-Lending Act, Equal Credit Opportunity Act,
Fair Credit Reporting Act, Fair Debt Collection Practices Act and Electronic
Funds Transfer Act, and comparable statutes in the states in which cardholders
reside. These statutes impose disclosure requirements when a credit card account
is advertised, when it is opened, at the end of monthly billing cycles, upon
account renewal for accounts on which annual fees are assessed, and at year end
and, in addition, limit cardholder liability for unauthorized use, prohibit
certain discriminatory practices in extending credit, and impose certain
limitations on the type of account-related charges that may be assessed. Federal
legislation requires credit card issuers to disclose to consumers the interest
rates, annual cardholder fees and other related grace periods, and balance
calculation methods associated with their credit card accounts. Cardholders are
entitled under current law to have payments and credits applied to the credit
card account promptly, to receive prescribed notices and to have billing errors
resolved promptly. Congress and the states may enact new laws and amendments to
existing laws to regulate further the credit card industry.
The Trust may be liable for certain violations of consumer protection laws
that apply to the Receivables, either as assignee of the Account Owner with
respect to obligations arising before transfer of the Receivables to the Trust
or as a party directly responsible for obligations arising after the transfer.
In addition, a cardholder may be entitled to assert such violations by way of
set-off against his obligation to pay the amount of Receivables owing. All
Receivables that were not created in compliance in all material respects with
the requirements of such laws (if such noncompliance has a material adverse
effect on the Certificateholders' Interest therein) will be reassigned to the
Transferor and ultimately back to the applicable Account Owner. The Servicer has
also agreed in the Pooling and Servicing Agreement to indemnify the Trust for,
among other things, any liability arising from such violations. See "The Pooling
and Servicing Agreement Generally--Representations, Warranties and Covenants."
Application of Federal and state bankruptcy and debtor relief laws would
adversely affect the interests of the Certificateholders if such laws result in
any Receivables being written off as uncollectible. See "The Pooling and
Servicing Agreement Generally--Defaulted Receivables; Rebates and Fraudulent
Charges."
PROPOSED LEGISLATION
Congress and the states may enact new laws and amendments to existing laws
to regulate further the credit card industry or to reduce finance charges or
other fees or charges applicable to credit card accounts. The potential effect
of any such legislation could be to reduce the yield on the Accounts. If such
yield is reduced, a Pay Out Event or Reinvestment Event could occur, and the
Rapid Amortization Period or Rapid Accumulation Period would commence. See "The
Pooling and Servicing Agreement Generally-- Pay Out Events and Reinvestment
Events."
RECENT LITIGATION
Since October 1991, a number of lawsuits and administrative actions have
been filed in several states against out-of-state banks (both federally-insured
state-chartered banks and federally-insured national banks) which issued credit
cards. These actions challenge various fees and charges (such as late fees,
over-the-limit fees, returned check charges and annual membership fees) assessed
against residents of the states in which such suits were filed, based on
restrictions or prohibitions under such states' laws alleged to be applicable to
the out-of-state credit card issuers. The Supreme Courts of California, Colorado
and New Jersey have recently issued decisions in such actions. The California
and Colorado Supreme Courts opined that federal law governed late fees and found
for the respective defendant banks, while the New Jersey Supreme Court found
that late payment fees are not interest and that, therefore, state law is not
preempted by federal law with respect to such fees. On June 3, 1996, the United
States Supreme Court upheld the decision of the California Supreme Court,
holding that the late payment fees in question were "interest" and as such were
governed by federal law, which authorizes federally-insured state banks to
charge out-of-state customers an interest rate allowed by the bank's home state.
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FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of material federal income tax
consequences relating to the purchase, ownership and disposition of a
Certificate offered hereunder that are anticipated to be relevant to most
categories of investors, which discussion has been prepared by Orrick,
Herrington & Sutcliffe LLP, special federal income tax counsel to the Transferor
("Special Tax Counsel"). Additional material federal income tax considerations,
if any, relevant to a particular Series will be set forth in the related
Prospectus Supplement. Special Tax Counsel is of the opinion that this
discussion is correct in all material respects. As more fully described below,
Special Tax Counsel is also of the opinion that the offered Certificates will be
characterized as debt for federal income tax purposes and that the Trust will
not be treated as an association or publicly traded partnership taxable as a
corporation for such purposes. Except as provided in a related Prospectus
Supplement, Special Tax Counsel will render no other opinions to the Transferor
with respect to the offered Certificates or the Trust. This discussion is
intended as an explanatory discussion of the possible effects of the
classification of the offered Certificates as debt to investors generally and
related tax matters affecting investors generally, but does not purport to
furnish information in the level of detail or with the attention to an
investor's specific tax circumstances that would be provided by an investor's
tax advisor. This discussion is based on current law, which is subject to
changes that could prospectively or retroactively modify or adversely affect the
tax consequences summarized below. The discussion does not address all of the
tax consequences relevant to a particular Certificate Owner in light of that
Certificate Owner's circumstances, and some Certificate Owners may be subject to
special tax rules and limitations not discussed below. Each prospective
Certificate Owner is urged to consult its own tax adviser in determining the
federal, state, local and foreign income and any other tax consequences of the
purchase, ownership and disposition of a Certificate.
For purposes of this discussion, "U.S. Person" means a citizen or resident
of the United States, a corporation or partnership organized in or under the
laws of the United States, any state thereof, or any political subdivision of
either (including the District of Columbia), or an estate or trust the income of
which is includible in gross income for U.S. federal income tax purposes
regardless of its source. The term "U.S. Certificate Owner" means any U.S.
Person and any other person to the extent that the income attributable to its
interest in a Certificate is effectively connected with that person's conduct of
a U.S. trade or business.
TREATMENT OF THE CERTIFICATES AS DEBT
The Transferor and the Certificateholders express in the Pooling and
Servicing Agreement the intent that for federal, state and local income and
franchise tax purposes, the Certificates will be debt secured by the
Receivables. The Transferor, by entering into the Pooling and Servicing
Agreement, and each investor, by the acceptance of a beneficial interest in a
Certificate, will agree to treat the Certificates as debt for federal, state and
local income and franchise tax purposes. However, the Pooling and Servicing
Agreement generally refers to the transfer of Receivables as a "sale," and
because different criteria are used in determining the non-tax accounting
treatment of the transaction, the Transferor will treat the Pooling and
Servicing Agreement for certain non-tax accounting purposes as causing a
transfer of an ownership interest in the Receivables and not as creating a debt
obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines its tax consequences. The form and non-tax
characterization of a transaction, while relevant factors, are not conclusive
evidence of its economic substance. In appropriate circumstances, the courts
have allowed taxpayers as well as the Internal Revenue Service (the "IRS") to
treat a transaction in accordance with its economic substance as determined
under federal income tax law, even though the participants in the transaction
have characterized it differently for non-tax purposes.
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The determination of whether the economic substance of a purchase of an
interest in property is instead a loan secured by the transferred property has
been made by the IRS and the courts on the basis of numerous factors designed to
determine whether the Transferor has relinquished (and the purchaser has
obtained) substantial incidents of ownership in the property. Among those
factors, the primary ones examined are whether the purchaser has the opportunity
to gain if the property increases in value, and has the risk of loss if the
property decreases in value. Except to the extent otherwise specified in the
related Prospectus Supplement, Special Tax Counsel is of the opinion that, under
current law as in effect on the Relevant Closing Date, although no transaction
closely comparable to that contemplated herein has been the subject of any
Treasury regulation, revenue ruling or judicial decision, for federal income tax
purposes the Certificates offered hereunder will not constitute an ownership
interest in the Receivables, but properly will be characterized as debt. Except
where indicated to the contrary, the following discussion assumes that the
Certificates offered hereunder are debt for federal income tax purposes.
TREATMENT OF THE TRUST
GENERAL. The Pooling and Servicing Agreement permits the issuance of
Certificates and certain other interests in the Trust (including Collateral
Interests), each of which may be treated for federal income tax purposes either
as debt or as equity interests in the Trust. If all of the Certificates and
other interests (other than the Transferor Certificate) in the Trust were
characterized as debt, the Trust might be characterized as a security
arrangement for debt collateralized by the Receivables and issued directly by
the Transferor (or other holders of the Transferor Certificate). Under such a
view, the Trust would be disregarded for federal income tax purposes.
Alternatively, if some of the Certificates or other interests in the Trust
(other than the Transferor Certificate) were characterized as equity, the Trust
might be characterized as a separate entity owning the Receivables, issuing its
own debt, and jointly owned by the Transferor (or other holder of the Transferor
Certificate) and the other holders of equity interests in the Trust. However,
Special Tax Counsel is of the opinion that, under current law as in effect on
the Relevant Closing Date, any such entity constituted by the Trust will not be
an association or publicly traded partnership taxable as a corporation.
POSSIBLE TREATMENT OF THE TRUST AS A PARTNERSHIP OR A PUBLICLY TRADED
PARTNERSHIP. Although, as described above, Special Tax Counsel is of the
opinion that the Certificates will properly be treated as debt for federal
income tax purposes and that the Trust will not be treated as an association or
publicly traded partnership taxable as a corporation for such purposes, such
opinion will not bind the IRS and thus no assurance can be given that such
treatment will prevail. If the IRS were to contend successfully that some or all
of the Certificates or any other interest in the Trust (other than the
Transferor Certificate, but including any Collateral Interest) were not debt
obligations for federal income tax purposes, all or a portion of the Trust could
be classified as a partnership or a publicly traded partnership taxable as a
corporation for such purposes. Because Special Tax Counsel is of the opinion
that the Certificates will be characterized as debt for federal income tax
purposes and because any holder of an interest in a Collateral Interest will
agree to treat that interest as debt for such purposes, no attempt will be made
to comply with any tax reporting requirements that would apply as a result of
such alternative characterizations.
If the Trust were treated in whole or in part as a partnership in which some
or all holders of interests in the publicly offered Certificates were partners,
that partnership could be classified as a publicly traded partnership and so
could be taxable as a corporation. Further, regulations published by the
Treasury Department (the "Regulations") could cause the Trust to constitute a
publicly traded partnership even if all holders of interests in publicly offered
Certificates are treated as holding debt. If the Trust were classified as a
publicly traded partnership, whether by reason of the treatment of publicly
offered Certificates as equity or by reason of the Regulations, it would avoid
taxation as a corporation if its income was not derived in the conduct of a
"financial business;" however, whether the income of the Trust would be so
classified is unclear.
Under the Code and the Regulations, a partnership will be classified as a
publicly traded partnership if equity interests therein are traded on an
"established securities market," or are "readily tradable" on a
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"secondary market" or its "substantial equivalent." The Transferor intends to
take measures designed to reduce the risk that the Trust could be classified as
a publicly traded partnership by reason of interests in the Trust other than the
publicly traded Certificates. Although the Transferor expects such measures will
ultimately be successful, certain of the actions that may be necessary for
avoiding the treatment of such interests as "readily tradable" on a "secondary
market" or its "substantial equivalent" are not fully within the control of the
Transferor. As a result, there can be no assurance that the measures the
Transferor intends to take will in all circumstances be sufficient to prevent
the Trust from being classified as a publicly traded partnership under the
Regulations.
If the Trust were treated as a partnership other than a publicly traded
partnership taxable as a corporation, that partnership would not be subject to
federal income tax. Rather, each item of income, gain, loss and deduction of the
partnership generated through the ownership of the related Receivables would be
taken into account directly in computing taxable income of the Transferor (or
the holder of the Transferor Certificate) and any Certificate Owners treated as
partners in accordance with their respective partnership interests therein. The
amounts and timing of income reportable by any Certificate Owners treated as
partners would likely differ from that reportable by such Certificate Owners had
they been treated as owning debt. In addition, if the Trust were treated in
whole or in part as a partnership other than a publicly traded partnership,
income derived from the partnership by any Certificate Owner that is a pension
fund or other tax-exempt entity may be treated as unrelated business taxable
income. Partnership characterization also may have adverse state and local
income or franchise tax consequences for a Certificate Owner. Further, if the
Trust were treated in whole or in part as a partnership and the number of
holders of interests in the publicly offered Certificates and other interests in
the Trust treated as partners equaled or exceeded 100, the Transferor may cause
that Trust to elect to be an "electing large partnership." The consequence of
such election to investors could include the determination of certain tax items
at the partnership level and the disallowance of otherwise allowable deductions.
No representation is made as to whether any such election will be made.
If the arrangement created by the Pooling and Servicing Agreement were
treated in whole or in part as a publicly traded partnership taxable as a
corporation, that entity would be subject to federal income tax at corporate tax
rates on its taxable income generated by ownership of the related Receivables.
That tax could result in reduced distributions to Certificate Owners. No
distributions from the Trust would be deductible in computing the taxable income
of the corporation, except to the extent that any Certificates were treated as
debt of the corporation and distributions to the related Certificate Owners were
treated as payments of interest thereon. In addition, distributions to
Certificate Owners not treated as holding debt would be dividend income to the
extent of the current and accumulated earnings and profits of the corporation
(and Certificate Owners may not be entitled to any dividends received deduction
in respect of such income).
FASIT ELECTION. Upon satisfying certain conditions set forth in the Pooling
and Servicing Agreement, the Transferor will be permitted to amend the Pooling
and Servicing Agreement and any Supplement in order to enable all or a portion
of a Trust to qualify under the Code as a "financial asset securitization
investment trust" or "FASIT" and to permit a FASIT election to be made with
respect thereto. See "The Pooling and Servicing Agreement
Generally--Amendments." Under the FASIT provisions of the Code, a FASIT
generally would avoid federal income taxation and could issue securities
substantially similar to the Certificates, and those securities would be treated
as debt for federal income tax purposes. However, there can be no assurance that
the Transferor will or will not cause any permissible FASIT election to be made
with respect to a Trust, or amend the Pooling and Servicing Agreement or any
Supplement in connection with any election. However, if such an election is
made, it may cause a holder to recognize gain (but not loss) with respect to its
Certificate, even though Special Tax Counsel will deliver its opinion that a
Certificate will be treated as debt for federal income tax purposes without
regard to the election and the Certificate would be treated as debt following
the election. Additionally, any such election and any related amendments to the
Pooling and Servicing Agreement and any Supplement may have other tax and
non-tax
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consequences to Certificateholders. Accordingly, prospective Certificateholders
should consult their tax advisors with regard to the effects of any such
election and any permitted related amendments on them in their particular
circumstances.
TAXATION OF INTEREST INCOME OF U.S. CERTIFICATE OWNERS
GENERAL. Stated interest on a beneficial interest in a Certificate will be
includible in gross income in accordance with a U.S. Certificate Owner's method
of accounting.
ORIGINAL ISSUE DISCOUNT. If the Certificates are issued with original issue
discount ("OID"), the provisions of sections 1271 through 1273 and 1275 of the
Internal Revenue Code of 1986 (the "Code") will apply to the Certificates. Under
those provisions, a U.S. Certificate Owner (including a cash basis holder)
generally would be required to accrue the OID on its interest in a Certificate
in income for federal income tax purposes on a constant yield basis, resulting
in the inclusion of OID in income somewhat in advance of the receipt of cash
attributable to that income. In general, a Certificate will be treated as having
OID to the extent that its "stated redemption price" exceeds its "issue price,"
if such excess is more than 0.25 percent multiplied by the weighted average life
of the Certificate (determined by taking into account only the number of
complete years following issuance until payment is made for any partial
principal payments). Under section 1272(a)(6) of the Code, special provisions
apply to debt instruments on which payments may be accelerated due to
prepayments of other obligations securing those debt instruments. However, no
regulations have been issued interpreting those provisions, and the manner in
which those provisions would apply to the Certificates is unclear. Additionally,
the IRS could take the position based on Treasury regulations that none of the
interest payable on a Certificate is "unconditionally payable" and hence that
all of such interest should be included in the Certificate's stated redemption
price at maturity. If sustained, such treatment should not significantly affect
the tax liability of most Certificate Owners, but prospective U.S. Certificate
Owners should consult their own tax advisers concerning the impact to them in
their particular circumstances.
MARKET DISCOUNT. A U.S. Certificate Owner who purchases an interest in a
Certificate at a discount that exceeds any unamortized OID may be subject to the
"market discount" rules of sections 1276 through 1278 of the Code. These rules
provide, in part, that gain on the sale or other disposition of a Certificate
and partial principal payments on a Certificate are treated as ordinary income
to the extent of accrued market discount. The market discount rules also provide
for deferral of interest deductions with respect to debt incurred to purchase or
carry a Certificate that has market discount.
MARKET PREMIUM. A U.S. Certificate Owner who purchases an interest in a
Certificate at a premium may elect to offset the premium against interest income
over the remaining term of the Certificate in accordance with the provisions of
section 171 of the Code.
SALE OR EXCHANGE OF CERTIFICATES
Upon a disposition of an interest in a Certificate, a U.S. Certificate Owner
generally will recognize gain or loss equal to the difference between the amount
realized on the disposition and the U.S. Certificate Owner's adjusted basis in
its interest in the Certificate. A taxable exchange of a Certificate also could
occur as a result of the Transferor's substitution of money or investments for
Receivables; see "The Pooling and Servicing Agreement Generally--Defeasance."
The adjusted basis in the interest in the Certificate will equal its cost,
increased by any OID or market discount includible in income with respect to the
interest in the Certificate prior to its sale and reduced by any principal
payments previously received with respect to the interest in the Certificate and
any amortized premium. Subject to the market discount rules, gain or loss will
be capital gain or loss if the interest in the Certificate was held as a capital
asset. Capital losses generally may be used only to offset capital gains.
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NON-U.S. CERTIFICATE OWNERS
In general, a non-U.S. Certificate Owner will not be subject to U.S. federal
income tax on interest (including OID) on a beneficial interest in a Certificate
unless (i) the non-U.S. Certificate Owner actually or constructively owns 10
percent or more of the total combined voting power of all classes of stock of
the Transferor entitled to vote (or of a profits or capital interest of the
Trust if characterized as a partnership), (ii) the non-U.S. Certificate Owner is
a controlled foreign corporation that is related to the Transferor (or the Trust
if treated as a partnership) through stock ownership, (iii) the non-U.S.
Certificate Owner is a bank described in Code Section 881(c)(3)(A), (iv) such
interest is contingent interest described in Code Section 871(h)(4), or (v) the
non-U.S. Certificate Owner bears certain relationships to any holder of either
the Transferor Certificate other than the Transferor or any other interest in
the Trust not properly characterized as debt. To qualify for the exemption from
taxation, under currently applicable procedures the last U.S. Person in the
chain of payment prior to payment to a non-U.S. Certificate Owner (the
"Withholding Agent") must have received (in the year in which a payment of
interest or principal occurs or in either of the two preceding years) a
statement that (i) is signed by the non-U.S. Certificate Owner under penalties
of perjury, (ii) certifies that the non-U.S. Certificate Owner is not a U.S.
Person and (iii) provides the name and address of the non-U.S. Certificate
Owner. The statement may be made on a Form W-8 or substantially similar
substitute form, and the non-U.S. Certificate Owner must inform the Withholding
Agent of any change in the information on the statement within 30 days of the
change. If a Certificate is held through a securities clearing organization or
certain other financial institutions, the organization or institution may
provide a signed statement to the Withholding Agent. However, in that case, the
signed statement must be accompanied by a Form W-8 or substitute form provided
by the non-U.S. Certificate Owner to the organization or institution holding the
Certificate on behalf of the non-U.S. Certificate Owner. The U.S. Treasury
Department is considering implementation of further certification requirements
aimed at determining whether the issuer of a debt obligation is related to
holders thereof. The U.S. Treasury Department recently issued final regulations
which will revise some of the foregoing procedures whereby a non-U.S.
Certificate may establish an exemption from withholding beginning January 1,
1999. Non-U.S. Certificate Owners should consult their tax advisers concerning
the impact to them, if any, of such procedures.
Generally, any gain or income realized by a non-U.S. Certificate Owner upon
retirement or disposition of an interest in a Certificate will not be subject to
U.S. federal income tax, provided that (i) in the case of a Certificate Owner
that is an individual, such Certificate Owner is not present in the United
States for 183 days or more during the taxable year in which such retirement or
disposition occurs and (ii) in the case of gain representing accrued interest,
the conditions described in the preceding paragraph for exemption from
withholding are satisfied. Certain exceptions may be applicable, and an
individual non-U.S. Certificate Owner should consult a tax adviser.
If the Certificates were treated as an interest in a partnership, the
recharacterization could cause a non-U.S. Certificate Owner to be treated as
engaged in a trade or business in the United States. In that event, the non-U.S.
Certificate Owner would be required to file a federal income tax return and, in
general, would be subject to U.S. federal income tax (including the branch
profits tax) on its net income from the partnership. Further, certain
withholding obligations apply with respect to income allocable or distributions
made to a foreign partner. That withholding may be at a rate as high as 39.6
percent. If some or all of the Certificates were treated as stock in a
corporation, any related dividend distributions to a non-U.S. Certificate Owner
generally would be subject to withholding of tax at the rate of 30 percent,
unless that rate were reduced by an applicable tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Backup withholding of U.S. federal income tax at a rate of 31 percent may
apply to payments made in respect of a Certificate to a registered owner who is
not an "exempt recipient" and who fails to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the
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manner required. Generally, individuals are not exempt recipients whereas
corporations and certain other entities are exempt recipients. Payments made in
respect of a U.S. Certificate Owner must be reported to the IRS, unless the U.S.
Certificate Owner is an exempt recipient or otherwise establishes an exemption.
Compliance with the identification procedures (described in the preceding
section) would establish an exemption from backup withholding for a non-U.S.
Certificate Owner who is not an exempt recipient.
In addition, upon the sale of a Certificate to (or through) a "broker," the
broker must withhold 31 percent of the entire purchase price, unless either (i)
the broker determines that the Transferor is a corporation or other exempt
recipient or (ii) the Transferor provides certain identifying information in the
required manner, and in the case of a non-U.S. Certificate Owner certifies that
the Transferor is a non-U.S. Certificate Owner (and certain other conditions are
met). Such a sale must also be reported by the broker to the IRS, unless either
(i) the broker determines that the Transferor is an exempt recipient or (ii) the
Transferor certifies its non-U.S. status (and certain other conditions are met).
Certification of the registered owner's non-U.S. status normally would be made
on Form W-8 under penalties of perjury, although in certain cases it may be
possible to submit other documentary evidence. As defined by Treasury
regulations, the term "broker" includes all persons who stand ready to effect
sales made by others in the ordinary course of a trade or business, as well as
brokers and dealers registered as such under the laws of the United States or a
state. These requirements generally will apply to a U.S. office of a broker, and
the information reporting requirements generally will apply to a foreign office
of a U.S. broker as well as to a foreign office of a foreign broker (i) that is
a controlled foreign corporation within the meaning of section 957(a) of the
Code or (ii) 50 percent or more of whose gross income from all sources for the
three year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the foreign broker has been in
existence) was effectively connected with the conduct of a trade or business
within the United States.
Any amounts withheld under the backup withholding rules from a payment to a
Certificate Owner would be allowed as a refund or a credit against such
Certificate Owner's U.S. federal income tax, provided that the required
information is furnished to the IRS.
Recently issued final Treasury regulations will revise some of the foregoing
information reporting and backup withholding procedures beginning January 1,
1999. Certificate Owners should consult their tax advisers concerning the impact
to them, if any, of such revised procedures.
STATE AND LOCAL TAXATION
The discussion above does not address the taxation of the Trust or the tax
consequences of the purchase, ownership or disposition of an interest in the
Certificates under any state or local tax law. Each investor should consult its
own tax adviser regarding state and local tax consequences.
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ERISA CONSIDERATIONS
This section provides a brief summary of the material provisions of ERISA
and the Code which should be considered by potential investors if such investors
contemplate acquisition of the Certificates as an investment of a Plan, as
defined below. Additional information with respect to each Series and the
Classes thereof will be included in the related Prospectus Supplement.
Section 406 of ERISA and Section 4975 of the Code prohibit certain pension,
profit sharing or other employee benefit plans, individual retirement accounts
or annuities, employee annuity plans and Keogh plans (each, a "Plan") from
engaging in certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code
(collectively, "Parties in Interest") with respect to the Plan. ERISA also
imposes certain duties on persons who are fiduciaries of Plans subject to ERISA
or Section 4975 of the Code and prohibits certain transactions between a Plan
and Parties in Interest with respect to such Plans. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of a Plan is considered to be a fiduciary of such Plan (subject to
certain exceptions not here relevant). A violation of these "prohibited
transaction" rules may generate excise tax and other liabilities under ERISA and
Section 4975 of the Code for such persons, unless a statutory regulatory or
administrative exemption is available. Plans that are governmental plans (as
defined in section 3(32) of ERISA) and certain church plans (as defined in
section 3(33) of ERISA) are not subject to ERISA requirements.
Plan fiduciaries must determine whether the acquisition and holding of the
Certificates of a Series and the operations of the Trust would result in direct
or indirect prohibited transactions under ERISA or Section 4975 of the Code. The
operations of the Trust could result in prohibited transactions if Plans that
purchase the Certificates of a Series are deemed to own an interest in the
underlying assets of the Trust. There may also be an improper delegation of the
responsibility to manage Plan assets if Plans that purchase the Certificates are
deemed to own an interest in the underlying assets of the Trust.
Pursuant to a regulation (the "Regulation") issued by the Department of
Labor ("DOL") concerning the definition of what constitutes the "plan assets" of
a Plan, the assets and properties of certain entities (including certain
insurance company general accounts) in which a Plan makes an equity investment
could be deemed to be assets of the Plan in certain circumstances. Accordingly,
if Plans purchase Certificates of a Series, the Trust could be deemed to hold
Plan assets unless one of the exceptions under the Regulation is applicable to
the Trust.
The Regulation only applies to the purchase by a Plan of an "equity
interest" in an entity. Because the Certificates will represent beneficial
interests in a Trust, and despite the agreement of the Transferor and the
Certificate Owners to treat each Series of Certificates as debt instruments, the
Certificates are likely to be considered equity interests in the Trust for
purposes of the Regulation, with the result that the Trust Assets are likely to
be treated as "plan assets" of the investing Plans for purposes of ERISA and
Section 4975 of the Code, unless either of the following exceptions applies. The
Regulation contains an exception that provides that if a Plan acquires a
"publicly-offered security," the issuer of the security is not deemed to hold
"plan assets." A publicly-offered security is a security that is (i) freely
transferable, (ii) part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another at the conclusion of the
initial public offering of such securities and (iii) either is (A) part of a
class of securities registered under Section 12(b) or 12(g) of the Exchange Act
or (B) sold to the Plan as part of an offering of securities to the public
pursuant to an effective registration statement under the Act and the class of
securities of which such security is a part is registered under the Exchange Act
within 120 days (or such later time as may be allowed by the Commission) after
the end of the fiscal year of the issuer during which the offering of such
securities to the public occurred. In addition, the Regulation provides that, if
at all times more than 75% of the value of each Class of equity interests in the
Trust (e.g., each Class of Certificates) is held by investors other than
"benefit plan investors" (which is defined in the Regulation as including Plans
and other employee benefit plans not subject to ERISA, such as governmental or
foreign
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plans, as well as entities holding assets deemed to be "plan assets"), the
investing plan's assets will not include any of the underlying Trust Assets.
No assurance can be made with respect to any offering of any Class of the
Certificates of any Series that the conditions which would allow the Trust
Assets not to be "plan assets" will be met, although the intention of the
Underwriters (but not their assurance) as to whether interests in each Class of
the Certificates of a particular Series will be held by at least 100 independent
investors at the conclusion of the offering for such Series, and therefore
qualify as publicly-offered securities eligible for the exception under the
Regulation, will be set forth in the related Prospectus Supplement.
If interests in a Class of the Certificates of a Series fail to meet the
criteria of publicly-offered securities and the Trust Assets are deemed to
include assets of Plans that hold Certificates of such Class, transactions
involving the Trust and Parties in Interest with respect to such Plans might be
prohibited under Section 406 of ERISA and Section 4975 of the Code unless an
exemption is applicable. In addition, any Transferor or any Underwriter of such
Series may be considered to be a Party in Interest or fiduciary with respect to
an investing Plan. Accordingly, an investment of "plan assets" of a Plan in such
Class of Certificates may result in a prohibited transaction under ERISA and
Section 4975 of the Code unless such investment is subject to a statutory or
administrative exemption. Thus, for example, if a participant in any Plan is a
cardholder of one of the Accounts, under DOL interpretations the purchase of
interests in such Class of Certificates by such Plan could constitute a
prohibited transaction. Five class exemptions issued by the DOL that could apply
in such event are DOL Prohibited Transaction Exemption ("PTCE") 96-23 (Class
Exemption for Plan Asset Transactions Determined by In-House Asset Managers),
PTCE 95-60 (Class Exemption for Certain Transactions Involving Insurance Company
General Accounts), PTCE 91-38 (Class Exemption for Certain Transactions
Involving Bank Collective Investment Funds), PTCE 90-1 (Class Exemption for
Certain Transactions Involving Insurance Company Pooled Separate Accounts) and
PTCE 84-14 (Class Exemption for Plan Asset Transactions Determined by
Independent Qualified Professional Asset Managers). There is no assurance that
these exemptions, even if all of the conditions specified therein are satisfied,
or any other exemption will apply to all transactions involving the Trust
Assets.
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the Certificates (or any interest therein) on behalf or with "plan
assets" of any Plan should consult their own counsel regarding whether the Trust
Assets represented by the Certificates would be considered "plan assets," the
consequences that would apply if the Trust Assets were considered "plan assets,"
and the possibility of exemptive relief from the prohibited transaction rules.
The Small Business Job Protection Act of 1996 added new Section 401(c) of
ERISA relating to the status of the assets of insurance company general accounts
under ERISA and Section 4975 of the Code. Pursuant to Section 401(c), the DOL is
required to issue final regulations (the "General Account Regulations") not
later than December 31, 1997 with respect to insurance policies or annuity
contracts issued on or before December 31, 1998 that are supported by an
insurer's general account. The General Account Regulations are to provide
guidance on which assets held by the insurer constitute "plan assets" for
purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of
the Code. The assets of a general account that support insurance polices or
annuity contracts (other than "guaranteed benefit polices" within the meaning of
Section 401(b)(2) of ERISA) (i) issued to Plans after December 31, 1998 or (ii)
issued to Plans on or before December 31, 1998 for which the insurance company
does not comply with the General Account Regulations, may be treated as "plan
assets." However, except in the case of avoidance of the General Account
Regulations and actions brought by the Secretary of Labor relating to certain
breaches of fiduciary duties that also constitute breaches of state or federal
criminal law, until the date that is 18 months after the General Account
Regulations become final, no liability under the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 may result on the
basis of a claim that the assets of the general account of an insurance company
constitute the "plan assets" of any Plan. The plan asset status of insurance
company separate accounts is unaffected by new Section 401(c) of ERISA, and
separate account assets continue to be treated as the "plan assets" of any such
Plan invested in a separate account.
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If the assets of a general account invested in the Certificates are treated
as "plan assets" of any Plan or the protections of Section 401(c) of ERISA
become unavailable, certain violations of the prohibited transaction rules may
be deemed to occur as a result of the operation of the Trust. Insurance
companies contemplating the investment of general account assets in the
Certificates should consult with their legal advisors concerning the impact of
Section 401(c) of ERISA, including the status of assets of the general account
as "plan assets" after December 31, 1998, and accordingly, the general account's
ability to continue to hold the Certificates after the date that is 18 months
after the General Account Regulations become final.
Finally, Plan fiduciaries and other Plan investors should consider the
fiduciary standards under ERISA or other applicable law in the context of the
Plan's particular circumstances before authorizing an investment of a portion of
the Plan's assets in the Certificates. Accordingly, among other factors, Plan
fiduciaries and other Plan investors should consider whether the investment (i)
satisfies the diversification requirements of ERISA or other applicable law,
(ii) is in accordance with the Plan's governing instruments, and (iii) is
prudent in light of the "Risk Factors" and other factors discussed herein and in
the related Prospectus Supplement.
PLAN OF DISTRIBUTION
The Certificates of any Series offered hereby and by the related Prospectus
Supplement may be offered by the underwriter or underwriters named in the
related Prospectus Supplement as agent or underwriter, or through underwriting
syndicates represented by such underwriter or underwriters (collectively, the
"Underwriters").
The Prospectus Supplement relating to a Series will set forth the terms of
the offering of such Series and each Class within such Series, including the
name or names of the Underwriters, the proceeds to and their intended use by the
Transferor, and either the initial public offering price, the discounts and
commissions to the Underwriters and any discounts or concessions allowed or
reallowed to certain dealers, or the method by which the price at which the
Underwriters will sell the Certificates of such Series will be determined.
The Underwriters will be obligated, subject to certain conditions, to
purchase all of the Certificates described in the Prospectus Supplement relating
to a Series if any such Certificates are purchased. The Certificates may be
acquired by the Underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Transferor may also sell the Certificates offered hereby and by means of
the related Prospectus Supplements from time to time in negotiated transactions
or otherwise, at prices determined at the time of sale. Such transactions may be
effected by selling Certificates to or through dealers and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Transferor and any purchasers of Certificates for whom they
may act as agents.
The place and time of delivery for the Series in respect of which this
Prospectus is delivered will be set forth in the related Prospectus Supplement.
LEGAL MATTERS
It is anticipated that certain legal matters relating to the issuance of the
Certificates of any Series will be passed upon for the Banks by
and, for the Transferor by . Certain legal matters relating to the
issuance of the Certificates under the laws of the State of Delaware will be
passed upon for the Transferor by Richards, Layton & Finger, P.A. and, with
respect to the federal tax consequences of such issuance, by Orrick, Herrington
& Sutcliffe LLP as Special Tax Counsel. Certain legal matters relating to the
issuance of the Certificates of a Series and ERISA matters will be passed upon
for the Underwriters by the counsel named in the Prospectus Supplement.
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INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
Account Owner..................................................................... 5, 8
Accounts.......................................................................... 1, 4
Act............................................................................... 2
Addition Cut-Off Date............................................................. 46
Addition Date..................................................................... 46
Additional Accounts............................................................... 24, 46
Additional Transferors............................................................ 35, 41
Adverse Effect.................................................................... 13
Amortization Period............................................................... 11
Automatic Additional Accounts..................................................... 48
Bank.............................................................................. 1
Banks............................................................................. 1
Cash Collateral Account........................................................... 15
Cash Collateral Guaranty.......................................................... 15
Cede.............................................................................. 9, 30
Cedel............................................................................. 33
Cedel Participants................................................................ 33
Certificate Owner................................................................. 9
Certificateholders................................................................ 6
Certificateholders' Interest...................................................... 6
Certificates...................................................................... 1, 5
Class............................................................................. 1, 6
Code.............................................................................. 69
Collateral Interest............................................................... 15, 61
Collection Account................................................................ 10, 50
Commercial Credit................................................................. 28
Commission........................................................................ 2
Companion Series.................................................................. 12, 37
Controlled Accumulation Period.................................................... 11
Controlled Amortization Period.................................................... 11
Cooperative....................................................................... 33
Counterparties.................................................................... 59
Defaulted Amount.................................................................. 52
Defaulted Receivables............................................................. 52
Defeased Series................................................................... 59
Definitive Certificate............................................................ 9
Definitive Certificates........................................................... 34
Depositaries...................................................................... 31
Depository........................................................................ 30
Disclosure Document............................................................... 8
Discount Option................................................................... 10
Discount Option Collections....................................................... 49
Discount Option Date.............................................................. 49
Discount Percentage............................................................... 49
Distribution Date................................................................. 10
DOL............................................................................... 72
DTC............................................................................... 9
Eligible Account.................................................................. 44
</TABLE>
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<TABLE>
<S> <C>
Eligible Deposit Account.......................................................... 50
Eligible Institution.............................................................. 50
Eligible Investments.............................................................. 50
Eligible Receivable............................................................... 45
Eligible Servicer................................................................. 55
ERISA............................................................................. 17
Euroclear......................................................................... 33
Euroclear Operator................................................................ 33
Euroclear Participants............................................................ 33
Excess Funding Account............................................................ 50
Excess Transferor Finance Charge Collections...................................... 37
Exchange Act...................................................................... 2
FASIT............................................................................. 68
FDIA.............................................................................. 18
FDIC.............................................................................. 1, 7, 18
FDR............................................................................... 25
Finance Charge Receivables........................................................ 9
FIRREA............................................................................ 18
Full Invested Amount.............................................................. 13
Funding Period.................................................................... 13
General Account Regulations....................................................... 73
Group............................................................................. 12, 38
Holders........................................................................... 34
Indirect Participants............................................................. 31
Ineligible Receivables............................................................ 42
Initial Accounts.................................................................. 24
Initial Cut-Off Date.............................................................. 24
Insolvency Event.................................................................. 53
Interchange....................................................................... 27
Interest Period................................................................... 10
Invested Amount................................................................... 7
Investor Amount................................................................... 7
IRS............................................................................... 66
L/C Bank.......................................................................... 15, 61
LIBOR............................................................................. 59
Limited Amortization Period....................................................... 11
Monthly Period.................................................................... 10
Monthly Servicing Fee............................................................. 54
Moody's........................................................................... 50
New Issuance...................................................................... 7
OID............................................................................... 69
Optional Amortization Period...................................................... 11
Participants...................................................................... 31
Participation Interests........................................................... 5, 46
Parties in Interest............................................................... 72
Pay Out Event..................................................................... 53
Paying Agent...................................................................... 51
Plan.............................................................................. 72
Pooling and Servicing Agreement................................................... 4, 5
Pre-Funding Account............................................................... 13
Pre-Funding Amount................................................................ 13
</TABLE>
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<TABLE>
<S> <C>
Principal Amortization Period..................................................... 11
Principal Receivables............................................................. 9
Principal Sharing Series.......................................................... 11
Principal Shortfalls.............................................................. 12
Principal Terms................................................................... 38
Prior Series...................................................................... 12
Prospectus Supplement............................................................. 1
PTCE.............................................................................. 73
Rapid Accumulation Period......................................................... 11
Rapid Amortization Period......................................................... 11
Rating Agency..................................................................... 17
Rating Agency Condition........................................................... 8, 39
Receivables....................................................................... 1, 4
Receivables Transfer Agreement.................................................... 8
Recoveries........................................................................ 24
Regulation........................................................................ 72
Regulations....................................................................... 67
Reinvestment Event................................................................ 53
Relevant Closing Date............................................................. 10
Removal Cut-Off Date.............................................................. 49
Removal Date...................................................................... 49
Removal Notice Date............................................................... 49
Removed Accounts.................................................................. 48
Required Principal Balance........................................................ 47
Required Transferor Amount........................................................ 46
Required Transferor Percentage.................................................... 47
Revolving Period.................................................................. 10
Scheduled Amortization Date....................................................... 11
Series............................................................................ 1, 6
Series Account.................................................................... 6
Series Enhancement................................................................ 4, 14
Series Investor Amount............................................................ 47
Series Percentage................................................................. 30
Series Supplement................................................................. 5
Servicer.......................................................................... 1, 4, 5
Servicer Default.................................................................. 56
Servicing Fee..................................................................... 54
Shared Principal Collections...................................................... 12
Shared Transferor Principal Collections........................................... 36
Special Tax Counsel............................................................... 66
Spread Account.................................................................... 16, 62
Standard & Poor's................................................................. 50
Stated Series Termination Date.................................................... 16, 52
Supplemental Certificate.......................................................... 7, 34, 38
Swaps............................................................................. 59
Tax Opinion....................................................................... 8
Termination Notice................................................................ 55
Terms and Conditions.............................................................. 33
Transferor........................................................................ 2, 5, 35
Transferor Amount................................................................. 6, 30
Transferor Certificate............................................................ 7
</TABLE>
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<TABLE>
<S> <C>
Transferor Certificates........................................................... 7, 38
Transferor Percentage............................................................. 30
Transferor's Interest............................................................. 6, 30, 38
Travelers......................................................................... 28
Travelers Consumer Credit Card Portfolio.......................................... 28
Trust............................................................................. 1, 4
Trust Assets...................................................................... 1, 4
Trust Portfolio................................................................... 28
Trust Termination Date............................................................ 16, 53
Trustee........................................................................... 1, 4
U.S. Certificate Owner............................................................ 66
U.S. Person....................................................................... 66
UCC............................................................................... 62
Underwriters...................................................................... 74
Withholding Agent................................................................. 69
</TABLE>
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain circumstances, the globally offered Travelers Bank Credit
Card Master Trust I Asset Backed Securities (the "Global Securities") to be
issued in Series from time to time (each, a "Series") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedel or
Euroclear. The Global Securities will be tradable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to conventional United States credit card
securities. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and Transferor's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled using the same-day funds.
TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
A-1
<PAGE>
TRADING BETWEEN DTC TRANSFEROR AND CEDEL OR EUROCLEAR PURCHASER. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedel Participant or a Euroclear Participant, the purchaser
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date. Payment will then be made by the
respective Depositary to the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The Global Securities credit will appear the next day
(European time) and the cash debit will be back-valued to, and the interest on
the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedel or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until Global Securities
are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC transferor on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR TRANSFEROR AND DTC PURCHASER. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The Transferor will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases, Cedel
or Euroclear will instruct the respective Depositary, as appropriate, to deliver
the bonds to the DTC Participant's account against payment. Payment will include
interest accrued on the Global Securities from and including the last coupon
payment date to and excluding the settlement date. The payment will then be
reflected in the account of the Cedel Participant or Euroclear Participant the
following day, and receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would be back-valued to the value date (which
would be the preceding day, when settlement occurred in New York). Should the
Cedel Participant or Euroclear Participant have a line of credit with its
respective clearing system and elect to be in debit in anticipation of receipt
of the sale proceeds in its account, the back-valuation will extinguish any
overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
A-2
<PAGE>
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of
Certificates that are non-U.S. Persons generally can obtain a complete exemption
from the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons that are Certificate Owners residing in a country
that has a tax treaty with the United States can obtain an exemption or reduced
tax rate (depending on the treaty terms) by filing Form 1001 (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the Certificate Owner or
his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Request for Taxpayer
Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
A-3
<PAGE>
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States, any state thereof, or any political subdivision of either (including the
District of Columbia) or (iii) an estate or trust the income of which is
includible in gross income for United States tax purposes regardless of its
source. This summary does not deal with all aspects of U.S. Federal income tax
withholding that may be relevant to foreign holders of the Global Securities.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities. Further, the
U.S. Treasury Department has recently finalized new regulations that will revise
some aspects of the current system for withholding on amounts paid to foreign
persons. Under these regulations, interest or OID paid to a nonresident alien
would continue to be exempt from U.S. withholding taxes (including backup
withholding) provided that the holder complies with the new procedures.
A-4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
Supplement or the Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Transferor or the Underwriter[s]. Neither this Prospectus Supplement nor the
Prospectus constitutes an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus Supplement or the Prospectus, nor any sale hereunder or thereunder,
shall, under any circumstances, create any implication that the information
herein or therein is correct as of any time subsequent to their respective dates
or that there has been no change in the affairs of the Transferor or the Trust
since such dates.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
-----
<S> <C>
Summary of Terms...............................
Risk Factors...................................
The Banks' Credit Card Activities..............
The Receivables................................
Maturity Assumptions...........................
Receivable Yield Considerations................
Description of the Certificates................
Federal Income Tax Consequences................
Underwriting...................................
Legal Matters..................................
Index of Defined Terms.........................
PROSPECTUS
Prospectus Supplement..........................
Reports to Certificateholders..................
Available Information..........................
Incorporation of Certain Documents by
Reference....................................
Summary of Terms...............................
Risk Factors...................................
Formation of the Trust.........................
The Banks' Credit Card Activities..............
Use of Proceeds................................
The Banks and Travelers Corp...................
Certain Legal Aspects of the Receivables.......
Description of the Certificates Enhancement....
Federal Income Tax Consequences................
ERISA Considerations...........................
Plan of Distribution...........................
Underwriting...................................
Legal Matters..................................
Index of Defined Terms.........................
</TABLE>
Until , 19 , all dealers effecting transactions in the
Certificates, whether or not participating in this distribution, may be required
to deliver a Prospectus Supplement and a Prospectus. This delivery requirement
is in addition to the obligation of dealers to deliver a Prospectus Supplement
and a Prospectus when acting as underwriters and with respect to their unsold
allotments.
TRAVELERS BANK
CREDIT CARD
MASTER TRUST I
$
CLASS A [ %] [FLOATING-RATE]
ASSET-BACKED CERTIFICATES,
SERIES 199
$
CLASS B [ %] [FLOATING-RATE]
ASSET-BACKED CERTIFICATES,
SERIES 199
CC CREDIT CARD CORPORATION
TRANSFEROR
TRAVELERS BANK & TRUST, FSB
SERVICER
---------------------
PROSPECTUS SUPPLEMENT
---------------------
UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Statement Fee............................................... $ 304**
Printing and Engraving Expenses.......................................... *
Trustee's Fees and Expenses.............................................. *
Legal Fees and Expenses.................................................. *
Blue Sky Fees and Expenses............................................... *
Accountants' Fees and Expenses........................................... *
Rating Agency Fees....................................................... *
Miscellaneous Fees and Expenses.......................................... *
---------
Total................................................................ $ *
---------
---------
</TABLE>
- ------------------------
* To be filed by amendment.
** Actual
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article X of the Certificate of Incorporation of CC Credit Card Corporation
provides that any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified and held harmless by
the corporation to the fullest extent legally permissible under the General
Corporation Law of the State of Delaware, as amended from time to time, against
all expenses (including attorneys' fees), liabilities, losses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding.
The General Corporation Law of the State of Delaware provides that a
corporation has the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that the person is or was a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. A corporation also has the power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be made in
respect of any claim, issue
II-1
<PAGE>
or matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 --Form of Underwriting Agreement for the Certificates*
4.1 --Form of Pooling and Servicing Agreement**
4.2 --Form of Series Supplement**
5.1 --Opinion of Richards, Layton & Finger, P.A. with respect to legality.*
8.1 --Opinion of Orrick, Herrington & Sutcliffe LLP with respect to federal tax matters.**
10.1 --Form of Receivables Transfer Agreement.**
23.1 --Consent of Richards, Layton & Finger, P.A. (included in its opinion filed as Exhibit
5.1)*
23.2 --Consents of Orrick, Herrington & Sutcliffe LLP (included in its opinion filed as
Exhibit 8.1)**
24.1 --Powers of Attorney**
</TABLE>
- ------------------------
* To be Filed by amendment.
** Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant on behalf of the Travelers Bank Credit Card
Master Trust I (the "Trust") hereby undertakes as follows:
(a) (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; PROVIDED, HOWEVER, that (a)(1)(i) and
(a)(1)(ii) will not apply if the information required to be included in a
post-effective amendment thereby is contained in periodic reports filed pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering hereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination of
the offering.
(b) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
II-2
<PAGE>
(c) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of each
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New York, New York, on January 9, 1998.
<TABLE>
<S> <C> <C>
CC CREDIT CARD CORPORATION
as originator of the Trust and as Transferor
on behalf of the Trust
By: /s/ BARBARA YASTINE
-----------------------------------------
Name: Barbara Yastine
Title: President
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 has been signed on January 9, 1998 by the following persons in the
capacities indicated.
SIGNATURE TITLE
- ------------------------------ --------------------------
/s/ BARBARA YASTINE President and Director
- ------------------------------ (Principal Executive
Name: Barbara Yastine Officer)
* Treasurer and Director
- ------------------------------ (Principal Financial
Name: Robert Matza Officer)
Vice President and
* Director (Controller or
- ------------------------------ Principal Accounting
Name: William Bozarth Officer)
- ------------------------------ Director
Name: Doug Johnson
- ------------------------
* The undersigned, by signing her name hereto, does hereby sign the
registration statement or amendment thereto on behalf of each of the
above-indicated directors and officers of CC Credit Card Corporation
pursuant to powers of attorney executed on behalf of each such director and
officer.
By: /s/ BARBARA YASTINE
-------------------------
Name: Barbara Yastine
Title: Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ----------- ------------------------------------------------------------------------------------------------ ---------------
<C> <S> <C>
1.1 --Form of Underwriting Agreement for the Certificates*..........................................
4.1 --Form of Pooling and Servicing Agreement**.....................................................
4.2 --Form of Series Supplement**...................................................................
5.1 --Opinion of Richards, Layton & Finger, P.A. with respect to legality*..........................
8.1 --Opinion of Orrick, Herrington & Sutcliffe LLP with respect to federal tax matters**...........
10.1 --Form of Receivables Transfer Agreement**......................................................
23.1 --Consent of Richards, Layton & Finger, P.A. (included in its opinion filed as Exhibit 5.1)*....
23.2 --Consent of Orrick, Herrington & Sutcliffe LLP (included in its opinions filed as Exhibit
8.1)**........................................................................................
24.1 --Powers of Attorney**..........................................................................
</TABLE>
- ------------------------
* To be filed by amendment
** Previously filed
