<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FLEET CREDIT CARD MASTER TRUST II
(FORMERLY ADVANTA CREDIT CARD MASTER TRUST II)
(ISSUER OF SECURITIES)
FLEET BANK (RI), NATIONAL ASSOCIATION
(DEPOSITOR TO THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
UNITED STATES 050495490
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
50 KENNEDY PLAZA
18TH FLOOR
PROVIDENCE, RHODE ISLAND 02903
(401) 278-5451
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LINDA MORRIS, ESQ.
FLEET BANK (RI), NATIONAL ASSOCIATION
PA HR GO1F
101 GIBRALTAR ROAD
HORSHAM, PENNSYLVANIA 19044
(215) 444-2339
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
PAUL WEIFFENBACH, 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
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<CAPTION>
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TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE PROPOSED MAXIMUM AGGREGATE
REGISTERED REGISTERED PRICE PER UNIT* OFFERING PRICE*
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<S> <C> <C> <C>
Asset Backed Securities...... $1,000,000 100% $1,000,000
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<CAPTION>
============================= ======================
TITLE OF SECURITIES TO BE AMOUNT OF
REGISTERED REGISTRATION FEE
- ----------------------------------------------------------------------------
<S> <C>
Asset Backed Securities...... $295
- ---------------------------------------------------------------------------------------------------
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</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> 2
EXPLANATORY NOTE
On February 20, 1998, through a series of transactions, Advanta National
Bank transferred substantially all of its consumer credit card business to
affiliates of Fleet Financial Group, Inc., including Fleet Bank (RI), National
Association, and the rights and obligations of Advanta National Bank, as Seller
and Servicer under the Pooling and Servicing Agreement were assigned,
transferred to and assumed by Fleet Bank (RI), National Association. References
herein to the "Seller" or the "Servicer" shall, unless the context otherwise
requires, for historical purposes prior to February 20, 1998 mean Advanta
National Bank and shall mean Fleet Bank (RI), National Association and its
successors and assigns for all periods on or after February 20, 1998.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO UPDATING, COMPLETION, MODIFICATION
AND AMENDMENT IN THE OFFERING CIRCULAR SUPPLEMENT IN ITS FINAL FORM. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED WITHOUT THE
DELIVERY OF A FINAL OFFERING CIRCULAR SUPPLEMENT AND ACCOMPANYING OFFERING
CIRCULAR. THIS OFFERING CIRCULAR SUPPLEMENT AND OFFERING CIRCULAR DO NOT
CONSTITUTE OR CONTAIN ANY INVITATION TO ANY PERSON TO SUBSCRIBE OR PURCHASE ANY
CLASS A CERTIFICATES, NOR ARE THEY CALCULATED TO INVITE, NOR DO THEY PERMIT THE
MAKING OF, OFFERS FOR ANY CLASS A CERTIFICATES.
REPRESENTATIVE FORM OF PROSPECTUS SUPPLEMENT
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 199 )
FLEET CREDIT CARD MASTER TRUST II
(FORMERLY KNOWN AS ADVANTA CREDIT CARD MASTER TRUST II)
$ CLASS A [FLOATING-RATE] [ %] ASSET-BACKED CERTIFICATES, SERIES
199 -
$ CLASS B [FLOATING-RATE] [ %] ASSET-BACKED CERTIFICATES, SERIES
199 -
FLEET BANK (RI), NATIONAL ASSOCIATION
SELLER AND 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") offered hereby will represent an undivided
interest in the assets of the Fleet Credit Card Master Trust II (formerly known
as the ADVANTA Credit Card Master Trust II) (the "Trust") formed pursuant to a
Pooling and Servicing Agreement between a predecessor in interest of Fleet Bank
(RI), National Association (the "Bank"), as Seller and Servicer (each as defined
herein), and Bankers Trust Company, as trustee (the "Trustee").
(Continued on next page)
------------------------
POTENTIAL INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH IN "RISK
FACTORS" COMMENCING ON PAGE S-18 HEREIN AND ON PAGE 17 IN THE PROSPECTUS.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF FLEET BANK (RI), NATIONAL ASSOCIATION OR ANY OF
ITS AFFILIATES, 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>
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PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT TRUST(1)
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<S> <C> <C> <C>
Per Class A Certificate...................... % % %
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Per Class B Certificate...................... % % %
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Total........................................ $ $ $
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</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 , 199 , 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> 4
(Continued from previous page)
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 property of the Trust includes a portfolio of MasterCard(R) and
VISA(R)* 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, as described more fully
herein and in the Prospectus, and including the benefits of monies and other
properties constituting Eligible Investments, if any, on deposit in, credited to
or held in certain accounts of the Trust and earnings thereon. The Receivables
arise in accounts which are owned by the Seller. The Bank 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 Seller owns the remaining undivided interest in the Trust
not represented by the Certificates, the Class C Interests 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 other Series of certificates that represent undivided interests in
certain assets of the Trust, which may have terms significantly different from
the Certificates and the Class C Interests.
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 .
Principal with respect to the Class A Certificates is scheduled to be
distributed to the Class A Certificateholders on the
Distribution Date, or earlier or later in certain circumstances described
herein. Principal with respect to the Class B Certificates is expected to be
distributed to the Class B Certificateholders on the
Distribution Date, or earlier or later in certain circumstances described
herein.
[The Trust will have the benefit of funds on deposit in a cash collateral
account (the "Cash Collateral Account") which will be funded by an initial
deposit of $ , for the benefit of the Class A Certificates, the Class B
Certificates and the Class C Interests. Amounts on deposit in the Cash
Collateral Account on each Distribution Date in excess of Required Cash
Collateral Amount will be withdrawn and applied as described herein. Amounts
available to be withdrawn from the Cash Collateral Account will be applied as
described herein under "Summary of Terms -- The Cash Collateral Account" and
"Description of the Certificates -- The Cash Collateral Account."]
[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 SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING" HEREIN.]
THE CERTIFICATES OFFERED HEREBY (TOGETHER WITH THE CLASS C INTERESTS, WHICH
ARE NOT OFFERED HEREBY OR BY THE PROSPECTUS) CONSTITUTE A SEPARATE SERIES OF
CERTIFICATES BEING OFFERED BY THE SELLER 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.
- ---------------
* MasterCard(R) and VISA(R) are federally registered servicemarks of MasterCard
International Inc. and Visa U.S.A., Inc., respectively.
S-2
<PAGE> 5
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 Principal 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.
TRUST........................ The Fleet Credit Card Master Trust II (formerly
known as the ADVANTA Credit Card master Trust II)
(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
undivided interest in the Trust Assets allocated
to the Certificates and the Class C Interests
(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
"Certificateholders" 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 Amended and Restated Pooling and Servicing
Agreement dated as of December 1, 1993, as
amended and restated as of May 23, 1994 (as
further amended and in effect from time to time,
the "Master Pooling and Servicing Agreement"),
between a predecessor in interest to Fleet Bank
(RI), National Association (the "Bank"), as
Seller and as Servicer (as each such term is
defined below), and Bankers Trust Company, 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 be
issued concurrently with the issuance of the
Certificates as part of Series 199 - and will [,
together with amounts on deposit in the Cash
Collateral Account,] constitute the Series
Enhancement for the Certificates.
The Trust was organized by Advanta National Bank
(formerly known as Advanta National Bank USA and
prior to that known as Colonial National Bank USA
and successor in interest to the former Advanta
National Bank) in 1993. In connection with the
Transaction and as permitted by the Master
Pooling and Servicing Agreement as amended by
Amendment Number 3 to the Amended and Restated
Pooling and Servicing Agreement dated as of
February 20, 1998, (i) Advanta National Bank
transferred to the Bank, and the Bank accepted
and assumed, all of Advanta National Bank's
rights and obligations under the Master Pooling
and Servicing Agreement and
S-3
<PAGE> 6
the outstanding Series Supplements, (ii) the Bank
became Seller and Servicer of the Trust, (iii)
Advanta National Bank was released from any
continuing obligations under the Master Pooling
and Servicing Agreement and the outstanding
Series Supplements, (iv) the Trust's name was
changed to the Fleet Credit Card Master Trust II
and (v) Advanta National Bank and the Bank filed
with the appropriate governmental authorities
Uniform Commercial Code financing statements
reflecting the transfer to and assumption by the
Bank. See "Transfer and Assignment" in the
Prospectus. The terms "Seller" and "Servicer"
mean the entity acting in each such capacity
under the Pooling and Servicing Agreement, is (a)
for the period prior to February 20, 1998,
Advanta National Bank and (b) for the period
beginning on February 20, 1998 to the date of
this Prospectus Supplement, the Bank.
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 Seller Certificates (the "Sellers'
Interest"), as described below. The aggregate
amount of Principal Receivables and amounts and
other property constituting Eligible Investments,
if any, on deposit in, credited to or held in the
Excess Funding Account allocated to the
Certificateholders and the Class C Interest
Holders (the "Invested Amount") will be
$ on the Closing Date (the "Initial
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 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 Seller in
connection with an increase in the amount of
Principal Receivables in the Trust.] The
aggregate amount of Principal Receivables and
amounts and other property constituting Eligible
Investments, if any, on deposit in, credited to
or held 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,
credited to or held 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 Holders (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
S-4
<PAGE> 7
Amount may increase under certain conditions as
the Sellers' 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
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 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 [and
certain amounts, if any, on deposit in the Cash
Collateral Account, as described herein].
The Seller Amount will fluctuate as the amount of
Principal Receivables in the Trust, the invested
amount of each Series, the Discount Percentage
and the amounts and other property constituting
Eligible Investments, if any, on deposit in,
credited to or held in the Excess Funding Account
and the Principal Funding Account change from
time to time. The Sellers' Interest will
represent the right to the assets of the Trust
not allocated to the Investor Interest or the
holders of investor certificates of other Series
(the Investor Interest and the interest in the
assets of the Trust held 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 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 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
S-5
<PAGE> 8
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 Fleet Financial
Group, Inc., the Bank or any affiliate thereof
except to the limited extent provided herein.
None of the Certificates, the Class C Interests,
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 Interests 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 (in the United States)
or Cedel or Euroclear (in Europe). See
"Description of the Certificates -- Definitive
Certificates" in the Prospectus.
SELLER AND SERVICER.......... Fleet Bank (RI), National Association, a national
banking association and a wholly-owned subsidiary
of Fleet Financial Group, Inc. The principal
executive offices of the Servicer are located at
50 Kennedy Plaza, 18th Floor, Providence, Rhode
Island 02903. See "The Bank and Fleet Financial
Group" in the Prospectus.
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 holders of the Class C
Interests (the "Class C Interest Holders"), the
holders of the Seller 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 the
Certificateholders, the Class C Interest Holders
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."
S-6
<PAGE> 9
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 that 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,
Providence, Rhode Island (or, with respect to the
determination of LIBOR, London, England) or any
other state in which the principal executive
offices of the Bank or any Additional Seller or
the Trustee are located, 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 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 the Bank or the Trustee is no longer
the Servicer, to pay current and overdue Class C
Servicing Fee. If Excess Spread and Excess
Finance Charges allocable to Series 199 - with
respect to such Distribution Date are less than
the Class A Required Amount, [amounts, if any, on
deposit in the Cash Collateral Account will then
be withdrawn to fund the remaining Class A
Required Amount. If Excess Spread and Excess
Finance Charges allocable to Series 199 - for
such Distribution Date and amounts, if any, on
deposit in the Cash Collateral Account are less
than the Class A Required Amount,] Reallocated
Principal Collections allocable first to the
Class C Invested Amount
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<PAGE> 10
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 allocated to Series 199 - , (ii)
[amounts, if any, on deposit in the Cash
Collateral Account and (iii) ] 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 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."
Excess Spread and Excess Finance Charges
allocable to Series 199 - and not required to pay
the Class A Required Amount or reimburse Class A
Investor Charge-Offs will be applied to fund the
Class B Required Amount. The "Class B Required
Amount" means the amount for any Distribution
Date equal to the sum of (a) the amount, if any,
by which 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 (b) the Class B
Investor Default Amount for the related Monthly
Period. If Excess Spread and Excess Finance
Charges 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, [amounts, if any, on deposit in
the Cash Collateral Account not required to fund
the Class A Required Amount will be withdrawn and
applied to fund the Class B Required Amount. If
such amounts available with respect to such
Distribution Date are insufficient to pay 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
S-8
<PAGE> 11
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
allocated to Series 199 - and not required to pay
the Class A Required Amount [and amounts, if any,
on deposit in the cash Collateral Account 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 the Series issued by
the Trust that will be outstanding on the Closing
Date. Series 199 - will be the Series
included in a group of Series ("Group [One]")
expected to be issued by the Trust from time to
time. See "Annex 1." Additional Series are
expected to be issued from time to time by the
Trust.
[THE CASH COLLATERAL
ACCOUNT...................... A cash collateral account (the "Cash Collateral
Account") will be held in the name of the Trustee
for the benefit of the Certificateholders and the
Class C Interest Holders. The Cash Collateral
Account will have a beginning balance of
$ which may be increased to the extent
collections of Excess Spread and Excess Finance
Charges allocable to Series 199 - are expected to
be deposited therein as described below. See
"Description of the Certificates -- The Cash
Collateral Account." To the extent set forth
herein, withdrawals will be made from the Cash
Collateral Account to pay the Class A Required
Amount first, then to pay the Class B Required
Amount and then to pay any unpaid Class C
Servicing Fee. See "Description of the
Certificates -- Reallocation of Cash Flows."]
AMOUNTS AVAILABLE AS
ENHANCEMENT.................. On each Distribution Date, the amount of
enhancement (the "Enhancement") available to the
Certificateholders will equal the lesser of (i)
the [sum of the] Class C Investor Amount [and the
amount, if any, on deposit in the Cash Collateral
Account] (the "Available Enhancement Amount") and
(ii) the Required Enhancement Amount. The
"Required Enhancement Amount" with respect to any
Distribution Date means, subject to certain
limitations more fully described 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
S-9
<PAGE> 12
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, [minus the amount of
funds on deposit in the Cash Collateral Account
after taking account all deposits and withdrawals
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 sum of (A)] the product of (I) $ ,
(II) % [and (III) a fraction the numerator of
which is equal to [the sum of] the Available Cash
Collateral Amount as of the immediately preceding
Distribution Date [and the Class C Floating
Percentage of the Pre-Funded Amount] and the
denominator of which is the Total Enhancement for
such Distribution Date and (B) the product of (I)
$ , (II) % and (III) a fraction, the
numerator of which is equal to the Class C
Invested Amount as of the immediately preceding
Distribution Date and the denominator of which is
the Total Enhancement for such Distribution
Date,] subject to certain limitations. With
respect to any Distribution Date, if the
Available Enhancement Amount is less than the
Required Enhancement Amount, certain Excess
Spread and Excess Finance Charges allocable to
Series 199 - will be used [first] to increase the
Class C Invested Amount to the extent of any
prior unreimbursed reductions in the Class C
Invested Amount [and then deposited to the Cash
Collateral Account to the extent of such
shortfall]. See "Description of the
Certificates -- Application of
Collections -- Excess Spread; Excess Finance
Charges." [On any Distribution Date, to the
extent that the sum of the amount on deposit in
the Cash Collateral Account and the Class C
Investor Amount exceeds the Required Enhancement
Amount, such excess may be paid to the Class C
Interest Holders and 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 Interests. 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 Seller Amount on the last
day of a Monthly Period during the Funding Period
exceeds the product of (A) the sum of % and the
Required Seller 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 $
S-10
<PAGE> 13
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
Holders 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."]
REVOLVING PERIOD............. No principal will be payable to or for the
benefit of Certificateholders [(other than any
principal payment made from amounts on deposit in
the Pre-Funding Account at the end of the Funding
Period)] 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 accumulation period with
respect to the Certificates (the "Accumulation
Period"), which includes separate accumulation
periods for the Class A Certificates and the
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 Accumulation Period," the day on which the
Revolving Period ends and the 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 Seller
Certificates or to amortizing or accumulating
Series in [Group One] or deposited into the
Excess Funding Account. See "Description of the
Certificates -- Principal Payments."
ACCUMULATION PERIOD;
PRINCIPAL PAYMENTS........... Unless a Pay Out Event shall have occurred, (a)
the Class A 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 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 Accumulation Period, the Available
Investor Principal Collections will no longer be
paid to the holders of the Seller Certificates or
to amortizing or accumulating Series in [Group
One] or deposited into the Excess Funding Account
S-11
<PAGE> 14
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 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 Accumulation Period, until the Class 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, if any, of (i) [the amount on deposit
in the Cash Collateral Account plus] the Class C
Investor Amount over (ii) the Required
Enhancement Amount (the "Enhancement Surplus").
During the 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 the aggregate
amount of Principal Receivables and 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 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 Seller
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
S-12
<PAGE> 15
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) on funds on deposit in the Principal
Funding Account (the "Principal Funding
Investment Proceeds") during the 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 full of 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.
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<PAGE> 16
If a Pay Out Event occurs during the 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 Holders 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 Seller
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 Holders until
the Class C Invested Amount is paid in full,
beginning with the Distribution following the
Monthly Period in which the Rapid Amortization
Period commences. 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 Class C Investor
Amount and the amount on deposit in the Cash
Collateral Account are 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
S-14
<PAGE> 17
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
Accumulation Period, certain collections of
Principal Receivables allocated to other Series
in [Group One], 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
Holders. See "Description of the
Certificates -- Shared Collections of Principal
Receivables."
REQUIRED SELLER PERCENTAGE... The Required Seller Percentage applicable to
Series 199 - is currently %, provided that
the Required Seller Percentage may be reduced to
as low as 2% if the Seller delivers an officer's
certificate stating that such reduction will not
have an Adverse Effect and the Rating Agency
Condition is satisfied.
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 Seller 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
of Principal and Interest; Termination" in the
Prospectus.
TRUSTEE...................... Bankers Trust Company, 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 Seller is
of the opinion 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.
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<PAGE> 18
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 the Class A Certificates must be
held, upon completion of the public offering made
hereby, by at least 100 investors who are
independent of the Seller 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
Seller 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
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 limitations.]
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
S-16
<PAGE> 19
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.]
S-17
<PAGE> 20
RISK FACTORS
Limited Liquidity. There is currently no market for the Certificates. The
Underwriter[s] 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 [funds held in the Cash
Collateral Account and] subordination of the Class C Interest, such amounts are
limited. If the Class C Invested Amount [and any amount on deposit in the Cash
Collateral Account are] 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" [and "-- The Cash Collateral
Account."]
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, and Excess Finance Charges allocated to Series 199 - ,
Reallocated Principal Collections with respect to the Class C Invested Amount,
[amounts, if any, on deposit in the Cash Collateral Account] 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. Pursuant to the Pooling and Servicing Agreement, the
Seller has the option to designate a fixed percentage or a variable percentage
of Receivables that otherwise would be treated as Principal Receivables to be
treated as Finance Charge Receivables. Any such designation would not result in
an increase in the amount of Finance Charge Receivables and a slower rate of
payment of collections in respect of Principal Receivables than otherwise would
occur. Pursuant to the Pooling and Servicing Agreement, the Seller can make such
a designation without notice to or the consent of Certificateholders. The Seller
must provide 30 days' prior written notice to the Servicer, the Trustee and each
Rating Agency of any such designation, and such designation will become
effective only if (i) in the reasonable belief of the Seller such designation
would not cause a Pay Out Event to occur with respect to any Series or an event
which with notice or the lapse of time or both would constitute a Pay Out Event
with respect to any Series and (ii) the Rating Agency Condition is satisfied.
See "Description of the Certificates -- Discount Option" in the Prospectus.
Rating of the Certificates. 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
of the Certificates is based primarily on the value of the Receivables [, the
availability of funds on deposit in the Cash Collateral Account and the
Pre-Funding Account as support for the Certificates] 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 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
S-18
<PAGE> 21
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 BANK'S CREDIT CARD ACTIVITIES
GENERAL
The Bank, as the survivor of a November 14, 1997 merger between the Bank
and Fleet Bank (Delaware), National Association, was, prior to the Transfer, the
owner of a portfolio of consumer credit card accounts originated or acquired by
the Bank or its predecessor (the "Existing Fleet Credit Card Portfolio"). As
discussed in the Prospectus under the caption "The Bank's Credit Card
Activities," on February 20, 1998, Advanta National Bank transferred to the Bank
the ownership interest in substantially all of the accounts in the Advanta
Consumer Credit Card Portfolio. The Fleet Consumer Credit Card Portfolio is,
therefore, a combination of consumer credit card accounts derived from the
Existing Fleet Credit Card Portfolio, from the Advanta Consumer Credit Card
Portfolio and additional consumer credit card accounts originated or acquired by
the Bank since February 20, 1998.
BILLING AND PAYMENT
Nearly all of the accounts in the Fleet Consumer Credit Card Portfolio are
subject to finance charges at prime indexed variable rates ranging from %
to % for purchases and cash advances, or London interbank offered rate
indexed variable rates ranging from % to % for purchases and cash
advances. For more information, see "The Bank's 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 Fleet Consumer Credit Card Portfolio. As of
, 199 , the Fleet Consumer Credit Card Portfolio included
receivables from accounts the receivables of which were transferred to trusts
similar to the Trust in an aggregate amount equal to approximately $
("Prior Securitizations"). As of , 199 , the Fleet Consumer Credit
Card Portfolio also included approximately $ of receivables from
accounts the receivables of which were transferred to the Trust. Additional
Accounts have been designated for inclusion in the Trust from time to time (the
"Master Trust II Sales") as set forth in Annex II. The Accounts in the Trust
Portfolio have been selected from accounts in the Fleet Consumer Credit Card
Portfolio that meet the requirements of Eligible Accounts in the Pooling and
Servicing Agreement. See "The Receivables" herein and "Description of the
Certificates -- Representations, Warranties and Covenants" in the Prospectus.
S-19
<PAGE> 22
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
FLEET CONSUMER CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Receivables Outstanding.....................................
Receivables Contractually Delinquent........................
As a Percentage of Receivables Outstanding:.................
30-59 Days.............................................
60-89 Days.............................................
90 or more days........................................
--------
Total.............................................
========
</TABLE>
LOSS EXPERIENCE
FLEET 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>
INTERCHANGE
In respect of Interchange attributed to the cardholder charges for
merchandise and services in the Accounts, the Bank will be required, pursuant to
the terms of the Pooling and Servicing Agreement, to transfer to the Trust in
the Business Day immediately preceding the Distribution Date an amount equal to
one-twelfth of % of the outstanding balance of the Principal Receivables
allocable to Series 199 - at the end of the last day of the preceding Monthly
Period.
THE RECEIVABLES
The Receivables in the Initial Accounts were conveyed to the Trust on
December 3, 1993 (the "Initial Closing Date"). The Initial Accounts were
selected from the Advanta Consumer Credit Card Portfolio satisfying criteria set
forth in the Pooling and Servicing Agreement (the "Criteria") as applied on
October 31, 1993 (the "Initial Cut Off 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.] Such Receivables were generated from
Additional Accounts selected from the Advanta Consumer Credit Card portfolio
prior to February 20, 1998 and from the Fleet Consumer Credit Card Portfolio
after February 20, 1998, in each case satisfying the Criteria as applied on the
relevant cut off date (the "Relevant Cut Off Date"). The Initial Accounts and
all Additional Accounts and any additional Receivables generated by such
Accounts conveyed to the Trust are hereinafter referred to as the "Trust
Portfolio." The Bank has broad discretion in selecting accounts that will be
designated as Additional Accounts. The Criteria are the requirements for an
account to qualify as an "Eligible Account" that are set forth in the
Prospectus. In order to meet the Criteria, each Account must, on the Relevant
Cut-Off Date, among other things, have been in existence and maintained by the
Bank, 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 as having been lost or stolen. See "Description
of the Certificates -- Representations, Warranties and Covenants" in the
Prospectus. Cardholders whose accounts are included in the Fleet Consumer Credit
Card Portfolio have billing addresses in all 50 states, the District of
Columbia, Puerto Rico, Guam, the Virgin Islands and certain foreign countries.
Pursuant to the Pooling and Servicing Agreement, the Seller may be obligated
(subject to certain limitations and conditions) to designate Additional Accounts
to be
S-20
<PAGE> 23
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 "Description of the Certificates-Generally -- Addition
of Accounts" in the Prospectus. These accounts must meet the Criteria set forth
above as of the Relevant Cut Off Date. Throughout the term of the Trust, the
Accounts from which the Receivables arise will be the same MasterCard and VISA
accounts designated by the Seller on the Relevant Cut Off Date (plus any
Additional Accounts subsequently designated as described above). In addition, as
of the Relevant Cut Off Date and on the date any new Receivables are created,
the Seller will represent and warrant to the Trust that the Receivables meet the
eligibility requirements specified in the Pooling and Servicing Agreement. See
"Description of the Certificates -- Representations, Warranties and Covenants"
in the Prospectus.
The Receivables, as of , 199 , totaled $ in
Accounts. The Accounts had an average credit limit of $ . The
percentage of the aggregate total Receivables balance to the aggregate total
credit limit was %. The average age of the Accounts was approximately
months.
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.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE 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 OF
NUMBER OF NUMBER OF TOTAL
CREDIT LIMIT BALANCE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- -------------------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
% $ %
Over $......................................
Total............................. % $ %
========
</TABLE>
S-21
<PAGE> 24
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF OF TOTAL
(DAYS 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>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS AND RECEIVABLES
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE OF
NUMBER OF NUMBER OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Alabama..................................... % $ %
Alaska......................................
Arizona.....................................
Arkansas....................................
California..................................
Colorado....................................
Connecticut.................................
Delaware....................................
District of Columbia........................
Florida.....................................
Georgia.....................................
</TABLE>
S-22
<PAGE> 25
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE OF
NUMBER OF NUMBER OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
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-23
<PAGE> 26
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 that 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 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 Seller 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
Seller, (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 Seller Amount is less than the
Required Seller Amount as of the last day of such Monthly Period, the failure of
the Seller to convey Receivables in Additional Accounts to the Trust such that
the Seller Amount is at least equal to the Required Seller Amount on or prior to
the tenth Business Day following such Determination Date or (ii) with respect to
the end of any Monthly Period, as determined on the related Determination Date,
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 Seller 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 the average of the Base Rate 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.
The term "Net Portfolio Yield" means, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction the numerator of which is the
sum of (a) the amount of collections of Finance Charge Receivables during such
Monthly Period allocable to the Certificates and to the Class C Interest,
including any other amounts that are to be treated as Collections of Finance
Charge Receivables under the Pooling and Servicing Agreement, after subtracting
therefrom the Defaulted Amount allocable to the Class A Certificates, the Class
B Certificates and the Class C Interest for the Distribution Date for such
Monthly Period, plus (b) the amount of any Principal Funding Investment Proceeds
for such Distribution Date, plus (c) the amount of any investment earnings (net
of investment losses and expenses) on funds on deposit in the Pre-Funding
Account for such Distribution Date plus, (d) the amount of funds, if any, to be
withdrawn from the reserve Account that, pursuant to the Supplement, are
required to be included in Class A Available Funds with respect to such
Distribution Date, and the denominator of which is the Investor Amount as of the
last day of the prior Monthly Period. For any Monthly Period, the "Base Rate"
will be equal to the annualized percentage equivalent to a fraction, the
numerator of which is equal to the sum of (i) the Class A Monthly Interest, (ii)
the Class B Monthly Interest, (iii) the Collateral Monthly Interest and (iv) the
Monthly Servicing Fee, each with respect to the related Distribution Date and
the denominator of which is the Investor Amount as of the last day of the
preceding Monthly Period.
A Pay Out Event occurs, with respect to the Certificates and each other
Series, automatically upon (a) an Insolvency Event relating to the Seller
(including any Additional Seller), (b) the Trust becoming an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the
S-24
<PAGE> 27
"Investment Company Act"), or (c) the inability of the Seller (including any
Additional Seller) to transfer Receivables to the Trust in accordance with the
Pooling and Servicing Agreement. 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."
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Fleet 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
FLEET 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 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. 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 Fleet 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. The historical
yield figures in the table are calculated on an accrual basis. Collections on
the Receivables will be on a cash basis and may not reflect the historical yield
experience in the table. For example, during periods of increasing delinquencies
accrual yields may exceed cash yields as amounts collected on credit card
receivables lag behind amounts accrued and billed to cardholders. Conversely, as
delinquencies decrease, cash yield may exceed accrual yields as amounts
collected in a current period may include amounts accrued during prior periods.
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
S-25
<PAGE> 28
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 AND FEES
FLEET 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 Fleet Consumer Credit Card Portfolio shown in the above
table is comprised of three components: finance charges, annual cardholder fees
and other service charges, such as late charges. The yield related to annual
cardholder fees (on those accounts that 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.]
[Discussion of any significant trends in Revenue table above, if any, to be
discussed.]
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Master Pooling and
Servicing Agreement entered into between a predecessor in interest to the Bank
(and later assumed by the Bank) as Seller and as Servicer of the Accounts and
the Receivables, and Bankers Trust Company, as Trustee for the
Certificateholders, filed as an exhibit to the Registration Statement of which
the Prospectus is a part. Pursuant to the Master Pooling and Servicing
Agreement, the Seller may execute further supplements thereto among each of the
Seller 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 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 Seller
Certificates, to amortizing or accumulating Series in [Group One] or, in certain
limited circumstances described herein, to the holders of the Class C Interests,
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 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 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 Interests (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
S-26
<PAGE> 29
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 "Description of the
Certificates -- Defaulted Receivables; Rebates and Fraudulent Charges" in the
Prospectus and "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 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 Accumulation Period, certain collections of
Principal Receivables otherwise allocable to other Series, to the extent such
collections are not needed to make payments to or for the benefit of such other
Series).
The Seller holds the interest in the Principal Receivables and the amounts
on deposit in the Excess Funding Account, if any (the "Seller Amount"), not
represented by the Certificates, the Class C Interest and the certificates of
and uncertificated interests in other Series, if any. The Seller holds an
undivided interest in the Trust (the "Sellers' Interest"), including the right
to a percentage (the "Seller 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 "Description of the
Certificates -- Defaulted Receivables; Rebates and Fraudulent Charges" in the
Prospectus and ["-- 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 Seller
Amount will fluctuate daily, therefore, to reflect the changes in the amount of
the Principal Receivables. During the 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 or the Class C
Interest Holders.
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 and Excess
Finance Charges 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
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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 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 and Excess
Finance Charges 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 Available Funds" means, with respect to any Monthly Period, an
amount equal to the Class C Floating Percentage of the collections of Finance
Charge Receivables allocated to Series 199 -- (including any [investment
earnings on amounts on deposit in the Pre-Funding Account and any other amounts
that are to be used as collections of Finance Charge Receivables in accordance
with the Pooling and Servicing Agreement)
"Class C Monthly Interest" means, with respect to any Distribution Date, an
amount equal to the product of (i)(A) a fraction, the numerator of which is the
actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator of
which is 360, times (B) the Class C Interest Rate and (ii) the Class C Investor
amount as of the preceding Record Date; provided, however, with respect to the
first Distribution Date, Class C Monthly Interest shall be equal to the interest
accrued on the Class C Initial Investor Amount at the applicable Class C
Interest Rate for the period from the Closing Date through , .
"Class C Interest Rate" means a rate specified in the Class C Supplemental
Agreement not greater than [onemonth LIBOR plus % per annum].
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<PAGE> 31
[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 Holders, 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 Seller Amount on the last day of any Monthly Period during the Funding
Period exceeds the product of (A) the sum of % and the Required Seller
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 Holders on
the next succeeding Distribution Date.]
[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 Holders. 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. Class C
Monthly Principal will be applied in accordance with the Class C Supplement
Agreement. The "Class C Supplemental Agreement" means the Class C Supplemental
Agreement dated as of the Closing Date, between the Bank, as Seller and
Servicer, and the Trustee.
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
product of the Invested Principal Collections multiplied by the
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<PAGE> 32
sum of the Class A Principal Percentage and the Class B Principal Percentage for
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 (excluding certain reallocated Principal Collections
that have resulted in a reduction of the Class C Invested 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, plus (d) an amount equal to the
excess, if any, of Class C Principal Collections over Class C Monthly Principal.
"Invested Principal Collections" means for any Monthly Period, the Principal
Allocation Percentage of all collections of Principal Receivables during such
Monthly Period.
"Class C Principal Collections" means, with respect to any Monthly Period,
the Invested Principal Collections less an amount equal to the product of (i)
the Invested Principal Collections and (ii) the sum of the Class A Principal
Percentage and the Class B Principal Percentage with respect to such Monthly
Period. plus the amount, if any, of Excess Spread and Excess Finance Charges to
be distributed pursuant to clauses [(h) and (i)] of "-- Application of
Collections -- Excess Spread; Excess Finance Charges" on the related
Distribution Date, minus the amount of Reallocated Principal Collections with
respect to such Monthly Period which are required to fund any deficiency in the
amounts to be distributed pursuant to the Class A Required Amount or the Class B
Required Amount for the related Distribution Date (excluding Reallocated
Principal Collections which have been allocated to reduce the Class B Invested
Amount).
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.
"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.
"Class C Monthly Principal" means (i) on any Distribution Date prior to the
Distribution Date on which the Class B Invested amount is paid in full, an
amount equal to the lesser of (A) Class C Principal Collections with respect to
such Distribution Date plus Available Investor Principal Collections (not
including any amounts specified in clause (d) of the definition of "Available
Investor Principal Collections") not applied to Class A Monthly Principal or
Class B Monthly Principal on such Distribution Date and (B) the Enhancement
Surplus on such Distribution Date, if any, (ii) beginning with the Distribution
Date on which the Class B Invested Amount is paid in full, an amount equal to
the sum of the Available Investor Principal Collections with respect to such
Distribution Date (minus the portion of such available Investor Principal
Collections applied to Class A Monthly Principal and Class B Monthly Principal
on such Distribution Date) and the Class C Principal Collections with respect to
such Distribution Date, and (iii) on any Distribution Date, in addition to the
amounts, if any, set forth in items (i) and (ii), at the option of the Seller,
and after receipt by the Servicer and the Trustee of a written determination by
each rating agency that such action will not result in a reduction or withdrawal
of the then current ratings of the Class A Certificates or the Class B
Certificates,
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<PAGE> 33
an amount established by the Seller and consistent with any restrictions set
forth in the determination of the Rating Agency; provided, however, with respect
to any Distribution Date, Class C Monthly Principal will not exceed the Class C
Invested Amount.
"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 , 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 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 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 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 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 that 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.]
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."
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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 Interests, the certificateholders' interest
for all other Series issued and outstanding and the Sellers' Interest 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
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 designations 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
Holders 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 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
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<PAGE> 35
being made; provided, however, that such ratio is subject to adjustment to give
effect to designations of Additional Accounts.
Such amounts allocated to the Certificateholders will be further allocated
between the Class A Certificateholders and the Class B Certificateholders and
the Class C Interest based on the Class A Principal Percentage and the Class B
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 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. Collections of
Principal Receivables allocable to Series 199 - and not allocated to the Class
A Certificateholders or the Class B Certificateholders will be allocated, in an
amount up to the Class C Invested Amount, to the Class C Interest Holders.
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.
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<PAGE> 36
"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," minus (vi) an amount equal to the product of the Class C
Floating Percentage and the Investor Default Amount (the "Class C Investor
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 and Excess Finance Charges 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 and Excess Finance
Charges are insufficient to fund the Class A Required Amount, [amounts, if any,
on deposit in the Cash Collateral Account will then be used to fund the
remaining Class A Required Amount. If such Excess Spread and Excess Finance
Charges and amounts, if any, on deposit in the Cash Collateral Account 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 and Excess Finance Charges allocated to Series
199 - [and amounts, if any, on deposit in the Cash Collateral Account] are
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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 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 sum of (a) the amount, if any, by which the sum of (i) Class B
Monthly Interest for such Distribution Date, (ii) any Class B 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 and (iv) the Class B Servicing Fee for such
Distribution Date and any unpaid Class B Servicing Fee exceeds the Class B
Available Funds and (b) the Class B Investor Default Amount for such Monthly
Period. 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 and Excess Finance Charges available to fund the remaining Class B
Required Amount with respect to such Distribution Date are less than the Class B
Required Amount [amounts, if any, on in the Cash Collateral Account not required
to fund the Class A Required Amount will then be used to fund the remaining
Class B Required Amount. If such Excess Spread and Excess Finance Charges and
amounts, if any, on deposit in the Cash Collateral Account are insufficient to
pay 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 and Excess Finance Charges and
Reallocated Principal Collections available for such purposes on each
Distribution Date. See "-- Application of Collections -- Excess Spread; Excess
Finance Charges." 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.
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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 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 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 Seller Certificates; provided that such
amount will be paid to the holders of the Seller Certificates only if the
Seller Amount is greater than the Required Seller Amount and the aggregate
amount of Principal Receivables is greater than the Required Principal
Balance and otherwise will be deposited in the Excess Funding Account until
the Seller Amount is greater than the Required Seller Amount and the
aggregate amount of Principal Receivables is greater than the Required
Principal Balance and the remainder will be paid to the holders of the
Seller Certificates; provided further, that if the Total Enhancement is
less than the Required Enhancement 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 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 Seller Certificates only if the Seller Amount on such
Date of Processing is greater than the Required Seller Amount and the
aggregate amount of Principal Receivables is greater than the Required
Principal Balance and otherwise will be deposited in the Excess Funding
Account until the Seller Amount is greater than the Required Seller Amount
and the aggregate amount of Principal Receivables is greater than the
Required Principal Balance and the remainder will be paid to the holders of
the Seller Certificates; provided further, however, that if the is Total
Enhancement is less than the Required Enhancement 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 Seller
Certificates only if the Seller Amount is greater than the Required Seller
Amount and aggregate amount of Principal Receivables is greater than
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<PAGE> 39
the Required Principal Balance and otherwise will be deposited in the
Excess Funding Account until the Seller Amount is greater than the Required
Seller Amount and the aggregate amount of Principal Receivables is greater
than the Required Principal Balance and the remainder will be paid to the
holders of the Seller 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 Holders;]
(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;
(3) on each Distribution Date after the Reserve Account Funding Date,
all net investment income accrued since the preceding Distribution Date on
funds on deposit in the Reserve Account will be retained in the Reserve
Account (to the extent that the amount on deposit in the reserve Account is
less that the Required Reserve Account Amount) and the balance, if any,
will be deposited in the Collection Account for distribution as collections
of Finance Charge Receivables allocable to the Certificateholders and the
Class C Interest Holders and;
(4) 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, if applicable, 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 will be
reduced to the extent that funds otherwise would be available to be
deposited in the Reserve Account on such Distribution Date) will be
withdrawn from the Reserve Account and deposited in 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);
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<PAGE> 40
(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" 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;
(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."
(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 the Bank 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" 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. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply Excess
Spread and Excess Finance Charges 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 and Excess Finance Charges allocated to
Series 199 - , such Excess Spread and Excess Finance Charges 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;
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<PAGE> 41
(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 and
Excess Finance Charges allocated to Series 199 - , such Excess Spread
and Excess Finance Charges 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";
(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, for such Distribution
Date, plus the amount of any Class C Monthly Interest previously due but
not paid to the Class C Interest Holders on a prior Distribution Date, plus
any additional interest with respect to amounts that were due but not paid
to the Class C Interest Holders on a prior Distribution Date at a rate
equal to the Class C Interest Rate ("Class C Additional Interest"), will be
distributed to the Class C Interest Holders;
(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 Investor Default Amount for such
Distribution Date shall be treated as a portion of Class C 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 Class C Principal Collections for such Distribution Date;
(10) an amount up to the excess, if any, of the Required Cash
Collateral Amount over the remaining Available Cash Collateral Amount
(without giving effect to any deposit to the Cash Collateral Account made
on such date) shall be deposited to the Cash Collateral Account; and
(11) an amount up to the excess, if any, of the Required Reserve
Account Amount over the principal amount on deposit in the Reserve Account
will be deposited in the Reserve Account;
[(12) an amount equal to the aggregate of any amounts to be applied
pursuant to the Class C Supplemental Agreement out of Excess Spread and
Excess Finance Charges allocated to Series 199 - will be applied in
accordance with the Class C Supplemental Agreement; and]
(13) 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 Seller Certificates as
described in "Description of the Certificates -- Sharing of Excess Finance
Charges" in the Prospectus.
[Cash Collateral Account;] Reallocated Principal Collections. On or before
each Distribution Date after giving effect to the distributions above under
"-- Excess Spread; Excess Finance Charges," the Trustee, acting pursuant to the
Servicer's instructions, will apply [the Available Cash Collateral Amount on
such
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<PAGE> 42
Distribution Date and] Reallocated Principal Collections for the related Monthly
Period to make the following distributions in the following priority:
[(1) if the amount of Excess Spread and Excess Finance Charges
allocated to Series 199 - for the related Monthly Period is less than
the amounts specified in clauses (1) through (5) and (7) above under
"-- Excess Spread; Excess Finance Charges," an amount equal to such
deficiency, not to exceed the Available Cash Collateral Amount, will be
withdrawn from the Cash Collateral Account and distributed to fund such
deficiency in order of priority set forth in clauses (1) through (5) and
(7) above under "-- Excess Spread; Excess Finance Charges";]
(2) if the [sum of (x) the amount of] Excess Spread and Excess Finance
Charges allocated to Series 199 - for the related Monthly Period [and
(y) the Available Cash Collateral Amount on such Distribution Date] is less
than the Class A Required Amount, Reallocated Principal Collections, up to
the amount of such deficiency, 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";
(3) if [the sum of (x)] the amount of Excess Spread and Excess Finance
Charges 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 [and (y) the Available Cash Collateral Amount not required to
fund the Class A Required Amount] 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."
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 that are not allocated as
a portion of Class C Monthly Principal will be treated as Shared Principal
Collections and applied as described under "Description of the
Certificates -- Shared Principal Collections" in the Prospectus;
(2) on each Distribution Date with respect to the 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) the balance, if any, may be treated as Class C Monthly
Principal if so required by the definition thereof; and
(iv) the balance, if any, will be treated as Shared Principal
Collections and applied as described under "Description of the
Certificates -- Shared Principal Collections" in the Prospectus.
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<PAGE> 43
(3) on each Distribution Date with respect to the Revolving Period,
all such Class C Principal Collections will be distributed or deposited in
the following priority:
(i) an amount equal to Class C Monthly Principal for such
Distribution Date, up to the Class C Invested Amount on such
Distribution Date, will be applied in accordance with the Class C
Supplemental Agreement; and
(ii) the balance, if any, will be treated as Available Investor
Principal Collections and applied as described in clause (1) above;
(4) on each Distribution Date with respect to the Accumulation Period
or the rapid Amortization Period, all such Class C Principal Collections
will be distributed or deposited in the following priority:
(i) an amount equal to Class C Monthly Principal for such
Distribution Date, up to the Class C Invested Amount on such
Distribution Date, will be applied in accordance with the Class C
Supplemental Agreement; and
(ii) the balance, if any, will be treated as Available Investor
Principal Collections and applied as described in clause (2) above.
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 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") 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 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 ,
provided that if such numerator is one, the Required Reserve Account Amount will
be zero, or (b) any other amount designated by the Seller, provided, that if
such designation is of a lesser amount, the Seller shall have provided the
Servicer and the Trustee with evidence that the Rating Agency Condition has been
satisfied and the Seller 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 Seller, 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
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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 over the Required Reserve Account
Amount and will pay such amount to the holders of the Seller Certificates.]
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.
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 holder of the Seller Certificates. Any amounts withdrawn from
the Reserve Account and distributed to the holders of the Seller Certificates as
described above will not be available for distribution to the
Certificateholders.]
[PAIRED SERIES
The Certificates are subject to being paired with one or more later issued
Series (each, a "Paired Series") on or after the commencement of the
Accumulation Period or the Rapid Amortization Period. A Paired 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
Paired 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 Paired Series, the aggregate investor
amount of such Paired Series will have been increased by an amount up to an
aggregate amount equal to the Investor Amount. The issuance of a Paired 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 Paired 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 that may occur in the Series Percentage.]
S-42
<PAGE> 45
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 the Certificateholders or the Class C Interest Holders, such
collections may be applied to cover principal payments due to or for the benefit
of other Principal Sharing Series [in Group One]. 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 [in Group One], 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 Accumulation
Period. There can be no assurance that such Shared Principal will be available
to cover payments of principal or deposits due on any Distribution Date during
the Accumulation Period. If no such Shared Principal Collections were available
to the Certificates, the Class A Investor Amount might not be paid in full by
the 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 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 are allocated to other Series, the pro rata
share of such Shared Principal Collections allocated to Certificateholders will
be reduced.
THE CASH COLLATERAL ACCOUNT
The Cash Collateral Account will be held for the benefit of the
Certificateholders and the Interest Holders, as their interests appear in the
Supplement. Funds on deposit in the Cash Collateral Account will be invested in
certain Eligible Investments. On each Distribution Date, all interest and
earnings (net of losses and investment expenses) accrued since the preceding
Distribution Date on funds on deposit in the Cash Collateral Account will be
paid to the holders of the Seller Certificates. The Cash Collateral Account will
be funded on the Closing Date in the initial amount of $ .
On each Distribution Date, the amount available to be withdrawn from the
Cash Collateral Account (the "Available Cash Collateral Amount") will be equal
to the least of (i) the amount on deposit in the Cash Collateral Account (before
giving effect to any deposit to be made to, or withdrawal from, the Cash
Collateral Account on such Distribution Date), (ii) the Required Enhancement
Amount and (iii) the Invested Amount as of such date.
The "Required Enhancement 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, minus the
amount of funds on deposit in the Cash Collateral Account after taking into
account all deposits and withdrawals 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 sum of (A) the product of (I)
$ , (II) % and (III) a fraction the numerator of which is equal to
the Available Cash Collateral Amount as of the immediately preceding
Distribution Date and (B) the product of (I) $ , (II) % and (III)
a fraction the numerator of which is equal to the Class C Invested Amount as of
the immediately preceding Distribution Date and the denominator of which is the
Total Enhancement Amount; provided, however, that (i) if certain withdrawals are
made from the Cash Collateral Account or 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 Enhancement Amount for such Distribution Date shall equal
the Required Enhancement Amount for the Distribution Date immediately preceding
the occurrence of such drawing, Pay Out Event or reduction in the Class C
Invested Amount, (ii) in no event shall the Required Enhancement Amount exceed
the sum of the Class A Invested Amount and the Class B Invested Amount on such
date, and (iii) the Required Enhancement Amount may be reduced without the
consent of the Certificateholders, if the Seller shall have received written
notice that the Rating Agency Condition has been
S-43
<PAGE> 46
satisfied for such reduction and the Seller 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 Seller, 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 - .
On each Distribution Date, one or more withdrawals may be made from the
Cash Collateral Account in an amount up to the Available Cash Collateral Amount,
to fund the amounts specified in clauses (1) through (5) and (7) of
"-- Application of Collections -- Excess Spread; Excess Finance Charges" in
order of priority specified therein.
On each Distribution Date, the Servicer or the Trustee, acting pursuant to
the Servicer's instructions, will apply Excess Spread and Excess Finance Charges
(to the extent described above under "-- Application of Collections Excess
Spread; Excess Finance Charges") to increase the amount on deposit in the Cash
Collateral Account to the extent such amount is less than the Required Cash
Collateral Amount. The "Required Cash Collateral Amount" means on any date of
determination the required Enhancement Amount less the Class C Investor Amount.
In addition, if on any Distribution Date the amount on deposit in the Cash
Collateral Account exceeds the Required Cash Collateral Amount, such excess will
be withdrawn and paid to the holder of the Seller Certificates.]
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 Holders in an amount
equal to the Class C Investor 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 allocated to Series
199 - or from [amounts, if any, on deposit in the Cash Collateral Account and]
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" 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 allocated to Series 199 - or from [amounts, if any, on deposit
in the Cash Collateral Account and] Reallocated Principal Collections allocable
to the Class C Invested Amount and applied as described above in "-- Application
of Collections -- Excess Spread; Excess Finance Charges" and "-- Reallocation of
Cash Flows;"
On each Distribution Date, if the Class A Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charges
allocable to Series - , [amounts, if any, on deposit in the Cash
Collateral Account and] 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
S-44
<PAGE> 47
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 Finance Charges allocated to Series 199 -
and available for such purpose as described under "-- Application of
Collections -- Excess Spread; Excess Finance Charges."
On each Distribution Date, if the Class B Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charges
allocable to Series 199 - and not required to pay the Class A Required Amount
[, amounts, if any, on deposit in the Cash Collateral Account 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 allocated to Series 199 - and
available for such purpose as described under "-- Application of
Collections -- Excess Spread; Excess Finance Charges."
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 Seller
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 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.
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 Seller (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 Seller in the
Pooling and Servicing Agreement, which failure has a material adverse
effect on the Certificateholders (which determination will be made, for so
long as the Class C Invested Amount is greater than zero, without reference
to whether any funds are available pursuant to any Series Enhancement) and
continues unremedied for a period of 60 days after written notice of such
failure shall have been given to the Seller by the Trustee, or to the
Seller and the Trustee
S-45
<PAGE> 48
by the holders of Certificates aggregating not less than 50% of the
outstanding principal balance of the Certificates;
(b) any representation or warranty made by the Seller in the Pooling
and Servicing Agreement or any information required to be given by the
Servicer on behalf of the Seller 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 Seller by the
Trustee, or to the Seller 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 interest of the Certificateholders are
materially and adversely affected (which determination shall be made, for
so long as the Class C Invested Amount is greater than zero, without
reference to whether any funds are available pursuant to any Series
Enhancement); provided, however, that a Pay Out Event shall not be deemed
to have occurred with respect to this subparagraph (b) if the Seller has
accepted reassignment of the related Receivable or all such Receivables, if
applicable, during such period (or such longer period as the Trustee may
specify) in accordance with the provisions of the Pooling and Servicing
Agreement;
(c) with respect to the end of any Monthly Period (i) with respect to
which the Seller Amount is less than the Required Seller Amount, the
failure of the Seller 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 Seller Amount is at least equal to the Required
Seller Amount or (ii) with respect to which the aggregate Principal
Receivables are less than the Required Principal Balance, the failure of
the Seller 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 any Seller (including any
Additional Seller);
(h) the Trust becomes an "investment company" within the meaning of
the Investment Company Act; or
(i) the inability of any Seller (including any Additional Seller) 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 Class C
Interest Holders 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 Seller and the Servicer (and to the Trustee
if given by the Certificateholders and the Class C Interest Holders), 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 in subparagraphs (c), (d), (f), (g), (h), or (i), a Pay Out
Event 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 Holders
immediately upon the occurrence of such event. Upon the occurrence of a Pay Out
Event, the Rapid Amortization Period will
S-46
<PAGE> 49
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
$ .
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 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 $ . 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"), is of the
opinion that the Certificates will properly be treated as indebtedness for
federal income tax purposes. See "Federal Income Tax Consequences" in the
Prospectus.
S-47
<PAGE> 50
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 Bank has agreed to sell to the
underwriter[s] named below (the "Underwriters"), and each of the underwriters
has agreed to purchase from the Bank, the principal amount of [Class A
Certificates] [and Class B Certificates] set forth opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITER CLASS A CERTIFICATES CLASS B CERTIFICATES
- ------------------------- -------------------- --------------------
<S> <C> <C>
.................... $ $
.................... $ $
.................... $ $
.................... $ $
</TABLE>
If the Underwriter[s] create a short position in the Certificates in
connection with the offering, i.e., if they sell more Certificates than are set
forth on the cover page of this Prospectus Supplement, the Underwriter[s] may
reduce that short position by purchasing 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 Seller, the Servicer, nor the Underwriter[s] 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 Certificates. In
addition, none of the Seller, the Servicer, nor the Underwriter[s] makes any
representation that the Underwriter[s] will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
The Seller 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 Seller 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 Seller 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 Seller by Edwards & Angell, Boston, Massachusetts. Certain
legal matters relating to the federal tax consequences of such issuance will be
passed upon for the Seller, 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-48
<PAGE> 51
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
TERM PAGE NO.
---- --------
<S> <C>
Accounts.................................................. S-2
Accumulation Period....................................... S-11
Accumulation Period Length................................ S-31
Available Cash Collateral Amount.......................... S-43
Available Enhancement Amount.............................. S-9
Available Investor Principal Collections.................. S-29
Available Reserve Account Amount.......................... S-42
Bank...................................................... S-1, S-3
Base Rate................................................. S-24
Business Day.............................................. S-7
Cash Collateral Account................................... S-2, S-9
Cede...................................................... S-6
Certificate Owner......................................... S-6
Certificateholders........................................ S-3
Certificateholders' Interest.............................. S-5
Certificates.............................................. S-1, S-3
Class A Accumulation Period............................... S-11
Class A Additional Interest............................... S-37
Class A Available Funds................................... S-27
Class A Certificate Rate.................................. S-5
Class A Certificateholders................................ S-3
Class A Certificates...................................... S-1, S-3
Class A Expected Final Distribution Date.................. S-24
Class A Floating Percentage............................... S-32
Class A Initial Invested Amount........................... S-4
Class A Invested Amount................................... S-4, S-33
Class A Investor Amount................................... S-34
Class A Investor Charge Off............................... S-45
Class A Investor Default Amount........................... S-44
Class A Monthly Interest.................................. S-28
Class A Monthly Principal................................. S-30
Class A Principal Percentage.............................. S-33
Class A Required Amount................................... S-7, S-34
Class A Servicing Fee..................................... S-47
Class B Accumulation Period............................... S-11
Class B Additional Interest............................... S-38
Class B Available Funds................................... S-28
Class B Certificate Rate.................................. S-5
Class B Certificateholders................................ S-3
Class B Certificates...................................... S-1, S-3
Class B Expected Final Distribution Date.................. S-24
Class B Floating Percentage............................... S-32
Class B Initial Invested Amount........................... S-4
Class B Invested Amount................................... S-4, S-33, S-39
Class B Investor Amount................................... S-34
Class B Investor Charge Off............................... S-45
</TABLE>
S-49
<PAGE> 52
<TABLE>
<CAPTION>
TERM PAGE NO.
---- --------
<S> <C>
Class B Investor Default Amount........................... S-44
Class B Monthly Interest.................................. S-28
Class B Monthly Principal................................. S-30
Class B Principal Commencement Date....................... S-40
Class B Principal Percentage.............................. S-33
Class B Required Amount................................... S-8, S-35
Class B Servicing Fee..................................... S-47
Class C Additional Interest............................... S-39
Class C Available Funds................................... S-28
Class C Floating Percentage............................... S-32
Class C Initial Invested Amount........................... S-4
Class C Interest Holders.................................. S-6
Class C Interest Rate..................................... S-28
Class C Interests......................................... S-2, S-3
Class C Invested Amount................................... S-4, S-34, S-39
Class C Investor Amount................................... S-34
Class C Investor Default Amount........................... S-34
Class C Monthly Interest.................................. S-28
Class C Monthly Principal................................. S-12, S-30
Class C Principal Collections............................. S-30
Closing Date.............................................. S-27
Code...................................................... S-16
Controlled Accumulation Amount............................ S-31
Controlled Deposit Amount................................. S-12
Criteria.................................................. S-20
Deficit Controlled Accumulation Amount.................... S-12, S-31
Definitive Certificate.................................... S-6
Determination Date........................................ S-24
Distribution Date......................................... S-7
DTC....................................................... S-6
Eligible Account.......................................... S-20
Enhancement............................................... S-9
Enhancement Surplus....................................... S-12
ERISA..................................................... S-16
Excess Finance Charges.................................... S-9
Excess Spread............................................. S-7, S-38
Existing Fleet Credit Card Portfolio...................... S-19
FDIC...................................................... S-1, S-6
Floating Allocation Percentage............................ S-32
Funding Period............................................ S-10
Group [One]............................................... S-9
Initial Closing Date...................................... S-20
Initial Cut Off Date...................................... S-20
Initial Invested Amount................................... S-4
Interest Period........................................... S-7
Invested Amount........................................... S-4, S-26, S-34
Invested Principal Collections............................ S-30
Investment Company Act.................................... S-24
Investor Amount........................................... S-34
</TABLE>
S-50
<PAGE> 53
<TABLE>
<CAPTION>
TERM PAGE NO.
---- --------
<S> <C>
Investor Default Amount................................... S-44
Investor Interest......................................... S-3
Master Pooling and Servicing Agreement.................... S-3
Master Trust II Sales..................................... S-19
Monthly Servicing Fee..................................... S-47
Monthly Period............................................ S-7
Net Portfolio Yield....................................... S-24
Paired Series............................................. S-42
Percentage Allocation..................................... S-36
Pooling and Servicing Agreement........................... S-3
Pre-Funded Amount......................................... S-10
Pre-Funding Account....................................... S-10
Principal Allocation Percentage........................... S-32
Principal Funding Account................................. S-12, S-41
Principal Funding Account Balance......................... S-33
Principal Funding Investment Proceeds..................... S-13, S-41
Prior Securitizations..................................... S-19
Rapid Amortization Period................................. S-14
Rating Agencies........................................... S-16
Rating Agency............................................. S-16
Reallocated Principal Collections......................... S-34
Receivables............................................... S-2
Relevant Cut Off Date..................................... S-20
Required Cash Collateral Amount........................... S-44
Required Enhancement Amount............................... S-9, S-43
Required Reserve Account Amount........................... S-41
Reserve Account........................................... S-41
Reserve Account Funding Date.............................. S-41
Revolving Period.......................................... S-11
Seller Amount............................................. S-27
Seller Percentage......................................... S-27
Sellers' Interest......................................... S-4, S-27
Series.................................................... S-3
Series 199 - ............................................ S-3
Series 199 - Termination Date............................ S-15
Series Investor Amount.................................... S-34
Series Percentage......................................... S-26
Servicing Base Amount..................................... S-47
Servicing Fee Rate........................................ S-47
Shared Principal Collections.............................. S-43
Subordinate Principal Collections......................... S-36
Supplement................................................ S-3
Trust..................................................... S-1, S-3
Trust Portfolio........................................... S-20
Trustee................................................... S-1, S-3
Underwriters.............................................. S-48
Underwriting Agreement.................................... S-48
</TABLE>
S-51
<PAGE> 54
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> 55
ANNEX II
RECEIVABLES IN ADDITIONAL ACCOUNTS
CONVEYED TO THE TRUST
[LISTING OF INFORMATION ABOUT ADDITIONAL ACCOUNTS]
II-1
<PAGE> 56
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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 SELLER
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 SELLER OF THE TRUST SINCE
SUCH DATES.
------------------------
TABLE OF CONTENTS
<TABLE>
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<S> <C>
PROSPECTUS SUPPLEMENT
Summary of Terms.......................... S-3
Risk Factors.............................. S-18
The Bank's Credit Card Activities......... S-19
The Receivables........................... S-20
Maturity Assumptions...................... S-24
Receivable Yield Considerations........... S-25
Description of the Certificates........... S-26
Federal Income Tax Consequences........... S-47
Underwriting.............................. S-48
Legal Matters............................. S-48
Index of Principal Terms.................. S-49
PROSPECTUS
Prospectus Supplement..................... 2
Reports to Certificateholders............. 2
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Summary of Terms.......................... 4
Risk Factors.............................. 17
Formation of the Trust.................... 22
Transfer and Assignment................... 22
The Bank's Credit Card Activities......... 23
Use of Proceeds........................... 28
The Bank and Fleet Financial Group........ 28
Certain Legal Aspects of the
Receivables............................. 28
Description of the Certificates........... 30
Enhancements.............................. 57
Federal Income Tax Consequences........... 59
ERISA Considerations...................... 64
Plan of Distributions..................... 66
Underwriting.............................. 66
Legal Matters............................. 67
Index of Principal Terms.................. 68
</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.
============================================================
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FLEET CREDIT CARD
MASTER TRUST II
$
CLASS A [ %] [FLOATING-RATE]
ASSET-BACKED CERTIFICATES,
SERIES 199 -
CLASS B [ %] [FLOATING-RATE]
ASSET-BACKED CERTIFICATES,
SERIES 199 -
FLEET BANK (RI),
NATIONAL ASSOCIATION
SELLER AND SERVICER
-------------------------------------------
PROSPECTUS SUPPLEMENT
-------------------------------------------
UNDERWRITER(S)
============================================================
<PAGE> 57
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 BY ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION.
SUBJECT TO COMPLETION, DATED MAY 13, 1998
PROSPECTUS
FLEET CREDIT CARD MASTER TRUST II
(FORMERLY KNOWN AS ADVANTA CREDIT CARD MASTER TRUST II)
ASSET-BACKED SECURITIES, ISSUABLE IN SERIES
FLEET BANK (RI), NATIONAL ASSOCIATION
SELLER AND SERVICER
This Prospectus relates to certain Asset-Backed Securities (the
"Certificates") that may be issued from time to time by Fleet Credit Card Master
Trust II (formerly ADVANTA Credit Card Master Trust II) (the "Trust") in one or
more series (each a "Series"). The Trust was formed pursuant to a pooling and
servicing agreement between a predecessor in interest of Fleet Bank (RI),
National Association (the "Bank"), as seller and servicer, and Bankers Trust
Company, as Trustee. The property of the Trust includes and will include a
portfolio of credit card receivables (the "Receivables") generated from time to
time in the ordinary course of business in a portfolio of consumer revolving
credit card accounts (the "Accounts") owned by the Bank, and all monies due in
payment of the Receivables and certain other property, which may include
participation interests in other pooled assets, all, as more fully described
herein and, with respect to any Series, in the related Prospectus Supplement.
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 Series will consist of one or more Classes,
one or more of which may be fixed rate Certificates, floating rate Certificates
or other type 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 which 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 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 AND WILL NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF FLEET FINANCIAL GROUP, INC.,
FLEET BANK (RI), NATIONAL ASSOCIATION 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 17 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 Principal Terms" beginning on page 68 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.
, 1998
<PAGE> 58
TABLE OF CONTENTS
<TABLE>
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PROSPECTUS SUPPLEMENT............... 2
REPORTS TO CERTIFICATEHOLDERS....... 2
AVAILABLE INFORMATION............... 2
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE...................... 2
SUMMARY OF TERMS.................... 4
RISK FACTORS........................ 17
FORMATION OF THE TRUST.............. 22
TRANSFER AND ASSIGNMENT............. 22
The Transfer...................... 22
Amendment to Pooling and Servicing
Agreement...................... 23
Assignment and Assumption
Agreement...................... 23
Rights Agreement.................. 23
THE BANK'S CREDIT CARD ACTIVITIES... 23
General........................... 23
Acquisition and Use of Credit
Cards.......................... 24
Billing and Payments.............. 25
Description of FDR................ 26
Delinquencies..................... 26
Interchange....................... 27
Competition....................... 27
USE OF PROCEEDS..................... 28
THE BANK AND FLEET FINANCIAL
GROUP............................. 28
CERTAIN LEGAL ASPECTS OF THE
RECEIVABLES....................... 28
Transfer of Receivables........... 28
Certain Matters Relating to
Receivership................... 29
Consumer Protection Laws.......... 30
DESCRIPTION OF THE CERTIFICATES..... 30
General........................... 31
Book-Entry Registration........... 32
Definitive Certificates........... 34
The Bank Certificate; Additional
Sellers........................ 35
Interest Payments................. 36
Principal Payments................ 36
Shared Principal Collections...... 37
Sharing of Excess Finance Charge
Collections.................... 37
Companion Series.................. 37
Groups............................ 37
New Issuances..................... 38
Transfer and Assignment of
Receivables.................... 39
Liquidation of Receivables........ 39
Representations, Warranties and
Covenants...................... 40
Addition of Accounts.............. 44
</TABLE>
<TABLE>
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Automatic Account Additions....... 45
Removal of Accounts............... 46
Servicing Procedures.............. 47
Discount Option................... 47
Trust Accounts.................... 48
Series Percentage and Seller
Percentage..................... 48
Application of Collections........ 49
Operation of Excess Funding
Account........................ 49
Defaulted Receivables; Rebates and
Fraudulent Charges............. 49
Final Payment of Principal and
Interest; Termination.......... 50
Trust Pay Out Events.............. 50
Servicing Compensation and Payment
of Expenses.................... 52
Certain Matters Regarding the
Servicer....................... 52
Indemnification................... 53
Servicer Default.................. 53
Reports to Certificateholders..... 55
Evidence as to Compliance......... 55
Amendments........................ 56
Defeasance........................ 56
List of Certificateholders........ 57
The Trustee....................... 57
ENHANCEMENT......................... 57
General........................... 57
Subordination..................... 58
Letter of Credit.................. 58
Cash Collateral Guaranty or
Account........................ 58
Collateral Interest............... 58
Surety Bond or Insurance Policy... 59
Spread Account.................... 59
FEDERAL INCOME TAX CONSEQUENCES..... 59
General........................... 59
Treatment of the Certificates as
Debt........................... 59
Treatment of the Trust............ 60
Taxation of Interest Income of
U.S. Certificate Owners........ 61
Sale or Exchange of
Certificates................... 62
Non-U.S. Certificate Owners....... 62
Information Reporting and Backup
Withholding.................... 63
State and Local Taxation.......... 64
ERISA CONSIDERATIONS................ 64
PLAN OF DISTRIBUTION................ 66
UNDERWRITING........................ 66
LEGAL MATTERS....................... 67
INDEX OF PRINCIPAL TERMS............ 68
ANNEX I: GLOBAL CLEARANCE,
SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES........................ I-1
</TABLE>
i
<PAGE> 59
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) and authorized denominations of each Class of such Series; (b)
certain information concerning the Receivables and other property, if any,
allocated for 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; (i) the plan of distribution of such Series; and (j)
whether the Certificates are to be issuable in registered or book-entry form.
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," "-- Reports to
Certificateholders" and "-- Evidence as to Compliance." Such reports will not
constitute financial statements prepared in accordance with generally accepted
accounting principles. Neither the Bank nor Fleet Financial Group, Inc. intends
to send any of its financial reports to Certificateholders. The 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
The Bank, as depositor to 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.
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
2
<PAGE> 60
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 Fleet Bank (RI), National Association,
Fleet Credit Card Services, 300 North Wakefield Drive, Newark, Delaware 19713.
Telephone requests for such copies should be directed to the Servicer at (215)
444-6800.
3
<PAGE> 61
SUMMARY OF TERMS
The following 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, and to the Pooling and
Servicing Agreement and the Series Supplement with respect to such Series (the
"Series Supplement") between the Bank, as Seller and Servicer, and Bankers Trust
Company (or another bank or trust company qualified under the Pooling and
Servicing Agreement and named in the Prospectus Supplement for the related
Series), as Trustee (collectively, the Pooling and Servicing Agreement and any
Series Supplement are sometimes referred to as the "Pooling and Servicing
Agreement"). Certain capitalized terms used herein are defined elsewhere in this
Prospectus. A listing of the pages on which some of such terms are defined is
found in the "Index of Principal Terms." Other Series which 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.
TRUST........................ The Fleet Credit Card Master Trust II (formerly
known as the ADVANTA Credit Card Master Trust II)
("the "Trust"), was formed pursuant to a pooling
and servicing agreement dated as of December 1,
1993, as amended and restated on May 23, 1994,
and as subsequently amended. Such pooling and
servicing agreement, as amended (the "Pooling and
Servicing Agreement"), is between Fleet Bank
(RI), National Association, as Seller and
Servicer, and Bankers Trust Company, as Trustee.
The Pooling and Servicing Agreement, as
originally executed, was between Colonial
National Bank USA and the Trustee. Colonial
National Bank USA subsequently changed its name
to Advanta National Bank USA and, following a
merger into it by Advanta National Bank, Advanta
National Bank USA changed its name to Advanta
National Bank ("Advanta National Bank"). Advanta
National Bank and the Trustee entered into
Amendment Number 3 to Amended and Restated
Pooling and Servicing Agreement dated as of
February 20, 1998 ("Amendment Number 3") to
permit Advanta National Bank to assign and
delegate to the Bank all of Advanta National
Bank's rights and obligations under the Pooling
and Servicing Agreement and to change the name of
the Trust from ADVANTA Credit Card Master Trust
II to the Fleet Credit Card Master Trust II. On
February 20, 1998, immediately after Amendment
Number 3 became effective, Advanta National Bank,
the Bank, Fleet Credit Card, LLC (the "LLC") and
the Trustee entered into an Assignment and
Assumption Agreement under which (i) Advanta
National Bank transferred to the Bank, and the
Bank accepted and assumed, all of Advanta
National Bank's rights and obligations under the
Pooling and Servicing Agreement, (ii) the Bank
became Seller and Servicer of the Trust, (iii)
Advanta National Bank was released from any
continuing obligations under the Pooling and
Servicing Agreement, (iv) the Trust's name was
changed to Fleet Credit Card Master Trust II, and
(iv) Advanta National Bank and the Bank filed
with the appropriate governmental authorities
Uniform Commercial Code financing statements
reflecting the transfer to and assumption by the
Bank. See "Transfer and Assignment." The terms
"Seller" and "Servicer" mean the entity acting in
such capacity under the Pooling and Servicing
Agreement, which is (a) for the period prior to
February 20, 1998, Advanta National Bank and (b)
for the period beginning on February 20, 1998 the
Bank and each Additional Seller. See "-- Seller."
4
<PAGE> 62
The Trust assets include and 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 or acquired by Advanta National Bank
prior to February 20, 1998 (the "Advanta Consumer
Credit Card Portfolio") or by the Bank or
affiliates of the Bank (together with the Advanta
Consumer Credit Card Portfolio, the "Fleet
Consumer Credit Card Portfolio"), which accounts
are currently MasterCard* and Visa* 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, the right to receive certain
Interchange attributed to cardholder charges for
merchandise and services in the Accounts, certain
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
and other property constituting Eligible
Investments on deposit in, credited to or held in
certain bank accounts of the Trust and 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 Trust assets may also
include participations (including 100%
participations) representing undivided interests
in a pool of assets consisting of revolving
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 any interests
in both such types of receivables and other self-
liquidating financial assets owned by the Seller
or any affiliate of the Seller and collections
thereon (collectively, "Participation
Interests"). Advanta National Bank conveyed to
the Trust all Receivables existing under certain
designated Accounts at the time of the formation
of the Trust (the "Initial Accounts") and all
Receivables arising under such Initial Accounts
from time to time thereafter. In addition,
Advanta National Bank and the Bank have conveyed
and the Bank may convey in the future all
Receivables existing under certain designated
Additional Accounts (including Automatic
Additional Accounts) and all Receivables
thereafter arising in such Additional Accounts.
SECURITIES OFFERED........... 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, 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 related Series
Supplement, the portion of collections allocable
to Certificateholders of such Series pursuant to
the Pooling and Servicing Agreement and the
related Series Supple-
- ---------------
* MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.
5
<PAGE> 63
ment, funds and other property constituting
Eligible Investments on deposit in, credited to
or held 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 and other property constituting
Eligible Investments on deposit in, credited to
or held 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 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 term "Certificateholders" refers to holders
of the Certificates, 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 certain providers of
Series Enhancement holding uncertificated
subordinated interests, and the interest of the
holders of the Seller Certificates (the "Sellers'
Interest"). The Sellers' Interest represents the
right to the assets of the Trust not allocated to
the Certificateholders' Interest. The term
"Seller Amount" refers to, at any time of
determination, an amount equal to the sum of (a)
the aggregate amount of principal Receivables in,
credited to or held in the Trust at such time and
(b) the principal amount on deposit in, credited
to or held in the Excess Funding Account at such
time, minus the sum of the amount of Principal
Receivables and the principal amount on deposit
in, credited to or held in the Excess Funding
Account allocated to each Series then outstanding
(for each Series, its "Invested Amount"). The
Seller 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.
6
<PAGE> 64
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 such
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 Seller
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 Fleet Financial Group, Inc.
("Fleet Financial Group"), the Bank or any
affiliate thereof. None of the Certificates, the
Accounts, the Receivables or the Participations
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
be transferable and have the characteristics
described below, (ii) a Bank Certificate,
evidencing the Bank's interest as Seller (the
"Bank Certificate"), which will initially be held
by the Bank and which is transferable in certain
circumstances to members of the affiliated group
of which Fleet Financial Group is the common
parent and (iii) Supplemental Certificates
delivered in exchange for a portion of the Bank
Certificate under certain circumstances described
in the Pooling and Servicing Agreement (each, a
"Supplemental Certificate", and, together with
the Bank Certificate, the "Seller Certificates").
A new issuance of Certificates (a "New Issuance")
may occur only upon satisfaction of the following
conditions: (i) on or before the fifth day
immediately preceding the date of such New
Issuance, the Seller 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 Seller shall have given each Rating
Agency notice of such issuance and (ii) the
Seller shall have delivered to the Trustee (a)
the 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
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certificate from the Seller stating that the
Seller reasonably believes that such New Issuance
will not cause a Pay Out Event to occur with
respect to any Series, and (e) if any Series of
Certificates are outstanding that were
characterized as debt at the time of their
issuance, an opinion of counsel to the effect
that, for federal tax purposes, 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, that the Trust will not be deemed to be
an association (or publicly traded partnership)
taxable as a corporation and that such New
Issuance will not cause an event in which gain or
loss would be recognized by any Certificateholder
or the Trust (a "Tax Opinion"). The Seller 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.
RECEIVABLES.................. The Receivables arise in Accounts that were
selected prior to February 20, 1998 from the
Advanta Consumer Credit Card Portfolio and
thereafter from the Fleet Consumer Credit Card
Portfolio, based on criteria provided in the
Pooling and Servicing Agreement. The initial
accounts (the "Initial Accounts") were selected
from the Advanta Consumer Credit Card Portfolio
and the Receivables therein were conveyed to the
Trust on December 9, 1993. With respect to
Additional Accounts or Participation Interests to
be included in the Trust, the selection was made
or will be made on the date specified in the
related assignment of such Additional Accounts or
Participation Interests to the Trust (each, a
"Related Cut Off Date"). The Receivables consist
of amounts charged by cardholders for merchandise
and services and cash 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 Seller to be included as Finance Charge
Receivables and net recovery amounts
("Recoveries") with respect to Defaulted
Receivables (collectively, the "Finance Charge
Receivables"); provided, however, that if the
Seller exercises the discount option, an amount
equal to the product of the Discount Percentage
and the amount of all or any specified portion of
Principal Receivables created after the effective
date of such option will be treated as Discount
Option Receivables and added to Finance Charge
Receivables. See "Description of the
Certificates -- Discount Option." In addition,
certain Interchange (as described in the Series
Supplements) attributed to cardholder charges for
merchandise and services will be treated as
collections of Finance Charge Receivables for
purposes of the Pooling and Servicing Agreement.
All new Receivables arising in such 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 Seller's
Interest
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represents the interest in the Principal
Receivables not represented by the Certificates
of any Series, the amount of the Seller'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
effected in DTC through the relevant Depositaries
of Cedel or Euroclear. See "Description of the
Certificates -- Book-Entry Registration."
SERVICER..................... Fleet Bank (RI), National Association. The
principal executive offices of the Bank are
located at 50 Kennedy Plaza, 18th Floor,
Providence, Rhode Island 02903. The Bank conducts
its servicing functions through Fleet Credit
Card, LLC, a subsidiary of the Bank.
SELLER....................... The Bank is currently the only Seller. Subject to
certain conditions described herein under
"Description of the Certificates -- The Bank
Certificate; Additional Sellers," the Bank may
designate one or more affiliates to transfer all
right, title and interest in Receivables or
Participation Interests to the Trust from
time-to-time. Any such Additional Seller will
generally have the same rights and obligations as
those of the Seller described herein.
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. 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 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
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<PAGE> 67
"Description of the Certificates -- Series
Percentage and Seller 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 -- Ability to Change
Terms of Receivables; Decrease in Finance
Charges."
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 Seller
Certificates, to other Series or deposited in the
Excess Funding Account (except in certain limited
circumstances).
AMORTIZATION PERIODS;
PRINCIPAL PAYMENTS........... 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 Seller 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") 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", "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. See "Description of the
Certificates -- Trust Pay Out Events" for a
discussion of the events which might lead to a
Rapid Amortization Period with respect to all
Series outstanding. 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 Certifi-
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<PAGE> 68
cateholders 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.................. 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 Collection Account and pay to
the holders of the Seller 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 Seller
Amount is less than or equal to the Required
Seller Amount, the Servicer will not distribute
to the holders of the Seller Certificates any
Shared Principal Collections that otherwise would
be distributed to the holders of the Seller
Certificates, but shall deposit such funds in the
Excess Funding Account.
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.
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 allocated all
collections with respect to certain portions of
the Receivables and any Participation Interests,
provided that the Rating Agency Condition is
satisfied and that such grouping will not result
in the occurrence of a Pay Out Event with respect
to any Series or materially adversely affect the
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<PAGE> 69
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 Principle 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.
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.
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<PAGE> 70
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 "Enhancement"
and "Risk Factors -- Limited Nature of Rating."
a. SUBORDINATION............. A Series of Certificates may include one or more
Classes of Certificates or uncertificated
interests that are subordinate to one or more
other Classes of such Series. The rights of the
holders of any such subordinated Certificates or
uncertificated interests 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 or
uncertificated interests, 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 or uncertificated
interests 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 or
uncertificated interests will be distributed to
holders of Certificates which are senior to such
subordinated Certificates or uncertificated
interests. If cash flows otherwise distributable
to holders of a subordinated Class of a Series
will be used as support for a Class of another
Series, the related Prospectus Supplement will
specify the manner and conditions for applying
such a cross-support feature. See
"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.
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<PAGE> 71
The maximum liability of an 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 "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 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 of Certificates
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 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 purchase by the Seller 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 purchase occurs will be as
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<PAGE> 72
specified in the related Prospectus Supplement
and together with any amounts on deposit in,
credited to or held 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" herein and in the related 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.
TRUSTEE...................... Bankers Trust Company.
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 17.
TAX STATUS................... Except to the extent otherwise specified in the
related Prospectus Supplement, Special Tax
Counsel to the Bank 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 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 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."
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<PAGE> 73
CERTIFICATE RATING........... Unless otherwise specified in the related
Prospectus Supplement, 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 Seller (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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<PAGE> 74
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. The underwriters
of any Series offered hereby presently expect to make a secondary market in the
Certificates offered hereby and pursuant to any Prospectus Supplement, but have
no obligation to do so.
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, certain major
credit card issuers assess finance charges for selected portions of their
portfolios at rates lower than the rates currently being assessed on the
Accounts. Advanta National Bank, commencing in March 1987, and the Bank since
its succession to Advanta National Bank has attempted to respond to this
increased competition by marketing cards to customers primarily without an
annual fee and by attempting to offer customers a finance charge rate below that
generally available from competitors. In addition, the Advanta National Bank
was, since 1983, and the Bank now is in the business of acquiring accounts
through direct mail solicitation. The Bank's ability to compete in the credit
card industry will affect its ability to generate new Receivables. See "The
Bank's Credit Card Activities -- Competition."
Bank's Ability to Change Terms of the Receivables; Decrease in Finance
Charges. The Bank is not transferring the Accounts to the Trust, only the
receivables arising in the Accounts. As owner of the Accounts, the Bank will
generally 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 its agreement with cardholders with respect to the Accounts. A decrease
in the finance charges and the other fees and charges assessed on the Accounts
should decrease the effective yield on the Accounts and could result in the
occurrence of a Series Pay Out Event for one or more Series and commencement of
the Rapid Amortization Period for each such Series. Under the Pooling and
Servicing Agreement, the Seller agrees 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 the Seller 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) the Seller's reasonable expectation is that
such reduction will cause a Series Pay Out Event to occur, or (ii) such
reduction is not also applied to any comparable segments of consumer revolving
credit card accounts owned by the Seller which have characteristics the same as,
or substantially similar to, such Accounts. The Seller 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 the Seller 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, the
Pooling and Servicing Agreement does not contain any restrictions on the ability
of a Seller to change the terms of the Accounts or the Receivables. See
"Description of the Certificates -- 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
the Seller to decrease finance charges or other fees and charges for existing
accounts, or take actions which would 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.
Characteristic as a Sale; Potential Effect of Insolvency and Receivership
of the Seller. The Seller has represented and warranted in the Pooling and
Servicing Agreement that the transfer of the Receivables to the Trust is and
will be either a sale of all right, title and interest in the Receivables and
all proceeds thereof to the Trust or the grant to the Trust of a pledge of such
property to the Trust. The Seller has taken and will take
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certain actions required to perfect the Trust's interest in the Receivables. The
Seller has represented and warranted that if the transfer by it to the Trust is
deemed to be a grant to the Trust of a security interest in the Receivables,
upon the filing of financing statements required to be filed under the Pooling
and Servicing Agreement, the Trust will have a first priority perfected security
interest therein. Nevertheless, if the transfer of the Receivables and all
proceeds thereof to the Trust is deemed to create a security interest therein, a
tax, government lien or other nonconsensual lien on property of the Seller
arising before Receivables come into existence may have priority over the
Trust's interest in such Receivables, and if the FDIC were appointed conservator
or receiver of the Seller, the conservator's or receiver's administrative
expenses may also have priority over the Trust's interest in such Receivables.
If a conservatorship or receivership proceeding were to be commenced involving
the Seller and the conservator or receiver of the Seller were to take the
position that the transfer of the Receivables from the Seller to the Trust
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 the Bank is the Servicer, cash collections held by
the Bank may, subject to certain conditions, be commingled and used for the
benefit of the Bank prior to the date on which such collections are required to
be deposited in the Collection Account as described under "Description of
Certificates -- Application of Collections." In the event of the conservatorship
or receivership of the Bank or, in certain circumstances, the lapse of certain
time periods, 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 Seller has granted a security interest in the
Receivables to the Trust and that security interest was validly perfected before
the insolvency of the Seller and was not granted or taken in contemplation of
insolvency or with the intent to hinder, delay or defraud the Seller 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"), provided that such security interest should not be subject to
avoidance by the FDIC, as conservator or receiver for the Seller. Positions
taken by the FDIC staff prior to the passage of FIRREA do not suggest that the
FDIC, as conservator or receiver for the Seller, would interfere with the timely
transfer to a Trust of payments collected on the Receivables. If, however, the
FDIC were to assert a contrary position, such as requiring the Trustee to
establish its right to those payments by submitting to and completing the
administrative claims procedure under the FDIA, or the conservator or receiver
were to request a stay of proceedings with respect to the Seller 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 the Seller, has the power
under the FDIA to repudiate contracts, including secured contracts of the
Seller. The FDIA provides that a claim for damages arising from the repudiation
of a contract is limited to "actual direct compensatory damages." In the event
the FDIC were to be appointed as conservator or receiver of the Seller and were
to repudiate the Pooling and Servicing 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. 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. If a conservator or receiver were
appointed for the Seller pursuant to the Pooling and Servicing Agreement, new
Principal Receivables would not be transferred to the Trust and the Trustee
would sell the Receivables (unless Certificateholders representing more than 50%
of the Investor Amount of each Series, or if any such Series has more than one
Class, of each Class of such Series, and, if at such time there is more than one
Seller, any Seller that is not the subject of such Insolvency Event, and any
holder of a Supplemental Certificate and certain other parties specified in the
Series Supplements instruct otherwise), thereby causing early termination of the
Trust and a pro rata loss to the Certificateholders if the net proceeds of such
sale were insufficient to pay Certificates in full. Upon the occurrence of a Pay
Out Event, if a conservator or receiver was appointed for the Seller and no Pay
Out Event other than such conservatorship, receivership or insolvency of the
Seller existed, the conservator or receiver may have the power to prevent the
early sale, liquidation or disposition of the Receivables and the commencement
of the Rapid Amortization Period. In addition, a conservator or receiver for the
Seller may have the power to cause early sale of the Receivables and the early
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payment of the Certificates or to prohibit the continued transfer of Receivables
to the Trust. See "Certain Legal Aspects of the Receivables -- Certain Matters
Relating to Receivership."
Effect of Consumer Protection Laws on Certificateholders. The Accounts and
the Receivables are subject to numerous federal and state consumer protection
laws which impose requirements on the making and collection of consumer loans.
Such laws, as well as any new laws or rulings which may be adopted, may
adversely affect the Servicer's ability to collect on the Receivables or
maintain previous levels of 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 Seller covenants 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
Seller, if, as a result of such breach, 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 (other than those permitted by the Pooling and Servicing Agreement
and subject to certain cure periods). The Seller also makes certain other
representations and warranties relating to the validity and enforceability of
the Accounts and the Receivables. 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 Seller or the Servicer, as the case
may be, will generally be obligated to accept the transfer of all Receivables in
the Account affected thereby. In addition, in the event of a breach of certain
representations and warranties, the Seller 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 "Description of the
Certificates -- 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 -- Receivables in Defaulted Accounts; Rebates and Fraudulent
Charges."
Proposed Legislation -- Limitation on Finance Charges. Congress and the
states may enact new laws and amendments to existing laws to regulate further
the credit card industry or to reduce finance charges or other fees or charges
applicable to credit card accounts. The potential effect of any such legislation
could be to reduce the yield on the Accounts. If such yield is reduced, a Pay
Out Event could occur, and a Rapid Amortization Period may commence. See "The
Pooling and Servicing Agreement Generally -- Pay Out Events and Reinvestment
Events."
Timing of Principal 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 designated for inclusion 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. A significant decline in the amount of Receivables generated in the
Accounts could result in the occurrence of a Series Pay Out Event for one or
more Series and the commencement of the Rapid Amortization 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, which is generally the
25th day subsequent to the monthly billing date (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 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. Advanta National Bank, in the past,
temporarily waived authorized increases in finance charges on certain accounts
notwithstanding increases in the prime rate or the London interbank offered
rate, and although the Bank is not currently doing so, the Bank may decide to do
so in the future. 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.
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See "Receivable Yield Considerations" in the Prospectus Supplement. The Pooling
and Servicing Agreement provides that the Seller will be required to designate
Additional Accounts the Receivables of which will be added to the Trust in the
event that the Seller Amount or the amount of the Principal Receivables is not
maintained at a certain minimum amount and may, under certain circumstances,
elect to add the Receivables in selected Accounts to the Trust. If Additional
Accounts are not designated by the Seller when required, a Series Pay Out Event
for one or more Series may occur and result in the commencement of a Rapid
Amortization Period for such Series. See "Description of the
Certificates -- Trust Pay Out Events" herein and "Description of the
Certificates -- Pay Out Events" in the Prospectus Supplement for a discussion of
other events which might lead to the commencement of the Rapid Amortization
Period for a Series.
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 Bank's 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. The Banks are unable 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.
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 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.
Reduction or Withdrawal of Ratings. There is no assurance that any rating
will remain for any given period of time or that any rating will not be lowered
or withdrawn entirely by a Rating Agency, if in such Rating Agency's judgment,
circumstances so warrant. Any such reduction or withdrawal of a rating, if it
were to occur, could adversely affect the market value of the Certificates.
Effect of Addition of Trust Assets on Credit Quality. The Seller expects,
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 Seller 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."
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Basis Risk. The Accounts generally have finance charges set at a rate
above the London interbank offered 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 London
interbank offered 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.
Issuance of New Series; Effects on Timing or Amounts of Payments to
Certificateholders and Voting Rights. The Trust, as a master trust, has issued
Series prior to the date of this Prospectus and is expected to issue additional
Series from time to time. 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 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 hereafter 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."
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 Seller
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.
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 Accounts and the
amount of Receivables, each relating to the 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 Bank, 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.
FORMATION OF THE TRUST
The Trust was formed, in accordance with the laws of the State of New York,
pursuant to the Pooling and Servicing Agreement. The Trust, when created, was
known as ADVANTA Credit Card Master Trust II. At the time of the creation of the
Trust, Advanta National Bank transferred to the Trust, without recourse, all of
its right, title and ownership interest in and to all Receivables in the Initial
Accounts and, with respect to all Additional Accounts designated by Advanta
National Bank prior to the Transfer described below, Advanta National Bank
transferred to the Trust, without recourse, all of its right, title and
ownership interest in and to all Receivables in such Additional Accounts. Since
the Transfer, the Bank has transferred and will transfer to the Trust, without
recourse, all of its right, title and ownership interest in and to all
Receivables arising and created under the Accounts. Such Receivables have been
and will be transferred to the Trust in exchange for the certificates of Series
already outstanding and other Series to be issued plus the Seller Certificates
representing the Sellers' Interest and other certificated or uncertificated
interests in the Trust. The Trust assets consist of the Receivables, all monies
due or to become due thereunder and all amounts received with respect thereto,
all proceeds of the Receivables, Recoveries, the right to receive certain
Interchange attributed to charges for merchandise and services, and proceeds of
credit insurance policies relating to the Receivables, all monies and other
property constituting Eligible Investments on deposit in, credited to or held in
certain bank accounts of the Trust and the benefits of any Series Enhancements
issued with respect to any Series (the drawing on or payment of such Series
Enhancement being available only to Certificateholders of the Series to which
such Series Enhancement relates). The Trust assets may also include
Participation Interests.
The Trust has not and will not engage in any activity other than acquiring
and holding the Receivables, issuing Certificates and certain uncertificated
interests with respect to each Series issued by the Trust, the Bank Certificate
and Supplemental Certificates, making payments thereon, obtaining Series
Enhancement applicable to any Series and activities related thereto. As a
consequence, the Trust is not expected to have any need for, or sources of,
capital resources other than the assets of the Trust.
TRANSFER AND ASSIGNMENT
The Trust was created in 1993 and from such formation until February 20,
1998 was known as ADVANTA Credit Card Master Trust II and Advanta National Bank
was Seller and Servicer under the Pooling and Servicing Agreement.
THE TRANSFER
On October 28, 1997, Advanta Corp. and Fleet Financial Group, Inc. ("Fleet
Financial Group") entered into a Contribution Agreement (the "Contribution
Agreement") pursuant to which they agreed that Advanta Corp. and certain of its
subsidiaries, including Advanta National Bank (the "Advanta Contributors"), and
Fleet Financial Group and certain of its subsidiaries (the "Fleet
Contributors"), would contribute certain of the assets and liabilities relating
to their respective consumer credit card businesses to a newly created Rhode
Island limited liability company, Fleet Credit Card, LLC (the "LLC"), initially
in exchange for a 4.99% membership interest in the LLC to the Advanta
Contributors and 95.01% membership interest to the Fleet Contributors and the
assumption of certain liabilities, and, prior to such contribution, the LLC
would direct the Fleet Contributors and the Advanta Contributors to transfer to
the Bank certain of those assets and liabilities, including their credit card
accounts and the assets and liabilities of Advanta National Bank relating to the
ADVANTA Credit Card Master Trust II. On February 20, 1998 the Advanta
Contributors and the Fleet Contributors transferred to the Bank those assets and
liabilities (collectively, the "Transfer").
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AMENDMENT TO POOLING AND SERVICING AGREEMENT
Immediately prior to the Transfer, Advanta National Bank and the Trustee
entered into Amendment Number 3 to Amended and Restated Pooling and Servicing
Agreement ("Amendment Number 3") pursuant to which the Pooling and Servicing
Agreement was amended to provide, among other things, that (1) the Bank
Certificate could be transferred to a member of the affiliated group of which
Fleet Financial Group is the common parent or to the Bank in connection with a
servicing transfer to the Bank, (2) Advanta National Bank could assign and
delegate to the Bank all of Advanta National Bank's rights and obligations under
the Pooling and Servicing Agreement and each Series Supplement as Seller and as
Servicer and (3) the name of the Trust would be changed to Fleet Credit Card
Master Trust II upon the assignment and delegation to the Bank.
ASSIGNMENT AND ASSUMPTION AGREEMENT
Also on February 20, 1998, immediately after the effectiveness of Amendment
Number 3, Advanta National Bank, the Bank, the LLC and the Trustee entered into
an Assignment and Assumption Agreement (the "Assignment Agreement") pursuant to
which Advanta National Bank assigned and transferred to the Bank all of Advanta
National Bank's rights and interests as Seller and Servicer under the Pooling
and Servicing Agreement and each Series Supplement thereto and delegated to the
Bank all of Advanta National Bank's duties and obligations as Seller and
Servicer under the Pooling and Servicing Agreement and under each of the
outstanding Series Supplements. Pursuant to the Assignment Agreement, the Bank
accepted all of Advanta National Bank's rights and interests as Seller and
Servicer and accepted and assumed all of Advanta National Bank's liabilities
under and assumed and agreed to perform each and every covenant and obligation
of the Seller and of the Servicer contained in the Pooling and Servicing
Agreement and the Series Supplements. Pursuant to the Assignment Agreement, the
Bank Certificate was assigned and transferred to the Bank. Pursuant to the
Assignment Agreement, Advanta National Bank was released as Seller and Servicer
and has no further obligations or liabilities under the Pooling and Servicing
Agreement or the Series Supplements and the Bank has become the sole Seller and
Servicer.
In addition, ownership of the Accounts has been transferred to the Bank,
and, pursuant to the Assignment Agreement, the Bank has sold, transferred,
assigned, set over and otherwise conveyed to the Trustee on behalf of the Trust,
for the benefit of the Certificateholders, all of the Bank's right, title and
interest in and to the Receivables in the Accounts. The Bank has also granted to
the Trustee on behalf of the Trust for the benefit of the Certificateholders, a
first priority perfected security interest in all of the Bank's right, title and
interest in and to the Receivables in the Accounts.
RIGHTS AGREEMENT
In connection with the Transfer, the Bank and the LLC entered into a Rights
Agreement dated as of February 20, 1998 pursuant to which the Bank assigned and
transferred to the LLC all economic rights and interests in the assets of the
Bank acquired as a result of the Transfer, and the Bank assigned and transferred
to the LLC an economic interest in all liabilities assumed by the Bank as a
result of the Transfer. The Rights Agreement states that the economic interests
thereby transferred is the transfer of contractual rights between the Bank and
the LLC to receive payments or to pay obligations and not an ownership interest
in or a lien on any of the assets of the Trust and that the transfer of economic
interests is subject to any and all rights, liens and security interests granted
to the Trustee pursuant to the Pooling and Servicing Agreement.
THE BANK'S CREDIT CARD ACTIVITIES
GENERAL
The Receivables which have been conveyed or will be conveyed to the Trust
pursuant to the Pooling and Servicing Agreement have been or will be, except as
otherwise described in the Prospectus Supplement, generated from transactions
made by holders of selected MasterCard and VISA credit card accounts, which
accounts, prior to February 20, 1998 were part of a portfolio of accounts owned
by Advanta National Bank
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(the "Advanta Consumer Credit Card Portfolio") and which on and after February
20, 1998 are part of a portfolio of accounts owned by the Bank (the "Fleet
Consumer Credit Card Portfolio"). The Bank, as a result of a merger on November
14, 1997 with Fleet Bank (Delaware), National Association, was the owner of a
portfolio of credit card accounts originated or acquired by the Bank or its
predecessor (the "Existing Fleet Credit Card Portfolio"). On February 20, 1998,
Advanta National Bank transferred to the Bank an ownership interest in
substantially all of the accounts, which, as of such date, constituted the
Advanta Consumer Credit Card Portfolio. As a result, the Fleet Consumer Credit
Card Portfolio is a combined portfolio consisting of (i) the Existing Fleet
Credit Card Portfolio, (ii) substantially all of the Advanta Consumer Credit
Card Portfolio as it existed on February 20, 1998 and (iii) accounts originated
or acquired by the Bank on or after February 20, 1998. The accounts in the
Advanta Consumer Credit Card Portfolio included and the accounts in the Fleet
Consumer Credit Card Portfolio include premium and regular accounts. 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 and those that charge annual cardholder fees
generally have higher annual cardholder fees than regular accounts that have
annual cardholder fees. Servicing of the Fleet Consumer Credit Card Portfolio is
performed primarily by the Bank through its subsidiary Fleet Credit Card, LLC;
however, certain data processing and administrative functions associated with
the servicing of the Fleet Consumer Credit Card Portfolio are currently
performed on behalf of the Bank 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 Bank 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
Bank. 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 Bank's new accounts are generated through direct
mail and telemarketing solicitation of potential cardholders. Beginning in 1983
and continuing through 1987, Advanta National Bank acquired lists of potential
cardholders from various sources. The lists were delivered to a third-party
processor, which after deleting existing cardholders, sorted the names based on
addresses and delivered the names to a credit bureau. Credit bureaus were
selected based on Advanta National Bank's evaluation of their relative strength
in a geographic area. The credit bureau identified those individuals who met
Advanta National Bank's predetermined credit criteria. Selected demographic
criteria were then applied to determine the individuals to be solicited.
Beginning in 1987, Advanta National Bank began employing a more direct method of
identifying potential cardholders. The Bank, as successor to the consumer credit
card business of Advanta National Bank, engages the credit bureau to identify
those individuals in the credit bureau's own files who meet the Bank's credit
and demographic criteria. Prior to 1987, individuals solicited were offered
Advanta National Bank's credit cards, subject to Advanta National Bank's
verification of information regarding employment and income, which occurred only
under certain circumstances. Beginning in March 1987, Advanta National Bank
obtained and the Bank now obtains a second credit bureau report on each
individual who responds positively to a solicitation and offered or offers a
credit card to that person only if the second report confirms the individual's
eligibility.
The criteria applied to evaluate potential cardholders, has since 1985,
included credit scoring using a model developed by the Fair, Isaacs 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. In 1997, Advanta National Bank began to use and the Bank has
continued the use
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of proprietary scoring models as a supplement to the credit scoring generated by
Advanta National Bank's and, now, the Bank's current scoring models.
Potential cardholders must meet minimum credit and income level standards
established by the Bank 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. Generally, initial credit lines of
up to $6,000 and $3,500 are offered for premium and regular cards, respectively.
Beginning in May 1993, credit line offers of $7,500 and $10,000 have been tested
on a limited basis, with most credit line offers remaining at the $6,000 or less
level. Beginning in 1997, credit lines of up to $100,000 have been offered for
platinum card accounts. However, the credit lines issued on platinum card
accounts tend to be similar to the credit lines offered on other premium
accounts. 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 Bank decides whether to extend additional credit.
Also, the Bank may initiate credit line increases for cardholders meeting
minimum standards for usage and payment history established by the Bank.
However, several risk based repricing initiatives were implemented in 1996 and
1997, during which time, no credit line increases were generally granted for
cardholders.
Accounts are opened with an initial term of one year. At the anniversary
date, accounts which meet certain criteria for usage and payment history are
reissued for one to three year terms.
Each cardholder is subject to an agreement governing the terms and
conditions of the related MasterCard or VISA account. Pursuant to each such
agreement, the Bank reserves the right, upon advance notice to the cardholder,
to change or terminate any terms, conditions, services or features of its
MasterCard and VISA accounts at any time, including increasing or decreasing
finance charges, other fees and charges or minimum payment terms. The agreement
with each cardholder provides that the 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 limit
the ability of the Bank to apply changes. For example, under applicable state
law, certain fees and charges are prohibited altogether. See "Risk
Factors -- Effects of Consumer Protection Laws on Certificateholders" and
"Certain Legal Aspects of the Receivables -- Consumer Protection Laws."
A cardholder may use the credit card for either purchases or cash advances.
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 Bank to draw against the cardholder's credit line.
The Bank generally limits the amount of credit available for cash advances on
new accounts to 50% of the total credit line. The majority of the accounts, the
receivables of which are expected to be included in the Trust, are subject to
the 50% limitation.
When a cardholder uses the credit card issued by a bank under contract with
MasterCard International, Inc. or VISA USA, Inc. (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 MasterCard International, Inc. and
VISA USA, Inc. to purchase and pay for daily all receivables generated by use of
credit cards issued by the member bank. If the member bank were to fail to
perform such obligations, MasterCard International, Inc. or VISA USA, Inc. would
have the right to cancel the credit cards issued by the member bank.
BILLING AND PAYMENTS
The Bank, using FDR as its service bureau, generates and mails to
cardholders monthly statements summarizing account activity. For the majority of
accounts, cardholders receive a 25-day grace period on purchases. Prior to April
5, 1995, cardholders were required to make a minimum monthly payment equal to
finance and other charges, plus 1/60th of the principal balance for premium
cards and 1/48th of the principal balance for regular cards. If such amount was
less than a stated minimum monthly payment (generally $20), the stated minimum
monthly payment was due. For monthly statements from April 5, 1995 through June
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1997, all cardholders were required to make a minimum monthly payment equal to
finance and other charges, plus 1/100th of their principal balance. In addition,
the stated minimum monthly payment was reduced from $20 to $10. From June 1997
to the present, most cardholders are now required to make a monthly payment
equal to 2% of their total balance.
All fees, charges and credit insurance premiums assessed by the Bank are
automatically charged to an account and are included in the account balance at
the end of each billing cycle. The accrued and unpaid finance charges assessed
by the Bank are calculated by multiplying the average daily balances of cash
advances and previously billed unpaid purchases in an account by the applicable
daily periodic rate then multiplying the resulting product by the number of days
in the billing cycle. 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 Bank may
immediately convert the annual percentage rate applicable to existing and future
balances to a higher rate.
The Bank primarily offers cards to customers without an annual fee. The
Bank also assesses miscellaneous transaction fees, including cash advance and
draft fees, late and overlimit charges, and returned check, returned draft, and
draft stop payment charges. Prior to June 1997, such miscellaneous fees did not
constitute a material portion of Finance Charge Receivables. However, since June
1997, such fees represent a greater portion of Finance Charge Receivables.
DESCRIPTION OF FDR
Certain data processing and administrative functions associated with the
servicing of the Fleet Consumer Credit Card Portfolio are currently being
performed on behalf of the Bank by FDR. FDR was established in 1968 as the data
processing unit of Midamerica Bankcard Association. According to FDR, it is the
leading provider of credit card processing, payment systems, electronic commerce
and information-based services to businesses and consumers, and, in 1996,
maintained data for 153 million credit and debit cards, authorized approximately
2.3 billion credit and debit card transactions for more than 1,400 financial
institutions, issued approximately 100 million credit and debit cards to
consumers, and processed 5.9 billion total card transactions for 500,000
merchants.
FDR's home office in the United States is located in Omaha, Nebraska.
DELINQUENCIES
On the date of this Prospectus, the accounts which have been designated as
Accounts and the Receivables of which are included in the Trust are accounts
which were included in the Advanta Consumer Credit Card Portfolio. The
discussion set forth in this paragraph relates to the policies currently in
effect with respect to such Accounts. Different policies may apply with respect
to accounts which were in the Existing Fleet Credit Card Portfolio or originated
thereafter and the Bank may, from time to time, revise its policies with respect
to delinquencies. Currently, with respect to Accounts designated to the Trust,
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
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 Bank's service center
personnel or the Bank's designees. Customer Assistance activities include
statement messages, formal collection letters and telephone calls. Customer
Assistance personnel initiate telephone contact with cardholders as early as one
day contractually delinquent. The intensity at which collection activity is
pursued depends on the risk the account presents to the Bank which is determined
by behavioral scoring and adaptive control techniques. In the event that initial
telephone contact fails to resolve the delinquency, the Bank continues to
contact the cardholder by telephone and by mail. Although such arrangements are
made infrequently, the Bank may also enter into arrangements with cardholders to
extend or otherwise change payment schedules. Delinquency levels are monitored
by management of both the Customer Assistance and Credit Policy departments of
the Bank and information is reported daily to senior management. Accounts are
charged off when they become 186 days
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contractually delinquent, at which time non-bankrupt accounts are generally sold
to outside third parties. The Bank charges off accounts within 30 days after
receipt of any notice that the customer has died, and within 90 days after
receipt of any notice of fraudulent charges within such account. In August 1996,
Advanta National Bank adopted a new charge-off methodology related to bankrupt
credit card accounts and such methodology continues to be in use by the Bank.
Under the previous methodology, when notification was received that a cardholder
had filed a bankruptcy petition, the account was written off within 30 days of
notification. Under the new methodology, the Bank utilizes an investigative
period of up to 90 days from the date of such notification. The receivable, if
not paid during such investigative period, will be charged off unless the
investigation shows that the cardholder's obligation should not be discharged as
the result of the bankruptcy proceeding. In no event, under the new methodology,
will the receivable be charged off later than 186 days after the receivable is
contractually delinquent. The credit evaluation, servicing and charge-off
policies and collection practices of the Bank may change from time to time in
accordance with the Bank's business judgment and applicable laws and
regulations.
Information with respect to the delinquency and loss experience of the
Fleet Consumer Credit Card Portfolio, 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 the VISA and MasterCard International
associations receive certain fees ("Interchange") as partial compensation for
taking credit risk, absorbing fraud losses and funding receivables for a limited
period prior to initial billing. Under the VISA and MasterCard International
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 International may from time to time
change the amount of Interchange reimbursed to banks issuing their credit cards.
In respect of Interchange attributed to the cardholder charges for merchandise
and services in the Accounts, collections of Finance Charge Receivables with
respect to any Monthly Period will be deemed to include Interchange as
calculated pursuant to the related Series Supplement for any Series.
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 Bank issues MasterCard
and VISA 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 sizeable branch systems through which credit cards are
marketed to the institutions' customer bases. Certain major credit card issuers
assess finance charges for selected portions of their portfolios at rates
significantly lower than the rates currently being assessed on the Accounts.
Advanta National Bank, as predecessor to the Bank, primarily responded to the
increased competition by marketing cards to customers without an annual fee and
the Bank has continued that practice.
The Trust will be dependent upon the Bank's continued ability to generate
new Receivables. The Bank's ability to compete in the credit card industry will
directly affect its ability to generate new Receivables. Under limited
circumstances, if the rate at which new Receivables are generated declines
significantly, a Pay Out Event with respect to a Series could occur and the
Rapid Amortization Period with respect to such Series could commence.
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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 Seller. The Seller will use
such proceeds to provide liquidity for anticipated future asset growth and will
use the balance for general corporate purposes.
THE BANK AND FLEET FINANCIAL GROUP
The Bank, which is a wholly-owned subsidiary of Fleet National Bank, is the
surviving bank of a merger consummated on November 14, 1997 between the Bank and
Fleet Bank (Delaware), National Association. The Bank is a limited purpose
credit card bank chartered under the laws of the United States.
The Bank is subject to the supervision and regulation of the Office of the
Comptroller of the Currency. The Bank's deposits are insured by the FDIC and the
Bank is a member bank of the Federal Reserve Bank of Boston.
Fleet Financial Group is a diversified financial services company organized
under the laws of the State of Rhode Island, with its principal executive office
located in Boston, Massachusetts. Fleet Financial Group was the 12th largest
bank holding company in the United States as of December 31, 1997 in terms of
total assets with total assets of $85.5 billion, total deposits of $63.7 billion
and total equity capital of $8.0 billion. The banking subsidiaries of Fleet
Financial Group are engaged in a general consumer and commercial banking and
investment management business throughout the states of Connecticut,
Massachusetts, New Jersey, New York, Rhode Island, Maine, New Hampshire and
Florida, and the nonbanking subsidiaries of Fleet Financial Group provide a
variety of financial services, including mortgage banking, asset-based lending,
consumer finance, real estate financing, securities brokerage services, capital
markets services, investment banking, investment advice and management, data
processing and student loan servicing.
The principal executive office of the Bank is located at 50 Kennedy Plaza,
18th Floor, Providence, Rhode Island 02903.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The Seller represents and warrants in the Pooling and Servicing Agreement
that the transfer of the Receivables to the Trust constituted either a sale to
the Trust of all right, title and interest of the Seller in and to the
Receivables or a pledge of the Receivables which pledge is a first priority,
perfected security interest free and clear from liens arising from or through
the Seller, except for certain potential tax and governmental liens and other
nonconsensual liens, the interest of the holders of the Bank Certificate and any
Supplemental Certificates and the Seller's right to receive interest and
investment earnings (net of losses and investment expenses) in respect of the
Collection Account or any Series Account. For a discussion of the Trust's rights
arising from a breach of these warranties, see "Description of the
Certificates -- Representations, Warranties and Covenants."
The Seller represents and warrants that the Receivables are "accounts" or
"general intangibles" for purposes of the Uniform Commercial Code (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 have been and 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, although some other
action under applicable state law may be required.
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There are certain limited circumstances 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 Pooling and
Servicing Agreement, however, the Seller warrants that the Receivables were
transferred to the Trust free and clear of the lien of any third party, except
for certain tax and governmental liens and other nonconsensual liens. In
addition, the Seller covenants that, except as permitted by the Pooling and
Servicing Agreement, it will not sell, pledge, assign, transfer or grant any
lien on any Receivable (or any interest therein) other than to the Trust. A tax
or other government lien or other nonconsensal lien on property of the Seller
arising prior to the time a Receivable comes into existence may also have
priority over the interest of the Trust in such Receivable. In addition, if the
FDIC were appointed as receiver or conservator of the Seller, certain
administrative expenses of the receiver or conservator may also have priority
over the interest of the Trust in the Receivables arising from the Accounts
owned by the Seller.
CERTAIN MATTERS RELATING TO RECEIVERSHIP
The Seller is chartered as a national banking association and is subject to
regulation and supervision by the Office of the Comptroller of the Currency,
which is authorized to appoint the FDIC as conservator or receiver of the Seller
upon the occurrence of certain events relating to the Seller's financial
condition.
The FDIA, as amended by FIRREA, sets forth certain powers that the FDIC
could exercise if it were appointed as receiver or conservator of the Seller.
Positions taken by the FDIC staff prior to the passage of FIRREA do not suggest
that the FDIC, as conservator or receiver for the Seller, 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
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 Seller 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 the
Seller, has the power under the FDIA to repudiate contracts, including secured
contracts of the Seller. The FDIA provides that a claim for damages arising from
the repudiation of a contract is limited to "actual direct compensatory
damages." In the event the FDIC were to be appointed as conservator or receiver
of the Seller and were to repudiate the Pooling and Servicing 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 Pooling and Servicing Agreement provides that, upon the commencement of
an Insolvency Event with respect to the Seller, the Seller will promptly give
notice thereof to the Trustee, and a Trust Pay Out Event will occur. Under the
Pooling and Servicing Agreement, no new Principal Receivables will be
transferred to the Trust and, unless otherwise instructed within a specified
period by the holders of Certificates evidencing more than 50% of the Investor
Amount of each Series (or if any such Series has more than one Class, of each
Class of such Series) and, if at such time there is more than one Seller, any
Seller which is not the subject of such Insolvency Event, and any holder of a
Supplemental Certificate and certain other parties specified in the Series
Supplements, or unless otherwise prohibited by law, the Trustee will proceed to
sell, dispose of or otherwise liquidate the Receivables in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from the
sale of the Receivables would then be treated by the Trustee as collections on
the Receivables. This procedure could be delayed as described above. Upon the
occurrence of a Pay Out Event, if a conservator or receiver is appointed for the
Seller and no Pay Out Event other than such conservatorship or receivership or
insolvency of the Seller exists, the conservator or receiver may have the power
to prevent the early sale, liquidation or disposition of Receivables and the
commencement of a Rapid Amortization Period with respect to any outstanding
Series. In addition, a conservator or receiver for the Seller 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
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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 laws include the
Federal Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit
Reporting Act, Fair Debt Collection Practice Act, Electronic Funds Transfer Act
and National Bank Act, as well as any relevant Delaware or Rhode Island laws 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, 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.
The Trust may be liable for certain violations of consumer protection laws
that apply to the Receivables, either as assignee of the Seller with respect to
obligations arising before transfer of the Receivables to the Trust or as a
party directly responsible for obligations arising after the transfer. In
addition, a cardholder may be entitled to assert such violations by way of
set-off against his obligation to pay the amount of Receivables owing. The
Seller covenants in the Pooling and Servicing Agreement to accept the transfer
of all Receivables in an Account, under certain circumstances, if any Receivable
in such Account has not been created in compliance with the requirements of such
laws. The Seller has also agreed in the Pooling and Servicing Agreement to
indemnify the Trust for, among other things, any liability arising from such
violations. See "Description of the Certificates -- 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 "Description of the
Certificates -- Defaulted Receivables; Rebates and Fraudulent Charges."
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued in Series pursuant to the Pooling and
Servicing Agreement (as supplemented by a Series Supplement thereto with respect
to each Series) between the Bank, as Seller of interests in the Receivables and
as Servicer of the Accounts and the Receivables, and Bankers Trust Company, as
Trustee for the Certificateholders of each Series. Pursuant to the Pooling and
Servicing Agreement, the Seller may execute further Series Supplements thereto
among the Seller, 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 Seller, 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 which 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. Each Series will be issued in the minimum denominations
for each Class specified in the related Prospectus Supplement.
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 assets of the Trust, 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 fixed percentage (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 Seller holds the interest in the Principal Receivables (the "Seller
Amount") not represented by the Certificates of all outstanding Series. The
Seller holds an undivided interest in the Trust (the "Sellers' Interest"),
including the right to a percentage (the "Seller 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 or
unless otherwise specified in the related Prospectus Supplement. See
"-- 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 Seller Amount will fluctuate daily,
therefore, to reflect the changes in the amount of the Principal Receivables.
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 Seller 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.
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 Interchange, Recoveries, proceeds
of credit insurance policies relating to the Receivables, all monies and other
property constituting Eligible Investments on deposit in, credited to or held 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.
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 Seller, 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 Seller has been
informed by DTC that DTC's nominee will be 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
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herein to distributions, notices, reports and statements to Certificateholders
shall refer to distributions, notices, reports and statements to DTC or Cede, as
the registered holder of the Certificates, as the case may be, for distribution
to Certificate Owners in accordance with DTC procedures. See "-- Book-Entry
Registration" and "-- Definitive Certificates."
If so specified in the Prospectus Supplement relating to a Series,
application will be made to list the Certificates of such Series, or all or a
portion of any Class thereof, on the Luxembourg Stock Exchange or any other
specified exchange.
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 & Co. ("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 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
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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.
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
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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." 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
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nominee, only if (i) the Seller 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
Seller is unable to locate a qualified successor, (ii) the Seller, 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 Seller 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 BANK CERTIFICATE; ADDITIONAL SELLERS
The Pooling and Servicing Agreement provides that the Seller may surrender
the Bank Certificate to the Trustee in exchange for a newly issued Bank
Certificate and one or more additional certificates (each, a "Supplemental
Certificate") for transfer or assignment to a person designated by the Seller
upon the execution and delivery of a supplement to the Pooling and Servicing
Agreement (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 "-- Amendments"); provided, that (a)
the Seller shall have given written notice to each Rating Agency of such
exchange, (b) the Seller 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 Seller 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
condition set forth in clause (b) above.
The Bank Certificate (or any interest therein) may be transferred to an
entity that is a member of the "affiliated group" of which Fleet Financial Group
is the "common parent" (as such terms are defined in Section 1504(a) of the
Code); provided, that (i) if any Series of Certificates are outstanding that
were characterized as debt at their time of issuance, the Seller shall have
delivered to the Trustee and each Rating Agency a Tax Opinion, and (ii) any such
transferee will be deemed to be a "Seller" for purposes of the
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provisions of the Pooling and Servicing Agreement regarding the Seller
indemnification and liquidation of the Receivables upon the occurrence of an
Insolvency Event. See "-- Liquidation of Receivables" and "-- Indemnification."
The Bank may designate affiliates of the Bank to be included as Seller
("Additional Sellers") 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 "-- Amendments") and, in connection with
such designation, the Seller shall surrender the Bank Certificate to the Trustee
in exchange for a newly issued Bank Certificate modified to reflect such
Additional Seller's interest in the Seller'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 Bank Certificate,
as applicable, shall have been satisfied with respect thereto prior to such
designation and exchange and (ii) any applicable conditions described in
"-- Addition of Accounts" shall have been satisfied with respect to the transfer
of Receivables or Participation Interests by any Additional Seller to the Trust.
Following the inclusion of an Additional Seller, the Additional Seller will be
treated in the same manner as a Seller and each Additional Seller generally will
have the same obligations and rights as a Seller 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 Investor Amount 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
Bank'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.
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 or, if applicable, an
Accumulation Period (as defined in the related Prospectus Supplement) 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 Seller 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 Seller
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
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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
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
Seller 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 Seller Amount is less than or
equal to the Required Seller Amount, the Servicer will not distribute to the
holders of the Seller Certificates any Shared Principal Collections that
otherwise would be distributed to the holders of the Seller Certificates, but
will deposit such funds in the Excess Funding Account.
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.
COMPANION SERIES
If specified in the Prospectus Supplement relating to a Series, such Series
may be paired with another Series (each, a "Companion Series"), such that a
reduction in the Invested Amount of one such Series results in an increase in
the Invested Amount of the other such 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 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.
GROUPS
If specified in the Prospectus Supplements relating to any group of Series
(together, a "Group"), such Series may be allocated all collections with respect
to certain portions of the Receivables and any Participation Interests, provided
that the Rating Agency Condition is satisfied and that such grouping will not
result in an Adverse Effect.
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NEW ISSUANCES
The Pooling and Servicing Agreement authorizes the Seller 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 Bank Certificate, evidencing the Bank's
interest, which will initially be held by the Bank and which is transferable in
certain circumstances to members of the affiliated group of which Fleet
Financial Group is the common parent and (iii) Supplemental Certificates
delivered in exchange for a portion of the Bank Certificate under certain
circumstances described in the Pooling and Servicing Agreement (each, a
"Supplemental Certificate," and, together with the Bank Certificate, the "Seller
Certificates"). The Bank 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 "Seller'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 Seller 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 Seller, 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 Seller must deliver a Tax Opinion. The Seller 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 Seller.
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 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 or Accumulation 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 Seller may perform
under the Pooling and Servicing Agreement. The Trust will terminate only as
provided in the Pooling and Servicing Agreement.
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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 Seller 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 Seller shall have given each Rating Agency notice
of such issuance and its date and (ii) the Seller 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
Seller stating that the Seller reasonably believes that such issuance will not
cause a Pay Out Event to occur with respect to any Series, and (e) if any Series
of Certificates are outstanding that were characterized as debt at the time of
their issuance, 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 Bank.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
The Seller has transferred and assigned to the Trust all of its right,
title and interest in and to specifically identified Receivables existing in the
Accounts owned by the Seller on the day of the relevant transfer and assignment
and in and to all Receivables created in the Accounts thereafter and all
proceeds thereof.
In connection with a transfer of the Receivables to the Trust, the Seller
annotates and indicates in its computer files that the Receivables have been
conveyed to the Trust for the benefit of the Certificateholders. In addition,
the Seller provides to the Trustee a computer file or a microfiche list
containing a true and complete list of all Accounts owned by the Seller 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 Related Cut Off Date. The Seller 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
Seller or the Servicer will not be segregated by the Seller or the Servicer 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 Seller has and will file UCC financing statements
meeting the requirements of applicable state law with respect to the
Receivables. See "Risk Factors -- Certain Legal Aspects" and "Certain Legal
Aspects of the Receivables."
LIQUIDATION OF RECEIVABLES
If an Insolvency Event occurs with respect to the Seller, the Seller 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. Within 15 days after receipt of such notice by the Trustee
of the occurrence of such Insolvency Event, the Trustee shall (i) publish a
notice in an authorized newspaper that an Insolvency Event has occurred and that
the Trustee intends to sell, dispose of or otherwise liquidate the Receivables
on commercially reasonable terms and in a commercially reasonable manner and
(ii) give notice to the Certificateholders describing the applicable provisions
of the Pooling and Servicing Agreement and requesting instructions from the
Certificateholders. Unless the Trustee has received instructions within 90 days
from the date notice is first published from (x) Certificateholders evidencing
more than 50% of the Investor Amount of each Series or, with respect to any
Series with two or more Classes, of each Class, to the effect that such
Certificateholders disapprove of the liquidation of the Receivables and wish to
continue having Principal Receivables transferred to the Trust as before such
Insolvency Event, and (y) if at such time there is more than one Seller, any
Seller which is not the subject of such Insolvency Event, and any holder of a
Supplemental Certificate and certain other parties specified in the Series
Supplements, to such effect, the Trustee shall promptly sell, dispose of or
otherwise liquidate the Receivables in a commercially reasonable
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manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids. The Trustee may obtain a prior determination
from any applicable conservator, receiver or liquidator that the terms and
manner of any proposed sale, disposition or liquidation are commercially
reasonable. If a conservator or receiver is appointed for the Seller and no Pay
Out Event other than such conservatorship or receivership or insolvency of the
Seller exists, the conservator or receiver may have the power to prevent the
early sale, liquidation or disposition of Receivables.
The proceeds from the sale, disposition or liquidation of the Receivables
pursuant to the previous paragraph ("Insolvency Proceeds") shall be immediately
deposited in the Collection Account. The Trustee shall determine conclusively
the amount of the Insolvency Proceeds which are deemed to be Finance Charge
Receivables and Principal Receivables. The Insolvency Proceeds shall be
allocated and distributed to Certificateholders in accordance with the terms of
each Series Supplement and the Trust shall terminate immediately thereafter.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Seller 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 Seller enforceable against the
Seller 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 owned by the Seller as of the
Related Cut Off Date 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 Related Cut Off Date, (iii) each
Receivable conveyed to the Trust by the Seller 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 Seller in connection with the conveyance by
the Seller 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 Seller in the Receivables conveyed to the
Trust by the Seller and the proceeds thereof or, if 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 Seller as holder of the
Bank Certificate or any Supplemental Certificate and (z) the Seller'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 Seller nor any person claiming through or under the
Seller 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
Related Cut Off Date, each Initial Account or Additional Account owned by the
Seller is an Eligible Account, (viii) as of the Related Cut Off Date, each
Receivable contained in any related Account owned by the Seller 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 owned by the Seller, such
Receivable is an Eligible Receivable, and (x) no selection procedure has been
utilized by
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the Seller 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 Seller 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 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 available for any reason 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 Seller or receipt by
the Seller 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, then the Seller 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 Seller 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 Seller 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 of the Ineligible Receivables
reassigned to the Seller which are Principal Receivables from the aggregate
amount of Principal Receivables used to calculate the Seller 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 Seller Amount, the Seller
Amount would be less than the Required Seller 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 Seller shall make a deposit
into the Excess Funding Account in immediately available funds in an amount
equal to the amount by which the Seller Amount would be reduced below the
Required Seller 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 Seller or its designee, without recourse, representation
or warranty, all the right, title and interest of the Trust in and to such
Ineligible Receivables, all moneys 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 Seller to effect the conveyance of
Ineligible Receivables pursuant to this Section. The obligation of the Seller 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 Seller
(including any Additional Seller) to accept reassignment of the Receivables will
be several and not joint with respect to the Receivables transferred by the
Seller to the Trust.
The Seller 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 national banking association or 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 and each Series Supplement and to execute
and deliver to the Trustee the Certificates pursuant
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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 render any cardholder
agreement relating to an Account owned by it or any Receivable transferred to
the Trust by it unenforceable by the Seller, the Servicer or the Trustee or
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 and each Series Supplement by
the Seller and the execution and delivery to the Trustee of the Certificates by
the Bank and the consummation by the Seller of the transactions provided for in
the Pooling and Servicing Agreement and each Series Supplement have been duly
authorized by the Seller by all necessary corporate action on the part of the
Seller and the Pooling and Servicing Agreement and each Series Supplement will
remain, from the time of its execution, an official record of the Seller; (iv)
the execution and delivery by the Seller of the Pooling and Servicing Agreement,
each Series Supplement and the Certificates, the performance by the Seller of
the transactions contemplated by the Pooling and Servicing Agreement and each
Series Supplement and the fulfillment by the Seller of the terms 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 Seller 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 Series Supplement and the Certificates, the
performance by the Seller of the transactions contemplated by the Pooling and
Servicing Agreement and each Series Supplement and the fulfillment by the Seller
of the terms thereof will not conflict with or violate any requirements of law
applicable to the Seller, (vi) there are no proceedings or investigations,
pending or, to the best knowledge of the Seller, 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, 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, any Series
Supplement or the Certificates, (c) seeking any determination or ruling that, in
the reasonable judgment of the Seller, would materially and adversely affect the
performance by it of its obligations with respect to any Series under the
Pooling and Servicing 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, 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 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 Seller of the Pooling and Servicing Agreement and each Series
Supplement and the execution and delivery by the Bank of the Certificates, the
performance by the Seller of the transactions contemplated by the Pooling and
Servicing 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 Seller has occurred
and the transfer of the Receivables by the Seller to the Trust has not been made
in contemplation of the occurrence thereof; and (ix) the Seller is either an
insured institution for the purposes of the Federal Deposit Insurance Act or 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 Seller of the Receivables to the Trust. Upon
discovery by the Seller, the Servicer or the Trustee of a breach of any of the
representations and warranties by the Seller set forth in the preceding
paragraph, the party discovering such breach will give prompt written notice to
the others and the Seller 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 revolving credit card account owned by the Bank and which account is
identified by the Seller as of the Related Cut Off Date as having the following
characteristics (a) is in existence and maintained by the Bank; (b) is payable
in United
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States dollars; (c) except as provided below, has not been identified as an
account the credit card or cards with respect to which have been reported to the
Bank as having been lost or stolen; (d) 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); (e) has an obligor who has not
been identified by the Bank as an employee of the Bank or any affiliate thereof;
(f) except as provided below, does not have any Receivables which are Defaulted
Receivables; and (g) except as provided below, does not have any Receivables
which have been identified by the Bank or the relevant obligor 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 Seller 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 to the Seller as lost or stolen, in each case as
of the Related Cut Off Date; provided that (a) the balance of all Receivables
included in such Accounts is reflected on the books and records of the Seller
(and 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
Seller, 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 the Seller, 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 Seller in connection with the
creation of such Receivable or the execution, delivery and performance by the
Seller 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 Seller 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
Seller to the Trust of all of the Seller'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 Seller has satisfied all obligations to be fulfilled by the Seller at the
time it is transferred to the Trust; and (k) as to which, at the time of its
transfer to the Trust, the Seller 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 Seller's
representations and warranties or for any other purpose. The Servicer, however,
has agreed to
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deliver to the Trustee on or before March 31 of each year an opinion of counsel
with respect to the validity of the security interest of the Trust in and to the
Receivables and certain other components of the Trust.
The Seller covenants in the Pooling and Servicing Agreement that, except as
otherwise required by any requirement of law, or as is deemed by the Seller in
its sole discretion to be necessary in order for the Seller to maintain its
lending business on a competitive basis, based on a good faith assessment by the
Seller of the nature of the competition in the lending business, it 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 Seller's
reasonable expectation is that such reduction would cause a Series Pay Out Event
to occur or (ii) such reduction is not also applied to any comparable segments
of consumer revolving credit card accounts owned by the Seller which have
characteristics the same as, or substantially similar to, such Accounts.
The Seller also covenants that it may only change the terms relating to any
of the Accounts owned by it if in the reasonable judgment of the Seller the
change is made applicable to the comparable segment of the consumer revolving
credit card accounts owned by the Seller with characteristics the same as, or
substantially similar to, the Accounts, subject to compliance with all
requirements of law.
ADDITION OF ACCOUNTS
Pursuant to the Pooling and Servicing Agreement, the Seller may (under
certain circumstances and subject to certain limitations and conditions) and,
under certain conditions, will be required to designate from time to time
additional Eligible Accounts to be included as Accounts ("Additional Accounts"),
and will convey to the Trust all Receivables of such Additional Accounts,
whether such Receivables are then existing or thereafter created. The date on
which Additional Accounts are transferred to the Trust is referred to herein as
the "Addition Date."
Each Additional Account must be an Eligible Account as of the Related Cut
Off Date. No selection procedures believed by the Seller to be adverse to the
interests of the Certificateholders will be utilized in selecting Additional
Accounts from the available Eligible Accounts in the Fleet Consumer Credit Card
Portfolio. However, since Additional Accounts selected from the Fleet Consumer
Credit Card Portfolio may not have been part of the Advanta Consumer Credit Card
Portfolio at the time of the initial transfer of Accounts to the Trust,
Additional Accounts may not be of the same credit quality as the Initial
Accounts. Additional Accounts may have been originated by Advanta National Bank
or an affiliate or by the Bank or an affiliate at a later date using credit
criteria different from those that were applied to the Initial Accounts or may
have been acquired by Advanta National Bank or the Bank or an affiliate from
another credit card issuer that had different credit criteria.
Required Additions. Generally, if either (x) the Seller Amount is less
than the Required Seller Amount or (y) the aggregate amount of Principal
Receivables is less than the Required Principal Balance, the Seller will be
required to designate additional Eligible Accounts to be included as Accounts in
a sufficient amount such that, after giving effect to such addition, the Seller
Amount as of the close of business on the applicable Addition Date is at least
equal to the Required Seller 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 Seller 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 (including "eligible assets" as such term is defined in Rule
3a-7 under the Investment Company Act of 1940 (or any successor to such Rule))
owned by the Seller or any affiliate of the Seller and collections thereon
("Participation Interests").
"Required Seller Amount" means, with respect to any date, the product of
the Required Seller Percentage and the aggregate amount of Principal
Receivables.
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"Required Seller Percentage" currently means 5%, provided the Required
Seller Percentage may be reduced to as low as 2% if the Seller 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.
Restricted Additions. The Seller 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 Seller shall have given the Trustee, the Servicer and each
Rating Agency written notice that the Additional Accounts or Participation
Interests will be included and specifying the applicable Addition Date, the
Related 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 Seller 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 Related Cut Off Date and the Addition Date, no Insolvency Event with
respect to the Seller shall have occurred nor shall the transfer of the
Receivables arising in the 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 Seller 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 Related 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
Seller reasonably believes that (A) the addition 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 to occur with respect to any Series and (B) in
the case of Additional Accounts, no selection procedure was utilized by the
Seller which would result in a selection of Additional Accounts (from among the
available Eligible Accounts owned by the Seller) that would be materially
adverse to the interests of the Certificateholders of any Series as of the
Addition Date; (vi) the Seller shall have delivered to the Trustee and each
Rating Agency an opinion of counsel stating the validity and perfection of the
transfer of the Receivables created in such Additional Accounts to the Trustee;
(vii) in the case of designation of Additional Accounts, the Seller 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, 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 Seller 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 which are originated by the Seller or any affiliate of the
Seller.
(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, 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 Seller 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 Seller to designate Automatic Additional Accounts
will be suspended until such time as each Rating Agency otherwise consents in
writing. If the Seller 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 Seller 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 Related Cut Off Date and the Addition Date, no
Insolvency Event with respect to the Seller shall have occurred nor shall the
transfer of the Receivables arising in the Automatic Additional Accounts to the
Trust have been made in contemplation of the occurrence thereof.
(vi) The Seller shall have delivered to the Trustee an officer's
certificate, dated the Addition Date, stating that (x) as of the applicable
Related 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 Seller reasonably believes
that (A) the addition by the Seller 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 to occur with
respect to any Series and (B) no selection procedure was utilized by the Seller
which would result in a selection of Automatic Additional Accounts (from among
the available Eligible Accounts owned by the Seller) that would be materially
adverse to the interests of the Certificateholders of any Series as of the
Addition Date.
(vii) The Seller 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
Subject to the conditions set forth below, on any day of any Monthly Period
the Seller shall have the right to require the reassignment to it or its
designee of all the Trust's right, title and interest in, to and under the
Receivables then existing and thereafter created, all moneys due or to become
due and all amounts received with respect thereto and all proceeds thereof in or
with respect to the Accounts owned and designated by the Seller (the "Removed
Accounts") or Participation Interests designated by the Seller, upon
satisfaction of the following conditions:
(a) on or before the fifth business day immediately preceding the
Removal Date (the "Removal Notice Date"), the Seller 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");
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(b) with respect to Removed Accounts, on or prior to the date that is
ten business days after the Removal Date, the Seller 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 Seller 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 Seller shall have delivered to the Trustee an officer's
certificate, dated the Removal Date, to the effect that the Seller
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 to occur with respect to any Series and (ii) no
selection procedure was utilized by the Seller 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; and
(f) as of the Removal Cut Off Date, no more than 10% of the
Receivables outstanding are more than thirty days contractually delinquent.
Upon satisfaction of the above conditions, the Trustee will execute and
deliver to the Seller or its designee a written reassignment and will, without
further action, be deemed to sell, transfer, assign, set over and otherwise
convey to the Seller 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 moneys 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 the Seller may at any
time and from time to time designate a percentage or percentages, which may be a
fixed percentage or a variable percentage based on a formula (the "Discount
Percentage"), of all or any specified portion of Principal Receivables created
after the effective date of such option (the "Discount Option Date") to be
treated as Finance Charge Receivables (the "Discount Option Receivables"). The
Seller also has the option of reducing or withdrawing the Discount Percentage,
at any time and from time to time, on and after the Discount Option Date. The
Pooling and Servicing Agreement requires the Seller to provide to the Servicer,
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 Seller would
cause a Pay Out 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 with
respect to any Series and (ii) only if the Rating Agency Condition is satisfied.
On the date of processing of any collections, the product of the Discount
Percentage and collections of Receivables that arise in the Accounts on such day
on or after the date such option is exercised that otherwise would be Principal
Receivables will be deemed "Discount Option Receivable 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 Receivables Collections will be deposited by the
Servicer into the Collection Account and an amount equal to the product of (iii)
the
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Seller Percentage and (iv) the amount of the Discount Option Receivable
Collections will be paid to the holders of the Seller Certificates. The former
amount deposited into the Collection Account will be applied as provided below
regarding collections of Finance Charge Receivables.
TRUST ACCOUNTS
The Servicer has caused 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 has also caused 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 A1 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
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 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 SELLER PERCENTAGE
Pursuant to the Pooling and Servicing Agreement, the Servicer will allocate
between the Series, including each Class of each Series, and the Seller'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 Seller Percentage in each case. The
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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 Seller 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 Seller 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 the Bank
remains the Servicer and (x) 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) or (y)
the Bank has provided to the Trustee a letter of credit covering the collection
risk of the Servicer acceptable to each Rating Agency, 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 Seller Amount is less than the
Required Seller Amount, the Servicer will deposit any Shared Principal
Collections that would otherwise be distributed to the holders of the Seller
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 amount by which the Seller Amount exceeds the Required Seller Amount
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 Seller 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 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 186 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 Seller 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 Seller, the amount of such Defaulted Receivables
which are subject to reassignment to the Seller 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.
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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 Seller 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 Seller 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 Seller
Amount at such time would cause the Seller Amount to be less than the Required
Seller Amount, the Seller 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.
The Trust will only terminate 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
Seller has delivered a written notice to the Trustee electing to terminate the
Trust), (b) December 31, 2044, or (c) if the Receivables are sold, disposed of
or liquidated following the occurrence of an Insolvency Event as described under
"-- Trust Pay Out 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 Seller.
TRUST PAY OUT EVENTS
The Revolving Period for all outstanding Series will continue through a
date specified in the related Series Supplement unless a Trust Pay Out Event or
a Series specific pay out event (a "Series Pay Out Event") specified in the
related Series Supplement with respect to such Series (and for a Series offered
hereby, the related Prospectus Supplement) occurs prior to such date. A "Trust
Pay Out Event" occurs with respect to all Series upon the occurrence of any of
the following:
(a) an Insolvency Event relating to the Seller (including any Additional
Seller);
(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 Seller (including any Additional Seller) is unable for any reason
to transfer Receivables to the Trust in accordance with the provisions
of the Pooling and Servicing Agreement.
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In addition, a Series Pay Out Event may occur with respect to a specific
Series if a Series Pay Out Event affecting such Series, as specified in the
related Series Supplement and described in the related Prospectus Supplement,
occurs with respect to such Series. A "Pay Out Event" means, with respect to any
Series, a Trust Pay Out Event or a Series Pay Out Event. 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. In such event,
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.
An "Insolvency Event" shall occur if the Seller (including if, at any such
time as there is more than one Seller, any Additional Seller) shall consent to
the appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Seller 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
Seller; or the Seller 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 Seller, the Seller 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. Within 15 days after receipt of such notice by the Trustee
of the occurrence of such Insolvency Event, the Trustee will (i) publish a
notice in an authorized newspaper that an Insolvency Event has occurred and that
the Trustee intends to sell, dispose of or otherwise liquidate the Receivables
on commercially reasonable terms and in a commercially reasonable manner and
(ii) give notice to the Certificateholders describing the applicable provisions
of the Pooling and Servicing Agreement and requesting instructions from the
Certificateholders. Unless the Trustee has received instructions within 90 days
from the date notice is first published from (x) Certificateholders evidencing
more than 50% of the Investor Amount of each Series or, with respect to any
Series with two or more Classes, of each Class, to the effect that such
Certificateholders disapprove of the liquidation of the Receivables and wish to
continue having Principal Receivables transferred to the Trust as before such
Insolvency Event, and (y) if at such time there is more than one Seller, any
Seller which is not the subject of such Insolvency and any holder of a
Supplemental Certificate and certain other parties specified in the Series
Supplements, to such effect, the Trustee shall promptly sell, dispose of or
otherwise liquidate the Receivables in a commercially reasonable manner and on
commercially reasonable terms, which shall include the solicitation of
competitive bids. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable.
The proceeds from the sale, disposition or liquidation of the Receivables
pursuant to the previous paragraph ("Insolvency Proceeds") shall be immediately
deposited in the Collection Account. The Trustee shall determine conclusively
the amount of the Insolvency Proceeds which are deemed to be Finance Charge
Receivables and Principal Receivables. The Insolvency Proceeds shall be
allocated and distributed to Certificateholders in accordance with the terms of
each Series Supplement and the Trust shall terminate immediately thereafter.
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
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corresponding loss. See "Certain Legal Aspects of the Receivables -- Certain
Matters Relating to Receivership" 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 Seller'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 Seller 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 Seller 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 shall accrue from the Closing Date with respect to such Series.
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 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 of at
least $50,000,000 as of the end of its most recent fiscal quarter.
Pursuant to the Pooling and Servicing Agreement, the Bank, 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 Seller's credit card guidelines; provided, that in
the case of a significant delegation to an entity other than Fleet Financial
Group, the Seller, any affiliate of the Seller, or FDR, (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. The Bank currently
conducts is servicing operations through Fleet Credit Card, LLC, a subsidiary of
the Bank and the Bank contracts with FDR to perform certain of its servicing
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activities. Notwithstanding any such delegation to any entity, the Servicer will
continue to be liable for all of its obligations under the Pooling and Servicing
Agreement.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the Seller will indemnify
and hold harmless the Trust and the Trustee, its officers, directors, employees
and agents from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of any acts, omissions or alleged acts or
omissions or otherwise arising out of or based upon the arrangement created by
the Pooling and Servicing Agreement or any Series Supplement, as though the
Pooling and Servicing Agreement or such Series Supplement created a general
partnership under the Delaware Uniform Partnership Law in which the Seller is
the general partner; provided, however, that the Seller will not indemnify the
Trustee if such acts, omissions or alleged acts or omissions constitute or are
caused by fraud, negligence, or willful misconduct by the Trustee; provided
further, without limiting the claims of third parties, that the Seller will not
indemnify 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; provided further, that the
Seller will not indemnify 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; and provided further, that the Seller will not
indemnify Certificateholders or the Certificate Owners for any liabilities,
costs or expenses of the Certificateholders or the Certificate Owners arising
under any tax law relating to any federal, state, local or foreign income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by or for the account of the Certificateholders
or the Certificate Owners in connection herewith to any taxing authority. Any
such indemnification will not be payable from the Trust assets.
The Pooling and Servicing Agreement also 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.
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 Seller under the Pooling and Servicing Agreement and in the
Seller Certificates will not be affected by such termination; provided, however,
if within 60 days of receipt of a Termination Notice, the Trustee does not
receive any bids from Eligible Servicers in accordance with the Pooling and
Servicing Agreement to act as a successor Servicer and receives an officer's
certificate of the Servicer to the effect that
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the Servicer cannot in good faith cure the Servicer Default which gave rise to
the Termination Notice, then the Trustee will offer the Seller 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 Seller will notify the Trustee in writing prior to the Record
Date for the Distribution Date of the purchase if they are exercising such
option. If the Seller exercises such option, the Seller will (i) if the Seller'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 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
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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 Seller
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 Stated Series
Termination Date, the Paying Agent will furnish to each person who at any time
during the preceding calendar year was a Certificateholder of record of a 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 November
30th of each calendar year, the Servicer will cause a firm of nationally
recognized independent public accountants (who may also render other services to
the Servicer or the Seller) to furnish a report (addressed to the Trustee) to
the effect that such firm has applied certain agreed-upon procedures to certain
documents and records relating to the servicing of the Receivables 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. In
addition, on or before November 30 of each calendar year, such accountants will
compare the mathematical calculations of certain amounts contained in the
monthly Servicer's certificates delivered during the period covered by such
report with the computer reports of the Servicer which were the source of such
amounts and deliver a report to the Trustee confirming that such amounts are in
agreement except for such exceptions as they believe to be immaterial and such
other exceptions which shall be set forth in such report.
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The Pooling and Servicing Agreement provides for delivery to the Trustee on
or before November 30 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 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 addition of a Participation
Interest to the Trust or the designation of an Additional Seller) by the Seller
(including, if applicable, any Additional Seller being designated), the Servicer
and the Trustee, without Certificateholder consent, provided that the Seller has
delivered to the Trustee an officer's certificate to the effect that the Seller
reasonably believes that such amendment will not have an Adverse Effect and that
the Rating Agency Condition has been satisfied.
The Pooling and Servicing Agreement or any Series Supplement may also be
amended by the Seller, 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 each 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 Seller delivers 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.
DEFEASANCE
Pursuant to the Pooling and Servicing Agreement, the Seller 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 Seller's or any affiliate of the Seller'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 Seller 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
its first exercise of its right to substitute monies or Eligible Investments for
Receivables, the Seller shall deliver to the Trustee a Tax Opinion with respect
to such deposit and termination of obligations and to the Servicer and the
Trustee written notice from each Rating Agency that the Rating Agency Condition
shall have been satisfied. In addition, the Seller must comply with certain
other requirements set forth in the Pooling and Servicing Agreement, including
requirements that the Seller 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
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meaning of the Investment Company Act of 1940, as amended, and that the Seller
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 Seller, 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
Seller 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.
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
Bankers Trust Company will be Trustee under the Pooling and Servicing
Agreement. The Seller, 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 Seller, 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.
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.
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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 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 or uncertificated interests 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 or uncertificated interests to the extent set forth in
the related Prospectus Supplement. The amount of subordination will decrease
whenever certain amounts otherwise payable to the holders of subordinated
Certificates or uncertificated interests are paid to the holders of the
Certificates which are senior to such subordinated Certificates or
uncertificated interests.
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 Seller 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 or the Bank as Seller and Servicer.
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 an
uncertificated, subordinated interest in the Trust (the "Collateral Interest")
in an amount initially equal to a percentage of the Certificates of such Series
specified in the Prospectus Supplement.
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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.
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 hereby, which discussion has been prepared by Orrick,
Herrington & Sutcliffe LLP, special federal income tax counsel to the Seller
("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 Seller 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 Seller expresses 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 Seller, by entering into the
Pooling and Servicing Agreement, and each investor, by the acceptance of a
beneficial
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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 Seller 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.
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 seller 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 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 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 Bank 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 Seller (or other holders of the Bank Certificate). Under such a view, the
Trust would be disregarded for federal income tax purposes. Alternatively, if
some of the Seller Certificates, the Certificates and other interests in the
Trust were characterized as equity therein, the Trust might be characterized as
a separate entity owning the Receivables, issuing its own debt, and jointly
owned by the Seller (or other holders of the Bank Certificate) and any other
holders of equity interests in the Trust. However, Special Tax Counsel is of the
opinion that, under the 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
opinions 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 Seller Certificates, the Certificates or other interest in the Trust
(including any Collateral Interest) were equity in the Trust for federal income
tax purposes, all or a portion of the Trust could be classified as a partnership
or a publicly trade 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.
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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 the publicly
offered Certificates are treated as holding debt. The Regulations generally
apply to taxable years beginning after December 31, 1995 and, accordingly, could
affect the classification of presently existing entities and the ongoing tax
treatment of already completed transactions. Although the Regulations provide
for a 10-year grandfather period for a partnership actively engaged in an
activity before December 4, 1995, it is not clear whether the Trust would
qualify for the grandfather period. 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 "secondary
market" or its "substantial equivalent." The Seller 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 Seller 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 Seller. As a
result, there can be no assurance that the measures the Seller 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 Seller (or the
holder of the Bank 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 Seller may cause the 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).
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.
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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. 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.
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 Seller 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 Seller (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 Seller Certificates other than the Seller 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-
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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 Owner may establish an exemption from
withholding beginning January 1, 1999. Non-U.S. Certificate Owners should
consult their tax advisors 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 advisor.
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 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 seller is a corporation or other exempt recipient
or (ii) the seller provides certain identifying information in the required
manner, and in the case of a non-U.S. Certificate Owner certifies that the
seller 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 seller is an exempt recipient or (ii) the seller
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
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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 advisors 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.
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.
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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 Seller 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 assets of the Trust 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
plans, as well as entities holding assets deemed to be "plan assets"), the
investing Plan's assets will not include any of the underlying assets of the
Trust.
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's
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's 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 Seller 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 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's
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's 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.
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Pursuant to Section 401(c), the DOL was 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 DOL issued proposed regulations under
Section 401(c) on December 22, 1997, but the required final regulations have not
been issued as of the date hereof. 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 assets" 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 plan invested in a separate account.
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").
UNDERWRITING
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
Seller, 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.
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The Seller 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 Seller 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 Bank by counsel named
in the Prospectus Supplement and, with respect to the federal tax consequences
of such issuance, by 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 PRINCIPAL TERMS
<TABLE>
<CAPTION>
TERM PAGE NO.
---- ---------
<S> <C>
Accounts.................................................... 1, 5
Accumulation Period......................................... 10
Act......................................................... 2
Addition Date............................................... 44
Additional Accounts......................................... 44
Additional Sellers.......................................... 36
Advanta Contributors........................................ 22
Advanta Consumer Credit Card Portfolio...................... 5
Advanta National Bank....................................... 4
Adverse Effect.............................................. 11
Amendment Number 3.......................................... 4, 23
Amortization Period......................................... 10
Assignment Agreement........................................ 23
Automatic Additional Accounts............................... 46
Bank........................................................ 1
Bank Certificate............................................ 7
Cash Collateral Account..................................... 14
Cash Collateral Guaranty.................................... 14
Cede........................................................ 9, 32
Cedel....................................................... 33
Cedel Participants.......................................... 33
Certificate Owner........................................... 9
Certificateholders.......................................... 6
Certificateholders' Interest................................ 6
Certificates................................................ 1, 5
Class....................................................... 6
Code........................................................ 62
Collateral Interest......................................... 14, 58
Collection Account.......................................... 9, 48
Commission.................................................. 2
Companion Series............................................ 11, 37
Contribution Agreement...................................... 22
Controlled Amortization Period.............................. 10
Cooperative................................................. 34
Defaulted Amount............................................ 49
Defaulted Receivables....................................... 49
Defeased Series............................................. 56
Definitive Certificate...................................... 9
Definitive Certificates..................................... 34
Depositaries................................................ 32
Depository.................................................. 31
Disclosure Document......................................... 8
Discount Option Date........................................ 47
Discount Option Receivable Collections...................... 47
Discount Option Receivables................................. 47
Discount Percentage......................................... 47
Distribution Date........................................... 9
</TABLE>
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<TABLE>
<CAPTION>
TERM PAGE NO.
---- ---------
<S> <C>
DOL......................................................... 64
DTC......................................................... 9
Due Date.................................................... 19
Eligible Account............................................ 42
Eligible Deposit Account.................................... 48
Eligible Institution........................................ 48
Eligible Investments........................................ 48
Eligible Receivable......................................... 43
Eligible Servicer........................................... 52
ERISA....................................................... 15
Euroclear................................................... 34
Euroclear Operator.......................................... 34
Euroclear Participants...................................... 34
Excess Funding Account...................................... 48
Exchange Act................................................ 2
"Existing Fleet Credit Card Portfolio"...................... 24
FDIA........................................................ 18
FDIC........................................................ 1, 7
FDR......................................................... 24
Finance Charge Receivables.................................. 8
FIRREA...................................................... 18
Fleet Contributors.......................................... 22
Fleet Consumer Credit Card Portfolio........................ 5
Fleet Financial Group....................................... 7, 22
Full Invested Amount........................................ 12
Funding Period.............................................. 12
General Account Regulations................................. 66
Group....................................................... 11, 37
Holders..................................................... 35
Indirect Participants....................................... 32
Ineligible Receivables...................................... 41
Initial Accounts............................................ 5, 8
Insolvency Event............................................ 51
Insolvency Proceeds......................................... 40, 51
Interchange................................................. 27
Interest Period............................................. 10
Invested Amount............................................. 6
Investor Amount............................................. 6
IRS......................................................... 60
L/C Bank.................................................... 13, 58
Limited Amortization Period................................. 10
LLC......................................................... 4, 22
MasterCard(R)............................................... 5
Monthly Period.............................................. 10
Monthly Servicing Fee....................................... 52
Moody's..................................................... 48
New Issuance................................................ 7
OID......................................................... 62
</TABLE>
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<TABLE>
<CAPTION>
TERM PAGE NO.
---- ---------
<S> <C>
Optional Amortization Period................................ 10
Participants................................................ 32
Participation Interests..................................... 5, 44
Parties in Interest......................................... 64
Pay Out Event............................................... 51
Paying Agent................................................ 48
Plan........................................................ 64
Pooling and Servicing Agreement............................. 4
Pre-Funding Account......................................... 12
Pre-Funding Amount.......................................... 12
Principal Amortization Period............................... 10
Principal Receivables....................................... 8
Principal Sharing Series.................................... 11
Principal Shortfalls........................................ 11, 37
Principal Terms............................................. 38
Prior Series................................................ 11
PTCE........................................................ 65
Rapid Amortization Period................................... 10
Rating Agency............................................... 16
Rating Agency Condition..................................... 7, 39
Receivables................................................. 1, 5
Recoveries.................................................. 8
Regulation.................................................. 64
Regulations................................................. 61
Related Cut Off Date........................................ 8
Relevant Closing Date....................................... 10
Removal Cut Off Date........................................ 47
Removal Date................................................ 46
Removal Notice Date......................................... 46
Removed Accounts............................................ 46
Required Principal Balance.................................. 45
Required Seller Amount...................................... 44
Required Seller Percentage.................................. 45
Revolving Period............................................ 10
Scheduled Amortization Date................................. 10
Seller...................................................... 35
Seller Amount............................................... 6, 31
Seller Certificates......................................... 7, 38
Seller Percentage........................................... 31
Sellers' Interest........................................... 6, 31, 38
Series...................................................... 1, 6
Series Account.............................................. 6
Series Enhancement.......................................... 5, 12
Series Investor Amount...................................... 45
Series Pay Out Event........................................ 50
Series Percentage........................................... 31
Series Supplement........................................... 4
Servicer Default............................................ 54
</TABLE>
70
<PAGE> 128
<TABLE>
<CAPTION>
TERM PAGE NO.
---- ---------
<S> <C>
Servicing Fee............................................... 52
Shared Principal Collections................................ 11, 37
Special Tax Counsel......................................... 59
Spread Account.............................................. 14, 59
Standard & Poor's........................................... 48
Stated Series Termination Date.............................. 15, 50
Supplemental Certificate.................................... 7, 35, 38
Tax Opinion................................................. 8
Termination Notice.......................................... 53
Terms and Conditions........................................ 34
Transfer.................................................... 22
Trust....................................................... 1, 4
Trust Pay Out Event......................................... 50
Trust Termination Date...................................... 15, 50
U.S. Certificate Owner...................................... 59
U.S. Person................................................. 59
UCC......................................................... 28
Underwriters................................................ 66
Visa........................................................ 5
Withholding Agent........................................... 62
</TABLE>
71
<PAGE> 129
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain circumstances, the globally offered Fleet Credit Card
Master Trust II 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 tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to issues of Certificates by ADVANTA Credit
Card Master Trust II prior to the change of the Trust to Fleet Credit Card
Master Trust II. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior Advanta
Credit Card Master Trust II issues in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
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<PAGE> 130
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depositary, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of the Global
Securities. After settlement has been completed, the Global Securities will be
credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The Global Securities credit will appear the next day
(European time) and the cash debit will be back-valued to, and the interest on
the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedel or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until Global Securities
are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would
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<PAGE> 131
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, under applicable law, (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.
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
I-3
<PAGE> 132
holding and disposing of the Global Securities. Further, the IRS 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.
I-4
<PAGE> 133
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.................................. $ 295**
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.
The Articles of Association (the "Articles") of Fleet Bank (RI), National
Association (the "Bank") provide that each person who was or is made 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
(each a "proceeding"), by reason of the fact that he or she is or was a
director, officer or employee of the Bank or is or was serving at the request of
the Bank as a director, officer, employee or agent of another corporation or of
a partnership, joint venture, limited liability company, trust, or other
enterprise, shall be indemnified and held harmless by the Bank to the fullest
extent authorized by the law of the state in which the Bank's ultimate parent
company is incorporated, expect as provided below. The Bank may, by action of
its Board of Directors, grant rights to indemnification to agents of the Bank
and to any director, officer, employee or agent of any of its subsidiaries with
the same scope and effect as the foregoing indemnification of directors and
officers.
The Articles provide, however, that (i) no person shall be indemnified
against expenses, penalties or other payments incurred in an administrative
proceeding or action institute by a federal bank regulatory agency that results
in a final order assessing civil money penalties against that person, requiring
affirmative action by that person in the form of payments to the Bank or
removing or prohibiting that person from service with the Bank and (ii) no
person shall be indemnified here the Articles to the extent such indemnification
would violate or conflict with any applicable federal statute or any applicable
final regulation or interpretation adopted by the Office of the Comptroller of
the Currency ("OCC") or the Federal Deposit Insurance Corporation ("FDIC").
The Articles also provide that the Bank may purchase, maintain and make
payment or reimbursement for reasonable premiums on, insurance to protect itself
and any director, officer, employee or agent of the Bank or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Bank would have the power to indemnify
such person against such person against such expense, liability or loss under
the law of the state in which the Bank's ultimate parent is incorporated;
provided, however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.
The Bank's ultimate parent company is incorporated in the State of Rhode
Island. The laws of the State of Rhode Island provide that Rhode Island
corporations may indemnify directors, officers, employees or agents against
judgments, fines, reasonable costs, expenses and counsel fees paid or incurred
in connection
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<PAGE> 134
with any proceeding to which such director, officer, employee or agent or his
legal representative may be a party (or for testifying when not a party) by
reason of his being a director, officer, employee or agent, provided that such
director, officer, employee or agent shall have acted in good faith and shall
have reasonably believed (a) if he was acting in his official capacity that his
conduct was in the corporation's best interests, (b) in all other cases that his
conduct was at least not opposed to its best interests, and (c) in the case of
any criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. With respect to possible indemnification of directors, officers and
controlling persons of the Bank for liabilities arising under the Securities Act
of 1933 (the "Act") pursuant to such provisions, the Bank is aware that the
Securities and Exchange Commission has publicly taken the position that such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
ITEM 16. EXHIBITS.
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement for the Certificates
4.1 -- Amended and Restated Pooling and Servicing Agreement
4.2 -- Amendment Number 1 to the Amended and Restated Pooling and
Servicing Agreement
4.3 -- Amendment Number 2 to the Amended and Restated Pooling and
Servicing Agreement
4.4 -- Amendment Number 3 to the Amended and Restated Pooling and
Servicing Agreement
4.5 -- Assignment and Assumption Agreement
4.6 -- Form of Series Supplement to Pooling and Servicing Agreement
5.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to legality
8.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to federal tax matters
23.1 -- Consent of Orrick, Herrington & Sutcliffe LLP (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 (included in Page II-4)
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant on behalf of the Fleet Credit Card Master Trust
II (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
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<PAGE> 135
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.
(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.
(d) That, for the purpose of determining any liability under the
Securities Act of 1933, each posteffective amendment that contains a form
of prospectus 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.
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<PAGE> 136
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it (i) has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3, (ii) reasonably believes that
the security rating requirement contained in Transaction Requirement B.5 of Form
S-3 will be met by the time of the sale of the securities registered hereunder
and (iii) has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Horsham, Pennsylvania, on May
13, 1998.
FLEET BANK (RI), NATIONAL ASSOCIATION
as Depositor to the Trust and as
Servicer on behalf
of the Trust
By: /s/ JOSEPH W. SAUNDERS
------------------------------------
Name: Joseph W. Saunders
Title: Chairman, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Joseph W. Saunders, John K. Bray and Michael Coco
as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for and in his own name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any or all other documents in
connection therewith, and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as might or could be done in person, hereby ratifying and confirming
all said attorney-in-fact and agent or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on May 13, 1998 by the following persons
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ JOSEPH W. SAUNDERS Chairman, President, Chief Executive Officer
- ----------------------------------------------------- and Director
Name: Joseph W. Saunders
/s/ JOHN K. BRAY Principal Financial Officer and Principal
- ----------------------------------------------------- Accounting Officer
Name: John K. Bray
/s/ ROBERT B. HEDGES, JR. Director
- -----------------------------------------------------
Name: Robert B. Hedges, Jr.
/s/ EUGENE M. MCQUADE Director
- -----------------------------------------------------
Name: Eugene M. McQuade
/s/ BRIAN T. MOYNIHAN Director
- -----------------------------------------------------
Name: Brian T. Moynihan
/s/ H. JAY SARLES Director
- -----------------------------------------------------
Name: H. Jay Sarles
/s/ HAYDEN D. WATSON Director
- -----------------------------------------------------
Name: Hayden D. Watson
/s/ MICHAEL R. ZUCCHINI Director
- -----------------------------------------------------
Name: Michael R. Zucchini
</TABLE>
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<PAGE> 137
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement for the Certificates
4.1 -- Amended and Restated Pooling and Servicing Agreement
4.2 -- Amendment Number 1 to the Amended and Restated Pooling and
Servicing Agreement
4.3 -- Amendment Number 2 to the Amended and Restated Pooling and
Servicing Agreement
4.4 -- Amendment Number 3 to the Amended and Restated Pooling and
Servicing Agreement
4.5 -- Assignment and Assumption Agreement
4.6 -- Form of Series Supplement to the Pooling and Servicing
Agreement
5.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to legality
8.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to federal tax matters
23.1 -- Consent of Orrick, Herrington & Sutcliffe LLP (included in
opinion filed as Exhibit 5.1)
23.2 -- Consent of Orrick, Herrington & Sutcliffe LLP (included in
opinion filed as Exhibit 8.1)
24.1 -- Powers of Attorney (included on Page II-4)
</TABLE>
II-5
<PAGE> 1
EXHIBIT 1.1
[FORM OF UNDERWRITING AGREEMENT]
_____________ , ____
Fleet Credit Card Master Trust II
$____________ Class __ [__%] [Floating Rate] Asset Backed
Certificates, Series ____-_
FLEET BANK (RI), NATIONAL ASSOCIATION
(AS SELLER AND SERVICER)
CLASS __ UNDERWRITING AGREEMENT
as Representative of the
Underwriter[s] set forth herein
c/o
Ladies and Gentlemen:
1. Introductory. Fleet Bank (RI), National Association, a
national banking association (the "Bank") proposes to cause
$____________aggregate principal amount of Fleet Credit Card Master Trust II
Class A [__%] [Floating Rate] Asset Backed Certificates, Series ____-_ the
"Class A Certificates") and $____________ aggregate principal amount of Fleet
Credit Card Master Trust II Class B [__%] [Floating Rate] Asset Backed
Certificates, Series 1____-_ (the "Class B Certificates,"and together with the
Class A Certificates, the "Certificates") to be issued under an Amended and
Restated Pooling and Servicing Agreement, between Bankers Trust Company, as
Trustee (the "Trustee") and the Bank (as Seller and Servicer and successor to
Advanta National Bank as provided in an Assignment and Assumption Agreement
dated as of February 20, 1998 (the "Assumption Agreement") among Advanta
National Bank, the Bank, Fleet Credit and LLC and the Trustee), dated as of
December 1, 1993 (as amended and restated as of May 23, 1994, as amended by
Amendment Number 1 to the Amended and Restated Pooling and Servicing Agreement
dated as of July 1, 1994, Amendment Number 2 to the Amended and Restated
Pooling and Servicing Agreement dated as of October 6, 1995 and Amendment
Number 3 to the Pooling and Servicing Agreement dated as of February 20, 1998),
as supplemented by the Series ____-__ Supplement with respect to the
Certificates, to be dated as of ___________ ___ (the "Series Supplement"). The
Amended and Restated Pooling and Servicing Agreement, as amended, together with
the Assumption Agreement and the Series
<PAGE> 2
Supplement is herein referred to as the "Pooling and Servicing Agreement"
(references herein to the Pooling and Servicing Agreement may, as the context
requires, include all supplements, including the Series Supplement, to the
Pooling and Servicing Agreement).
The Class __ Certificates are being sold concurrently herewith
pursuant to an underwriting agreement dated the date hereof (the "Class _
Underwriting Agreement"), among the Bank and the underwriter[s] named therein
(the "Class _ Underwriter[s]"). In addition, the Bank, the Trustee, the CIA
Lenders parties thereto, _________________ and _______________, as Cash
Collateral Depositor, will enter into a Loan Agreement, to be dated as of
____________ , ____ (the "Loan Agreement"), pursuant to which the CIA Lenders
(as such term is defined in the Loan Agreement) will purchase the Collateral
Interest relating to the Certificates and the Cash Collateral Depositor will
make the initial deposit into the Cash Collateral Account. The assets of the
Trust will include, among other things, certain amounts due (the "Receivables")
on a pool of VISA and MasterCard credit card accounts of the Bank (the
"Accounts"), the benefit of funds on deposit in the Cash Collateral Account and
recoveries on Defaulted Receivables. To the extent not defined herein,
capitalized terms used herein have the meanings assigned in the Pooling and
Servicing Agreement.
The Bank hereby agrees with _________________, _____________,
______________ (the "Underwriter[s]") as follows:
2. Representations and Warranties of the Bank. The Bank
represents and warrants to, and agrees with, the Underwriter[s] that:
(a) The Bank is a national banking association duly
organized and validly existing in good standing under the laws of the United
States, and has all requisite corporate power, authority and legal right to own
its property and conduct its credit card business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement, the Class _
Underwriting Agreement, the Certificates and each of the Pooling and Servicing
Agreement and the Loan Agreement (the Pooling and Servicing Agreement and the
Loan Agreement, together, the "Transaction Documents").
(b) The execution and delivery of this Agreement, the
Class _ Underwriting Agreement, the Certificates, the Series Supplement, the
Loan Agreement and the Assumption Agreement, the incurrence of the obligations
herein and therein set forth and the consummation of the transactions
contemplated hereunder and thereunder have been duly authorized by the Bank by
all necessary action on the part of the Bank.
(c) This Agreement and the Class _ Underwriting Agreement
have been duly authorized and validly executed and delivered by the Bank.
(d) Each of the Series Supplement and the Loan Agreement
will be executed and delivered by the Bank on or before the Closing Date, and
when executed and delivered by the other parties thereto, each will constitute
a valid and binding agreement of the Bank,
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<PAGE> 3
enforceable against the Bank in accordance with its terms, and the Pooling and
Servicing Agreement as previously executed and delivered by predecessors of the
Bank and the Assumption Agreement, previously executed by the Bank each
constitute a valid and binding agreement of the Bank, enforceable against the
Bank each in accordance with its terms, except, in each case, to the extent
that (i) the enforceability thereof may be subject to insolvency,
reorganization, moratorium, receivership or other similar laws now or hereafter
in effect relating to creditors' or other obligees' rights generally or the
rights of creditors or other obligees insured by the FDIC, (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought and (iii) certain remedial provisions of
the Pooling and Servicing Agreement may be unenforceable in whole or in part
under the UCC, but the inclusion of such provisions does not render the other
provisions of the Pooling and Servicing Agreement invalid and, notwithstanding
that such provisions may be unenforceable in whole or in part, the Trustee, on
behalf of the Holders of the Certificates, will be able to enforce the remedies
of a secured party under the UCC.
(e) The Certificates will be issued pursuant to the terms
of the Pooling and Servicing Agreement and, when executed by the Bank and
authenticated by the Trustee in accordance with the Pooling and Servicing
Agreement and delivered pursuant to this Agreement and the Class _ Underwriting
Agreement, will be validly issued and outstanding and entitled to the benefits
of the Pooling and Servicing Agreement. The Certificates will be in all
material respects in the form contemplated by the Pooling and Servicing
Agreement and will conform to the description thereof contained in the
Prospectus and Registration Statement, as amended or supplemented.
(f) The Bank is not in violation of any Requirement of
Law or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan agreement, note, lease or other instrument to
which it is a party or by which it is bound or to which any of its property is
subject, which violations or defaults separately or in the aggregate would have
a material adverse effect on the Bank or the Trust.
(g) Neither the issuance and sale of the Certificates,
nor the execution and delivery by the Bank of this Agreement, the Class _
Underwriting Agreement, the Certificates or the Transaction Documents, nor the
incurrence by the Bank of the obligations herein and therein set forth, nor the
consummation of the transactions contemplated hereunder or thereunder, nor the
fulfillment of the terms hereof or thereof does or will (i) violate any
Requirement of Law presently in effect, applicable to it or its properties or
by which it or its properties are or may be bound or affected, (ii) conflict
with, or result in a breach of, or constitute a default under, any indenture,
contract, agreement, deed, lease, mortgage or instrument to which it is a party
or by which it or its properties are bound, or (iii) result in the creation or
imposition of any Lien upon any of its property or assets, except for those
encumbrances created under the Pooling and Servicing Agreement.
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<PAGE> 4
(h) All consents, approvals, authorizations, orders,
filings, registrations or qualifications of or with any court or any other
governmental agency, board, commission, authority, official or body required in
connection with the execution and delivery by the Bank of this Agreement, the
Class _ Underwriting Agreement, the Certificates or the Transaction Documents,
or to the consummation of the transactions contemplated hereunder and
thereunder, or to the fulfillment of the terms hereof and thereof have been or
will have been obtained on or before the Closing Date.
(i) All actions required to be taken by the Bank as a
condition to the offer and sale of the Certificates as described herein or in
the Class _ Underwriting Agreement or the consummation of any of the
transactions described in the Prospectus and Registration Statement have been
or, prior to the Closing Date, will be taken.
(j) The Pooling and Servicing Agreement is not required
to be qualified under the Trust Indenture Act of 1939.
(k) The representations and warranties made by the Bank
in the Pooling and Servicing Agreement and made in any Officer's Certificate of
the Bank delivered pursuant to the Pooling and Servicing Agreement will be true
and correct at the time made and on and as of the Closing Date as if set forth
herein.
(l) The Receivables (including Receivables in Additional
Accounts the Receivables of which will not be conveyed to the Trust until the
Closing Date) had an aggregate outstanding balance determined as of
______________ in the amount set forth in the Prospectus.
(m) The Bank agrees it has not granted, assigned, pledged
or transferred and shall not grant, assign, pledge or transfer to any Person a
security interest in, or any other right, title or interest in, the
Receivables, except as provided in the Pooling and Servicing Agreement, and
agrees to take all action required by the Pooling and Servicing Agreement in
order to maintain the security interest in the Receivables granted pursuant to
the Pooling and Servicing Agreement.
(n) A registration statement on Form S-3 (No. __-_____),
including a form of prospectus and such amendments thereto as may have been
required to the date hereof, relating to the Certificates and the offering
thereof in accordance with Rule 415 under the Securities Act of 1933, as
amended (the "Act"), has been filed with, and has been declared effective by,
the Securities and Exchange Commission (the "Commission"). If any
post-effective amendment to such registration statement has been filed with the
Commission prior to the execution and delivery of this Agreement, the most
recent such amendment has been declared effective by the Commission. For
purposes of this Agreement, "Effective Time" means the date and time as of
which such registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission, and "Effective Date"
means the date of the Effective Time. Such registration statement, as amended
at the Effective Time, is hereinafter referred to as the "Registration
Statement." The Bank proposes to file with the Commission pursuant to Rule
424(b) ("Rule 424(b)") under the Act a supplement (the "Prospectus Supplement")
to the
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<PAGE> 5
prospectus included in the Registration Statement (such prospectus, in the form
it appears in the Registration Statement or in the form most recently revised
and filed with the Commission pursuant to Rule 424(b), is hereinafter referred
to as the "Base Prospectus") relating to the Certificates and the method of
distribution thereof. The Base Prospectus and the Prospectus Supplement,
together with any amendment thereof or supplement thereto, are hereinafter
referred to as the "Prospectus".
(o) On the Effective Date, the Registration Statement
conformed in all respects to the requirements of the Act and the rules and
regulations of the Commission thereunder (the "Rules and Regulations") and did
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and on the date of this Agreement, the Registration
Statement and the Prospectus conform, and at the time of filing of the
Prospectus pursuant to Rule 424(b) the Registration Statement and the
Prospectus will conform, in all respects with the requirements of the Act and
the Rules and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, except that the foregoing does not apply to
statements in or omissions from either of such documents based upon written
information furnished to the Bank by the Underwriter[s] specifically for use
therein.
(p) There has not been any material adverse change, or
any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or operations
of the Bank or its subsidiaries, taken as a whole, from ______________.
3. Purchase, Sale, Payment and Delivery of the Certificates.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Bank agrees to sell to the Underwriter[s], and the Underwriter[s]
agree to purchase from the Bank, at a purchase price of ______ of the principal
amount thereof, ________ aggregate principal amount of the Class _
Certificates, each Underwriter to purchase the amounts shown on Schedule A
hereto.
(b) The Bank will deliver the Class _ Certificates to you
against payment of the purchase price in immediately available funds, drawn to
the order of the Bank, at the office of _______________, in _______________ at
10:00 A.M., New York City time, on ____________ , ____, or at such other time
not later than seven full business days thereafter as you and the Bank
determine, such time being herein referred to as the "Closing Date." Each of
the Class _ Certificates so to be delivered shall be represented by one or more
definitive certificates registered in the name of Cede & Co., as nominee for
The Depository Trust Company. The Bank shall make such definitive certificates
representing the Class _ Certificates available for inspection by the
Underwriter[s] at the office at which the Class _ Certificates are to be
delivered no later than five hours before the close of business in New York
City on the business day prior to the Closing Date.
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<PAGE> 6
4. Offering by Underwriter[s]. It is understood that after the
Effective Date, the Underwriter[s] propose to offer the Class _ Certificates
for sale to the public (which may include selected dealers) as set forth in the
Prospectus.
5. Certain Agreements of the Bank. The Bank agrees with the
Underwriter[s] that:
(a) Immediately following the execution of this
Agreement, the Bank will prepare a Prospectus Supplement setting forth the
amount of Certificates covered thereby and the terms thereof not otherwise
specified in the Base Prospectus, the price at which such Certificates are to
be purchased by the Underwriter[s] and the Class _ Underwriter[s], the initial
public offering price, the selling concessions and allowances, and such other
information as the Bank deems appropriate. The Bank will transmit the
Prospectus, including such Prospectus Supplement, to the Commission pursuant to
Rule 424(b) by a means reasonably calculated to result in filing with the
Commission pursuant to Rule 424(b). The Bank will not file any amendment of the
Registration Statement with respect to the Class _ Certificates or supplement
to the Prospectus unless a copy has been furnished to you for your review a
reasonable time prior to the proposed filing thereof or to which you shall
reasonably object to in writing. The Bank will advise you promptly of (i) the
effectiveness of any amendment or supplementation of the Registration Statement
or Prospectus, (ii) any request by the Commission for any amendment or
supplementation of the Registration Statement or the Prospectus or for any
additional information, (iii) the receipt by the Bank of any notification with
respect to the suspension of qualification of the Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purposes and (iv) the institution by the Commission of any stop order
proceeding in respect of the Registration Statement, and will use their best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Act, any event occurs as a
result of which the Prospectus, as then amended or supplemented, would include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time
to amend the Prospectus to comply with the Act, the Bank promptly will prepare
and file with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance.
Neither your consent to, nor the Underwriter['s] delivery of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(c) As soon as practicable, the Bank will cause the Trust
to make generally available to the Certificateholders an earnings statement or
statements of the Trust covering a period of at least 12 months beginning after
the Effective Date which will satisfy the provisions of Section 11(a) of the
Act and Rule 158 of the Commission promulgated thereunder.
(d) The Bank will furnish to you copies of the
Registration Statement (one of which will be signed and will include all
exhibits), the Prospectus and all amendments and
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<PAGE> 7
supplements to such documents, in each case as soon as available and in such
quantities as you reasonably request.
(e) The Bank will endeavor to qualify the Class _
Certificates for sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request and the determination of the
eligibility for investment of the Class _ Certificates under the laws of such
jurisdictions as you may designate and will continue such qualifications in
effect so long as required for the distribution of the Class _ Certificates;
provided, however, that the Bank shall not be obligated to qualify to do
business in any jurisdiction where such qualification would subject the Bank,
as the case may be, to general or unlimited service of process in any
jurisdiction where it is not now so subject.
(f) For a period from the date of this Agreement until
the retirement of the Class _ Certificates, the Bank, as Servicer, will furnish
to you copies of each certificate and the annual statements of compliance
delivered to the Trustee pursuant to Article III of the Pooling and Servicing
Agreement and the annual independent certified public accountant's servicing
reports furnished to the Trustee pursuant to Article III of the Pooling and
Servicing Agreement, by first class mail as soon as practicable after such
certificates, statements and reports are furnished to the Trustee.
(g) So long as any Class _ Certificate is outstanding,
the Bank will furnish to you, by first-class mail as soon as practicable (i)
all documents concerning the Certificates distributed by the Bank to
Certificateholders, or filed with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (ii) any order of the
Commission under the Act or the Exchange Act applicable to the Trust or to the
Bank as originators of the Trust, or pursuant to a "no-action" letter obtained
from the staff of the Commission by the Bank and affecting the Trust or the
Bank as originators of the Trust and (iii) from time to time, such other
information concerning the Trust as you may reasonably request.
(h) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated for any reason,
except a default by you hereunder, the Bank will pay [description of expenses
to be paid by Bank.]
(i) To the extent, if any, that any of the ratings
provided with respect to the Certificates by Moody's Investors Service, Inc. or
Standard & Poor's Ratings Services are conditional upon the furnishing of
documents or the taking of any other actions by the Bank, the Bank shall
furnish such documents and take any such other actions.
6. Conditions of the Obligations of the Underwriter[s]. The
obligation of the Underwriter[s] to purchase and pay for the Class _
Certificates will be subject to the accuracy of the representations and
warranties on the part of the Bank herein, to the accuracy of the statements of
officers of the Bank made pursuant to the provisions hereof, to the performance
by the Bank of its obligations hereunder and to the following additional
conditions precedent:
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<PAGE> 8
(a) On or prior to the date of this Agreement, you shall
have received a letter, dated the date of this Agreement, of ________________,
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder,
substantially in the form heretofore agreed to and otherwise in form and in
substance satisfactory to you and your counsel.
(b) The Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a) of
this Agreement; and, prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Bank or you, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting particularly the business or
properties of the Bank which, in your judgment, materially impairs the
investment quality of the Certificates; (ii) any downgrading in the rating of
any debt securities of the Bank or Fleet Financial Group, Inc. ("Fleet
Financial") by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), or any public announcement
that any such organization has under surveillance or review its rating of any
such debt securities (other than an announcement with positive implications of
a possible upgrading, and no implication of a possible downgrading, of such
rating), (iii) any suspension or limitation of trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the Bank or
Fleet Financial on any exchange or in the over-the-counter market; (iv) any
banking moratorium declared by Federal, Rhode Island or New York authorities;
or (v) any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress or any other substantial
national or international calamity or emergency if, in your judgment, the
effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Class _ Certificates.
(d) You shall have received an opinion, dated the Closing
Date, of __________ _________ General Counsel for the Bank, to the effect that:
(i) The Bank (x) has been duly chartered and is
validly existing as a national banking association under the laws of
the United States, with power and authority to own its properties and
conduct its business as described in the Prospectus; (y) is neither
required to qualify, nor to register as a foreign corporation, in any
state in order to conduct its credit card business, except where the
failure to so qualify or register would not have a material adverse
effect upon the Certificateholders; and (z) has the power, authority
and legal right to acquire, own and service the Accounts and the
Receivables;
(ii) The Bank has the power and authority to
execute and deliver this Agreement, the Class _ Underwriting
Agreement, the Series Supplement, the Loan Agreement and the
Certificates and to consummate the transactions contemplated herein
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<PAGE> 9
and therein and the Bank, at the time of the Assignment Agreement, had
and at all times since has had and does now have the power and
authority to execute and deliver the Assignment Agreement and to
consummate the transactions contemplated by the Assignment Agreement
and the Pooling and Servicing Agreement.
(iii) Each of the Class _ Underwriting Agreement, the
Series Supplement, the Loan Agreement and the Certificates has been
duly authorized, executed and delivered by the Bank;
(iv) This Assignment Agreement has been duly
authorized, executed and delivered by the Bank;
(v) This Agreement has been duly authorized,
executed and delivered by the Bank;
(vi) The Registration Statement has become
effective under the Act and to the best of such counsel's knowledge no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been
instituted or threatened under the Act; the Registration Statement,
the Prospectus and each amendment thereof or supplement thereto (other
than the financial and statistical information contained therein) on
their respective effective dates or dates of issuance appear on their
face to be appropriately responsive in all material respects to the
applicable requirements of the Act and the Rules and Regulations; such
counsel has no reason to believe that either the Registration
Statement or the Prospectus, or any such amendment or supplement, as
of such respective dates, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Prospectus, as amended or supplemented as of the date of such
opinion, contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading (except that such counsel may express
no opinion as to (y) any financial statements, schedules or other
financial data included in the Registration Statement, the Prospectus,
or any such amendment or supplement, or (z) the exhibits to the
Registration Statement); and the summaries in the Registration
Statement and Prospectus of statutes, legal proceedings, contracts and
other documents are accurate and fairly present the information
required to be shown;
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<PAGE> 10
(vii) No consent, approval, authorization or
order of, or filing of UCC financing statements with any court or
governmental agency or body having jurisdiction over the Bank is
required for the consummation of the transactions contemplated by this
Agreement, the Class _ Underwriting Agreement, the Pooling and
Servicing Agreement or the Loan Agreement, except for (x) filing of
UCC financing statements with respect to the transactions contemplated
in the Pooling and Servicing Agreement; (y) such consents, approvals,
authorizations, orders or filings as have been obtained under the Act;
and (z) such consents, approvals, authorizations, orders or filings as
may be required under blue sky laws of any jurisdiction;
(viii) The execution, delivery and performance by the
Bank of this Agreement, the Class _ Underwriting Agreement, the
Pooling and Servicing Agreement and the Loan Agreement, the transfer
of the Receivables to the Trust, the issuance and sale of the
Certificates and the consummation of any other of the transactions
contemplated herein or in the Pooling and Servicing Agreement or the
Loan Agreement will not conflict with, result in a breach of or a
violation of any of the terms of, or constitute a default under, (x)
the Articles of Association or By-Laws of the Bank or (y) any rule,
order, statute or regulation known to such counsel to be currently
applicable to the Bank, or (z) any agreement or other instrument,
known to such counsel, to which the Bank is a party or by which it is
bound; and
(ix) To such counsel's knowledge, there are no
actions, proceedings or investigations pending before any court,
administrative agency or other tribunal (w) asserting the invalidity
of this Agreement, the Class _ Underwriting Agreement, the Pooling and
Servicing Agreement, the Loan Agreement or the Certificates, (x)
seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this
Agreement, the Class _ Underwriting Agreement, the Pooling and
Servicing Agreement or the Loan Agreement, (y) which might materially
and adversely affect the performance by the Bank of its obligations
under, or the validity or enforceability of, this Agreement, the Class
_ Underwriting Agreement, the Pooling and Servicing Agreement, the
Loan Agreement or the Certificates or (z) seeking adversely to affect
the federal income tax attributes of the Certificates as described in
the Prospectus under the headings "Summary of Terms -- Tax Status" and
"Federal Income Tax Consequences."
(e) You shall have received a letter of Edwards & Angell,
counsel for the Bank, to the effect that you may rely on those provisions of
their opinions to Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services with respect to certain matters relating to the transfer of the
Receivables to the Trust, with respect to the perfection of the Trust's
interest in the Receivables and with respect to other related matters.
(f) You shall have received an opinion dated the closing
date, of Orrick, Herrington & Sutcliffe LLP, special counsel to the Bank, to
the effect that
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<PAGE> 11
(i) The Pooling and Servicing Agreement, including
the allocation of Collections provisions thereof, constitutes the
legal, valid and binding obligation of the Bank under the laws of the
State of New York, enforceable against the Bank in accordance with its
terms.
(ii) Each of this Agreement and the Class _
Underwriting Agreement constitutes the legal, valid and binding
obligation of the Bank under the laws of the State of New York,
enforceable against the Bank in accordance with its terms.
(iii) The Loan Agreement constitutes the legal,
valid and binding obligation of the Bank under the laws of the State
of New York, enforceable against the Bank in accordance with its
terms.
(iv) The Certificates, when executed and
authenticated in accordance with the terms of the Pooling and
Servicing Agreement and delivered to and paid for by the
Underwriter[s] in accordance with this Agreement, will be duly and
validly issued and outstanding and will be entitled to the benefits of
the Pooling and Servicing Agreement.
(v) The statements in the Base Prospectus under the
headings "Certain Legal Aspects of the Receivables," "ERISA
Considerations" and "Federal Income Tax Consequences" and the
summaries thereof under the headings "Summary of Terms -- Tax Status"
and "--ERISA Considerations" in the Base Prospectus and "Summary of
Terms -- Tax Status" and "--ERISA Considerations" and "Federal Income
Tax Consequences" in the Prospectus Supplement, to the extent they
constitute matters of law or legal conclusions with respect thereto,
have been reviewed by us and are correct in all material respects.
(vi) This Agreement, the Pooling and Servicing
Agreement and the Certificates conform in all material respects to the
descriptions thereof contained in the Prospectus.
(vii) The Pooling and Servicing Agreement is not
required to be qualified under the Trust Indenture Act of 1939, as
amended, and the Trust is not now, and immediately following the sale
of the Certificates pursuant to this Agreement will not be, required
to be registered under the Investment Company Act of 1940, as amended.
(viii) For federal income tax purposes the
Certificates will properly be characterized as indebtedness and for
purposes of Section 6.03(b)(vi) of the Pooling and Servicing Agreement
(a) the issuance of the Certificates will not adversely affect the tax
characterization as debt of Investor Certificates of any outstanding
Series or Class that were characterized as debt at the time of their
issuance, (b) following the issuance of the Certificates, the Trust
will not be an association (or publicly traded partnership) taxable as
a corporation and (c) the issuance of the Certificates will not cause
or constitute an event in which gain or loss would be recognized by
any Investor Certificateholder or the Trust. Although the foregoing
represents our views regarding the characteristics of the
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<PAGE> 12
Trust and the Certificates for federal income tax purposes, we call
your attention to the discussion of alternative characterizations and
risks discussed in the Base Prospectus under the heading "Federal
Income Tax Consequences."
(h) You shall have received from ___________________,
special counsel for the Underwriter[s], such opinion or opinions, dated the
Closing Date, with respect to such matters relating to this transaction as you
may require, and the Bank shall have furnished to such counsel such documents
as they request for the purpose of enabling them to pass upon such matters.
(i) You shall have received a certificate from the Bank,
dated the Closing Date, of two Vice Presidents or more senior officers of the
Bank in which such officers, to the best of their knowledge after reasonable
investigation, shall state that (u) the representations and warranties of the
Bank in this Agreement are true and correct in all material respects on and as
of the Closing Date, (v) the Bank has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date, (w) the representations and warranties of the
Bank, as a Seller and as Servicer, are true and correct as of the dates
specified in the Pooling and Servicing Agreement, (x) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are threatened by the
Commission, (y) nothing has come to such officers' attention that would lead
such officers to believe that the Registration Statement or the Prospectus, and
any amendment or supplement thereto, as of its date and as of the Closing Date,
contained an untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and (z)
subsequent to the date of the Prospectus, there has been no material adverse
change in the financial position or results of operation of the Bank's credit
card business except as set forth in or contemplated by the Prospectus or as
described in such certificate.
(j) You shall have received an opinion of White & Case,
counsel to the Trustee, addressed to you, dated the Closing Date, satisfactory
in form and substance to you and your counsel and substantially to the effect
that:
(i) The Trustee has been duly incorporated and
is validly existing as a banking corporation under the laws of the
State of New York and has the power and authority to enter into and to
perform all actions required of it under the Pooling and Servicing
Agreement and the Loan Agreement;
(ii) Each of the Pooling and Servicing
Agreement and the Loan Agreement has been duly authorized, executed
and delivered by the Trustee and constitutes a legal, valid and
binding obligation of the Trustee, enforceable against the Trustee in
accordance with its terms, except as such enforceability may be
limited by (y) bankruptcy, insolvency, liquidation, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights in general, as such laws would apply in the event
of a bankruptcy, insolvency, liquidation, reorganization, moratorium
or similar
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<PAGE> 13
occurrence affecting the Trustee, and (z) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(iii) The Certificates have been duly authenticated
and delivered by the Trustee;
(iv) The execution and delivery of the Pooling
and Servicing Agreement and the Loan Agreement by the Trustee and the
performance by the Trustee of their terms does not conflict with or
result in a violation of (y) any law or regulation of the United
States of America or the State of New York governing the banking or
trust powers of the Trustee, or (z) the Certificate of Incorporation
or By-Laws of the Trustee; and
(v) No approval, authorization or other action
by, or filing with, any governmental authority of the United States of
America or the State of New York having jurisdiction over the banking
or trust powers of the Trustee is required in connection with the
execution and delivery by the Trustee of the Pooling and Servicing
Agreement and the Loan Agreement or the performance by the Trustee
thereunder.
(k) You shall have received an opinion of counsel to each
CIA Lender, addressed to you, dated the Closing Date, satisfactory to you and
your counsel and substantially to the effect that:
(i) The CIA Lender is validly existing as a
______________ under the laws of the _______________ and is duly
licensed to ___________________________.
(ii) The Loan Agreement has been duly authorized
by all necessary corporate action on the part of the CIA Lender.
(iii) The Loan Agreement has been duly executed and
delivered by the CIA Lender and, assuming due authorization, execution
and delivery of the Loan Agreement by the other parties thereto,
constitutes the legal, valid and binding obligation of the CIA Lender
enforceable against the CIA Lender in accordance with its terms under
the laws of the State of New York, except as such enforceability may
be limited by (w) bankruptcy, insolvency, receivership,
conservatorship, reorganization, liquidation, moratorium or other
similar laws affecting the enforcement of creditor's rights and
remedies in general, as such laws would apply in the event of the
bankruptcy, insolvency, reorganization or liquidation of, or other
similar occurrence with respect to, the CIA Lender, or in the event of
any moratorium or similar occurrence affecting the CIA Lender, (x) the
principles of law or equity relating to fraud, (y) general principles
of equity, including, but not limited to, the availability of certain
equitable remedies and (z) the refusal of a court to enforce a
covenant to indemnify on grounds that such covenant is contrary to
public policy.
13
<PAGE> 14
(iv) The ____________________ of the CIA Lender is
duly licensed to do business in the State of __________ and is subject
to regulation by the United States and the State of ______________.
The CIA Lender is subject to service of process in the State of New
York.
(v) No consent, license (other than the license
referred to in paragraph (iv)), or approval of any governmental
authority, agency or instrumentality of the United States or the State
of New York is required in connection with the validity of, or the
execution, delivery, performance or enforceability of, the Loan
Agreement.
[(l) You shall have received an opinion of foreign counsel
to each CIA Lender addressed to you, dated the Closing Date, satisfactory to
you and your counsel and substantially to the effect that:
(i) The CIA Lender is a banking corporation duly
organized and validly existing under the laws of the relevant foreign
jurisdiction. The CIA Lender has the corporate power and authority to
execute, deliver and perform, through its _______________ Branch, its
obligations under the Loan Agreement.
(ii) The Loan Agreement has been duly authorized by
the CIA Lender and, when duly executed and delivered by an authorized
officer of the CIA Lender, will constitute the legal, valid and
binding obligation of the CIA Lender enforceable against the CIA
Lender in accordance with its terms, except as limited by bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar
laws affecting generally the enforcement of creditors' rights and
remedies as the same may be applied in the event of the bankruptcy,
insolvency, liquidation, reorganization or similar situation of the
CIA Lender or a moratorium applicable to the CIA Lender. The
obligations of the CIA Lender under the Loan Agreement will rank
equally with general deposits and all other unsecured indebtedness of
the CIA Lender whether now or hereafter outstanding which are not
contractually subordinated to the payment of such obligations.
(iii) Any final money judgment for a fixed and
definite sum by a competent New York Court or United States Court
sitting in New York obtained against the CIA Lender and based upon the
Loan Agreement should, upon request, be declared valid and enforceable
by the competent courts of the relevant foreign jurisdiction, if such
judgment is not subject to appeal and is enforceable according to the
laws of New York; provided, however, that such judgment will not be
enforced if its contents are in violation of fundamental principles of
the relevant foreign jurisdiction's legal system or if it has been
rendered in violation of such principles. Such counsel knows of no
reason why recognition of such judgment would be deemed or held to the
contrary to the relevant foreign jurisdiction's legal system. In
addition, enforcement may be refused if the foreign state does not
observe reciprocity. Reciprocity is affirmed with regard to decisions
of United States courts and of courts of the State of New York. As a
general rule it can be stated that decisions of United States courts
and of courts of the State of New York are enforceable in the relevant
foreign jurisdiction.
14
<PAGE> 15
(iv) The parties to the Loan Agreement will
alternatively be able to proceed against the CIA Lender's head office
in the relevant foreign jurisdiction, if the CIA Lender defaults in
its obligations under the Loan Agreement.]
(m) You shall have received evidence satisfactory to you
that the Class _ Certificates shall be rated ____ by Moody's Investors Service,
Inc. and ____ by Standard & Poor's Ratings Services and that the Class _
Certificates shall be rated no lower than __ by Moody's Investors Service, Inc.
and no lower than __ by Standard & Poor's Ratings Services.
The Bank will furnish you with such conformed copies of such
opinions, certificates, letters and documents as you reasonably request.
7. Indemnification and Contribution. (a) The Bank will indemnify
and hold harmless the Underwriter[s] against any losses, claims, damages or
liabilities, joint or several, to which the Underwriters may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein r necessary to make
the statements therein not misleading, and will reimburse the Underwriter[s]
for any legal or other expenses reasonably incurred by the Underwriter[s] in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Bank will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Bank by the Underwriter[s] specifically for use therein.
(b) The Underwriter[s] agree [,severally and not
jointly,] to indemnify and hold harmless the Bank against any losses, claims,
damages or liabilities to which the Bank may become subject, under the Act or
otherwise and will reimburse any legal or other expenses reasonably incurred by
the Bank in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the Bank
by the Underwriter[s] specifically for use therein, and will reimburse any
legal or other expenses reasonably incurred by the Bank in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred.
15
<PAGE> 16
(c) Promptly after receipt by an indemnified party under
this section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or (b) above. In
case any such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(d) If the indemnification provided for in this section
is unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Bank on the one hand and the Underwriter[s] on the other from the
offering of the Class _ Certificates, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Bank on the one hand and the
Underwriter[s] on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities as well as any
other relevant equitable considerations. The relative benefits received by the
Bank on the one hand and the Underwriter[s] on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) of the Class _ Certificates received by the Bank bear to
the total underwriting discounts and commissions received by the Underwriter[s]
with respect to the Class _ Certificates. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Bank or the
Underwriter[s] and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission with respect to the Class _ Certificates. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this subsection (d). Notwithstanding the provisions of this
subdivision (d), the Underwriter[s] shall not be required to contribute any
amount in excess of the amount by which the total price at which the Class _
Certificates underwritten by the Underwriter[s] and distributed to the public
were offered to the public exceeds the amount of any damages which the
Underwriter[s] have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission with respect to the
Class _ Certificates. No person guilty of fraudulent
16
<PAGE> 17
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Bank under this Section shall
be in addition to any liability which the Bank may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls the Underwriter[s] within the meaning of the Act; and the obligations
of the Underwriter[s] under this section shall be in addition to any liability
which the Underwriter[s] may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Bank, to each officer of the Bank
who has signed the Registration Statement and to each person, if any, who
controls the Bank within the meaning of the Act.
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Bank or their officers and of the Underwriter[s] set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made
by or on behalf of the Underwriter[s], the Bank or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Class _ Certificates. If this
Agreement is terminated or if for any reason other than default by the
Underwriter[s] the purchase of the Class _ Certificates by the Underwriter[s]
is not consummated, the Bank shall remain responsible for the expenses to be
paid by it pursuant to Section 5 and the respective obligations of the Bank and
the Underwriter[s] pursuant to Section 7 shall remain in effect. If for any
reason the purchase of the Class _Certificates by the Underwriter[s] is not
consummated other than solely because of the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 6(c), the Bank will reimburse the
Underwriter[s] for all out-of-pocket expenses reasonably incurred by them in
connection with the offering of the Class _ Certificates.
9. Computational Materials and ABS Term Sheets. (a) Each
Underwriter agrees to provide to the Bank, not less than two Business Days
prior to the date on which the Bank is required to file the Prospectus
Supplement pursuant to Rule 424(b), any information used by it (in such written
or electronic format as required by the Bank) with respect to the offering of
the Class _ Certificates that constitutes "Computational Materials," as defined
in the Commission's No-Action Letter, dated May 20, 1994, addressed to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated and Kidder
Structured Asset Corporation (as made generally applicable to registrants,
issuers and underwriters by the Commission's response to the request of the
Public Securities Association dated May 27, 1994 (the "Kidder/PSA Letter")),
that is not contained in the Prospectus (without taking into account
information incorporated therein by reference).
(b) Each Underwriter agrees to provide to the Bank, not
less than two Business Days prior to the date on which the Bank is required to
file the Prospectus Supplement pursuant to Rule 424(b), any information used by
it (in such written or electronic format as required by the Bank) with respect
to the offering of the Class _ Certificates that constitutes "ABS Term Sheets",
as defined in the Commission's No-Action Letter, dated February 17, 1995,
17
<PAGE> 18
addressed to the Public Securities Association, that is not contained in the
Prospectus (without taking into account information incorporated therein by
reference).
(c) Each Underwriter severally agrees, assuming all
information provided by the Bank is accurate and complete in all material
respects, to indemnify and hold harmless the Bank, each of the officers and
directors of the Bank and each person who controls the Bank within the meaning
of Section 15 of the Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of a material fact contained in the Computational Materials or ABS Term Sheets,
if any, provided by the Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such loss, claim, damage, liability or
action as such expenses are incurred. The obligations of the Underwriter under
this Section 9(c) shall be in addition to any liability that the Underwriter
may otherwise have.
The procedures set forth in Sections 7(c) and 7(d) shall be
equally applicable to this Section 9(c).
10. Notices. All communications hereunder will be in writing and,
if sent to the Underwriter[s], will be mailed, delivered or telegraphed and
confirmed to:
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13. Financial Services Act. Each Underwriter represents and
warrants to, and agrees with, the Bank that (w) it has complied and shall
comply with all applicable provisions of the Financial Services Act 1986 and
the Public Offers of Securities Regulations 1995 (the "Regulations") with
respect to anything done by it in relation to the Class _ Certificates in, from
or otherwise involving the United Kingdom; (x) it has only issued or passed on
and shall only issue or pass on in the United Kingdom any document received by
it in connection with the issue of the Class _ Certificates to a person who is
of a kind described in Article 9(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or who is a person to whom
the document may otherwise lawfully be issued or passed on; (y) it has not
offered or sold and, during the period of six months from the date hereof, will
not offer or sell any Class _ Certificate to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing, or disposing of investments (as principal or agent) for the
18
<PAGE> 19
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Regulations.
19
<PAGE> 20
If you are in agreement with the foregoing, please sign two
counterparts hereof and return one to the Bank whereupon this letter and your
acceptance shall become a binding agreement among the Bank and the
Underwriter[s].
Very truly yours,
FLEET BANK (RI),
NATIONAL ASSOCIATION
By
--------------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof
as [Representative of the]
Underwriter[s] set forth herein
By
--------------------------
Name:
Title:
20
<PAGE> 21
SCHEDULE A
<TABLE>
<CAPTION>
Class _ Certificates
--------------------
Principal Amount of
Underwriters Class _ Certificates
------------ --------------------
<S> <C>
</TABLE>
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
COLONIAL NATIONAL BANK USA,
Seller and Servicer,
and
BANKERS TRUST COMPANY,
Trustee
ADVANTA CREDIT CARD MASTER TRUST II
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1993
As Amended and Restated on May 23, 1994
<PAGE> 2
Page
TABLE OF CONTENTS
ARTICLE I
Definitions
Section 1.01. Definitions................................................ 1
Section 1.02. Other Definitional Provisions.............................. 21
ARTICLE II
Conveyance of Receivables
Section 2.01. Conveyance of Receivables.................................. 23
Section 2.02. Acceptance by Trustee...................................... 24
Section 2.03. Representations and Warranties of the Sellers
Relating to the Sellers.................................... 25
Section 2.04. Representations and Warranties of the Sellers
Relating to the Agreement and Any Supplement
and the Receivables........................................ 27
Section 2.05. Reassignment of Ineligible Receivables..................... 29
Section 2.06. Reassignment of Receivables in Trust Portfolio............. 30
Section 2.07. Covenants of the Sellers................................... 31
Section 2.08. Addition of Accounts....................................... 33
Section 2.09. Removal of Accounts and Participation Interests............ 37
Section 2.10. Account Allocations........................................ 38
Section 2.11. Discount Option............................................ 39
ARTICLE III
Administration and Servicing
of Receivables
Section 3.01. Acceptance of Appointment and Other Matters Relating
to the Servicer............................................ 41
Section 3.02. Servicing Compensation..................................... 42
Section 3.03. Representations, Warranties and Covenants of the
Servicer................................................... 42
Section 3.04. Reports and Records for the Trustee........................ 46
Section 3.05. Annual Certificate of Servicer............................. 46
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available................... 46
Section 3.07. Tax Treatment.............................................. 47
<PAGE> 3
Page
Section 3.08. Notices to Colonial........................................ 47
Section 3.09. Adjustments................................................ 47
Section 3.10. Reports to the Commission.................................. 48
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
Section 4.01. Rights of Certificateholders............................... 49
Section 4.02. Establishment of Collection Account and Excess
Funding Account............................................ 49
Section 4.03. Collections and Allocations................................ 51
Section 4.04. Shared Principal Collections............................... 52
Section 4.05. Allocation of Trust Assets to Series or Groups
ARTICLE V
Distributions and Reports to
Certificateholders
ARTICLE VI
The Certificates
Section 6.01. The Certificates........................................... 55
Section 6.02. Authentication of Certificates............................. 55
Section 6.03. New Issuances.............................................. 56
Section 6.04. Registration of Transfer and Exchange of Certificates...... 57
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates.......... 60
Section 6.06. Persons Deemed Owners...................................... 61
Section 6.07. Appointment of Paying Agent................................ 61
Section 6.08. Access to List of Registered Certificateholders'
Names and Addresses........................................ 62
Section 6.09. Authenticating Agent....................................... 62
Section 6.10. Book-Entry Certificates.................................... 63
Section 6.11. Notices to Clearing Agency................................. 64
Section 6.12. Definitive Certificates.................................... 64
Section 6.13. Global Certificate; Exchange Date.......................... 65
Section 6.14. Meetings of Certificateholders............................. 66
Section 6.15. Uncertificated Classes..................................... 69
ARTICLE VII
<PAGE> 4
Page
Other Matters Relating to the Sellers
Section 7.01. Liability of the Sellers................................... 70
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Sellers................................ 70
Section 7.03. Limitations on Liability of the Sellers.................... 71
Section 7.04. Liabilities................................................ 71
ARTICLE VIII
Other Matters Relating to the Servicer
Section 8.01. Liability of the Servicer.................................. 73
Section 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer............................... 73
Section 8.03. Limitation on Liability of the Servicer and Others......... 73
Section 8.04. Servicer Indemnification of the Trust and the Trustee...... 74
Section 8.05. The Servicer Not To Resign................................. 74
Section 8.06. Access to Certain Documentation and Information
Regarding the Receivables.................................. 75
Section 8.07. Delegation of Duties....................................... 75
Section 8.08. Examination of Records..................................... 76
ARTICLE IX
Pay Out Events
Section 9.01. Trust Pay Out Events....................................... 77
Section 9.02. Additional Rights Upon the Occurrence of Certain Events.... 77
ARTICLE X
Servicer Defaults
Section 10.01. Servicer Defaults.......................................... 79
Section 10.02. Trustee To Act, Appointment of Successor................... 81
Section 10.03. Notification to Certificateholders......................... 83
ARTICLE XI
The Trustee
<PAGE> 5
Page
Section 11.01. Duties of Trustee.......................................... 84
Section 11.02. Certain Matters Affecting the Trustee...................... 85
Section 11.03. Trustee Not Liable for Recitals in Certificates............ 87
Section 11.04. Trustee May Own Certificates............................... 87
Section 11.05. The Servicer To Pay Trustee's Fees and Expenses............ 87
Section 11.06. Eligibility Requirements for Trustee....................... 87
Section 11.07. Resignation or Removal of Trustee.......................... 88
Section 11.08. Successor Trustee.......................................... 88
Section 11.09. Merger or Consolidation of Trustee......................... 89
Section 11.10. Appointment of Co-Trustee or Separate Trustee.............. 89
Section 11.11. Tax Returns................................................ 90
Section 11.12. Trustee May Enforce Claims Without Possession
of Certificates............................................ 91
Section 11.13. Suits for Enforcement...................................... 91
Section 11.14. Rights of Certificateholders To Direct Trustee............. 92
Section 11.15. Representations and Warranties of Trustee.................. 92
Section 11.16. Maintenance of Office or Agency............................ 93
ARTICLE XII
Termination
Section 12.01. Termination of Trust....................................... 94
Section 12.02. Final Distribution......................................... 94
Section 12.03. Sellers' Termination Rights................................ 95
Section 12.04. Defeasance................................................. 95
Section 12.05. Optional Purchase.......................................... 97
ARTICLE XIII
Miscellaneous Provisions
Section 13.01. Amendment; Waiver of Past Defaults......................... 99
Section 13.02. Protection of Right, Title and Interest to Trust........... 100
Section 13.03. Limitation on Rights of Certificateholders................. 101
Section 13.04. Governing Law.............................................. 102
Section 13.05. Notices; Payments.......................................... 102
Section 13.06. Rule 144A Information...................................... 103
Section 13.07. Severability of Provisions................................. 103
Section 13.08. Assignment................................................. 104
Section 13.09. Certificates Nonassessable and Fully Paid.................. 104
Section 13.10. Further Assurances......................................... 104
Section 13.11. Nonpetition Covenant....................................... 104
Section 13.12. No Waiver; Cumulative Remedies............................. 104
Section 13.13. Counterparts............................................... 104
Section 13.14. Third-Party Beneficiaries.................................. 105
<PAGE> 6
Page
Section 13.15. Actions by Certificateholders.............................. 105
Section 13.16. Merger and Integration..................................... 105
Section 13.17. Headings................................................... 105
Section 13.18. Construction of Agreement.................................. 105
EXHIBITS
Exhibit A Form of Bank Certificate
Exhibit B Form of Assignment of Receivables in Additional Accounts
Exhibit C Form of Reassignment of Receivables in Removed Accounts
Exhibit D Form of Annual Servicer's Certificate
Exhibit E-1 Private Placement Legend
Exhibit E-2 Representation Letter
Exhibit E-3 ERISA Legend
Exhibit F-1 Form of Certificate of Foreign Clearing Agency
Exhibit F-2 Form of Alternate Certificate to be delivered to Foreign
Clearing Agency
Exhibit F-3 Form of Certificate to be delivered to Foreign Clearing Agency
Exhibit G-1 Form of Opinion of Counsel with respect to Amendments
Exhibit G-2 Form of Opinion of Counsel with respect to Accounts
SCHEDULES
Schedule 1 List of Accounts [Deemed Incorporated]
<PAGE> 7
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT dated and effective
as of December 1, 1993, as amended and restated on May 23, 1994, among
COLONIAL NATIONAL BANK USA, a national banking association, as Seller and
Servicer, and BANKERS TRUST COMPANY, a New York banking corporation, as
Trustee.
WHEREAS, Colonial National Bank USA ("Colonial"), as Seller and Servicer,
and the Trustee entered into that certain Pooling and Servicing Agreement dated
as of December 1, 1993 (the "Original Pooling and Servicing Agreement"); and
WHEREAS, Colonial, as Seller and Servicer, and the Trustee desire to amend
and restate the Original Pooling and Servicing Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the Original Pooling and Servicing Agreement is hereby amended and
restated in its entirety as follows and each party agrees as follows for the
benefit of the other parties, the Certificateholders and any Series Enhancer (to
the extent provided herein and in any Supplement):
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings, and the definitions of such
terms are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter genders of such
terms.
"Account" shall mean each Initial Account and each Additional Account, but
shall exclude any Account all the Receivables in which are either reassigned or
assigned to a Seller or its designee or the Servicer in accordance with the
terms of this Agreement. The definition of Account shall include each account
into which an Account is transferred (a "Transferred Account"); provided that
(i) such transfer is made in accordance with the Credit Card Guidelines and (ii)
such Transferred Account can be traced or identified, by reference to or by way
of the computer files or microfiche lists delivered to the Trustee pursuant to
Section 2.01 or 2.08, as an account into which an Account has been transferred.
The term "Account" shall be deemed to refer to an Additional Account only from
and after the Addition Date with respect thereto, and the term "Account" shall
be deemed to refer to any Removed Account only prior to the Removal Date with
respect thereto.
<PAGE> 8
"Accumulation Period" shall mean, with respect to any Series, or any Class
within a Series, a period following the Revolving Period, which shall be the
accumulation or other period in which Collections of Principal Receivables are
accumulated in an account for the benefit of the Investor Certificateholders of
such Series, or a Class within such Series, in each case as defined for such
Series in the related Supplement.
"Act" shall mean the Securities Act of 1933, as amended.
"Addition" shall mean the designation of additional Eligible Accounts to
be included as Accounts or of Participation Interests to be included as Trust
Assets pursuant to subsection 2.08(a), (b) or (d).
"Additional Account" shall mean each consumer revolving credit card
account or other revolving credit account established pursuant to a Cardholder
Agreement, which account is designated pursuant to subsection 2.08(a), (b) or
(d) to be included as an Account and is identified in a computer file or
microfiche list delivered to the Trustee by the applicable Seller pursuant to
Sections 2.01 and 2.08.
"Additional Seller" shall have the meaning specified in subsection
2.08(e).
"Addition Cut-Off Date" shall mean, with respect to any Additional
Accounts or Participation Interests to be included in the Trust, the date
specified in the related Assignment.
"Addition Date" shall mean (a) with respect to Additional Accounts, the
date on which the Receivables in such Additional Accounts are conveyed to the
Trust pursuant to subsection 2.08(a), (b) or (d) and (b) with respect to
Participation Interests, the date from and after which such Participation
Interests are to be included as Trust Assets pursuant to subsection 2.08(a) or
(b).
"Adverse Effect" shall mean, with respect to any action, that such action
will (a) result in the occurrence of a Pay Out Event with respect to any Series
or (b) materially adversely affect the amount or timing of distributions to be
made to the Investor Certificateholders of any Series or Class pursuant to this
Agreement and the related Supplement.
"Affiliate" shall mean, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" shall mean the power to
direct the management and policies of a Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Aggregate Investor Amount" shall mean, as of any date of determination,
the sum of (i) the aggregate Investor Amounts of all Series of Certificates
issued and outstanding on such date of determination and (ii) the sum of the
Enhancement Investor Amounts, if any, for all outstanding Series on such date of
determination.
<PAGE> 9
"Aggregate Series Percentage" shall mean, with respect to Principal
Receivables, Defaulted Receivables and Finance Charge Receivables and any date
of determination, the sum of the Series Percentages for such categories of
Receivables for all outstanding Series on such date of determination; provided,
however, that the Aggregate Series Percentage shall not exceed 100%.
"Agreement" shall mean this Pooling and Servicing Agreement and all
amendments hereof and supplements hereto, including, with respect to any Series
or Class, the related Supplement.
"Amortization Period" shall mean, with respect to any Series, or any Class
within a Series, a period following the Revolving Period, which shall be the
controlled amortization period, the principal amortization period, the rapid
amortization period, the optional amortization period, the limited amortization
period or other amortization period, in each case as defined with respect to
such Series in the related Supplement.
"Applicants" shall have the meaning specified in Section 6.08.
"Appointment Date" shall have the meaning specified in subsection 9.02(a).
"Assignment" shall have the meaning specified in subsection 2.08(c)(vii).
"Authorized Newspaper" shall mean any newspaper or newspapers of general
circulation in the Borough of Manhattan, The City of New York, or Philadelphia,
Pennsylvania, printed in the English language (and, with respect to any Series
or Class, if and so long as the Investor Certificates of such Series or Class
are listed on the Luxembourg Stock Exchange and such exchange shall so require,
in Luxembourg, printed in any language satisfying the requirements of such
exchange) and customarily published on each business day at such place, whether
or not published on Saturdays, Sundays or holidays.
"Automatic Additional Account" shall have the meaning specified in
subsection 2.08(d)(i).
"Bank Certificate" shall mean the certificate executed by Colonial and
authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit A, as the same may be modified in accordance with subsection 2.08(e).
"Bearer Certificates" shall have the meaning specified in Section 6.01.
"Benefit Plan" shall have the meaning specified in subsection 6.04(c).
"Book-Entry Certificates" shall mean beneficial interests in the Investor
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 6.10.
"Business Day" shall mean any day other than (a) a Saturday or Sunday or
(b) any other day on which banks in New York, New York, Philadelphia,
Pennsylvania, or Claymont,
<PAGE> 10
Delaware (or, with respect to any Series, any additional city specified in the
related Supplement) or any other State in which the principal executive offices
of Colonial or any Additional Seller are located, are authorized or obligated by
law, executive order or governmental decree to be closed.
"Cardholder Agreement" shall mean, with respect to an Account, the
agreements between Colonial or any Additional Seller, as the case may be, and
the related Obligor, governing the terms and conditions of such Account, as such
agreements may be amended, modified or otherwise changed from time to time and
as distributed (including any amendments and revisions thereto) to holders of
such Account.
"Cash Advance Fees" shall have the meaning specified in the Cardholder
Agreement applicable to each Account for cash advance fees or similar terms.
"CEDEL" shall mean Centrale de Livraison de Valeurs Mobilieres S.A.
"Certificate" shall mean any one of the Investor Certificates or the
Seller Certificates.
"Certificateholder" or "Holder" shall mean an Investor Certificateholder
or a Person in whose name any one of the Seller Certificates is registered.
"Certificateholders' Interest" shall have the meaning specified in Section
4.01.
"Certificate Owner" shall mean, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Certificate Rate" shall mean, with respect to any Series or Class, the
certificate rate specified therefor in the related Supplement.
"Certificate Register" shall mean the register maintained pursuant to
Section 6.04, providing for the registration of the Registered Certificates and
the Seller Certificates and transfers and exchanges thereof.
"Class" shall mean, with respect to any Series, any one of the classes of
Investor Certificates of that Series.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the closing date
specified in the related Supplement.
<PAGE> 11
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collection Account" shall have the meaning specified in Section 4.02.
"Collections" shall mean all payments by or on behalf of Obligors
(including Insurance Proceeds) received in respect of the Receivables, in the
form of cash, checks (to the extent collected), wire transfers, electronic
transfers, ATM transfers or other form of payment in accordance with the
Cardholder Agreement in effect from time to time. All Recoveries will be treated
as Collections of Finance Charge Receivables. Collections with respect to any
Monthly Period shall include a portion, calculated pursuant to subsection
2.07(i), of Interchange paid to the Trust with respect to such Monthly Period,
to be applied as if such amount were Collections of Finance Charge Receivables
for all purposes. As specified in any Participation Interest Supplement or
Supplement, Collections shall include amounts received with respect to
Participation Interests.
"Colonial" shall mean Colonial National Bank USA, a national banking
association.
"Commission" shall have the meaning specified in subsection 3.01(b).
"Companion Series" shall mean (i) each Series which has been paired with
another Series (which Series may be prefunded or partially prefunded), such that
the reduction of the Investor Amount of such Series results in the increase of
the Investor Amount of such other Series, as described in the related
Supplements, and (ii) such other Series.
"Contractually Delinquent" with respect to an Account, shall mean an
Account as to which the required minimum payment set forth on the related
billing statement has not been received by the due date thereof.
"Corporate Trust Office" shall mean the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of the execution of this Agreement is located at Four
Albany Street, New York, New York, 10006, Attention: Corporate Trust and Agency
Group/Structured Finance Group.
"Coupon" shall have the meaning specified in Section 6.01.
"Credit Card Guidelines" shall mean the written policies and procedures of
Colonial or any Additional Seller, as the case may be, relating to the operation
of its consumer revolving lending business, including, without limitation, the
written policies and procedures for determining the creditworthiness of credit
card account customers, the extension of credit to credit card account customers
and relating to the maintenance of credit card accounts and collection of
receivables with respect thereto, as such policies and procedures may be
amended, modified, or otherwise changed from time to time.
"Date of Processing" shall mean, with respect to any transaction or
receipt of Collections, the Business Day such transaction or receipt of
Collections is first recorded on the Servicer's computer file of consumer
revolving credit card accounts (without regard to the effective date of such
recordation).
<PAGE> 12
"Defaulted Amount" shall mean, 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 a Seller or the Servicer became obligated to accept reassignment or
assignment in accordance with the terms of this Agreement during such Monthly
Period; provided, however, that, if an Insolvency Event occurs with respect to
any Seller, the amount of such Defaulted Receivables which are subject to
reassignment to such Seller in accordance with the terms of this Agreement shall
not be added to the sum so subtracted and, if any of the events described in
subsection 10.01(d) occur with respect to the Servicer, the amount of such
Defaulted Receivables which are subject to reassignment or assignment to the
Servicer in accordance with the terms of this Agreement shall not be added to
the sum so subtracted.
"Defaulted Receivables" shall mean, with respect to any Monthly Period,
all Principal Receivables which are charged off as uncollectible in such Monthly
Period in accordance with the Credit Card Guidelines and the Servicer's
customary and usual servicing procedures for servicing 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 186 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 applicable Credit Card Guidelines.
"Defeasance" shall have the meaning specified in subsection 12.04(a).
"Defeased Series" shall have the meaning specified in subsection 12.04(a).
"Definitive Certificates" shall have the meaning specified in Section
6.10.
"Definitive Euro-Certificates" shall have the meaning specified in Section
6.13.
"Depositaries" shall mean the Person specified in the applicable
Supplement, in its capacity as depositary for the respective accounts of any
Clearing Agency or any Foreign Clearing Agencies.
"Depository Agreement" shall mean, if applicable with respect to any
Series or Class, the agreement among the Sellers, the Trustee and a Clearing
Agency, or as otherwise provided in the related Supplement.
"Determination Date" shall mean, unless otherwise specified in the related
Supplement, with respect to any Distribution Date, the third Business Day
preceding such Distribution Date.
"Discount Option Date" shall mean each date on which a Discount Percentage
designated by the Sellers pursuant to Section 2.11 takes effect.
<PAGE> 13
"Discount Option Receivables" shall have the meaning specified in Section
2.11. The aggregate amount of Discount Option Receivables outstanding on any
Date of Processing occurring on or after the Discount Option Date shall equal
the sum of (a) the aggregate Discount Option Receivables at the end of the prior
Date of Processing (which amount, prior to the Discount Option Date, shall be
zero) plus (b) any new Discount Option Receivables created on such Date of
Processing minus (c) any Discount Option Receivables Collections received on
such Date of Processing. Discount Option Receivables created on any Date of
Processing shall mean the product of the amount of any Principal Receivables
created on such Date of Processing (without giving effect to the proviso in the
definition of Principal Receivables) and the Discount Percentage.
"Discount Option Receivable Collections" shall mean on any Date of
Processing occurring in any Monthly Period succeeding the Monthly Period in
which the Discount Option Date occurs, the product of (a) a fraction the
numerator of which is the Discount Option Receivables and the denominator of
which is the sum of the Principal Receivables and the Discount Option
Receivables in each case (for both the numerator and the denominator) at the end
of the preceding Monthly Period and (b) Collections of Principal Receivables on
such Date of Processing (without giving effect to the proviso in the definition
of Principal Receivables).
"Discount Percentage" shall mean the percentages, if any, designated by
the Sellers pursuant to Section 2.11.
"Distribution Date" shall mean, unless otherwise defined in a Supplement
with respect to a Series, the fifteenth day of each calendar month or, if such
fifteenth day is not a Business Day, the next succeeding Business Day.
"Dollars", "$" or "U.S. $" shall mean United States Dollars.
"Eligible Account" shall mean a revolving credit card account owned by
Colonial, in the case of the Initial Accounts, or Colonial or any Additional
Seller, in the case of Additional Accounts, which accounts are identified by
Colonial as of the Trust Cut-Off Date with respect to an Initial Account or by
Colonial or any Additional Seller as of the related Addition Cut-Off Date with
respect to an Additional Account as having the following characteristics:
is in existence and maintained by Colonial, in the case of the
Initial Accounts, or Colonial or any Additional Seller, in the case of
Additional Accounts;
is payable in Dollars;
except as provided below, has not been identified as an account the
credit card or cards with respect to which have been reported to Colonial
or the applicable Additional Seller as having been lost or stolen;
the Obligor of which has provided, as his or her billing address, an
address located in the United States (or its territories or possessions or
a military address);
<PAGE> 14
has an Obligor who has not been identified by Colonial or the
applicable Additional Seller as an employee of Colonial or such Additional
Seller or any Affiliate of either thereof;
except as provided below, does not have any Receivables which are
Defaulted Receivables; and
except as provided below, does not have any Receivables which have
been identified by Colonial or the applicable Additional Seller or the
relevant Obligor as having been incurred as a result of fraudulent use of
any related credit card.
Eligible Accounts may include Accounts, the Receivables of which have been
written off, or with respect to which the related Seller 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 to such Seller as lost
or stolen, in each case as of the Trust Cut-Off Date, with respect to the
Initial Accounts, and as of the related Addition Cut-Off Date, with respect to
Additional Accounts; provided that (a) the balance of all Receivables included
in such Accounts is reflected on the books and records of such Seller (and is
treated for purposes of this Agreement) as "zero", and (b) charging privileges
with respect to all such Accounts have been canceled in accordance with the
relevant Credit Card Guidelines.
"Eligible Deposit Account" shall mean either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the 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.
"Eligible Institution" shall mean (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) a long-term unsecured debt
rating of A1 or better by 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 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 for the purposes of this definition.
"Eligible Investments" shall mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
direct obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America;
demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions
or trust companies
<PAGE> 15
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;
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 each Rating Agency in its highest investment category;
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;
investments in money market funds rated in the highest investment
category by each Rating Agency or otherwise approved in writing by each
Rating Agency;
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
any other investments approved in writing by each Rating Agency.
"Eligible Receivable" shall mean each Receivable:
which has arisen under an Eligible Account;
which was created in compliance with all Requirements of Law
applicable to the Seller that transferred such Receivable to the Trust,
the failure to comply with which would have a material adverse effect on
Investor Certificateholders, and pursuant to a Cardholder Agreement which
complies with all Requirements of Law applicable to such Seller, the
failure to comply with which would have a material adverse effect on
Investor Certificateholders;
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 such Seller in connection
with the creation of such Receivable or the execution, delivery and
performance by such Seller of its obligations, if any, under the related
Cardholder Agreement have been duly obtained or given and are in full
force and effect as of such date of creation of such Receivable;
as to which, at the time of its transfer to the Trust, such Seller
or the Trust will have good and marketable title thereto, free and clear
of all Liens (other than any Lien for municipal or other local taxes if
such taxes are not then due and payable or if such Seller is then
contesting the validity thereof in good faith by appropriate proceedings
and has set aside on its books adequate reserves with respect thereto);
<PAGE> 16
which has been the subject of either a valid transfer and assignment
from such Seller to the Trust of all such Seller's right, title and
interest therein or the grant of a first priority perfected security
interest therein (and in the proceeds thereof), effective until the
termination of the Trust;
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);
which constitutes either an "account" or a "general intangible"
under and as defined in Article 9 of the UCC;
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;
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 Section 3.09 to make an adjustment;
as to which, at the time of its transfer to the Trust, such Seller
has satisfied all obligations to be fulfilled by such Seller at the time
it is transferred to the Trust; and
as to which, at the time of its transfer to the Trust, such Seller
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.
"Eligible Servicer" shall mean the Trustee, or if the Trustee is not
acting as Servicer, an entity which, at the time of its appointment as Servicer,
(a) is servicing a portfolio of revolving credit card accounts, (b) is legally
qualified and has the capacity to service the Accounts, (c) is qualified to use
the software that is then being used to service the Accounts or obtains the
right to use, or has its own software, which is adequate to perform its duties
under this Agreement, (d) has demonstrated the ability to professionally and
competently service a portfolio of similar accounts in accordance with high
standards of skill and care, and (e) has a net worth of at least $50,000,000 as
of the end of its most recent fiscal quarter.
"Enhancement Agreement" shall mean any agreement, instrument or document
governing the terms of any Series Enhancement or pursuant to which any Series
Enhancement is issued or outstanding.
<PAGE> 17
"Enhancement Investor Amount" shall have the meaning, if applicable with
respect to any Series, specified in the related Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Excess Funding Account" shall have the meaning specified in Section 4.02.
"Excess Funding Amount" shall mean the amount on deposit in the Excess
Funding Account.
"Exchange Date" shall mean, with respect to any Series, any date that is
after the related Closing Date, in the case of Definitive Euro-Certificates in
registered form, or upon presentation of certification of non-United States
beneficial ownership (as described in Section 6.13), in the case of Definitive
Euro-Certificates in bearer form.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor.
"Finance Charge Receivables" shall mean all amounts billed to the Obligors
on any Account in respect of (i) Periodic Finance Charges, (ii) annual
membership fees and annual service charges, (iii) Late Fees, (iv) Overlimit
Fees, (v) Cash Advance Fees, (vi) Discount Option Receivables, if any, and (vii)
all other fees and charges with respect to the Accounts designated by the Seller
to be included as Finance Charge Receivables. All Recoveries will be treated as
Collections of Finance Charge Receivables. Collections of Finance Charge
Receivables with respect to any Monthly Period shall be deemed to include
Interchange as calculated pursuant to the related Supplement for any Series.
Finance Charge Receivables shall also include the interest portion of
Participation Interests as shall be determined pursuant to the applicable
Participation Interest Supplement or Supplement.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.
"Foreign Clearing Agency" shall mean CEDEL and the Euroclear Operator.
"Global Certificate" shall have the meaning specified in subsection
6.13(a).
"Governmental Authority" shall mean the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" shall mean, with respect to any Series, the group of Series, if
any, in which the related Supplement specifies such Series is to be included.
"Ineligible Receivables" shall have the meaning specified in subsection
2.05(a).
<PAGE> 18
"Initial Account" shall mean each MasterCard(R) and VISA(R)(1) account
established pursuant to a Cardholder Agreement between Colonial and any Person,
and identified by account number and by the Receivable balance in a computer
file or microfiche list delivered to the Trustee by Colonial on or prior to the
Initial Closing Date pursuant to Section 2.01.
"Initial Closing Date" shall mean December 9, 1993.
"Insolvency Event" shall have the meaning specified in subsection
9.01(a)(i).
"Insolvency Proceeds" shall have the meaning specified in subsection
9.02(b).
"Insurance Proceeds" shall mean any amounts recovered by the Servicer
pursuant to any credit insurance policies covering any Obligor with respect to
Receivables under such Obligor's Account.
"Interchange" shall mean interchange fees payable to any Seller, in its
capacity as credit card issuer, through VISA or MasterCard in connection with
cardholder charges for goods, services, and cash advances, as calculated
pursuant to the related Supplement for any Series.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended from time to time.
"Investor Amount" shall mean, with respect to any Series and for any date,
an amount equal to the Investor Amount specified in the related Supplement.
"Investor Certificateholder" shall mean the Person in whose name a
Registered Certificate is registered in the Certificate Register or the bearer
of any Bearer Certificate (or the Global Certificate, as the case may be) or
Coupon.
"Investor Certificates" shall mean any certificated or uncertificated
interest in the Trust designated as, or deemed to be, an "Investor Certificate"
in the related Supplement.
"Late Fees" shall have the meaning specified in the Cardholder Agreement
applicable to each Account for late fees or similar terms.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, participation or equity interest, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any jurisdiction to
evidence any of the
(1) MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and of VISA USA, Inc., respectively.
<PAGE> 19
foregoing, excluding any lien or filing pursuant to this Agreement; provided,
however, that any assignment or transfer pursuant to subsection 6.03(c) or (d)
or Section 7.02 shall not be deemed to constitute a Lien.
"Manager" shall mean the lead manager, manager or co-manager or Person
performing a similar function with respect to an offering of Definitive
Euro-Certificates.
"MasterCard" shall mean MasterCard International Incorporated.
"Monthly Period" shall mean, with respect to each Distribution Date,
unless otherwise provided in a Supplement, the period from and including the
first day of the preceding calendar month to and including the last day of such
calendar month; provided, however, that the initial Monthly Period with respect
to any Series will commence on the Closing Date with respect to such Series.
"Monthly Servicing Fee" shall have the meaning specified in Section 3.02.
"Moody's" shall mean Moody's Investors Service, Inc., or its successor.
"Notices" shall have the meaning specified in subsection 13.05(a).
"Obligor" shall mean, with respect to any Account, the Person or Persons
obligated to make payments with respect to such Account, including any guarantor
thereof, but excluding any merchant.
"Officer's Certificate" shall mean, unless otherwise specified in this
Agreement, a certificate delivered to the Trustee signed by the Chairman of the
Board, President, any Vice President or the Treasurer of a Seller or the
Servicer, as the case may be.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be
counsel for, or an employee of, the Person providing the opinion and who shall
be reasonably acceptable to the Trustee.
"Overlimit Fees" shall have the meaning specified in the Cardholder
Agreement applicable to each Account for overlimit fees or similar terms if such
fees are provided for with respect to such Account.
"Participating Seller" shall have the meaning specified in subsection
2.08(c)(i).
"Participation Interests" shall have the meaning specified in subsection
2.08(a)(ii).
"Participation Interest Supplement" shall mean a Supplement entered into
pursuant to subsections 2.08(a)(ii) and 13.01(a) in connection with the
conveyance of Participation Interests to the Trust.
<PAGE> 20
"Paying Agent" shall mean any paying agent and co-paying agent appointed
pursuant to Section 6.07 and shall initially be the Trustee; provided, that if
the Supplement for a Series so provides, a Paying Agent may be appointed with
respect to such Series.
"Pay Out Event" shall mean, with respect to each Series, a Trust Pay Out
Event or a Series Pay Out Event.
"Periodic Finance Charges" shall have the meaning specified in the
Cardholder Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.
"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Principal Receivable" shall mean all amounts charged by Obligors for
merchandise and services and cash advances, but shall not include Finance Charge
Receivables or Defaulted Receivables; provided, however, that after the Discount
Option Date, Principal Receivables on any Date of Processing thereafter shall
mean Principal Receivables as otherwise determined pursuant to this definition
minus the amount of any Discount Option Receivables. Principal Receivables shall
also include the principal portion of Participation Interests as shall be
determined pursuant to the applicable Participation Interest Supplement or
Supplement. In calculating the aggregate amount of Principal Receivables on any
day, the amount of Principal Receivables shall be reduced by the aggregate
amount of credit balances in the Accounts on such day. Any Receivables which the
related Seller is unable to transfer as provided in Section 2.10 shall not be
included in calculating the aggregate amount of Principal Receivables, except to
the extent so provided in Section 2.10.
"Principal Sharing Series" shall mean a Series that, pursuant to the
Supplement therefor, is entitled to receive Shared Principal Collections.
"Principal Shortfalls" shall have the meaning specified in Section 4.04.
"Principal Terms" shall mean, with respect to any Series, (i) the name or
designation; (ii) the Initial Investor Amount, the Series Investor Amount and
the Series Invested Amount (or method for calculating such amounts); (iii) the
Certificate Rate (or method for the determination thereof); (iv) the payment
date or dates and the date or dates from which interest shall accrue; (v) the
method for allocating Collections to Certificateholders of such Series; (vi) the
designation of any Series Accounts 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 Investor Certificates of such Series may be
exchanged for Investor Certificates of another Series, repurchased by the
Sellers or remarketed to other investors; (x) the Series Termination Date; (xi)
the number of Classes of Investor Certificates 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 Investor Certificates of such Series will
be issuable in temporary or permanent global form (and, in such case, the
depositary for such Global Certificate or Certificates, the terms and
conditions, if any, upon which such Global
<PAGE> 21
Certificate may be exchanged, in whole or in part, for Definitive Certificates,
and the manner in which any interest payable on a temporary or Global
Certificate will be paid); (xiii) whether the Investor Certificates of such
Series may be issued 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.
"Rating Agency" shall mean, with respect to any outstanding Series or
Class, each statistical rating agency selected by the Sellers to rate the
Investor Certificates of such Series or Class, as specified in the related
Supplement.
"Rating Agency Condition" shall mean, with respect to any action, that
each Rating Agency shall have notified the Sellers in writing that such action
will not result in a reduction or withdrawal of the rating of any outstanding
Series or Class with respect to which it is a Rating Agency.
"Reassignment" shall have the meaning specified in Section 2.09.
"Receivable" shall mean any amount owing by the Obligor under an Account
from time to time, including amounts owing for Principal Receivables and Finance
Charge Receivables. A Receivable shall be deemed to have been created at the end
of the day on the Date of Processing of such Receivable. Receivables which
become Defaulted Receivables shall not be shown on the Servicer's records as
amounts payable (and shall cease to be included as Receivables) on the day on
which they become Defaulted Receivables.
"Record Date" shall mean, with respect to any Distribution Date, the last
Business Day of the preceding Monthly Period, except as otherwise provided with
respect to a Series in the related Supplement.
"Recoveries" shall mean all amounts, including Insurance Proceeds,
received by the Servicer with respect to Receivables which have previously
become Defaulted Receivables, net of any out-of-pocket costs and expenses of
collection (including attorneys fees and expenses deducted therefrom).
"Registered Certificateholder" shall mean the Holder of a Registered
Certificate.
"Registered Certificates" shall have the meaning specified in Section
6.01.
"Removal Cut-Off Date" shall have the meaning specified in subsection
2.09(b).
"Removal Date" shall have the meaning specified in subsection 2.09(a).
"Removal Notice Date" shall have the meaning specified in subsection
2.09(a).
"Removed Accounts" shall have the meaning specified in Section 2.09.
"Required Designation Date" shall have the meaning specified in subsection
2.08(a).
<PAGE> 22
"Required Principal Balance" shall mean, as of any date of determination,
(a) the sum of the Series Investor Amounts for each Series outstanding on such
date, minus (b) the Excess Funding Amount.
"Required Seller Amount" shall mean, with respect to any date, an amount
equal to the product of the Required Seller Percentage and the aggregate amount
of Principal Receivables.
"Required Seller Percentage" shall mean 7%; provided, however, that the
Sellers may reduce the Required Seller Percentage upon (x) 30 days' prior notice
to the Trustee and each Rating Agency, (y) satisfaction of the Rating Agency
Condition with respect thereto and (z) delivery to the Trustee of a certificate
of a Vice President or more senior officer of each Seller stating that such
Seller reasonably believes that such reduction will not, based on the facts
known to such officer at the time of such certification, then or thereafter have
an Adverse Effect; provided further, that the Required Seller Percentage shall
not at any time be less than 2%.
"Requirements of Law" with respect to any Person shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of an arbitrator or Governmental Authority, in
each case applicable to or binding upon such Person or to which such Person is
subject, whether Federal, state or local (including, without limitation, usury
laws, the Federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System).
"Responsible Officer" shall mean any officer within the Corporate Trust
Office (or any successor group of the Trustee) including any Vice President, any
Assistant Secretary, any Assistant Treasurer, or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above-designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Revolving Period" shall mean, with respect to any Series, the period
specified as such in the related Supplement.
"RTC" shall mean the Resolution Trust Corporation or any successor.
"Rule 144A" shall mean Rule 144A under the Act, as such Rule may be
amended from time to time.
"Sellers" shall mean Colonial and any Additional Seller, and their
successors and permitted assigns.
"Seller Amount" shall mean, on any date of determination, an amount equal
to (i) the sum of (a) the aggregate amount of Principal Receivables at the end
of the day immediately prior to such date of determination, and (b) the Excess
Funding Amount at the end of the day immediately prior to such date of
determination, and minus the sum of the Series Invested Amounts for each Series
outstanding on such date at the end of such day.
<PAGE> 23
"Seller Certificates" shall mean, collectively, the Bank Certificate and
any outstanding Supplemental Certificates.
"Sellers' Interest" shall have the meaning specified in Section 4.01.
"Seller Percentage" shall mean, on any date of determination, when used
with respect to Principal Receivables, Finance Charge Receivables and Defaulted
Receivables, a percentage equal to 100% minus the Aggregate Series Percentage
with respect to such categories of Receivables.
"Series" shall mean any series of Investor Certificates established
pursuant to a Supplement.
"Series Account" shall mean any deposit, trust, escrow or similar account
maintained for the benefit of any Series or Class, as specified in any
Supplement.
"Series Enhancement" shall mean the rights and benefits provided to the
Investor Certificateholders of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, cash collateral guaranty, spread
account, guaranteed rate agreement, maturity liquidity facility, tax protection
agreement, interest rate swap agreement, interest rate cap agreement or other
similar arrangement. The subordination of any Series or Class to another Series
or Class shall be deemed to be a Series Enhancement.
"Series Enhancer" shall mean the Person or Persons providing any Series
Enhancement, other than the Investor Certificateholders of any Series or Class
which is subordinated to another Series or Class.
"Series Invested Amount" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"Series Investor Amount" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"Series Pay Out Event" shall mean, with respect to any Series, each event,
if any, specified in the Supplement as a Series Pay Out Event with respect to
such Series.
"Series Percentage" shall have, with respect to Principal Receivables,
Finance Charge Receivables and Defaulted Receivables, and any Series of
Certificates, the meaning stated in the related Supplement.
"Series Termination Date" shall mean, with respect to any Series, the
termination date for such Series specified in the related Supplement.
"Servicer" shall mean initially Colonial and its permitted successors and
assigns, in its capacity as Servicer pursuant to this Agreement, and thereafter
any Person appointed Successor Servicer as herein provided.
"Servicer Default" shall have the meaning specified in Section 10.01.
<PAGE> 24
"Servicing Fee" shall have the meaning specified in Section 3.02.
"Servicing Fee Rate" shall mean, with respect to any Series, the servicing
fee rate specified in the related Supplement.
"Servicing Officer" shall mean any officer of the Servicer, or any
attorney-in-fact of the Servicer, involved in, or responsible for, the
administration and servicing of the Receivables whose name appears on a list of
servicing officers furnished to the Trustee by the Servicer, as such list may
from time to time be amended.
"Shared Principal Collections" shall have the meaning specified in Section
4.04.
"Standard & Poor's" shall mean Standard & Poor's Corporation or its
successor.
"Successor Servicer" shall have the meaning specified in subsection
10.02(a).
"Supplement" shall mean, with respect to any Series, a Supplement to this
Agreement, executed and delivered in connection with the original issuance of
the Investor Certificates of such Series pursuant to Section 6.03, and all
amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the meaning specified in subsection
6.03(c).
"Tax Opinion" shall mean, with respect to any action, an Opinion of
Counsel to the effect that, (a) for Federal income tax purposes, such action
will not adversely affect the tax characterization as debt of Investor
Certificates of any outstanding Series or Class that were characterized as debt
at the time of their issuance, (b) following such action the Trust will not be
deemed to be an association (or publicly traded partnership) taxable as a
corporation and (c) such action will not cause or constitute an event in which
gain or loss would be recognized by any Investor Certificateholder or the Trust.
"Termination Notice" shall have the meaning specified in Section 10.01.
"Transfer Agent and Registrar" shall have the meaning specified in Section
6.04.
"Transfer Date" shall mean the Business Day immediately preceding each
Distribution Date.
"Transfer Restriction Event" shall have the meaning specified in Section
2.10.
"Transferred Account" shall have the meaning set forth in the definition
of "Account."
"Trust" shall mean the ADVANTA Credit Card Master Trust II created by this
Agreement.
"Trust Assets" shall have the meaning specified in Section 2.01.
<PAGE> 25
"Trust Cut-Off Date" shall mean October 31, 1993.
"Trustee" shall mean Bankers Trust Company, in its capacity as trustee on
behalf of the Trust, or its successor in interest, or any successor trustee
appointed as herein provided.
"Trust Pay Out Event" shall mean each event specified in subsection
9.01(a).
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in the State of Delaware or any other state or states where
the filing of a financing statement is required to perfect the Trust's interest
in the Receivables and the proceeds thereof or in any other specified
jurisdiction.
"United States" shall mean the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"Vice President" when used with respect to the Sellers or the Servicer
shall mean any vice president thereof whether or not designated by a number or
word or words added before or after the title "vice president".
"VISA" shall mean VISA USA, Inc.
Section 1.02. Other Definitional Provisions.
With respect to any Series, all terms used herein and not otherwise
defined herein shall have meanings ascribed to them in the related Supplement.
All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
As used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles or regulatory accounting principles, as
applicable. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles or
regulatory accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
The agreements, representations and warranties of Colonial and any
Additional Seller in this Agreement in each of their respective capacities as
Sellers and, in the case of Colonial, as Servicer, shall be deemed to be the
agreements, representations and warranties of Colonial and such Additional
Seller solely in each such capacity for so long as Colonial and such Additional
Seller act in each such capacity under this Agreement.
<PAGE> 26
The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; references to any Section, Schedule
or Exhibit are references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" means "including
without limitation."
Unless otherwise specifically provided herein, the failure of this
Agreement to specify the meaning of a term or the applicability of a provision
to any Series shall not preclude the meaning of such term or the applicability
of such provision with respect to such Series being set forth in the Supplement
therefor.
[END OF ARTICLE I]
<PAGE> 27
ARTICLE II
Conveyance of Receivables
Section 2.01. Conveyance of Receivables. By execution of this
Agreement, Colonial, as Seller, does hereby sell, transfer, assign, set over and
otherwise convey to the Trustee, on behalf of the Trust, for the benefit of the
Certificateholders, all its right, title and interest in, to and under the
Receivables existing at the close of business on the Initial Closing Date, in
the case of Receivables arising in the Initial Accounts, and on each Addition
Date, in the case of Receivables arising in the Additional Accounts, and in each
case thereafter created from time to time until the termination of the Trust,
all Interchange and Recoveries allocable to the Trust as provided herein, all
moneys due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in the UCC) thereof. Such
property, together with all moneys on deposit in the Collection Account, the
Excess Funding Account, the Series Accounts and any Series Enhancement shall
constitute the assets of the Trust (the "Trust Assets"). The foregoing does not
constitute and is not intended to result in the creation or assumption by the
Trust, the Trustee, any Investor Certificateholder or any Series Enhancer of any
obligation of the Servicer, Colonial, any Additional Seller or any other Person
in connection with the Accounts or the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors, merchant
banks, merchant clearance systems, VISA, MasterCard or insurers. The foregoing
sale, transfer, assignment, set over and conveyance to the Trust shall be made
to the Trustee, on behalf of the Trust, and each reference in this Agreement to
such sale, transfer, assignment set over and conveyance shall be construed
accordingly.
The Sellers agree to record and file, at their own expense, financing
statements (and continuation statements when applicable) with respect to the
Receivables now existing and hereafter created meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect, and maintain the perfection of, the sale and assignment of the
Receivables to the Trust, and to deliver a file stamped copy of each such
financing statement or other evidence of such filing (which may, for purposes of
this Section 2.01, consist of telephone confirmation of such filing) to the
Trustee on or prior to the Initial Closing Date, in the case of Receivables
arising in the Initial Accounts, and (if any additional filing is so necessary)
the applicable Addition Date, in the case of Receivables arising in Additional
Accounts. The Trustee shall be under no obligation whatsoever to file such
financing or continuation statements or to make any other filing under the UCC
in connection with such sale and assignment.
The Sellers further agree, at their own expense, (a) on or prior to (x)
the Initial Closing Date, in the case of the Initial Accounts, (y) the
applicable Addition Date, in the case of Additional Accounts, and (z) the
applicable Removal Date, in the case of Removed Accounts, to indicate in the
appropriate computer files that Receivables created in connection with the
Accounts (other than Removed Accounts) have been conveyed to the Trust pursuant
to this Agreement for the benefit of the Certificateholders (or conveyed to the
Sellers or their designees in the case of Removed Accounts) by including (or
deleting in the case of Removed Accounts) in such computer files the code "13,"
(or any other code specified in an Assignment) in the PORTF_CD field of such
computer files, and (b) on or prior to the Initial Closing Date, each
<PAGE> 28
Addition Date and each Removal Date, as applicable, to deliver to the Trustee a
computer file or microfiche list containing a true and complete list of all such
Accounts specifying for each such Account, as of the Trust Cut-Off Date, in the
case of the Initial Accounts, the applicable Addition Cut-Off Date, in the case
of Additional Accounts, and the applicable Removal Cut-Off Date, in the case of
Removed Accounts, its account number, the aggregate amount outstanding in such
Account and the aggregate amount of Principal Receivables outstanding in such
Account. Such file or list, as supplemented from time to time to reflect
Additional Accounts and Removed Accounts, shall be marked as Schedule 1 to this
Agreement and is hereby incorporated into and made a part of this Agreement. The
Seller agrees not to alter the codes or field referenced in clause (a) above
with respect to any Account during the term of this Agreement unless and until
such Accounts become Removed Accounts or unless and until (i) the Sellers shall
give written notice of any such alteration to the Trustee, such written notice
to be as of the date of its receipt by the Trustee incorporated into and made
part of this Agreement, and (ii) the Trustee and the Sellers shall execute and
file any UCC financing statement or amendment thereof necessitated by such
alteration.
Section 2.02. Acceptance by Trustee.
The Trustee hereby acknowledges its acceptance on behalf of the Trust
of all right, title and interest to the property, now existing and hereafter
created, conveyed to the Trust pursuant to Section 2.01 and declares that it
shall maintain such right, title and interest, upon the trust herein set forth,
for the benefit of all Certificateholders. The Trustee further acknowledges
that, prior to or simultaneously with the execution and delivery of this
Agreement, the Seller delivered to the Trustee the computer file or microfiche
list relating to the Initial Accounts described in the last paragraph of Section
2.01.
The Trustee hereby agrees not to disclose to any Person (or to any
other department or operating division of the Trustee, other than the corporate
trust department of the Trustee or, if the Trustee shall be appointed the
Successor Servicer, such other departments or operating divisions of the Trustee
as shall be necessary to fulfill its duties as Servicer), any of the account
numbers or other information contained in the computer files or microfiche lists
marked as Schedule 1 or otherwise delivered to the Trustee from time to time,
except (i) to a Successor Servicer or as required by a Requirement of Law
applicable to the Trustee, (ii) in connection with the performance of the
Trustee's duties hereunder, (iii) in enforcing the rights of Certificateholders
or (iv) after consultation with the Sellers, as requested by any Person in
connection with the financing statements filed pursuant to this Agreement. The
Trustee also agrees not to use any of the foregoing information for any purpose
other than for the purposes provided for in this Agreement. The Trustee agrees
to take such measures as shall be reasonably requested by the Sellers to protect
and maintain the security and confidentiality of such information and, in
connection therewith, will allow the Sellers to inspect the Trustee's security
and confidentiality arrangements from time to time during normal business hours.
The Trustee shall provide the Sellers with notice five Business Days prior to
any disclosure pursuant to this subsection 2.02(b).
The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement or any Supplement.
<PAGE> 29
Section 2.03. Representations and Warranties of the Sellers Relating to
the Sellers. Each of the Sellers hereby represents and warrants to the Trust as
of each Closing Date that:
Organization and Good Standing. Such Seller is a national banking
association or 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 properties and
conduct its consumer revolving lending business as such properties are presently
owned and such business is presently conducted, to execute, deliver and perform
its obligations under this Agreement and each Supplement and to execute and
deliver to the Trustee the Certificates pursuant hereto.
Due Qualification. Such Seller 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 with
respect to such Seller, in each jurisdiction in which failure to so qualify or
to obtain such licenses and approvals would render any Cardholder Agreement
relating to an Account owned by such Seller or any Receivable transferred to the
Trust by such Seller unenforceable by such Seller, the Servicer or the Trustee
or would have a material adverse effect on the interests of the
Certificateholders hereunder or under any Supplement; provided, however, that no
representation or warranty is 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 hereby.
Due Authorization. The execution, delivery and performance of this
Agreement and each Supplement by such Seller and, in the case of Colonial, the
execution and delivery to the Trustee of the Certificates and the consummation
by such Seller of the transactions provided for in this Agreement and each
Supplement have been duly authorized by such Seller by all necessary corporate
action on the part of such Seller and this Agreement and each Supplement will
remain, from the time of its execution, an official record of such Seller.
No Conflict. The execution and delivery by such Seller of this
Agreement, each Supplement and, in the case of Colonial, the Certificates, the
performance by such Seller of the transactions contemplated by this Agreement
and each Supplement and the fulfillment by such Seller of the terms hereof and
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 such Seller is a party or by which
it or any of its properties are bound.
No Violation. The execution and delivery by such Seller of this
Agreement, each Supplement and, in the case of Colonial, the Certificates, the
performance by such Seller of the transactions contemplated by this Agreement
and each Supplement and the fulfillment by such Seller of the terms hereof and
thereof will not conflict with or violate any Requirements of Law applicable to
such Seller.
No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of such Seller, threatened against such Seller, before
any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement, any
Supplement or the Certificates, (ii) seeking to prevent the
<PAGE> 30
issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, any Supplement or the Certificates, (iii)
seeking any determination or ruling that, in the reasonable judgment of such
Seller, would materially and adversely affect the performance by such Seller of
its obligations under this Agreement or any Supplement, (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement, any Supplement or the Certificates or (v)
seeking to affect adversely the income tax attributes of the Trust under the
Federal or Delaware income or franchise tax systems.
All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery by such Seller of this
Agreement, each Supplement and, in the case of Colonial, the Certificates, the
performance by such Seller of the transactions contemplated by this Agreement
and each Supplement and the fulfillment by such Seller of the terms hereof and
thereof, have been obtained; provided, however, that such Seller makes no
representation or warranty regarding state securities or "blue sky" laws in
connection with the distribution of the Certificates.
Insolvency. No Insolvency Event with respect to such Seller has
occurred and the transfer of the Receivables by such Seller to the Trust has not
been made in contemplation of the occurrence thereof.
FDIC Insurance. Such Seller is either an insured institution
for purposes of the Federal Deposit Insurance Act or is a bankruptcy-remote
entity.
The representations and warranties of each Seller set forth in this
Section 2.03 shall survive the transfer and assignment by such Seller of the
respective Receivables to the Trust. Upon discovery by such Seller, the Servicer
or the Trustee of a breach of any of the representations and warranties by such
Seller set forth in this Section 2.03, the party discovering such breach shall
give prompt written notice to the others. Such Seller agrees to cooperate with
the Servicer and the Trustee in attempting to cure any such breach. For purposes
of the representations and warranties set forth in this Section 2.03, each
reference to a Supplement shall be deemed to refer only to those Supplements in
effect as of the relevant Closing Date.
Section 2.04. Representations and Warranties of the Sellers Relating to
the Agreement and Any Supplement and the Receivables.
Representations and Warranties. Each of the Sellers hereby represents
and warrants to the Trust as of each Closing Date and, with respect to
Additional Accounts the Receivables in which are being transferred by such
Seller to the Trust, as of the related Addition Date that:
this Agreement, each Supplement and, in the case of
Additional Accounts the Receivables in which are being transferred by
such Seller to the Trust, the related Assignment, each constitutes a
legal, valid and binding obligation of such Seller enforceable against
such Seller 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
<PAGE> 31
in general and the rights of creditors of national banking associations
and except as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity);
as of the Initial Closing Date and as of the related
Addition Date with respect to Additional Accounts the Receivables in
which are being transferred by such Seller to the Trust, Schedule 1 to
this Agreement, as supplemented on such date, is an accurate and
complete listing in all material respects of all the Accounts owned by
such Seller as of the Trust Cut-Off Date or such Addition Cut-Off Date,
as the case may be, and the information contained therein with respect
to the identity of such Accounts and the Receivables existing in such
Accounts is true and correct in all material respects as of the Trust
Cut-Off Date or such Addition Cut-Off Date, as the case may be;
each Receivable conveyed to the Trust by such Seller has
been conveyed to the Trust free and clear of any Lien of any Person
claiming through or under such Seller or any of its Affiliates (other
than Liens permitted under subsection 2.07(b)) and in compliance, in
all material respects, with all Requirements of Law applicable to such
Seller;
all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by such Seller in connection with the
conveyance by such Seller of Receivables to the Trust have been duly
obtained, effected or given and are in full force and effect;
either this Agreement or, in the case of Additional
Accounts, the related Assignment constitutes a valid sale, transfer and
assignment to the Trust of all right, title and interest of such Seller
in the Receivables conveyed to the Trust by such Seller and the
proceeds thereof or, if this Agreement or, in the case of Additional
Accounts, the related Assignment does not constitute a sale of such
property, it constitutes a grant of a "security interest" (as defined
in the UCC) in such property to the Trust, which, in the case of
existing Receivables and the proceeds thereof, is enforceable upon
execution and delivery of this Agreement or, with respect to then
existing Receivables in Additional Accounts, as of the applicable
Addition Date, and which will be enforceable with respect to such
Receivables hereafter and thereafter created and the proceeds thereof
upon such creation. Upon the filing of the financing statements
pursuant to Sections 2.01 and 2.08 and, in the case of Receivables
hereafter created and the proceeds thereof, upon the creation thereof,
the Trust shall have a first priority perfected security or ownership
interest in such property and proceeds except for (x) Liens permitted
under subsection 2.07(b), (y) the interests of the Sellers as Holders
of the Bank Certificate or any Supplemental Certificate, and (z) the
Sellers' right, if any, to interest accruing on and investment
earnings, if any, in respect of the Collection Account or any Series
Account, as provided in this Agreement or the related Supplement;
provided, however, that the Sellers make no representation or warranty
with respect to the effect of Section 9-306 of the UCC on the rights of
the Trustee to proceeds held by any Seller;
except as otherwise expressly provided in this Agreement
or any Supplement, neither such Seller nor any Person claiming through
or under such Seller has any claim to
<PAGE> 32
or interest in the Collection Account, the Excess Funding Account, any
Series Account or any Series Enhancement;
on the Trust Cut-Off Date, each Initial Account owned by
such Seller is an Eligible Account and, on the applicable Addition
Cut-Off Date, each related Additional Account owned by such Seller is
an Eligible Account;
on the Trust Cut-Off Date, each Receivable then existing
in an Account owned by such Seller is an Eligible Receivable and, on
the applicable Addition Cut-Off Date, each Receivable contained in any
related Additional Accounts owned by such Seller is an Eligible
Receivable;
as of the date of the creation of any new Receivable in an
Account owned by such Seller, such Receivable is an Eligible
Receivable; and
no selection procedure has been utilized by such Seller
which such Seller reasonably believes would result in a selection of
Initial Accounts or Additional Accounts (from among the available
Eligible Accounts owned by such Seller on the Trust Cut-Off Date or the
applicable Addition Cut-Off Date, as the case may be) that would be
materially adverse to the interests of the Investor Certificateholders.
Notice of Breach. The representations and warranties of each Seller
set forth in this Section 2.04 shall survive the transfer and assignment by such
Seller of Receivables to the Trust. Upon discovery by such Seller, the Servicer
or the Trustee of a breach of any of the representations and warranties by such
Seller set forth in this Section 2.04, the party discovering such breach shall
give prompt written notice to the others. Such Seller agrees to cooperate with
the Servicer and the Trustee in attempting to cure any such breach. For purposes
of the representations and warranties set forth in this Section 2.04, each
reference to a Supplement shall be deemed to refer only to those Supplements in
effect as of the date of the relevant representations or warranties.
Section 2.05. Reassignment of Ineligible Receivables.
Reassignment of Receivables. In the event (i) any representation or
warranty of a Seller contained in subsection 2.04(a)(ii), (iii), (iv), (vii),
(viii), (ix) or (x) 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 such Seller or an Account owned by such Seller 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 available for any reason 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 such Seller or receipt by
such Seller of notice thereof given by the Trustee, or (ii) it is so provided in
subsection 2.07(a) with respect to any Receivables transferred to the Trust by
such Seller, then such Seller shall accept reassignment of all Receivables in
the related Account ("Ineligible Receivables") on the terms and conditions set
forth in paragraph (b) below; provided, however, that such Receivables will not
be deemed to be Ineligible Receivables and will not be reassigned to such Seller
if, on any day prior to the end of
<PAGE> 33
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) such Seller
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.
Price of Reassignment. The Servicer shall deduct the portion of the
Ineligible Receivables reassigned to a Seller which are Principal Receivables
from the aggregate amount of Principal Receivables used to calculate the Seller
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 Seller
Amount, the Seller Amount would be less than the Required Seller 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
relevant Seller shall make a deposit into the Excess Funding Account in
immediately available funds in an amount equal to the amount by which the Seller
Amount would be reduced below the Required Seller 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 this Section 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 relevant Seller or its designee, without recourse,
representation or warranty, all the right, title and interest of the Trust in
and to such Ineligible Receivables, all moneys 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 relevant Seller to
effect the conveyance of Ineligible Receivables pursuant to this Section. The
obligation of a Seller 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 this Section, shall constitute the sole remedy respecting the
event giving rise to such obligation available to Certificateholders (or the
Trustee on behalf of the Certificateholders).
Section 2.06. Reassignment of Receivables in Trust Portfolio. In the
event any representation or warranty of a Seller set forth in subsection 2.03(a)
or (c) or subsection 2.04(a)(i), (v) or (vi) is not true and correct in any
material respect and such breach has a material adverse effect on the
Certificateholders' Interest in the Receivables transferred to the Trust by such
Seller, then either the Trustee or the Holders of Investor Certificates
evidencing more than 50% of the Aggregate Investor Amount, by notice then given
to such Seller and the Servicer (and to the Trustee if given by the Investor
Certificateholders), may direct such Seller to accept a reassignment of the
Receivables transferred to the Trust by such Seller if such breach and any
material adverse effect caused by such breach is not cured within 60 days of
such notice (or within such longer period, not in excess of 150 days, as may be
specified in such notice), and upon those conditions such Seller shall be
obligated to accept such reassignment on the terms set forth below; provided,
however, that such Receivables will not be reassigned to such Seller if, on any
day prior to the end of such 60-day or longer period (i) the relevant
representation and
<PAGE> 34
warranty shall be true and correct in all material respects as if made on such
day and (ii) such Seller shall have delivered to the Trustee a certificate of an
authorized officer describing the nature of such breach and the manner in which
the relevant representation and warranty became true and correct.
The relevant Seller shall deposit in the Collection Account in
immediately available funds 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, in payment for such reassignment, an amount
equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related Supplement. Notwithstanding anything to the
contrary in this Agreement, such amounts shall be distributed on such
Distribution Date in accordance with Article IV and the terms of each
Supplement.
Upon the deposit, if any, required to be made to the Collection Account
as provided in this Section and the reassignment of the 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
relevant Seller or its designee, without recourse, representation or warranty,
all the right, title and interest of the Trust in and to such Receivables, all
moneys 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 relevant Seller to effect the conveyance of such Receivables
pursuant to this Section. The obligation of a Seller to accept reassignment of
any Receivables, and to make the deposits, if any, required to be made to the
Collection Account as provided in this section, shall constitute the sole remedy
respecting the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of the Certificateholders) or any
Series Enhancer.
Section 2.07. Covenants of the Sellers. Each Seller hereby covenants as
follows:
Receivables to be Accounts or General Intangibles. Except in
connection with the enforcement or collection of a Receivable, such Seller will
take no action to cause any Receivable transferred by it to the Trust to be
evidenced by any instrument or chattel paper (as defined in the UCC) and, if any
such Receivable is so evidenced, it shall be deemed to be an Ineligible
Receivable in accordance with subsection 2.05(a) and shall be reassigned to such
Seller in accordance with subsection 2.05(b); provided, however, that
Receivables evidenced by notes taken from Obligors in the ordinary course of
business of the Servicer's collection efforts shall not be deemed Ineligible
Receivables solely as a result thereof.
Security Interests. Except for the conveyances hereunder, such Seller
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any Receivable transferred by it to
the Trust, whether now existing or hereafter created, or any interest therein;
such Seller will immediately notify the Trustee of the existence of any Lien on
any such Receivable; and such Seller shall defend the right, title and interest
of the Trust in, to and under such Receivables, whether now existing or
hereafter created, against all claims of third parties claiming through or under
such Seller; provided, however, that nothing in this subsection 2.07(b) shall
prevent or be deemed to prohibit such Seller from suffering to exist upon any of
the Receivables transferred by it to the Trust any Liens for municipal or other
local taxes if such taxes shall not at the time be due and payable or if such
Seller shall currently be
<PAGE> 35
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
Sellers' Interest. Except for the conveyances hereunder, in
connection with any transaction permitted by Section 7.02 and as provided in
Sections 2.08(e) and 6.03, such Seller agrees not to transfer, assign, exchange
or otherwise convey or pledge, hypothecate or otherwise grant a security
interest in the Sellers' Interest represented by the Bank Certificate or any
Supplemental Certificate and any such attempted transfer, assignment, exchange,
conveyance, pledge, hypothecation or grant shall be void.
Notwithstanding the foregoing paragraph, the Sellers may pledge,
hypothecate or otherwise grant a security interest in any (or any portion of)
the Seller Certificates to the Federal Reserve Bank of Philadelphia and the
Federal Home Loan Bank of Pittsburgh; provided, however, that such pledge,
hypothecation, or grant may not be used as an artifice or device to avoid or
limit the foregoing prohibition on transfer; provided further that under no
circumstances may the Sellers pledge, hypothecate, or otherwise grant a security
interest in any of their rights in the Seller Certificates other than the right
to receive cash payments in respect of such Seller Certificates as provided in
this Agreement or any Supplement.
Delivery of Collections. In the event that such Seller receives
Collections, such Seller agrees to pay the Servicer all such Collections as soon
as practicable after receipt thereof but in no event later than two Business
Days after the Date of Processing by the Seller.
Notice of Liens. Such Seller shall notify the Trustee promptly after
becoming aware of any Lien on any Receivable other than the conveyances
hereunder or Liens permitted under subsection 2.07(b).
Periodic Finance Charges and Other Fees. Such Seller hereby agrees
that, except as otherwise required by any Requirement of Law, or as is deemed by
such Seller in its sole discretion to be necessary in order for such Seller to
maintain its lending business on a competitive basis based on a good faith
assessment by such Seller of the nature of its competition in the lending
business, it shall not at any time reduce the annual percentage rate of the
Periodic Finance Charges assessed on the Receivables transferred by it to the
Trust or other fees charged on any of the Accounts owned by it if, as a result
of any such reduction, either (i) such Seller's reasonable expectation is that
such reduction will cause a Series Pay Out Event to occur or (ii) such reduction
is not also applied to any comparable segments of consumer revolving credit card
accounts owned by such Seller which have characteristics the same as, or
substantially similar to, such Accounts.
Cardholder Agreements and Credit Card Guidelines. Such Seller shall
comply with and perform its obligations under the Cardholder Agreements relating
to the Accounts owned by it and the Credit Card Guidelines and all applicable
rules and regulations of MasterCard and VISA or their respective substantial
equivalents except insofar as any failure so to comply or perform would not
materially and adversely affect the rights of the Trust or the
Certificateholders hereunder. Subject to compliance with all Requirements of
Law, such Seller may change the terms and provisions of the Cardholder
Agreements or the Credit Card Guidelines with respect to any of the Accounts
owned by it in any respect (including the calculation of the amount, or the
<PAGE> 36
timing, of charge-offs and the Periodic Finance Charges and other fees to be
assessed thereon) only if in the reasonable judgment of such Seller such change
is made applicable to any comparable segment of the consumer revolving credit
card accounts owned by such Seller which have characteristics the same as, or
substantially similar to, such Accounts.
(h) MasterCard and VISA. Such Seller, to the extent applicable to
Accounts owned or serviced by such Seller, shall use its best efforts to remain,
either directly or indirectly, a member in good standing of the MasterCard
system, the VISA system and any other similar entity's or organization's system
relating to any other type of consumer revolving credit card accounts included
as Accounts.
(i) Interchange. With respect to any Distribution Date, on or prior to
the last day of the preceding Monthly Period, the Seller shall notify the
Servicer of the amount of Interchange required to be included as Collections of
Finance Charge Receivables with respect to such Monthly Period, which amount for
any Series shall be specified in the related Supplement. Not later than 12:00
noon, New York City time, on the Business Day immediately preceding such
Distribution Date, the Seller shall deposit into the Collection Account, in
immediately available funds, the amount of Interchange to be so included as
Collections of Finance Charge Receivables with respect to such Monthly Period.
Section 2.08. Addition of Accounts.
Required Additions. (i) If on any Determination Date, as
of the close of business on the last Business Day of the preceding
Monthly Period, either (x) the Seller Amount is less than the Required
Seller Amount or (y) the aggregate amount of Principal Receivables is
less than the Required Principal Balance, the Sellers shall on or prior
to the close of business on the 10th Business Day following such
Determination Date (the "Required Designation Date"), unless the Seller
Amount exceeds the Required Seller Amount or the aggregate amount of
Principal Receivables exceeds the Required Principal Balance, as the
case may be, in either case as of the close of business on any day
after the last Business Day of such Monthly Period and prior to the
Required Designation Date, designate additional Eligible Accounts to be
included as Accounts as of the Required Designation Date or any earlier
date in a sufficient amount such that, after giving effect to such
addition, the Seller Amount as of the close of business on the
applicable Addition Date is at least equal to the Required Seller
Amount on such date and the aggregate amount of Principal Receivables
exceeds the Required Principal Balance on such date. The failure of any
condition set forth in paragraph (c) below, as the case may be, shall
not relieve the Sellers of their obligation pursuant to this paragraph;
provided, however, that the failure of the Sellers to transfer
Receivables to the Trust as provided in this clause (i) solely as a
result of the unavailability of a sufficient amount of Eligible
Receivables shall not constitute a breach of this Agreement; provided
further, that any such failure which has not been timely cured may
nevertheless result in the occurrence of a Pay Out Event.
(ii) In lieu of, or in addition to, designating Additional
Accounts pursuant to clause (i) above, the Sellers may, subject to the
conditions specified in paragraph (c) below, convey to the Trust
participations (including 100% participations) representing undivided
interests in a pool of assets primarily consisting of revolving credit
card
<PAGE> 37
receivables, consumer loan receivables (secured and unsecured), and any
interests in any of the foregoing, including securities representing or
backed by such receivables, and other self-liquidating financial assets
(including any "Eligible Assets" as such term is defined in Rule 3a-7
under the Investment Company Act (or any successor to such Rule)) owned
by a Seller or any Affiliate of any Seller and collections thereon
("Participation Interests"). The addition of Participation Interests in
the Trust pursuant to this paragraph (a) or paragraph (b) below shall
be effected by a Participation Interest Supplement, dated the
applicable Addition Date and entered into pursuant to subsection
13.01(a).
Restricted Additions. Each Seller 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 designated
pursuant to subsection 2.08(a) or (b), the Trust shall purchase the Receivables
in such Additional Accounts (and such Additional Accounts shall be deemed to be
Accounts for purposes of this Agreement) 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, each Seller which owns any such Additional
Account or is transferring any such Participation Interest to the Trust
(a "Participating Seller") shall have given the Trustee, the Servicer
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 the case of
Additional Accounts);
(ii) in the case of Additional Accounts, the Participating
Sellers 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 the Participating
Seller 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 an Addition pursuant to
subsection 2.08(a)(i), the Rating Agency Condition shall have been
satisfied;
(v) each Participating Seller 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) such Participating Seller
reasonably believes that (A)
<PAGE> 38
the addition by such Participating Seller 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 to occur with
respect to any Series and (B) in the case of Additional Accounts, no
selection procedure was utilized by such Participating Seller which
would result in a selection of Additional Accounts (from among the
available Eligible Accounts owned by such Participating Seller) that
would be materially adverse to the interests of the Investor
Certificateholders of any Series as of the Addition Date;
(vi) the Participating Sellers shall have delivered to the
Trustee and each Rating Agency an Opinion of Counsel, which counsel
shall be outside counsel, dated the Addition Date, in accordance with
subsection 13.02(d);
(vii) in the case of designation of Additional Accounts, the
Participating Sellers shall have delivered to the Trustee (x) the
computer file or microfiche list required to be delivered pursuant to
Section 2.01 with respect to such Additional Accounts and (y) a duly
executed, written assignment (including an acceptance by the Trustee
for the benefit of the Certificateholders), substantially in the form
of Exhibit B (the "Assignment"); and
(viii) unless each Rating Agency otherwise consents, the
number of Additional Accounts designated pursuant to subsection 2.08(a)
with respect to any of the three consecutive Monthly Periods commencing
in January, April, July and October of each calendar year, commencing
in January 1994, 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 designated pursuant to
subsection 2.08(a) 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) Each Seller 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 (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 shall
be deemed to include only consumer revolving credit card accounts which
are originated by a Seller or any Affiliate of a Seller.
(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 1994,
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 shall 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 Sellers shall have delivered to
the Trustee and each Rating
<PAGE> 39
Agency an Opinion of Counsel (which counsel shall be outside counsel)
in accordance with subsection 13.02(d), 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 Sellers to designate Automatic Additional Accounts will be
suspended until such time as each Rating Agency otherwise consents in
writing. If the Sellers are 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 in subsection
2.04(a)(viii) with respect to the Receivables in such Automatic
Additional Account for purposes of Section 2.05; provided, that the
cure period for such breach shall not exceed 30 days.
(iv) The Participating Sellers 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 any Participating Seller
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) Each Participating Seller 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) such Participating Seller reasonably
believes that (A) the addition by such Participating Seller 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 to occur with respect to any
Series and (B) no selection procedure was utilized by such
Participating Seller which would result in a selection of Automatic
Additional Accounts (from among the available Eligible Accounts owned
by such Participating Seller) that would be materially adverse to the
interests of the Investor Certificateholders of any Series as of the
Addition Date.
(vii) The Participating Sellers shall have delivered to the
Trustee (x) the computer file or microfiche list required to be
delivered pursuant to Section 2.01 with respect to such Automatic
Additional Accounts and (y) a duly executed Assignment.
Additional Sellers. Colonial may designate Affiliates of Colonial to
be included as Sellers ("Additional Sellers") under this Agreement by an
amendment hereto pursuant to subsection 13.01(a) and, in connection with such
designation, the Sellers shall surrender the Bank Certificate to the Trustee in
exchange for a newly issued Bank Certificate modified to reflect such Additional
Seller's interest in the Sellers' Interest; provided, however, that prior to any
such designation and exchange the conditions set forth in subsection 6.03(c) or
6.03(d), as applicable, shall have been satisfied with respect thereto.
<PAGE> 40
Section 2.09. Removal of Accounts and Participation Interests. On any
day of any Monthly Period each Seller shall have the right to require the
reassignment to it or its designee of all the Trust's right, title and interest
in, to and under the Receivables then existing and thereafter created, all
moneys due or to become due and all amounts received with respect thereto and
all proceeds thereof in or with respect to the Accounts owned and designated by
such Seller (the "Removed Accounts") or Participation Interests designated by
the Seller, upon satisfaction of the following conditions:
on or before the fifth Business Day immediately preceding the Removal
Date (the "Removal Notice Date"), such Seller shall have given the Trustee, the
Servicer, each Rating Agency and any Series Enhancer written notice of such
removal, specifying the date for removal of the Removed Accounts or
Participation Interests (the "Removal Date");
with respect to Removed Accounts, on or prior to the date that is ten
Business Days after the Removal Date, such Seller shall have amended Schedule 1
by delivering to the Trustee a computer file or microfiche list containing a
true and complete list of the Removed Accounts specifying for each such Account,
as of the 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;
with respect to Removed Accounts, such Seller 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;
the Rating Agency Condition shall have been satisfied with respect to
such removal;
such Seller shall have delivered to the Trustee an Officer's
Certificate, dated the Removal Date, to the effect that such Seller 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 to occur with respect to any Series and (ii) no selection procedure was
utilized by such Seller which would result in a selection of Removed Accounts or
Participation Interests that would be materially adverse to the interests of the
Investor Certificateholders of any Series as of the Removal Date; and
as of the Removal Cut-Off Date, no more than 10% of the Receivables
outstanding are more than thirty days Contractually Delinquent.
Upon satisfaction of the above conditions, the Trustee shall execute
and deliver to the relevant Seller or its designee a written reassignment in
substantially the form of Exhibit C (the "Reassignment") and shall, without
further action, be deemed to sell, transfer, assign, set over and otherwise
convey to such Seller 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 moneys due and to become due and all amounts received with
respect thereto and all proceeds thereof. In addition, the Trustee shall execute
such other documents and instruments of transfer or assignment and
<PAGE> 41
take such other actions as shall reasonably be requested by the relevant Seller
to effect the conveyance of Participation Interests or Receivables pursuant to
this Section 2.09.
Section 2.10. Account Allocations. In the event that any Seller is
unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement, including by reason of the application of the
provisions of Section 9.02 or any order of any Governmental Authority (a
"Transfer Restriction Event"), then, in any such event, (a) such Seller and the
Servicer agree (except as prohibited by any such order) to allocate and pay to
the Trust, after the date of such inability, all Collections of Receivables
transferred to the Trust by such Seller, including Collections of Receivables
transferred to the Trust by such Seller prior to the occurrence of such event,
and all amounts which would have constituted Collections but for such Seller's
inability to transfer Receivables (up to an aggregate amount equal to the amount
of Receivables transferred to the Trust by such Seller in the Trust on such
date), (b) such Seller and the Servicer agree that such amounts will be applied
as Collections in accordance with Article IV and the terms of each Supplement
and (c) for so long as the allocation and application of all Collections and all
amounts that would have constituted Collections are made in accordance with
clauses (a) and (b) above, Principal Receivables and all amounts which would
have constituted Principal Receivables but for such Seller's inability to
transfer Receivables to the Trust which are written off as uncollectible in
accordance with this Agreement shall continue to be allocated in accordance with
Article IV and the terms of each Supplement. For the purpose of the immediately
preceding sentence, such Seller and the Servicer shall treat the first received
Collections with respect to the Accounts owned by such Seller as allocable to
the Trust until the Trust shall have been allocated and paid Collections in an
amount equal to the aggregate amount of Principal Receivables in such Accounts
as of the date of the occurrence of such event. If such Seller or the Servicer
is unable pursuant to any Requirements of Law to allocate Collections as
described above, such Seller and the Servicer agree that, after the occurrence
of such event, payments on each Account owned by such Seller with respect to the
principal balance of such Account shall be allocated first to the oldest
principal balance of such Account and shall have such payments applied as
Collections in accordance with Article IV and the terms of each Supplement. The
parties hereto agree that Finance Charge Receivables, whenever created, accrued
in respect of Principal Receivables which have been conveyed to the Trust shall
continue to be a part of the Trust notwithstanding any cessation of the transfer
of additional Principal Receivables to the Trust and Collections with respect
thereto shall continue to be allocated and paid in accordance with Article IV
and the terms of each Supplement.
Section 2.11. Discount Option. The Sellers shall have the option to
designate at any time and from time to time a percentage or percentages, which
may be a fixed percentage or a variable percentage based on a formula (the
"Discount Percentage"), of all or any specified portion of Principal Receivables
created after the Discount Option Date to be treated as Finance Charge
Receivables ("Discount Option Receivables"). The Seller shall also have the
option of reducing or withdrawing the Discount Percentage, at any time and from
time to time, on and after such Discount Option Date. The Sellers shall provide
to the Servicer, the Trustee and any Rating Agency 30 days prior written notice
of the Discount Option Date, and such designation shall become effective on the
Discount Option Date (i) unless such designation in the reasonable belief of the
Sellers would cause a Pay Out Event with respect to any Series to occur, or an
event which, with notice or lapse of time or both, would constitute a Pay Out
Event with respect to any
<PAGE> 42
Series and (ii) only if the Rating Agency Condition shall have been satisfied
with respect to such designation.
After the Discount Option Date, the Sellers shall treat Discount
Option Receivable Collections as Collections of Finance Charge Receivables.
[END OF ARTICLE II]
<PAGE> 43
ARTICLE III
Administration and Servicing
of Receivables
Section 3.01. Acceptance of Appointment and Other Matters Relating to
the Servicer.
Colonial agrees to act as the Servicer under this Agreement and the
Certificateholders by their acceptance of Certificates consent to Colonial
acting as Servicer.
The Servicer shall service and administer the Receivables, shall
collect payments due under the Receivables and shall charge off as uncollectible
Receivables, all in accordance with its customary and usual servicing procedures
for servicing credit card receivables comparable to the Receivables and in
accordance with the Credit Card Guidelines. The Servicer shall have full power
and authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, subject to Section 10.01 and provided Colonial is
the Servicer, the Servicer or its designee (rather than the Trustee) is hereby
authorized and empowered (i) to make withdrawals and payments or to instruct the
Trustee to make withdrawals and payments from the Collection Account, the Excess
Funding Account and any Series Account, as set forth in this Agreement or any
Supplement, and (ii) to take any action required or permitted under any Series
Enhancement, as set forth in this Agreement or any Supplement. Without limiting
the generality of the foregoing and subject to Section 10.01, the Servicer or
its designee is hereby authorized and empowered to make any filings, reports,
notices, applications and registrations with, and to seek any consents or
authorizations from, the Securities and Exchange Commission (the "Commission")
and any state securities authority on behalf of the Trust as may be necessary or
advisable to comply with any Federal or state securities laws or reporting
requirements. The Trustee shall furnish the Servicer with any powers of attorney
or other documents necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties hereunder.
The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other credit card receivables.
The Servicer shall comply with and perform its servicing obligations
with respect to the Accounts and Receivables in accordance with the Cardholder
Agreements relating to the Accounts and the Credit Card Guidelines and all
applicable rules and regulations of VISA, MasterCard and any other similar
entity or organization relating to any other type of consumer revolving credit
card accounts included as Accounts, except insofar as any failure to so comply
or perform would not materially and adversely affect the Trust or the Investor
Certificateholders.
The Servicer shall pay out of its own funds, without reimbursement,
all expenses incurred in connection with the Trust and the servicing activities
hereunder including expenses related to enforcement of the Receivables, fees and
disbursements of the Trustee, any Paying Agent and any Transfer Agent and
Registrar (including the reasonable fees and expenses of its
<PAGE> 44
counsel) and independent accountants and all other fees and expenses, including
the costs of filing UCC financing and continuation statements and the costs and
expenses relating to obtaining and maintaining the listing of any Investor
Certificates on any stock exchange, that are not expressly stated in this
Agreement to be payable by the Trust or the Sellers (other than Federal, state,
local and foreign income, franchise and other taxes, if any, or any interest or
penalties with respect thereto, assessed on the Trust).
The Servicer agrees that upon a request by the Sellers it will use
its reasonable best efforts to obtain and maintain the listing of the Investor
Certificates of any Series or Class on any specified security exchange. If any
such request is made, the Servicer shall give notice to the Sellers and the
Trustee on the date on which such Investor Certificates are approved for such
listing and within three Business Days following receipt of notice by the
Servicer of any actual, proposed or contemplated delisting of such Investor
Certificates by any such securities exchange. The Trustee or the Servicer, each
in its sole discretion, may terminate any listing on any such securities
exchange at any time subject to the notice requirements set forth in the
preceding sentence.
Section 3.02. Servicing Compensation. As full compensation for its
servicing activities hereunder and as reimbursement for any expense incurred by
it in connection therewith, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") with respect to each Monthly Period, payable
monthly on the related Distribution Date, in an amount equal to one-twelfth of
the product of (a) the weighted average of the Servicing Fee Rates with respect
to each outstanding Series (based upon the Servicing Fee Rate for each Series
and the Investor Amount (or such other amount as specified in the related
Supplement) of such Series, in each case as of the last day of the prior Monthly
Period) and (b) the amount of Principal Receivables on the last day of the prior
Monthly Period. The share of the Servicing Fee allocable to (i) the
Certificateholders' Interest of a particular Series with respect to any Monthly
Period (the "Monthly Servicing Fee") and (ii) the Enhancement Investor Amount,
if any, of a particular Series with respect to any Monthly Period will each be
determined in accordance with the relevant Supplement. The portion of the
Servicing Fee with respect to any Monthly Period not so allocated to the
Certificateholders' Interest or the Enhancement Investor Amount, if any, of a
particular Series shall be paid by the Holders of the Seller Certificates on the
related Distribution Date and in no event shall the Trust, the Trustee, the
Investor Certificateholders of any Series or any Series Enhancer be liable for
the share of the Servicing Fee with respect to any Monthly Period to be paid by
the Holders of the Seller Certificates.
Section 3.03. Representations, Warranties and Covenants of the
Servicer. Colonial, as initial Servicer, hereby makes, and any Successor
Servicer by its appointment hereunder shall make, on each Closing Date (and on
the date of any such appointment), the following representations, warranties and
covenants:
Organization and Good Standing. The Servicer is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States of America or a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation, and
has full corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement and each Supplement and, in all
material respects,
<PAGE> 45
to own its properties and conduct its business as such properties are presently
owned and as such business is presently conducted.
Due Qualification. The Servicer 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 interests of the Investor
Certificateholders hereunder or under any Supplement.
Due Authorization. The execution, delivery, and performance of this
Agreement and each Supplement have been duly authorized by the Servicer by all
necessary corporate action on the part of the Servicer and this Agreement and
each Supplement will remain, from the time of its execution, an official record
of the Servicer.
Binding Obligation. This Agreement and each Supplement constitutes a
legal, valid and binding obligation of the Servicer, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect, affecting the enforcement of creditors' rights in general
and the rights of creditors of national banking associations and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
No Violation. The execution and delivery of this Agreement and each
Supplement by the Servicer, the performance of the transactions contemplated by
this Agreement and each Supplement and the fulfillment of the terms hereof and
thereof applicable to the Servicer will not conflict with, violate, result in
any breach of any of the material terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, any Requirement of
Law applicable to the Servicer or any indenture, contract, agreement, mortgage,
deed of trust or other instrument to which the Servicer is a party or by which
it or any of its properties are bound.
No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of the Servicer, threatened against the Servicer
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this Agreement or
any Supplement, seeking any determination or ruling that, in the reasonable
judgment of the Servicer, would materially and adversely affect the performance
by the Servicer of its obligations under this Agreement or any Supplement, or
seeking any determination or ruling that would materially and adversely affect
the validity or enforceability of this Agreement or any Supplement.
Compliance with Requirements of Law. The Servicer shall duly satisfy
all obligations on its part to be fulfilled under or in connection with the
Receivables and the related Accounts, will maintain in effect all qualifications
required under Requirements of Law in order to service the Receivables and the
related Accounts properly and will comply in all material respects with all
other Requirements of Law in connection with servicing the Receivables and the
related Accounts, the failure to comply with which would have a material adverse
effect on the interests of the Certificateholders.
<PAGE> 46
No Rescission or Cancellation. Subject to Section 3.09, the Servicer
shall not permit any rescission or cancellation of a Receivable except as
ordered by a court of competent jurisdiction or other Governmental Authority or
in the ordinary course of its business and in accordance with the Credit Card
Guidelines.
Protection of Certificateholders' Rights. The Servicer shall take no
action which, nor omit to take any action the omission of which, would
substantially impair the rights of Certificateholders in any Receivable or
Account, nor shall it, except in the ordinary course of its business and in
accordance with the Credit Card Guidelines, reschedule, revise or defer
Collections due on the Receivables.
Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of a Receivable, the Servicer will
take no action to cause any Receivable to be evidenced by any instrument (as
defined in the UCC) and, if any Receivable is so evidenced, it shall be
reassigned or assigned to the Servicer as provided in this Section; provided,
however, that Receivables evidenced by notes taken from Obligors in the ordinary
course of business of the Servicer's collection efforts shall not be deemed
Ineligible Receivables solely as a result thereof.
All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery by the Servicer of this
Agreement and each Supplement, the performance by the Servicer of the
transactions contemplated by this Agreement and each Supplement and the
fulfillment by the Servicer of the terms hereof and thereof, have been obtained;
provided, however, that the Servicer makes no representation or warranty
regarding state securities or "blue sky" laws in connection with the
distribution of the Certificates.
For purposes of the representations and warranties set forth in this
Section 3.03, each reference to a Supplement shall be deemed to refer only to
those Supplements in effect as of the relevant Closing Date or the date of
appointment of a Successor Servicer, as applicable.
In the event any of the representations, warranties or covenants of the
Servicer contained in paragraph (g), (h), (i) or (j) with respect to any
Receivable or the related Account is breached, and as a result of such breach
the Trust's rights in, to or under any Receivable in the related Account or the
proceeds of such Receivable are impaired or such proceeds are not available for
any reason to the Trust free and clear of any Lien, then no later than the
expiration of 60 days (or such longer period, not in excess of 150 days, as may
be agreed to by the Trustee) from the earlier to occur of the discovery of such
event by the Servicer, or receipt by the Servicer of notice of such event given
by the Trustee, all Receivables in the Account or Accounts to which such event
relates shall be reassigned or assigned to the Servicer on the terms and
conditions set forth below; provided, however, that such Receivables will not be
reassigned or assigned to the Servicer if, on any day prior to the end of such
60-day or longer period, (i) the relevant representation and warranty shall be
true and correct, or the relevant covenant shall have been complied with, in all
material respects and (ii) the Servicer shall have delivered to the Trustee a
certificate of an authorized officer describing the nature of such breach and
the manner in which such breach was cured.
<PAGE> 47
If Colonial is the Servicer, such reassignment or assignment shall be
accomplished in the manner set forth in subsection 2.05(b) as if the reassigned
or assigned Receivables were Ineligible Receivables (including the requirement,
if applicable, to reduce the aggregate amount of Principal Receivables used to
calculate the Seller Amount, the Series Percentages and any other percentage
used to allocate within or among Series applicable to any Series and to make
deposits into the Excess Funding Account). If Colonial is not the Servicer, the
Servicer shall effect such assignment by making a deposit into the Collection
Account in immediately available funds on the Transfer Date following the
Monthly Period in which such assignment obligation arises in an amount equal to
the amount of such Receivables, which deposit shall be considered a Collection
of Principal Receivables and shall be applied in accordance with Article IV and
the terms of each Supplement.
Upon each such reassignment or assignment to the Servicer, the Trustee,
on behalf of the Trust, shall automatically and without further action be deemed
to sell, transfer, assign, set over and otherwise convey to the Servicer,
without recourse, representation or warranty, all right, title and interest of
the Trust in and to such Receivables, all moneys due or to become due and all
amounts received with respect thereto and all proceeds thereof. The Trustee
shall execute such documents and instruments of transfer or assignment and take
such other actions as shall be reasonably requested by the Servicer to effect
the conveyance of any such Receivables pursuant to this Section. The obligation
of the Servicer to accept reassignment or assignment of such Receivables, and to
make the deposits, if any, required to be made to the Collection Account or the
Excess Funding Account as provided in the preceding paragraph, shall constitute
the sole remedy respecting the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of Certificateholders) or any
Series Enhancer.
Section 3.04. Reports and Records for the Trustee.
Daily Records. On each Business Day, the Servicer, with prior written
notice by the Trustee shall make or cause to be made available at the office of
the Servicer on any Business Day during normal business hours for inspection by
the Trustee a record setting forth (i) the Collections in respect of Principal
Receivables and in respect of Finance Charge Receivables processed by the
Servicer on the second preceding Business Day in respect of the Accounts and
(ii) the amount of Receivables as of the close of business on the second
preceding Business Day. The Servicer shall, at all times, maintain its computer
files with respect to the Accounts in such a manner so that the Accounts may be
specifically identified.
Monthly Servicer's Certificate. Not later than the Determination Date
immediately preceding each Distribution Date, the Servicer shall, with respect
to each outstanding Series, deliver to the Trustee, the Paying Agent and each
Rating Agency a certificate of a Servicing Officer in substantially the form set
forth in the related Supplement.
Section 3.05. Annual Certificate of Servicer. The Servicer shall
deliver to the Trustee and each Rating Agency, on or before November 30 of each
calendar year, beginning with November 30, 1994, an Officer's Certificate (with
appropriate insertions) substantially in the form of Exhibit D.
<PAGE> 48
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available.
On or before November 30 of each calendar year, beginning with
November 30, 1994, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Sellers) to furnish a report (addressed to the Trustee) to the
Trustee, the Servicer and each Rating Agency to the effect that they have
applied certain procedures agreed upon with the Servicer and examined certain
documents and records relating to the servicing of Accounts under this Agreement
and each Supplement and that, on the basis of such agreed-upon procedures,
nothing has come to the attention of such accountants that caused them to
believe that the servicing (including the allocation of Collections) has not
been conducted in compliance with the terms and conditions set forth in Articles
III and Article IV and Section 8.08 of this Agreement and the applicable
provisions of each Supplement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement.
Such report shall set forth the agreed upon procedures performed.
On or before November 30 of each calendar year, beginning with
November 30, 1994, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Sellers) to furnish a report (addressed to the Trustee) to the
Trustee, the Servicer and each Rating Agency to the effect that they have
applied certain procedures agreed upon with the Servicer to compare the
mathematical calculations of certain amounts set forth in the Servicer's
certificates delivered pursuant to subsection 3.04(b) during the period covered
by such report with the Servicer's computer reports which were the source of
such amounts and that on the basis of such agreed-upon procedures and
comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement.
A copy of each certificate and report provided pursuant to Section
3.04(b), 3.05 or 3.06 may be obtained by any Investor Certificateholder or
Certificate Owner by a request to the Trustee addressed to the Corporate Trust
Office.
Section 3.07. Tax Treatment. Unless otherwise specified in a Supplement
with respect to a particular Series, the Sellers have entered into this
Agreement, and the Certificates will be issued, with the intention that, for
Federal, state and local income and franchise tax purposes only, the Investor
Certificates of each Series which are characterized as indebtedness at the time
of their issuance will qualify as indebtedness secured by the Receivables. The
Sellers, by entering into this Agreement, and each Certificateholder, by the
acceptance of any such Certificate (and each Certificate Owner, by its
acceptance of an interest in the applicable Certificate), agree to treat such
Investor Certificates for Federal, state and local income and franchise tax
purposes as indebtedness. Each Holder of such Investor Certificate agrees that
it will cause any Certificate Owner acquiring an interest in a Certificate
through it to comply with this Agreement as to treatment as indebtedness under
applicable tax law, as described in this Section 3.07.
<PAGE> 49
Section 3.08. Notices to Colonial. In the event that Colonial is no
longer acting as Servicer, any Successor Servicer shall deliver to Colonial each
certificate and report required to be provided thereafter pursuant to Section
3.04(b), 3.05 or 3.06.
Section 3.09. Adjustments.
If the Servicer adjusts downward the amount of any Receivable because
of a rebate, refund, unauthorized charge or billing error to an account holder,
or because such Receivable was created in respect of merchandise which was
refused or returned by an account holder, 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 Seller Amount, the Series
Percentages and any other percentage used to allocate within or among Series
applicable to any Series will be reduced by the amount of the adjustment.
Similarly, the amount of Principal Receivables used to calculate the Seller
Amount, the Series Percentages and any other percentage used to allocate within
or among Series applicable to any Series will be reduced by the amount of any
Receivable which was discovered as having been created through a fraudulent or
counterfeit charge. Any adjustment required pursuant to either of the two
preceding sentences shall be made on or prior to the end of the Monthly Period
in which such adjustment obligation arises. In the event that, following the
exclusion of such Principal Receivables from the calculation of the Seller
Amount, the Seller Amount would be less than the Required Seller Amount, not
later than 12:00 noon, New York City time, on the Distribution Date following
the Monthly Period in which such adjustment obligation arises, the Seller which
transferred such Principal Receivables to the Trust shall make a deposit into
the Excess Funding Account in immediately available funds in an amount equal to
the amount by which the Seller Amount would be below the Required Seller Amount
(up to the amount of such Principal Receivables).
If (i) the Servicer makes a deposit into the Collection Account in
respect of a Collection of a Receivable and such Collection was received by the
Servicer in the form of a check which is not honored for any reason or (ii) the
Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is received shall
be deemed not to have been paid.
Section 3.10. Reports to the Commission. The Servicer shall, on behalf
of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
The Sellers shall, at the expense of the Servicer, cooperate in any reasonable
request of the Servicer in connection with such filings.
[END OF ARTICLE III]
<PAGE> 50
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
Section 4.01. Rights of Certificateholders. The Investor Certificates
shall represent fractional undivided interests in the Trust, which, with respect
to each Series, shall consist of the right to receive, to the extent necessary
to make the required payments with respect to the Investor Certificates of such
Series at the times and in the amounts specified in the related Supplement, the
portion of Collections allocable to Investor Certificateholders of such Series
pursuant to this Agreement and such Supplement, funds on deposit in the
Collection Account and the Excess Funding Account allocable to
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and funds available
pursuant to any related Series Enhancement (collectively, with respect to all
Series, the "Certificateholders' Interest"), it being understood that the
Investor Certificates of any Series or Class shall not represent any interest in
any Series Account or Series Enhancement for the benefit of any other Series or
Class. The Seller Certificates shall represent the ownership interest in the
remainder of the Trust Assets not allocated pursuant to this Agreement or any
Supplement to the Certificateholders' Interest, including the right to receive
Collections with respect to the Receivables and other amounts at the times and
in the amounts specified in this Agreement or any Supplement to be paid to the
Holders of the Seller Certificates (the "Sellers' Interest"); provided, however,
that the Seller Certificates shall not represent any interest in the Collection
Account, the Excess Funding Account, any Series Account or any Series
Enhancement, except as specifically provided in this Agreement or any
Supplement; provided further, that the foregoing shall not be construed to limit
the Trustee's obligations to make payments to the Holders of the Seller
Certificates, the Sellers and the Servicer as and when required under this
Agreement and any Supplement.
Section 4.02. Establishment of Collection Account and Excess Funding
Account. The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account (or Eligible Deposit Accounts) bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Certificateholders (the "Collection Account"). The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Collection Account and in all proceeds thereof. The Collection Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Certificateholders. Except as expressly provided in this Agreement, the Servicer
agrees that it shall have no right of setoff or banker's lien against, and no
right to otherwise deduct from, any funds held in the Collection Account for any
amount owed to it by the Trustee, the Trust, any Certificateholder or any Series
Enhancer. If, at any time, the Collection Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall within ten
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new Collection Account meeting
the conditions specified above, transfer any cash or any investments to such new
Collection Account and from the date such new Collection Account is established,
it shall be the "Collection Account."
<PAGE> 51
Unless otherwise agreed to by each Rating Agency, if at any time
neither Colonial nor any Affiliate of Colonial is the Servicer, the Collection
Account will be moved from Colonial if then maintained there.
Funds on deposit in the Collection Account (other than amounts
deposited pursuant to Section 2.06, 9.02, 10.01 or 12.02) shall at the direction
of the Servicer be invested by the Trustee in Eligible Investments selected by
the Servicer. All such Eligible Investments shall be held by the Trustee for the
benefit of the Certificateholders. The Trustee shall maintain for the benefit of
the Certificateholders possession of the negotiable instruments or securities,
if any, evidencing such Eligible Investments. Investments of funds representing
Collections collected during any Monthly Period shall be invested in Eligible
Investments that will mature so that funds will be available at the close of
business on the Transfer Date following such Monthly Period. Unless directed by
the Servicer, funds deposited in the Collection Account on a Transfer Date with
respect to the next following Distribution Date are not required to be invested
overnight. For purposes of determining the availability of funds or the balances
in the Collection Account for any reason under this Agreement, all investment
earnings net of investment expenses and losses on such funds shall be deemed not
to be available or on deposit.
The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders (the
"Excess Funding Account"). The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Excess Funding Account
and in all proceeds thereof. The Excess Funding Account shall be under the sole
dominion and control of the Trustee for the benefit of the Certificateholders.
Except as expressly provided in this Agreement, the Servicer agrees that it
shall have no right of setoff or banker's lien against, and no right to
otherwise deduct from, any funds held in the Excess Funding Account for any
amount owed to it by the Trustee, the Trust, any Certificateholder or any Series
Enhancer. If, at any time, the Excess Funding Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new Excess Funding Account
meeting the conditions specified above, transfer any cash or any investments to
such new Excess Funding Account and from the date such new Excess Funding
Account is established, it shall be the "Excess Funding Account."
Unless otherwise agreed by each Rating Agency, if at any time neither
Colonial nor any other Affiliate of Colonial is the Servicer, the Excess Funding
Account will be moved from Colonial if then maintained there.
Funds on deposit in the Excess Funding Account shall at the direction
of the Servicer be invested by the Trustee in Eligible Investments selected by
the Servicer. All such Eligible Investments shall be held by the Trustee for the
benefit of the Certificateholders. The Trustee shall maintain for the benefit of
the Certificateholders possession of the negotiable instruments or securities,
if any, evidencing such Eligible Investments. Funds on deposit in the Excess
Funding Account on any date (after giving effect to any withdrawals from the
Excess Funding Account on such date) will be invested in Eligible Investments
that will mature so that funds will be available at the close of business on the
Transfer Date following such date. Unless
<PAGE> 52
directed by the Servicer, funds deposited in the Excess Funding Account on a
Transfer Date with respect to the next following Distribution Date are not
required to be invested overnight. On each Transfer Date, the Servicer shall
instruct the Trustee to withdraw on the related Distribution Date from the
Excess Funding Account and deposit in the Collection Account all interest and
other investment earnings (net of losses and investment expenses) on funds on
deposit in the Excess Funding Account, for application as Collections of Finance
Charge Receivables with respect to the prior Monthly Period. Interest (including
reinvested interest) and other investment income and earnings on funds on
deposit in the Excess Funding Account shall not be considered part of the Excess
Funding Amount for purposes of this Agreement. On any Transfer Date on which no
Series is in an Accumulation Period or Amortization Period, the Servicer shall
determine the amount by which the Seller Amount exceeds the Required Seller
Amount on such date and shall instruct the Trustee to withdraw such amount from
the Excess Funding Account on the related Distribution Date and pay such amount
to the Holders of the Seller Certificates. On any Transfer Date on which one or
more Series is in an Accumulation Period or Amortization Period, the Servicer
shall determine the aggregate amount of Principal Shortfalls, if any, with
respect to each such Series that is a Principal Sharing Series (after giving
effect to the allocation and payment provisions in the Supplement with respect
to each such Series), and the Servicer shall instruct the Trustee to withdraw
such amount (up to the Excess Funding Amount) from the Excess Funding Account on
the succeeding Distribution Date and allocate such amount among each such Series
as Shared Principal Collections as specified herein and in each related
Supplement.
Section 4.03. Collections and Allocations.
Collections. The Servicer will apply or will instruct the Trustee to
apply all funds on deposit in the Collection Account as described in this
Article IV and in each Supplement. Except as otherwise provided below or as
expressly provided in any Supplement with respect to Collections allocated to
the related Series, the Servicer shall deposit Collections into the Collection
Account no later than the second Business Day following the Date of Processing
of such Collections. Subject to the express terms of any Supplement, but
notwithstanding anything else in this Agreement to the contrary, for so long as
Colonial remains the Servicer and (x) 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, which is satisfactory to each Rating
Agency), or (y) Colonial has provided to the Trustee a letter of credit covering
collection risk of the Servicer acceptable to each Rating Agency (as evidenced
by a letter from each Rating Agency), the Servicer need not make the daily
deposits of Collections into the Collection Account as provided in the preceding
sentence, but may make a single deposit in the Collection Account in immediately
available funds not later than 12:00 noon, New York City time, on the Transfer
Date following the Monthly Period with respect to which such deposit was made.
Subject to the express terms of any Supplement, but notwithstanding anything
else in this Agreement to the contrary, with respect to any Monthly Period,
whether the Servicer is required to make deposits of Collections pursuant to the
first or the second preceding sentence, (i) the Servicer will only be required
to deposit Collections into the Collection Account up to the aggregate amount of
Collections required to be deposited into any Series Account or, without
duplication, distributed on or prior to the related Distribution Date to
Investor Certificateholders or to any Series Enhancer pursuant to the terms of
any Supplement or Enhancement Agreement and (ii) if at any time prior to such
Distribution Date the amount of Collections deposited in the
<PAGE> 53
Collection Account exceeds the amount required to be deposited pursuant to
clause (i) above, the Servicer will be permitted to withdraw the excess from the
Collection Account.
Allocations for the Seller Certificates. Throughout the existence of
the Trust, unless otherwise stated in any Supplement, the Servicer shall
allocate to the Holders of the Seller Certificates an amount equal to the
product of (A) the Seller Percentage and (B) the aggregate amount of such
Collections allocated to Principal Receivables and Finance Charge Receivables,
respectively, in respect of each Monthly Period. Notwithstanding anything in
this Agreement to the contrary, unless otherwise stated in any Supplement, the
Servicer need not deposit this amount or any other amounts so allocated to the
Seller Certificates pursuant to any Supplement into the Collection Account and
shall pay, or be deemed to pay, such amounts as collected to the Holders of the
Seller Certificates.
The payments to be made to the Holders of the Seller Certificates
pursuant to this subsection 4.03(c) do not apply to deposits to the Collection
Account or other amounts that do not represent Collections, including payment of
the purchase price for Receivables pursuant to Section 2.06 or 10.01, proceeds
from the sale, disposition or liquidation of Receivables pursuant to Section
9.02 or 12.02 or payment of the purchase price for the Certificateholders'
Interest of a specific Series pursuant to the related Supplement.
Section 4.04. Shared Principal Collections. On each Distribution Date,
(a) the Servicer shall 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 shall withdraw from the
Collection Account and pay to the Holders of the Seller Certificates an amount
equal to the excess, if any, of (x) the aggregate amount for all outstanding
Series of Collections of Principal Receivables which the related Supplements or
this Agreement 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 Supplements specify are "Principal
Shortfalls" for such Distribution Date; provided, however, that if, on any
Distribution Date the Seller Amount is less than or equal to the Required Seller
Amount, the Servicer will not distribute to the Holders of the Seller
Certificates any Shared Principal Collections that otherwise would be
distributed to the Holders of the Seller Certificates, but shall deposit such
funds in the Excess Funding Account.
Section 4.05. Allocation of Trust Assets to Series or Groups. To the
extent so provided in the Supplement for any Series or in an amendment to the
Pooling and Servicing Agreement executed pursuant to subsection 13.01(a),
Receivables conveyed to the Trust pursuant to Section 2.01 and Receivables or
Participation Interests conveyed to the Trust pursuant to Section 2.08 or any
Participation Interest Supplement, and all Collections received with respect to
such Receivables or Participation Interests, may be allocated in whole or in
part to one or more Series or Groups as may be provided in such Supplement or
amendment, provided, however, that any such allocation shall be effective only
upon satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately
preceding such allocation, the Servicer shall have given the Trustee
and each Rating Agency written notice of such allocation;
<PAGE> 54
(ii) the Rating Agency Condition shall have been satisfied
with respect to such allocation; and
(iii) the Servicer shall have delivered to the Trustee an
Officer's Certificate, dated the date of such allocation, to the effect
that the Servicer reasonably believes that such allocation will not
have an Adverse Effect.
Any such Supplement or amendment may provide that (i) such
allocation to one or more particular Series or Groups may terminate upon the
occurrence of certain events specified therein and (ii) that upon the occurrence
of any such event, such assets and any Collections with respect thereto, shall
be reallocated to other Series or Groups or to all Series, all as shall be
provided in such Supplement or amendment.
[END OF ARTICLE IV]
<PAGE> 55
ARTICLE V
Distributions and Reports to
Certificateholders
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
[END OF ARTICLE V]
<PAGE> 56
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Investor Certificates of any Series
or Class may be issued in bearer form ("Bearer Certificates") with attached
interest coupons and any other applicable coupon (collectively, the "Coupons")
or in fully registered form ("Registered Certificates") and shall be
substantially in the form of the exhibits with respect thereto attached to the
applicable Supplement. The Bank Certificate will be issued in registered form,
substantially in the form of Exhibit A, and shall upon issue be executed and
delivered by Colonial to the Trustee for authentication and redelivery as
provided in Section 6.02. Except as otherwise provided in Section 6.03 or in any
Supplement, Bearer Certificates shall be issued in minimum denominations of
$100,000 and Registered Certificates shall be issued in minimum denominations of
$1,000 and in integral multiples of $1,000 in excess thereof. If specified in
any Supplement, the Investor Certificates of any Series or Class shall be issued
upon initial issuance as a single certificate evidencing the aggregate original
principal amount of such Series or Class as described in Section 6.13. The Bank
Certificate shall be a single certificate and shall initially represent the
entire Sellers' Interest. Each Certificate shall be executed by manual or
facsimile signature on behalf of Colonial by its respective President or any
Vice President. Certificates bearing the manual or facsimile signature of an
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of Colonial shall not be rendered invalid, notwithstanding that
such individual ceased to be so authorized prior to the authentication and
delivery of such Certificates or does not hold such office at the date of such
Certificates. No Certificates shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. Bearer Certificates shall be dated the
related Closing Date. All Registered Certificates and Seller Certificates shall
be dated the date of their authentication.
Section 6.02. Authentication of Certificates. The Trustee shall
authenticate and deliver the Investor Certificates of each Series and Class that
are issued upon original issuance to or upon the order of the Sellers against
payment to the Sellers of the purchase price therefor. The Trustee shall
authenticate and deliver the Bank Certificate to Colonial simultaneously with
its delivery of the Investor Certificates of the first Series to be issued
hereunder. If specified in the related Supplement for any Series or Class, the
Trustee shall authenticate and deliver outside the United States the Global
Certificate that is issued upon original issuance thereof.
Section 6.03. New Issuances.
The Sellers may from time to time direct the Trustee, on behalf of
the Trust, to authenticate one or more new Series of Investor Certificates. The
Investor Certificates of all outstanding Series shall be equally and ratably
entitled as provided herein to the benefits of this Agreement without
preference, priority or distinction, all in accordance with the terms and
<PAGE> 57
provisions of this Agreement and the applicable Supplement except, with respect
to any Series or Class, as provided in the related Supplement.
On or before the Closing Date relating to any new Series, the parties
hereto will execute and deliver a Supplement which will specify the Principal
Terms of such new Series. The terms of such Supplement may modify or amend the
terms of this Agreement solely as applied to such new Series. The obligation of
the Trustee to authenticate the Investor Certificates of such new Series and to
execute and deliver the related Supplement is subject to the satisfaction of the
following conditions:
on or before the fifth day immediately preceding the
Closing Date, the Sellers shall have given the Trustee and the Servicer
notice of such issuance and the Closing Date; and on or before the
tenth day immediately preceding the Closing Date, the Sellers shall
have given each Rating Agency notice of such issuance;
the Sellers shall have delivered to the Trustee the
related Supplement, in form satisfactory to the Trustee, executed by
each party thereto;
the Sellers shall have delivered to the Trustee any
related Enhancement Agreement executed by each of the parties thereto,
other than the Trustee;
the Rating Agency Condition shall have been satisfied with
respect to such issuance;
the Sellers shall have delivered to the Trustee an
Officer's Certificate, dated the Closing Date, to the effect that such
Seller reasonably believes that such issuance will not, based on the
facts known to such officer at the time of such certification, then or
thereafter cause a Pay Out Event to occur with respect to any Series;
and
if any Series of Investor Certificates are outstanding
that were characterized as debt at the time of their issuance, the
Sellers shall have delivered to the Trustee and each Rating Agency a
Tax Opinion, dated the Closing Date, with respect to such issuance.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and authenticate the Investor Certificates of such Series upon
execution thereof by Colonial.
(c) The Sellers may surrender the Bank Certificate to the Trustee in
exchange for a newly issued Bank Certificate and one or more additional
certificates (each a "Supplemental Certificate"), the terms of which shall be
defined in a supplement to this Agreement (which supplement shall be subject to
subsection 13.01(a) only to the extent that it amends any of the terms of this
Agreement), to be delivered to or upon the order of the Sellers (or the Holder
of a Supplemental Certificate, in the case of the transfer or exchange thereof,
as provided below), upon satisfaction of the following conditions:
The Sellers shall have given written notice to each
Rating Agency of such exchange;
<PAGE> 58
the Seller 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
if any Series of Investor Certificates are outstanding
that were characterized as debt at the time of their issuance, the
Sellers 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 Supplemental Certificate may be transferred or exchanged only upon
satisfaction of the conditions set forth in clause (ii) above.
(d) The Bank Certificate (or any interest therein) may be transferred
to a Person which is a member of the "affiliated group" of which ADVANTA Corp.
is the "common parent" (as such terms are defined in Section 1504(a) of the
Code); provided that (i) if any Series of Investor Certificates are outstanding
that were characterized as debt at the time of their issuance, the Sellers shall
have delivered to the Trustee and each Rating Agency a Tax Opinion, dated the
date of such transfer, with respect thereto, and (ii) any such transferee shall
be deemed to be a "Seller" for purposes of Sections 7.04 and 9.02.
Section 6.04. Registration of Transfer and Exchange of Certificates.
The Trustee shall cause to be kept at the office or agency to be
maintained in accordance with the provisions of Section 11.16 a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, a transfer agent and registrar (which may be the Trustee) (the
"Transfer Agent and Registrar") shall provide for the registration of the
Registered Certificates and of transfers and exchanges of the Registered
Certificates as herein provided. The Transfer Agent and Registrar shall
initially be the Trustee and any co-transfer agent and co-registrar chosen by
the Sellers and acceptable to the Trustee, including, if and so long as any
Series or Class is listed on the Luxembourg Stock Exchange and such exchange
shall so require, a co-transfer agent and co-registrar in Luxembourg. Any
reference in this Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context requires otherwise.
The Trustee may revoke such appointment and remove any Transfer Agent
and Registrar if the Trustee determines in its sole discretion that such
Transfer Agent and Registrar failed to perform its obligations under this
Agreement in any material respect. Any Transfer Agent and Registrar shall be
permitted to resign as Transfer Agent and Registrar upon 30 days' notice to the
Sellers, the Trustee and the Servicer; provided, however, that such resignation
shall not be effective and such Transfer Agent and Registrar shall continue to
perform its duties as Transfer Agent and Registrar until the Trustee has
appointed a successor Transfer Agent and Registrar reasonably acceptable to the
Sellers.
Subject to paragraph (c) below, upon surrender for registration of
transfer of any Registered Certificate at any office or agency of the Transfer
Agent and Registrar maintained for such purpose, one or more new Registered
Certificates (of the same Series and Class) in authorized denominations of like
aggregate fractional undivided interests in the
<PAGE> 59
Certificateholders' Interest shall be executed, authenticated and delivered, in
the name of the designated transferee or transferees.
At the option of a Registered Certificateholder, Registered
Certificates (of the same Series and Class) may be exchanged for other
Registered Certificates of authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest, upon surrender of the
Registered Certificates to be exchanged at any such office or agency; Registered
Certificates, including Registered Certificates received in exchange for Bearer
Certificates, may not be exchanged for Bearer Certificates. At the option of the
Holder of a Bearer Certificate, subject to applicable laws and regulations,
Bearer Certificates may be exchanged for other Bearer Certificates or Registered
Certificates (of the same Series and Class) of authorized denominations of like
aggregate fractional undivided interests in the Certificateholders' Interest,
upon surrender of the Bearer Certificates to be exchanged at an office or agency
of the Transfer Agent and Registrar located outside the United States. Each
Bearer Certificate surrendered pursuant to this Section shall have attached
thereto all unmatured Coupons; provided that any Bearer Certificate, so
surrendered after the close of business on the Record Date preceding the
relevant payment date after the expected final payment date need not have
attached the Coupon relating to such payment date (in each case, as specified in
the applicable Supplement).
Whenever any Investor Certificates are so surrendered for exchange,
Colonial shall execute, the Trustee shall authenticate and the Transfer Agent
and Registrar shall deliver (in the case of Bearer Certificates, outside the
United States) the Investor Certificates which the Investor Certificateholder
making the exchange is entitled to receive. Every Investor Certificate presented
or surrendered for registration of transfer or exchange shall be accompanied by
a written instrument of transfer in a form satisfactory to the Trustee or the
Transfer Agent and Registrar duly executed by the Investor Certificateholder or
the attorney-in-fact thereof duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any such transfer or exchange.
All Investor Certificates (together with any Coupons) surrendered for
registration of transfer and exchange or for payment shall be canceled and
disposed of in a manner satisfactory to the Trustee. The Trustee shall cancel
and destroy any Global Certificate upon its exchange in full for Definitive
Euro-Certificates and shall deliver a certificate of destruction to the Sellers.
Such certificate shall also state that a certificate or certificates of a
Foreign Clearing Agency to the effect referred to in Section 6.13 was received
with respect to each portion of the Global Certificate exchanged for Definitive
Euro-Certificates.
Colonial shall execute and deliver to the Trustee Bearer Certificates
and Registered Certificates in such amounts and at such times as are necessary
to enable the Trustee to fulfill its responsibilities under this Agreement, each
Supplement and the Certificates.
<PAGE> 60
The Transfer Agent and Registrar will maintain at its expense in each
of the Borough of Manhattan, The City of New York, and, if and so long as any
Series or Class is listed on the Luxembourg Stock Exchange, Luxembourg, an
office or agency where Investor Certificates may be surrendered for registration
of transfer or exchange (except that Bearer Certificates may not be surrendered
for exchange at any such office or agency in the United States).
a) (i) Registration of transfer of Investor Certificates
containing a legend substantially to the effect set forth on Exhibit
E-1 shall be effected only if such transfer (x) is made pursuant to an
effective registration statement under the Act, or is exempt from the
registration requirements under the Act, and (y) is made to a Person
which is not an employee benefit plan, trust or account, including an
individual retirement account, that is subject to ERISA or that is
described in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a plan's investment
in such entity (a "Benefit Plan"). In the event that registration of a
transfer is to be made in reliance upon an exemption from the
registration requirements under the Act, the transferor or the
transferee shall deliver, at its expense, to the Sellers, the Servicer
and the Trustee, an investment letter from the transferee,
substantially in the form of the investment and ERISA representation
letter attached hereto as Exhibit E-2, and no registration of transfer
shall be made until such letter is so delivered.
Investor Certificates issued upon registration or transfer
of, or Investor Certificates issued in exchange for, Investor
Certificates bearing the legend referred to above shall also bear such
legend unless the Sellers, the Servicer, the Trustee and the Transfer
Agent and Registrar receive an Opinion of Counsel, satisfactory to each
of them, to the effect that such legend may be removed.
Whenever an Investor Certificate containing the legend
referred to above is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and Registrar shall
promptly seek instructions from the Servicer regarding such transfer
and shall be entitled to receive instructions signed by a Servicing
Officer prior to registering any such transfer. The Sellers hereby
agree to indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or expense
incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by them in relation to
any such instructions furnished pursuant to this clause (i).
(ii) Registration of transfer of Investor Certificates
containing a legend to the effect set forth on Exhibit E-3 shall be
effected only if such transfer is made to a Person which is not a
Benefit Plan. By accepting and holding any such Investor Certificate,
an Investor Certificateholder shall be deemed to have represented and
warranted that it is not a Benefit Plan. By acquiring any interest in a
Book-Entry Certificate which contains such legend, a Certificate Owner
shall be deemed to have represented and warranted that it is not a
Benefit Plan.
(iii) If so requested by the Sellers, the Trustee will make
available to any prospective purchaser of Investor Certificates who so
requests, a copy of a letter provided
<PAGE> 61
to the Trustee by or on behalf of the Sellers relating to the
transferability of any Series or Class to a Benefit Plan.
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates. If any
mutilated Certificate (together, in the case of Bearer Certificates, with all
unmatured Coupons (if any) appertaining thereto) is surrendered to the Transfer
Agent and Registrar, or the Transfer Agent and Registrar receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and there
is delivered to the Transfer Agent and Registrar and the Trustee such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Trustee that such Certificate has been acquired by
a bona fide purchaser, Colonial shall execute, the Trustee shall authenticate
and the Transfer Agent and Registrar shall deliver (in the case of Bearer
Certificates, outside the United States), in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and aggregate fractional undivided interest. In connection with the
issuance of any new Certificate under this Section, the Trustee or the Transfer
Agent and Registrar may require the payment by the Certificateholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and Transfer Agent and Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 6.06. Persons Deemed Owners. The Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may (a) prior to due
presentation of a Registered Certificate for registration of transfer, treat the
Person in whose name any Registered Certificate is registered as the owner of
such Registered Certificate for the purpose of receiving distributions pursuant
to the terms of the applicable Supplement and for all other purposes whatsoever,
and (b) treat the bearer of a Bearer Certificate or Coupon as the owner of such
Bearer Certificate or Coupon for the purpose of receiving distributions pursuant
to the terms of the applicable Supplement and for all other purposes whatsoever;
and, in any such case, neither the Trustee, the Paying Agent, the Transfer Agent
and Registrar nor any agent of any of them shall be affected by any notice to
the contrary. Notwithstanding the foregoing, in determining whether the Holders
of the requisite Investor Certificates have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
owned by any of the Sellers, the Servicer, any other Holder of a Seller
Certificate, the Trustee or any Affiliate thereof, shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Certificates which the Trustee
actually knows to be so owned shall be so disregarded. Certificates so owned
which have been pledged in good faith shall not be disregarded and may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Certificates and that
the pledgee is not any Seller, the Servicer, any other Holder of a Seller
Certificate or any Affiliate thereof.
Section 6.07. Appointment of Paying Agent. The Paying Agent shall make
distributions to Investor Certificateholders from the Collection Account or any
applicable Series Account pursuant to the provisions of the applicable
Supplement and shall report the amounts of such distributions to the Trustee.
Any Paying Agent shall have the revocable power to withdraw
<PAGE> 62
funds from the Collection Account or any applicable Series Account for the
purpose of making the distributions referred to above. The Trustee may revoke
such power and remove the Paying Agent if the Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement or any Supplement in any material respect. The Paying Agent
shall initially be the Trustee and any co-paying agent chosen by the Sellers and
acceptable to the Trustee, including, if and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such exchange so requires, a
co-paying agent in Luxembourg or another western European city. Any Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' notice to the
Trustee. In the event that any Paying Agent shall resign, the Trustee shall
appoint a successor to act as Paying Agent. The Trustee shall cause each
successor or additional Paying Agent to execute and deliver to the Trustee an
instrument in which such successor or additional Paying Agent shall agree with
the Trustee that it will hold all sums, if any, held by it for payment to the
Investor Certificateholders in trust for the benefit of the Investor
Certificateholders entitled thereto until such sums shall be paid to such
Investor Certificateholders. The Paying Agent shall return all unclaimed funds
to the Trustee and upon removal shall also return all funds in its possession to
the Trustee. The provisions of Sections 11.01, 11.02, 11.03 and 11.05 shall
apply to the Trustee also in its role as Paying Agent, for so long as the
Trustee shall act as Paying Agent. Any reference in this Agreement to the Paying
Agent shall include any co-paying agent unless the context requires otherwise.
Section 6.08. Access to List of Registered Certificateholders' Names
and Addresses. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer or the Paying Agent, within five Business
Days after receipt by the Trustee of a request therefor, a list in such form as
the Servicer or the Paying Agent may reasonably require, of the names and
addresses of the Registered Certificateholders. If any Holder or group of
Holders of Investor Certificates of any Series or all outstanding Series, as the
case may be, evidencing not less than 10% of the aggregate unpaid principal
amount of such Series or all outstanding Series, as applicable (the
"Applicants"), apply to the Trustee, and such application states that the
Applicants desire to communicate with other Investor Certificateholders with
respect to their rights under this Agreement or any Supplement or under the
Investor Certificates and is accompanied by a copy of the communication which
such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified by such Applicants for its costs and expenses, shall
afford or shall cause the Transfer Agent and Registrar to afford such Applicants
access during normal business hours to the most recent list of Registered
Certificateholders of such Series or all outstanding Series, as applicable, held
by the Trustee, within five Business Days after the receipt of such application.
Such list shall be as of a date no more than 45 days prior to the date of
receipt of such Applicants' request.
Every Registered Certificateholder, by receiving and holding a
Registered Certificate, agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents, shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Registered Certificateholders hereunder, regardless of the
sources from which such information was derived.
Section 6.09. Authenticating Agent. The Trustee may appoint one or more
authenticating agents with respect to the Certificates which shall be authorized
to act on behalf of the Trustee in authenticating the Certificates in connection
with the issuance, delivery,
<PAGE> 63
registration of transfer, exchange or repayment of the Certificates. Whenever
reference is made in this Agreement to the authentication of Certificates by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication on behalf of the Trustee by an authenticating
agent and certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Sellers and the Servicer.
Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any power or any further act on the part of the Trustee
or such authenticating agent. An authenticating agent may at any time resign by
giving notice of resignation to the Trustee and to the Sellers. The Trustee may
at any time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Sellers. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time an
authenticating agent shall cease to be acceptable to the Trustee or the Sellers,
the Trustee promptly may appoint a successor authenticating agent. Any successor
authenticating agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an authenticating agent. No successor
authenticating agent shall be appointed unless acceptable to the Trustee and the
Sellers. The Sellers agree to pay to each authenticating agent from time to time
reasonable compensation for its services under this Section. The provisions of
Sections 11.01, 11.02 and 11.03 shall be applicable to any authenticating agent.
Pursuant to an appointment made under this Section, the Certificates
may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
----------------------------
----------------------------
as Authenticating Agent
for the Trustee,
by
---------------------------
Authorized Officer
Section 6.10. Book-Entry Certificates. Unless otherwise specified in
the related Supplement for any Series or Class, the Investor Certificates, upon
original issuance, shall be issued in the form of one or more typewritten
Investor Certificates representing the Book-Entry Certificates, to be delivered
to the Clearing Agency, by, or on behalf of, the Sellers. The Investor
Certificates shall initially be registered on the Certificate Register in the
name of the Clearing Agency or its nominee, and no Certificate Owner will
receive a definitive certificate
<PAGE> 64
representing such Certificate Owner's interest in the Investor Certificates,
except as provided in Section 6.12. Unless and until definitive, fully
registered Investor Certificates ("Definitive Certificates") have been issued to
the applicable Certificate Owners pursuant to Section 6.12 or as otherwise
specified in any such Supplement:
the provisions of this Section shall be in full force and effect;
the Sellers, the Servicer and the Trustee may deal with the Clearing
Agency and the Clearing Agency Participants for all purposes (including the
making of distributions) as the authorized representatives of the respective
Certificate Owners;
to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control; and
the rights of the respective Certificate Owners shall be exercised
only through the Clearing Agency and the Clearing Agency Participants and shall
be limited to those established by law and agreements between such Certificate
Owners and the Clearing Agency or the Clearing Agency Participants. Pursuant to
the Depository Agreement, unless and until Definitive Certificates are issued
pursuant to Section 6.12, the Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit distributions of
principal and interest on the related Investor Certificates to such Clearing
Agency Participants.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Investor Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
Investor Certificates, such direction or consent may be given by Certificate
Owners (acting through the Clearing Agency and the Clearing Agency Participants)
owning Investor Certificates evidencing the requisite percentage of principal
amount of Investor Certificates.
Section 6.11. Notices to Clearing Agency. Whenever any notice or other
communication is required to be given to Investor Certificateholders of any
Series or Class with respect to which Book-Entry Certificates have been issued,
unless and until Definitive Certificates shall have been issued to the related
Certificate Owners, the Trustee shall give all such notices and communications
to the applicable Clearing Agency.
Section 6.12. Definitive Certificates. If Book Entry Certificates have
been issued with respect to any Series or Class and the Sellers advise the
Trustee that the Clearing Agency is no longer willing or able to discharge
properly its responsibilities under the Depository Agreement with respect to
such Series or Class and the Trustee or the Sellers are unable to locate a
qualified successor, the Sellers, at their option, advise the Trustee that they
elect to terminate the book-entry system with respect to such Series or Class
through the Clearing Agency or 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
the Clearing Agency through the Clearing Agency Participants that the
continuation of a book-entry system with respect to the Investor Certificates of
such Series or Class through the Clearing Agency is no longer in the best
interests of the Certificate Owners with respect to such Certificates, then the
Trustee shall notify all Certificate Owners of such Certificates, through the
<PAGE> 65
Clearing Agency, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of any such Certificates by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency for
registration, Colonial shall execute and the Trustee shall authenticate and
deliver such Definitive Certificates. Neither the Sellers nor the Trustee shall
be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of such Definitive Certificates, all references herein to obligations
imposed upon or to be performed by the Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with respect
to such Definitive Certificates, and the Trustee shall recognize the Holders of
such Definitive Certificates as Investor Certificateholders hereunder.
Section 6.13. Global Certificate; Exchange Date.
If specified in the related Supplement for any Series or Class, the
Investor Certificates for such Series or Class will initially be issued in the
form of a single temporary global Certificate (the "Global Certificate") in
bearer form, without interest coupons, in the denomination of the entire
aggregate principal amount of such Series or Class and substantially in the form
set forth in the exhibit with respect thereto attached to the related
Supplement. The Global Certificate will be executed by Colonial and
authenticated by the Trustee upon the same conditions, in substantially the same
manner and with the same effect as the Definitive Certificates. The Global
Certificate may be exchanged as described below for Bearer or Registered
Certificates in definitive form (the "Definitive Euro-Certificates").
The Manager shall, upon its determination of the date of completion
of the distribution of the Investor Certificates of such Series or Class, so
advise the Trustee, the Sellers, the Depositaries, and each Foreign Clearing
Agency forthwith. Without unnecessary delay, but in any event not prior to the
Exchange Date, Colonial will execute and deliver to the Trustee at its London
office or its designated agent outside the United States definitive Bearer
Certificates in an aggregate principal amount equal to the entire aggregate
principal amount of such Series or Class. All Bearer Certificates so issued and
delivered will have Coupons attached. The Global Certificate may be exchanged
for an equal aggregate principal amount of Definitive Euro-Certificates only on
or after the Exchange Date. An institutional investor that is a U.S. Person may
exchange the portion of the Global Certificate beneficially owned by it only for
an equal aggregate principal amount of Registered Certificates bearing the
applicable legend set forth in the form of Registered Certificates attached to
the related Supplement and having a minimum denomination of $500,000, which may
be in temporary form if the Sellers so elect. The Sellers may waive the $500,000
minimum denomination requirement if they so elect. Upon any demand for exchange
for Definitive Euro-Certificates in accordance with this paragraph, the Sellers
shall cause the Trustee to authenticate and deliver the Definitive
Euro-Certificates to the Holder (x) outside the United States, in the case of
Bearer Certificates, and (y) according to the instructions of the Holder, in the
case of Registered Certificates, but in either case only upon presentation to
the Trustee of a written statement substantially in the form of Exhibit F-1 with
respect to the Global Certificate or portion thereof being exchanged, signed by
a Foreign Clearing Agency and dated on the Exchange Date or a subsequent date,
to the effect that it has received in writing or by tested telex a certification
substantially in the form of (i) in the case of beneficial ownership of the
Global Certificate or a portion thereof being exchanged by a United States
institutional
<PAGE> 66
investor pursuant to the second preceding sentence, the certificate in the form
of Exhibit F-2 signed by the Manager which sold the relevant Certificates or
(ii) in all other cases, the certificate in the form of Exhibit F-3, the
certificate referred to in this clause (ii) being dated on the earlier of the
first actual payment of interest in respect of such Certificates and the date of
the delivery of such Certificate in definitive form. Upon receipt of such
certification, the Trustee shall cause the Global Certificate to be endorsed in
accordance with paragraph (d) below. Any exchange as provided in this Section
shall be made free of charge to the Holders and the beneficial owners of the
Global Certificate and to the beneficial owners of the Definitive
Euro-Certificates issued in exchange, except that a person receiving Definitive
Euro-Certificates must bear the cost of insurance, postage, transportation and
the like in the event that such person does not receive such Definitive
Euro-Certificates in person at the offices of a Foreign Clearing Agency.
The delivery to the Trustee by a Foreign Clearing Agency of any
written statement referred to above may be relied upon by the Sellers and the
Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency
pursuant to the terms of this Agreement.
Upon any such exchange of all or a portion of the Global Certificate
for a Definitive Euro-Certificate or Certificates, such Global Certificate shall
be endorsed by or on behalf of the Trustee to reflect the reduction of its
principal amount by an amount equal to the aggregate principal amount of such
Definitive Euro-Certificate or Certificates. Until so exchanged in full, such
Global Certificate shall in all respects be entitled to the same benefits under
this Agreement as Definitive Euro-Certificates authenticated and delivered
hereunder except that the beneficial owners of such Global Certificate shall not
be entitled to receive payments of interest on the Certificates until they have
exchanged their beneficial interests in such Global Certificate for Definitive
Euro-Certificates.
Section 6.14. Meetings of Certificateholders.
If at the time any Bearer Certificates are issued and outstanding
with respect to any Series or Class to which any meeting described below
relates, the Servicer or the Trustee may at any time call a meeting of Investor
Certificateholders of any Series or Class or of all Series, to be held at such
time and at such place as the Servicer or the Trustee, as the case may be, shall
determine, for the purpose of approving a modification of or amendment to, or
obtaining a waiver of any covenant or condition set forth in, this Agreement,
any Supplement or the Investor Certificates or of taking any other action
permitted to be taken by Investor Certificateholders hereunder or under any
Supplement. Notice of any meeting of Investor Certificateholders, setting forth
the time and place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given in accordance with Section 13.05, the
first mailing and publication to be not less than 20 nor more than 180 days
prior to the date fixed for the meeting. To be entitled to vote at any meeting
of Investor Certificateholders a person shall be (i) a Holder of one or more
Investor Certificates of the applicable Series or Class or (ii) a person
appointed by an instrument in writing as proxy by the Holder of one or more such
Investor Certificates. The only persons who shall be entitled to be present or
to speak at any meeting of Investor Certificateholders shall be the persons
entitled to vote at such meeting and their counsel and any representatives of
the Sellers, the Servicer and the Trustee and their respective counsel.
<PAGE> 67
At a meeting of Investor Certificateholders, persons entitled to vote
Investor Certificates evidencing a majority of the aggregate unpaid principal
amount of the applicable Series or Class or all outstanding Series, as the case
may be, shall constitute a quorum. No business shall be transacted in the
absence of a quorum, unless a quorum is present when the meeting is called to
order. In the absence of a quorum at any such meeting, the meeting may be
adjourned for a period of not less than 10 days; in the absence of a quorum at
any such meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days; at the reconvening of any meeting further adjourned
for lack of a quorum, the persons entitled to vote Investor Certificates
evidencing at least 25% of the aggregate unpaid principal amount of the
applicable Series or Class or all outstanding Series, as the case may be, shall
constitute a quorum for the taking of any action set forth in the notice of the
original meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided above except that such notice must be given not less than five
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage of the aggregate principal amount of the outstanding applicable
Investor Certificates which shall constitute a quorum.
Any Investor Certificateholder who has executed an instrument in
writing appointing a person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided that such
Investor Certificateholder shall be considered as present or voting only with
respect to the matters covered by such instrument in writing. Subject to the
provisions of Section 13.01, any resolution passed or decision taken at any
meeting of Investor Certificateholders duly held in accordance with this Section
shall be binding on all Investor Certificateholders whether or not present or
represented at the meeting.
The holding of Bearer Certificates shall be proved by the production
of such Bearer Certificates or by a certificate, satisfactory to the Servicer,
executed by any bank, trust company or recognized securities dealer, wherever
situated, satisfactory to the Servicer. Each such certificate shall be dated and
shall state that on the date thereof a Bearer Certificate bearing a specified
serial number was deposited with or exhibited to such bank, trust company or
recognized securities dealer by the Person named in such certificate. Any such
certificate may be issued in respect of one or more Bearer Certificates
specified therein. The holding by the Person named in any such certificate of
any Bearer Certificate specified therein shall be presumed to continue for a
period of one year from the date of such certificate unless at the time of any
determination of such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be produced, (ii) the
Bearer Certificate specified in such certificate shall be produced by some other
Person or (iii) the Bearer Certificate specified in such certificate shall have
ceased to be outstanding. The appointment of any proxy shall be proved by having
the signature of the Person executing the proxy guaranteed by any bank, trust
company or recognized securities dealer satisfactory to the Trustee.
The Trustee shall appoint a temporary chairman of the meeting. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Holders of Investor Certificates evidencing a majority of the
aggregate unpaid principal amount of Investor Certificates of the applicable
Series or Class or all outstanding Series, as the case may be, represented at
the meeting. No vote shall be cast or counted at any meeting in respect of any
<PAGE> 68
Investor Certificate challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote except as an Investor Certificateholder or proxy. Any meeting of
Investor Certificateholders duly called at which a quorum is present may be
adjourned from time to time, and the meeting may be held as so adjourned without
further notice.
The vote upon any resolution submitted to any meeting of Investor
Certificateholders shall be by written ballot on which shall be subscribed the
signatures of Investor Certificateholders or proxies and on which shall be
inscribed the serial number or numbers of the Investor Certificates held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Investor
Certificateholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published as provided above. The record shall be
signed and verified by the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Servicer and the other to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
Section 6.15. Uncertificated Classes. Notwithstanding anything to the
contrary contained in this Article VI or in Article XII, unless otherwise
specified in any Supplement, any provisions contained in this Article VI and in
Article XII relating to the registration, form, execution, authentication,
delivery, presentation, cancellation and surrender of Certificates shall not be
applicable to any uncertificated Certificates.
[END OF ARTICLE VI]
<PAGE> 69
ARTICLE VII
Other Matters Relating to the Sellers
Section 7.01. Liability of the Sellers. Each Seller (including any
Additional Sellers) shall be jointly liable in all respects for the obligations,
covenants, representations and warranties of the Sellers arising under or
related to this Agreement or any Supplement. A Seller shall be liable only to
the extent of the obligations specifically undertaken by it in its capacity as
Seller. Each other Seller hereby authorizes and empowers Colonial to execute and
deliver, on behalf of such Seller, as attorney-in-fact or otherwise, all
documents and other instruments required or permitted to be delivered by such
Seller under this Agreement or any Supplement, and to do and accomplish all
other acts and things required or permitted to be done or accomplished by such
Seller hereunder or thereunder.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Sellers.
None of the Sellers shall consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person unless:
(x) the corporation formed by such consolidation or into
which such Seller is merged or the Person which acquires by conveyance
or transfer the properties and assets of such Seller substantially as
an entirety shall be, if such Seller is not the surviving entity, a
corporation organized and existing under the laws of the United States
of America or any State or the District of Columbia, and shall be a
savings and loan association, a national banking association, a bank or
other entity which is not subject to Title 11 of the United States Code
or a bankruptcy remote corporation and, if such Seller is not the
surviving entity, such corporation shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the performance of every covenant
and obligation of such Seller hereunder, including its obligations
under Section 7.04; and (y) such Seller has delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section, that such supplemental agreement is
a valid and binding obligation of such surviving entity enforceable
against such surviving entity in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect and except as
such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity), and that all
conditions precedent herein provided for relating to such transaction
have been complied with;
the Rating Agency Condition shall have been satisfied with
respect to such consolidation, merger, conveyance or transfer; and
<PAGE> 70
if any Series of Investor Certificates are outstanding
that were characterized as debt at the time of their issuance, the
relevant Seller shall have delivered to the Trustee and each Rating
Agency a Tax Opinion, dated the date of such consolidation, merger,
conveyance or transfer, with respect thereto.
(b) The obligations of the Sellers hereunder shall not be assignable
nor shall any Person succeed to the obligations of the Sellers hereunder except
in each case in accordance with the provisions of the foregoing paragraph.
Section 7.03. Limitations on Liability of the Sellers. Subject to
Sections 7.01 and 7.04, none of the Sellers nor any of the directors, officers,
employees or agents of any of the Sellers acting in their capacities as Sellers
shall be under any liability to the Trust, the Trustee, the Certificateholders,
the Certificate Owners, any Series Enhancer or any other Person for any action
taken or for refraining from the taking of any action in good faith in their
capacities as Sellers pursuant to this Agreement, it being expressly understood
that such liability is expressly waived and released as a condition of, and
consideration for, the execution of this Agreement and any Supplement and the
issuance of the Certificates; provided, however, that this provision shall not
protect any Seller or any such Person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Sellers and any director, officer,
employee or agent of any of the Sellers may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person (other
than the Sellers) respecting any matters arising hereunder.
Section 7.04. Liabilities. The Sellers shall indemnify and hold
harmless the Trust and the Trustee, its officers, directors, employees and
agents from and against any reasonable loss, liability, expense, damage or
injury suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of or based upon the arrangement created by this Agreement
or any Supplement, as though this Agreement or such Supplement created a
partnership under the Delaware Uniform Partnership Law in which the Sellers are
general partners; provided, however, that the Sellers shall not indemnify the
Trustee if such acts, omissions or alleged acts or omissions constitute or are
caused by fraud, negligence, or willful misconduct by the Trustee; provided
further, that the Sellers shall not indemnify the Trust, the Investor
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 Investor Certificateholders; provided, further, that the Sellers
shall not indemnify the Trust, the Investor 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; and provided further, that the Sellers
shall not indemnify the Trust, the Investor Certificateholders or the
Certificate Owners for any liabilities, costs or expenses of the Trust, the
Investor Certificateholders or the Certificate Owners for any liabilities, costs
or expenses of the Trust, the Trustee or the Investor Certificateholders arising
under any tax law relating to any Federal, state, local or foreign income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by the Trust, the Investor Certificateholders or
the Certificate Owners in connection herewith to any taxing authority. Any such
indemnification shall not be payable
<PAGE> 71
from the Trust Assets. The provisions of this indemnity shall run directly to
and be enforceable by an injured party subject to the limitations hereof.
[END OF ARTICLE VII]
<PAGE> 72
ARTICLE VIII
Other Matters Relating to the Servicer
Section 8.01. Liability of the Servicer. The Servicer shall be liable
under this Article only to the extent of the obligations specifically undertaken
by the Servicer in its capacity as Servicer.
Section 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into
which the Servicer is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Servicer substantially as
an entirety shall be, if the Servicer is not the surviving entity, a
corporation organized and existing under the laws of the United States
of America or any State or the District of Columbia and, if the
Servicer is not the surviving entity, such corporation shall expressly
assume, by an agreement supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the performance of
every covenant and obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section, that such supplemental agreement is
a valid and binding obligation of such surviving entity enforceable
against such surviving entity in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect and except as
such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity), and that all
conditions precedent herein provided for relating to such transaction
have been complied with;
the Rating Agency Condition shall have been satisfied with respect to
such assignment and succession; and
the corporation formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety shall be an
Eligible Servicer.
Section 8.03. Limitation on Liability of the Servicer and Others.
Except as provided in Section 8.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Trustee, the
Certificateholders, any Series Enhancer or any other Person for any action taken
or for refraining from the taking of any action in good faith in its capacity as
Servicer pursuant to this Agreement; provided, however, that this provision
shall not protect the Servicer or any such Person against
<PAGE> 73
any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person (other than the Servicer) respecting any matters arising hereunder. The
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its duties as Servicer in accordance
with this Agreement and which in its reasonable judgment may involve it in any
expense or liability. The Servicer may, in its sole discretion, undertake any
such legal action which it may deem necessary or desirable for the benefit of
the Certificateholders with respect to this Agreement and the rights and duties
of the parties hereto and the interests of the Certificateholders hereunder.
Section 8.04. Servicer Indemnification of the Trust and the Trustee.
The Servicer shall 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 this 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 shall not indemnify the Trustee if such acts, omissions or alleged acts
or omissions constitute or are caused by fraud, negligence, or willful
misconduct by the Trustee; provided further, that the Servicer shall not
indemnify the Trust, the Investor 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 Investor Certificateholders; provided
further, that the Servicer shall not indemnify the Trust, the Investor
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; and provided
further, that the Servicer shall not indemnify the Trust, the Investor
Certificateholders or the Certificate Owners for any liabilities, costs or
expenses of the Trust, the Investor 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 or arising
from a failure to comply therewith) required to be paid by the Trust, the
Investor Certificateholders or the Certificate Owners in connection herewith to
any taxing authority. Indemnification pursuant to this Section shall not be
payable from the Trust Assets. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
Section 8.05. The Servicer Not To Resign. The Servicer shall not resign
from the obligations and duties hereby imposed on it except upon determination
that (i) the performance of its duties hereunder is no longer permissible under
any Requirement of Law and (ii) there is no reasonable action which the Servicer
could take to make the performance of its duties hereunder permissible under any
such Requirements of Law. Any determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee. No resignation shall become effective until the Trustee or a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 10.02. If within 120 days of the date of
the determination that the Servicer may no longer act as Servicer the Trustee is
unable to appoint a Successor Servicer, the Trustee shall serve as Successor
Servicer. Notwithstanding the foregoing, the Trustee shall, if it is legally
<PAGE> 74
unable so to act, petition a court of competent jurisdiction to appoint any
established institution that is an Eligible Servicer as the Successor Servicer
hereunder. The Trustee shall give prompt notice to each Rating Agency upon the
appointment of a Successor Servicer.
Section 8.06. Access to Certain Documentation and Information Regarding
the Receivables. The Servicer shall provide to the Trustee access to the
documentation regarding the Accounts and the Receivables in such cases where the
Trustee is required in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Sellers, the
Trustee and the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors and the failure of the Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this Section.
Section 8.07. Delegation of Duties. In the ordinary course of business,
the Servicer may at any time delegate any duties hereunder to any Person who
agrees to conduct such duties in accordance with the Credit Card Guidelines and
this Agreement; provided, however, in the case of significant delegation to a
Person other than ADVANTA Corp., a Seller, any Affiliate of a Seller, or First
Data Corporation, (i) at least 30 days prior written notice shall 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 shall have determined that the Rating
Agency Condition has been met. Any such delegations shall not relieve the
Servicer of its liability and responsibility with respect to such duties, and
shall not constitute a resignation within the meaning of Section 8.05.
Section 8.08. Examination of Records. The Servicer shall clearly and
unambiguously indicate in its computer files or other records that the
Receivables arising in the Accounts have been conveyed to the Trustee, on behalf
of the Trust, pursuant to this Agreement for the benefit of the
Certificateholders. The Servicer shall, prior to the sale or transfer to a third
party of any receivable held in its custody, examine its computer and other
records to determine that such receivable is not a Receivable.
[END OF ARTICLE VIII]
<PAGE> 75
ARTICLE IX
Pay Out Events
Section 9.01. Trust Pay Out Events. If any one of the following events
shall occur with respect to the Trust ("Trust Pay Out Events"):
(i) any of the Sellers shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings of
or relating to such Seller 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 such Seller; or any of the
Sellers 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 (any such event, an "Insolvency Event");
(ii) the Trust shall become subject to regulation by the
Commission as an "investment company" within the meaning of the
Investment Company Act; or
(iii) a Transfer Restriction Event shall occur;
then, a Pay Out Event shall occur with respect to each Series without any notice
or other action on the part of the Trustee or the Investor Certificateholders,
immediately upon the occurrence of such event.
Section 9.02. Additional Rights Upon the Occurrence of Certain Events.
If an Insolvency Event occurs with respect to any of the
Sellers, the Sellers shall on the day any such Insolvency Event occurs (the
"Appointment Date"), immediately cease to transfer Principal Receivables to the
Trust and shall promptly give notice to the Trustee thereof. Notwithstanding any
cessation of the transfer to the Trust of additional Principal Receivables,
Principal Receivables transferred to the Trust prior to the occurrence of such
Insolvency Event 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. Within 15 days
after receipt of such notice by the Trustee of the occurrence of such Insolvency
Event, the Trustee shall (i) publish a notice in an Authorized Newspaper that an
Insolvency Event has occurred and that the Trustee intends to sell, dispose of
or otherwise liquidate the Receivables on commercially reasonable terms and in a
commercially reasonable manner and (ii) give notice to the Investor
Certificateholders describing the provisions of this Section and requesting
instructions from such Holders. Unless the Trustee shall have received
instructions within 90 days from the date notice pursuant to clause (i) above
<PAGE> 76
is first published from (x) Holders of Investor Certificates evidencing more
than 50% of the Investor Amount of each Series or, with respect to any Series
with two or more Classes, of each Class, to the effect that such Investor
Certificateholders disapprove of the liquidation of the Receivables and wish to
continue having Principal Receivables transferred to the Trust as before such
Insolvency Event, and (y) each of the Sellers (other than the Seller that is the
subject of such Insolvency Event), including any Additional Seller, any Holder
of a Supplemental Certificate and any permitted assignee or successor under
Section 7.02, to such effect, the Trustee shall promptly sell, dispose of or
otherwise liquidate the Receivables in a commercially reasonable manner and on
commercially reasonable terms, which shall include the solicitation of
competitive bids. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The provisions of
Sections 9.01 and 9.02 shall not be deemed to be mutually exclusive.
The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to paragraph (a) ("Insolvency Proceeds") shall be
immediately deposited in the Collection Account. The Trustee shall determine
conclusively the amount of the Insolvency Proceeds which are deemed to be
Finance Charge Receivables and Principal Receivables. The Insolvency Proceeds
shall be allocated and distributed to Investor Certificateholders in accordance
with Article IV and the terms of each Supplement and the Trust shall terminate
immediately thereafter.
The Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article IX with respect to competitive bids.
[END OF ARTICLE IX]
<PAGE> 77
ARTICLE X
Servicer Defaults
Section 10.01. Servicer Defaults. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
any failure by the Servicer to make any payment, transfer or deposit
or to give instructions or notice to the Trustee pursuant to the terms of this
Agreement or any Supplement on or before the date occurring five Business Days
after the date such payment, transfer or deposit or such instruction or notice
is required to be made or given, as the case may be, under the terms of this
Agreement or any Supplement;
failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement or any Supplement which has a material adverse effect on the
interests hereunder of the Investor Certificateholders of any Series or Class
and which continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Trustee, or to the Servicer and the Trustee by
Holders of Investor Certificates evidencing more than 50% of the Aggregate
Investor Amount (or, with respect to any such failure that does not relate to
all Series, 50% of the aggregate Investor Amount of all Series to which such
failure relates); or the Servicer shall delegate its duties under this
Agreement, except as permitted by Section 8.02 or 8.07, 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 Holders of Investor Certificates
evidencing more than 50% of the Aggregate Investor Amount;
any representation, warranty or certification made by the Servicer in
this Agreement or any Supplement or in any certificate delivered pursuant to
this Agreement or any Supplement shall prove to have been incorrect when made,
which has a material adverse effect on the rights of the Investor
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 the
Holders of Investor Certificates evidencing more than 50% of the Aggregate
Investor Amount (or, with respect to any such representation, warranty or
certification that does not relate to all Series, 50% of the aggregate Investor
Amount of all Series to which such representation, warranty or certification
relates); or
the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to 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, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer, and such decree or order shall have
<PAGE> 78
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;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either the Trustee or the Holders of Investor
Certificates evidencing more than 50% of the Aggregate Investor Amount, by
notice then given to the Servicer (and to the Trustee if given by the Investor
Certificateholders) (a "Termination Notice"), may terminate all but not less
than all the rights and obligations of the Servicer as Servicer under this
Agreement and in and to the Receivables and the proceeds thereof; provided,
however, if within 60 days of receipt of a Termination Notice the Trustee does
not receive any bids from Eligible Servicers in accordance with subsection
10.02(c) 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, the Trustee shall
offer the Sellers the right at their option to purchase the Certificateholders'
Interest on the Distribution Date next succeeding 60 days after the receipt by
the Servicer of a Termination Notice. The purchase price for the
Certificateholders' Interest shall be equal to the sum of the amounts specified
therefor with respect to each outstanding Series in the related Supplement. The
Sellers shall notify the Trustee prior to the Record Date for the Distribution
Date of the purchase if they are exercising such option. If any of the Sellers
exercise such option, such Sellers shall (x) if such Sellers' 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, in
reliance on certain certificates to the effect that the Receivables constitute
fair value for consideration paid therefor and as to the solvency of such
Sellers, the purchase would not be considered a fraudulent conveyance and (y)
deposit the purchase price into the Collection Account not later than 12:00
noon, New York City time, on such Distribution Date in immediately available
funds. The purchase price shall be allocated and distributed to Investor
Certificateholders in accordance with Article IV and the terms of each
Supplement.
After receipt by the Servicer of such Termination Notice, and on the
date that a Successor Servicer shall have been appointed by the Trustee pursuant
to Section 10.02, all authority and power of the Servicer under this Agreement
shall pass to and be vested in a Successor Servicer; and, without limitation,
the Trustee is hereby authorized and empowered (upon the failure of the Servicer
to cooperate) to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of such transfer of servicing rights. The Servicer agrees to
cooperate with the Trustee and such Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder including, without limitation, the transfer to such
Successor Servicer of all authority of the Servicer to service the Receivables
provided for under this Agreement, including, without limitation, all authority
over all Collections which shall on the date of transfer be held by the Servicer
for deposit, or which have been deposited by the Servicer, in the Collection
Account, or which shall thereafter be received with respect to the Receivables,
and in assisting the Successor Servicer and in enforcing all rights to Insurance
Proceeds. The Servicer shall promptly transfer its electronic records
<PAGE> 79
relating to the Receivables to the Successor Servicer in such electronic form as
the Successor Servicer may reasonably request and shall promptly transfer to the
Successor Servicer all other records, correspondence and documents necessary for
the continued servicing of the Receivables in the manner and at such times as
the Successor Servicer shall reasonably request. To the extent that compliance
with this Section 10.01 shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall deem
necessary to protect its interests.
Notwithstanding the foregoing, any delay in or failure of performance
under subsection 10.01(a) for a period of 5 Business Days or under subsection
10.01(b) or (c) for a period of 60 days (in addition to any period provided in
subsection 10.01(a), (b) or (c)) shall not constitute a Servicer Default until
the expiration of such additional 5 Business Days or 60 days, respectively, if
such delay or failure could not be prevented by the exercise of reasonable
diligence by the Servicer and such delay or failure was caused by an act of God
or the public enemy, acts of declared or undeclared war, terrorism, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and any Supplement and the Servicer shall provide the Trustee, each Rating
Agency, the Holders of the Seller Certificates and the Investor
Certificateholders 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.
Section 10.02. Trustee To Act, Appointment of Successor.
On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 10.01, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Trustee or until a date mutually agreed
upon by the Servicer and Trustee. The Trustee shall as promptly as possible
after the giving of a Termination Notice appoint an Eligible Servicer as a
successor servicer (the "Successor Servicer"), and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Trustee. In the event that a Successor Servicer has not been appointed or has
not accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Trustee without further action shall automatically be appointed
the Successor Servicer. The Trustee may delegate any of its servicing
obligations to an Affiliate of the Trustee or agent in accordance with Section
3.01(b) and 8.07. Notwithstanding the foregoing, the Trustee shall, if it is
legally unable so to act, petition a court of competent jurisdiction to appoint
any established institution qualifying as an Eligible Servicer as the Successor
Servicer hereunder. The Trustee shall give prompt notice to each Rating Agency
upon the appointment of a Successor Servicer.
Upon its appointment, the Successor Servicer shall be the successor
to the Servicer with respect to servicing functions under this Agreement and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof, and all
references in this Agreement to the Servicer shall be deemed to refer to the
Successor Servicer.
<PAGE> 80
In connection with any Termination Notice, the Trustee will review
any bids which it obtains from Eligible Servicers and shall be permitted to
appoint any Eligible Servicer submitting such a bid as a Successor Servicer for
servicing compensation not in excess of the aggregate Servicing Fees for all
Series; provided, however, that the Holders of the Seller Certificates shall be
responsible for payment of the Sellers' portion of such aggregate Servicing Fees
and that no such monthly compensation paid out of Collections shall be in excess
of such aggregate Servicing Fees. Each Holder of a Seller Certificate agrees
that, if Colonial (or any Successor Servicer) is terminated as Servicer
hereunder, the portion of the Collections in respect of Finance Charge
Receivables that such Holders are entitled to receive pursuant to this Agreement
or any Supplement shall be reduced by an amount sufficient to pay such Holders'
share (determined by reference to the Supplements with respect to any
outstanding Series) of the compensation of the Successor Servicer.
All authority and power granted to the Successor Servicer under this
Agreement shall automatically cease and terminate upon termination of the Trust
pursuant to Section 12.01 and shall pass to and be vested in the Sellers and,
without limitation, the Sellers are hereby authorized and empowered to execute
and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Sellers in effecting the termination of the responsibilities and rights of
the Successor Servicer to conduct servicing on the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
the Sellers in such electronic form as the Sellers may reasonably request and
shall transfer all other records, correspondence and documents to the Sellers in
the manner and at such times as the Sellers shall reasonably request. To the
extent that compliance with this Section 10.02 shall require the Successor
Servicer to disclose to the Sellers information of any kind which the Successor
Servicer deems to be confidential, the Sellers shall be required to enter into
such customary licensing and confidentiality agreements as the Successor
Servicer shall deem necessary to protect its interests.
Section 10.03. Notification to Certificateholders. Within two Business
Days after the Servicer becomes aware of any Servicer Default, the Servicer
shall give notice thereof to the Trustee and each Rating Agency and the Trustee
shall give notice to the Investor Certificateholders. Upon any termination or
appointment of a Successor Servicer pursuant to this Article, the Trustee shall
give prompt notice thereof to the Investor Certificateholders.
[END OF ARTICLE X]
<PAGE> 81
ARTICLE XI
The Trustee
Section 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Default and
after the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If a Responsible Officer has received written notice that a Servicer
Default has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of such man's own
affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement.
Subject to subsection 11.01(a), no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Holders of Investor
Certificates evidencing more than 50% of the Investor Amount of any
Series relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee in relation to such Series,
under this Agreement; and
the Trustee shall not be charged with knowledge of any
failure by the Servicer referred to in clauses (a) and (b) of Section
10.01 unless a Responsible Officer of the Trustee obtains actual
knowledge of such failure or the Trustee receives written notice of
such failure from the Servicer or any Holders of Investor Certificates
evidencing not less than 10% of the Investor Amount of any Series
adversely affected thereby.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be
<PAGE> 82
responsible for the manner of performance of, any of the obligations of the
Servicer under this Agreement except during such time, if any, as the Trustee
shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to (i) impair the interests of
the Trust in any Receivable now existing or hereafter created or (ii) impair the
value of any Receivable now existing or hereafter created.
(f) The Trustee shall have no power to vary the corpus of the Trust,
except as expressly provided in this Agreement.
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day required to be performed by the Paying Agent or the Transfer Agent
and Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated as soon as possible upon knowledge of a Responsible Officer thereof
and receipt of appropriate records, if any, to perform such obligation, duty or
agreement in the manner so required.
(h) If any of the Sellers has agreed to transfer any of its consumer
revolving credit card receivables (other than the Receivables) to another
Person, upon the written request of such Seller, the Trustee will enter into
such intercreditor agreements with the transferee of such receivables as are
customary and necessary to separately identify the rights, if any, of the Trust
and such other Person in such Seller's consumer revolving credit card
receivables; provided, that the Trustee shall not be required to enter into any
intercreditor agreement which could adversely affect the interests of the
Certificateholders and, upon the request of the Trustee, such Seller will
deliver an Opinion of Counsel on any matters relating to such intercreditor
agreement, reasonably requested by the Trustee.
Section 11.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) the Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accord with, any Assignment, the initial report, the
annual Servicer's certificate, the monthly payment instructions and notification
to the Trustee, the monthly Certificateholder's statement, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented to it pursuant to this Agreement by the proper
party or parties;
(b) the Trustee may consult with counsel, and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or any Enhancement Agreement, or
to institute, conduct or defend any litigation hereunder or in relation hereto,
at the request, order or direction of any of the
<PAGE> 83
Certificateholders, or any Enhancement Provider, pursuant to the provisions of
this Agreement or any Enhancement Agreement, unless such Certificateholders or
any Enhancement Provider shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve the Trustee
of the obligations, upon the occurrence of any Servicer Default (which has not
been cured), to exercise such of the rights and powers vested in it by this
Agreement and any Series Enhancement, and to use the same degree of care and
skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any Assignment, the initial report, the annual
Servicer's certificate, the monthly payment instructions and notification to the
Trustee, the monthly Certificateholder's statement, any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing so to do
by Holders of Investor Certificates evidencing more than 50% of the Investor
Amount of any Series which could be adversely affected if the Trustee does not
perform such acts;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder; and
(g) except as may be required by subsection 11.01(a) hereof, the
Trustee shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by the Seller
with its representations and warranties or for any other purpose.
Section 11.03. Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.15, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or any
Supplement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee shall
not be accountable for the use or application by the Sellers of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Sellers or the Holders of the Seller
Certificates in respect of the Receivables or deposited in or withdrawn from the
Collection Account, the Excess Funding Account or any Series Account by the
Servicer.
Section 11.04. Trustee May Own Certificates. Subject to Section 6.06,
the Trustee in its individual or any other capacity may become the owner or
pledgee of Investor Certificates or Supplemental Certificates with the same
rights as it would have if it were not the Trustee.
<PAGE> 84
Section 11.05. The Sellers To Pay Trustee's Fees and Expenses. The
Sellers covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and, subject to Section 7.04, the Sellers will
pay or reimburse the Trustee (without reimbursement from the Collection Account
or otherwise) upon its request for all reasonable expenses, disbursements and
advances (if any) incurred or made by the Trustee (including the fees and
expenses of Trustee's counsel) in accordance with any of the provisions of this
Agreement except any such expense, disbursement or advance as may arise from its
own negligence or bad faith and except as provided in the following sentence. If
the Trustee is appointed Successor Servicer pursuant to Section 10.02, the
provisions of this Section 11.05 shall not apply to expenses, disbursements and
advances made or incurred by the Trustee in its capacity as Successor Servicer.
The obligations of the Sellers under Section 7.04 and this Section 11.05 shall
survive the termination of the Trust and the resignation or removal of the
Trustee.
Section 11.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a bank or a corporation organized and doing
business under the laws of the United States of America or any state thereof and
subject to supervision or examination by Federal or state authority and
authorized under such laws to exercise corporate trust powers that either (x)
has a long-term unsecured debt rating of at least Baa3 by Moody's and BBB- by
Standard & Poor's and, in the case of an entity that is subject to risk-based
capital adequacy requirements, risk-based capital of at least $50,000,000 or, in
the case of an entity that is not subject to risk-based capital adequacy
requirements, a combined capital and surplus of at least $50,000,000 or (y)
shall otherwise be acceptable to each Rating Agency. If such bank or corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 11.06, the combined capital and surplus of such bank or
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.07.
Section 11.07. Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Servicer. Upon receiving
such notice of resignation, the Servicer shall promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have accepted within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.06 and shall fail to resign after written
request therefor by the Servicer or the Sellers, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the
<PAGE> 85
purpose of rehabilitation, conservation or liquidation, then the Servicer or
Sellers may, but shall not be required to, remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.08 and any liability of the Trustee arising hereunder
shall survive such appointment of a successor trustee.
Section 11.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 11.07 shall
execute, acknowledge and deliver to the Sellers, to the Servicer and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents and statements held by it hereunder, and the Sellers and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as provided in this
Section 11.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 11.06.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 11.08, such successor trustee shall provide notice of such
succession hereunder to all Investor Certificateholders and the Servicer shall
provide such notice to each Rating Agency and any Series Enhancer entitled
thereto pursuant to the relevant Supplement.
Section 11.09. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 11.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust may at the time be located, the Trustee shall have
the power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
<PAGE> 86
trustees, of all or any part of the Trust, and to vest in such Person or
Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 11.10, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable; provided, however, that the Trustee
shall exercise due care in the appointment of any co-trustee. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 11.06 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 11.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act) except to the extent that under any laws of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder) the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
<PAGE> 87
Section 11.11. Tax Returns. In the event the Trust shall be required to
file tax returns, the Servicer, as soon as practicable after it is made aware of
such requirement, shall prepare or cause to be prepared any tax returns required
to be filed by the Trust and, to the extent possible, shall file such returns at
least five days before such returns are due to be filed. The Trustee is hereby
authorized to sign any such return on behalf of the Trust. The Servicer shall
prepare or shall cause to be prepared all tax information required by law to be
distributed to Certificateholders and shall deliver such information to the
Trustee at least five days prior to the date it is required by law to be
distributed to Certificateholders. The Servicer, upon request, will furnish the
Trustee with all such information known to the Servicer as may be reasonably
required in connection with the preparation of all tax returns of the Trust. In
no event shall the Trustee or the Servicer be liable for any liabilities, costs
or expenses of the Trust, the Investor Certificateholders or the Certificate
Owners arising under any tax law, including without limitation federal, state,
local or foreign income or excise taxes or any other tax imposed on or measured
by income (or any interest or penalty with respect thereto or arising from a
failure to comply therewith).
Section 11.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any Series
of Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of any Series of Certificates in respect of which such judgment
has been obtained.
Section 11.13. Suits for Enforcement.
(a) If a Servicer Default shall occur and be continuing, the Trustee,
in its discretion may, subject to the provisions of Sections 10.01 and 11.14,
proceed to protect and enforce its rights and the rights of any Series of
Certificates under this Agreement by a suit, action or proceeding in equity or
at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the execution of any power
granted in this Agreement or for the enforcement of any other legal, equitable
or other remedy as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of the rights of the Trustee or any Series
of Certificates.
(b) If the FDIC, the RTC or any equivalent governmental agency or
instrumentality or any designee of any of them shall have been appointed as
receiver, conservator, assignee, trustee in bankruptcy or reorganization,
liquidator, sequestrator or custodian with respect to any Seller (the
"Receiver"), the Trustee shall, irrespective of whether the principal of any
Series or Class of Certificates shall then be due and payable;
(i) unless prohibited by applicable law or regulation or
unless under FIRREA the Receiver is required to participate in the
process as a defendant or otherwise, promptly take or cause to be taken
any and all necessary or advisable commercially reasonable action as a
secured creditor on behalf of the Certificateholders to recover,
repossess, collect or liquidate the Receivables or any other Trust
Assets on a "self-help"
<PAGE> 88
basis or otherwise and exercise any rights or remedies of a secured
party under the applicable UCC and take any other appropriate action to
protect and enforce the rights and remedies of the Trustee and the
Certificateholders;
(ii) promptly, and in any case within any applicable claims
bar period specified under FIRREA or otherwise, file and prove a claim
or claims under FIRREA or otherwise, by filing proofs of claim,
protective proofs of claim or otherwise, for the whole amount of unpaid
principal and interest in respect of the Certificates and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee and the Certificateholders allowed in
any judicial, administrative, corporate or other proceedings relating
to such Seller, its creditors or its property, including any actions
relating to the preservation of deficiency claims or for the protection
against loss of any claim in the event the Trustee's or the
Certificateholders' status as secured creditors are successfully
challenged; and
(iii) collect and receive any moneys or other property
payable or deliverable on any such claims and distribute all amounts
with respect to the claims of the Certificateholders to the
Certificateholders.
(c) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Certificateholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Certificateholder in any such proceeding.
Section 11.14. Rights of Certificateholders To Direct Trustee. Holders
of Investor Certificates evidencing more than 50% of the Aggregate Investor
Amount (or, with respect to any remedy, trust or power that does not relate to
all Series, 50% of the aggregate Investor Amount of all Series to which such
remedy, trust or power relates) shall have the right to direct the time, method,
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee; provided, however,
that, subject to Section 11.01, the Trustee shall have the right to decline to
follow any such direction if the Trustee being advised by counsel determines
that the action so directed may not lawfully be taken, or if the Trustee in good
faith shall, by a Responsible Officer or Responsible Officers of the Trustee,
determine that the proceedings so directed would be illegal or involve it in
personal liability or be unduly prejudicial to the rights of Certificateholders
not parties to such direction; and provided further, that nothing in this
Agreement shall impair the right of the Trustee to take any action deemed proper
by the Trustee and which is not inconsistent with such direction of such Holders
of Investor Certificates.
Section 11.15. Representations and Warranties of Trustee. The Trustee
represents and warrants as of each Closing Date that:
(a) the Trustee is a banking corporation organized, existing and
authorized to engage in the business of banking under the laws of the State of
New York;
<PAGE> 89
(b) the Trustee has full power, authority and right to execute, deliver
and perform this Agreement and each Supplement, and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement and each Supplement; and
(c) this Agreement and each Supplement has been duly executed and
delivered by the Trustee.
Section 11.16. Maintenance of Office or Agency. The Trustee will
maintain at its expense an office or agency (the "Corporate Trust Office") where
notices and demands to or upon the Trustee in respect of the Certificates and
this Agreement may be served (a) in the Borough of Manhattan, The City of New
York, in the case of Registered Certificates and Holders thereof, and (b) in
London or Luxembourg, in the case of Bearer Certificates and Holders thereof, if
and for so long as any Bearer Certificates are outstanding. The Corporate Trust
Office shall initially be located at Four Albany Street, New York, New York
10006. The Trustee will give prompt notice to the Servicer and to Investor
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
[END OF ARTICLE XI]
<PAGE> 90
ARTICLE XII
Termination
Section 12.01. Termination of Trust. The Trust and the respective
obligations and responsibilities of the Sellers, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Investor Certificateholders as hereinafter set forth) shall terminate, except
with respect to the duties described in Sections 7.04, 8.04 and 12.02(b), upon
the earliest of (i) December 31, 2024, (ii) the day following the payment date
on which the Investor Amount and the Enhancement Investor Amount, if any, for
each Series is zero (provided that the Sellers have delivered a written notice
to the Trustee electing to terminate the Trust) and (iii) the time provided in
subsection 9.02(b).
Section 12.02. Final Distribution.
The Servicer shall give the Trustee at least 30 days prior notice of
the payment date on which the Investor Certificateholders of any Series or Class
may surrender their Investor Certificates for payment of the final distribution
on and cancellation of such Investor Certificates (or, in the event of a final
distribution resulting from the application of Section 2.06, 9.02 or 10.01,
notice of such payment date promptly after the Servicer has determined that a
final distribution will occur, if such determination is made less than 30 days
prior to such payment date). Such notice shall be accompanied by an Officer's
Certificate setting forth the information specified in Section 3.05 covering the
period during the then-current calendar year through the date of such notice.
Not later than the fifth day of the month in which the final distribution in
respect of such Series or Class is payable to Investor Certificateholders, the
Trustee shall provide notice to Investor Certificateholders of such Series or
Class specifying (i) the date upon which final payment of such Series or Class
will be made upon presentation and surrender of Investor Certificates of such
Series or Class at the office or offices therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such payment date is not applicable, payments being made only upon presentation
and surrender of such Investor Certificates at the office or offices therein
specified (which, in the case of Bearer Certificates, shall be outside the
United States). The Trustee shall give such notice to the Transfer Agent and
Registrar and the Paying Agent at the time such notice is given to Investor
Certificateholders.
Notwithstanding a final distribution to the Investor
Certificateholders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in the
Collection Account and any Series Account allocated to such Investor
Certificateholders shall continue to be held in trust for the benefit of such
Investor Certificateholders and the Paying Agent or the Trustee shall pay such
funds to such Investor Certificateholders upon surrender of their Investor
Certificates (and any excess shall be paid in accordance with the terms of any
relevant Enhancement Agreement). In the event that all such Investor
Certificateholders shall not surrender their Investor Certificates for
cancellation within six months after the date specified in the notice from the
Trustee described in paragraph (a), the Trustee shall give a second notice to
the remaining such Investor Certificateholders to surrender their Investor
Certificates for cancellation and receive the final distribution with respect
thereto
<PAGE> 91
(which surrender and payment, in the case of Bearer Certificates, shall be
outside the United States). If within one year after the second notice all such
Investor Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining such Investor Certificateholders concerning
surrender of their Investor Certificates, and the cost thereof shall be paid out
of the funds in the Collection Account or any Series Account held for the
benefit of such Investor Certificateholders. The Trustee and the Paying Agent
shall pay to the Sellers any moneys held by them for the payment of principal or
interest that remains unclaimed for two years. After payment to the Sellers,
Investor Certificateholders entitled to the money must look to the Sellers for
payment as general creditors unless an applicable abandoned property law
designates another Person.
In the event that the Investor Amount with respect to any Series is
greater than zero on its Series Termination Date or such earlier date as is
specified in the related Supplement (after giving effect to deposits and
distributions otherwise to be made on such date), the Trustee will sell or cause
to be sold on such Series Termination Date, in accordance with the procedures
and subject to the conditions described in such Supplement, Principal
Receivables and the related Finance Charge Receivables (or interests therein) in
an amount equal to 100% of the Investor Amount and accrued and unpaid interest
thereon with respect to such Series on such date (after giving effect to such
deposits and distributions; provided, however, that in no event shall such
amount exceed such Series' Series Percentages of Receivables on such Series
Termination Date). The proceeds from any such sale shall be allocated and
distributed in accordance with the terms of the applicable Supplement.
Section 12.03. Sellers' Termination Rights. Upon the termination of the
Trust pursuant to Section 12.01 and the surrender of the Seller Certificates,
the Trustee shall sell, assign and convey to the Holders of the Seller
Certificates or their designee, without recourse, representation or warranty,
all right, title and interest of the Trust in the Receivables, whether then
existing or thereafter created, all moneys due or to become due and all amounts
received with respect thereto and all proceeds thereof, except for amounts held
by the Trustee pursuant to subsection 12.02(b). The Trustee shall execute and
deliver such instruments of transfer and assignment, in each case without
recourse, as shall be reasonably requested by the Holders of the Seller
Certificates to vest in the Holders of the Seller Certificates or their designee
all right, title and interest which the Trust had in the Receivables and such
other related assets.
Section 12.04. Defeasance. Notwithstanding anything to the contrary in
this Agreement or any Supplement:
The Seller may at its option be discharged from its obligations
hereunder with respect to any Series or all outstanding Series (the "Defeased
Series") on the date the applicable conditions set forth in subsection 12.04(c)
are satisfied (a "Defeasance"); provided, however, that the following rights,
obligations, powers, duties and immunities shall survive with respect to the
Defeased Series until otherwise terminated or discharged hereunder: (i) the
rights of the Holders of Investor Certificates of the Defeased Series to
receive, solely from the trust fund provided for in subsection 12.04(c),
payments in respect of principal of and interest on such Investor Certificates
when such payments are due; (ii) the Sellers' obligations with respect to such
<PAGE> 92
Certificates under Sections 6.04 and 6.05; (iii) the rights, powers, trusts,
duties, and immunities of the Trustee, the Paying Agent and the Registrar
hereunder; and (iv) this Section 12.04.
Subject to subsection 12.04(c), the Sellers at their option may cause
Collections allocated to the Defeased Series and available to purchase
additional Receivables to be applied to purchase Eligible Investments rather
than additional Receivables.
The following shall be the conditions to Defeasance under subsection
12.04(a):
the Sellers irrevocably shall have deposited or caused to
be deposited with the Trustee (such deposit to be made from other than
the Sellers' or any Affiliate of the Sellers' funds), under the terms
of an irrevocable trust agreement in form and substance satisfactory to
the Trustee, as trust funds in trust for making the payments described
below, (A) Dollars in an amount, or (B) Eligible Investments which
through the scheduled payment of principal and interest in respect
thereof will provide, not later than the due date of payment thereon,
money in an amount, or (C) a combination thereof, in each case
sufficient to pay and discharge (without relying on income or gain from
reinvestment of such amount), and which shall be applied by the Trustee
to pay and discharge, all remaining scheduled interest and principal
payments on all outstanding Investor Certificates of the Defeased
Series on the dates scheduled for such payments in this Agreement and
the applicable Supplements and all amounts owing to the Series
Enhancers with respect to the Defeased Series;
a statement from a firm of nationally recognized
independent public accountants (who may also render other services to
the Sellers) to the effect that such deposit is sufficient to pay the
amounts specified in clause (i) above;
prior to its first exercise of its right pursuant to this
Section 12.04 with respect to a Defeased Series to substitute money or
Eligible Investments for Receivables, if any Series of Investor
Certificates are outstanding that were characterized as debt at the
time of their issuance, the Seller shall have delivered to the Trustee
a Tax Opinion with respect to such deposit and termination of
obligations, and (in any case) an Opinion of Counsel to the effect that
(A) such deposit and termination of obligations will not result in the
Trust being required to register as an "investment company" within the
meaning of the Investment Company Act and (B) if the Sellers'
short-term deposit or long-term unsecured debt obligations are not
rated at least P-3 or Baa3, respectively, by Moody's, such deposit and
termination of obligations would not be a fraudulent conveyance (based
in reliance on certain certificates to the effect that the Receivables
and termination of obligations constitute fair value for consideration
paid therefor and as to the solvency of the Sellers);
the Sellers shall have delivered to the Trustee an
Officer's Certificate of the Sellers stating the Sellers reasonably
believe that such deposit and termination of obligations will not,
based on the facts known to such officer at the time of such
certification, then cause a Pay Out Event with respect to any Series or
any event that, with the giving of notice or the lapse of time, would
result in the occurrence of a Pay Out Event with respect to any Series;
and
<PAGE> 93
the Rating Agency Condition shall have been satisfied and
the Sellers shall have delivered copies of such written notice to the
Servicer and the Trustee.
Section 12.05. Optional Purchase.
If so provided in any Supplement, the Sellers may, but shall
not be obligated to, cause a final distribution to be made in respect of the
related Series of Investor Certificates on a specified Distribution Date or when
the Investor Amount reaches a specified level or under any circumstances
specified in such Supplement by depositing into the Collection Account or the
applicable Series Account, not later than the Transfer Date preceding such
Distribution Date, for application in accordance with Section 12.02, the amount
specified in such Supplement; provided, however that if the short-term deposits
or long-term unsecured debt obligations of the Sellers are not rated at the time
of such purchase of Receivables at least P-3 or Baa3, respectively, by Moody's,
no such event shall occur unless the Sellers shall deliver an Opinion of Counsel
reasonably acceptable to the Trustee that such deposit into the Collection
Account or any Series Account as provided in the related Supplement would not
constitute a fraudulent conveyance of the Sellers (based in reliance on
certificates to the effect that the Receivables constitute fair value for
consideration paid therefor and as to the solvency of the Sellers).
The amount deposited pursuant to subsection 12.05(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Section 12.02 on the related Distribution Date following the date of such
deposit. All Certificates of a Series which are purchased by the Sellers
pursuant to subsection 12.05(a) shall be delivered by the Sellers upon such
purchase to, and be cancelled by, the Transfer Agent and Registrar and be
disposed of in a manner satisfactory to the Trustee and the Seller. The Investor
Amount of each Series which is purchased by the Sellers pursuant to subsection
12.05(a) shall, for the purposes of the definitions of "Series Invested Amount"
and "Seller Amount," be deemed to be equal to zero on the Distribution Date
following the making of the deposit, and the Seller Amount shall thereupon be
deemed to have been increased by the Series Invested Amount of such Series.
[END OF ARTICLE XII]
<PAGE> 94
ARTICLE XIII
Miscellaneous Provisions
Section 13.01. Amendment; Waiver of Past Defaults.
This Agreement or any Supplement may be amended from time to time
(including in connection with (x) the provision of additional Series Enhancement
for the benefit of the Certificateholders of any Series (or the reduction of
such Series Enhancement), (y) the addition of a Participation Interest to the
Trust or (z) the designation of an Additional Seller) by the Servicer, the
Sellers (including, if applicable, any Additional Seller being designated) and
the Trustee without the consent of any of the Certificateholders, provided that
(i) each Seller shall have delivered to the Trustee an Officer's Certificate to
the effect that such Seller reasonably believes that such action will not have
an Adverse Effect and (ii) the Rating Agency Condition shall have been satisfied
with respect to any such amendment.
This Agreement or any Supplement may also be amended from time to
time by the Servicer, the Sellers and the Trustee, with the consent of the
Holders of Investor Certificates evidencing not less than 66-2/3% of the
aggregate Investor Amount of the Investor Certificates of all adversely affected
Series, for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or any Supplement or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall (i) reduce in any manner the amount of or delay the
timing of any distributions to be made to Investor Certificateholders or
deposits of amounts to be so distributed or the amount available under any
Series Enhancement without the consent of each affected Certificateholder, (ii)
change the definition of or the manner of calculating the interest of any
Investor Certificateholder without the consent of each affected Investor
Certificateholder, (iii) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Investor Certificateholder or
(iv) adversely affect the rating of any Series or Class by each Rating Agency
without the consent of the Holders of Investor Certificates of such Series or
Class evidencing not less than 66-2/3% of the aggregate Investor Amount of the
Investor Certificates of such Series or Class. Any amendment to be effected
pursuant to this paragraph shall be deemed not to adversely affect any
outstanding Series with respect to which the Sellers shall deliver an Opinion of
Counsel, addressed and delivered to the Trustee, that such action will not, in
such counsel's reasonable opinion, have an Adverse Effect with respect to such
Series. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's rights, duties or immunities under this
Agreement or otherwise.
Promptly after the execution of any such amendment or consent (other
than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such amendment to each Investor
Certificateholder, and the Servicer shall furnish notification of the substance
of such amendment to each Rating Agency.
It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such
<PAGE> 95
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Investor Certificateholders shall be subject to such reasonable requirements as
the Trustee may prescribe.
Any Supplement executed in accordance with the provisions of
subsection 6.03(b) shall not be considered an amendment to this Agreement for
the purposes of this Section.
(f) The Holders of Investor Certificates evidencing more than 66-2/3%
of the aggregate Investor Amount of the Investor Certificates of each Series, or
with respect to any Series with two or more Classes, of each Class (or with
respect to any default that does not relate to all Series, 66-2/3% of the
aggregate Investor Amount of the Investor Certificates of each Series to which
such default relates or, with respect to any such Series with two or more
Classes, of each Class) may, on behalf of all Certificateholders, waive any
default by the Sellers or the Servicer in the performance of their obligations
hereunder and its consequences, except the failure to make any distributions
required to be made to Investor Certificateholders or to make any required
deposits of any amounts to be so distributed. Upon any such waiver of a past
default, such default shall cease to exist, and any default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
Section 13.02. Protection of Right, Title and Interest to Trust.
The Servicer shall cause this Agreement, all amendments and
supplements hereto and all financing statements and continuation statements and
any other necessary documents covering the Certificateholders' and the Trustee's
right, title and interest to the Trust to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Certificateholders and the Trustee
hereunder to all property comprising the Trust. The Servicer shall deliver to
the Trustee file-stamped copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available following
such recording, registration or filing. The Sellers shall cooperate fully with
the Servicer in connection with the obligations set forth above and will execute
any and all documents reasonably required to fulfill the intent of this
paragraph.
Within 30 days after any of the Sellers makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) seriously
misleading within the meaning of Section 9-402(7) (or any comparable provision)
of the UCC, such Seller shall give the Trustee notice of any such change and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's security interest in the Receivables and
the proceeds thereof.
Each Seller and the Servicer will give the Trustee prompt notice of
any relocation of any office from which it services Receivables or keeps records
concerning the Receivables or of its principal executive office and whether, as
a result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file such financing
statements or amendments as may be necessary to perfect or to continue the
perfection of the Trust's
<PAGE> 96
security interest in the Receivables and the proceeds thereof. Each Seller and
the Servicer will at all times maintain each office from which it services
Receivables and its principal executive offices within the United States.
The Servicer will deliver to the Trustee: (i) upon the execution and
delivery of each amendment of this Agreement or any Supplement, an Opinion of
Counsel to the effect specified in Exhibit G-1; (ii) on each Addition Date on
which any Additional Accounts (other than Automatic Additional Accounts) are to
be designated as Accounts pursuant to subsection 2.08(a) or (b) and on each date
specified in subsection 2.08(d)(iii) with respect to the designation of
Automatic Additional Accounts as Accounts, an Opinion of Counsel substantially
in the form of Exhibit G-2, and on each Addition Date on which any Participation
Interests are to be included in the Trust pursuant to subsection 2.08(a) or (b),
an Opinion of Counsel covering the same substantive legal issues addressed by
Exhibit G-2 but conformed to the extent appropriate to relate to Participation
Interests; and (iii) on or before March 31 of each year, beginning with March
31, 1995, an Opinion of Counsel substantially in the form of Exhibit G-2.
Section 13.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust, nor shall such death or incapacity
entitle such Certificateholders' legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Investor Certificateholder shall have any right to vote (except as
expressly provided in this Agreement) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Investor Certificateholders
from time to time as partners or members of an association, nor shall any
Investor Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any provision
hereof.
No Investor Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Investor Certificateholder previously shall have made, and unless the Holders of
Investor Certificates evidencing more than 50% of the aggregate unpaid principal
amount of all Investor Certificates (or, with respect to any such action, suit
or proceeding that does not relate to all Series, 50% of the aggregate unpaid
principal amount of the Investor Certificates of all Series to which such
action, suit or proceeding relates) shall have made, a request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after such request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Investor Certificateholder with every other Investor Certificateholder and
the Trustee, that no one or more Investor Certificateholders shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of
<PAGE> 97
this Agreement to affect, disturb or prejudice the rights of the Holders of any
other of the Investor Certificates, or to obtain or seek to obtain priority over
or preference to any other such Investor Certificateholder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Investor Certificateholders except as
otherwise expressly provided in this Agreement. For the protection and
enforcement of the provisions of this Section, each and every Investor
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 13.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 13.05. Notices; Payments.
All demands, notices, instructions, directions and communications
(collectively, "Notices") under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered at, mailed by registered
mail, return receipt requested, or sent by facsimile transmission (i) in the
case of the Sellers or the Servicer, to Colonial National Bank USA, Five Horsham
Business Center, 300 Welsh Road, Horsham, Pennsylvania 19044, Attn: General
Counsel (facsimile no. (215) 657-3610), (ii) in the case of the Trustee, to the
Corporate Trust Office (facsimile no. (212) 251-6439), (iii) in the case of
Moody's, to 99 Church Street, New York, New York 10007, Attn: ABS Monitoring
Department, 4th Floor (facsimile no. 212-553-4600), (iv) in the case of Standard
& Poor's, to 26 Broadway, New York, New York 10004, Attn: Asset Backed Group,
15th Floor (facsimile no. 212-412-0323), (v) in the case of the Paying Agent or
the Transfer Agent and Registrar, to the Corporate Trust Office, New York, New
York 10006, Attn: Corporate Trust and Agency Group/Structured Finance Group
(facsimile no. (212) 250-6439) and (vi) to any other Person as specified in any
Supplement; or, as to each party, at such other address or facsimile number as
shall be designated by such party in a written notice to each other party.
Any Notice required or permitted to be given to a Holder of
Registered Certificates shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. No Notice shall
be required to be mailed to a Holder of Bearer Certificates or Coupons but shall
be given as provided below. Any Notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Investor Certificateholder receives such Notice. In addition, (a) if
and so long as any Series or Class is listed on the Luxembourg Stock Exchange
and such Exchange shall so require, any Notice to Investor Certificateholders
shall be published in an Authorized Newspaper of general circulation in
Luxembourg within the time period prescribed in this Agreement and (b) in the
case of any Series or Class with respect to which any Bearer Certificates are
outstanding, any Notice required or permitted to be given to Investor
Certificateholders of such Series or Class shall be published in an Authorized
Newspaper within the time period prescribed in this Agreement.
<PAGE> 98
All Notices to be given to Colonial, as a Seller, or Colonial, as
Servicer, shall be deemed given if one Notice is provided to the address of
Colonial. All Notices to be made to the Sellers shall be deemed given if one
Notice is provided to the address of Colonial. All payments hereunder to
Colonial, whether as a Seller or as Servicer shall be made to such account as
Colonial may specify in writing. All payments hereunder to the Sellers shall be
deemed made if made to the account of Colonial as provided above.
Section 13.06. Rule 144A Information. For so long as any of the
Investor Certificates of any Series or Class are "restricted securities" within
the meaning of Rule 144(a)(3) under the Act, each of the Sellers, the Trustee,
the Servicer and any Series Enhancer agree to cooperate with each other to
provide to any Investor Certificateholders of such Series or Class and to any
prospective purchaser of Certificates designated by such an Investor
Certificateholder, upon the request of such Investor Certificateholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act.
Section 13.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Certificates or the rights of the Certificateholders.
Section 13.08. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.02, this Agreement may not be
assigned by the Servicer without the prior consent of Holders of Investor
Certificates evidencing not less than 66-2/3% of the Aggregate Investor Amount.
Section 13.09. Certificates Nonassessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the interests in the
Trust represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever and that Certificates upon
authentication thereof by the Trustee pursuant to Section 6.02 are and shall be
deemed fully paid.
Section 13.10. Further Assurances. The Sellers and the Servicer agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of this Agreement, including the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
Section 13.11. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Servicer, the Trustee, each Seller, each
Series Enhancer and each Holder of a Seller Certificate shall not, prior to the
date which is one year and one day after the termination of this Agreement with
respect to the Trust, acquiesce, petition or otherwise invoke or cause the Trust
to invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Trust under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar
<PAGE> 99
official of the Trust or any substantial part of its property or ordering the
winding-up or liquidation of the affairs of the Trust.
Section 13.12. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
Section 13.13. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 13.14. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
any Series Enhancer (to the extent provided in this Agreement and the related
Supplement) and their respective successors and permitted assigns. Except as
otherwise expressly provided in this Agreement, no other Person will have any
right or obligation hereunder.
Section 13.15. Actions by Certificateholders. Wherever in this
Agreement a provision is made that an action may be taken or a Notice given by
Certificateholders, such action or Notice may be taken or given by any
Certificateholder, unless such provision requires a specific percentage of
Certificateholders.
Any Notice, request, authorization, direction, consent, waiver or
other act by the Holder of a Certificate shall bind such Holder and every
subsequent Holder of such Certificate and of any Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or omitted to be done by the Trustee or the Servicer in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
Section 13.16. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 13.17. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 13.18. Construction of Agreement. The Sellers hereby grant a
security interest to (i) the Trustee for the benefit of the Certificateholders
and (ii) any Series Enhancer to the extent of the Enhancement Investor Amount,
if any, provided for in the relevant Supplement (which interest, in the case of
any Series Enhancer will be subordinated to the interest of the Investor
Certificateholders), in all of the Sellers' right, title and interest in, to and
under the Receivables now existing and hereafter created, all moneys due or to
become due and all amounts received with respect thereto and all "proceeds"
thereof and any other Trust Assets, to
<PAGE> 100
secure all the Sellers' and Servicer's obligations hereunder, including, without
limitation, the Sellers' obligation to sell or transfer Receivables hereafter
created to the Trust and the Servicer's obligation to remit Collections
hereunder (collectively, the "Obligations"). This Agreement shall constitute a
security agreement under applicable law.
<PAGE> 101
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
COLONIAL NATIONAL BANK USA,
Seller and Servicer,
by /s/ MICHAEL COCO
-----------------------------------
Name: Michael Coco
Title: Assistant Vice President
BANKERS TRUST COMPANY,
Trustee,
by /s/ MELISSA J. KAYE
-----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.2
AMENDMENT NUMBER 1 TO THE AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
This AMENDMENT TO THE AMENDED AND RESTATED POOLING AND
SERVICING AGREEMENT (this "Amendment") is dated as of July 1, 1994, and is by
and between Colonial National Bank USA ("Colonial") as seller and servicer, and
Bankers Trust Company as Trustee for the ADVANTA Credit Card Master Trust II
(the "Trust") under the Amended and Restated Pooling and Servicing Agreement
dated as of December 1, 1993 as amended and restated on May 23, 1994, by and
between Colonial and the Trustee (such agreement, "the Pooling Agreement").
Unless the context otherwise requires, capitalized terms used herein and not
defined shall have the meaning given them in the Pooling and Servicing
Agreement.
WHEREAS, Section 13.01(b) of the Pooling Agreement permits
amendment of the Pooling Agreement on the terms and conditions therein
specified;
WHEREAS, Colonial and the Trustee desire to amend the
agreement as provided herein;
WHEREAS, the Holders of Investor Certificates evidencing in
excess of 66 2/3% of the aggregate Investor Amount of the Investor Certificates
have consented to the amendment contemplated herein as evidenced by the executed
consent attached hereto;
NOW THEREFORE, for good consideration the parties hereto agree
to as follows:
ARTICLE I
Amendment to Pooling Agreement
Section 7.04 shall be amended by deleting the current Section 7.04 and
substituting in its place the following:
Section 7.04 Liabilities. The Seller shall indemnify and hold
harmless the Trust and the Trustee, its officers, directors, employees and
agents from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of any acts, omissions or alleged acts or omissions or
otherwise arising out of or based upon the arrangement created by this Agreement
or any Supplement as though this Agreement or such Supplement created a general
partnership under the Delaware Uniform Partnership Law in which the Sellers are
general partners; provided, however, that the Sellers shall not indemnify the
Trustee if such acts, omissions or alleged acts or omissions constitute or are
caused by fraud, negligence, or willful misconduct by the Trustee; provided
further, without limiting the claims of third parties pursuant
<PAGE> 2
to the last sentence hereof, that the Sellers shall not indemnify the Trust, the
Investor 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 Investor Certificateholders; provided further, that the Sellers
shall not indemnify the Trust, the Investor 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; and provided further, that the Sellers
shall not indemnify the Investor Certificateholders or the Certificate Owners
for any liabilities, costs or expenses of the Investor Certificateholders or the
Certificate Owners arising under any tax law relating to any Federal state,
local or foreign income or franchise taxes or any other tax imposed on or
measured by income (or any interest or penalties with respect thereto or arising
from a failure to comply therewith) required to be paid by or for the account of
the Investor Certificateholders or the Certificate Owners in connection herewith
to any taxing authority. Any such indemnification shall not be payable from the
Trust Assets. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof.
ARTICLE II
Miscellaneous
SECTION 2.1. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 2.2. Severability. If any one or more of the
covenants, agreements, provisions or terms or portions thereof of this Amendment
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms or portions thereof shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this Amendment
and shall in no way affect the validity or enforceability of the other
provisions or portions of this Amendment.
Section 2.3. Counterparts. This Amendment may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
2
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be signed as of the day and year first above written.
COLONIAL NATIONAL BANK USA
as Seller and Servicer
/s/ MICHAEL COCO
-------------------------------
Name: Michael Coco
Title: Assistant Vice President
BANKERS TRUST COMPANY
Trustee
/s/ KEVIN J. HEALEY
-------------------------------
Name: Kevin J. Healey
Title: Assistant Secretary
3
<PAGE> 1
EXHIBIT 4.3
EXECUTION COPY
AMENDMENT NUMBER 2
TO THE
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
THIS AMENDMENT NUMBER 2 TO THE AMENDED AND RESTATED POOLING
AND SERVICING AGREEMENT, dated as of October 6, 1995, (this "Amendment") is
among COLONIAL NATIONAL BANK USA, a national banking association ("CNB"), as a
Seller and the Servicer, ADVANTA NATIONAL BANK, a national banking association
("ANB"), as an Additional Seller, and BANKERS TRUST COMPANY, as Trustee (the
"Trustee") under the Amended and Restated Pooling and Servicing Agreement dated
as of December 1, 1993, between CNB, as a Seller and the Servicer, and the
Trustee, as amended and restated on May 23, 1994 (as amended, supplemented and
in effect on the date hereof, the "Pooling and Servicing Agreement").
RECITALS
WHEREAS, subsections 2.08(e) and 13.01(a) of the Pooling and
Servicing Agreement permit amendment of the Pooling and Servicing Agreement to
designate an Affiliate of CNB as an Additional Seller on the terms and
conditions therein specified; and
WHEREAS, CNB wishes to amend Sections 4.03 and 12.01 of the
Pooling and Servicing Agreement as provided herein in accordance with Section
13.01(a) of the Pooling and Servicing Agreement.
NOW THEREFORE, in consideration of the premises and the
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings specified in the Pooling and
Servicing Agreement.
SECTION 2. Addition of Additional Seller.
(a) Pursuant to subsection 2.08(e) of the Pooling and
Servicing Agreement, CNB hereby designates ANB, an Affiliate of CNB, as an
Additional Seller under the Pooling and Servicing Agreement. From and after the
Effective Date, references in the Pooling and Servicing Agreement and any
outstanding Supplement to a "Seller" shall be construed to include ANB in its
capacity as a Seller under the Pooling and Servicing Agreement and references to
the "Sellers" shall mean CNB and ANB in their capacities as
<PAGE> 2
Sellers under the Pooling and Servicing Agreement, unless in each case the
context requires otherwise.
(b) ANB hereby accepts its designation by CNB as an Additional
Seller, and on the Effective Date expressly assumes all of the obligations,
duties, liabilities, immunities and rights of a Seller and a Holder of the Bank
Certificate under the Pooling and Servicing Agreement and each outstanding
Supplement and agrees to be bound as a Seller and a Holder of the Bank
Certificate by all of the terms, covenants and conditions of the Pooling and
Servicing Agreement and each outstanding Supplement. Notwithstanding the
foregoing, each of the parties hereto agrees that ANB shall have no liability
for, nor shall any Person have any claim against ANB with respect to, the
performance by CNB of its obligations (or CNB's failure to perform any of its
obligations) under the Pooling and Servicing Agreement or any Supplement and, in
addition, each of the parties hereto also agrees that CNB shall have no
liability for, nor shall any Person have any claim against CNB with respect to,
the performance by ANB of its obligations (or ANB's failure to perform any of
its obligations) under the Pooling and Servicing Agreement or any Supplement.
SECTION 3. Amendment of Section 4.03.
(a) The second paragraph of subsection 4.03(b) of the Pooling
and Servicing Agreement is hereby amended in its entirety to read as follows:
"The payments to be made to the Holders of the Seller
Certificates pursuant to this subsection 4.03(b) do not apply to
deposits to the Collection Account or other amounts that do not
represent Collections, including payment of the purchase price for
Receivables pursuant to Section 2.06 or 10.01, proceeds from the sale,
disposition or liquidation of Receivables pursuant to Section 9.02 or
12.02 or payment of the purchase price for the Certificateholders'
Interest of a specific Series pursuant to the related Supplement."
(b) Section 4.03 of the Pooling and Servicing Agreement is
hereby amended by inserting clause (c) immediately following clause (b). Clause
(c) shall read as follows:
"(c) Principal Allocations to the Excess Funding Account.
Throughout the existence of the Trust the amount of Collections of
Principal Receivables that is allocated to Investor Certificateholders,
and which is to be paid to the Holders of the Seller Certificates as
provided in this Agreement and in any Supplement shall be paid to such
Holders only if the Seller Amount on such day is greater than the
Required Seller Amount on such day (after giving affect to all
Principal Receivables transferred to the Trust on such day) and
otherwise shall be deposited in the Excess Funding Account and applied
in accordance with Section 4.02 of this Agreement."
2
<PAGE> 3
SECTION 4. Amendment of Section 12.01. Clause (i) of Section
12.01 of the Pooling and Servicing Agreement is hereby amended in its entirety
to read as follows: "(i) December 31, 2044,".
SECTION 5. Representations and Warranties of the Sellers. Each
of the Sellers severally represents that, after giving effect to this Amendment:
(a) Each of CNB and ANB shall be a Seller for the purposes of
Section 7.04 and Section 9.02 of the Pooling and Servicing Agreement; and
(b) The Seller Amount shall not be less than 2% of the total
amount of Principal Receivables after the exchange of the Bank Certificate
pursuant to Section 6(c) of this Amendment.
SECTION 6. Effectiveness. The amendment provided for by this
Amendment shall become effective on the date (the "Effective Date") that each of
the following events occur:
(a) CNB and ANB shall have delivered to the Trustee an
Officer's Certificate from each of CNB and ANB stating that CNB and ANB
reasonably believe that the execution and delivery of this Amendment will not
have an Adverse Effect.
(b) CNB and ANB shall have received from each Rating Agency
written confirmation that the execution and delivery of this Amendment will not
result in the reduction or withdrawal of its current rating of any outstanding
Series or Class of Investor Certificates.
(c) CNB shall have surrendered the Bank Certificate to the
Trustee in exchange for a newly issued Bank Certificate modified to reflect
ANB's interest in the Seller's Interest with notice of such exchange given to
each Rating Agency.
(d) CNB and ANB shall have delivered to the Trustee and each
Rating Agency a Tax Opinion as to the transfer of an interest in the Bank
Certificate to ANB.
(e) The Servicer shall have delivered to the Trustee an
Opinion of Counsel as to the matters specified in Exhibit G-1 to the Pooling and
Servicing Agreement with respect to this Amendment.
(f) Each of the parties hereto shall have received
counterparts of this Amendment, duly executed by each of the parties hereto.
3
<PAGE> 4
(g) Each requirement of any Series Enhancement agreement
applicable to amendment of the Pooling and Servicing Agreement shall have been
satisfied.
SECTION 7. Pooling and Servicing Agreement in Full Force and
Effect as Amended. Except as specifically amended hereby, all of the terms and
conditions of the Pooling and Servicing Agreement shall remain in full force and
effect. All references to the Pooling and Servicing Agreement in any other
document or instrument shall be deemed to mean such Pooling and Servicing
Agreement as amended by this Amendment. This Amendment shall not constitute a
novation of the Pooling and Servicing Agreement, but shall constitute an
amendment thereof. The parties hereto agree to be bound by the terms and
obligations of the Pooling and Servicing Agreement, as amended by this
Amendment, as though the terms and obligations of the Pooling and Servicing
Agreement were set forth herein.
SECTION 8. Counterparts. This Amendment may be executed in any
number of counterparts and by separate parties hereto on separate counterparts,
each of which when executed shall be deemed an original, but all such
counterparts taken together shall constitute one and the same instrument.
SECTION 9. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to the Pooling and Servicing Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
COLONIAL NATIONAL BANK USA,
Seller and Servicer
By:/s/ MICHAEL COCO
---------------------------
Name: Michael Coco
Title: Vice President
ADVANTA NATIONAL BANK,
Additional Seller
By:/s/ MICHAEL COCO
----------------------------
Name: Michael Coco
Title: Vice President
BANKERS TRUST COMPANY,
Trustee
By: /s/ KEVIN J. HEALEY
------------------------------
Name: Kevin J. Healey
Title: Assistant Vice President
5
<PAGE> 1
EXHIBIT 4.4
EXECUTION COPY
AMENDMENT NUMBER 3
TO THE
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
THIS AMENDMENT NUMBER 3 TO THE AMENDED AND RESTATED POOLING
AND SERVICING AGREEMENT, dated as of February 20, 1998, (this "Amendment") is
between ADVANTA NATIONAL BANK (formerly known as Advanta National Bank USA and
prior to that known as Colonial National Bank USA and successor in interest to
the former Advanta National Bank), a national banking association ("ANB"), as
Seller and Servicer, and BANKERS TRUST COMPANY, as Trustee (the "Trustee") under
the Amended and Restated Pooling and Servicing Agreement dated as of December 1,
1993, between ANB, as Seller and Servicer, and the Trustee, as amended and
restated on May 23, 1994 (as amended, supplemented and in effect on the date
hereof, the "Pooling and Servicing Agreement").
RECITALS
WHEREAS, ANB wishes to amend the Pooling and Servicing
Agreement as provided herein in accordance with Section 13.01(a) of the Pooling
and Servicing Agreement and the Trustee is willing to consent to such amendment
upon the terms provided for herein.
NOW THEREFORE, in consideration of the premises and the
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings specified in the Pooling and
Servicing Agreement. In addition, the following words and phrases shall have the
following meanings:
"Assignment and Assumption" shall mean the Assignment and
Assumption Agreement dated as of February 20, 1998 among ANB, Fleet and the
Trustee.
<PAGE> 2
"Fleet" shall mean Fleet Bank (RI), National Association, a
national banking association.
SECTION 2. Amendment of Section 1.01. Two new definitions are
hereby added to Section 1.01 of the Pooling and Servicing Agreement, to be
placed in the proper alphabetical order, which shall read as follows:
"Amendment Number 3 Effective Date" shall mean the effective
date for Amendment Number 3 to this Agreement, which shall be February
20, 1998.
"Fleet" shall mean Fleet Bank (RI), National Association, a
national banking association, and its permitted successors and assigns.
SECTION 3. Amendment of Section 1.02. Section 1.02 of the
Pooling and Servicing Agreement is hereby amended by inserting subsection(g)
immediately following subsection (f). Subsection (g) shall read as follows:
(g) From and after the Amendment Number 3 Effective Date, each
and every reference to Colonial in this Agreement and each Supplement
shall be deleted and replaced with the defined term "Fleet."
SECTION 4. Amendment of Section 6.03. Subsection 6.03(d) of
the Pooling and Servicing Agreement is hereby amended in its entirety to read as
follows:
(d) The Bank Certificate (or any interest therein) may be
transferred to (x) a Person which is a member of the "affiliated group"
of which Fleet Financial Group, Inc. is the "common parent" (as such
terms are defined in Section 1504(a) of the Code) or (y) to Fleet in a
servicing transfer pursuant to Section 13.08; provided that (i) if any
Series of Investor Certificates are outstanding that were characterized
as debt at the time of their issuance, the Sellers shall have delivered
to the Trustee and each Rating Agency a Tax Opinion, dated the date of
such transfer, with respect thereto, and (ii) any such transferee shall
be deemed to be a "Seller" for purposes of Section 7.04 and 9.02.
2
<PAGE> 3
SECTION 5. Amendment to Section 7.02. Subsection 7.02(b) of
the Pooling and Servicing Agreement is hereby amended in its entirety to read as
follows:
(b) the obligations of the Sellers hereunder shall not be
assignable nor shall any Person succeed to the obligations of the
Sellers hereunder except in each case in accordance with the provisions
of the foregoing paragraph or the provisions of Section 13.08.
SECTION 6. Amendment of Section 10.01. The phrase "except as
permitted by Section 8.02 or 8.07," appearing in the tenth line of subsection
10.01(b) of the Pooling and Servicing Agreement is hereby amended to read as
follows: "except as permitted by Section 8.02, 8.07 or 13.08,".
SECTION 7. Amendment of Section 13.08. Section 13.08 of the
Pooling and Servicing Agreement is hereby amended in its entirety to read as
follows:
Section 13.08. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Section 8.02 or as
provided below, this Agreement may not be assigned by the Servicer
without the prior consent of Holders of Investor Certificates
evidencing not less than 66-2/3% of the Aggregate Investor Amount;
provided, that, effective as of the Amendment Number 3 Effective Date,
Colonial may assign and delegate to Fleet all of its rights and
obligations hereunder as Seller and as Servicer upon satisfaction of
each of the following conditions: (i) Fleet shall expressly assume, by
an agreement supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the performance of every
covenant and obligation of Colonial as Seller and Servicer hereunder,
(ii) Fleet shall deliver to the Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such assignment and delegation
complies with this Section and that such supplemental agreement is a
valid and binding obligation of Fleet enforceable against Fleet in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally from time to
time in effect and except as such
3
<PAGE> 4
enforceability may be limited by general principals of equity (whether
considered in a suit at law or in equity), and that all conditions
precedent herein provided for in this Section 13.08 have been complied
with and (iii) the Rating Agency Condition shall have been satisfied
with respect to such assignment and delegation.
SECTION 8. Amendment to Change Name of the Trust. From and
after the Effective Date, every reference in the Pooling and Servicing Agreement
and in any certificate or other document made or delivered pursuant thereto to
the ADVANTA Credit Card Master Trust II shall be amended to refer to the Fleet
Credit Card Master Trust II and the name of the Trust shall be the Fleet Credit
Card Master Trust II.
SECTION 9. Representation and Warranties of ANB. ANB
represents that, after giving effect to this Amendment and the execution and
delivery by each of the parties thereto of the Assignment and Assumption:
(a) Fleet shall be a Seller for the purpose of Section 7.04
and Section 9.02 of the Pooling and Servicing Agreement; and
(b) The Seller Amount shall not be less than 2% of the total
amount of Principal Receivables after the exchange of the Bank Certificate
pursuant to Section 10(c) of this Amendment.
SECTION 10. Effectiveness. The amendment provided for by this
Amendment shall become effective on the date (the "Effective Date") that each of
the following events occur:
(a) ANB shall have delivered to the Trustee an Officer's
Certificate from ANB stating that ANB reasonably believes that the execution and
delivery of this Amendment will not have an Adverse Effect.
(b) ANB shall have received from each Rating Agency written
confirmation that the execution and delivery of this Amendment and the
Assignment and Assumption will not result in the reduction or withdrawal of its
current rating of any outstanding Series or Class of Investor Certificates.
4
<PAGE> 5
(c) ANB shall have surrendered the Bank Certificate to the
Trustee in exchange for a newly issued Bank Certificate modified to reflect
Fleet's ownership of the Seller's Interest with notice of such exchange given to
each Rating Agency.
(d) ANB shall have delivered to the Trustee and each Rating
Agency a Tax Opinion as to the transfer of an interest in the Bank Certificate
to Fleet.
(e) The Servicer shall have delivered to the Trustee an
Opinion of Counsel as to the matters specified in Exhibit G-1 to the Pooling and
Servicing Agreement with respect to this Amendment.
(f) Each of the parties hereto shall have received
counterparts of this Amendment, duly executed by each of the parties hereto.
(g) Each of the parties hereto shall have received
counterparts of the Assignment and Assumption, duly executed by each of the
parties thereto.
SECTION 11. Pooling and Servicing Agreement in Full Force and
Effect as Amended. Except as specifically amended hereby, all of the terms and
conditions of the Pooling and Servicing Agreement shall remain in full force and
effect. All references to the Pooling and Servicing Agreement in any other
document or instrument shall be deemed to mean such Pooling and Servicing
Agreement as amended by this Amendment. This Amendment shall not constitute a
novation of the Pooling and Servicing Agreement, but shall constitute an
amendment thereof. The parties hereto agree to be bound by the terms and
obligations of the Pooling and Servicing Agreement, as amended by this
Amendment, as though the terms and obligations of the Pooling and Servicing
Agreement were set forth herein.
SECTION 12. Counterparts. This Amendment may be executed in
any number of counterparts and by separate parties hereto on separate
counterparts, each of which when executed shall be deemed an original, but all
such counterparts taken together shall constitute one and the same instrument.
SECTION 13. Governing Law. THIS AMENDMENT SHALL BE
5
<PAGE> 6
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
SECTION 14. Sequence of Amendments. If an Amendment Number 4
to the Amended and Restated Pooling and Servicing Agreement ("Amendment Number
4") shall be executed on the Amendment Number 3 Effective Date, this Amendment
shall be deemed to have been entered into and become effective after Amendment
Number 4 shall have been entered into and become effective notwithstanding the
numerical sequence of this Amendment and Amendment Number 4.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to the Pooling and Servicing Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
ADVANTA NATIONAL BANK,
Seller and Servicer
By: /s/ MICHAEL COCO
---------------------------
Name: Michael Coco
Title: Vice President
BANKERS TRUST COMPANY,
Trustee
By: /s/ JENNA KAUFMAN
---------------------------
Name: Jenna Kaufman
Title: Vice President
[Signature Page to Amendment No. 3 to the
Amended and Restated Pooling and Servicing Agreement]
<PAGE> 1
EXHIBIT 4.5
EXECUTION COPY
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment
Agreement"), dated as of February 20, 1998 is among ADVANTA NATIONAL BANK, a
national banking association, previously known as Advanta National Bank USA and
prior to that known as Colonial National Bank USA ("Advanta"), FLEET BANK (RI),
National Association, a national banking association ("Fleet (RI)"), FLEET
CREDIT CARD, LLC, a Rhode Island limited liability company ("LLC"), and BANKERS
TRUST COMPANY, a New York banking corporation, as Trustee (the "Trustee") under
that Amended and Restated Pooling and Servicing Agreement dated as of December
1, 1993, as Amended and Restated on May 23, 1994 (as amended by Amendment Number
1 dated as of July 1, 1994, as further amended by Amendment Number 2 dated as of
October 6, 1995, as further amended by Amendment Number 3 dated as of February
20, 1998, and as supplemented by each of the outstanding Series Supplements and
each of the Assignments of Additional Accounts entered into on or prior to the
date hereof, the "Agreement") pursuant to which the ADVANTA Credit Card Master
Trust II (the "Trust") was created and the Certificates (the "Certificates")
described in Schedule II hereto have been delivered. Each Series of Certificates
was issued pursuant to a Supplement and all of such Supplements which remain in
effect as of the date hereof are listed on Schedule II to this Assignment
Agreement (collectively, the "Supplements"). All terms used herein and not
defined herein have the meaning assigned thereto in the Agreement.
WHEREAS, Advanta will contribute and transfer substantially
all of the assets and liabilities of its consumer credit card business to LLC,
and simultaneously therewith LLC will direct Advanta to transfer certain of such
assets and liabilities to Fleet National Bank or Fleet (RI), all in accordance
with the Contribution Agreement dated as of October 28, 1997 (the "Contribution
Agreement") between Advanta Corp. and Fleet Financial Group, Inc. and Rights
Agreements dated as of February 20, 1998 (the "Rights Agreements") between LLC
and Fleet (RI) or Fleet National Bank; and
WHEREAS, pursuant to the terms of Section 13.08 of the
Agreement as amended by Amendment Number 3 to the Agreement, dated as of
February 20, 1998 ("Amendment Number 3") Advanta may assign and delegate to
Fleet (RI) all of Advanta's rights and obligations as Seller and Servicer under
the Agreement, and Advanta and Fleet (RI) have agreed that Advanta will assign
and delegate to Fleet (RI) and Fleet (RI) will accept and assume all of
Advanta's rights and obligations as Seller and Servicer under the Agreement; and
WHEREAS, this Assignment Agreement is entered into as an
agreement supplemental to the Agreement within the meaning of Section 13.08 of
the Agreement.
NOW, THEREFORE, pursuant to the Agreement, the Rights
Agreements and the Contribution Agreement, and in consideration of these
premises, and for good and valuable
<PAGE> 2
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed that:
ARTICLE I
ASSIGNMENT OF ADVANTA RIGHTS AND DELEGATION OF ADVANTA DUTIES AND OBLIGATIONS
Section 1.1 Assignment of Advanta's Rights. Advanta, as of the
date hereof, hereby assigns and transfers to Fleet (RI) all of Advanta's right,
title and interest as Seller and Servicer under the Agreement and under each of
the Supplements.
Section 1.2 Delegation of Advanta Duties and Obligations.
Advanta hereby delegates to Fleet (RI) all of Advanta's liabilities, duties and
obligations as Seller and Servicer under the Agreement and under each of the
Supplements.
Section 1.3 Acceptance and Assumption. Fleet (RI), by the
execution hereof, hereby accepts from Advanta and acknowledges transfer of all
of Advanta's right, title and interest as Seller and Servicer under the
Agreement and under each of the Supplements. Fleet (RI), by the execution
hereof, hereby accepts and assumes all of Advanta's liabilities, duties and
obligations as Seller and Servicer under the Agreement and under each of the
Supplements and Fleet (RI) hereby agrees and acknowledges, for the benefit of
the Trustee and all of the Certificateholders, that Fleet (RI) hereby assumes
all of the liabilities under and assumes and agrees to perform each and every
covenant and obligation of the Seller and of the Servicer contained in the
Agreement and in each Supplement.
Section 1.4 Acknowledgement, Consent and Release. The Trustee
hereby acknowledges and consents to the assignment and delegation of Advanta's
rights, title, interests, duties and obligations as Seller and Servicer and to
Fleet (RI)'s acceptance and assumption thereof and hereby acknowledges and
agrees that as of the date hereof, Fleet (RI) has been substituted for Advanta
as Seller and Servicer under the Agreement and under each of the Supplements and
that, as a result, Advanta is released as Seller and Servicer under the
Agreement and each of the Supplements and that, as of the date hereof, Advanta
is hereby released from all duties and obligations under the Agreement and the
Supplements except to the extent of obligations that arose prior to the date
hereof.
ARTICLE II
TRANSFER OF THE BANK CERTIFICATE
Section 2.1 Transfer of Bank Certificate. As provided in
Section 6.03 of the Agreement, as amended, the Bank Certificate may be
transferred to Fleet (RI) in a servicing transfer pursuant to Section 13.08 and
Advanta hereby assigns and transfers to Fleet (RI) all of Advanta's right, title
and interest in the Bank Certificate and simultaneously with the execution
2
<PAGE> 3
hereof, Advanta will surrender the Bank Certificate to the Trustee for transfer
to Fleet (RI) and will deliver to the Trustee a Tax Opinion as provided in
Section 6.03(d) of the Agreement.
ARTICLE III
ASSIGNMENT OF RECEIVABLES
Section 3.1 Assignment of Receivables.
(a) Fleet (RI) hereby acknowledges that Advanta has
transferred to Fleet (RI) Advanta's portfolio of consumer credit card accounts
including all of the Initial Accounts designated to the Trust pursuant to the
terms of Section 2.01 of the Agreement and each Additional Account designated to
the Trust pursuant to Section 2.08 of the Agreement and those Assignments of
Receivables in Additional Accounts listed in Schedule III to this Assignment
Agreement (the "Account Assignments"). Fleet (RI) acknowledges that, pursuant to
the Agreement and to the Account Assignments, Advanta has sold, transferred,
assigned and set over and otherwise conveyed to the Trustee, on behalf of the
Trust, for the benefit of the Certificateholders, all of Advanta's right, title
and interest in and to (i) the Receivables existing at the time of the
designation of such Accounts as an Account and the Receivables thereafter
created from time to time until the termination of the Trust and arising in
connection with the Accounts, (ii) all monies due or to become due and all
amounts received with respect to the Receivables (including all Finance Charge
Receivables relating thereto), (iii) all proceeds (including "proceeds" as
defined in the UCC) of and Collections of the Receivables, including Insurance
Proceeds and Recoveries relating to Receivables, and (iv) to the extent not
otherwise included in the Receivables, Interchange allocable to the Trust
pursuant to the Agreement.
(b) Fleet (RI) hereby confirms, affirms and ratifies the sale,
transfer, assignment, set over, conveyance and pledge contained in the Agreement
and in each of the Account Assignments and Fleet (RI) hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trustee, on behalf of the Trust,
for the benefit of the Certificateholders, all of Fleet (RI)'s right, title and
interest in and to (i) the Receivables now existing or hereafter created in the
Initial Accounts and all Additional Accounts designated in the Account
Assignments, (ii) all monies due or to become due and all amounts received with
respect thereto (including all Finance Charge Receivables relating thereto),
(iii) all proceeds (including "proceeds" as defined in the UCC) of and
Collections of such Receivables, including Insurance Proceeds and Recoveries
relating to the Receivables, (iv) to the extent not otherwise included in such
Receivables, Interchange allocable to the Trust pursuant to the Agreement, and
(v) all amounts on deposit in the Collection Account (other than net investment
earnings thereon), the Excess Funding Account, any Series Account, and any Yield
Maintenance Account.
(c) Fleet (RI) hereby grants to the Trustee, on behalf of the
Trust, for the benefit of the Certificateholders, a first priority perfected
security interest in all of Fleet (RI)'s right, title and interest in and to (i)
the Receivables now existing and hereafter created and arising in the Initial
Accounts and all Additional Accounts, (ii) all monies due or to become due and
all amounts received with respect to the Receivables (including all Finance
Charge Receivables relating thereto), (iii) all proceeds (including "proceeds"
as defined in the UCC) of
3
<PAGE> 4
and Collections of the Receivables including Insurance Proceeds and Recoveries
relating thereto, (iv) to the extent not otherwise included in the Receivables,
Interchange allocable to the Trust pursuant to the Agreement and (v) all amounts
on deposit in the Collection Account (other than net investment earnings
thereon), the Excess Funding Account, any Series Account and any Yield
Maintenance Account and this Assignment Agreement shall constitute a security
agreement under applicable law.
Section 3.2 Acceptance of Assignment. The Trustee hereby
acknowledges its acceptance on behalf of the Trust, for the benefit of the
Certificateholders, of all right, title and interest in and to the property, now
existing and hereafter created, conveyed to the Trust pursuant to Section 3.1(b)
of this Assignment Agreement and declares that it shall maintain such right,
title and interest, upon the trust set forth in the Agreement for the benefit of
the Certificateholders. The Trustee also hereby acknowledges its acceptance on
behalf of the Trust, for the benefit of the Certificateholders, of a security
interest in all right, title and interest in and to the property, now existing
and hereafter created, granted to the Trustee pursuant to Section 3.1(c) of this
Assignment Agreement and declares that it shall maintain such right, title and
interest upon the trust set forth in the Agreement for the benefit of all the
Certificateholders.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 Representations and Warranties. Fleet (RI) hereby
assumes the performance of all of the obligations and covenants and assumes all
of the liabilities of Advanta as Seller and as Servicer under the Agreement and
each of the Supplements as if Fleet (RI) were the original Seller and Servicer
including, without limitation, the obligations of the Seller to transfer the
Receivables and proceeds thereof to the Trust.
Section 4.2 Reassignment of Receivables. Fleet (RI) agrees
that upon the execution and delivery of Amendment Number 3, under the terms of
the Agreement, it shall be and is deemed to be the Seller which transferred all
Receivables to the Trust and agrees to accept the reassignment of Receivables as
provided in Sections 2.05 and 2.06 notwithstanding the fact that a Receivable
may have been transferred to the Trust prior to the date of this Assignment
Agreement and after the date of this Assignment Agreement no such assignment
shall be made to Advanta and any amounts required to be deposited as a result of
such reassignment shall be the obligation of Fleet (RI).
Section 4.3 Covenants.
(a) Fleet (RI), as Seller and Servicer, agrees to comply with
all of the covenants of the Seller and of the Servicer as set forth in the
Agreement and in each of the Supplements and from and after the date of this
Assignment Agreement, Fleet (RI) covenants to execute and deliver to Advanta or
to the Trustee such additional documents and instruments and to take such
action, all without further consideration, as Advanta shall reasonably request
to effectuate the
4
<PAGE> 5
assignment, assumption and release provided herein, including, but not limited
to, the execution and filing of UCC financing statements.
(b) From and after the date of this Assignment Agreement,
Advanta covenants to execute and deliver to Fleet (RI) such additional documents
and instruments and to take such action, all without further consideration, as
Fleet (RI) shall reasonably request to effectuate the assignment, assumption and
release provided herein, including, but not limited to, the execution and filing
of UCC financing statements.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.1 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 5.2 Counterparts. This Assignment Agreement may be
executed in two or more counterparts, and by different parties on separate
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
Section 5.3 Governing Law. THIS ASSIGNMENT AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING THE
UCC AS IN EFFECT IN THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have caused this
Assignment Agreement to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.
ADVANTA NATIONAL BANK,
Seller and Servicer
By:/s/ MICHAEL COCO
----------------------------------
Name: Michael Coco
Title Vice President
FLEET BANK (RI), NATIONAL
ASSOCIATION,
Assignee and Seller and
Servicer by transfer and assumption
By:/s/ DOUGLAS L. JACOBS
----------------------------------
Name: Douglas L. Jacobs
Title: Executive Vice President
BANKERS TRUST COMPANY,
Trustee
By:/s/ JENNA KAUFMAN
----------------------------------
Name: Jenna Kaufman
Title: Vice President
Acknowledged and Agreed
FLEET CREDIT CARD, LLC
By:/s/ JOSEPH W. SAUNDERS
-------------------------------
Name: Joseph W. Saunders
Title: President
[Signature Page for Assignment Agreement]
<PAGE> 7
SCHEDULE I
List of All Outstanding Supplements to the Amended and Restated Pooling and
Servicing Agreement dated as of December 1, 1993,
as Amended and Restated on May 23, 1994
<PAGE> 8
SCHEDULE II
List of All Series of Certificates
Outstanding Under the Agreement
<PAGE> 9
SCHEDULE III
List of Assignment of
Receivables in Additional Accounts
<PAGE> 1
Exhibit 4.6
[Form of Series Supplement]
- --------------------------------------------------------------------------------
FLEET BANK (RI), NATIONAL BANK
Seller and Servicer
and
BANKERS TRUST COMPANY
Trustee
on behalf of the Series ____-__ Certificateholders
SERIES ____-__ SUPPLEMENT
Dated as of ____________
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1993,
as Amended and Restated on May 23, 1994
FLEET CREDIT CARD MASTER TRUST II
SERIES ____-__
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
Page
-----
TABLE OF CONTENTS
<S> <C>
ARTICLE I
Section 1.1. Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Section 2.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Section 3.1. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
Section 4.1. Collections and Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.2. Determination of Monthly Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.3. Determination of Monthly Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.4. Required Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.5 Application of Class A Available Funds, Class B Available Funds, Class C Available Funds,
Available Investor Principal Collections and Class C Principal Collections . . . . . . . . . . 27
Section 4.6. Default Amounts; Investor Charge-Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.7. Excess Spread; Excess Finance Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.8. Reallocated Principal Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.9. Excess Finance Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.10 Shared Principal Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
[Section 4.11. Determination of LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.12. Cash Collateral Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.13. Principal Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.14. Class A Accumulation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.15. Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 4.16. Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.17. Increases in Invested Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
Section 5.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.2. Certificates and Statements43
ARTICLE V
Section 6.1. Series ____-__ Pay Out Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII
Section 7.1. Optional Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.2. Series Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
Section 8.1. Sale of Receivables or Certificateholders' Interest Pursuant to Section 2.06 or 10.01 of the
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.2. Distribution of Proceeds of Sale, Disposition or Liquidation of the Receivables Pursuant to
Section 9.02 of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.3. Instructions Pursuant to Section 9.02(a) of the Agreement. . . . . . . . . . . . . . . . . . . 49
ARTICLE IX
Section 9.1. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE X
Section 10.1. Certain Matters Regarding the Class C Interest Holder . . . . . . . . . . . . . . . . . . . . 49
Section 10.2. Ratification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.3. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.4. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 10.6. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
EXHIBITS
EXHIBIT A-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Class A Certificate
EXHIBIT A-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Class B Certificate
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Monthly Payment Instructions
EXHIBIT C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Monthly Certificateholders' Statement
</TABLE>
iii
<PAGE> 5
SERIES ____-__ SUPPLEMENT, dated as of ________ __, ____ (the
"Supplement"), between FLEET BANK (RI), NATIONAL ASSOCIATION, a national
banking association, as Seller and Servicer, and its successors and assigns and
BANKERS TRUST COMPANY, a New York banking corporation, as Trustee.
Pursuant to the Amended and Restated Pooling and Servicing Agreement dated
as of December 1, 1993, as Amended and Restated on May 23, 1994 (as amended and
supplemented, including by the terms of this Supplement, the "Agreement"),
among Fleet Bank (RI), National Association (as Seller and Servicer by
assignment and assumption of rights, duties and obligations from Advanta
National Bank) (Advanta National Bank formerly being Advanta known as Advanta
National Bank USA and prior to that known as Colonial National Bank USA) and
the Trustee, Fleet Credit Card Master Trust II) (formerly known as ADVANTA
Credit Card Master Trust II) (the "Trust") was created. Section 6.03 of the
Agreement provides that the Seller may from time to time direct the Trustee to
authenticate one or more new Series of Investor Certificates representing
fractional undivided interests in the Trust. The Principal Terms of any new
Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Supplement, the Seller and the Trustee shall create a new
Series of Investor Certificates and specify the Principal Terms thereof.
ARTICLE I
Creation of the Series ____-__ Certificates
Section 1.1. Designation. (a) There is hereby created a Series of
Investor Certificates to be issued pursuant to the Agreement and this
Supplement to be known as "Fleet Credit Card Master Trust II, Series ____-__."
The Series ____-__ Certificates shall be issued in two Classes. The first
Class shall be known as the "Class A Floating Rate Asset Backed Certificates,
Series ____-__" and the second Class shall be known as the "Class B Floating
Rate Asset Backed Certificates, Series ____-__." In addition, there is hereby
created a third Class of interests in the Trust which, except as expressly
provided herein, shall be deemed to be "Investor Certificates" for all purposes
under the Agreement and this Supplement and shall be in uncertificated form and
which shall be known as the ["Floating Rate] Class C Asset Backed Interests,
Series ____-__." [Solely for the purposes of Section 9.02(a) of the Agreement,
the holders of interests in the Class C Interest shall be deemed to be a
separate Class.] The Class C Interest Holder shall be the Series Enhancer for
Series ____-__. [Notwithstanding anything to the contrary in the Agreement,
the institution making the initial deposit to the Cash Collateral Account shall
not be deemed to be a Series Enhancer for Series ____-__.]
(b) Series ____-__ shall be included in Group One. Series ____-__ shall
be a Principal Sharing Series with respect to Group One only. Series ____-__
shall not be subordinated to any other Series. Notwithstanding any provision
in the Agreement or in this Supplement to the contrary, the first Distribution
Date with respect to Series ____-__ shall be the __________ Distribution Date,
and references herein to the Monthly Period relating to the _________
Distribution Date shall mean the period from the Closing Date through the end
of ___________.
<PAGE> 6
(c) In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Supplement shall govern.
(d) The Class C Interest Holder, as holder of an "Investor Certificate"
under the Agreement, shall be entitled to the benefits of the Agreement and
this Supplement. Notwithstanding the foregoing, except as expressly provided
herein, the provisions of Article VI and Article XII of the Agreement relating
to the registration, authentication, delivery, presentation, cancellation and
surrender of Registered Certificates and clauses (a) and (c) of the definition
of "Tax Opinion" in Section 1.01 of the Agreement shall not be applicable to
the Class C Interest.
ARTICLE II
Definitions
Section 2.1. Definitions.
(a) Whenever used in this Supplement, the following words and phrases
shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and the
masculine as well as the feminine and neuter genders of such terms.
"Accumulation Date" shall mean the close of business on _______________.
"Accumulation Period" shall mean the Class A Accumulation Period and the
Class B Accumulation Period.
"Additional Interest" shall mean, at any time of determination, the Class
A Additional Interest, the Class B Additional Interest and the Class C
Additional Interest.
"Available Cash Collateral Amount" shall mean, with respect to any
Distribution Date, the lesser of (a) the amount on deposit in the Cash
Collateral Account on such date (before giving effect to any deposit to, or
withdrawal from, the Cash Collateral Account to be made with respect to such
date) and (b) the lesser of the Required Enhancement Amount and the Invested
Amount as of such date.
"Available Enhancement Amount" shall mean, for any date of determination,
the sum of (a) the Class C Investor Amount and (b) the aggregate amount of
funds on deposit in the Cash Collateral Account, in each case on such date.
"Available Investor Principal Collections" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) an amount equal to the
Investor Principal Collections minus (ii) the amount of Reallocated Principal
Collections with respect to such Monthly Period which pursuant to Section
4.8(a) are required to fund any deficiency in the
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<PAGE> 7
amount to be distributed pursuant to Sections 4.5(a)(i), (ii) and (iii) for the
related Distribution Date (excluding Reallocated Principal Collections that
have resulted in a reduction of the Class C Invested Amount pursuant to Section
4.6(c)), plus (b) any Shared Principal Collections with respect to other Series
in Group One that are allocated to Series ____-__ in accordance with Section
4.04 of the Agreement and Section 4.10 hereof, plus (c) any other amounts which
pursuant to subsection 4.5(a)(iii) (including any amounts allocated with
respect thereto pursuant to subsection 4.7(a)) and subsections 4.7(b), (d) and
(e) hereof are to be treated as Available Investor Principal Collections with
respect to the related Distribution Date, plus (d) the excess, if any, of Class
C Principal Collections over Class C Monthly Principal with respect to the
related Distribution Date.
"Average Principal Balance" shall mean, (i) for any Monthly Period during
the Funding Period, the weighted average of the sum of the Principal
Receivables in the Trust and the principal amount on deposit in the Excess
Funding Account at the end of the day on the last day of the prior Monthly
Period and on the end of the day on each Tuesday in such Monthly Period
immediately preceding each Wednesday on which the Invested Amount is increased
pursuant to Section 4.17 weighted, respectively, by a fraction, the numerator
of which is the number of days from and including each such day to but
excluding the next such day, or in the case of the last such day, to but
excluding the last day of such Monthly Period, and the denominator of which is
the number of days in such Monthly Period, and (ii) for any Monthly Period in
which an Addition Date occurs, the weighted average of the sum of the Principal
Receivables in the Trust and the principal amount on deposit in the Excess
Funding Account at the end of the day on the last day of the prior Monthly
Period and the sum of the Principal Receivables in the Trust and the principal
amount on deposit in the Excess Funding Account at the end of the day on the
related Addition Date, weighted, respectively, by a fraction, the numerator of
which is the number of days from and including the first day of such Monthly
Period, to but excluding the related Addition Date, and the denominator of
which is the number of days in such Monthly Period, and by a fraction, the
numerator of which is the number of days from and including the related
Addition Date to and including the last day of such Monthly Period, and the
denominator of which is the number of days in such Monthly Period.
"Bank" shall mean Fleet Bank (RI), National Association and its successors
and assigns.
"Base Rate" shall mean, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is equal to the sum
of the Class A Monthly Interest, the Class B Monthly Interest, the Class C
Monthly Interest and the Monthly Servicing Fee with respect to the related
Distribution Date and the denominator of which is the Investor Amount as of the
last day of the preceding Monthly Period.
"Cash Collateral Account" shall have the meaning specified in subsection
4.12(a).
"Cash Collateral Account Investments" shall mean Eligible Investments.
"Cash Enhancement Surplus" shall mean, as of any date of determination,
the excess, if any, of (a) the amount on deposit in the Cash Collateral Account
over (b) the Required
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<PAGE> 8
Cash Collateral Amount. Any Cash Enhancement Surplus shall be applied in
accordance with the Class C Supplemental Agreement.
"Class A Accumulation Period" shall mean, unless a Pay Out Event with
respect to Series ____-__ shall have occurred prior thereto, the period
commencing on the Accumulation Date or such later date as is determined in
accordance with Section 4.14 and ending on the first to occur of (a) the
commencement of the Rapid Amortization Period, (b) the payment in full to the
Class A Certificateholders of the Class A Investor Amount or (c) the Series
Termination Date.
"Class A Accumulation Period Length" shall have the meaning specified in
Section 4.14.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.2(a).
"Class A Available Funds" shall mean, with respect to any Monthly Period,
an amount equal to the sum of (a) the Class A Floating Percentage of the
Collections of Finance Charge Receivables allocated to Series ____-__
(including any investment earnings on amounts on deposit in the Pre-Funding
Account and any other amounts that are to be treated as Collections of Finance
Charge Receivables in accordance with the 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 which, pursuant to Section 4.15, are required to be included in
Class A Available Funds with respect to such Distribution Date.
"Class A Certificate Rate" shall mean, for any Interest Period with
respect to the Class A Certificates, a per annum rate equal to [LIBOR as of the
LIBOR Determination Date applicable to such Interest Period plus the Class A
Certificate Rate Spread] [____%].
["Class A Certificate Rate Spread" shall mean __% per annum.]
"Class A Certificateholder" shall mean the Person in whose name a Class A
Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any one of the Certificates executed by
the Seller and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A-1.
"Class A Expected Final Distribution Date" shall mean the ___________
Distribution Date.
"Class A Floating Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is equal to the Class A Invested Amount as
of the close of business on the last day of the preceding Monthly Period and
the denominator of which is equal to the Invested Amount as of such day;
provided, however, that with respect to the first Monthly Period, the
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<PAGE> 9
Class A Floating Percentage shall mean the percentage equivalent of a fraction,
the numerator of which is the Class A Initial Invested Amount and the
denominator of which is the Initial Invested Amount.
"Class A Initial Invested Amount" shall mean $____________.
"Class A Initial Investor Amount" shall mean the aggregate initial
principal balance of the Class A Certificates, which is $______________.
"Class A Interest Shortfall" shall have the meaning specified in
subsection 4.2(a).
"Class A Invested Amount" shall mean, on any date of determination, an
amount equal to (a) the Class A Initial Invested Amount, plus (b) the amount of
any increases in the Class A Invested Amount during the Funding Period pursuant
to Section 4.17 on or prior to such date, minus (c) 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 to the Class A Certificateholders on or prior to such
date, minus (d) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs for all prior Distribution Dates over the aggregate amount of Class
A Investor Charge-Offs reimbursed pursuant to subsection 4.6(a) prior to such
date minus (e) the Principal Funding Account Balance.
"Class A Investor Amount" shall mean, on any date of determination, an
amount equal to the sum of (a) the Class A Invested Amount, (b) the Class A
Floating Percentage of the Pre-Funded Amount and (c) the Principal Funding
Account Balance.
"Class A Investor Charge-Off" shall have the meaning specified in
subsection 4.6(a).
"Class A Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Class A Floating Percentage
for such Monthly Period.
"Class A Monthly Interest" shall have the meaning specified in subsection
4.2(a).
"Class A Monthly Principal" shall have the meaning specified in subsection
4.3(a).
"Class A Penalty Rate" shall mean the sum of the Class A Certificate Rate
and ___% per annum.
"Class A Principal Percentage" shall mean, with respect to any Monthly
Period (i) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is
the Class A Invested Amount as of the last day of the immediately preceding
Monthly Period and the denominator of which is the Invested Amount as of such
day and (ii) during the Accumulation Period or the Rapid Amortization
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<PAGE> 10
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class A Invested Amount as of the
last day of the Revolving Period, and the denominator of which is the Invested
Amount as of such last day; provided, however, that with respect to the first
Monthly Period, the Class A Principal Percentage shall mean the percentage
equivalent of a fraction, the numerator of which is the Class A Initial
Invested Amount and the denominator of which is the Initial Invested Amount.
"Class A Required Amount" shall have the meaning specified in Section
4.4(a).
"Class A Servicing Fee" shall have the meaning specified in Section 3.1.
"Class B Accumulation Period" shall mean, unless a Pay Out Event with
respect to Series ____-__ shall have occurred prior thereto, the period
commencing on the first day of the Monthly Period immediately preceding the
Class B Principal Commencement Date and ending on the first to occur thereafter
of (a) the commencement of the Rapid Amortization Period, (b) the payment in
full to the Class B Certificateholders of the Class B Invested Amount or (c)
the Series Termination Date.
"Class B Additional Interest" shall have the meaning specified in Section
4.2(b).
"Class B Available Funds" shall mean, with respect to any Monthly Period,
an amount equal to the Class B Floating Percentage of the Collections of
Finance Charge Receivables allocated to Series ____-__ (including any
investment earnings on amounts on deposit in the Pre-Funding Account and any
other amounts that are to be treated as Collections of Finance Receivables in
accordance with the Agreement).
"Class B Certificate Rate" shall mean, for any Interest Period with
respect to the Class B Certificates, a per annum rate equal to [LIBOR as of the
LIBOR Determination Date for such Interest Period plus the Class B Certificate
Rate Spread] [___%].
["Class B Certificate Rate Spread" shall mean ____% per annum.]
"Class B Certificateholder" shall mean the Person in whose name a Class B
Certificate is registered in the Certificate Register.
"Class B Certificates" shall mean any one of the Certificates executed by
the Seller and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A-2.
"Class B Expected Final Distribution Date" shall mean the __________
Distribution Date.
"Class B Floating Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is equal to the Class B Invested Amount as of
the close of business on the last day of the preceding Monthly Period and the
denominator of which is equal to the Invested Amount as of such day; provided,
however, that with respect to the first Monthly Period, the
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<PAGE> 11
Class B Floating Percentage shall mean the percentage equivalent of a fraction,
the numerator of which is the Class B Initial Invested Amount and the
denominator of which is the Initial Invested Amount.
"Class B Initial Invested Amount" shall mean $_____________.
"Class B Initial Investor Amount" shall mean the aggregate initial
principal balance of the Class B Certificates, which is $_____________.
"Class B Interest Shortfall" shall have the meaning specified in Section
4.2(b).
"Class B Invested Amount" shall mean, on any date of determination, an
amount equal to (a) the Class B Initial Invested Amount, plus (b) the amount of
any increases in the Class B Invested Amount during the Funding Period pursuant
to Section 4.17 on or prior to such date, minus (c) 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 to the Class B Certificateholders prior to such date
minus (d) 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 pursuant to subsection 4.6(b) for
all Distribution Dates preceding such date, minus (e) the amount of Reallocated
Principal Collections allocated on all prior Distribution Dates pursuant to
subsection 4.8(a) (excluding any Reallocated Principal Collections that have
resulted in a reduction in the Class C Invested Amount pursuant to subsection
4.6(c)), minus (f) an amount equal to the amount by which the Class B Invested
Amount has been reduced on all prior Distribution Dates pursuant to subsection
4.6(a) and plus (g) the amount of Excess Spread and Excess Finance Charges
allocated and available on all prior Distribution Dates pursuant to subsection
4.7(e) for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (d), (e) and (f); provided, however, that the Class B
Invested Amount may not be reduced below zero.
"Class B Investor Amount" shall mean, for any date of determination, an
amount equal to the sum of (a) the Class B Invested Amount and (b) the Class B
Floating Percentage of the Pre-Funded Amount.
"Class B Investor Charge-Off" shall have the meaning specified in
subsection 4.6(b).
"Class B Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Class B Floating Percentage
for such Monthly Period.
"Class B Monthly Interest" shall have the meaning specified in subsection
4.2(b).
"Class B Monthly Principal" shall have the meaning specified in subsection
4.3(b).
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<PAGE> 12
"Class B Penalty Rate" shall mean the sum of the Class B Certificate Rate
and ___% per annum.
"Class B Principal Commencement Date" shall mean the Distribution Date on
which the Class A Investor Amount is paid in full or on which the Principal
Funding Account Balance is equal to the Class A Investor Amount; 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 shall mean the Class B Expected Final
Distribution Date.
"Class B Principal Percentage" shall mean, with respect to any Monthly
Period (i) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is
the Class B Invested Amount as of the last day of the immediately preceding
Monthly Period and the denominator of which is the Invested Amount as of such
day and (ii) during the 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; provided, however, that with respect to the first
Monthly Period, the Class B Principal Percentage shall mean the percentage
equivalent of a fraction, the numerator of which is the Class B Initial
Invested Amount and the denominator of which is the Initial Invested Amount.
"Class B Required Amount" shall have the meaning specified in subsection
4.4(b).
"Class B Servicing Fee" shall have the meaning specified in Section 3.1.
"Closing Date" shall mean ___________, _____.
"Class C Additional Interest" shall have the meaning specified in
subsection 4.2(c).
"Class C Available Funds" shall mean, with respect to any Monthly Period,
an amount equal to the Class C Floating Percentage of the Collections of
Finance Charge Receivables allocated to Series ____-__ (including any
investment earnings on amounts on deposit in the Pre-Funding Account and any
other amounts that are to be treated as Collections of Finance Charge
Receivables in accordance with the Agreement).
"Class C Default Amount" shall mean, with respect to each Distribution
Date, an amount equal to the product of (i) the Investor Default Amount for the
related Monthly Period and (ii) the Class C Floating Percentage for such
Monthly Period.
"Class C Floating Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class C Invested Amount as of the
close of business on the last day of the preceding Monthly Period and the
denominator of which is equal to the Invested Amount as
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<PAGE> 13
of such day; provided, however, that with respect to the first Monthly Period,
the Class C Floating Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Class C Initial Invested Amount and the
denominator of which is the Initial Invested Amount.
"Class C Initial Invested Amount" shall mean $_____________.
"Class C Initial Investor Amount" shall mean the aggregate initial
principal balance of the Class C Interest, which is $_____________.
"Class C Interest" shall mean a fractional undivided interest in the Trust
which shall consist of the right to receive, to the extent necessary to make
the required payments to the Class C Interest Holder under this Supplement and
under the Class C Supplemental Agreement, the portion of Collections allocable
thereto under the Agreement and this Supplement, funds on deposit in the
Collection Account allocable thereto pursuant to the Agreement and this
Supplement and, subject to the rights of the other Series ___ - __
Certificateholders with respect thereto, funds on deposit in the Pre-Funding
Account.
"Class C Interest Holder" shall mean the entity so designated in the Class
C Supplemental Agreement.
"Class C Interest Rate" shall mean the rate designated as such in the
Class C Supplemental Agreement, such rate not to exceed ___%.
"Class C Interest Shortfall" shall have the meaning specified in
subsection 4.2(c).
"Class C Invested Amount" shall mean, for any date of determination, an
amount equal to (a) the Class C Initial Invested Amount, plus (b) the amount of
any increases in the Class C Invested Amount during the Funding Period pursuant
to Section 4.17 on or prior to such date, minus (c) an amount equal to the
amount by which the Class C Invested Amount has been reduced on all prior
Distribution Dates pursuant to Section 4.6, minus (d) the aggregate amount paid
pursuant to subsections 4.5(e)(i), 4.5(f)(iii) and 4.5(g)(i) prior to such
date, and plus (e) the aggregate amount of Excess Finance Charges and Excess
Spread allocated and available on all prior Distribution Dates pursuant to
subsection 4.7(i) for the purpose of reimbursing amounts deducted pursuant to
the foregoing clause (c); provided, however, that the Class C Invested Amount
may not be reduced below zero.
"Class C Investor Amount" shall mean, for any date of determination, an
amount equal to the sum of (a) the Class C Invested Amount and (b) the Class C
Floating Percentage of the Pre-Funded Amount.
"Class C Monthly Interest" shall have the meaning specified in subsection
4.2(c).
"Class C Monthly Principal" shall have the meaning specified in subsection
4.3(c).
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<PAGE> 14
"Class C Principal Collections" shall mean, with respect to any Monthly
Period, an amount equal to (a) the Invested Principal Collections with respect
to such Monthly Period, minus (b) the amount of Investor Principal Collections
with respect to such date, plus (c) the amount, if any, of Excess Spread and
Excess Finance Charges to be distributed pursuant to subsections 4.7(h) and (i)
on the related Distribution Date and minus (d) the amount of Reallocated
Principal Collections with respect to such Monthly Period which, pursuant to
Section 4.8, are required to fund any deficiency in the amounts to be
distributed pursuant to subsections 4.5(a)(i), (ii) and (iii) and 4.5(b)(i) and
(ii) and subsection 4.7(d) for the related Distribution Date (excluding
Reallocated Principal Collections which have been allocated to reduce the Class
B Invested Amount).
"Class C Principal Shortfall" shall mean, for any Distribution Date during
the Accumulation Period or the Rapid Amortization Period, the excess of Class C
Monthly Principal for such Distribution Date over the amount of Class C
Principal Collections available on such date pursuant to subsection 4.5(g).
"Class C Servicing Fee" shall have the meaning specified in Section 3.1.
"Class C Supplemental Agreement" shall mean the agreement among the
Seller, the Servicer and the Trustee dated the date hereof, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Controlled Accumulation Amount" shall mean (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 nine; provided, however, that, if
the Class A Accumulation Period is modified pursuant to Section 4.14, (i) the
Controlled Accumulation Amount for each Distribution Date with respect to the
Class A Accumulation Period shall mean the amount determined in accordance with
Section 4.14 on the date on which the Class A Accumulation Period has most
recently been modified and (ii) the sum of the Controlled Accumulation Amounts
for all Distribution Dates with respect to the modified Class A Accumulation
Period shall not be less than the maximum Class A Invested Amount during the
Revolving 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.
"Controlled Deposit Amount" shall mean, for any Distribution Date with
respect to the Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
"Covered Amount" shall mean for any Distribution Date with respect to the
Class A Accumulation Period or the first Special Payment Date, if such Special
Payment Date occurs prior to the Class B Principal Commencement Date, an amount
equal to the product of (i) (A) a fraction, the numerator of which is the
actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator
of which is 360, times (B) the Class A Certificate Rate and (ii) the Principal
Funding Account Balance, if any, as of the preceding Distribution Date.
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<PAGE> 15
"Deficit Controlled Accumulation Amount" shall mean (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 the case may be, for such subsequent Distribution Date.
"Designated Maturity" shall mean, [for the initial LIBOR Determination
Date, two months, and for each LIBOR Determination Date thereafter, one month.]
"Distribution Date" shall have the meaning assigned thereto in the
Agreement, except that, with respect to the Series ____-__ Certificates, the
first Distribution Date shall be ____________.
"Enhancement Investor Amount" shall mean the Class C Invested Amount.
"Enhancement Surplus" shall mean, with respect to any Distribution Date,
the excess, if any, of (a) the amount on deposit in the Cash Collateral Account
plus the Class C Investor Amount over (b) the Required Enhancement Amount.
"Excess Finance Charges" shall have the meaning specified in Section 4.9.
"Excess Spread" shall mean, with respect to any Distribution Date, the sum
of the amounts, if any, specified pursuant to subsections 4.5(a)(iv),
4.5(b)(iii) and 4.5(c)(ii) with respect to such Distribution Date.
"Finance Charge Shortfall" shall have the meaning specified in Section
4.9.
"Fitch" shall mean Fitch IBCA, Inc., or its successors.
"Floating Allocation Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the 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 Principal Receivables in the Trust at the end of
the day on such date (or with respect to the first Monthly Period, at the end
of the day on the Closing Date) and (y) the principal amount on deposit in the
Excess Funding Account as of the end of the day on such date and (2) the sum of
the numerators used to calculate the Series Percentages (as such term is
defined in the Agreement) with respect to Finance Charge Receivables or
Defaulted Receivables, as applicable, for all Series then outstanding;
provided, however, that, with respect to any Monthly Period in which an
Addition Date occurs and the Servicer need not make daily deposits of
Collections into the Collection Account, the denominator in (x) above shall be
the Average Principal Balance; provided further, however, that
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<PAGE> 16
with respect to any Monthly Period in which an Addition Date occurs and the
Servicer is required to make daily deposits of Collections into the Collection
Account, the denominator in (x) above shall be (1) for the period from and
including the first day of such Monthly Period to but excluding the related
Addition Date, the aggregate amount of Principal Receivables in the Trust at
the end of the day on the last day of the prior Monthly Period and (2) for the
period from and including the related Addition Date to and including the last
day of such Monthly Period, the aggregate amount of Principal Receivables in
the Trust at the end of the day on the related Addition Date and provided
further, however, that with respect to any Monthly Period during the Funding
Period, the Floating Allocation Percentage shall be calculated as the
percentage equivalent to a fraction, the numerator of which is the average
Invested Amount on each day of the Monthly Period and the denominator of which
is the Average Principal Balance.
"Funding Period" shall mean the period commencing on the Closing Date and
ending upon the first to occur of (x) the commencement of the Rapid
Amortization Period, (y) the date on which the Invested Amount shall first
equal the Initial Investor Amount and (z) ______________, ___.
"Group One" shall mean Series 1994-B, Series 1994-D, Series 1995-A, Series
1995-B, Series 1995-C, Series 1995-D, Euro Series 1995-E, Series 1995-F, Series
1995-G, Series 1996-A, Series 1996-B, Series 1996-C, Series 1996-D, Series
1996-E, Series 1998-A and Series ____-__ and each other Series hereafter
specified in the related Supplement to be included in Group One.
"Initial Invested Amount" shall mean the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Class C Initial
Invested Amount.
"Initial Investor Amount" shall mean the sum of the Class A Initial
Investor Amount, the Class B Initial Investor Amount and the Class C Initial
Investor Amount.
"Initial Pre-Funded Amount" shall mean $_____________.
"Initial Servicing Fee" shall have the meaning specified in Section 3.1.
"Interchange" shall mean, with respect to Series ____-__ and with respect
to each Distribution Date, an amount of Interchange (as defined in the
Agreement) equal to one-twelfth of 1.25% of the outstanding balance of the
Principal Receivables allocable to Series ____-__ on the last day of the
preceding Monthly Period.
"Interest Period" shall mean, with respect to any Distribution Date, the
period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.
"Invested Amount" shall mean, as of any date of determination, an amount
equal to the sum of (a) the Class A Invested Amount as of such date, (b) the
Class B Invested Amount as of such date and (c) the Class C Invested Amount as
of such date.
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<PAGE> 17
"Invested Principal Collections" shall mean, with respect to any Monthly
Period, an amount equal to the Principal Allocation Percentage of all
Collections in respect of Principal Receivables received during such Monthly
Period.
"Investor Amount" shall mean, as of any date of determination, an amount
equal to the sum of (a) the Invested Amount, (b) the Pre-Funded Amount and (c)
the Principal Funding Account Balance.
"Investor Charge-Offs" shall mean Class A Investor Charge-Offs and Class B
Investor Charge-Offs.
"Investor Default Amount" shall mean, with respect to any Distribution
Date, an amount equal to the product of (a) the Defaulted Amount for the
related Monthly Period and (b) the Floating Allocation Percentage for such
Monthly Period.
"Investor Principal Collections" shall mean, with respect to any Monthly
Period, an amount equal to the product of (i) Invested Principal Collections
with respect to such Monthly Period and (ii) the sum of the Class A Principal
Percentage and the Class B Principal Percentage with respect to such Monthly
Period.
["LIBOR" shall mean an interest rate per annum determined by the Trustee
for each Interest Period in accordance with the provisions of Section 4.11.]
["LIBOR Determination Date" shall mean ___________ with respect to the
period from the Closing Date through ___________; and, with respect to each
Interest Period thereafter, the second London Business Day prior to every
Distribution Date on which such Interest Period begins commencing with the
__________ Distribution Date.]
"London Business Day" shall mean a Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank
market.
"Monthly Interest" means, with respect to any Distribution Date, the Class
A Monthly Interest, the Class B Monthly Interest and Class C Monthly Interest
for such Distribution Date.
"Monthly Servicing Fee" shall have the meaning specified in Section 3.1.
"Net Portfolio Yield" shall mean, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of which is equal
to (a) an amount equal to the product obtained by multiplying the Floating
Allocation Percentage with respect to such Monthly Period and the amount of
Collections of Finance Charge Receivables with respect to such Monthly Period
(including any other amounts that are to be treated as Collections of Finance
Charge Receivables in accordance with the Agreement) plus (b) any investment
earnings on amounts on deposit in the Pre-Funding Account, plus (c) the amount
of any Principal Funding Investment Proceeds for the related Distribution Date,
plus (d) the amount of funds, if any, to be withdrawn from the Reserve Account
which, pursuant to Section 4.15, are required to be
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<PAGE> 18
included in Class A Available Funds with respect to such Distribution Date,
minus (e) the Investor Default Amount for the Distribution Date with respect to
such Monthly Period, and the denominator of which is the Investor Amount as of
the last day of the preceding Monthly Period.
"Percentage Allocation" shall have the meaning specified in subsection
4.1(b)(ii).
"Pre-Funded Amount" shall mean, as of any date of determination, the
amount on deposit in the Pre-Funding Account (net of all interest and other
investment income).
"Pre-Funding Account" shall have the meaning set forth in subsection
4.16(a).
"Principal Allocation Percentage" shall mean, with respect to any Monthly
Period:
(a) during the Revolving 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 immediately preceding Monthly
Period (or, in the case of the first Monthly Period, the Closing Date) and the
denominator of which is the greater of (i) the sum of (A) the total amount of
Principal Receivables in the Trust as of the last day of the immediately
preceding Monthly Period and (B) 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;
(b) 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 Invested Amount as of the last day of the
Revolving Period or, if the numerator has been reduced as described in the
first proviso below during an Accumulation Period and a Rapid Amortization
Period commences, as the last day of the Accumulation Period, and the
denominator of which is the greater of (i) the sum of (A) the total amount of
Principal Receivables in the Trust as of the last day of the immediately
preceding Monthly Period and (B) the principal amount on deposit in the Excess
Funding Account as of such last day 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 during the Accumulation Period, on any date, at the
option of the Servicer, the numerator of the Principal Allocation Percentage
may be reduced below the numerator used in the previous Monthly Period, to an
amount not less than the greater of (x) the Invested Amount as of the last day
of the immediately preceding Monthly Period (less the amount of any
distributions of principal made to Series ____-__ Certificateholders since the
last day of the immediately preceding Monthly Period) and (y) an amount that,
if used as the numerator of the Principal Allocation Percentage for the
remainder of the Accumulation Period, assuming for this purpose that (1) the
payment rate with respect to Collections of Principal Receivables remains
constant at the level of the immediately preceding Monthly Period, (2) the
total amount of Principal Receivables in the Trust (and the principal amount on
deposit in the Excess Funding Account, if any) remains constant at the level on
the date of such reduction, (3) no Pay Out Event with respect to any Series
will subsequently occur and (4) no additional Series
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<PAGE> 19
(other than any Series being issued on the date of such reduction) will be
subsequently issued, would assure that Available Investor Principal Collections
for Series ____-__ would equal at least ___% of the Controlled Accumulation
Amount for each Monthly Period for so long as the Invested Amount is greater
than zero; provided further, however, that any such reduction of the numerator
of the Principal Allocation Percentage shall be subject to the receipt by the
Trustee of an Officer's Certificate of the Servicer to the effect that the
Servicer does not expect that the Available Investor Principal Collections for
any Monthly Period would be less than the Controlled Accumulation Amount;
provided further, however, that with respect to any Monthly Period in which an
Addition Date occurs and the Servicer need not make daily deposits of
Collections into the Collection Account, the amount in clause (i) of paragraphs
(a) and (b) above shall be the Average Principal Balance; provided further,
however, that with respect to any Monthly Period in which an Addition Date
occurs and the Servicer is required to make daily deposits of Collections into
the Collection Account, the amount in clause (i) of paragraphs (a) and (b)
above shall be (1) for the period from and including the first day of such
Monthly Period to but excluding the related Addition Date, the sum of (x) the
aggregate amount of Principal Receivables in the Trust at the end of the day on
the last day of the prior Monthly Period and (y) the principal amount on
deposit in the Excess Funding Account as of such last day and (2) for the
period from and including the related Addition Date to and including the last
day of such Monthly Period, the sum of (x) the aggregate amount of Principal
Receivables in the Trust at the end of the day on the related Addition Date and
(y) the principal amount on deposit in the Excess Funding Account at the end of
the day on the related Addition Date; and provided further, however, that with
respect to any Monthly Period during the Funding Period, the Principal
Allocation Percentage shall be calculated as the percentage equivalent of a
fraction, the numerator of which is the average Invested Amount on each day of
the Monthly Period and the denominator of which is the Average Principal
Balance.
"Principal Funding Account" shall have the meaning set forth in subsection
4.13(a)(i).
"Principal Funding Account Balance" shall mean, with respect to any date
of determination during the Accumulation Period, the principal amount, if any,
on deposit in the Principal Funding Account on such date of determination.
"Principal Funding Investment Proceeds" shall have the meaning specified
in subsection 4.13(a)(ii).
"Principal Shortfall" shall have the meaning specified in Section 4.10.
"Rapid Amortization Period" shall mean, (a) if on the day on which a Trust
Pay Out Event or a Series ____-__ Pay Out Event is deemed to have occurred the
Servicer need not make daily deposits into or withdrawals from the Collection
Account pursuant to subsection 4.03(a) of the Agreement, the period commencing
at the close of business on the Business Day immediately preceding the first
day of the Monthly Period in which such Trust Pay Out Event or Series ____-__
Pay Out Event is deemed to have occurred or (b) otherwise, the period
commencing at the close of business on the Business Day immediately preceding
the day on which a Trust Pay Out Event or a Series ____-__ Pay Out Event is
deemed to have occurred, and
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<PAGE> 20
ending on the first to occur of (i) the payment in full to the Class A
Certificateholders and the Class B Certificateholders of the Class A Investor
Amount and the Class B Invested Amount, respectively, and the payment in full
to the Class C Interest Holder of the Class C Invested Amount, if any, or (ii)
the Series Termination Date.
"Reallocated Principal Collections" shall mean, with respect to any
Monthly Period, the product of (a) the Principal Allocation Percentage with
respect to such Monthly Period, (b) the aggregate amount of Collections in
respect of Principal Receivables for such Monthly Period and (c) the sum of the
Class B Floating Percentage and the Class C Floating Percentage with respect to
such Monthly Period.
"Reassignment Amount" shall mean, with respect to any Distribution Date,
after giving effect to any deposits and distributions otherwise to be made on
such Distribution Date, the sum of (i) the Invested Amount on such Distribution
Date, plus (ii) Monthly Interest for such Distribution Date and any Monthly
Interest previously due but not distributed to the Series ____-__
Certificateholders or the Class C Interest Holder on a prior Distribution Date,
plus (iii) the amount of Additional Interest, if any, for such Distribution
Date and any Additional Interest previously due but not distributed to the
Series ____-__ Certificateholders or the Class C Interest Holder on a prior
Distribution Date.
["Reference Banks" shall mean ___________________________________ and
___________________ such other major banks in the London interbank market
selected by the Servicer from time to time.]
"Required Cash Collateral Amount" shall mean, with respect to any date of
determination, the Required Enhancement Amount less the Class C Investor
Amount; provided, that for the first two Distribution Dates with respect to
Series ____-__ following the Closing Date, the Required Cash Collateral Amount
shall not exceed the product of (I) 2.5% and (II) the sum of the Invested
Amount and the Pre-Funded Amount.
"Required Draw Amount" shall have the meaning specified in subsection
4.12(c).
"Required Enhancement Amount" shall mean, with respect to any Distribution
Date, 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 all distributions made on such Distribution Date, minus the
amount of funds on deposit in the Cash Collateral Account, after taking into
account all deposits and withdrawals 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 sum of (A) the product of (I)
$_____________, (II) ___% and (III) a fraction the numerator of which is equal
to the Available Cash Collateral Amount as of the immediately preceding
Distribution Date and the denominator of which is the Total Enhancement for
such Distribution Date and (B) the product of (I) $_____________ (II) ___% and
(III) a fraction the numerator of which is equal to the Class C Invested Amount
as of the immediately preceding Distribution Date and the denominator of which
is the Total Enhancement for such Distribution Date; provided, however,
16
<PAGE> 21
that (i) if there are any withdrawals from the Cash Collateral Account pursuant
to subsection 4.12(c) or any reductions in the Class C Invested Amount pursuant
to clause (b) of the definition of such amount, or a Pay Out Event occurs with
respect to Series ____-__, then the Required Enhancement Amount for any
Distribution Date shall equal the Required Enhancement Amount on the
Distribution Date immediately preceding such reduction or Pay Out Event, (ii)
in no event shall the Required Enhancement Amount exceed the sum of the Class A
Invested Amount and the Class B Invested Amount on any such date, and (iii) the
Required Enhancement Amount may be reduced without the consent of the Series
____-__ Certificateholders or the Class C Interest Holder, if the Seller shall
have received written notice from each Rating Agency (with a copy delivered to
the Trustee) that such reduction will not result in the reduction or withdrawal
of the then current rating of the Series ____-__ Certificates and the Seller
shall have delivered to the Trustee an Officer's Certificate to the effect
that, based on the facts known to such officer at such time, in the reasonable
belief of the Seller, such reduction will not cause a Pay Out Event or an event
that, after the giving of notice or the lapse of time, would constitute a Pay
Out Event, to occur with respect to Series ____-__.
"Required Reserve Account Amount" shall mean, with respect to any
Distribution Date prior to the Reserve Account Funding Date, $0, and on or
after the Reserve Account Funding Date, an amount 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 nine (except that if such numerator is one, the Required Reserve
Account Amount determined pursuant to this clause (a) shall be $0) or (b) any
other amount designated by the Seller, provided that, if such designation is of
a lesser amount, the Seller (i) shall have received written notice from each
Rating Agency that such designation will not result in the reduction or
withdrawal of the rating of the Series ____-__ Certificates and shall have
delivered copies of each such written notice to the Servicer and the Trustee,
and (ii) 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 Seller, such designation will not cause a
Pay Out Event or an event that, after the giving of notice or the lapse of
time, would cause a Pay Out Event, to occur with respect to Series ____-__.
"Reserve Account" shall have the meaning specified in subsection 4.15(a).
"Reserve Account Funding Date" shall mean the Distribution Date with
respect to the Monthly Period which commences three months prior to the Monthly
Period in which, as of the related Determination Date, the Accumulation Period
is scheduled to commence.
"Reserve Account Surplus" shall mean, as of any date of determination, the
amount, if any, by which the amount on deposit in the Reserve Account exceeds
the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in subsection
4.15(c).
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<PAGE> 22
"Revolving Period" shall mean the period beginning on the Closing Date and
ending on the earlier of (a) the close of business on the day preceding the
commencement of the Accumulation Period and (b) the close of business on the
day preceding the commencement of the Rapid Amortization Period.
"Series Invested Amount" shall mean the Invested Amount.
"Series Investor Amount" shall mean, as of any date of determination, an
amount equal to the numerator of the Principal Allocation Percentage on such
date.
"Series ____-__" shall mean the Series of Investor Certificates, the terms
of which are specified in this Supplement, and shall include the Class A
Certificates, the Class B Certificates and the Class C Interest.
"Series ____-__ Certificateholder" shall mean a Class A Certificateholder
or a Class B Certificateholder.
"Series ____-__ Certificate" shall mean a Class A Certificate or a Class B
Certificate.
"Series _____ -___ Holder" shall mean a Class A Certificateholder, a Class
B Certificateholder or a Class C Interest Holder.
"Series ____-__ Pay Out Event" shall have the meaning specified in Section
6.1.
"Series Percentage" shall mean with respect to Finance Charge Receivables
and Defaulted Receivables, the Floating Allocation Percentage, and with respect
to Principal Receivables, the Principal Allocation Percentage.
"Series Termination Date" shall mean the earlier to occur of (i) the
______ Distribution Date and (ii) the termination of the Trust pursuant to
Section 12.01 of the Agreement.
"Servicing Base Amount" shall have the meaning specified in Section 3.1.
"Servicing Fee Rate" shall mean 2.0%.
"Special Payment Date" shall mean each Distribution Date with respect to
the Rapid Amortization Period.
"Subordinate Principal Collections" shall have the meaning specified in
subsection 4.1(a)(ii).
"Telerate Page 3750" shall mean the display page currently so designated
on the Dow Jones Telerate Service (or such other page as may replace such page
on such service for the purpose of displaying comparable rates or prices).
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<PAGE> 23
"Total Enhancement" shall mean, for purposes of determining the Required
Enhancement Amount with respect to any Distribution Date, an amount equal to
the sum of (i) the Available Cash Collateral Amount as of the immediately
preceding Distribution Date, and (ii) the Class C Investor Amount as of the
immediately preceding Distribution Date.
(b) Notwithstanding anything to the contrary in this Supplement or the
Agreement, the term "Rating Agency" shall mean, whenever used in this
Supplement or the Agreement with respect to Series ____-__, Moody's, Standard &
Poor's and Fitch; provided, however, that references to "Rating Agency" in the
definition of "Eligible Investments" shall be deemed to not include Fitch to
the extent that an investment is rated by Moody's and Standard & Poor's, but
not by Fitch. Reference to rating categories of Moody's and Standard & Poor's
in the Agreement shall be deemed to be references to the equivalent rating
categories of Fitch.
(c) All capitalized terms used herein and not otherwise defined herein
have the meanings ascribed to them in the Agreement.
(d) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Supplement shall refer to this Supplement as a whole
and not to any particular provision of this Supplement; references to any
Article, Section or Exhibit are references to Articles, Sections and Exhibits
in or to this Supplement unless otherwise specified; and the term "including"
means "including without limitation."
(e) Unless the context otherwise requires, references in this Supplement
to the "Seller" or the "Sellers" shall mean the Bank in its capacity as Seller
and any successors or assigns of the Bank as Seller; and from and after the
date any Additional Seller is designated pursuant to subsection 2.08(e) of the
Agreement, such references shall mean the Bank or its successors or assigns as
Seller and any such Additional Seller(s).
ARTICLE III
Servicer and Trustee
Section 3.1. Servicing Compensation.
The share of the Servicing Fee allocable to the Series ____-__
Certificateholders and the Class C Interest Holder with respect to any
Distribution Date (the "Monthly Servicing Fee"), shall be equal to one-twelfth
the product of (i) the Servicing Fee Rate and (ii) the Invested Amount, if any,
as of the last day of the Monthly Period preceding such Distribution Date (the
amount calculated pursuant to this clause (ii) is referred to as the "Servicing
Base Amount"); provided, however, with respect to the _______________, ___
Distribution Date, the Monthly Servicing Fee (the "Initial Servicing Fee")
shall be $________.
The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders with respect to any Distribution Date (the "Class A
Servicing Fee"), shall be
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<PAGE> 24
equal to one-twelfth of the product of (a) the Class A Floating Percentage, (b)
the Servicing Fee Rate and (c) the Servicing Base Amount; provided, however,
that with respect to the ________ Distribution Date, the Class A Servicing Fee
shall 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"), shall be equal to one-twelfth of the product of (a) the Class
B Floating Percentage, (b) the Servicing Fee Rate and (c) the Servicing Base
Amount; provided, however, that with respect to the ________ Distribution Date,
the Class B Servicing Fee shall be $________. The share of the Monthly
Servicing Fee allocable to the Class C Interest Holder with respect to any
Distribution Date (the "Class C Servicing Fee"), shall be equal to one-twelfth
of the product of (a) the Class C Floating Percentage, (b) the Servicing Fee
Rate and (c) the Servicing Base Amount; provided, however, that with respect to
the ________ Distribution Date, the Class C Servicing Fee shall be $________.
The remainder of the Servicing Fee shall be paid by the Holders of the Seller
Certificates or the Certificateholders of other Series (as provided in the
related Supplements) and in no event shall the Trust, the Trustee, the Series
____-__ Certificateholders or the Class C Interest Holder be liable for the
share of the Servicing Fee to be paid by the Holders of the Seller Certificates
or the Certificateholders of any other Series. The Class A Servicing Fee shall
be payable to the Servicer solely to the extent amounts are available for
distribution in respect thereof pursuant to subsection 4.5(a)(ii), 4.7(a),
4.8(a) or 4.12(c); the Class B Servicing Fee shall be payable solely to the
extent amounts are available for distribution in respect thereof pursuant to
subsection 4.5(b)(ii), 4.7(c), 4.8(b) or 4.12(c); and the Class C Servicing Fee
shall be payable solely to the extent amounts are available for distribution in
respect thereof pursuant to subsection 4.5(c)(i), 4.7(g) or 4.12(c).
ARTICLE IV
Rights of Series ____-__ Certificateholders and Class C Interest
Holder and Allocation and Application of Collections
Section 4.1. Collections and Allocations. The Servicer will apply, or
will instruct the Trustee to apply, all collections and other funds on deposit
in the Collection Account that are allocated to the Series ____-__ Certificates
and the Class C Interest as follows:
(a) Allocations During the Revolving Period. During the Revolving
Period, the Servicer shall, on or prior to the close of business on the second
Business Day following any Date of Processing, allocate the following amounts
as set forth below:
(i) Allocate to the Series ____-__ Certificateholders and the Class
C Interest Holder the product of (x) the Floating Allocation Percentage on
such Date of Processing and (y) the aggregate amount of Collections of
Finance Charge Receivables on such Date of Processing, and of that
allocation, deposit and retain in the Collection Account [(A) prior to the
LIBOR Determination Date occurring in such Monthly Period, an amount equal
to the product of (v) the Floating Allocation Percentage on such Date of
Processing and (w) the aggregate amount of Collections of Finance Charge
Receivables on such Date of Processing and (B) on and after such LIBOR
Determination Date, the difference between (1) Monthly
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<PAGE> 25
Interest for the related Distribution Date (plus, if the Bank is not the
Servicer, the Monthly Servicing Fee for such Monthly Period) and (2) the
amounts previously deposited in the Collection Account with respect to
such Monthly Period pursuant to this subsection (a)(i);]
(ii) Allocate to the Series ____-__ Certificateholders and the Class
C Interest Holder an amount equal to the product of (A) the Principal
Allocation Percentage on such Date of Processing and (B) the aggregate
amount of Collections of Principal Receivables on such Date of Processing,
which amount shall be first, if any other Principal Sharing Series in
Group One is outstanding and in its Amortization Period or Accumulation
Period (as such terms are defined in the Agreement), retained in the
Collection Account for application, to the extent necessary, as Shared
Principal Collections in accordance with Section 4.04 of the Agreement to
other Series in Group One on the related Distribution Date, and second
paid to the Holders of the Seller Certificates; provided however, that the
amount to be paid to the Holders of the Seller Certificates pursuant to
this subsection 4.1(a)(ii) on any Date of Processing shall be paid to such
Holders only if the Seller Amount on such Date of Processing is greater
than the Required Seller Amount (after giving effect to all Principal
Receivables transferred to the Trust on such day and any amounts deposited
in the Excess Funding Account on such day) and otherwise shall be
deposited in the Excess Funding Account until the Seller Amount is greater
than the Required Seller Amount and applied in accordance with Section
4.02 of the Agreement and the remainder shall be paid to the Holders of
the Seller Certificates; provided further, however, that if and for so
long as the Total Enhancement is less than the Required Enhancement Amount
during a Monthly Period, an amount equal to the sum of (x) the Class C
Floating Percentage of the product of the Principal Allocation Percentage
and the aggregate amount of Collections of Principal Receivables and (y)
the Class B Principal Percentage of the product of the Principal
Allocation Percentage and the aggregate amount of Collections of Principal
Receivables ("Subordinate Principal Collections") on each Date of
Processing with respect to such Monthly Period shall be deposited and
retained in the Collection Account during such Monthly Period.
(b) Allocations During the Accumulation Period. During the Accumulation
Period, the Servicer shall, prior to the close of business on the second
Business Day following any Date of Processing, allocate the following amounts
as set forth below:
(i) Allocate to the Series ____-__ Certificateholders and the Class
C Interest Holder and deposit and retain in the Collection Account an
amount equal to the product of (A) the Floating Allocation Percentage on
such Date of Processing and (B) the aggregate amount of Collections of
Finance Charge Receivables on such Date of Processing.
(ii) Allocate to the Series ____-__ Certificateholders and the Class
C Interest Holder and deposit and retain in the Collection Account an
amount equal
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<PAGE> 26
to the product of (x) the Principal Allocation Percentage on such Date of
Processing and (y) the aggregate amount of Collections of Principal
Receivables on such Date of Processing (for any such date, a "Percentage
Allocation"); 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 first, if any other
Principal Sharing Series in Group One is outstanding and in its
Amortization Period or Accumulation Period (as such terms are defined in
the Agreement), retained in the Collection Account for application, to the
extent necessary, as Shared Principal Collections in accordance with
Section 4.04 of the Agreement to other Series in Group One on the related
Distribution Date, and second paid to the Holders of the Seller
Certificates only if the Seller Amount on such Date of Processing is
greater than the Required Seller Amount (after giving effect to all
Principal Receivables transferred to the Trust on such day and any amounts
deposited in the Excess Funding Account on such day) and otherwise shall
be deposited in the Excess Funding Account until the Seller Amount is
greater than the Required Seller Amount and applied in accordance with
Section 4.02 of the Agreement and the remainder shall be paid to the
Holders of the Seller Certificates; provided further, however, that if and
for so long as the Total Enhancement is less than the Required Enhancement
Amount during a Monthly Period, Subordinate Principal Collections with
respect to each Date of Processing with respect to such Monthly Period
shall be retained in the Collection Account during such Monthly Period.
(c) Allocations During the Rapid Amortization Period. During the Rapid
Amortization Period, the Servicer shall, prior to the close of business on the
second Business Day following any Date of Processing, allocate the following
amounts as set forth below:
(i) Allocate to the Series ____-__ Certificateholders and the Class
C Interest Holder and deposit and retain in the Collection Account an
amount equal to the product of (A) the Floating Allocation Percentage on
such Date of Processing and (B) the aggregate amount of Collections of
Finance Charge Receivables on such Date of Processing.
(ii) Allocate to the Series ____-__ Certificateholders and the Class
C Interest Holder and deposit and retain in the Collection Account an
amount equal to the product of (A) the Principal Allocation Percentage on
such Date of Processing and (B) the aggregate amount of Collections of
Principal Receivables on such Date of Processing; 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 Series ____-__ Certificateholders and the Class C
Interest Holder, the amount determined in accordance with this
subparagraph (ii) in excess thereof shall be first, if any other Principal
Sharing Series in Group One is outstanding and in its Amortization Period
or Accumulation Period (as such terms are defined in the Agreement),
retained in the Collection Account for application, to the extent
necessary, as Shared Principal
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<PAGE> 27
Collections in accordance with Section 4.04 of the Agreement to other
Series in Group One on the related Distribution Date, and second paid to
the Holders of the Seller Certificates only if the Seller Amount on such
Date of Processing is greater than the Required Seller Amount (after
giving effect to all Principal Receivables transferred to the Trust on
such day and any amounts deposited in the Excess Funding Account on such
day) and otherwise shall be deposited in the Excess Funding Account until
the Seller Amount is greater than the Required Seller Amount and applied
in accordance with Section 4.02 of the Agreement and the remainder shall
be paid to the Holders of the Seller Certificates.
(d) Notwithstanding anything to the contrary in this Section 4.1, if on
any Date of Processing the aggregate amount of Principal Receivables is less
than the sum of the Series Investor Amounts for all Series outstanding, all
Collections of Principal Receivables on such date that are otherwise payable to
the Holders of the Seller Certificates shall, unless such Collections are to be
retained in the Collection Account, be deposited in the Excess Funding Account
and applied in accordance with Section 4.02 of the Agreement.
(e) Notwithstanding the foregoing, the Servicer need not make daily
deposits of Collections into the Collection Account at any time when the
requirements of Section 4.03 of the Agreement are satisfied.
Section 4.2. Determination of Monthly Interest.
(a) The amount of monthly interest ("Class A Monthly Interest")
distributable from the Collection Account with respect to the Class A
Certificates on each Distribution Date shall be an amount equal to the product
of (i) (A) a fraction, the numerator of which is the actual number of days in
the related Interest Period and the denominator of which is 360, times (B) the
Class A Certificate Rate and (ii) the outstanding principal amount of the Class
A Certificates as of the close of business on the preceding Record Date;
provided, however, with respect to the ________ Distribution Date, Class A
Monthly Interest shall be equal to the interest accrued on the Class A Initial
Investor Amount at the applicable Class A Certificate Rate for the period from
the Closing Date to but excluding ___________.
On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class A Interest Shortfall"), of (x)
the Class A Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Class A Monthly Interest on
such Distribution Date (after giving effect to any withdrawal from the Cash
Collateral Account with respect to such Distribution Date). If the Class A
Interest Shortfall with respect to any Distribution Date is greater than zero,
an additional amount ("Class A Additional Interest") equal to the product of
(i) (A) a fraction, the numerator of which is the actual number of days from
and including the preceding Distribution Date to but excluding such Distribution
Date and the denominator of which is 360, times (B) the Class A Penalty Rate and
(ii) such Class A Interest Shortfall (or the portion thereof which has not been
paid to the Class A Certificateholders) shall be payable as provided herein with
respect to the Class A Certificates on each Distribution Date following such
Distribution Date to and including the Distribution Date on which such Class A
Interest Shortfall is paid to the Class A
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<PAGE> 28
Certificateholders. Notwithstanding anything to the contrary herein, Class A
Additional Interest shall be payable or distributed to Class A
Certificateholders only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly Interest")
distributable from the Collection Account with respect to the Class B
Certificates on each Distribution Date shall be an amount equal to the product
of (i) (A) a fraction, the numerator of which is the actual number of days in
the related Interest Period and the denominator of which is 360, times (B) the
Class B Certificate Rate and (ii) the outstanding principal amount of the Class
B Certificates as of the close of business on the preceding Record Date;
provided, however, with respect to the ________ Distribution Date, Class B
Monthly Interest shall be equal to the interest accrued on the Class B Initial
Investor Amount at the applicable Class B Certificate Rate for the period from
the Closing Date to but excluding ___________.
On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class B Interest Shortfall"), of (x)
the Class B Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Class B Monthly Interest on
such Distribution Date (after giving effect to any withdrawal from the Cash
Collateral Account with respect to such Distribution Date). If the Class B
Interest Shortfall with respect to any Distribution Date is greater than zero,
an additional amount ("Class B Additional Interest") equal to the product of
(i) (A) a fraction, the numerator of which is the actual number of days in the
period from and including the preceding Distribution Date to but excluding such
Distribution Date and the denominator of which is 360, times (B) the Class B
Penalty Rate and (ii) such Class B Interest Shortfall (or the portion thereof
which has not been paid to the Class B Certificateholders) shall be payable as
provided herein with respect to the Class B Certificates on each Distribution
Date following such Distribution Date to and including the Distribution Date on
which such Class B Interest Shortfall is paid to the Class B
Certificateholders. Notwithstanding anything to the contrary herein, Class B
Additional Interest shall be payable or distributed to Class B
Certificateholders only to the extent permitted by applicable law.
(c) The amount of monthly interest ("Class C Monthly Interest")
distributable from the Collection Account with respect to the Class C Interest
on each Distribution Date shall be an amount equal to the product of (i) (A) a
fraction, the numerator of which is the actual number of days in the related
Interest Period and the denominator of which is 360, times (B) the Class C Rate
and (ii) the Class C Investor Amount as of the close of business on the
preceding Record Date; provided, however, with respect to the ________
Distribution Date, Class C Monthly Interest shall be equal to the interest
accrued on the Class C Initial Investor Amount at the applicable Class C
Interest Rate for the periods from the Closing Date to but excluding
__________.
On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class C Interest Shortfall"), of (x)
the Class C Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Class C Monthly Interest on
such Distribution Date pursuant to subsection 4.7(f) or pursuant to the Class C
Supplemental Agreement. If the Class C Interest Shortfall with respect
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to any Distribution Date is greater than zero, an additional amount ("Class C
Additional Interest") equal to the product of (i) (A) a fraction, the numerator
of which is the actual number of days in the period from and including the
preceding Distribution Date to but excluding such Distribution Date and the
denominator of which is 360, times (B) the Class C Interest Rate and (ii) such
Class C Interest Shortfall (or the portion thereof which has not been paid to
the Class C Interest Holder) shall be payable as provided herein with respect
to the Class C Interest on each Distribution Date following such Distribution
Date to and including the Distribution Date on which such Class C Interest
Shortfall is paid to the Class C Interest Holder. Notwithstanding anything to
the contrary herein, Class C Additional Interest shall be payable or
distributed to the Class C Interest Holder only to the extent permitted by
applicable law.
Section 4.3. Determination of Monthly Principal.
(a) The amount of monthly principal ("Class A Monthly Principal")
distributable from the Collection Account with respect to the Class A
Certificates on each Distribution Date, beginning with the first Distribution
Date with respect to the Accumulation Period or the Rapid Amortization Period,
shall be equal to the least of (x) the Available Investor Principal Collections
on deposit in the Collection Account with respect to such Distribution Date,
(y) 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 (z) the Class A
Invested Amount on such Distribution Date.
(b) The amount of monthly principal ("Class B Monthly Principal")
distributable from the Collection Account with respect to the Class B
Certificates on each Distribution Date, beginning with the Class B Principal
Commencement Date, shall be equal to the least of (x) the 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),
(y) for each Distribution Date with respect to the Class B Accumulation Period
on or prior to the Class B Expected Final Distribution Date, the Controlled
Deposit Amount for such Distribution Date and (z) the Class B Invested Amount
on such Distribution Date.
(c) The amount, if any, of monthly principal ("Class C Monthly
Principal") distributable with respect to the Class C Invested Amount on each
Distribution Date shall equal the following amounts:
(i) on any Distribution Date prior to the Distribution Date on
which the Class B Invested Amount is paid in full, shall be an amount
equal to the lesser of (A) (x) Class C Principal Collections with respect
to such Distribution Date plus (y) Available Investor Principal
Collections (not including any amounts specified in clause (d) of the
definition of "Available Investor Principal Collections") not applied to
Class A Monthly Principal or Class B Monthly Principal on such
Distribution Date and (B) the Enhancement Surplus on such Distribution
Date, if any;
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(ii) for each Distribution Date beginning on the Distribution Date
on which the Class B Invested Amount is paid in full, shall be an amount
equal to the sum of the Available Investor Principal Collections (not
including any amounts specified in clause (d) of the definition of
"Available Investor Principal Collections") with respect to such
Distribution Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal and Class B Monthly
Principal on such Distribution Date) and the Class C Principal Collections
with respect to such Distribution Date; and
(iii) on any Distribution Date, in addition to the amounts, if
any, set forth in items (i) and (ii) above, at the option of the Seller
(as evidenced by written instructions to the Servicer and the Trustee with
a copy to the Class C Interest Holder), and after receipt by the Servicer
and the Trustee of a written determination by each Rating Agency that such
action will not result in a reduction or withdrawal of the then current
ratings of the Class A Certificates or the Class B Certificates, shall be
an amount established by the Seller and consistent with any restrictions
set forth in the determination of the Rating Agency;
provided, however, with respect to any Distribution Date, Class C Monthly
Principal shall not exceed the Class C Invested Amount and, with respect to any
Distribution Date with respect to the Revolving Period and the Accumulation
Period, Class C Monthly Principal shall be zero except to the extent otherwise
specified in, or pursuant to, clauses (i), (ii) and (iii) above.
Section 4.4. Required Amount.
(a) With respect to each Distribution Date, on the related Determination
Date, the Servicer shall determine the amount (the "Class A Required Amount"),
if any, by which (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 the Class A Certificateholders on a prior Distribution Date, (iii) any
Class A Additional Interest for such Distribution Date 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, (v) any Class A Servicing Fee previously due but
not paid to the Servicer and (vi) the Class A Investor Default Amount, if any,
for such Distribution Date exceeds (b) the Class A Available Funds. In the
event that the Class A Required Amount for such Distribution Date is greater
than zero, the Servicer shall give written notice to the Trustee of such
positive Class A Required Amount on the date of computation and all or a
portion of the Excess Spread and the Excess Finance Charges allocable to Series
____-__ with respect to the related Monthly Period in an amount equal to the
Class A Required Amount for such Distribution Date shall be distributed from
the Collection Account on such Distribution Date pursuant to Section 4.7(a).
In the event that the Class A Required Amount for such Distribution Date
exceeds the amount of
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Excess Spread and the amount of Excess Finance Charges allocable to Series
____-__ with respect to the related Monthly Period, all or a portion of the
Available Cash Collateral Amount with respect to such Distribution Date in an
amount equal to such excess shall be applied to fund the Class A Required
Amount. In the event that the Class A Required Amount for such Distribution
Date exceeds the amount of Excess Spread, the Excess Finance Charges allocated
to Series ____-__ with respect to the related Monthly Period and the Available
Cash Collateral Amount with respect to such Distribution Date, all or a portion
of the Reallocated Principal Collections with respect to such Monthly Period in
an amount equal to such excess shall be distributed from the Collection Account
on such Distribution Date pursuant to Section 4.8(a).
(b) With respect to each Distribution Date on the related Determination
Date, the Servicer shall determine the amount (the "Class B Required Amount")
equal to the sum of (I) the amount, if any, by which (a) the sum of (i) Class B
Monthly Interest for such Distribution Date, (ii) any Class B Monthly Interest
previously due but not paid to the Class B Certificateholders on a prior
Distribution Date, (iii) any Class B Additional Interest for such Distribution
Date and any Class B Additional Interest previously due but not paid to the
Class B Certificateholders on a prior Distribution Date, (iv) the Class B
Servicing Fee for such Distribution Date, and (v) any Class B Servicing Fee
previously due but not paid to the Servicer exceeds (b) the Class B Available
Funds plus (II) the Class B Investor Default Amount for such Distribution Date.
In the event that the Class B Required Amount for such Distribution Date is
greater than zero, all or a portion of Excess Spread and the Excess Finance
Charges allocable to Series ____-__ (other than Excess Spread and Excess
Finance Charges applied pursuant to subsection 4.7(a) and (b) with respect to
such Distribution Date) with respect to the related Monthly Period shall be
applied to fund the Class B Required Amount. In the event that the Class B
Required Amount for such Distribution Date exceeds the amount of Excess Spread
and Excess Finance Charges allocable to Series ____-__ with respect to such
Monthly Period and available to fund the Class B Required Amount as provided in
the preceding sentence, all or a portion of the Available Cash Collateral
Amount (other than that portion of the Available Cash Collateral Amount applied
to fund the Class A Required Amount with respect to such Distribution Date) in
an amount equal to such excess shall be applied to fund the Class B Required
Amount. In the event that the Class B Required Amount for such Distribution
Date exceeds the portion of Excess Spread and Excess Finance Charges allocated
to Series ____-__ with respect to the related Monthly Period and available to
fund the Class B Required Amount, as provided in the preceding sentence, and
the portion of the Available Cash Collateral Amount with respect to such
Distribution Date withdrawn from the Cash Collateral Account to fund the Class
B Required Amount, all or a portion of the Reallocated Principal Collections
allocable to the Class C Invested Amount and available therefor with respect to
such Monthly Period in an amount equal to such excess shall be distributed from
the Collection Account on such Distribution Date pursuant to subsection 4.8(b).
Section 4.5. Application of Class A Available Funds, Class B Available
Funds, Class C Available Funds, Available Investor Principal Collections and
Class C Principal Collections. The Servicer shall apply or shall cause the
Trustee to apply, on each Distribution Date, Class A Available Funds, Class B
Available Funds, Class C Available Funds, Available Investor Principal
Collections and Class C Principal Collections for the Monthly Period with
respect to such Distribution Date to make the following distributions:
(a) On each Distribution Date, an amount equal to the Class A Available
Funds with respect to such Distribution Date will be distributed in the
following priority:
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(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders on a
prior Distribution Date, plus the amount of any Class A Additional
Interest for such Distribution Date and any Class A Additional Interest
previously due but not distributed to the Class A Certificateholders on a
prior Distribution Date, shall be distributed to the Paying Agent for
payment to the Class A Certificateholders;
(ii) an amount equal to the Class A Servicing Fee for such
Distribution Date, plus the amount of any Class A Servicing Fee previously
due but not distributed to the Servicer on a prior Distribution Date,
shall be distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount for
such Distribution Date shall be treated as a portion of Available Investor
Principal Collections for such Distribution Date; and
(iv) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed as set forth in Section 4.7.
(b) On each Distribution Date, an amount equal to the Class B Available
Funds with respect to such Distribution Date will be distributed in the
following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to the Class B Certificateholders on a
prior Distribution Date, plus the amount of any Class B Additional
Interest for such Distribution Date and any Class B Additional Interest
previously due but not distributed to the Class B Certificateholders on a
prior Distribution Date, shall be distributed to the Paying Agent for
payment to the Class B Certificateholders;
(ii) an amount equal to the Class B Servicing Fee for such
Distribution Date, plus the amount of any Class B Servicing Fee previously
due but not distributed to the Servicer on a prior Distribution Date,
shall be distributed to the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.7.
(c) On each Distribution Date, an amount equal to the Class C Available
Funds with respect to such Distribution Date will be distributed in the
following priority:
(i) if the Bank 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, shall be distributed to the
Servicer; and
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(ii) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed as set forth in Section 4.7.
(d) On each Distribution Date with respect to the Revolving Period, an
amount equal to the Available Investor Principal Collections for the related
Monthly Period, to the extent not allocated in accordance with subsection
4.3(c)(i) or (iii), shall be treated as Shared Principal Collections and
applied in accordance with Section 4.04 of the Agreement to other Series in
Group One or the Holders of the Seller Certificates.
(e) On each Distribution Date with respect to the Revolving Period, an
amount equal to the Class C Principal Collections plus any Available Investor
Principal Collections allocated to Class C Monthly Principal for the related
Monthly Period will be distributed in the following order of priority:
(i) an amount equal to Class C Monthly Principal for such
Distribution Date, up to the Class C Invested Amount on such Distribution
Date, shall be applied in accordance with the Class C Supplemental
Agreement; and
(ii) the balance, if any, shall be treated as a portion of Available
Investor Principal Collections for such Distribution Date.
(f) On each Distribution Date with respect to the Accumulation Period or
the Rapid Amortization Period, an amount equal to the Available Investor
Principal Collections for the related Monthly Period will be distributed in the
following priority:
(i) an amount equal to Class A Monthly Principal for such
Distribution Date, up to the Class A Invested Amount, on such Distribution
Date, shall be deposited in the Principal Funding Account for payment to
the Class A Certificateholders by the Paying Agent on the earlier to occur
of the Class A Expected Final Distribution Date or the first Special
Payment Date;
(ii) for each Distribution Date beginning on the Class B Principal
Commencement Date, an amount equal to Class B Monthly Principal for such
Distribution Date, up to the Class B Invested Amount on such Distribution
Date, shall be distributed to the Paying Agent for payment to the Class B
Certificateholders;
(iii)the balance, if any, of such Available Investor Principal
Collections shall be allocated to Class C Monthly Principal to the extent
specified in subsection 4.3(c) and applied in accordance with subsection
4.5(g); and
(iv) for each Distribution Date, after giving effect to paragraphs
(i), (ii) and (iii) above, an amount equal to the balance, if any, of such
Available Investor Principal Collections then on deposit in the Collection
Account shall be treated as Shared Principal Collections and applied in
accordance with Section 4.04 of the
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Agreement to other Series in Group One or to the Holders of the Seller
Certificates.
(g) On each Distribution Date with respect to the Accumulation Period or
the Rapid Amortization Period, an amount equal to Class C Principal Collections
and the portion of Available Investor Principal Collections allocated to Class
C Monthly Principal deposited in the Collection Account for the related Monthly
Period will be distributed in the following order of priority:
(i) an amount equal to Class C Monthly Principal for such
Distribution Date, up to the Class C Invested Amount, shall be applied in
accordance with the Class C Supplemental Agreement; and
(ii) the balance, if any, of such Class C Principal Collections then
on deposit in the Collection Account shall be treated as a portion of
Available Investor Principal Collections for such Distribution Date.
Section 4.6. Default Amounts; Investor Charge-Offs.
(a) On each Determination Date commencing with the Determination Date
relating to the ________ Distribution Date, the Servicer shall calculate the
Class A Investor Default Amount, if any, for the related Distribution Date.
If, on any Distribution Date, the Class A Required Amount for the related
Monthly Period exceeds the sum of (x) the amount of Reallocated Principal
Collections with respect to such Monthly Period, (y) the amount of Excess
Spread and the Excess Finance Charges allocable to Series ____-__ with respect
to such Distribution Date and (z) the Available Cash Collateral Amount with
respect to such Distribution Date, the Class C Invested Amount shall be reduced
by the amount of such excess, but not by more than the excess of the Class A
Investor Default Amount for such Distribution Date over the amount of
Reallocated Principal Collections, Excess Spread and Excess Finance Charges and
the amount withdrawn from the Cash Collateral Account used to fund 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 shall be reduced to zero and the Class B Invested
Amount shall 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 and the amount of Reallocated Principal Collections, Excess
Spread and Excess Finance Charges and the amount withdrawn from the Cash
Collateral Account used to fund the Class A Investor Default Amount for such
Distribution Date. In the event that such reduction would cause the Class B
Invested Amount to be a negative number, the Class B Invested Amount shall be
reduced to zero, and the Class A Invested Amount shall be reduced by the amount
by which the Class B Invested Amount would have been reduced below zero, but
not by more than the excess, if any, of the Class A Investor Default Amount for
such Distribution Date over the aggregate amount of the reductions, if any, of
the Class C Invested Amount and the Class B Invested Amount for such
Distribution Date and the amount of Reallocated Principal Collections, Excess
Spread and Excess Finance Charges and the amount withdrawn from the Cash
Collateral Account used to fund the Class A
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Investor Default Amount for such Distribution Date (a "Class A Investor
Charge-Off"). Class A Investor Charge-Offs shall thereafter be reimbursed and
the Class A Invested Amount increased (but not by an amount in excess of the
aggregate unreimbursed Class A Investor Charge-Offs) on any Distribution Date
by the amount of Excess Spread and Excess Finance Charges allocated and
available for that purpose pursuant to subsection 4.7(b).
(b) On each Determination Date, the Servicer shall calculate the Class B
Required Amount, if any, for the related Distribution Date. If, on any
Distribution Date, the Class B Required Amount for such Distribution Date
exceeds the sum of (x) the amount of Excess Spread and Excess Finance Charges
allocated to Series ____-__ with respect to the related Monthly Period which
are not used to fund the Class A Required Amount and Class A Investor
Charge-Offs on the related Distribution Date, (y) the portion, if any, of the
Available Cash Collateral Amount to be withdrawn from the Cash Collateral
Account pursuant to subsection 4.12(c) which is remaining after applying such
amounts to fund any deficiency of amounts payable pursuant to subsection 4.7(a)
with respect to such Distribution Date and (z) the amount of Reallocated
Principal Collections which are available to fund the Class B Required Amount
on such Distribution Date pursuant to subsection 4.8(b), then the Class C
Invested Amount shall be reduced by the amount of such excess, but not by more
than the excess of the Class B Investor Default Amount for such Distribution
Date over the amount of Reallocated Principal Collections, Excess Spread and
Excess Finance Charges and the amount withdrawn from the Cash Collateral
Account used to fund the Class B 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 shall be reduced to zero,
and the Class B Invested Amount shall 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 and the amount of
Reallocated Principal Collections, Excess Spread and Excess Finance Charges and
the amount withdrawn from the Cash Collateral Account used to fund the Class B
Investor Default Amount for such Distribution Date (a "Class B Investor
Charge-Off"). Class B Investor Charge-Offs shall thereafter be reimbursed and
the Class B Invested Amount increased (but not by an amount in excess of the
aggregate unreimbursed Class B Investor Charge-Offs) on any Distribution Date
by the amount of Excess Spread and Excess Finance Charges allocated and
available for that purpose pursuant to subsection 4.7(e).
(c) If, on any Distribution Date, Reallocated Principal Collections for
such Distribution Date are applied pursuant to subsection 4.8(a) or (b), the
Class C Invested Amount shall be reduced by the amount of such Reallocated
Principal Collections. In the event that such reduction would cause the Class
C Invested Amount to be a negative number, the Class C Invested Amount shall be
reduced to zero, and the Class B Invested Amount shall be reduced by the amount
by which the Class C Invested Amount would have been reduced below zero.
(d) If, on any Distribution Date, the Class C Default Amount exceeds the
amount of Excess Spread and Excess Finance Charges available to fund the Class
C Default Amount pursuant to subsection 4.7(h) on such Distribution Date, then
the Class C Invested Amount shall be reduced by the amount of such excess.
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Section 4.7. Excess Spread; Excess Finance Charges. The Servicer shall
apply or shall cause the Trustee to apply, on each Distribution Date, Excess
Spread and Excess Finance Charges allocated to Series ____-__ with respect to
the related Monthly Period, to make the following distributions in the
following priority:
(a) an amount equal to the Class A Required Amount, if any, with respect
to such Distribution Date shall be distributed by the Trustee to fund any
deficiency pursuant to subsections 4.5(a)(i), (ii) and (iii), in that order of
priority;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed as provided in subsection
4.6(a) (after giving effect to the allocation on such Distribution Date of any
amount for that purpose pursuant to subsection 4.6(a)) shall be treated as a
portion of Available Investor Principal Collections for such Distribution Date;
(c) an amount up to the Class B Required Amount, if any, with respect to
such Distribution Date shall be distributed by the Trustee to fund any
deficiency pursuant to subsections 4.5(b)(i) and (ii), in that order of
priority;
(d) an amount equal to the Class B Investor Default Amount for such
Distribution Date shall be treated as a portion of Available Investor Principal
Collections for such Distribution Date;
(e) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (d), (e) and (f) of the
definition of "Class B Invested Amount" in Section 2.1 of this Supplement (but
not in excess of the aggregate amount of such reductions which have not been
previously reimbursed) shall be treated as a portion of Available Investor
Principal Collections for such Distribution Date;
(f) an amount equal to the Class C Monthly Interest for such
Distribution Date, plus the amount of any Class C Monthly Interest previously
due but not distributed to the Class C Interest Holder on a prior Distribution
Date pursuant to this subsection or pursuant to the Class C Supplemental
Agreement plus the amount of any Class C Additional Interest for such
Distribution Date and any Class C Additional Interest previously due but not
distributed to the Class C Interest Holder on a prior Distribution Date shall
be paid to the Class C Interest Holder for application in accordance with the
Class C Supplemental Agreement;
(g) an amount equal to the Class C Servicing Fee for such Distribution
Date (or if ANB or the Trustee is no longer the Servicer, the portion of the
Class C Servicing Fee for such Distribution Date not paid pursuant to
subsection 4.5(c)(i)), plus the amount of any Class C Servicing Fee previously
due but not distributed to the Servicer on a prior Distribution Date, shall be
distributed to the Servicer;
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(h) an amount equal to the Class C Default Amount for such Distribution
Date shall be treated as a portion of Class C Principal Collections with
respect to such Distribution Date;
(i) an amount equal to the aggregate amount by which the Class C
Invested Amount has been reduced pursuant to clause (c) of the definition of
"Class C Invested Amount" (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated as a
portion of Class C Principal Collections with respect to such Distribution
Date;
(j) an amount up to the excess, if any, of the Required Cash Collateral
Amount over the remaining Available Cash Collateral Amount (without giving
effect to any deposit made on such date hereunder) shall be deposited into the
Cash Collateral Account;
(k) an amount up to the excess, if any, of the Required Reserve Account
Amount over the amount on deposit therein, shall be deposited into the Reserve
Account;
(l) (1) an amount equal to the aggregate of any other amounts then owed
pursuant to the Class C Supplemental Agreement (excluding amounts required to
be deposited in the Spread Account under and as defined in the Class C
Supplemental Agreement) shall be applied in accordance with the Class C
Supplemental Agreement and (2) amounts required to be deposited in the Spread
Account under and as defined in the Class C Supplemental Agreement shall be so
deposited therein; and
(m) the balance, if any, shall constitute a portion of "Excess Finance
Charges" available for allocation to other Series in Group One or to the
Holders of the Seller Certificates for such Distribution Date as described in
Section 4.9.
Section 4.8. Reallocated Principal Collections. The Servicer shall apply
or shall cause the Trustee to apply on each Distribution Date, Reallocated
Principal Collections (applying all such Collections with respect to the Class
C Invested Amount prior to applying any such Collections with respect to the
Class B Invested Amount and applying no such Collections with respect to the
Class B Invested Amount pursuant to clause (b) below) with respect to such
Distribution Date, to make the following distributions in the following
priority:
(a) an amount equal to the excess, if any, of (i) the Class A Required
Amount, if any, with respect to such Distribution Date over (ii) the sum of (x)
the amount of Excess Spread and Excess Finance Charges allocated to Series
____-__ with respect to the related Monthly Period and (y) the Available Cash
Collateral Amount with the respect to such Distribution Date shall be
distributed by the Trustee to fund any deficiency pursuant to subsections
4.5(a)(i), (ii) and (iii), in that order of priority;
(b) an amount equal to the excess, if any, of (i) the Class B Required
Amount, if any, with respect to such Distribution Date over (ii) the sum of (x)
the amount of Excess Spread and Excess Finance Charges allocated and available
to the Class B Certificates pursuant to subsections 4.7(c) and (d) on such
Distribution Date and (y) the amount withdrawn from the
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Cash Collateral Account pursuant to subsection 4.12(c) which is remaining after
application pursuant to subsection 4.7(a) with respect to such Distribution
Date shall be distributed by the Trustee to fund any deficiency pursuant to
subsections 4.5(b)(i) and (ii) and subsection 4.7(d), in that order of
priority; and
(c) the balance, if any, of such Reallocated Principal Collections
allocable to the Class B Invested Amount shall be treated as a portion of
Available Investor Principal Collections to be applied in accordance with
subsections 4.5(d) and (f), and the balance, if any, of such Reallocated
Principal Collections allocable to the Class C Invested Amount shall be treated
as a portion of Class C Principal Collections to be applied in accordance with
subsections 4.5(e) and (g).
Section 4.9. Excess Finance Charges. On each Distribution Date, (a) the
Servicer shall allocate the aggregate amount of all outstanding Series in Group
One that the related Supplements specify are to be treated as a portion of
Excess Finance Charges for such Distribution Date (collectively, "Excess
Finance Charges") as specified in the Supplements for each Series in Group One
and (b) the Servicer shall withdraw (or shall instruct the Trustee in writing
to withdraw) from the Collection Account and pay to the Holders of the Seller
Certificates an amount equal to the excess, if any, of (x) the Excess Finance
Charges for such Distribution Date over (y) the aggregate amount for all Series
in Group One that the related Supplements specify are Finance Charge Shortfalls
(as defined in the related Supplements) for such Distribution Date. Excess
Finance Charges for any Distribution Date will be allocated to Series ____-__
in an amount equal to the product of (x) the aggregate amount of Excess Finance
Charges for such Distribution Date and (y) a fraction, the numerator of which
is the Finance Charge Shortfall for Series ____-__ for such Distribution Date
and the denominator of which is the aggregate amount of Finance Charge
Shortfalls (as defined in the related Supplements) for all the Series in Group
One for such Distribution Date. The "Finance Charge Shortfall" for Series
____-__ for any Distribution Date shall be equal to the excess, if any, of (a)
the full amount required to be paid, without duplication, pursuant to
subsections 4.5(a), 4.5(b), 4.5(c) and 4.7 (except for subsection 4.7(l)(2)) on
such Distribution Date over (b) the sum of Class A Available Funds, Class B
Available Funds and Class C Available Funds with respect to the related Monthly
Period.
Section 4.10 Shared Principal Collections. Subject to Section 4.04 of
the Agreement, Shared Principal Collections for any Distribution Date will be
allocated to Series ____-__ in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Series in
Group One for such Distribution Date and (y) a fraction, the numerator of which
is the Principal Shortfall for Series ____-__ for such Distribution Date and
the denominator of which is the aggregate amount of Principal Shortfalls for
all the Series which are Principal Sharing Series in Group One for such
Distribution Date. The "Principal Shortfall" for Series ____-__ shall be equal
to (a) for any Distribution Date with respect to the Revolving Period and the
Rapid Amortization Period, zero, (b) for any Distribution Date with respect to
the Accumulation Period (on or prior to the Class B Expected Final Distribution
Date), the excess, if any, of the Controlled Deposit Amount with respect to
such Distribution Date over the amount of Available Investor Principal
Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections) and (c) for each Distribution
Date
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with respect to the Accumulation Period after the Class B Expected Final
Distribution Date, the excess, if any, of the Invested Amount over the amount
of Available Investor Principal Collections and Class C Principal Collections
for such Distribution Date (excluding any portion thereof attributable to
Shared Principal Collections).
[Section 4.11. Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee shall determine LIBOR
based on the rate for deposits in United States dollars for a period of the
Designated Maturity which appears on Telerate Page 3750 as of 11:00 A.M.
(London Time) on such date.
(b) If such rate does not appear on Telerate Page 3750, the Trustee will
determine LIBOR on the basis of quotations of the offered rates for deposits in
United States dollars provided by the Reference Banks at approximately 11:00
A.M. (London time) on such LIBOR Determination Date to prime banks in the
London interbank market for a period of the Designated Maturity. If at least
two such quotations are provided, LIBOR will be the arithmetic mean of such
quotations.
(c) If, on the LIBOR Determination Date, such rate does not appear on
Telerate Page 3750 and only one or none of the Reference Banks provides such
offered quotations, LIBOR will be the rate per annum that the Trustee
determines to be the arithmetic mean of the offered quotations that three major
banks in The City of New York selected by the Servicer are quoting at
approximately 11:00 A.M. (New York City time) on that day for Class C
Supplemental s in United States dollars to leading European banks for a period
of the Designated Maturity.
(d) The Class A Certificate Rate or Class B Certificate Rate applicable
to the then current and the immediately preceding Interest Periods may be
obtained by any Series ____-__ Certificateholder by telephoning the Trustee at
its Corporate Trust Office at (800) 735-7777.]
Section 4.12. Cash Collateral Account.
(a) The Servicer shall establish and maintain, in the name of the
Trustee, on behalf of the Trust, for the benefit of the Series ____-__
Certificateholders and the Class C Interest Holder, as their interests appear
herein, an Eligible Deposit Account (the "Cash Collateral Account") bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Series ____-__ Certificateholders and the Class C Interest
Holder. The Cash Collateral Account shall initially be established with the
Trustee. The Trustee shall possess all right, title and interest in all funds
on deposit from time to time in the Cash Collateral Account and in all proceeds
thereof. The Cash Collateral Account shall be under the sole dominion and
control of the Trustee for the benefit of the Series ____-__ Certificateholders
and the Class C Interest Holder. The interest of the Class C Interest Holder
in the Cash Collateral Account shall be subordinated to the interests of the
Series ____-__ Certificateholders as provided herein and in the Class C
Supplemental Agreement. If at any time the Cash Collateral Account ceases to
be an Eligible Deposit Account, the Trustee (or the Servicer on its behalf)
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, as to
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which each Rating Agency may consent) establish a new Cash Collateral Account
meeting the conditions specified above as an Eligible Deposit Account, and
shall transfer any cash and/or any investments to such new Cash Collateral
Account. The Trustee, at the direction of the Servicer, shall make deposits to
and withdrawals from the Cash Collateral Account in the amounts and at the
times set forth in this Supplement and the Class C Supplemental Agreement. All
withdrawals from the Cash Collateral Account shall be made in the priority set
forth below. The Class C Interest Holder shall not be entitled to
reimbursement from the Trust Assets for any withdrawals from the Cash
Collateral Account except as specifically provided in this Supplement and the
Class C Supplemental Agreement.
(b) On the Closing Date, the Trustee shall deposit $___________ received
by it in immediately available funds pursuant to the Class C Supplemental
Agreement into the Cash Collateral Account. Funds on deposit in the Cash
Collateral Account shall be invested at the direction of the Servicer by the
Trustee in Cash Collateral Account Investments. Funds on deposit in the Cash
Collateral Account on any Transfer Date, after giving effect to any withdrawals
from the Cash Collateral Account on such Transfer Date, shall be invested in
such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. No Eligible Investment
shall be disposed of prior to its maturity; provided, however, that the Trustee
may sell, liquidate or dispose of an Eligible Investment before its maturity,
if so directed by the Servicer, the Servicer having reasonably determined that
the interest of the Series ____-__ Certificateholders and the Class C Interest
Holder may be adversely affected if such Eligible Investment is held to its
maturity. The proceeds of any such investments shall be invested in such
investments that will mature so that such funds will be available for
withdrawal on or prior to the Transfer Date immediately following the date of
such investment. The Trustee shall maintain for the benefit of the Series
____-__ Certificateholders and the Class C Interest Holder possession of the
negotiable instruments or securities, if any, evidencing the Cash Collateral
Account Investments. On each Transfer Date, all interest and earnings (net of
losses and investment expenses) accrued since the preceding Transfer Date on
funds on deposit in the Cash Collateral Account shall be applied in accordance
with the Class C Supplemental Agreement. For purposes of determining the
availability of funds or the balances in the Cash Collateral Account for any
reason under this Supplement, all investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On each Determination Date, the Servicer shall calculate the amount
(the "Required Draw Amount") by which the amounts specified in clauses (a)
through (e) and (g) of Section 4.7 with respect to the related Distribution
Date exceed the amount of Excess Spread and Excess Finance Charges allocated to
Series ____-__ with respect to the related Monthly Period. In the event that
for any Distribution Date the Required Draw Amount is greater than zero, the
Servicer shall give written notice to the Trustee and the Class C Interest
Holder of such positive Required Draw Amount on the related Determination Date.
On the related Transfer Date, the Required Draw Amount, if any, up to the
Available Cash Collateral Amount, shall be withdrawn from the Cash Collateral
Account and distributed to fund any deficiency pursuant to subsections 4.7(a)
through (e) and (g) (in the order of priority set forth in Section 4.7).
(d) In the event that the Cash Enhancement Surplus on any Distribution
Date, after giving effect to all deposits to and withdrawals from the Cash
Collateral Account with
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respect to such Distribution Date, and after giving effect to any payment of
Class C Monthly Principal (or other reduction of the Class C Invested Amount)
with respect to such Distribution Date, is greater than zero, the Trustee,
acting in accordance with the instructions of the Servicer, shall withdraw from
the Cash Collateral Account, and apply in accordance with the Class C
Agreement, an amount equal to such Cash Enhancement Surplus.
Section 4.13. Principal Funding Account.
(a)(i) The Servicer, for the benefit of the Series ____-__
Certificateholders, shall establish and maintain in the name of the
Trustee, on behalf of the Trust, an Eligible Deposit Account (the
"Principal Funding Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series
____-__ Certificateholders. The Principal Funding Account shall initially
be established with the Trustee.
(ii) At the direction of the Servicer, funds on deposit in the
Principal Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall
be held by the Trustee for the benefit of the Series ____-__
Certificateholders; provided that on each Distribution Date all interest
and other investment income (net of losses and investment expenses )
("Principal Funding Investment Proceeds") on funds on deposit therein
shall be applied as set forth in paragraph (iii) below. Funds on deposit
in the Principal Funding Account shall be invested in Eligible Investments
that will mature so that such funds will be available at the close of
business on the Transfer Date preceding the following Distribution Date.
No Eligible Investment shall be disposed of prior to its maturity;
provided, however, that the Trustee may sell, liquidate or dispose of an
Eligible Investment before its maturity, if so directed in writing by the
Servicer, the Servicer having reasonably determined that the interest of
the Series ____-__ Certificateholders may be adversely affected if such
Eligible Investment is held to its maturity. Unless the Servicer directs
otherwise, funds deposited in the Principal Funding Account on a Transfer
Date (which immediately precedes a Distribution Date) upon the maturity of
any Eligible Investments are not required to be invested overnight.
(iii) On each Distribution Date, the Servicer shall direct the
Trustee to withdraw from the Principal Funding Account and deposit into
the Collection Account all Principal Funding Investment Proceeds then on
deposit in the Principal Funding Account, and such Principal Funding
Investment Proceeds shall be treated as a portion of Class A Available
Funds for such Distribution Date.
(iv) Reinvested interest and other investment income on funds
deposited in the Principal Funding Account shall not be considered to be
principal amounts on deposit therein for purposes of this Supplement.
(b)(i) The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Principal Funding Account
and in all proceeds thereof. The Principal Funding Account shall be under
the sole dominion and control of the Trustee
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for the benefit of the Series ____-__ Certificateholders. If, at any
time, the Principal Funding Account ceases to be an Eligible Deposit
Account, the Trustee shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Principal Funding Account meeting the conditions
specified in paragraph (a) (i) above as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Principal
Funding Account.
(ii) Pursuant to the authority granted to the Servicer in Section
3.01(b) of the Agreement, the Servicer shall have the power, revocable by
the Trustee, to make withdrawals and payments or to instruct the Trustee
to make withdrawals and payments from the Principal Funding Account for
the purposes of carrying out the Servicer's or Trustee's duties hereunder.
Pursuant to the authority granted to the Paying Agent in Section 5.01 of
this Supplement and Section 6.07 of the Agreement, the Paying Agent shall
have the power, revocable by the Trustee, to withdraw funds from the
Principal Funding Account for the purpose of making distributions to the
Series ____-__ Certificateholders.
Section 4.14. Class A Accumulation Period. The Class A
Accumulation Period is scheduled to commence on the Accumulation Date;
provided, however, that if the Class A Accumulation Period Length on any
Determination Date (determined as described below) is less than ____ months,
upon notice to the Trustee, the Sellers, each Rating Agency and the Class C
Interest Holder, the Servicer, at its option, may elect to modify the date on
which the Class A Accumulation Period actually commences to the first day of
the month that is a number of months prior to the month in which the Class A
Expected Final Distribution Date occurs at least equal to the Class A
Accumulation Period Length (so that, as a result, the number of Monthly Periods
in the Class A Accumulation Period will at least equal the Class A Accumulation
Period Length); provided, however, that (i) the length of the Class A
Accumulation Period will not be less than one month; and (ii) notwithstanding
any other provision of this Supplement to the contrary, no election to postpone
the commencement of the Class A Accumulation Period shall be made after a Pay
Out Event (as defined in the related Supplement) shall have occurred and is
continuing with respect to any other Series. On each Determination Date, the
Servicer will determine the "Class A Accumulation Period Length," which will
mean a number of months such that the amount available for distribution of
principal on the Class A Certificates on the Class A Expected Final
Distribution Date will equal or exceed the Class A Investor Amount, assuming
for this purpose that (1) the payment rate with respect to Collections of
Principal Receivables remains constant at the lowest level of such payment rate
during the twelve preceding Monthly Periods (or such lower payment rate as the
Servicer may select), (2) the total amount of Principal Receivables in the
Trust (and the principal amount on deposit in the Excess Funding Account, if
any) remains constant at the level on such date of determination, (3) no Pay
Out Event with respect to any Series will subsequently occur and (4) no
additional Series (other than any Series being issued on such date of
determination) will be subsequently issued. Any notice by the Servicer
electing to modify the commencement of the Class A Accumulation Period pursuant
to this Section 4.14 shall specify (i) the Class A Accumulation Period Length,
(ii) the commencement date of the Class A Accumulation Period and (iii) the
Controlled Accumulation Amount with respect to each Monthly Period during the
Class A Accumulation Period.
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Section 4.15. Reserve Account.
(a) The Servicer shall establish and maintain, in the name of the
Trustee, on behalf of the Trust, for the benefit of the Series ____-__
Certificateholders and the Class C Interest Holder, an Eligible Deposit Account
(the "Reserve Account") bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Series ____-__
Certificateholders and the Class C Interest Holder. The Reserve Account shall
initially be established with the Trustee. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Reserve Account and in all proceeds thereof. The Reserve Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Series ____-__ Certificateholders and the Class C Interest Holder. If at any
time the Reserve Account ceases to be an Eligible Deposit Account, the Trustee
(or the Servicer on its behalf) shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Reserve Account meeting the conditions specified above
as an Eligible Deposit Account, and shall transfer any cash and/or any
investments to such new Reserve Account. The Trustee, at the direction of the
Servicer, shall (i) make withdrawals from the Reserve Account from time to time
for the purposes set forth in this Supplement, and (ii) on each Distribution
Date (from and after the Reserve Account Funding Date) prior to the termination
of the Reserve Account make a deposit into the Reserve Account in the amount
specified in, and otherwise in accordance with, subsection 4.7(l).
(b) Funds on deposit in the Reserve Account shall be invested at
the written direction of the Servicer by the Trustee in Eligible Investments.
Funds on deposit in the Reserve Account on any Transfer Date, after giving
effect to any withdrawals from the Reserve Account on such Transfer Date, shall
be invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the immediately succeeding Transfer
Date. The Trustee shall maintain for the benefit of the Series ____-__
Certificateholders and the Class C Interest Holder possession of the negotiable
instruments or securities, if any, evidencing such Eligible Investments. No
Eligible Investment shall be disposed of prior to its maturity; provided,
however, that the Trustee may sell, liquidate or dispose of an Eligible
Investment before its maturity, if so directed by the Servicer in writing, the
Servicer having reasonably determined that the interest of the Series ____-__
Certificateholders may be adversely affected if such Eligible Investment is
held to its maturity. On each Distribution Date, all interest and earnings
(net of losses and investment expenses) accrued since the preceding
Distribution Date on funds on deposit in the Reserve Account shall be retained
in the Reserve Account (to the extent that the amount on deposit in the Reserve
Account is less than the Required Reserve Account Amount) and the balance, if
any, shall be deposited in the Collection Account and treated as Collections of
Finance Charge Receivables allocable to Series ____-__. For purposes of
determining the availability of funds or the balance in the Reserve Account for
any reason under this Supplement, except as otherwise provided in the preceding
sentence, investment earnings on such funds shall be deemed not to be available
or on deposit.
(c) On the Determination Date preceding each Distribution Date with
respect to the Accumulation Period (prior to the Class B Expected Final
Distribution Date) and the first Special Payment Date, the Servicer shall
calculate the "Reserve Draw Amount" which shall be
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equal to the excess, if any, of the Covered Amount with respect to such
Distribution Date or Special Payment Date over the Principal Funding Investment
Proceeds with respect to such Distribution Date or Special Payment Date;
provided, that such amount will be reduced to the extent that funds otherwise
would be available for deposit in the Reserve Account under subsection 4.7(l)
with respect to such Distribution Date.
(d) In the event that for any Distribution Date the Reserve Draw
Amount is greater than zero, the Reserve Draw Amount, up to the amount on
deposit in the Reserve Account, shall be withdrawn from the Reserve Account on
the related Transfer Date by the Trustee (acting in accordance with the
instructions of the Servicer), deposited into the Collection Account and
included in Class A Available Funds for such Distribution Date.
(e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the instructions of the Servicer,
shall withdraw from the Reserve Account, and pay to the Class C Interest Holder
for application in accordance with the Class C Supplemental Agreement, an
amount equal to such Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article XII of the Agreement, (ii) the day on which the Class A
Investor Amount is paid in full to the Series ____-__ Certificateholders, (iii)
if the Accumulation Period has not commenced, the occurrence of a Pay Out Event
with respect to Series ____-__ and (iv) if the Accumulation Period has
commenced, the earlier of the first Special Payment Date and the Class A
Expected Final Distribution Date, the Trustee, acting in accordance with the
written instructions of the Servicer, after the prior payment of all amounts
owing to the Series ____-__ Certificateholders which are payable from the
Reserve Account as provided herein, shall withdraw from the Reserve Account and
pay to the Class C Interest Holder for application in accordance with the Class
C Supplemental Agreement, all amounts, if any, on deposit in the Reserve
Account and the Reserve Account shall be deemed to have terminated for purposes
of this Supplement.
Section 4.16. Pre-Funding Account.
(a) Establishment of the Pre-Funding Account. The Servicer hereby
directs the Trustee, for the benefit of the Series ____-__ Certificateholders
and the Class C Interest Holder, to establish and maintain or cause to be
established and maintained in the name of the Trustee, on behalf of the Series
____-__ Certificateholders and the Class C Interest Holder, an Eligible Deposit
Account (the "Pre-Funding Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series ____-__
Certificateholders and the Class C Interest Holder. The Seller does hereby
transfer, assign, set over and otherwise convey to the Trustee for the benefit
of the Series ____-__ Certificateholders and the Class C Interest Holder,
without recourse, all of its right, title and interest in, to and under the
Pre-Funding Account, any Eligible Investments on deposit therein and any
proceeds of the foregoing. The Pre-Funding Account shall be under the sole
dominion and control of the Trustee for the benefit of the Series ____-__
Certificateholders and the Class C Interest Holder. If, at any time, the
Pre-Funding Account ceases to be an Eligible Deposit Account, the Servicer
shall
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direct the Trustee to establish within ten Business Days a new Pre-Funding
Account meeting the conditions specified above, transfer any cash and/or any
investments from the old Pre-Funding Account to such new Pre-Funding Account
and from the date such new Pre-Funding Account is established, it shall be the
"Pre-Funding Account." In addition, after five days' notice to the Trustee,
the Servicer may direct the Trustee to establish a new Pre-Funding Account
meeting the conditions specified above, transfer any cash and/or investments
from the old Pre-Funding Account to such new Pre-Funding Account and from the
date such new Pre-Funding Account is established, it shall be the "Pre-Funding
Account." The Trustee, at the direction of the Servicer, shall make
withdrawals and payments from the Pre-Funding Account from time to time for the
purposes set forth in this Supplement.
(b) Administration of Pre-Funding Account. The Trustee shall on
the Closing Date deposit into the Pre-Funding Account the Initial Pre-Funded
Amount from the proceeds of the sale of the Series ____-__ Certificates and the
Class C Interest. On the Business Day preceding each Transfer Date, the
Trustee, acting in accordance with written instructions from the Servicer,
shall withdraw from the Pre-Funding Account and deposit into the Collection
Account all interest and other investment income on the Pre-Funded Amount with
respect to the prior Monthly Period. Such investment income shall be deemed to
be Collections of Finance Charge Receivables allocated to Series ____-__.
Interest (including reinvested interest) and other investment income on funds
on deposit in the Pre-Funding Account shall not be considered part of the
Pre-Funded Amount for purposes of this Supplement.
(c) Investment of Funds in Pre-Funding Account. Funds on deposit
in the Pre-Funding Account shall be invested in Eligible Investments by the
Trustee (or, at the direction of the Trustee, by the Servicer on behalf of the
Trustee) selected at the written direction of the Servicer. Funds on deposit
in the Pre-Funding Account on the Closing Date and thereafter shall be invested
in Eligible Investments that will mature so that such funds will be available
for withdrawal on the Business Day next succeeding the next increase in the
Invested Amount pursuant to Section 4.17 or, if earlier, on the next succeeding
Transfer Date.
(d) Principal Payments from Pre-Funding Account. In the event that
the Pre-Funded Amount exceeds zero at the end of the Funding Period, on the
first Distribution Date on or after the last day of the Funding Period the
Servicer shall apply or shall cause the Trustee to apply the Pre-Funded Amount
to the payment by the Paying Agent of principal on the Class A Certificates,
the Class B Certificates and the Class C Interest on a pro rata basis based on
the Class A Invested Amount, the Class B Invested Amount and the Class C
Invested Amount.
Section 4.17. Increases in Invested Amount. On each Wednesday
during the Funding Period, commencing ________, ___ the Invested Amount shall
increase to the extent that the Seller Amount on the preceding day exceeds the
product of (A) the sum of ____% and the Required Seller 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 preceding day;
provided, however, that the Invested Amount shall in no event exceed
$_____________ or increase pursuant to this Section 4.17 by an amount in excess
of the Pre-Funded Amount immediately prior to giving effect to such increase.
Such increase in the Invested Amount shall be allocated to the Class A
Certificates, the Class B Certificates and the
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Class C Interest Holder on a pro rata basis based on the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested Amount immediately
prior to such increase. Upon any increase in the Invested Amount pursuant to
this Section 4.17, the Servicer shall instruct the Trustee in writing to
withdraw from the Pre-Funding Account and pay to Holders of the Seller
Certificates no later than the next succeeding Business Day an amount equal to
the amount of such increase in the Invested Amount.
ARTICLE V
Distributions and Reports to Series ____-__ Certificateholders
Section 5.1. Distributions.
(a) On each Distribution Date, the Paying Agent shall distribute to each
Class A Certificateholder of record on the related Record Date (other than as
provided in Section 12.02 of the Agreement) such Class A Certificateholder's
pro rata share of the amounts that are allocated and available on such
Distribution Date to pay interest on the Class A Certificates pursuant to this
Supplement.
(b) On each Distribution Date, commencing with the first to occur of the
Class A Expected Final Payment Date and the first Special Payment Date, the
Paying Agent shall distribute to each Class A Certificateholder of record on
the related Record Date (other than as provided in Section 12.02 of the
Agreement) such Class A Certificateholder's pro rata share of the amounts that
are allocated and available on such date to pay principal of the Class A
Certificates pursuant to this Supplement up to a maximum amount on any such
date equal to the Class A Investor Amount on such date (unless there has been
an optional repurchase of the Certificateholders' Interest pursuant to Section
10.01 of the Agreement, in which event the foregoing limitation will not
apply).
(c) On each Distribution Date, the Paying Agent shall distribute to each
Class B Certificateholder of record on the related Record Date (other than as
provided in Section 12.02 of the Agreement) such Class B Certificateholder's
pro rata share of the amounts that are allocated and available on such
Distribution Date to pay interest on the Class B Certificates pursuant to this
Supplement.
(d) On each Distribution Date, commencing with the Class B Principal
Commencement Date, the Paying Agent shall distribute to each Class B
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Class B Certificateholder's pro rata
share of the amounts that are allocated and available on such date to pay
principal of the Class B Certificates pursuant to this Supplement up to a
maximum amount on any such date equal to the Class B Investor Amount on such
date (unless there has been an optional repurchase of the Certificateholders'
Interest pursuant to Section 10.01 of the Agreement, in which event the
foregoing limitation will not apply).
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(e) The distributions to be made pursuant to this Section 5.1 are
subject to the provisions of Sections 2.06, 9.02, 10.01 and 12.02 of the
Agreement and Sections 8.1 and 8.2 of this Supplement.
(f) Except as provided in Section 12.02 of the Agreement with respect to
a final distribution, distributions to Series ____-__ Certificateholders
hereunder shall be made by check mailed to each Series ____-__
Certificateholder at such Series ____-__ Certificateholder's address appearing
in the Certificate Register without presentation or surrender of any Series
____-__ Certificate or the making of any notation thereon; provided, however,
that with respect to Series ____-__ Certificates registered in the name of a
Clearing Agency, such distributions shall be made to such Clearing Agency in
immediately available funds.
Section 5.2. Certificates and Statements.
(a) Not later than each Determination Date, the Servicer shall deliver
to the Trustee, the Paying Agent, each Rating Agency and the Class C Interest
Holder, a certificate substantially in the form of Exhibit B prepared by the
Servicer.
(b) On each Distribution Date, the Paying Agent, on behalf of the
Trustee, shall forward to each Series ____-__ Certificateholder a statement
substantially in the form of Exhibit C prepared by the Servicer.
(c) A copy of each statement or certificate provided pursuant to
paragraph (a) or (b) may be obtained by any Series ____-__ Certificateholder or
any Certificate Owner thereof by a request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning with
calendar year _____, the Paying Agent, on behalf of the Trustee, shall furnish
or cause to be furnished to each Person who at any time during the preceding
calendar year was a Series ____-__ Certificateholder, a statement prepared by
the Servicer containing the information which is required to be contained in
the statement to Series ____-__ Certificateholders, as set forth in paragraph
(b) above, aggregated for such calendar year or the applicable portion thereof
during which such Person was a Series ____-__ Certificateholder, together with
other information as is required to be provided by an issuer of indebtedness
under the Internal Revenue Code. Such obligation of the Servicer shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Paying Agent pursuant to any requirements
of the Internal Revenue Code as from time to time in effect.
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ARTICLE VI
Series ____-__ Pay Out Events
Section 6.1. Series ____-__ Pay Out Events. If any one of the following
events (each, a "Series ____-__ Pay Out Event") shall occur with respect to
Series ____-__:
(a) failure on the part of the Seller (A) to make any payment or deposit
required by the terms of the Agreement on or before the date occurring five
Business Days after the date such payment or deposit is required to be made
herein or (B) duly to observe or perform in any material respect any other
covenants or agreements of the Seller set forth in the Agreement which has a
material adverse effect on the Series ____-__ Certificateholders (which
determination shall be made, for so long as the Class C Invested Amount is
greater than zero, without reference to whether any funds are available
pursuant to Series Enhancement) and 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 Seller by the Trustee, or to the
Seller and the Trustee by Holders of Series ____-__ Certificates aggregating
not less than 50% of the outstanding principal balance of the Series ____-__
Certificates;
(b) any representation or warranty made by the Seller in the Agreement
or any information contained in a computer file or microfiche list required to
be delivered by the Servicer on behalf of the Seller pursuant to Section 2.01
or 2.08 of the Agreement (A) shall prove to have been incorrect in any material
respect when made or when delivered, which continues to be incorrect in any
material respect for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to
the Seller by the Trustee, or to the Seller and the Trustee by Holders of the
Series ____-__ Certificates aggregating not less than 50% of the outstanding
principal balance of the Series ____-__ Certificates and (B) as a result of
which the interests of the Series ____-__ Certificateholders are materially and
adversely affected (which determination shall be made, for so long as the Class
C Invested Amount is greater than zero, without reference to whether any funds
are available pursuant to any Series Enhancement); provided, however, that a
Series Pay Out Event pursuant to this subparagraph (b) shall not be deemed to
occur hereunder if the Seller has accepted reassignment of the related
Receivable, or all of such Receivables, if applicable, during such period (or
such longer period as the Trustee may specify) in accordance with the
provisions hereof and of the Agreement;
(c) (1) with respect to the last day of any prior Monthly Period during
which the Seller Amount is less than the Required Seller Amount, the failure of
the Seller to convey on or prior to the Required Designation Date Receivables
in Additional Accounts to the Trust such that the Seller Amount shall be at
least equal to the Required Seller Amount as of the close of business on the
applicable Addition Date; or (2) with respect to the last day of any prior
Monthly Period during which the aggregate amount of Principal Receivables is
less than the Required Principal Balance as of such day, the failure of the
Seller to convey on or prior to the Required Designation Date Receivables in
Additional Accounts to the Trust such that the aggregate amount of the
Principal Receivables shall be at least equal to the Required Principal Balance
as of the close of business on the applicable Addition Date;
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(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 shall occur which would have a material adverse
effect on the Series ____-__ Certificateholders (which determination shall be
made, for so long as the Class C Invested Amount is greater than zero, without
reference to whether any funds are available pursuant to any Series
Enhancement); 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;
then, in the case of any event described in subparagraph (a), (b) or (e), after
the applicable grace period, if any, set forth in such subparagraphs, either
the Trustee or the holders of Investor Certificates (including the Class C
Interest Holder) of Series ____-__ evidencing more than 50% of the aggregate
unpaid principal amount of such Investor Certificates (including the Class C
Interest) by notice then given in writing to the Sellers and the Servicer (and
to the Trustee if given by the Holders of Investor Certificates (including the
Class C Interest Holder) of Series ____-__) may declare that a Pay Out Event
has occurred with respect to Series ____-__ as of the date of such notice, and,
in the case of any event described in subparagraph (c), (d) or (f) a Pay Out
Event shall occur with respect to Series ____-__ without any notice or other
action on the part of the Trustee or Holders of Investor Certificates
(including the Class C Interest Holder) of Series ____-__ immediately upon the
occurrence of such event.
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1. Optional Repurchase. On any day occurring on or after the
date on which the Investor Amount is reduced to 5% or less of the maximum
Invested Amount during the Revolving Period, the Sellers shall have the option
to purchase the interest of the holders of Investor Certificates (including the
Class C Interest), at a purchase price equal to (i) if such day is a
Distribution Date, the Reassignment Amount for such Distribution Date or (ii)
if such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day.
Section 7.2. Series Termination.
(a) If, on the _________ Distribution Date, the Investor Amount (after
giving effect to all changes therein on such date) would be greater than zero,
the Servicer, on behalf of the Trustee, shall, within the 40-day period which
begins on such Distribution Date, solicit bids for the sale of Principal
Receivables and the related Finance Charge Receivables (or interests therein)
in an amount equal to the Investor Amount and accrued and unpaid interest
thereon at the close of business on the last day of the Monthly Period
preceding the Series Termination Date (after giving effect to all distributions
required to be made on the Series Termination Date,
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<PAGE> 50
except pursuant to this Section 7.2; provided, however that in no event shall
such amount exceed the Series Percentage of Receivables on the Series
Termination Date). Such bids shall require that such sale shall (subject to
Section 7.2(b)) occur on the Series Termination Date. The Seller and the Class
C Interest Holder shall be entitled to participate in, and to receive from the
Trustee a copy of each other bid submitted in connection with, such bidding
process.
(b) The Servicer, on behalf of the Trustee, shall sell such Receivables
(or interests therein) on the Series Termination Date to the bidder who made
the highest cash purchase offer. The proceeds of any such sale shall be
treated as Collections on the Receivables allocated to the Series ____-__
Certificateholders and the Class C Interest Holder pursuant to the Agreement
and this Supplement; provided, however, that the Servicer shall determine
conclusively the amount of such proceeds which are allocable to Finance Charge
Receivables and the amount of such proceeds which are allocable to Principal
Receivables. During the period from the _______ Distribution Date to the
Series Termination Date, the Servicer shall continue to collect payments on the
Receivables and allocate and deposit such collections in accordance with the
provisions of the Agreement and the Supplements.
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or Certificateholders' Interest Pursuant
to Section 2.06 or 10.01 of the Agreement.
(a) Purchase Price. The amount to be paid with respect to Series
____-__ in connection with (i) a reassignment of Receivables to the Seller
pursuant to Section 2.06 of the Agreement or (ii) a repurchase of the
Certificateholders' Interest pursuant to Section 10.01 of the Agreement shall
equal the Reassignment Amount for the first Distribution Date following the
Monthly Period in which the reassignment obligation arises under the Agreement.
(b) Distributions Pursuant to Section 7.01 or 7.02 of this Supplement
and Section 10.01 of the Agreement. With respect to the Reassignment Amount
deposited into the Collection Account pursuant to Section 7.1 or 8.1(a)(ii) or
any amounts allocable to Series ____-__ deposited into the Collection Account
pursuant to Section 7.2, the Trustee shall, not later than 3:00 p.m. New York
City time, on the related Distribution Date, make deposits or distributions of
the following amounts (in the priority set forth below and, in each case, after
giving effect to any deposits and distributions otherwise to be made on such
date) in immediately available funds: (i) (x) the Class A Investor Amount on
such Distribution Date will be distributed to the Paying Agent for payment to
the Class A Certificateholders and (y) an amount equal to the sum of (A) Class
A Monthly Interest for such Distribution Date, (B) any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders on a prior
Distribution Date and (C) the amount of Class A Additional Interest, if any,
for such Distribution Date and any Class A Additional Interest previously due
but not distributed to the Class A Certificateholders on any prior Distribution
Date, will be distributed to the Paying Agent for payment to the Class A
Certificateholders, (ii) (x) the Class B Invested Amount on such Distribution
Date will be
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<PAGE> 51
distributed to the Paying Agent for payment to the Class B Certificateholders
and (y) an amount equal to the sum of (A) Class B Monthly Interest for such
Distribution Date, (B) any Class B Monthly Interest previously due but not
distributed to the Class B Certificateholders on a prior Distribution Date and
(C) the amount of Class B Additional Interest, if any, for such Distribution
Date and any Class B Additional Interest previously due but not distributed to
the Class B Certificateholders on any prior Distribution Date, will be
distributed to the Paying Agent for payment to the Class B Certificateholders
and (iii) the Class C Invested Amount on such date and the amount of accrued
and unpaid interest on the Class C Invested Amount (including any unpaid Class
C Additional Interest) will be distributed to the Class C Interest Holder for
application in accordance with the Class C Supplemental Agreement.
(c) Distributions Pursuant to Section 2.06 of the Agreement. With
respect to any amounts deposited into the Collection Account pursuant to
subsection 8.1(a)(i), the Trustee shall, not later than 3:00 p.m., New York
City time, on the related Distribution Date, deposit the principal portion of
such amounts that are allocable to the Class A Certificates and the Class B
Certificates into the Collection Account and the principal portion of such
amounts allocable to the Class C Interest shall be distributed to the Class C
Interest Holder for application in accordance with the Class C Supplemental
Agreement.
(d) Notwithstanding anything to the contrary in this Supplement or the
Agreement, all amounts distributed to the Paying Agent pursuant to subsection
8.1(b) for payment to the Series ____-__ Certificateholders shall be deemed
distributed in full to the Series ____-__ Certificateholders on the date on
which such funds are distributed to the Paying Agent pursuant to this Section
and shall be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement.
Section 8.2. Distribution of Proceeds of Sale, Disposition or Liquidation
of the Receivables Pursuant to Section 9.02 of the Agreement.
(a) Not later than 12:00 noon, New York City time, on the Distribution
Date following the date on which the Insolvency Proceeds are deposited into the
Collection Account pursuant to subsection 9.02(b) of the Agreement, the Trustee
shall (in the following priority and, in each case, after giving effect to any
deposits and distributions otherwise to be made on such Distribution Date) (i)
deduct an amount equal to the Class A Invested Amount on such Distribution Date
from the portion of the Insolvency Proceeds allocated to Collections of
Principal Receivables and distribute such amount to the Paying Agent for
payment to the Class A Certificateholders, provided that the amount of such
distribution shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to Collections of Principal Receivables and (y) the
Principal Allocation Percentage with respect to the related Monthly Period,
(ii) deduct an amount equal to the Class B Invested Amount on such Distribution
Date from the portion of the Insolvency Proceeds allocated to Collections of
Principal Receivables and distribute such amount to the Paying Agent for
payment to the Class B Certificateholders, provided that the amount of such
distribution shall not exceed (x) the product of (A) the portion of such
Insolvency Proceeds allocated to Collections of Principal Receivables and (B)
the Principal Allocation Percentage with respect to the related Monthly Period
minus (y) the amount
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<PAGE> 52
distributed to the Paying Agent pursuant to clause (i) of this sentence and
(iii) deduct an amount equal to the Class C Invested Amount, if any, on such
Distribution Date from the portion of the Insolvency Proceeds allocated to
Collections of Principal Receivables and distribute such amount to the Class C
Interest Holder for application in accordance with the Class C Supplemental
Agreement, provided that the amount of such distribution shall not exceed (x)
the product of (1) the portion of the Insolvency Proceeds allocated to
Collections of Principal Receivables and (2) the Principal Allocation
Percentage with respect to such Monthly Period minus (y) the amounts
distributed to the Paying Agent pursuant to clauses (i) and (ii) of this
sentence. To the extent that the product of (A) the portion of the Insolvency
Proceeds allocated to Collections of Principal Receivables and (B) the
Principal Allocation Percentage with respect to the related Monthly Period
exceeds the aggregate amounts distributed to the Paying Agent and the Class C
Interest Holder pursuant to the preceding sentence, the excess shall be
allocated to the Sellers' Interest and shall be released to the Holders of the
Seller Certificates on such Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such Distribution
Date, the Trustee shall (in the following priority and, in each case, after
giving effect to any deposits and distributions otherwise to be made on such
Distribution Date) (i) deduct an amount equal to the sum of (w) Class A Monthly
Interest for such Distribution Date, (x) any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders on a prior
Distribution Date and (y) the amount of Class A Additional Interest, if any,
for such Distribution Date and any Class A Additional Interest previously due
but not distributed to the Class A Certificateholders on a prior Distribution
Date from the portion of the Insolvency Proceeds allocated to Collections of
Finance Charge Receivables and distribute such amount to the Paying Agent for
payment to the Class A Certificateholders, provided that the amount of such
distribution shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to Collections of Finance Charge Receivables, (y) the
Floating Allocation Percentage with respect to the related Monthly Period and
(z) the Class A Floating Percentage with respect to such Monthly Period and
(ii) deduct an amount equal to the sum of (w) Class B Monthly Interest for such
Distribution Date, (x) Class B Monthly Interest previously due but not
distributed to the Class B Certificateholders and (y) the amount of Class B
Additional Interest, if any, for such Distribution Date and any Class B
Additional Interest previously due but not distributed to the Class B
Certificateholders on a prior Distribution Date from the portion of the
Insolvency Proceeds allocated to Collections of Finance Charge Receivables and
distribute such amount to the Paying Agent for payment to the Class B
Certificateholders, provided that the amount of such distribution shall not
exceed the product of (x) the portion of the Insolvency Proceeds allocated to
Collections of Finance Charge Receivables, (y) the Floating Allocation
Percentage with respect to the related Monthly Period and (z) the Class B
Floating Percentage with respect to such Monthly Period. To the extent that
the product of (A) the portion of the Insolvency Proceeds allocated to
Collections of Finance Charge Receivables and (B) the Floating Allocation
Percentage with respect to the related Monthly Period exceeds the aggregate
amount distributed to the Paying Agent pursuant to the preceding sentence, the
excess shall be released to the Class C Interest Holder for application by the
Class C Interest Holder in accordance with the Class C Supplemental Agreement.
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<PAGE> 53
(c) Notwithstanding anything to the contrary in this Supplement or the
Agreement, all amounts distributed to the Paying Agent pursuant to this Section
for payment to the Series ____-__ Certificateholders shall be distributed in
full to the Series ____-__ Certificateholders on the date on which funds are
distributed to the Paying Agent pursuant to this Section and shall be deemed to
be a final distribution pursuant to Section 12.02 of the Agreement.
Section 8.3. Instructions Pursuant to Section 9.02(a) of the Agreement.
The Holders of Investor Certificates of Series ____-__ evidencing more than 50%
of the Investor Amount of each Class (including the Class C Interest) shall not
be considered as having disapproved of any liquidation of the Receivables and
to continue transferring Principal Receivables to the Trust pursuant to
subsection 9.02(a) of the Agreement unless Holders of more than 50% of the
Investor Amount of each of the Class A Certificates, the Class B Certificates
and the Class C Interest instruct the Trustee to such effect in the manner
required pursuant to subsection 9.02(a) of the Agreement.
ARTICLE IX
Certificates
Section 9.1. Book-Entry Certificates. The Class A Certificates and the
Class B Certificates shall be delivered as Book-Entry Certificates. The
Clearing Agency for the Class A Certificates and the Class B Certificates shall
be The Depository Trust Company, and the Class A Certificates and the Class B
Certificates shall be initially registered in the name of Cede & Co., its
nominee.
ARTICLE X
Miscellaneous Provisions
Section 10.1. Certain Matters Regarding the Class C Interest Holder.
Amounts payable to the Class C Interest Holder hereunder shall be applied in
accordance with the provisions of the Class C Supplemental Agreement.
Section 10.2. Ratification of Agreement. As supplemented by this
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
Section 10.3. Counterparts. This Supplement may be executed in two or
more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
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Section 10.4. Governing Law. THIS SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING THE UCC AS IN
EFFECT IN THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.5. Notices. All directions, notices and instructions to the
Trustee shall be in writing (which may be facsimile).
Section 10.6. Amendments. This Supplement may be amended by the Seller
without the consent of the Servicer, the Trustee or any Investor
Certificateholder if the Seller provides the Trustee with (i) an Opinion of
Counsel to the effect that such amendment or modification would reduce the risk
that the Trust would be treated as taxable as a publicly traded partnership
pursuant to Code section 7704 and (ii) an Officer's Certificate that such
amendment or modification would not materially and adversely affect any
Investor Certificateholder, provided that no such amendment shall be deemed
effective without (i) the Trustee's consent, if the Trustee's rights, duties
and obligations hereunder are thereby modified and (ii) the Trustee having
obtained written assurance that such amendment or modification will not, by
itself, lower the then-current ratings on the Series ____-__ Certificates. The
Seller shall provide the Rating Agencies with prior written notice of any such
amendment or modification.
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IN WITNESS WHEREOF, the undersigned have caused this Supplement to
be duly executed and delivered by their respective duly authorized officers on
the day and year first above written.
FLEET BANK (RI), NATIONAL
ASSOCIATION,
Seller and Servicer,
By:
------------------------
Name:
Title:
BANKERS TRUST COMPANY,
Trustee
By:
------------------------
Name:
Title:
[Signature Page for Series ____-__ Supplement]
51
<PAGE> 1
Exhibit 5.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
May 13, 1998
Fleet Bank (RI), National Association
50 Kennedy Plaza
Providence, Rhode Island 02903
RE: FLEET CREDIT CARD MASTER TRUST II
FLEET BANK (RI), NATIONAL ASSOCIATION (SELLER AND SERVICER)
REGISTRATION STATEMENT ON FORM S-3 NO. 333-
Ladies and Gentlemen:
We have acted as counsel for Fleet Bank (RI), National Association, a
national banking association (the "Bank"), in connection with the Registration
Statement on Form S-3 (the "Registration Statement") filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), for the registration under the Act of Asset Backed Certificates
(collectively, the "Certificates") to be issued from time to time in series
(each, a "Series") and representing undivided interests in the Fleet Credit
Card Master Trust II (the "Trust"). Such Certificates will be issued pursuant
to the Amended and Restated Pooling and Servicing Agreement, as amended (the
"Pooling and Servicing Agreement"), between the Bank, as Seller and Servicer by
assignment from the previous seller and servicer, and Bankers Trust Company, as
Trustee.
We have examined such instruments, documents and records as we
deemed relevant and necessary as a basis of our opinion hereinafter expressed.
In such examination, we have assumed the following: (a) the authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; and (c) the truth,
accuracy and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed.
Based on such examination, we are of the opinion that when the
issuance of each Series of the Certificates has been duly authorized by the
appropriate corporate action and the Certificates of such Series have been duly
executed, authenticated and delivered in accordance with the Pooling and
Servicing Agreement, and sold in the manner described in the Registration
Statement, any amendment thereto and the prospectus and prospectus supplement
relating thereto, the Certificates will be legally issued, fully paid,
non-assessable and binding obligations
<PAGE> 2
Fleet Bank (RI), National Association
May 13, 1998
Page 2
of the Trust and the holders of the Certificates of such Series will be
entitled to the benefits of such Pooling and Servicing Agreement, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the rights of creditors generally and general
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and fair dealing, and the possible unavailability of
specific performance or injunctive relief, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and the prospectus contained therein. In giving such
consent, we do not admit that we are "experts," within the meaning of the term
as used in the Act or the rules and regulations of the Securities and Exchange
Commission issued thereunder, with respect to any part of the Registration
Statement, including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ ORRICK HERRINGTON & SUTCLIFFE LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE> 1
Exhibit 8.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
May 13, 1998
Fleet Bank (RI), National Association
50 Kennedy Plaza
Providence, Rhode Island 02903
Re: FLEET CREDIT CARD MASTER TRUST II
FLEET BANK (RI), NATIONAL ASSOCIATION (SELLER AND SERVICER)
REGISTRATION STATEMENT ON FORM S-3 NO. 333-
Ladies and Gentlemen:
We have acted as counsel for Fleet Bank (RI), National
Association, a national banking association (the "Bank"), in connection with the
preparation of the Registration Statement on Form S-3 (the "Registration
Statement") filed on May 13, 1998 with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"), for the registration
under the Act of Asset Backed Certificates (collectively, the "Certificates") to
be issued from time to time in series (each, a "Series") and representing an
undivided interest in Fleet Credit Card Master Trust II (the "Trust"). Such
Certificates will be issued pursuant to a pooling and servicing agreement (the
"Pooling and Servicing Agreement"), between the Bank, as Seller and Servicer by
assignment from the previous seller and servicer, and Bankers Trust Company, as
Trustee.
We hereby confirm that the statements set forth in the
prospectus relating to the Certificates (the "Prospectus") forming a part of the
Registration Statement under the headings "Summary of Terms --Tax Status" and
"Federal Income Tax Consequences," and the statements set forth in the
representative form of prospectus supplement relating to the Certificates (the
"Prospectus Supplement") forming a part of the Registration Statement under the
headings "Summary of Terms -- Tax Status" and "Federal Income Tax Consequences,"
which statements have been prepared by us, to the extent that they constitute
matters of law or legal conclusions with respect thereto, are correct in all
material respects, and we hereby confirm the opinions set forth therein.
We note that the Prospectus and form of Prospectus Supplement
do not relate to a specific transaction. Accordingly, the above-referenced
description of federal income tax consequences and opinions may, under certain
circumstances, require modification in the context of an actual transaction.
<PAGE> 2
Fleet Bank (RI), National Association
May 13, 1998
Page 2
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. In giving such consent, we do not admit that we
are "experts" within the meaning of the term used in the Act or the rules and
regulations of the Securities and Exchange Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
