As filed with the Securities and Exchange Commission on October 28, 1999
Registration No. 333-10970
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
AMENDMENT NO. 2
TO
FORM F-1
Registration Statement under the Securities Act of 1933
Gracechurch Card Funding (No. 1) PLC Gracechurch Receivables Trustee Limited
Barclaycard Funding PLC
(Exact name of Registrants as specified in their charters)
England and Wales
(State or other jurisdiction of incorporation or organisation)
----------------------
200 Aldersgate Street, Grenville Street, 54 Lombard Street,
London EC1A 4JJ St Helier, London EC3P 3AH
United Kingdom Jersey JE2 4UF United Kingdom
44-171-600-1000 44-1534-814814 44-171-699-5000
(Address, including zip code, and telephone number, including area code, of
principal executive offices of Registrants)
6189 None
(Primary Standard Industrial (I.R.S. Employer
Classification Code Numbers) Identification Numbers)
Patricia Ryan Guarino
Barclays Bank PLC
222 Broadway
New York, New York 20038
(212)-412-1383
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------
Copies to:
Paul Weiffenbach Kevin Ingram
Orrick, Herrington & Sutcliffe Clifford Chance
1 Threadneedle Street 200 Aldersgate Street
London EC2R 8AW London EC1A 4JJ
United Kingdom United Kingdom
----------------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this registration statement.
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, check the following box. |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
Calculation of Registration Fee
<TABLE>
<CAPTION>
==================================================================================================================================
Title of each class Proposed maximum Proposed maximum
of securities to be amount to be offering aggregate Amount of
registered registered (1) price per unit (2) offering price (1) registration fee(4)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Floating Rate Asset-
Backed Notes, Class A.. $1,000,000 100% $1,000,000 $278
Floating Rate Asset-
Backed Notes, Class B.. $1,000,000 100% $1,000,000 $278
Medium Term Notes (3)
Investor Certificates(3)
==================================================================================================================================
</TABLE>
(1) Includes an indeterminate amount of securities that are to be offered or
sold in connection with market-making activities by Barclays Capital Inc.,
an affiliate of the transferor and servicer.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act.
(3) Gracechurch Receivables Trustee Limited is the registrant for the Investor
Certificates, Barclaycard Funding PLC is the registrant for the Medium
Term Notes and Gracechurch Card Funding (No. 1) PLC is the registrant for
the Class A Notes and the Class B Notes. The Investor Certificates and the
Medium Term Notes are being issued to Barclaycard Funding PLC and
Gracechurch Card Funding (No. 1) PLC, respectively, and will be the
primary sources of payments on the Class A Notes and the Class B Notes.
The Medium Term Notes and the Investor Certificates are not being offered
directly to investors.
(4) Previously paid.
The registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrants
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>
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The information in this prospectus is not complete and may be amended. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
================================================================================
Subject to Completion, Dated October *, 1999
Prospectus
- -------------------------------------------------------------------------------
$1,000,000,000
Gracechurch Card Funding (No. 1) PLC
Issuer
Barclays Bank PLC
Transferor, Servicer and Trust Cash Manager
$900,000,000 Class A Floating Rate Asset-Backed Notes
$50,000,000 Class B Floating Rate Asset-Backed Notes
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Public per Underwriting Proceeds To Issuer
Class Interest Rate Note Discount per Note per Note
----------------------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
A One-month LIBOR plus *% *% $*
*% annually
B One-month LIBOR plus *% *% $*
*% annually
</TABLE>
* The ultimate source of payment on the offered notes will be collections
on consumer credit and charge card accounts of Barclaycard originated in
the United Kingdom.
* The transaction documents, other than the depository agreement, will be
governed by the laws of England and Wales. The depository agreement will
be governed by New York law.
* A separate currency swap for each class of the offered notes will be used
to convert the sterling amounts received from the medium term notes into
U.S. dollar amounts for payment on the offered notes.
Please consider carefully the risk factors beginning on page 7 in this
prospectus.
A note is not a deposit and neither the notes nor the underlying receivables
are insured or guaranteed by any United Kingdom or United States governmental
agency.
The notes offered in this prospectus are obligations of the issuer only. The
issuer will only have a limited pool of assets to satisfy its obligations on
the notes. The notes are not obligations of Barclays Bank PLC or any of its
affiliates.
The total price to the public is $*, the total amount of the underwriting
discount is $*, and the total amount of proceeds plus accrued interest and
before deduction of expenses is $*.
We have applied to have the offered notes listed on the London Stock Exchange.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the offered notes or determined that
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offence.
- -------------------------------------------------------------------------------
Underwriters of the Class A Notes
Barclays Capital
* *
* *
Underwriter of the Class B Notes
Barclays Capital
*, 1999
<PAGE>
Important Notice About Information Presented In This Prospectus
We include cross-references to captions in this prospectus where you can
find further related discussions. The following table of contents provides the
pages on which these captions are located.
Table Of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary................................................... 1
Program Structural Summary.......................................... 1
Structural Diagram of Barclaycard Securitisation Program............ 2
The Issuer.......................................................... 3
The Note Trustee, Principal Paying Agent and Agent Bank............. 3
The Notes........................................................... 3
The Closing Date.................................................... 3
The MTN Issuer and Initial Investor Beneficiary..................... 3
The Medium Term Notes............................................... 3
The Security Trustee................................................ 4
The Receivables..................................................... 4
The Initial Transferor, Servicer, Trust Cash Manager and Excess
Interest Beneficiary ............................................... 4
The Receivables Trustee............................................. 4
The Receivables Trust............................................... 4
The Investor Certificates........................................... 4
The Swap Counterparty............................................... 5
The Swap Agreements................................................. 5
Optional Early Redemption........................................... 5
Notices............................................................. 5
United Kingdom Tax Status........................................... 5
United States Federal Income Tax Status............................. 6
ERISA Considerations for Investors.................................. 6
Risk Factors......................................................... 7
Introduction......................................................... 19
U.S. Dollar Presentation............................................. 19
The Issuer........................................................... 19
Directors and Secretary............................................. 19
Management's Discussion And Analysis Of Financial Condition......... 20
Sources of Capital and Liquidity................................... 20
Results of Operations.............................................. 20
Expenses Loan Agreement............................................. 20
Use Of Proceeds...................................................... 20
The MTN Issuer....................................................... 20
Directors and Secretary............................................. 21
Management's Discussion and Analysis of Financial Condition......... 21
Sources of Capital and Liquidity................................... 21
Results of Operations.............................................. 21
The Receivables Trustee.............................................. 21
Management and Activities........................................... 22
Barclays Bank PLC.................................................... 23
Business............................................................ 23
Year 2000 Compliance................................................ 24
Credit Card Usage in the United Kingdom.............................. 25
Barclaycard and the Barclaycard Card Portfolio....................... 25
General............................................................. 25
Description of Great Universal Stores Home Shopping Ltd............. 25
Acquisition and Use of Card Accounts................................ 26
Description of Processing........................................... 26
Billing and Payment................................................. 26
Delinquency and Loss Experience..................................... 27
Delinquency Experience -- Bank Portfolio........................... 28
Loss Experience -- Bank Portfolio.................................. 29
Provision for Bad and Doubtful Debt -- Bank Portfolio.............. 29
The Receivables...................................................... 30
Assignment of Receivables to the Receivables Trustee................ 30
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Redesignation and Removal of Accounts............................... 32
Discount Option Receivables......................................... 32
Special Fees........................................................ 33
Interchange......................................................... 33
Annual Fees......................................................... 33
Reductions in Receivables, Early Collections and Credit Adjustments. 33
Representations..................................................... 34
Amendments to Card Agreement and Card Guidelines.................... 36
Summary of Securitised Portfolio as of 30 September, 1999........... 36
Composition by Account Balance -- Securitised Portfolio............ 36
Composition by Credit Limit -- Securitised Portfolio............... 36
Composition by Account Age -- Securitised Portfolio................ 37
Geographic Distribution of Accounts -- Securitised Portfolio....... 37
Composition by Product Line -- Securitised Portfolio............... 37
Maturity Assumptions................................................ 38
Cardholder Monthly Payment Rates -- Bank Portfolio.................. 38
Receivables Yield Considerations.................................... 39
Yield Experience -- Bank Portfolio................................. 40
The Receivables Trust................................................ 41
General Legal Structure............................................. 41
The Receivables Trust's Property.................................... 42
General Entitlement of Beneficiaries to Trust Property.............. 43
Allocation and Application of Collections........................... 44
Acquiring Additional Entitlements to Trust Property and Payments for
Receivables ........................................................ 46
Non-Petition Undertaking of Beneficiaries........................... 47
Trust Pay Out Events................................................ 47
Termination of the Receivables Trust................................ 48
Amendments to the Declaration of Trust and Trust Cash Management
Agreement .......................................................... 48
Disposals........................................................... 48
Trustee Payment Amount.............................................. 49
Servicing of Receivables and Trust Cash Management................... 49
General -- Servicing................................................ 49
General -- Trust Cash Management.................................... 50
Servicing and Trust Cash Manager Compensation....................... 50
Termination of Appointment of Servicer.............................. 52
Termination of Appointment of Trust Cash Manager.................... 53
Series 99-1.......................................................... 55
General............................................................. 55
Beneficial Entitlement of the MTN Issuer to Trust Property.......... 55
Allocation, Calculation and Distribution of Finance Charge
Collections to the MTN Issuer ...................................... 57
Class A Investor Interest........................................... 58
Class B Investor Interest........................................... 59
Class C Investor Interest........................................... 60
Revolving Period.................................................... 61
Controlled Accumulation Period...................................... 61
Regulated Amortisation Period....................................... 62
Rapid Amortisation Period........................................... 63
Allocation, Calculation and Distribution of Principal Collections to
the MTN Issuer ..................................................... 63
Postponement of Controlled Accumulation Period...................... 67
Unavailable Principal Collections................................... 67
Shared Principal Collections........................................ 68
Defaulted Receivables; Investor Charge-Offs......................... 68
Excess Spread....................................................... 70
Extra Amount........................................................ 71
Aggregate Investor Indemnity Amount................................. 71
Principal Funding Account........................................... 71
Reserve Account..................................................... 72
Distribution Ledgers................................................ 73
Trustee Payment Amount.............................................. 73
Qualified Institutions.............................................. 73
Series 99-1 Pay Out Events.......................................... 74
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Your Payment Flows.................................................. 76
The Trust Deed....................................................... 78
The Notes And The Global Notes....................................... 79
Terms and Conditions of the Notes.................................... 82
The Swap Agreements.................................................. 93
General............................................................. 93
Common Provisions of the Swap Agreements............................ 94
The Medium Term Notes................................................ 96
Material Legal Aspects of the Receivables............................ 98
Consumer Credit Act 1974............................................ 98
Transfer of Benefit of Receivables.................................. 99
United Kingdom Taxation Treatment Of The Notes....................... 100
Overview............................................................ 100
Taxation of US Residents............................................ 100
Taxation of Interest Paid........................................... 101
Proposed European Directive on the Taxation of Savings.............. 102
Ownership and Disposal, Including Redemption, of the Notes by United
Kingdom Corporation Tax Payers ..................................... 102
Stamp Duty and Stamp Duty Reserve Tax............................... 103
United Kingdom Inheritance Tax...................................... 103
Taxation of the MTN issuer and the issuer........................... 103
Taxation of the Receivables Trustee................................. 103
United States Federal Income Tax Consequences........................ 104
Overview............................................................ 104
Tax Status of the Receivables Trust, the MTN Issuer and the Issuer.. 104
United States Holders............................................... 105
Interest Payments and Distributions................................. 106
Sourcing........................................................... 106
Disposition or Retirement of Investment............................. 106
Sourcing........................................................... 106
Investment in a Passive Foreign Investment Company.................. 107
Sourcing........................................................... 108
Controlled Foreign Corporation Status............................... 108
Non-United States Holders........................................... 108
Backup Withholding and Information Reporting........................ 108
ERISA Considerations................................................. 109
Enforcement of Foreign Judgements in England And Wales............... 111
Underwriting......................................................... 111
Ratings of the Offered Notes......................................... 113
Experts.............................................................. 113
Legal Matters........................................................ 114
Reports to Noteholders............................................... 114
Where You Can Find More Information.................................. 114
Listing and General Information...................................... 114
Index of Terms for Prospectus........................................ 117
Index of Appendices.................................................. 119
Appendix A.......................................................... A1
Appendix B.......................................................... B1
Appendix C.......................................................... C1
Appendix D.......................................................... D1
Appendix E.......................................................... E1
Appendix F.......................................................... F1
Appendix G.......................................................... G1
</TABLE>
(iii)
<PAGE>
Prospectus Summary
The following is a brief overview of the key aspects of the class A notes
and the class B notes, which we refer to as the offered notes. You need to read
all of this prospectus to fully understand the terms of the offered notes.
Series Structure
<TABLE>
<CAPTION>
Class of Notes Initial Principal Balance Sterling Equivalent % of Total
- ------------------------------- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C>
Class A*....................... $900,000,000 L546,345,000* 90%
Class B*....................... $50,000,000 L30,352,500* 5%
Class C*....................... $50,000,000 L30,352,500* 5%
Total*......................... $1,000,000,000 L607,050,000* 100%
</TABLE>
- -------------------------------------------------------------------------------
* sterling equivalent obtained by converting dollars to sterling at the
exchange rate of L0.60705 to $1.
<TABLE>
<CAPTION>
Class A Notes Class B Notes
<S> <C> <C>
Anticipated Ratings:..... "AAA" or its equivalent "A" or its equivalent
from four from four
internationally internationally
recognised rating recognised
agencies. rating agencies.
Credit Enhancement:...... Subordination of the
class B and class C Subordination of the
notes. class C Notes.
Interest Rate:........... One-month LIBOR, plus One-month LIBOR, plus
*% annually. *% annually.
Interest Accrual Method:. Actual/360. Actual/360.
Interest Payment Dates:.. The 15th day of each The 15th day of each
calendar month. calendar month.
First Interest Payment January 2000 interest January 2000 interest
Date: .................. payment date. payment date.
Scheduled Redemption November 2002 interest November 2002 interest
Date: .................. payment date. payment date.
Legal Final Redemption November 2004 interest November 2004 interest
Date: .................. payment date. payment date.
Clearance/Settlement:.... DTC/Euroclear/ DTC/Euroclear/
Cedelbank. Cedelbank.
Minimum Denomination:.... $1,000. $1,000.
</TABLE>
Program Structural Summary
The following is a brief summary description of the Barclaycard
securitisation program, of which your notes will form a part.
Barclaycard, a division of Barclays Bank PLC, will assign all of its
present and future beneficial interest in receivables in designated revolving
credit and charge card accounts originated by Barclaycard in the United
Kingdom. Only the receivables will be assigned. The accounts will be retained
by Barclaycard.
The receivables will be assigned to a special purpose company,
incorporated offshore in Jersey, Channel Islands, acting as receivables
trustee. The receivables trustee will hold the receivables on trust for
Barclaycard, as transferor beneficiary and excess interest beneficiary, and a
special purpose subsidiary of Barclays called the MTN issuer, as investor
beneficiary.
The receivables trustee may issue multiple series of investor certificates
to the MTN issuer. Each series of investor certificates will represent an
undivided beneficial interest in the receivables trust. They will entitle the
MTN issuer to payments of interest and principal payable from collections on
the receivables.
The MTN issuer will finance its acquisition of an undivided beneficial
interest in the receivables trust, evidenced by the issuance of each series of
investor certificates, by issuing series of limited recourse medium term notes
to individual issuers and credit enhancement providers, if any. The limited
recourse nature of the medium term notes will ensure that the MTN issuer is
only ever liable under a series of medium term notes for payments of principal
and interest equal to what is paid under the corresponding series of investor
certificates.
The issuers, in turn, will finance their purchases of each series of
medium term notes by issuing series of notes to investors. Your series of
notes, series 99-1, will be the first series of notes issued under this
program.
1
<PAGE>
Structural Diagram of Barclays Bank PLC Securitisation Program
[GRAPHIC OMITTED]
2
<PAGE>
The Issuer
Gracechurch Card Funding (No. 1) PLC is a public limited company
incorporated in England and Wales. Its registered office is at 200 Aldersgate
Street, London EC1A 4JJ. Its telephone number is 44-171-600-1000.
The issuer is a newly created special purpose company. The purpose of the
issuer is to issue the notes which represent its asset-backed debt obligations.
The issuer will not engage in any unrelated activities.
The Note Trustee, Principal Paying Agent and Agent Bank
The note trustee, principal paying agent and agent bank is The Bank of New
York, London Branch. The note trustee will act as trustee for the noteholders
under the trust deed. The principal paying agent will make payments on the
notes. The agent bank will calculate the interest rate on the notes. The Bank
of New York, London Branch's address is One Canada Square, London E14 5AL,
United Kingdom. Its telephone number is 44-171-570-1784.
The Notes
In this document, we are offering two classes of notes:
* floating rate class A notes with an initial principal balance of
$900,000,000.
* floating rate class B notes with an initial principal balance of
$50,000,000.
The class A notes and the class B notes represent asset-backed debt
obligations of the issuer. The class A notes are secured by payments received
by the issuer from the class A MTN and payments received from the swap
counterparty. The class B notes are secured by payments received by the issuer
from the class B MTN and payments received from the swap counterparty. The
issuer's ability to make these payments will ultimately be dependent upon
collections Barclaycard receives on the receivables.
We will issue the notes under the trust deed. The notes will also be
subject to a paying agency and agent bank agreement and a depository agreement.
The security for the notes will be created under a deed of charge between the
issuer and the note trustee. The terms of the notes will be contained in the
trust deed, the paying agency and agent bank agreement, the depository
agreement and the deed of charge.
On the date the offered notes are issued, the floating rate class C notes
with an initial principal balance of $50,000,000 will be offered in
transactions exempt from the registration requirements under the Securities
Act. The class C notes are not being offered by this prospectus. The class C
notes will also represent asset-backed debt obligations of the issuer secured
by payments received by the issuer from the class C MTN and payments received
from the swap counterparty.
The class B notes will be subordinated to the class A notes. The class C
notes will be subordinated to both the class A notes and the class B notes.
If there is an event of default under the notes, the note trustee, on your
behalf, can appoint a receiver of the issuer who would continue to collect
amounts paid by the MTN issuer under the medium term notes. The note trustee
would also be able to sell the medium term notes. In addition, the note trustee
may give an enforcement notice to the issuer declaring the notes to be
immediately due and payable. A declaration that the notes have become
immediately due and payable will not, of itself, accelerate the timing or
amount of redemption of the notes.
The Closing Date
We will issue the notes on or about 23 November, 1999.
The MTN Issuer and Initial Investor Beneficiary
The MTN issuer is Barclaycard Funding PLC, a public limited company
incorporated in England and Wales. Its registered office is located at 54
Lombard Street, London EC3P 3AH. The MTN issuer is a subsidiary of Barclays.
The MTN issuer was established to issue secured limited recourse medium
term notes under a programme.
The Medium Term Notes
On the closing date, the MTN issuer will sell to the issuer three limited
recourse medium term notes issued as a series under its medium term note
programme. These limited recourse medium term notes will be called the class A
MTN, the class B MTN and the class C MTN. The MTN issuer has made an
application to the London Stock Exchange for the medium term notes to be
admitted to the official list of the London Stock Exchange.
The issuer will make payments of interest and principal on the class A
notes, the class B notes and the class C notes from respective payments of
interest and principal made by the MTN issuer on the class A MTN, the class B
MTN and the class C MTN and from amounts paid by the swap counterparty.
If an event of default occurs under the medium term notes, the security
trustee, on behalf of the issuer as holder of the medium term notes, can
appoint a receiver of the medium term notes issuer who would continue to
collect amounts paid on the investor certificates. The security trustee would
also be able to sell the investor certificates. In addition, the security
trustee may give an enforcement notice to the medium term notes issuer
declaring the medium term notes to be immediately due and
3
<PAGE>
payable. A declaration that the medium term notes have become immediately due
and payable will not, of itself, accelerate the timing or amount of redemption
of the medium term notes.
The Security Trustee
The security trustee is The Bank of New York, London Branch. The security
trustee will act as trustee for the holder of the medium term notes under the
security trust and cash management deed.
The Receivables
The receivables consist of amounts charged by cardholders to designated
MasterCard* and VISA* revolving credit and charge card accounts of Barclaycard
originated or acquired in the United Kingdom for the acquisition of merchandise
and services and cash advances. The receivables also include the periodic
finance charges and fees charged to the credit and charge card accounts and
interchange.
The Initial Transferor, Servicer, Trust Cash Manager and Excess Interest
Beneficiary
Barclays Bank PLC originates the credit and charge card receivables
through its business unit, Barclaycard. Barclaycard's principal place of
business is located at 1234 Pavilion Drive, Northampton NN4 75G, United
Kingdom. Barclaycard will transfer the credit and charge card receivables to
the receivables trustee.
Barclaycard will be the initial transferor of the receivables trust.
Barclaycard will service the receivables in the receivables trust.
Barclaycard may not resign as servicer, but may be terminated and a successor
servicer may be appointed in its place if a servicer default occurs. In the
future, additional transferors, if any, may act as co-servicers.
Barclaycard will also be appointed as the initial trust cash manager to
manage the bank accounts of the receivables trustee for each series of investor
certificates.
Barclaycard will be the excess interest beneficiary of the receivables
trust.
Barclays Bank PLC is a bank incorporated in England and Wales. Its head
office is located at 54 Lombard Street, London EC3P 3AH, United Kingdom. It is
regulated in the United Kingdom by the Financial Services Authority. Its
telephone number is 44-207-699-5000.
* MasterCard and VISA are U.S. federally registered servicemarks of MasterCard
International Inc. and VISA U.S.A., Inc. and are registered trademarks in the
United Kingdom of MasterCard International Inc. and VISA International Service
Association.
The Receivables Trustee
Gracechurch Receivables Trustee Limited, the receivables trustee, is a
private limited company incorporated under the laws of Jersey, Channel Islands
on 29 September, 1999. Its registered office is located at Normandy House,
Grenville Street, St Helier, Jersey JE2 4UF. The shares of the receivables
trustee are held by a professional trust company -- not affiliated with
Barclays -- on trust for charitable purposes. This means that any profits
received by the receivables trustee, after all amounts have been paid on the
investor certificates, will be paid to charities in Jersey selected at the
discretion of the professional trust company. The payments on your notes will
not be affected by this arrangement. The receivables trustee will act as
trustee of the receivables trust.
The Receivables Trust
The receivables trust will be formed by a declaration of trust and trust
cash management agreement.
The purpose of the receivables trust is to acquire credit and charge card
receivables of Barclaycard and any additional transferors and to make payments
on the investor certificates. The receivables trustee may issue other series of
investor certificates, representing undivided beneficial interests in the
receivables trust, from time to time. The receivables trustee may not engage in
any unrelated activities.
The Investor Certificates
The MTN issuer will pay the proceeds of the medium term notes to the
receivables trustee to acquire, for each class of medium term notes, separate,
undivided beneficial interests in the receivables trust. These undivided
beneficial interests will be the first series of the receivables trust and will
be represented by a class A investor certificate, a class B investor
certificate and a class C investor certificate. The receivables trustee may
issue multiple series of investor certificates from time to time.
The MTN issuer will make payments of principal and interest on the class A
MTN, the class B MTN and the class C MTN from respective payments of principal
and interest made on the class A investor certificate, the class B investor
certificate and the class C investor certificate.
The receivables trustee will be entitled to use the proceeds of the
investor certificates paid to it by the MTN issuer -- together with monies paid
to it by the other beneficiaries of the trust -- to accept an offer by the
transferor to assign to the receivables trustee the present and future
receivables generated by the designated credit and charge card accounts of the
transferor.
The investor certificates will entitle the MTN issuer to receive payment
of a portion of collections of the credit and charge card receivables assigned
by the transferor to the receivables trustee. The MTN
4
<PAGE>
issuer will use those collections for the redemption of first the class A MTN,
then the class B MTN and then the class C MTN.
If a pay out event occurs, the rapid amortisation period or the regulated
amortisation period may begin, which could cause an early redemption of your
notes. If the transferor beneficiary or the excess interest beneficiary were to
become insolvent, the receivables trustee may be required to liquidate the
receivables. In addition, some breaches of representations made by the
transferor will require the transferor to repurchase the receivables.
The Swap Counterparty
The swap counterparty for the class A notes, the class B notes and the
class C notes will be Barclays Bank PLC acting through Barclays Capital, its
investment banking division in the United Kingdom. The swap counterparty's
address is 5 The North Colonnade, Canary Wharf, London E14 4BB, United Kingdom.
The Swap Agreements
Barclaycards' cardholders will make payments to Barclaycard in the lawful
currency of the United Kingdom, which is called pounds sterling. Accordingly,
payments on the investor certificates and the medium term notes will also be
made in sterling. So that you can receive payments on your class A notes or
class B notes in United States dollars, the issuer will enter into two swap
agreements with the swap counterparty. The issuer will also enter into a swap
agreement with the swap counterparty to make payments in dollars on the class C
notes.
Under the swap agreement for the class A notes, the issuer will pay to the
swap counterparty the portion of sterling amounts received on the class A MTN
allocated to make payments on the class A notes, and the swap counterparty will
convert those sterling amounts into dollars. Under the swap agreement for the
class B notes, the issuer will pay to the swap counterparty the portion of
sterling amounts received on the class B MTN allocated to make payments on the
class B notes, and the swap counterparty will convert those sterling amounts
into dollars.
Optional Early Redemption
The issuer has the option to redeem all of the remaining notes when their
principal balance is reduced to less than 10% of their original principal
balance.
If an optional early redemption occurs, you will receive a final
distribution equal to the entire unpaid principal balance of your notes plus
any accrued and unpaid interest.
Notices
Any notices that are required to be given by the terms of your notes will
be deemed to be validly given if they are published in the Financial Times or
another leading English language daily newspaper in London.
United Kingdom Tax Status
Subject to important qualifications and conditions set out under "United
Kingdom Taxation Treatment of the Notes", including as to final documentation
and assumptions, Clifford Chance, as special United Kingdom tax advisers, are
of the opinion that:
* payment of principal and interest on the offered notes will be subject to
taxation in the United Kingdom as described in the section of this
prospectus headed "United Kingdom Taxation Treatment of the Notes";
* no UK withholding tax will be required on these payments to any offered
noteholder;
* no UK stamp duty or stamp duty reserve tax is payable on the issue of the
global notes or on the issue or transfer by delivery of a note in
definitive form;
* the MTN issuer and the issuer will be subject to UK corporation tax, at a
maximum rate of 30 per cent., on the profit reflected in their respective
profit and loss accounts as increased by the amounts of any non-
deductible expenses or losses. The profit in the profit and loss account
will not exceed 1 basis point of the principal amount outstanding on the
medium term notes in the case of the MTN issuer, or on the notes in the
case of the issuer. Examples of non-deductible expenses and losses may
include, for the MTN issuer: (1) amounts paid by the MTN issuer to the
receivables trustee to cover the receivables trustee's fees and expenses,
and (2) any losses of principal which cannot be met out of excess spread
and are not reflected by account-specific provisions in the MTN issuer's
statutory accounts; and for the issuer, certain expenses related to cash
management; and
* the receivables trustee will have no UK tax liabilities apart from a
liability to UK income tax or corporation tax on any amounts, such as
trustee fees, which are paid to the receivables trustee for its own
benefit; and accordingly, the receivables trustee will have no liability
to UK tax in relation to amounts which it receives on behalf of the MTN
issuer or amounts which it is obliged to pay to the MTN issuer.
Subject to final documentation in a form satisfactory to them and which is
not inconsistent with the descriptions in this prospectus other than
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the exhibits to this prospectus, Clifford Chance, as special UK tax advisers,
expect to give an opinion at closing by reference to the final documentation and
based on certain assumptions listed in that opinion, which will cover in detail
the matters referred to under this heading "United Kingdom Tax Status". See
"Risk Factors. Taxable Nature of MTN Issuer and Issuer Could Cause a Loss on
Your Notes".
United States Federal Income Tax Status
As is further described herein, special U.S. tax counsel is of the opinion
that each of the receivables trust, the MTN issuer and the issuer will not be
subject to United States federal income tax.
The issuer intends to treat the class A notes and the class B notes as debt
for United States federal income tax purposes. Each noteholder, by holding a
beneficial interest in a note, will agree to conform to that treatment. However,
no ruling will be obtained from the IRS on the characterisation of the notes for
federal income tax purposes. Further, based on the absence of relevant legal
authority and the adverse impact on the characterisation determination of (1)
the nature and extent of the capitalisation of the issuer and (2) the effect of
a termination of a Swap Agreement on an investor's principal entitlement,
special U.S. tax counsel to the issuer is unable to render any legal opinion
with respect to whether the notes will be treated as debt for such purposes, and
it is possible that the class A notes and class B notes could be viewed as
equity interests in the issuer for such purposes. U.S. holders of class A notes
or class B notes that are treated as equity in the issuer likely would be
treated as owning shares in a passive foreign investment company.
If the class A notes or class B notes were treated as equity in a passive
foreign investment company, all or a portion of both distributions and gains on
the class A notes or class B notes as applicable generally would be taxable to
the holder as ordinary income, and would be taxable at the highest marginal
rates applicable to current and prior years during the holding period. Further,
all or a portion of the distributions could be subject to the additional
interest charge tax. This interest charge regime may be avoided by an investor
treated as owning equity in a passive foreign investment company if that
investor makes an effective qualified electing fund, or QEF election. A United
States holder making a QEF election generally would be required to include its
pro rata share of the issuer's ordinary income and net capital gains in income
for each taxable year. In general, a QEF election would be required to be made
on or before the due date for filing a United States holders' federal income tax
return for the first taxable year for which it holds a note. Alternatively, it
may be possible for an investor to avoid the interest charge regime applicable
to equity in a passive foreign investment company by making an election to
account for its investment using a mark-to-market method of tax accounting,
under which it would take into account accrued gains and losses on its
investment in the class A notes or class B notes as applicable during the tax
years to which they relate, treating all related income and loss as ordinary
income and loss. However, the applicability of the mark-to-market election is
dependent upon certain facts -- such as the frequency of secondary market
trading of the class A notes and the class B notes -- as to which there is
uncertainty and, accordingly, as to which no assurance is possible. Should
neither of the foregoing elections effectively be made, investors would be
subject to the tax rules applicable to investors in passive foreign investment
companies described above.
Special U.S. federal income tax counsel to the issuer, Orrick, Herrington
and Sutcliffe LLP, have prepared and reviewed the summary of federal income tax
consequences set forth in this prospectus, and renders the United States
federal income tax opinions contained in this prospectus.
See "United States Federal Income Tax Consequences".
ERISA Considerations for Investors
Subject to important considerations described under "ERISA Considerations"
in this prospectus, the class A notes are eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts.
The class B notes are not eligible for purchase by persons investing
assets of employee benefit plans or individual retirement accounts.
6
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Risk Factors
You should carefully consider the following risk factors before deciding
to invest in the notes offered by this prospectus.
You May Not Be Able to There currently is no secondary market for the
Sell Your Notes notes. The underwriters expect, but are not
obligated, to make a market in the notes. If no
secondary market develops, you may not be able
to sell your notes prior to maturity. We cannot
offer any assurance that one will develop or,
if one does develop, that it will continue.
Allocations of Charged-Off We anticipate that the servicer will charge off
Receivables Could Reduce or write off as uncollectable some of the
Your Payments receivables. Each class of investor interest in
the receivables trust will be allocated a
portion of those charged-off receivables. If
the amount of charged-off receivables allocated
to the class A investor interest exceeds the
amount of funds available to cover those
charge-offs, and the class C investor interest
and class B investor interest have been reduced
to zero, the class A investor interest will be
reduced. This could cause the holders of the
class A notes to not receive the full amount of
principal and interest due to them. Similarly,
if the amount of charged-off receivables
allocated to the class B investor interest
exceeds the amount of funds available to cover
those charge-offs and the class C investor
interest has been reduced to zero, the class B
investor interest will be reduced. This could
cause the holders of the class B notes to not
receive the full amount of principal and
interest due to them. See "Series 99-1:
Defaulted Receivables; Investor Charge-Offs".
The Class B Notes Bear The class B notes are subordinated in right of
Additional Risk Because They payment of principal to the class A notes.
are Subordinated to the Principal payments to the class B noteholders
Class A Notes will not be made until the class A noteholders
are paid in full. This could cause the class B
noteholders to not receive the full amount of
principal due to them.
Inability of Noteholders to Some series 99-1 pay out events will cause the
Receive the Full Percentage start of the regulated amortisation period
Allocation of Principal rather than the rapid amortisation period.
Collections During the During a regulated amortisation period, all of
Regulated Amortisation the principal collections allocated to the
Period Could Delay investor interest may not be used to make
Payments on Your Notes or payments of principal on the investor
Cause a Loss on Your Notes certificates as they would be during a rapid
amortisation period. Instead, principal
payments on the investor certificates -- and
thus ultimately on your notes -- will be
limited to the controlled deposit amount. This
could cause you to receive payments of
principal slower than you would during a rapid
amortisation period. Since some of the series
99-1 pay out events that result in the start of
a regulated amortisation period are caused by a
deterioration in the performance of the
receivables, a delay in the principal payments
on your notes could expose you to an increased
risk of losses on your notes or a delay in
payment on your notes.
Grouping of the MTN Issuer Contractual provisions will be contained in the
with Barclays for Tax security trust and cash management deed and the
Purposes Could Jeopardise other agreements to which the MTN issuer is a
the Bankruptcy Remote Status party by which the other parties to those
of the MTN Issuer Causing an agreements agree not to take any actions
Early Redemption of Your against the MTN issuer that might lead to its
Notes or a Loss on Your bankruptcy. Furthermore, the MTN issuer will be
Notes contractually restricted from undertaking any
business other than in connection with the
financings described in this prospectus. In
particular, the MTN issuer will be expressly
prohibited from incurring any additional
indebtedness, having any employees, owning any
premises and establishing or acquiring any
subsidiaries. Together, these provisions ensure
that the likelihood of the MTN issuer becoming
insolvent or bankrupt is remote.
Notwithstanding the steps that will be taken to
ensure that a bankruptcy of the MTN issuer will
be remote, it is likely that the MTN issuer
will be included in the Barclays group
registration for VAT purposes. If it is so
included, it will be technically liable, on a
joint and several basis, along with all other
companies included in the group registration,
for the whole of the group VAT liability.
Accordingly, potential secondary liabilities
for VAT of other Barclays companies within the
same VAT group could increase the likelihood of
the MTN issuer becoming insolvent. In addition,
there are provisions in the UK tax code that
are designed to enable the UK Inland Revenue to
collect corporation tax from one member of a
group where other members of the group have
7
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been involved in asset-stripping schemes that
are designed to evade corporate tax
liabilities.
In rating the notes, the rating agencies have
assessed the likelihood of secondary tax
liabilities arising having regard to the
existing short-term debt rating of the initial
transferor and historic levels of liabilities
to VAT with the VAT registered Barclays group
and, additionally, the mechanics that have been
put in place so as to minimise any such
liabilities that may fall on the MTN issuer.
However, if the MTN issuer were to become
liable for the VAT or corporate tax liabilities
of another member in the Barclays group, which
the MTN issuer was unable to meet, the UK
Inland Revenue could seek to put the MTN issuer
in bankruptcy. This could cause an early
redemption of your notes or a loss on your
notes.
Issuance of Additional The MTN issuer may issue new series of medium
Series May Adversely Affect term notes in connection with the issuance of
Your Rights by Diluting new series of investor certificates. The holder
Your Voting Power of the medium term notes of each series --
including the issuer -- may require the MTN
issuer, as investor beneficiary, to take action
or direct actions to be taken under the
declaration of trust and trust cash management
agreement or a supplement. However, the consent
or approval of holders of a percentage of the
total principal balance of the medium term
notes of all series might be necessary to
require or direct those actions. These actions
include terminating the appointment of the
servicer under the beneficiaries servicing
agreement or the trust cash manager under the
declaration of trust and trust cash management
agreement. Thus, the holder of any new series
of medium term notes will have voting rights
that will reduce the percentage interest of the
issuer as holder of the medium term notes.
Holders of medium term notes of other series --
or persons with the power to direct their
actions -- may have interests that do not
coincide with the interests of the issuer -- or
the persons with the power to direct the
issuer. This may restrict your ability to
ultimately direct the MTN issuer to take the
actions referred to above.
Insolvency of the None of the MTN issuer, the receivables trustee
Transferor May Result in an or the issuer has undertaken or will undertake
Inability to Repurchase any investigations, searches or other actions
Receivables to verify the details of the receivables --
other than steps taken by the issuer to verify
the details of the receivables that are
presented in this prospectus -- or to establish
the creditworthiness of any cardholder on the
designated accounts. The MTN issuer,
receivables trustee and the issuer will rely
solely on the representations given by the
transferor to the receivables trustee about the
receivables, the cardholders on the designated
accounts, the designated accounts and the
effect of the assignment of the receivables.
If any representation made by the transferor
about the receivables proves to have been
incorrect when made, the transferor will be
required to repurchase the affected receivables
from the receivables trustee. If the transferor
becomes bankrupt or insolvent, the receivables
trustee may be unable to compel the transferor
to repurchase receivables, and you could incur
a loss on your notes or an early redemption of
your notes.
Insolvency of the Issuer, The ability of each of the issuer, the MTN
the MTN Issuer or the issuer and the receivables trustee to meet its
Receivables Trustee Could obligations under the notes, the medium term
Cause an Early Redemption notes and the receivables securitisation
of Your Notes or a Loss on agreement and the declaration of trust and
Your Notes trust cash management agreement will depend
upon their continued solvency.
A company that has assets in the United Kingdom
will be insolvent if its
liabilities exceed its assets or if it is
unable to pay its debts as they fall due. Each
of the issuer, the MTN issuer and the
receivables trustee have been structured so
that the likelihood of their becoming insolvent
is remote. Each of these entities will be
contractually restricted from undertaking any
business other than in connection with the
financings described in this prospectus. They
each will be expressly prohibited from
incurring any additional indebtedness, having
any employees, owning any premises and
establishing or acquiring any subsidiaries.
Contractual provisions will be contained in
each of the agreements to which they are a
party that will prohibit the other parties to
those agreements from taking any actions
against these entities that might lead to their
bankruptcy. Together, these provisions help
ensure that the likelihood of any of these
entities becoming insolvent or bankrupt is
remote.
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Notwithstanding these actions, it is still
possible that the issuer, the MTN issuer or the
receivables trustee could become insolvent. If
this were to occur, you could suffer a loss on
your notes or an early redemption of your
notes.
Application of the Consumer The primary statute dealing with consumer
Credit Act 1974 May credit in the United Kingdom is the Consumer
Impede Collection Efforts Credit Act 1974. The Consumer Credit Act
and Could Cause Early applies to the transactions occurring on the
Redemption of Your Notes or designated accounts and, in whole or in part,
a Loss on Your Notes to the credit or charge card agreements. This
may have consequences for your investment in
the notes, because of the possible
unenforceability of, or possible liability for
misrepresentation or breach of contract, in
relation to an underlying credit or charge card
agreement.
If a credit or charge card agreement has not
been executed or modified in accordance with
the Consumer Credit Act, it may be
unenforceable against a cardholder without a
court order -- and in some instances may be
completely unenforceable. As is common with
many other UK credit card issuers, some of
Barclaycard's credit and charge card agreements
do not comply in all respects with the Consumer
Credit Act or other related legislation. As a
result, these agreements may be unenforceable
by Barclaycard against the cardholders without
a court order. The transferor gives no
guarantee that a court order could be obtained
if required. With respect to those credit or
charge card agreements which may not be
compliant, such that a court order could not be
obtained, the transferor estimates that this
could apply to approximately 1% of the
aggregate principal receivables in the
designated accounts on 30 September, 1999.
Barclaycard does not anticipate any material
increase in the percentage of these
receivables in the securitised portfolio. The
accounts that do not comply with the Consumer
Credit Act are still legal, valid and binding
obligations of the cardholder and it will still
be possible to collect payments and demand
arrears from cardholders willing to pay their
debt and demand arrears from cardholders who
are falling behind with their payments. The
transferor will have no obligation to repay or
account to a cardholder for any payments
received by a cardholder because of this
non-compliance with the Consumer Credit Act.
However, if losses arise on these accounts,
they will be written off and borne by the
investor beneficiary and transferor beneficiary
based on their interests in the receivables
trust.
Transactions involving the use of a credit or
charge card in the United Kingdom may
constitute transactions under debtor-creditor-
supplier agreements for the purposes of section
75 of the Consumer Credit Act. A debtor-
creditor-supplier agreement includes an
agreement by which the creditor, with knowledge
of its purpose, advances funds to finance a
debtor's purchase of goods or services from a
supplier.
Section 75 of the Consumer Credit Act provides
that if a supplier breaches a contract between
the supplier and a cardholder in a transaction
under a debtor-creditor-supplier agreement, or
if the supplier makes a misrepresentation about
the contract, the creditor may also be liable
to the cardholder for the breach or
misrepresentation. An example of a supplier's
breach of contract would include the supplier
selling the cardholder merchandise that is
defective or unsuitable for its purpose. In
these circumstances, the cardholder may have
the right to reduce the amount owed to the
transferor under his or her credit or charge
card account. This right would survive the sale
of the receivables to the receivables trustee.
As a result, the receivables trustee may not
receive the full amount otherwise owed by a
cardholder. However, the creditor will not be
liable where the cash price of the item or
service supplied underlying the claim is less
than L100 or greater than L30,000.
The receivables trustee has agreed to indemnify
the transferor for any loss suffered by the
transferor from a cardholder claim under
section 75 of the Consumer Credit Act. This
indemnity cannot exceed the original
outstanding principal balance of the affected
charges on a designated account.
The receivables trustee's indemnity will be
payable only from excess spread on the
receivables. Any amounts that the transferor
recovers from the supplier will reduce the
transferor's loss for purposes of the
receivables trustee's indemnity. This is
described under "Series 99-1: Aggregate
Investor Indemnity
9
<PAGE>
Amount". The transferor will have rights of
indemnity against suppliers under section 75 of
the Consumer Credit Act. The transferor may
also be able to charge-back the transaction in
dispute to the supplier under the operating
regulations of VISA or MasterCard.
If the transferor's loss for purposes of the
receivables trustee's indemnity exceeds the
excess spread available to satisfy the loss,
the transferor interest in the receivables
trust will be reduced by the amount of the
excess loss.
These consequences could result in you
incurring a loss on your notes or an early
redemption of your notes.
Failure to Notify Cardholders The transfer by the transferor to the
of the Transfer of Receivables receivables trustee of the benefit of the
Could Delay or Reduce receivables is governed by English law and does
Payments on Your Notes not give the receivables trustee full legal
title to the receivables. Notice to the
cardholders of the transfer would perfect the
legal title of the receivables trustee to the
receivables. The receivables trustee has agreed
that notice of the transfer will not be given
to cardholders, unless the transferor's long-
term senior unsecured indebtedness as rated by
Moody's, Standard & Poor's or Fitch IBCA were
to fall below Baa2, BBB or BBB, respectively.
The lack of notice has several legal
consequences that could delay or reduce
payments on your notes.
Until notice is given to a cardholder, the
cardholder will discharge his or her obligation
under the designated account by making payment
to the transferor.
Prior to the insolvency of the transferor,
unless notice was given to a cardholder who is
a depositor or other creditor of the
transferor, equitable set-offs may accrue in
favor of the cardholder against his or her
obligation to make payments to the transferor
under the designated account. These rights may
result in the receivables trustee receiving
reduced payments on the receivables. The
transfer of the benefit of any receivables to
the receivables trustee will continue to be
subject both to any prior equities that a
cardholder had and to any equities the
cardholder may become entitled to after the
transfer. Where notice of the transfer is given
to a cardholder, however, some rights of set-
off may not arise after the date notice is
given.
Failure to give notice to the cardholder means
that the receivables trustee would not take
priority over any interest of a later
encumbrancer or transferee of the transferor's
rights who has no notice of the transfer to the
receivables trustee. This could lead to a loss
on your notes.
Failure to give notice to the cardholder also
means that the transferor or the cardholder can
amend the card agreement without obtaining the
receivables trustee's consent. This could
adversely affect the receivables trustee's
interest in the receivables, which could lead
to a loss on your notes.
Competition in the UK The credit and charge card industry in the
Card Industry Could United Kingdom is highly competitive. There is
Lead to Early Redemption increased competitive use of advertising,
of Your Notes target marketing and pricing competition in
interest rates and annual cardholder fees as
both traditional and new card issuers seek to
expand or enter the UK market and compete for
customers.
New card issuers may rely on customer loyalty
and may have particular ways of reaching and
attracting customers. For example,
major supermarket retailers are promoting the
use of their own cards through extensive in-
store campaigns and low introductory interest
rates. Also, a number of new card issuers have
entered the UK market from the United States.
Some of these U.S. issuers have experience in
the utilisation of cardholder data gained in
the United States greater than that of
Barclaycard that could allow them to increase
their number of new cardholders, which may lead
to a competitive advantage. As a result of this
competition, certain competitors offer cards to
selected customers at lower interest rates than
those offered by Barclaycard.
This competitive environment may affect the
originator's ability to originate new accounts
and generate new receivables. If the rate at
which new receivables are generated declines
significantly and if the transferor is unable
to nominate additional accounts for the
receivables trust, a series 99-1 pay out event
could occur. A series 99-1 pay out event could
result in an early redemption of your notes.
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Social, Legal, Political and Changes in card use, payment patterns, amounts
Economic Factors of yield on the card portfolio generally and
Affect Card Payments the rate of defaults by cardholders may result
and Are Unpredictable from a variety of social, legal, political and
economic factors in the United Kingdom. Social
factors include changes in public confidence
levels, attitudes toward incurring debt and
perception of the use of credit and charge
cards. Economic factors include the rate of
inflation, the unemployment rate and relative
interest rates offered for various types of
loans. Political factors include lobbying from
interest groups, such as consumers and
retailers, and government initiatives in
consumer and related affairs: for example, a
non-statutory review of banking services was
announced by the UK Chancellor of the Exchequer
in November 1998 which is wide ranging and
might encompass the manner and levels of
charges earned by card issuers from cardholders
and merchant acquirers. We are unable to
determine and have no basis on which to predict
accurately whether, or to what extent, social
legal, political or economic factors will
affect the future use of credit, default rates,
the yield on the card portfolio generally or
cardholder repayment patterns.
A Change in the Terms of the Only the receivables arising under the
Receivables May Adversely designated accounts will be transferred to the
Affect the Amount or Timing receivables trustee. The originator will
of Collections and Could Cause continue to own those accounts. As the owner of
an Early Redemption the accounts, the originator retains the right
or a Downgrade of Your Notes to change the terms of the accounts. For
example, the originator could change the
monthly interest rate, reduce or eliminate fees
on the accounts or reduce the required minimum
monthly payment.
The originator may change the terms of the
accounts to maintain its competitive position
in the UK credit and charge card industry.
Changes in interest and fees could lower the
amount of finance charge receivables generated
by those accounts. This could cause a pay out
event to occur, which might cause an early
redemption of your notes. This could also cause
a reduction in the credit ratings on your
notes.
Principal on Your Notes The receivables in the receivables trust may be
May Be Paid Earlier paid at any time and we cannot assure you that
Than Expected new receivables will be generated or will be
Creating a Reinvestment generated at levels needed to maintain the
Risk to You or Later than receivables trust. To prevent the early
Expected redemption of the notes, new receivables must
be generated and added to the receivables trust
or new accounts must be originated and
nominated for the receivables trust. The
receivables trust is required to maintain a
minimum amount of receivables. The generation
of new receivables or receivables in new
accounts is affected by the originator's
ability to compete in the current industry
environment and by customers changing borrowing
and payment patterns. If there is a decline in
the generation of new receivables or new
accounts, you may be repaid your principal
before the expected date.
One factor that affects the level of finance
charge and principal collections is the extent
of convenience usage. Convenience use means
that the cardholders pay their account balances
in full on or before the due date. The
cardholder, therefore, avoids all finance
charges on his or her account. An increase in
the convenience usage by cardholders would
decrease the effective yield on the accounts
and could cause a pay out event and therefore
possibly an early redemption of your notes.
No premium will be paid upon an early
redemption of your notes. If you receive
principal on your notes earlier than expected,
you may not be able to reinvest the principal
at a similar rate of return.
Alternatively, a decrease in convenience usage
may reduce the principal payment rate on the
accounts. This could result in you receiving
the principal on your notes later than
expected.
Credit Enhancement May Credit enhancement for your notes is limited.
Be Insufficient to Prevent a The only sources of payment for your notes are
Loss on Your Notes the assets of the issuer pledged to secure
payment of your notes. If problems develop with
the receivables, such as an increase in losses
on the receivables, or if there are problems in
the collection and transfer of the receivables
to the trust, or if the swap counterparty fails
to make payments on the dollar swap agreements,
it is possible that you may not receive the
full amount of interest and principal that you
would otherwise receive.
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Issuance of Additional Series Series 99-1 is the first series created within
by the Receivables the receivables trust. Additional series may
Trustee on Behalf of from time to time be created within the
the Receivables Trust receivables trust. Any new series of investor
May Adversely Affect certificates -- and medium term notes and notes
Payments on Your Notes -- will also be payable from the receivables in
the receivables trust. The principal terms of
any new series of investor certificates will be
contained in a new series supplement to the
declaration of trust and trust cash management
agreement. The terms of a new series contained
in the new series supplement to the declaration
of trust and trust cash management agreement
will not be subject to your prior review or
consent.
The principal terms of a new series may include
methods for determining investor percentages
and allocating collections, provisions creating
different or additional security or other
credit enhancement for the new series,
provisions subordinating the new series to
other series, and other amendments or
supplements to the declaration of trust and
trust cash management agreement that apply only
to the new series. It is a condition to the
issuance of a new series that each rating
agency that has rated any debt ultimately
payable from a prior series of investor
certificates that is outstanding -- including
your notes -- confirms in writing that the
issuance of the new series will not result in a
reduction or withdrawal of its rating.
However, the terms of a new series could
adversely affect the timing and amounts of
payments on any other outstanding series,
including series of which your notes are a
part.
Credit Quality of the The transferor may designate additional credit
Receivables Trust's Assets or charge card accounts as designated accounts
May Be Eroded by the and offer the receivables trustee an assignment
Addition of New Accounts of the receivables arising under the additional
Which Could Adversely Affect accounts. The transferor may be required at
Collections of Receivables times to nominate additional accounts as
designated accounts. These accounts may include
accounts that were originated using criteria
that are different from those applicable to the
accounts from which receivables were originally
assigned to the receivables trustee. For
example, they could be originated at a
different date with different underwriting
standards, or they could be acquired from
another institution that used different
underwriting standards. Consequently, there can
be no assurance that accounts that become
designated accounts in the future will have the
same credit quality as the designated accounts
on the closing date. This could adversely
affect collections on the receivables.
Interest Rate Payable by the The majority of the designated accounts have
Receivables Trustee on Behalf monthly interest rates that are constant,
of the Receivables Trust except for Barclaycard's ability to change the
May Increase Without a interest rate at its discretion. The interest
Corresponding Change in rate paid to the MTN issuer will be based on
Card Rates Potentially the London interbank offered rate for deposits
Causing a Loss on Your in sterling, which changes from time to time.
Notes or Early Redemption Accordingly, the interest payable to the MTN
of Your Notes issuer could increase without a corresponding
increase in the amount of finance charge
collections. If this occurred, you could suffer
a loss on your notes or a pay out event could
occur causing an early redemption of your
notes.
Commingling of Collections Collections from cardholders on the designated
with the Transferor May Delay accounts and other Barclaycard cardholders will
or Reduce Payments on initially be paid to an operating account of
Your Notes the transferor. The transferor has declared a
trust over the operating account for
collections that are deposited in it.
Collections on the designated accounts will be
transferred to the trustee collection account
within two business days of being identified.
For the limited time that collections on the
designated accounts are in the operating
account, they may be commingled with other
funds of the transferor or future beneficiaries
and they may be untraceable. Consequently, if
the transferor were to become insolvent, there
may be a delay in the transfer of collections
to the receivables trustee if the transferor --
or a liquidator or administrator of the
transferor -- attempted to freeze the operation
of the operating account pending completion of
any rights of tracing. This could ultimately
cause a delay or reduction in the payments you
receive on your notes.
12
<PAGE>
If the Transferor Opts to The transferor may opt to cause a percentage of
Treat a Portion of Principal receivables that would otherwise be treated as
Receivables as Finance principal receivables to be treated as finance
Charge Receivables, an charge receivables. If the transferor were to
Early Redemption of Your exercise this option, it could prevent a pay
Notes Could Occur or Could out event from occurring because of a reduction
Be Delayed of the portfolio yield, which could delay an
early redemption of your notes at a time when
the performance of the receivables is
deteriorating. Once this option is exercised,
the transferor may also reduce the percentage
or stop using the percentage at any time.
However, this option, if exercised, will reduce
the aggregate amount of principal receivables,
which may increase the likelihood that the
transferor will be required to designate
additional accounts from which receivables will
be assigned to the receivables trustee. If the
transferor were unable to designate additional
accounts, a pay out event could occur and you
could receive payments of principal on your
notes before you expect them.
If Optional Early Redemption When the total principal balance of the notes
Occurs, It Will is reduced to less than 10% of their original
Result in an Early Redemption total principal balance, the issuer has the
of Your Notes Creating a option to redeem the notes in full. This early
Reinvestment Risk redemption may result in an early return of
your investment. No premium will be paid in the
event of an exercise of the early redemption
option. If you receive principal on your notes
earlier than expected, you may not be able to
reinvest the principal at a rate of return
similar to that on your notes.
If Cardholders Are Concentrated If the receivables trust has a high
in a Geographic Region, concentration of receivables from cardholders
Economic Downturn in that located in a single region, an economic
Region May Adversely Affect downturn in that region may have a magnified
Collections of Receivables adverse effect on the receivables trust because
of that concentration. This prospectus contains
a geographic breakdown of accounts and the
amount of receivables generated in the regions
of the United Kingdom. See "The Receivables --
Geographic Distribution of Accounts --
Securitised Portfolio".
On 30 September, 1999, approximately 36.86% of
the outstanding balance of receivables were
from cardholders located in London and 11.71%
of the outstanding balance of receivables were
from cardholders located in the Central
Midlands. No other region currently accounts
for more than 10% of the outstanding balance of
the receivables. These concentration levels may
change in the future.
We are not aware of any existing adverse
economic conditions affecting either of these
regions that would be material to you. Future
adverse economic conditions affecting either of
these regions or any of the other regions,
however, could adversely affect the performance
of the receivables which could result in a loss
on your notes.
The Year 2000 Problem Could Many computer programs and electronic
Disrupt the Generation and components that incorporate computer programs
Servicing of the Receivables use only two digit references for dates and
date dependent functions and therefore require
upgrading or replacement to recognise and
properly perform functions involving dates
before and after 1 January, 2000.
Barclays Bank PLC has been upgrading, testing
and replacing its mission critical computer
systems to address the Year 2000 problem, and
expects to be able to perform its servicing and
originator functions without significant
interruption. Barclays Bank PLC has also been
communicating with its key suppliers to monitor
their efforts in addressing the Year 2000
problem. One company's system failure could
directly or indirectly affect another company.
If Barclays Bank PLC or any of its suppliers
are adversely affected by the Year 2000
problem, the generation and servicing of
receivables could be disrupted and payments to
you could be reduced or delayed.
Adoption of the Euro by the Before your notes have matured, the euro could
United Kingdom Would Have become the lawful currency of the United
Uncertain Effects on Your Notes Kingdom. If that were to happen, all amounts
payable on the medium term notes -- including
the sterling payments owed to the swap
counterparty on the dollar swap agreement but
not any dollar payments made by the swap
counterparty to the issuer -- may become
payable in euro. If the medium term notes are
outstanding when the euro becomes the lawful
currency of the United Kingdom, we intend to
make payments on the medium term notes and the
swap agreements according to the then market
practice of
13
<PAGE>
payment on debts or, as the case may be, swaps.
We are uncertain what effect, if any, the
adoption of the euro by the United Kingdom may
have on investors in the notes.
Adoption of Proposed European In May 1998, the European Commission presented
Directive on the Taxation to the Council of Ministers of the European
of Savings Could Cause Union a proposal to oblige member states to
Withholding Tax to be Applied adopt either a "withholding tax system" or an
to Payments on the Notes "information reporting system" for interest,
discounts and premiums on debt instruments. It
is not clear whether this proposal will be
adopted, and if it is adopted, whether it will
be adopted in its current form and if it is
adopted what the impact will be on your notes.
The withholding tax system would require a
paying agent established in a member state to
withhold tax at a minimum rate of 20 per cent.
from any interest, discount or premium paid to
an individual resident in another member state
unless the individual presents a certificate
obtained from the tax authorities of the member
state in which the individual is resident
confirming that those authorities are aware of
the payment due to the individual. The
information reporting system would require a
member state to supply to other member states
details of any payment of interest, discount or
premium made by paying agents within its
jurisdiction to an individual resident in
another member state.
The term "paying agent" is widely defined and
includes an agent who collects interest,
discounts or premiums on behalf of an
individual beneficially entitled to the
payment. If this proposal is adopted, it will
not apply to payments of interest, discount and
premiums made before 1 January, 2001.
You May Be Subject to UK If any of the following events occur, you will
Withholding Taxes If Definitive be entitled to receive definitive notes for
Notes Are issued your book-entry interests:
for Book-Entry Interests
* as a result of a change in UK or U.S. law,
the issuer or any paying agent is or will be
required to make any deduction or withholding
on account of tax from any payment on the
notes that would not be required if the notes
were in definitive form;
* DTC has notified the issuer that it is
unwilling or unable to hold the
certificateless depository interests or to
continue as a clearing agency under the
United States Securities and Exchange Act of
1934 and the issuer cannot appoint a
successor;
* if the depository notifies the issuer that it
is at any time unwilling or unable to
continue as depository and the issuer cannot
appoint a successor; or
* the principal amount of the notes is
accelerated because an event of default has
occurred.
Under current UK tax law, following the
issuance of definitive notes, interest payable
on the definitive notes will be subject to UK
withholding tax -- currently at the rate of 20
per cent. -- subject to the terms of any
applicable double tax treaty or other available
relief. Neither the issuer nor any other person
will be obliged to pay additional amounts to
compensate you for any withholding tax.
If Stamp Duty Becomes Payable, Stamp duty is a UK tax levied on documents
it May Cause a Loss on which effect transfers of title on sale. Stamp
Your Notes duty is charged at the rate of 3.5 per cent. of
the sale price, insofar as the sale price can
be ascertained at the time when the relevant
document is executed. The sale of the
receivables to the receivables trustee will be
initiated by way of an offer document delivered
in accordance with the receivables
securitsation agreement, with the receivables
trustee being permitted to accept the offer, if
it so chooses, by way of the transfer of the
purchase price from the receivables trustee to
the transferor. The transaction which occurs on
acceptance of the offer by the receivables
trustee will be regarded for stamp duty
purposes, as a sale of an interest in the
receivables by Barclaycard to the receivables
trustee as trustee for the MTN issuer. Barclays
has received legal advice, subject to sight of
final documents, that stamp duty will not be
payable on the sale of an interest in the
receivables by Barclays to the MTN issuer. This
is primarily on the basis that the MTN Issuer
is a subsidiary of Barclays and therefore the
transaction described above will benefit from
an exemption from stamp duty for sales between
associated companies.
14
<PAGE>
In order to fulfil all of the conditions for
avoiding stamp duty on the sale of the
receivables, it is necessary for Barclays to
execute a transfer of the receivables which are
the subject of the offer and to have the
transfer adjudicated free of duty by the United
Kingdom Stamp Office. Under current law and
practice, there is no time limit in effect for
Barclays to do this.
Barclays has agreed in the receivables
securitisation agreement to seek a final
adjudication with the United Kingdom Stamp
Office within six months after the closing date
that no stamp duty is payable on a transfer of
a part of the receivables comprised in the
offer. The issuer has agreed to indemnify the
MTN issuer for any stamp duty which it becomes
liable to pay. In the circumstance where the
adjudication is not successful, the issuer will
undertake to obtain a loan facility under which
the MTN issuer would be permitted to draw to
fund any liability to stamp duty. If the issuer
is unable to secure the necessary stamp duty
facility, the MTN issuer may be unable to
enforce its rights in the receivables if
sufficient funds are not available from excess
spread to pay the stamp duty and to have the
transfer of the receivables stamped. This could
cause a loss on your notes.
Taxable Nature of MTN Issuer As explained in "Prospectus Summary: United
and Issuer Could Cause a Loss Kingdom Tax Status" above, the MTN issuer and
on Your Notes the issuer will be liable to UK corporation tax
at the current rate of 30 per cent. on the
profit reflected in their respective profit and
loss accounts as increased to take account of
any non-deductible expenses or losses; which
profit before any such increase is not expected
to exceed 1 basis point of the principal amount
outstanding on the MTN notes and the notes
respectively.
If the taxable profits of the MTN issuer or the
issuer are greater than expected, because
either the profit shown in the profit and loss
account is greater than 1 basis point of the
principal amount outstanding, or non-deductible
expenses or losses are greater than expected,
the MTN issuer or the issuer, as the case may
be, will be subject to corporation tax on the
greater amount at the maximum rate of 30 per
cent., and you could suffer losses on your
notes as a result.
In order for the closing of the sale of the
notes to occur, an opinion must be obtained
from UK tax advisers covering the matters
described under the heading "Prospectus
Summary: United Kingdom Tax Status" above, and
in particular confirming the expected tax
treatment of the MTN issuer and the issuer and
analysing in detail the sorts of expenses which
either entity can incur which may not be
deductible. Subject to finalisation of
documents in a form which is satisfactory to
them and not inconsistent with the descriptions
set out in this prospectus other than the
exhibits to this prospectus, Clifford Chance,
as special tax advisers, expect to deliver this
closing tax opinion -- called the closing tax
opinion -- to the appropriate rating standard.
An opinion of UK tax advisers, however, is
not binding on the courts, and no specific
transaction rulings on this issue will be
obtained from the UK Inland Revenue. In
addition, there is no case law authority on a
number of features of the transactions that
raise difficult questions.
U.S. Tax Treatment There are no regulations, published rulings or
of the Notes is Uncertain and judicial decisions addressing the
Could Have Adverse Tax characterisation for U.S. federal income tax
Consequences for U.S. purposes of securities with terms similar to
Noteholders the notes. Further, because of the nature and
extent of capitalisation of the issuer and the
effect of a termination of a swap agreement on
an investor's principal entitlement, special
U.S. federal income tax counsel to the issuer
is not able to opine as to the appropriate
classification of the notes as debt or as
equity.
Although no ruling or legal opinion will be
obtained on the classification of the notes as
debt or equity for U.S. federal income tax
purposes, the issuer intends to take the
position that the notes are debt of the issuer
for U.S. federal income tax purposes. Based on
this position, the class A notes and class B
notes may be considered to be issued with
original issue discount. The accrual of
original issue discount may require holders to
recognise income in advance of the receipt of
payments of it.
15
<PAGE>
If the notes were not treated as debt, they
likely would be treated as equity in the issuer
for U.S. federal income tax purposes. Further,
the issuer likely would be treated as a
"passive foreign investment company" for U.S.
federal income tax purposes, and holders of
notes treated as equity likely would be treated
as holding shares in a passive foreign
investment company. If the notes were treated
as equity in a passive foreign investment
company, holders may be subject to a special,
adverse tax regime which would tax any gain at
ordinary income rates rather than as capital
gain, and which would increase taxes otherwise
owing with respect to any gain and
distributions of interest by an interest
charge. Investors generally may avoid such
adverse tax consequences if they properly and
effectively make a qualified electing fund, or
QEF, election with respect to their notes. Such
an election generally would have the effect of
requiring an investor in a note to report its
share of the income earned by the issuer and,
accordingly, would produce a U.S. federal
income tax liability with respect to the class
A notes and class B notes generally similar to
that applicable to such notes were they to
properly be characterised as debt for U.S.
federal income tax purposes. Accordingly, it is
suggested that prospective investors carefully
consider the making of a QEF election with
respect to the class A notes and class B notes.
See "United States Federal Income Tax
Consequences -- Investment in a Passive Foreign
Investment Company."
Limited Nature of Credit Each credit rating assigned to your notes
Ratings Assigned to Your reflects the rating agency's assessment only of
Notes the likelihood that interest and principal will
be paid to you by the final redemption date,
not that it will be paid when expected or
scheduled. These ratings are based on the
rating agencies' determination of the value of
the receivables, the reliability of the
payments on the receivables, the
creditworthiness of the swap counterparty and
the availability of credit enhancement.
The ratings do not address the following:
* the likelihood that the principal or interest
on your notes will be redeemed or paid, as
expected on the scheduled redemption dates;
* the possibility of the imposition of United
Kingdom or European withholding tax;
* the marketability of the notes, or any market
price; or
* that an investment in the notes is a suitable
investment for you.
A rating is not a recommendation to purchase,
hold or sell the notes.
Ratings Can Be Lowered or Any rating agency may lower its rating or
Withdrawn After You Purchase withdraw its rating if, in the sole judgement
Your Notes of the rating agency, the credit quality of the
notes has declined or is in question. If any
rating assigned to your notes is lowered or
withdrawn, the market value of your notes may
be reduced.
The issuer has the right, but not the
obligation, to direct the swap counterparty to
assign the swap agreements to a replacement
swap counterparty if the long-term credit
rating of the swap counterparty is withdrawn or
reduced below "Aa3" by Moody's or its short-
term credit rating is reduced below "A-1+" by
Standard & Poor's and the swap counterparty has
not remedied the event under the terms of the
swap agreements. We cannot assure you, however,
that the issuer will be able to find a
replacement swap counterparty and assign the
swap agreements in this event or that the
ratings of your notes will not be withdrawn
or reduced in this event.
Termination of Swap A swap agreement may be terminated,
Agreements Could Result in an but only if the issuer has been directed
Early Redemption of Your to do so by the relevant noteholders,
Notes with the approval of 66 2/2 of class A
noteholders, orif no class A noteholders,
66 2/3 of class B noteholders, or if no class B
noteholders, 66 2/3 of class C noteholders, if
as a result of a change in applicable law,
withholding taxes would be imposed -- by any
jurisdiction -- on any payments made or
required to be made to the issuer by the swap
counterparty under the swap agreement and there
are not any reasonable measures that the swap
counterparty can take to avoid their
imposition. In addition, a swap agreement may
be terminated if the issuer determines that the
issuer or the paying agent has or will become
obligated to deduct or withhold amounts from
payments on the related class of notes to be
made to any of the related noteholders on the
next interest payment date, for any tax,
16
<PAGE>
assessment or other governmental charge imposed
by the United Kingdom or any political
subdivision or taxing authority of the United
Kingdom on the payments as a result of any
change in its laws or regulations or rulings,
or any change in official position regarding
the application or interpretation of its laws,
regulations or rulings, which change or
amendment becomes effective on or after the
date the notes are issued, and there are no
reasonable measures the issuer can take to
avoid the tax or assessment.
A payment default by the swap counterparty or a
default in the payment of interest by the
issuer to the swap counterparty if funds are
available to pay interest will result in a
termination of any swap agreement. The swap
agreements may also terminate following a
material breach in a representation or covenant
by the swap counterparty, the insolvency of the
issuer or the swap counterparty or changes in
law resulting in illegality.
The swap agreements may also be terminated upon
the occurrence of certain other events
described under "The Swap Agreements: Common
Provisions of the Swap Agreements".
The termination without replacement of any of
the swap agreements will result in an event of
default under the notes and a pay out event
that results in a rapid amortisation period. We
cannot assure you that any of the swap
agreements will not terminate prior to the
payment in full of the principal balance of
your notes. If any of the swap agreements
terminates prior to the payment in full of the
principal balance of your notes, you could
receive payments of principal on your notes
before you expect them.
Withholding Taxes on Swap The issuer and the swap counterparty will each
Payments or Your Notes May represent and warrant in each swap agreement
Reduce the Amount You Are that, under current applicable law, each of
Paid on Your Notes them is entitled to make all payments required
to be made by them under the swap agreement
free and clear of, and without deduction for or
on account of, any taxes, assessments or other
governmental charges -- which we refer to as
withholding taxes. However, neither the issuer
nor the swap counterparty will be required to
indemnify the other party for any withholding
taxes imposed on payments under a swap
agreement as a result of a change in applicable
law.
If any withholding taxes -- by any jurisdiction
-- would be imposed on any payments made or
required to be made by the swap counterparty to
the issuer under a swap agreement as a result
of a change in applicable law and the
obligation to deduct or withhold cannot be
avoided by the swap counterparty, the issuer
may terminate the swap agreement, but only if
the issuer has been directed to do so by the
relevant noteholders. If the relevant
noteholders do not elect to terminate the swap
agreement, then payments to that class of
noteholders will be reduced pro rata by an
amount withheld for any withholding taxes.
In addition, if any UK withholding taxes would
be imposed on any payments made or required to
be made by the issuer or the paying agent on
any class of notes, the issuer will terminate
the relevant swap agreement if the issuer has
been directed to do so by the relevant
noteholders. Upon the imposition of any UK
withholding taxes, the payments to the class A
noteholders or class B noteholders will be
reduced pro rata by any amount withheld.
Payment of an Early If a swap agreement is terminated before its
Termination Payment to the scheduled termination date, the issuer or the
Swap Counterparty May swap counterparty may be liable to make an
Reduce Payments on Your Notes early termination payment to the other party.
The amount of any early termination payment
will be based on the market value of the
terminated swap agreement. This market value
will be computed on the basis of market
quotations of the cost of entering into a swap
transaction with the same terms and conditions
that would have the effect of preserving the
respective full payment obligations of the
parties. Any early termination payment could,
if interest rates or the sterling -- dollar
exchange rate change significantly, be
substantial.
Any early termination payment made by the
issuer to the swap counterparty under a swap
agreement will be made from principal
collections allocated to the relevant class of
notes. That will cause the sterling amounts
available for conversion to dollars, and
possibly your payments, to be reduced --
perhaps substantially. Under the terms and
conditions of the notes, the amount of
17
<PAGE>
available principal collections allocated to
amount of a notional swap termination payment
your notes will be reduced by the as more fully
described under "Terms and Conditions of the
Notes". If available principal collections are
insufficient to pay the notional swap
termination payment, the balance of the early
termination payment will be paid to the extent
of available principal collections allocated to
your notes on the next interest payment date
together with interest on the unpaid notional
swap termination payment carried forward from
the previous interest payment date. See "The
Swap Agreements".
18
<PAGE>
Introduction
You can find a listing of the pages where terms used in this prospectus
are defined under the caption "Index of Terms for Prospectus" beginning on page
112.
U.S. Dollar Presentation
Unless this prospectus provides a different rate, the translations of
pounds sterling into dollars have been made at the rate of 0.60705, which is
the closing price on 30 September, 1999 for the dollar/sterling exchange rate
as displayed on the Bloombergu Service under GBP Currency HP. Using this rate
does not mean that pound sterling amounts actually represent those U.S. dollar
amounts or could be converted into U.S. dollars at that rate.
References throughout this document to "L", "pounds" or "pounds sterling"
are to the lawful currency of the United Kingdom of Great Britain and Northern
Ireland. References in this document to "US$", "$", "U.S. dollars" or "dollars"
are to the lawful currency of the United States of America.
The Issuer
The issuer was formed in England and Wales on 24 June, 1999 as Harpmist
PLC. It passed a special resolution to change its name to Gracechurch Card
Funding (No. 1) PLC on 10 September, 1999. Its registered office and principal
place of business are located at 200 Aldersgate Street, London EC1A 4JJ, United
Kingdom.
All of its issued share capital is held by Gracechurch Card (Holdings)
Limited. It has a fiscal year end date of 31 December.
The issuer was formed principally to:
* issue the notes;
* enter into all financial arrangements in order to issue the notes;
* purchase the series 99-1 medium term notes; and
* enter into all the documents necessary to purchase the series 99-1
medium term notes.
Directors and Secretary
The following sets out the directors of the issuer and their business
addresses and principal activities. Because the issuer is organised as a
special purpose company and will be largely passive, it is expected that the
directors of the issuer in that capacity will participate in its management to
a limited extent.
<TABLE>
<CAPTION>
Name Nationality Business Address Principal Activities
- ------------------------------- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C>
Peter Stuart Crook 1234 Pavilion Drive,
British Northampton NN4 7SG Finance Director
David Roger Finney 155 Bishopsgate, London EC2M
British 3UU Trust Official
David Donald Needham 155 Bishopsgate, London EC2M
British 3UU Trust Official
Peter Michael Hills 155 Bishopsgate, London EC2M
British 3UU Trust Official
(alternative director)
</TABLE>
Clifford Chance Secretaries will provide the issuer with general
secretarial, registrar and company administration services on behalf of David
Roger Finney. The fees of Clifford Chance Secretaries for providing such
services will be included in the MTN Issuer Costs Amounts. See "Series 99-1:
Allocation, Calculation and Distribution of Finance Charge Collections to the
MTN Issuer".
The secretary of the issuer:
<TABLE>
<CAPTION>
Name Business Address
-------------------------------- ------------------------------------------
<S> <C>
David Roger Finney 155 Bishopsgate, London EC2M 3TG
</TABLE>
19
<PAGE>
The net proceeds of the sale of the notes will be used by the issuer to
purchase the medium term notes. The issuer will be prohibited by the trust deed
and the terms and conditions of the notes from engaging in business other than:
* the business described in this prospectus;
* preserving and exercising its rights under the notes, the deed of
charge, the paying agency and agent bank agreement, the depository
agreement, the trust deed, the expenses loan agreement, the swap
agreements, the corporate services agreement and the underwriting
and subscription agreements for the notes; and
* purchasing the series 99-1 medium term notes.
The issuer's ability to incur, assume or guarantee debt will also be
restricted by the trust deed and the terms and conditions of the notes.
Barclays does not own, directly or indirectly, any of the share capital of
the issuer.
Management's Discussion And Analysis Of Financial Condition
Sources of Capital and Liquidity
The issuer's source of capital will be the net proceeds of the offering of
the notes.
The issuer's primary sources of liquidity will be payments of interest and
principal on the medium term notes and borrowings under the expenses loan
agreement.
Results of Operations
As of the date of this prospectus, the issuer does not have an operating
history. Because the issuer does not have an operating history, we have not
included in this prospectus any historical or pro forma ratio of earnings to
fixed charges. The earnings on the medium term notes, the interest costs of the
notes and the related operating expenses will determine the issuer's results of
operations in the future. The income generated on the medium term notes will be
used to pay principal and interest on the notes.
Use Of Proceeds
The net proceeds of the issue of the class A notes, the class B notes and
the class C notes will be $[*]. The fees and commissions payable on the issue
of the notes will be deducted from the gross proceeds of the issue. The issuer
will use its reasonable endeavours to make a drawing under the expenses loan
agreement of at least an amount equal to the fees and commissions payable on
the notes. The issuer will use the net proceeds of the issue of the notes
converted into sterling under the swap agreements together with the drawing
under the expenses loan agreement to purchase the medium term notes from the
MTN issuer on or about 23 November 1999 -- called the "closing date".
Expenses Loan Agreement
On the closing date, the issuer -- as borrower -- will enter into a loan
agreement with Barclays -- as lender -- under which Barclays will lend to the
issuer up to a maximum amount of L2,000 to be used by the issuer to meet
its costs and expenses relating to issuing the notes. This loan agreement is
called the "Expenses Loan Agreement". The amounts outstanding under the
Expenses Loan Agreement will bear interest at the rate of three-month sterling
LIBOR and a margin of [*] per cent. per annum. The payment of interest under
the Expenses Loan Agreement will be paid monthly on each distribution date. To
the extent the issuer has insufficient funds left after making all payments of
principal and interest on the notes, the amount of that interest will be
deferred until the next distribution date. The principal amount outstanding
under the Expenses Loan Agreement will not fall due for repayment until all
principal, interest and other amounts due on the notes have been paid in full.
The MTN Issuer
The MTN issuer was formed in England and Wales on 13 August, 1990 as
Barshelfco (No. 28) Limited. It re-registered as a public limited company and
changed its name to Barclaycard Funding PLC on 19 October, 1999. Its registered
office and principal place of business are located at 54 Lombard Street, London
EC3P 3AH, United Kingdom.
The MTN issuer has a fiscal year end of 31 December.
The MTN issuer was formed principally to:
20
<PAGE>
* issue the medium term notes;
* enter into the financial arrangements to issue the medium term
notes;
* purchase investor certificates representing a beneficial interest
in the receivables trust; and
* enter into the documents and exercise its powers connected to the
above.
The MTN issuer has not engaged in any activities since its incorporation
other than the above.
Barclays holds 75% of the issued share capital of the MTN issuer,
representing 51% of the issued voting share capital and a 49% entitlement to
distributable profits. The remaining share capital is held by the Royal
Exchange Trust Company Limited.
Directors and Secretary
The following sets out the directors of the MTN issuer and their business
addresses and principal activities. Because the MTN issuer is organised as a
special purpose company and will be largely passive, it is expected that the
directors of the MTN issuer in that capacity will participate in its management
to a limited extent.
<TABLE>
<CAPTION>
Name Nationality Business Address Principal
Activities
- ------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C>
Peter Stuart Crook British 1234 Pavilion Drive Finance Director
Northampton NN4 7SG
David Roger Finney British 155 Bishopsgate, Trust Official
London EC2M 3TG
Brian Donald British 155 Bishopsgate, Trust Official
Needham London EC2M 3TG
Peter Michael British 155 Bishopsgate, Trust Official
Hills (alternate London EC2M 3TG
director)
</TABLE>
The secretary of the MTN issuer is:
<TABLE>
<CAPTION>
Secretary's Name Business Address
- -------------------------------------------------------- -----------------------------------------------------------------------
<S> <C>
Barcosec Limited 54 Lombard Street, London EC3P 3AH
</TABLE>
The proceeds of the sale of the medium term notes will be used by the MTN
issuer to acquire certificates representing a beneficial interest in series 99-
1 of the receivables trust -- called the "investor certificates".
Management's Discussion and Analysis of Financial Condition
Sources of Capital and Liquidity
The MTN issuer's source of capital will be the proceeds of the offering of
the medium term notes.
The MTN issuer's primary source of liquidity will be payments of principal
and interest on the investor certificates.
Results of Operations
As of the date of this prospectus, the MTN issuer does not have an
operating history. Because the MTN issuer does not have an operating history,
we have not included in this prospectus any historical or pro forma ratio of
earnings to fixed charges. The earnings on series of investor certificates, the
interest costs of series of medium term notes and the related operating
expenses will determine the MTN issuer's results of operations in the future.
The income generated on the investor certificates for series 99-1 will be used
to pay principal and interest on the medium term notes.
The Receivables Trustee
The receivables trustee was formed under the laws of Jersey. Its
registered office is at Normandy House, Grenville Street, St Helier, Jersey JE2
4UF and you can inspect its memorandum and articles of association at the
offices of Clifford Chance at 200 Aldersgate Street, London EC1A 4JJ, United
Kingdom.
All of the issued share capital of the receivables trustee is held by a
trust company formed in Jersey, Bedell & Cristin Trustees Limited.
The trust company must pay any capital or income of the receivables
trustee that it holds to institutions formed for charitable purposes.
The receivables trustee was formed principally to:
21
<PAGE>
* act as trustee of the receivables trust;
* accept transfer of the receivables from the transferor; and
* issue investor certificates on behalf of the receivables trust.
Bedell & Cristin Trust Company Limited, a company formed under the laws of
Jersey provides the receivables trustee with company secretarial, registrar and
company administration services. Its fees for providing these services are
included in the fees paid to the receivables trustee. See the section "The
Receivables Trust: Trustee Payment Amount".
Barclays Bank PLC does not own, directly or indirectly, any of the share
capital of the receivables trustee.
Management and Activities
The receivables trustee has been established specifically to act as
trustee of the receivables trust. Its activities are restricted by the
declaration of trust and trust cash management agreement and the related
supplements.
Since it was formed, the receivables trustee has:
* engaged in activities incidental to the declaration of the
receivables trust;
* obtained the necessary customer credit licence and data protection
registrations in the United Kingdom and/or Jersey;
* authorised and executed the documents that it is a party to in
order to establish the receivables trust and to create series 99-1
within the receivables trust;
* engaged in activities incidental to the anticipated transfer to it
of receivables under the designated accounts; and
* authorised the other documents to which it is a party.
The receivables trustee covenants in the declaration of trust and trust
cash management agreement that it will not without the prior written consent of
each of the beneficiaries of the receivables trust:
* carry on any business other than as trustee of the receivables
trust and will not engage in any activity or do anything at all
except:
(1) hold and exercise its rights in the trust property of the
receivables trust and perform its obligations for the
receivables trust's property;
(2) preserve, exercise and enforce any of its rights and
perform and observe its obligations under the declaration
of trust and trust cash management agreement, the
receivables sale agreement, the master definitions
schedule, each supplement and each other document executed
for issuance including any documents secured directly or
indirectly by a series of investor certificates issued by
the receivables trust, any mandate and other agreement
about a Trust Account or a bank account in which the
receivables trustee has a beneficial interest, the trust
section 75 indemnity, and any other document contemplated
by and executed in connection with any of the preceding
documents. We refer to these documents collectively as
"relevant documents";
(3) pay dividends or make other distributions to the extent
required by applicable law;
(4) use, invest or dispose of any of its property or assets in
the manner provided in or contemplated by the relevant
documents; and
(5) perform any and all acts incidental to or otherwise
necessary in connection with (1), (2), (3) or (4) above;
* incur any debt other than debt that is described by this
prospectus or a supplement;
* give any guarantee or indemnity in respect of any debt;
* create any mortgage, charge, pledge, lien or other encumbrance
securing any obligation of any person or other type of
preferential arrangement having similar effect, over any of its
assets, or use, invest, sell or otherwise dispose of any part of
its assets, including any uncalled capital, or undertaking,
present or future, other than as expressly contemplated by the
relevant documents;
* consolidate or merge with any other person or convey or transfer
its properties or assets to any person;
22
<PAGE>
* permit the validity or effectiveness of the receivables trust to
be supplemented, amended, varied, terminated, postponed or
discharged -- other than as expressly contemplated in the
declaration of trust and trust cash management agreement or in any
supplement;
* have any employees or premises or have any subsidiary; and
* have an interest in any bank account other than a Trust Account
and its own bank account opened for the purpose of receiving and
making payments to be made otherwise than in its capacity as
receivables trustee -- including paying the servicing fee to the
servicer or cash management fee to the trust cash manager.
Barclays Bank PLC
Barclays Bank PLC will perform the following roles in connection with the
issuance of the notes:
* initial transferor;
* servicer;
* cash manager for the receivables trust and the medium term notes;
* transferor beneficiary and excess interest beneficiary;
* swap counterparty; and
* lender under expenses loan agreement.
Business
Barclays Bank PLC is a public limited company registered in England and
Wales under number 1026167. The liability of the members of Barclays Bank PLC
is limited. It has its registered and head office at 54 Lombard Street, London
EC3P 3AH. Barclays Bank PLC was incorporated on 7 August 1925 under the
Colonial Bank Act 1925 and on 4 October 1971 was registered as a company
limited by shares under the Companies Acts 1948 to 1967. Under the Barclays
Bank Act 1984, on 1 January, 1985 Barclays Bank PLC was re-registered as a
public limited company and its name was changed from "Barclays Bank
International Limited" to "Barclays Bank PLC".
Barclays Bank PLC and its subsidiary undertakings are, together, called
the Barclays group. The Barclays group is a UK based financial services group
which undertakes mainly banking and investment banking business. In terms of
assets employed, it is one of the largest financial services groups in the
United Kingdom. The Barclays group also operates in the financial markets of
many other countries around the world. As well as servicing domestic markets,
it provides co-ordinated global services to multinational corporations and
financial institutions from group operations in the world's main financial
centres. Its principal activities include retail and corporate banking,
investment banking and insurance. The whole of the issued ordinary share
capital of Barclays Bank PLC is owned by Barclays PLC which is the ultimate
holding company of the Barclays group.
The short-term unsecured obligations of Barclays Bank PLC are rated A-1+
by Standard and Poor's, P-1 by Moody's and F-1+ by Fitch IBCA and the long-term
unsecured obligations of Barclays Bank PLC are rated AA by Standard & Poor's,
Aa2 by Moody's and AA+ by Fitch IBCA.
As of 30 June 1999, Barclays Bank PLC and its subsidiaries had total assets
of $397,436 million -- including total net loans and advances of $240,613
million, total liabilities of $383,323 million -- including total deposits of
$257,013 million, and shareholders' funds of $13,994 million -- comprising
called-up share capital of $3,421 million, equity reserves of $10,116 million
and non-equity reserves of $456 million. Barclays profit on ordinary activities
before tax for the first half of 1999 was $1,598 million. As of 31 December,
1998, Barclays Bank PLC and its subsidiaries had total assets of $361,569
million -- including total net loans and advances of $218,633 million, total
liabilities of $348,137 million -- including total deposits of $235,935 million,
and shareholders' funds of $13,351 million -- comprising called-up share capital
of $3,420 million, equity reserves of $9,498 million and non-equity reserves of
$433 million. Barclays profit on ordinary activities before tax for 1998 was
$3,122 million.
The annual report on Form 20-F for the year ended 31 December, 1998 and
the interim report on Form 6-K for the semi-annual period ended 30 June 1999 of
Barclays PLC and Barclays Bank PLC are on file with the Securities and Exchange
Commission. Barclays will provide, without charge to each person to whom this
prospectus is delivered, on the request of that person, a copy of the Form 20-F
and Form 6-K referred to in the previous sentence. Written requests should be
directed to: Barclays Bank PLC, 54 Lombard Street, London, EC3P 4AH, England,
Attention: Barclays Group Corporate Secretariat.
Neither the class A notes nor the class B notes are obligations of
Barclays Bank PLC, Barclays PLC or any of their affiliates.
23
<PAGE>
Year 2000 Compliance
The Barclays Group Year 2000 Programme, initiated in 1996, is responsible
for Year 2000 projects across the Barclays group world-wide and is sponsored by
John Varley, Chief Executive, Retail Financial Services, who reports directly
to Matthew Barrett, Chief Executive of the Barclays group. A Programme Board of
executives representing all Barclays group businesses is chaired by David
Weymouth, the Managing Director, Barclays Service Provision, who reports
directly to the programme sponsor. The Barclays group Year 2000 Programme
includes planning at the Barclaycard level.
Barclays has continued working to ensure that its mission critical
systems, those which could have an immediate and observable impact on the
Barclays group's customers and therefore its ability to continue to operate
effectively, can deal satisfactorily with the Year 2000 problem. Barclays
believes that all mission critical information technology systems for its
Barclaycard business, including embedded systems, have now been tested and are
Year 2000 ready.
Together with other banks and external network providers, Barclays has
taken part in successful testing of the key industry infrastructure in the
United Kingdom, including the cheque clearing and electronic payment systems,
credit cards and automatic teller machines. Barclays will continue to
participate in industry-wide testing throughout the remainder of 1999. Where
appropriate, similar joint testing is undertaken in other countries in which it
operates.
As a result of working closely with key suppliers the Barclays group has
been able to satisfy itself as to their current, or planned, state of readiness
and the support arrangements required for the cutover to the new year. The Year
2000 readiness of approximately 1,500 of Barclays' most critical counterparties
is being assessed centrally and procedures are in place to ensure that credit
exposure to those, and other banks with whom the Barclays group, has a
relationship, is managed with Year 2000 readiness in mind.
The Barclays group collates and analyses information on specific aspects
of the preparedness of countries in which it operates using data from a variety
of sources. Barclays continues to evaluate significant potential Year 2000
impacts on its funding capability and incorporates such risks into its capital
and liquidity plans.
Despite all these actions Barclays is not taking its progress for granted.
All systems changes are now subject to "Clean Management" processes in order to
prevent the Year 2000 problem being reintroduced. In order to further mitigate
the risk associated with the introduction of new systems a "Change Freeze"
regime has been implemented across the Barclays group, the first element of
which began in July.
It is a prudent planning scenario that there could be some disruption
caused directly or indirectly by the Year 2000 problem. Contingency plans
across the Barclays group -- including the business of Barclaycard -- are
therefore being reviewed and updated, and are being augmented with continuity
plans to mitigate the possible effects of the Year 2000 problem. At the end of
July, Barclays had completed an initial cutover plan which defines how the
Barclays group will operate across the change from 1999 into 2000. This
includes the establishment and testing of a network of command centres,
internal and external communications and participation in industry testing
during the non-business days. This work will continue to be refined during the
remainder of 1999 incorporating market requirements.
The total cost of the Year 2000 Programme is estimated not to exceed $412
million, including $33 million of capitalised costs, for the four year period
ending December 2000. The total amount spent on the Year 2000 Programme to the
end of June was about $297 million, including $25 million of capitalised costs,
of which $58 million was incurred in the half year to June 1999. Year 2000
costs include correction, testing, third party assurance and contingency
planning.
Barclays expectations about completion of its Year 2000 remediation and
testing efforts, the anticipated costs to complete the project and anticipated
business, operational and financial risks to the Barclays group are subject to
a number of uncertainties. Barclays estimates of the cost of preparing for the
Year 2000 are based on numerous assumptions regarding future events including,
among others, expectations of third party modification plans and the nature and
amount of fixing and testing which may be required as well as continued
availability of trained personnel. For example, if the Barclays group is
affected by the inability of suppliers, service providers, counterparties,
customers, payment and settlement networks or market exchanges to deal
satisfactorily with the Year 2000 problem and to continue operations, or the
Barclays group is unsuccessful in identifying or finding all Year 2000 problems
in its critical operations, or if the Barclays group is unable to retain the
staff or third party consultants necessary to implement its Year 2000 Programme
at currently projected costs and timetables, the Barclays group's operations or
financial results could be materially affected.
24
<PAGE>
Credit Card Usage in the United Kingdom
The United Kingdom credit card market is the largest and most developed in
Europe. The adult population of the United Kingdom is 45 million, and the total
population is 59 million. It is estimated that 41% of the adult British
population holds at least one credit card.
The number of credit, charge and corporate cards in issue in the UK has
grown steadily since 1976, and exceeded 42 million in August 1999. Of these, 26
million carried the VISA service mark and 16 million the MasterCard service
mark, with the remainder comprised of corporate and charge cards.
In the last five years, the number of cards in issue has risen sharply
with 16 million new cards issued in this period. Purchases in the UK, in the
twelve months to August 1999, totalled almost $128.5 billion. UK plastic card
borrowings have more than doubled since 1994, and were approximately $44.5
billion at the end of August 1999.
UK consumers use their card in a variety of ways. Figures from a trade
organisation in England show that in the year to August, the average
transaction was $87, with a high of $261 in the "Travel" sector, and low of $55
in "Food/drink". These two sectors account for, respectively, 13.7% and 12.9%
of total credit card spending.
Barclaycard and the Barclaycard Card Portfolio
General
Barclaycard, a division of Barclays Bank PLC, is the largest credit card
issuer in the UK. Barclaycard is based in Northampton, England and has in
excess of 4,000 employees in the UK and the rest of Europe. In 1966 Barclaycard
issued the UK's first credit card and today has the largest credit card market
share in the UK with $9,754,329,392 of billed balances as of 30 September,
1999. Barclaycard offers over 12 credit card products and services to
individual and corporate customers. The average customer has had a Barclaycard
for 13 years.
In September 1998 Barclaycard announced a three year cost efficiency
programme designed to meet world benchmarking standards. The programme, which
included the announcement of the loss of 800 jobs over a three year period in
the card issuing business, involves a major investment in front office
telephony systems. Also, Barclaycard is implementing plans to invest in
information based customer management technology and skills to complement its
brand-name led strategy.
The receivables being securitised come from transactions made by
MasterCard and VISA card accountholders. These include premium accounts and
standard accounts from Barclaycard's portfolio of card accounts. Premium
accounts may carry higher credit limits and may offer different services to the
cardholders.
A cardholder may use his or her card for both purchases and cash advances.
A purchase is when cardholders use their cards to acquire goods or services. A
cash advance is when cardholders use their cards to get cash from a financial
institution or automated teller machine or using credit card cheques issued by
Barclaycard drawn against their VISA credit lines. Cardholders may draw against
their MasterCard or VISA credit lines by transferring balances owed to other
creditors to their Barclaycard accounts.
See "Servicing of Receivables and Trust Cash Management" for a description
of how Barclaycard services receivables. Barclaycard undertakes all the
processing and administering of accounts apart from cardholder payment
processing, which is done for Barclaycard by Great Universal Stores Home
Shopping Ltd., a company not affiliated with Barclaycard.
Description of Great Universal Stores Home Shopping Ltd.
Barclaycard is a party to an agreement with Great Universal Stores Home
Shopping Ltd., under which they provide Barclaycard with certain processing
services. Under this agreement, Great Universal Stores Home Shopping Ltd.
collects and processes all remittances arising from Barclaycard's credit and
charge card portfolio through facilities located in Bolton, England. Great
Universal Stores Home Shopping Ltd. has been providing these services to
Barclaycard since February 1996. The Great Universal Stores Home Shopping Ltd.
contract with Barclaycard is scheduled to expire in February 2001. At this
time, Barclaycard believes that, at the expiration of the contract, it will be
able either to enter into a comparable agreement at comparable pricing with
Great Universal Stores Home Shopping Ltd. or with another qualified entity or
to take this function back within Barclaycard or another Barclays Bank PLC
division or affiliate.
25
<PAGE>
Acquisition and Use of Card Accounts
Barclaycard uses a value driven marketing strategy to focus new
origination campaigns. This process is assisted by the use of financial
forecasting models for each method it uses to solicit cardholders. The main way
Barclaycard recruits its customers is by introductions from Barclays branches,
but it also uses targeted mailing, media inserts and, in the last year, the
internet. In the future, the internet may increase substantially as a means of
recruiting new cardholders, although we are unable to predict how cardholders
recruited in this way will perform relative to those recruited by traditional
means.
When received, credit application details are screened by a combination of
system based checking, external credit bureau data and manual verification,
where appropriate.
Barclaycard uses a range of application scorecards to assess the credit
quality of new account applications, each tailored towards different market
segments. Scorecards are derived using a combination of factors including
Barclays account history, annual income, time in and place of residence,
current employment and credit bureau data. A proprietary cash flow model is
used to help determine the acceptance score levels for each scorecard.
Acceptance score levels are reviewed at least quarterly by committee.
The initial limit of an account is determined using credit score and
income matrices. Initial limits are set at comparatively low levels. Limits are
increased in a controlled and regular manner using behaviour score and credit
bureau data. Behaviour scoring was introduced in 1989 and is one of the key
tools used by Barclaycard in risk management and underpins all risk decisions
applied to accounts once they have been opened. Barclaycard currently uses
behaviour scorecards developed in conjunction with the Fair, Isaacs
International UK Corporation, an independent firm experienced in developing
credit scoring models.
The behaviour scorecards are monitored using retrospective sampling which
allows a comparison of actual to expected performance over predetermined time
periods. This analysis allows the effectiveness of the scorecards to be
measured on a regular basis, and underpins the decisions on scorecard
development.
Credit limits are adjusted based upon Barclaycard's continuing evaluation
of an account holder's credit behaviour and suitability using Triad V, the
latest account management system developed by the Fair, Isaacs Companies.
Each cardholder has a card agreement with Barclaycard governing the terms
and conditions of their MasterCard or VISA account. Under each card agreement,
Barclaycard is able, if it gives advance notice to the cardholder, to add or
change any terms, conditions, services or features of the MasterCard or VISA
accounts at any time. This includes increasing or decreasing periodic finance
charges, or minimum payment terms. Each card agreement enables Barclaycard to
apply charges to current outstanding balances as well as to future
transactions.
Barclaycard regularly reviews its credit and charge card agreement forms
to determine their compliance with applicable law and the suitability of their
terms and conditions. If they need to be updated or amended, this will be done
on a timetable consistent with the issues identified.
Description of Processing
Barclaycard settlement systems have links to VISA, MasterCard and Europay
to enable cardholder transactions to be transferred. MasterCard owns 15% of
Europay and Europay's members own the rest of Europay. Barclaycard also
acquires transactions from merchants. Transactions acquired in this way
relating to Barclaycard cardholders are passed to the card account processing
systems directly rather than via VISA or Europay.
Billing and Payment
Barclaycard generates and mails monthly statements to cardholders which
give details of the transactions for that account.
Cardholders can get up to 56 days interest free on purchases.
At the moment, cardholders must make a monthly minimum payment which is at
least equal to the greater of:
* 3% of the statement balance; and
* the stated minimum payment, which is currently approximately $8.
Notwithstanding the above, in the case of the Premier Card, Barclaycard's
charge card product, cardholders must pay the statement balance in full, which
is collected via direct debit 14 days after the date of the statement.
Certain eligible cardholders may be given the option to take a payment
holiday.
Barclaycard charges an annual fee on accounts which ranges from $16 to
$132 depending on the card product. In order to retain customers, Barclaycard
may waive this fee. Barclaycard also assesses a cash advance fee which is 1.5%
of the cash advance with a minimum of $2.47
26
<PAGE>
The finance charges on purchases assessed monthly are calculated by
multiplying the account's average daily purchase balance over the billing
period by the applicable monthly rate. Finance charges are calculated on
purchases from the date the purchase is debited to the relevant account.
Monthly periodic finance charges are not assessed on purchases if all balances
shown in the billing statement are paid by the date they are due. This is
usually 25 days after the billing date.
The finance charges on cash advances assessed monthly are calculated by
multiplying the account's average daily balances of cash advances over the
billing period by the applicable monthly rate. Finance charges are calculated
on cash advances from the date of the transaction -- except for cash advances
by use of credit card cheques, where finance charges are usually calculated
from the date the transaction is debited to the relevant account.
The interest rates on Barclaycard's credit card accounts may be changed by
Barclaycard and are not linked to any index. This is market practice in the
United Kingdom. At the moment, the standard annual percentage rate of charge on
accounts ranges from 14.9 to 19.9 per cent., which includes the annual fee.
Barclaycard may sometimes offer temporary promotional rates. Barclaycard also
offers activation programmes and other incentives.
Barclaycard has an established pricing committee, consisting of senior
directors, which meets monthly and determines the pricing on Barclaycard's
credit and charge card accounts. The timing of meetings is broadly aligned to
meetings of the Bank of England monetary policy committee. Pricing decisions
are based upon:
* actual and anticipated movements in underlying interest rates;
* marketing strategies and recruitment campaigns; and
* competitive environment.
The committee considers pricing in its broadest sense covering interest
rates, annual fees, minimum payment amounts and other factors.
English law does not prescribe a maximum rate that may be charged as
interest for a debt. However, the obligation to make interest payments will not
be enforceable to the extent that the interest rate is extortionate. An
interest rate will be extortionate if it requires the debtor or a relative of
the debtor to make payments -- whether unconditionally or on certain
contingencies -- which are grossly exorbitant, or which otherwise grossly
contravene ordinary principles of fair dealing. Barclaycard believes that the
interest rates charged on its cards do not contravene any laws relating to
extortionate credit agreements.
Delinquency and Loss Experience
An account is contractually delinquent if the minimum payment is not
received by the due date indicated on the customer's statement. Once an account
is recognised as delinquent a determination is made of the timing and type of
initial contact. This initial contact is typically between 5 and 60 days after
an account becomes delinquent and may be by statement, letter or telephone. The
basis for determining the timing of initial contact may include the age of the
account, the amount outstanding, the past account performance and behaviour
score and any external credit bureau information available.
Efforts to collect delinquent receivables occur at each stage of
delinquency. Collection activities include statement messages, telephone calls
and formal collection letters. This process is normally completed after
anywhere between 120 and 180 days of delinquency, at which point an account is
charged-off. There is no specific period of delinquency at the end of which an
account must be charged-off. The decision to charge-off is based upon an
assessment of the likelihood of recovery and rehabilitation of the individual
account and may occur at any point in the collection process. In certain
circumstances, in particular where notification of bankruptcy is received,
charge-off occurs sooner and may be immediate. In addition, there are instances
where accounts are not charged-off after 180 days of delinquency, including
where an outstanding payment protection insurance claim or voucher dispute
exists.
A charge-off team within the collections unit undertakes a review of all
accounts which have been flagged for charge-off to ensure that all possible
steps have been taken to bring the account current. Once charged-off, the
accounts are typically placed with debt collection agencies to maximise
recoveries. Post charge-off account rehabilitation may occur where improved
credit circumstances and significant recovery occurs. However, charging
privileges can only be re-instated once the cardholder has been accepted for a
new account.
The following tables set forth the delinquency and loss experience of
Barclaycards portfolio of VISA and MasterCard credit and charge card accounts
denominated in pounds sterling -- called the "bank portfolio" -- for each of
the periods shown. The information in the tables is presented in U.S. dollars.
The bank portfolio includes platinum, gold and classic VISA and MasterCard
credit cards and the Premier VISA charge card. Because the receivables in the
securitised accounts -- called the "securitised portfolio" -- may in the future
only represent a portion of the bank portfolio, and because the economic
environment may change, we cannot assure you that the delinquency and loss
experience of the securitised portfolio will be the same as the historical
experience set forth below.
27
<PAGE>
Delinquency Experience
Bank Portfolio
<TABLE>
<CAPTION>
As of 30 September 1999 As of 30 June 1999 As of 31 March 1999
--------------------------- -------------------------- -------------------------
Percentage Percentage Percentage
of Total of Total of Total
Receivables Receivables Receivables Receivables Receivables Receivables
-------------- ----------- ------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Receivables Outstanding(1).... $10,065,057,565 $9,499,099,323 $8,973,349,282
Receivables Delinquent:
30--59 Days................... $176,466,009 1.75% $169,372,926 1.78% $159,005,521 1.77%
60--89 Days................... 89,957,585 0.89 91,169,176 0.96 82,383,378 0.92
90--119 Days.................. 59,125,523 0.59 58,347,562 0.61 50,775,261 0.57
120--149 Days................. 41,614,119 0.41 38,913,715 0.41 34,086,303 0.38
150 Days or more.............. 83,695,102 0.83 67,768,641 0.71 53,544,066 0.60
-------------- ----------- ------------- ----------- ------------- ----------
Total......................... $450,858,338 4.48% $425,572,021 4.48% $379,794,529 4.23%
============== =========== ============= =========== ============= ==========
-------------- ----------- ------------- ----------- ------------- ----------
Repayment Programme Accounts(2) $130,426,511 1.30% $112,231,351 1.18% $93,493,821 1.04%
============== =========== ============= =========== ============= ==========
As of 31 December 1998 As of 31 December 1997 As of 31 December 1996
---------------------------- --------------------------- --------------------------
Percentage Percentage Percentage
of Total of Total of Total
Receivables Receivables Receivables Receivables Receivables Receivables
------------- ------------- ------------ ------------- ----------- -------------
<S> C> <C> <C> <C> <C> <C>
Receivables Outstanding(1).... 9,055,290,590 $7,930,756,625 $7,140,888,786 $6,461,648,431
Receivables Delinquent:
30--59 Days................... $158,440,195 1.75% $102,971,647 1.30% $88,452,853 1.24%
60--89 Days................... 79,645,343 0.88% 42,549,610 0.54 39,576,828 0.55
90--119 Days.................. 47,733,162 0.53 27,953,051 0.35 26,966,780 0.38
120--149 Days................. 32,505,994 0.36 19,006,742 0.24 18,138,477 0.25
150 Days or more.............. 48,724,641 0.54 51,654,124 0.65 4,958,264 0.07
------------- ------------- ------------ ------------- ----------- -------------
Total......................... $367,049,335 4.05% $244,135,174 3.08% 178,093,203 2.49%
============= ============= ============ ============= =========== =============
------------- ------------- ------------ ------------- ----------- -------------
Repayment Programme Accounts(2) $74,566,479 0.82% $34,850,751 0.44% $21,883,597 0.31%
============= ============= ============ ============= =========== =============
As of 31 December 1995 As of 31 December 1994
--------------------------- -----------------------
Percentage Percentage
of Total of Total
Receivables Receivables Receivables Receivables
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Receivables Outstanding(1).... $5,700,933,862
Receivables Delinquent:
30--59 Days................... 82,072,543 1.27% $55,220,426 0.97%
60--89 Days................... 33,175,988 0.51 20,306,886 0.36
90--119 Days.................. 23,202,032 0.36 11,534,906 0.20
120--149 Days................. 15,649,102 0.24 6,521,262 0.11
150 Days or more.............. 4,338,728 0.07 1,431,146 0.03
------------ ------------- ----------- -----------
Total......................... $158,438,394 2.45% $95,014,627 1.67%
============ ============= =========== ===========
------------ ------------- ----------- -----------
Repayment Programme Accounts(2) $19,993,871 0.31% $23,551,052 0.41%
============ ============= =========== ===========
</TABLE>
Note
(1) The receivables outstanding on the accounts consist of all amounts due
from cardholders as posted to the accounts as of the date shown.
(2) Repayment programs are arrangements that are made with customers who fall
into financial difficulty. They are agreed as part of a customer
assistance tool set which is targeted at managing the risk on those
customers who are in difficulty whilst maintaining the customer
relationship. They are subject to minimum regular monthly payments.
In 1997, the introduction of the Triumph computer system combined with a
re-engineering of the collection process, resulted in increased flexibility in
the management of 150 or more days delinquencies. The new system allowed the
tracking and managing of accounts further into their delinquency profile as
opposed to the historic charging-off of accounts at this stage.
28
<PAGE>
Loss Experience
Bank Portfolio
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------------------------
30 September
1999 30 June 1999 31 March 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
Average receivables outstanding(1)........................................ $9,939,601,739 $9,379,117,500 $8,943,070,232
Total gross charge-offs(2)................................................ 92,939,579 90,392,464 122,399,583
Recoveries(3)............................................................. 26,443,617 26,696,866 24,253,420
Total net charge-offs(4).................................................. 66,495,962 63,695,597 98,146,163
---------------- ---------------- ----------------
Total net charge-offs as a percentage of average receivables outstanding(5) 2.68% 2.72% 4.39%
================ ================ ================
Year ended 31 December
------------------------------------------------------
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
Average receivables outstanding(1)........................................ $8,226,003,597 $7,175,924,182 $6,592,008,620
Total gross charge-offs(2)................................................ 290,734,015 185,815,933 223,311,193
Recoveries(3)............................................................. 93,454,157 82,096,147 90,092,899
Total net charge-offs(4).................................................. 197,279,858 103,719,786 133,218,293
---------------- ---------------- ----------------
Total net charge-offs as a percentage of average receivables outstanding(5) 2.40% 1.45% 2.02%
================ ================ ================
Year ended 31 December
--------------------------------------
1995 1994
---------------- ----------------
<S> <C> <C>
Average receivables outstanding(1)........................................ $5,950,392,038 $5,176,315,073
Total gross charge-offs(2)................................................ 164,835,454 137,627,293
Recoveries(3)............................................................. 85,799,144 85,135,953
Total net charge-offs(4).................................................. 79,036,310 52,491,340
---------------- ----------------
Total net charge-offs as a percentage of average receivables outstanding(5) 1.33% 1.01%
================ ================
</TABLE>
Notes
(1) Average receivables outstanding is the average monthly receivable balance
during the periods indicated.
(2) Total gross charge-offs are total principal and interest charge-offs
before recoveries and do not include the amount of any reductions in
average receivables outstanding due to fraud, returned goods, customer
disputes or other miscellaneous credit adjustments.
(3) Recoveries include all monies received after charge-off, including any
monies received as a result of any sale or other disposition of
receivables in charged-off accounts.
(4) Total net charge-offs are total gross charge-offs less recoveries.
(5) All percentages shown are annualised.
In Barclaycard's opinion, the causes of the increase in delinquency and
net charge-off experience are twofold:
* In late 1997, Barclaycard introduced a customer relationship-based
approach to delinquency, driven by Barclaycard's perception of the
credit risk associated with a customer rather than the time period
of delinquency. Low credit risk accounts are actioned later,
resulting in increased portfolio delinquency levels up to 90 days
past due. High risk accounts, however, are actioned at an earlier
stage of delinquency, resulting in short term delinquencies being
weighted towards lower credit risk accounts.
* Since the first quarter of 1998, and markedly since the third
quarter of 1998, Barclaycard have experienced adverse economic
conditions as a result of a slowdown in the UK economy. The
delinquency and net charge-off experience during 1998 and the
first quarter of 1999 reflects this economic deterioration.
Provision for Bad and Doubtful Debt
Bank Portfolio
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------------------
30 September
1999 30 June 1999 31 March 1999
<S> <C> <C> <C>
Average receivables outstanding(1)............................. $9,939,601,739 $9,379,117,500 $8,943,070,232
Net charge(2).................................................. 57,594,372 59,835,278 88,843,383
Net charge as a percentage of average receivables outstanding(3) 2.32% 2.55% 3.97%
Year ended 31 December
------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Average receivables outstanding(1)............................. $8,226,003,597 $7,175,924,182 $6,592,008,620
Net charge(2).................................................. 189,666,854 232,527,088 166,021,366
Net charge as a percentage of average receivables outstanding(3) 2.31% 3.24% 2.52%
Year ended 31 December
-------------------------------
1995 1994
<S> <C> <C>
Average receivables outstanding(1)............................. $5,950,392,038 $5,176,315,073
Net charge(2).................................................. 108,213,906 86,444,674
Net charge as a percentage of average receivables outstanding(3) 1.82% 1.67%
</TABLE>
(1) Average receivables outstanding is the average daily receivable balance
during the period indicated.
(2) The net charge includes both specific and general charges and releases for
the provision for bad and doubtful debt on the bank portfolio. As general
provisions are normally adjusted on a semi-annual basis, not quarterly,
the total general release undertaken in the first half of 1999 has been
evenly reapportioned in accordance with Barclaycard management's judgement
in order to more fully reflect the quarterly positions.
(3) All percentages shown are annualised.
29
<PAGE>
The Receivables
Assignment of Receivables to the Receivables Trustee
Barclaycard as the initial transferor will offer on the closing date to
the receivables trustee an assignment of all receivables that have arisen or
will arise in all designated accounts as of 31 October, 1999 -- called the
"pool selection date". An account of the initial transferor will be designated
as a "designated account" if the account has been originated under and
continues to conform to the credit and charge card products described in this
prospectus and has not been identified on the initial transferor's system as
being excluded from the offer. Only credit and charge card products available
to the transferor's individual accountholders may be designated.
If for any reason there are receivables from designated accounts that
cannot be assigned to the receivables trustee, the transferor will hold those
receivables, and any collections on those receivables, on trust for the
receivables trustee. These collections will be treated as if the receivables
had been properly assigned.
Under the terms of the receivables securitisation agreement, the
transferor also has the right to select accounts that conform to the conditions
in the second paragraph above and that are not designated and nominate them as
designated accounts by offering the receivables trustee an assignment of all
future and existing receivables in these accounts. These accounts are called
"additional accounts". An additional account will be treated as a designated
account from the date on which its receivables are offered to the receivables
trustee. This date is called the "addition date". When additional accounts are
nominated the transferor must, amongst other things:
* provide the receivables trustee with a certificate stating that it
is solvent;
* confirm, in the document that offers to assign the receivables in
the additional accounts to the receivables trustee, that:
(1) the offer of the receivables in the additional accounts
meets the Maximum Addition Amount criteria; or
(2) if the offer does not meet the Maximum Addition Amount
criteria, the rating agencies have confirmed that the
designation of additional accounts will not result in a
reduction or withdrawal of the current rating of any
outstanding debt that is secured directly or indirectly by
the receivables in the receivables trust, including your
notes.
* obtain a legal opinion addressed to the receivables trustee about
any receivables from a jurisdiction outside of the United Kingdom.
Any of these preconditions may be waived by the receivables trustee if the
rating agencies confirm in writing that the waiver will not result in the
reduction or withdrawal of their rating on any related beneficiary debt. At the
time that it is nominated, each additional account must also meet the
eligibility criteria as at the time of its designation. These criteria are
explained in "-- Representations" below. Additional accounts may have been
originated or purchased using underwriting standards that are different from
the underwriting standards used by Barclaycard in selecting the original
designated accounts. As a result, additional accounts that are selected in
future may not have the same credit quality.
"Maximum Addition Amount" means, for any addition date, the number of
additional accounts originated by the transferor after the pool selection date
and nominated as additional accounts without prior rating agency confirmation
that would not either:
* for any three consecutive monthly periods starting with the
monthly period beginning on the first day of the month before the
pool selection date, exceed 15 per cent of the number of
designated accounts at the end of the ninth monthly period before
the start of such three monthly periods;
* for any twelve-month period, be equal to 20 per cent of the
designated accounts as of the first day of the twelve-month period
or, if later, as of the cut-off date.
Notwithstanding what we just said, if the total principal balance of
receivables in the additional accounts described in either of the two prior
bullet points is more than either:
(1) 15 per cent. of the total amount of eligible principal receivables
determined as of the later of the pool selection date and the
first day of the third preceding monthly period, minus the amount
of eligible principal receivables in each additional account that
was nominated since the later of the closing date and the first
day of the third preceding monthly period -- calculated for each
additional account on its addition date; or
(2) 20 per cent. of the total amount of eligible principal receivables
as of the later of the closing date and the first day of the
calendar year in which the addition date occurs, minus the total
amount
30
<PAGE>
of eligible principal receivables in each additional account that
was nominated since the later of the closing date and the first
day of the calendar year, calculated for each additional account
as of its addition date,
then the Maximum Addition Amount will be the lesser of (1) or (2) above.
Every offer of receivables to the receivables trustee under the
receivables securitisation agreement will comprise offers of the following:
* all existing receivables in the designated accounts;
* all future principal receivables under the designated accounts,
until the first to occur of (1) the time a designated account
becomes a redesignated account, (2) the receivables trust is
terminated or (3) an Insolvency Event occurs;
* all future finance charge receivables under those designated
accounts that have accrued on receivables that have been assigned
to the receivables trustee as described in the two prior bullet
points;
* all amounts recoverable on future receivables -- including from
the disposal of charged-off receivables to Barclaycard;
* if capable of being assigned, the benefit of any guarantee or
insurance policy obtained by the transferor for any obligations
owed by a cardholder on a designated account; and
* the benefit of all amounts representing Acquired Interchange.
The transferor will ensure that each redesignated account is identified
on the transferor's computer system on the date that a designated account
becomes a redesignated account.
Throughout the term of the receivables trust, the designated accounts from
which the receivables will arise will be the designated accounts plus any
additional accounts designated by the transferor from time to time, minus any
redesignated accounts.
Existing receivables and future receivables arising under the designated
accounts will be principal receivables or finance charge receivables. Principal
receivables are receivables that are not finance charge receivables. Principal
receivables are amounts owing by cardholders for the purchase of merchandise or
services and from cash advances, including foreign exchange commissions charged
for merchandise and services payable, or cash advances denominated in, a
currency other than sterling. They are reduced by any credit balance on the
designated account on that day.
"Finance charge receivables" are amounts owing from cardholders for
transaction fees, periodic finance charges, charges for credit insurance,
special fees, interchange and annual fees -- see "-- Special Fees" and "--
Annual Fees" below -- and any Discount Option Receivables.
Under the receivables securitisation agreement, each offer of receivables
made by the transferor will be accepted by paying the purchase price for the
offered receivables. Payment for existing receivables will have to be made no
later than the business day following the date on which the offer is made.
Alternatively, the parties can agree to a longer period of time for payment.
Payment for future receivables will be made no later than two business days
after the date of processing for those receivables. Alternatively, the parties
can agree to a longer period if the rating agencies consent. This payment will
also include payment for the assignment of the benefit of Acquired Interchange
to the receivables trustee.
A "business day" will be a day other than a Saturday, a Sunday or a day on
which banking institutions in London, England or New York, New York are
authorised or obliged by law or executive order to be closed.
It has been agreed between the transferor and the receivables trustee
that, for the purposes of the offer made on the closing date:
(1) the receivables trustee will be entitled to use the collections in
the designated accounts before the date that the offer is accepted
as if the offer had been accepted on the closing date;
(2) the amount payable on the closing date for the designated accounts
will equal the outstanding face amount of all existing principal
receivables, together with an obligation of the receivables
trustee to pay for all future receivables generated on the
designated accounts that are part of the offer on an ongoing,
daily basis when those future receivables are generated.
The payments in (2) will be net of any payments made in (1),
subject to a minimum of L1.
31
<PAGE>
The obligation of the receivables trustee to make payments to the
transferor for the acceptance of an offer or in payment for any future
receivables, will be reduced by the amount of any shortfall in the amount
funded by the transferor as a beneficiary, providing that the Transferor
Interest is increased accordingly.
Redesignation and Removal of Accounts
Each designated account will continue to be a designated account until
such time as the transferor reclassifies it as being no longer a designated
account -- called a "redesignated account".
A designated account becomes a redesignated account on the date specified
by the transferor. No designated account will become a redesignated account
this way unless (1) it has become a cancelled account, a defaulted account or a
zero balance account or (2) the transferor delivers an officer's certificate
confirming the following conditions are satisfied:
* the redesignation will not cause a pay out event to occur;
* the transferor has represented that its selection procedures for
the selection of designated accounts for redesignation are not
believed to have any material adverse effect on any investor
beneficiary;
* the rating agencies have confirmed that the action will not result
in a downgrade in rating of any outstanding debt that is secured
directly or indirectly by the receivables in the receivables
trust; and
* the transferor and the servicer can certify that collections equal
to the outstanding face amount of each principal receivable and
the outstanding balance of each finance charge receivable have
been received by the receivables trustee on all receivables
assigned for that account other than any receivables charged off
as uncollectable.
A "cancelled account" is a designated account that has had its charging
privileges permanently withdrawn. A "defaulted account" is a designated account
where the receivables have been charged off by the servicer as uncollectable in
line with the credit card guidelines or the usual servicing procedures of the
servicer for similar credit and charge card accounts. A "zero balance account"
is a designated account that has had a nil balance of receivables for a
considerable period of time and has been identified by the servicer as a zero
balance account under the credit and charge card guidelines or the usual
servicing procedures of the servicer.
Redesignated accounts will include all accounts that become cancelled
accounts, defaulted accounts and zero balance accounts from the date on which
they are redesignated in any of these ways. The principal receivables that
exist before the date of redesignation will be paid for by the receivables
trustee. Any future receivables that come into existence after that time will
not be assigned to the receivables trustee as set out in the receivables
securitisation agreement. No receivable that has been assigned to the
receivables trustee will be reassigned to the transferor except in the limited
circumstances described under the heading "-- Representations".
Until money has been received for the assigned receivables, that have not
been charged off, a reassigned account wil not be identified as having been
removed. The amount identified will be equal to the outstanding face amount of
each principal receivable and finance charge receivable. Once these payments
have been received or any reassignment has occurred, the account will be
identified to indicate that it has become a removed account.
Discount Option Receivables
The transferor may, by giving at least thirty days' prior notice to the
servicer, the receivables trustee and the rating agencies, nominate a fixed or
variable percentage -- called the "Discount Percentage" -- of principal
receivables in the designated accounts. If a Discount Percentage has been
nominated previously, an extension to that period can be applied for in this
way. From the date and for the length of time stated in the notice:
* the amount payable by the receivables trustee to accept an offer
of receivables will be reduced by a percentage amount equal to the
Discount Percentage; and
* a percentage of the principal receivables equal to the Discount
Percentage will be treated by the receivables trustee as finance
charge receivables. These are called "Discount Option
Receivables".
The nomination of a Discount Percentage or increase in the time it is in
place will be effective only if the rating agencies consent to the proposed
nomination or increase and confirm that it will not result in the downgrade or
withdrawal of the current rating of any debt that is secured directly or
indirectly by the receivables in the receivables trust, including your notes.
The transferor must also provide the receivables trustee with a certificate
confirming:
32
<PAGE>
* that the performance of the portfolio of designated accounts, in
their reasonable opinion, is not generating adequate cash flows
for the beneficiaries of the receivables trust and the size of the
Discount Percentage is not intended solely to accelerate
distributions to the excess interest beneficiary; and
* that the transferor is solvent and will remain so following the
nomination or increase.
The transferor may have different reasons to designate a Discount
Percentage. The finance charge collections on the designated accounts may
decline for various reasons or may stay constant. The notes have interest rates
that are variable and that could increase. Any of these variables could cause a
Series 99-1 Pay Out Event to occur based in part on the amount of finance
charge collections and the interest rate on the notes. The transferor could
avoid the occurrence of this Series 99-1 Pay Out Event by designating a
Discount Percentage, causing an increase in the amount of finance charge
collections. The transferor, however, is under no obligation to designate a
Discount Percentage and we cannot assure you that the transferor would
designate a Discount Percentage to avoid a Series 99-1 Pay Out Event.
Special Fees
The transferor may in the future charge special fees on its credit or
charge card accounts. These special fees may be assessed at one time or on an
ongoing basis. Any special fees that are charged on designated accounts will be
regarded as finance charge receivables and collections of these special fees
will be treated as finance charge collections. The transferor may, however,
decide that these special fees will be viewed as principal receivables and
collections on them will be allocated accordingly. This can be done only if the
transferor certifies that it has an opinion from legal counsel that the special
fees amount to repayment, for United Kingdom tax purposes, in whole or in part
of an advance to a cardholder.
Interchange
Members participating in the VISA and MasterCard associations receive fees
called "interchange" as partial compensation, for amongst other things, taking
credit risk and absorbing fraud losses. Under the Visa and MasterCard systems,
interchange is passed from the banks that clear the transactions for merchants
to card issuing banks. Interchange fees are calculated as a percentage of the
amount of a credit or charge card transaction for the purchase of goods or
services. This percentage varies from time to time.
On each transfer date the transferor will deposit into the Trustee
Collection Account an amount equal to the interchange received for the
preceding monthly period. This amount is called the "Acquired Interchange" and
is calculated as follows:
Acquired Interchange = A X B
where
A = total interchange paid or payable to the transferor for that period,
and
B = total charges eligible for interchange in designated accounts for
that period
---------------------------------------------------------------------
total charges eligible for interchange in all card accounts owned by
the transferor for that period
Annual Fees
Receivables assigned or to be assigned to the receivables trustee include
annual fees on the designated accounts. All annual fees are and will be treated
as finance charge receivables. The transferor may, however, by notice to the
servicer, the receivables trustee and the rating agencies designate in a
certificate to the receivables trustee that annual fees will be treated as
principal receivables. No designation of annual fees as principal receivables
will be effective unless the transferor has certified that it has received
legal advice that these annual fees will amount, for United Kingdom tax
purposes, to repayment of an advance to a cardholder. For the purposes of
series 99-1, all annual fees are treated as finance charge receivables.
Reductions in Receivables, Early Collections and Credit Adjustments
If a principal receivable that has been assigned to the receivables
trustee is reduced -- for reasons other than because of Section 75 of the
Consumer Credit Act or a credit adjustment -- after the offer date, because of
set-off, counterclaim or any other matter between the cardholder and the
transferor, and the transferor has received a benefit, then the transferor will
pay an amount equal to that reduction to the receivables trustee. Similarly, if
an existing receivable has already been assigned and the transferor has
received full or partial payment of that receivable before the date that the
receivable was purportedly assigned, then the transferor will pay the amount of
that collection to the receivables trustee.
33
<PAGE>
If any principal receivable assigned to the receivables trustee is reduced
for credit adjustment reasons after the offer date, then the transferor will
pay that amount to the receivables trustee. A credit adjustment is the
outstanding face amount of a principal receivable that:
* was created by virtue of a sale of merchandise that was
subsequently refused or returned by a cardholder or against which
the cardholder has asserted any defence, dispute, set-off or
counterclaim;
* is reduced because the cardholder had received a rebate, refund,
charge-back or adjustment; or
* is fraudulent or counterfeit.
Alternatively, instead of paying these amounts to the receivables trustee,
the transferor can reduce the Transferor Interest by the amount of the credit
adjustment, but not below zero.
Representations
Each offer of receivables to the receivables trustee will include
representations by the transferor about the offer of the existing receivables
and the future receivables. The representations for the existing receivables
will be given as of pool selection date or an addition date, as applicable, and
the representations for the future receivables will be given on the date they
are processed, and will include, in each case, that:
* the receivable is an eligible receivable and has arisen from an
eligible account in the amount specified in the offer or daily
activity report, as applicable;
* each assignment passes good and marketable title for that
receivable to the receivables trustee, together with the benefit
of all collections and other rights in connection with it, free
from encumbrances of any person claiming on it through the
transferor to the receivables and, unless such receivable does not
comply with the Consumer Credit Act, nothing further needs to be
done to enforce these rights in the courts of England and Wales,
Scotland or Northern Ireland, or any permitted additional
jurisdiction, without the participation of the transferor, except
for payment of any United Kingdom stamp duty and giving a notice
of assignment to the cardholders;
* the assignment complies with all applicable laws on the date of
assignment; and
* the transferor did not use any procedures adverse to the
beneficiaries of the receivables trust in selecting the designated
accounts from Barclaycard's portfolio of card accounts;
If a representation given in connection with any principal receivable
proves to be incorrect when made, then the transferor is obliged to pay the
receivables trustee an amount equal to the face value of that receivable on the
following business day. A receivable of this type will afterwards be treated as
an ineligible receivable.
The transferor's obligation to pay amounts due as a result of any breach
of a representation can be fulfilled, in whole or in part, by a reduction in
the amount of the Transferor Interest. The Transferor Interest, however, may
not be reduced below zero. If the transferor meets a payment obligation of this
type, the receivables trustee will have no further claim against the transferor
for the breached representation. However, a breach of a representation may
result in a Series 99-1 Pay Out Event.
If:
* all principal receivables arising under a designated account
become ineligible as a result of incorrect representations;
* that account has become a redesignated account; and
* the transferor has complied with the payment obligations for the
principal receivables;
then the transferor can require the receivables trustee to reassign all those
receivables to the transferor.
The receivables trustee has not made and will not make any initial or
periodic examination of the receivables to determine if they are eligible
receivables or if the transferor's representations and warranties are true.
The term "eligible account" means, as of the pool selection date or on an
addition date, a credit or charge card account:
* where the cardholder is not a company or partnership for the
purposes of Section 349(2) of the Income and Corporation Taxes Act
1988;
* which was in existence and maintained with the transferor before
it became a designated account;
* which is payable in pounds sterling or the currency of the
permitted additional jurisdiction where the account is in a
permitted additional jurisdiction, as applicable;
34
<PAGE>
* which is governed by one of the transferor's standard form card
agreements or, if it was acquired by the transferor, it is
originated on contractual terms not materially different from the
standard form;
* which is governed in whole or in part by the Consumer Credit Act
and creates legal, valid and binding obligations between the
transferor and the cardholder which, except in the case of an
account on which restricted eligible receivables arise, is
enforceable, subject to bankruptcy laws, general principles of
equity and limitations on enforcement in any cardholder
jurisdiction and was otherwise created and complies with all other
applicable laws;
* where the cardholder's most recent billing address is located in
England, Wales, Scotland, Northern Ireland, or a permitted
additional jurisdiction or a restricted additional jurisdiction;
* which has not been classified by the transferor as counterfeit,
cancelled, fraudulent, stolen or lost;
* which has been originated or purchased by the transferor;
* which has been operated in all material respects in accordance
with the transferor's policies and procedures and usual practices
for the operation of its credit and charge card business; and
* the receivables in respect of which have not been charged off by
the transferor on the date the account is specified as a
designated account.
If all these conditions have not been satisfied, then an account may still
be an eligible account if each rating agency gives their approval.
"restricted eligible receivables" are receivables arising on an eligible
account, the terms of which fail to comply with the Consumer Credit Act, such
that a court would have no discretion to grant a court order.
A "permitted additional jurisdiction" is a jurisdiction -- other than
England and Wales, Scotland and Northern Ireland -- agreed by the transferor
and the receivables trustee, and which each rating agency has confirmed in
writing that its inclusion as a permitted additional jurisdiction will not
result in its withdrawing or reducing its rating on any related beneficiary
debt.
A "restricted additional jurisdiction" is a jurisdiction -- other than
England, Wales, Scotland and Northern Ireland or a permitted additional
jurisdiction -- which together with each other account with a billing address
in that jurisdiction and any other jurisdiction other than England, Wales,
Scotland, Northern Ireland or a permitted additional jurisdiction represent
less than 5 per cent. by number of the designated accounts.
A "notice of assignment" means a notice given to a cardholder of the
assignment of the receivables -- and the benefit of any guarantees -- to the
receivables trustee.
An "eligible receivable" means a receivable that:
* has arisen under an eligible account;
* was originated under one of the transferor's standard form credit
or charge card agreements and is governed, in whole or in part, by
the Consumer Credit Act, or else, if the related account was
acquired by the transferor, contractual terms that are materially
the same as the standard form credit and charge card agreements
and are governed, in whole or in part, by the Consumer Credit Act;
* was otherwise created in compliance with all other applicable
laws;
* was originated in accordance with the transferor's policies and
procedures and usual practices for its credit and charge card
business;
* is not a defaulted receivable as at the pool selection date or
addition date, as applicable;
* is free of any encumbrances exercisable against the transferor
arising under or through the transferor or any of its affiliates;
* to which the transferor has good and marketable title;
* is the legal obligation of the cardholder, enforceable -- except
in the case of restricted eligible receivables -- in accordance
with the terms of the credit and charge card agreement, subject to
bankruptcy, general principles of equity and limitations on
enforcement in any cardholder jurisdiction; and
* is not currently subject to any defence, dispute, event, set-off,
counterclaim or enforcement order.
As is market practice in the United Kingdom for credit and charge card
securitisation transactions, principal receivables that are delinquent will
still constitute eligible receivables if they comply with the eligibility
requirements. See the table captioned: "Delinquency Experience -- Bank
Portfolio" in "Barclaycard and the Barclaycard Card Portfolio -- Delinquency
and Loss Experience" below for data showing the percentage of delinquent
receivables.
35
<PAGE>
"Ineligible receivables" means principal receivables which arise under a
designated account but which do not comply with all the criteria set out in the
definition of eligible receivables as at the pool selection date or an addition
date, as applicable.
Amendments to Card Agreement and Card Guidelines
The transferor may amend the terms and conditions of its standard form
card agreements or change its policies and procedures and usual practices for
its general card business. These amendments may include reducing or increasing
the amount of monthly minimum required payments required or may involve changes
to periodic finance charges or other charges that would apply to the designated
accounts. See "Risk Factors: A Change in the Terms of the Receivables May Cause
an Early Redemption or a Downgrade of Your Notes".
Summary of Securitised Portfolio as of 30 September, 1999
The tables that follow summarise the securitised portfolio by various
criteria as of the billing dates of accounts in the month ending on 30
September, 1999. Because the future composition of the securitised portfolio
may change over time, these tables are not necessarily indicative of the
composition of the securitised portfolio at any time after 30 September, 1999.
Composition by Account Balance
Securitised Portfolio
<TABLE>
<CAPTION>
Percentage of Percentage of
Total Number of Total Number of Total
Account Balance Range Accounts Accounts Receivables Receivables
---------------------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Credit Balance.................................... 160,237 1.88% $(17,289,623) (0.18)%
No Balance........................................ 2,879,091 33.80 0 0.00
$00.01 to $5,000.00............................... 5,045,876 59.24 6,413,167,437 65.75
$5,000.01 to $10,000.00........................... 360,481 4.23 2,424,488,810 24.86
$10,000.01 to $15,000.00.......................... 58,916 0.69 694,502,073 7.12
$15,000.01 to $20,000.00.......................... 9,325 0.11 156,582,981 1.61
$20,000.01 to $25,000.00.......................... 2,019 0.02 44,436,059 0.46
$25,000.01 to $30,000.00.......................... 632 0.01 17,111,085 0.18
$30,000.01 to $35,000.00.......................... 274 0.00 8,774,712 0.09
$35,000.01 to $40,000.00.......................... 112 0.00 4,190,686 0.04
$40,000.01 to $45,000.00.......................... 67 0.00 2,843,619 0.03
$45,000.01 to $50,000.00.......................... 33 0.00 1,571,977 0.02
$50,000.01 and over............................... 51 0.00 3,949,575 0.04
---------------- ---------------- ---------------- ----------------
TOTAL............................................. 8,517,114 100.00% $9,754,329,392 100.00%
================ ================ ================ ================
</TABLE>
Composition by Credit Limit
Securitised Portfolio
<TABLE>
<CAPTION>
Percentage of Percentage of
Total Number of Total Number of Total
Credit Limit Range Accounts Accounts Receivables Receivables
-------------------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Less than $5,000.00............................... 5,737,719 67.37% $3,550,352,336 36.40%
$5,000.01 to $10,000.00........................... 1,974,103 23.18 3,522,997,275 36.12
$10,000.01 to $15,000.00.......................... 543,308 6.38 1,798,721,150 18.44
$15,000.01 to $20,000.00.......................... 193,329 2.27 586,507,984 6.01
$20,000.01 to $25,000.00.......................... 41,479 0.49 166,561,871 1.71
$25,000.01 to $30,000.00.......................... 15,802 0.19 61,590,172 0.63
$30,000.01 to $35,000.00.......................... 7,270 0.09 35,522,596 0.36
$35,000.01 to $40,000.00.......................... 1,446 0.02 8,398,308 0.09
$40,000.01 to $45,000.00.......................... 1,380 0.02 9,613,627 0.10
$45,000.01 to $50,000.00.......................... 583 0.01 5,447,231 0.06
$50,000.01 and over............................... 695 0.01 8,616,842 0.09
---------------- ---------------- ---------------- ----------------
TOTAL............................................. 8,517,114 100.00% $9,754,329,392 100.00%
================ ================ ================ ================
</TABLE>
36
<PAGE>
Composition by Account Age
Securitised Portfolio
<TABLE>
<CAPTION>
Percentage of
Total Number of Total Number of Percentage of
Account Age Accounts Accounts Receivables Total Receivables
- --------------------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Not more than 2 Years........................... 1,245,685 14.63% $ 1,178,432,715 12.08%
Over 2 Years to 4 Years......................... 1,102,321 12.94 1,160,674,307 11.90
Over 4 Years to 8 Years......................... 1,810,457 21.26 1,908,461,212 19.57
Over 8 Years to 12 Years........................ 1,270,942 14.92 1,198,338,702 12.29
Over 12 Years to 16 Years....................... 931,716 10.94 1,377,029,619 14.12
Over 16 Years to 20 Years....................... 808,899 9.50 1,166,112,612 11.95
Over 20 Years................................... 1,347,094 15.82 1,765,280,225 18.10
----------------- ----------------- ----------------- -----------------
TOTAL........................................... 8,517,114 100.00% $ 9,754,329,392 100.00%
================= ================= ================= =================
</TABLE>
Geographic Distribution of Accounts
Securitised Portfolio
<TABLE>
<CAPTION>
Percentage of
Total Number of Total Number of Percentage of
Region Accounts Accounts Receivables Total Receivables
- --------------------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
London.......................................... 2,938,805 34.50% $ 3,595,813,966 36.86%
Central Midlands................................ 1,042,966 12.25 1,142,177,199 11.71
Lancashire...................................... 709,807 8.33 824,490,450 8.45
East............................................ 601,116 7.06 655,494,414 6.72
Yorkshire....................................... 549,187 6.45 621,142,900 6.37
South........................................... 556,675 6.54 604,524,051 6.20
Wales........................................... 564,373 6.63 590,675,460 6.06
Northeast....................................... 367,388 4.31 411,253,846 4.22
West Country.................................... 286,823 3.37 293,611,393 3.01
Scotland........................................ 222,433 2.61 303,235,228 3.11
Southwest....................................... 145,629 1.71 166,942,392 1.71
Southeast....................................... 123,663 1.45 145,854,590 1.50
Border Regions.................................. 93,952 1.10 98,558,374 1.01
Northern Ireland................................ 51,036 0.60 65,748,174 0.67
Other........................................... 59,592 0.70 69,527,187 0.71
Non UK.......................................... 203,669 2.39 165,249,767 1.69
----------------- ----------------- ----------------- -----------------
TOTAL........................................... 8,517,114 100.00% $ 9,754,329,392 100.00%
================= ================= ================= =================
</TABLE>
Composition by Product Line
Securitised Portfolio
<TABLE>
<CAPTION>
Percentage of
Total Number of Total Number of Percentage of
Product Accounts Accounts Receivables Total Receivables
- --------------------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Classic Visa.................................... 5,902,944 69.31% $ 6,633,860,699 68.01%
Mastercard...................................... 2,027,774 23.81 1,468,560,343 15.06
Platinum........................................ 387,784 4.55 1,413,746,165 14.49
Premier......................................... 89,591 1.05 117,489,000 1.20
Gold Visa....................................... 41,504 0.49 79,673,803 0.82
Other........................................... 67,517 0.79 40,999,381 0.42
----------------- ----------------- ----------------- -----------------
TOTAL........................................... 8,517,114 100.00% $ 9,754,329,392 100.00%
================= ================= ================= =================
</TABLE>
37
<PAGE>
Maturity Assumptions
The Series 99-1 Supplement to the declaration of trust and trust cash
management agreement provides that the MTN issuer will not receive
distributions of principal collections on the Class A Investor Interest, for
payment of principal on the class A MTN, until the series 99-1 scheduled
redemption date or earlier if a Pay Out Event results in the start of the
Regulated Amortisation Period or the Rapid Amortisation Period. The MTN issuer
will also not begin to receive distributions of principal collections on the
Class B Investor Interest, for payment of principal on the class B MTN, until
the final payment of principal on the class A MTN has been made, and will not
begin to receive distributions of principal collections on the Class C Investor
Interest, for payment of principal on the class C MTN, until the final payment
of principal on the class B MTN has been made.
On each transfer date during the Controlled Accumulation Period, an amount
equal to the Controlled Deposit Amount will be deposited in the Principal
Funding Account until the balance of the Principal Funding Account equals the
Investor Interest. Although it is anticipated that principal collections will
be available on each transfer date during the Controlled Accumulation Period to
make a deposit of the Controlled Deposit Amount and that the Investor Interest
will be paid to the MTN issuer on the series 99-1 scheduled redemption date,
allowing the MTN issuer to fully redeem each class of the MTNs outstanding, no
assurance can be given that sufficient principal collections will be available.
If the amount required to pay the Investor Interest in full is not available on
the series 99-1 scheduled redemption date, a Series 99-1 Pay Out Event will
occur and the Rapid Amortisation Period will begin.
If a Regulated Amortisation Trigger Event occurs during the Controlled
Accumulation Period, the Regulated Amortisation Period will begin. If any other
Pay Out Event occurs during the Controlled Accumulation Period, the Rapid
Amortisation Period will begin. In each case, any amount on deposit in the
Principal Funding Account will be paid to the MTN issuer for the Investor
Interest on the first interest payment date relating to the Regulated
Amortisation Period or the Rapid Amortisation Period. In addition, to the
extent that the Investor Interest for each class has not been distributed in
full, the MTN issuer will be entitled to monthly distributions of principal
collections during the Rapid Amortisation Period equal to the Available
Investor Principal Collections until first the Class A Investor Interest, then
the Class B Investor Interest and then the Class C Investor Interest have been
distributed in full or, during the Regulated Amortisation Period, an amount
equal to the Controlled Deposit Amount until the Investor Interest for each
class has been distributed in full. A Pay Out Event occurs, either
automatically or after specified notice, after a Trust Pay Out Event or a
Series 99-1 Pay Out Event occurs. See "The Receivables Trust: Trust Pay Out
Events" and "Series 99-1: Series 99-1 Pay Out Events". If a Series 99-1 Pay Out
Event occurs, it will automatically trigger an early redemption event under the
medium term notes.
The following table presents the highest and lowest cardholder monthly
payment rates for the bank portfolio during any month in the period shown and
the average cardholder monthly payment rates for all months during the periods
shown. These are calculated as a percentage of total opening receivables
balances during the periods shown. The payment rates are based on amounts which
would be deemed principal collections and finance charge collections for the
related accounts.
Cardholder Monthly Payment Rates
Bank Portfolio
<TABLE>
<CAPTION>
Quarter Ended Year Ended 31 December
------------------------------------ ---------------------------------------------------------------
30
September 30 June 31 March
1999 1999 1999 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lowest Month.. 25.00% 22.01% 24.57% 25.09% 26.64% 29.27% 30.34% 30.55%
Highest Month. 26.08% 27.97% 28.94% 31.02% 36.47% 39.13% 34.75% 36.37%
Monthly Average 25.62% 25.40% 26.89% 28.80% 32.01% 33.03% 32.94% 34.04%
</TABLE>
38
<PAGE>
Collections may vary from month to month due to:
* seasonal variations;
* promotional offerings -- such as payment holidays;
* general economic conditions; and
* payment habits of individual cardholders.
There is no guarantee that the future monthly payment rates for the
securitised portfolio will be similar to the historical experience set forth in
the table above or that there will be enough principal collections to deposit
the Controlled Deposit Amount into the Principal Funding Account each month to
fully redeem your notes by the series 99-1 scheduled redemption date. If a Pay
Out Event occurs, the average life and maturity of your notes could be
significantly reduced, since you may start receiving principal distributions
before the series 99-1 scheduled redemption date.
Because there may be a slowdown in the payment rate below the payment
rates used to determine the Controlled Deposit Amount or a Pay Out Event may
occur which would start the Rapid Amortisation Period or the Regulated
Amortisation Period, there is no guarantee that the actual number of months
elapsed from the closing date to the final distribution date for your notes
will equal the expected number of months. As described under "Series 99-1:
Postponement of Controlled Accumulation Period", if the servicer shortens the
Controlled Accumulation Period there is no guarantee that there will be enough
time to accumulate all amounts necessary to fully pay the Investor Interest on
the series 99-1 scheduled redemption date. See "Risk Factors: Principal on Your
Notes May Be Paid Earlier Than Expected Creating a Reinvestment Risk to You or
Later Than Expected".
Receivables Yield Considerations
The gross revenues from finance charges and fees billed to accounts in
the portfolio of credit and charge card accounts for each of the calendar years
ended 31 December, 1998, 31 December, 1997, 31 December, 1996, 31 December,
1995, 31 December, 1994 and for each of the three months ended 31 March, 1999,
30 June, 1999 and 30 September, 1999, are presented in the following table.
The historical yield figures in the following table are calculated on
an accrual basis. Collections of receivables included in the receivables trust
will be on a cash basis and may not be the same as historical yields set forth
in the table. During periods of increasing delinquencies or an increase in
periodic payment deferral programmes, accrual yields may exceed cash amounts
accrued and billed to cardholders. Conversely, as delinquencies decrease or the
use of periodic payment deferral programmes decreases, cash yields may exceed
accrual yields as amounts collected in a current period may include amounts
accrued during prior periods. However, the transferor believes that during the
periods referred to in the table set forth below, the yield on an accrual basis
closely approximated the yield on a cash basis. The yield on both an accrual
and a cash basis will be affected by many factors, including the monthly
periodic finance charges on the receivables, the amount of the annual fees and
other fees, changes in the delinquency rate on the receivables and the
percentage of cardholders who pay their balances in full each month and do not
incur monthly periodic finance charges. For example, the transferor could
change the monthly interest rate applied to the accounts or reduce or eliminate
fees on the accounts. See "Risk Factors: A Change in the Terms of the
Receivables May Adversely Affect the Amount or Timing of Collections and May
Cause an Early Redemption or a Downgrade of Your Notes".
The following table sets forth the revenue for the bank portfolio of card
accounts. The revenue is comprised of monthly periodic finance charges, card
fees, annual fees and interchange. These revenues vary for each account based
on the type and volume of activity for each account. See "Barclaycard and the
Barclaycard Card Portfolio".
39
<PAGE>
Yield Experience
Bank Portfolio(1)
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------
30 September
1999 30 June 1999 31 March 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
Accrued finance charges and fees(2)(3)..................................... $1,458,857,084 $1,432,869,747 $1,462,740,870
Average receivables outstanding(4)......................................... $9,939,601,739 $9,379,117,500 $8,943,070,232
Yield from finance charges and fees(5)..................................... 14.68% 15.28% 16.36%
Yield from interchange(6).................................................. 3.03% 3.06% 2.93%
---------------- ---------------- ----------------
Yield from finance charges fees and interchange............................ 17.71% 18.34% 19.28%
================ ================ ================
Net yield from finance charges, fees and interchange after deducting accrued
cost of funds(7) ......................................................... 12.42% 12.85% 13.22%
================ ================ ================
Year ended 31 December
------------------------------------------------------
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
Accrued finance charges and fees(2)(3)..................................... $1,422,798,428 $1,251,325,492 $1,150,098,564
Average receivables outstanding(4)......................................... $8,226,003,597 $7,175,924,182 $6,592,008,620
Yield from finance charges and fees(5)..................................... 17.30% 17.44% 17.45%
Yield from interchange(6).................................................. 3.39% 3.78% 3.94%
---------------- ---------------- ----------------
Yield from finance charges fees and interchange............................ 20.68% 21.22% 21.38%
================ ================ ================
Net yield from finance charges, fees and interchange after deducting accrued
cost of funds(7) ......................................................... 13.66% 14.32% 15.16%
================ ================ ================
Year ended 31 December
------------------------------------
1995 1994
---------------- ----------------
<S> <C> <C>
Accrued finance charges and fees(2)(3)..................................... $1,048,564,748 $874,940,096
Average receivables outstanding(4)......................................... $5,950,392,038 $5,176,315,073
Yield from finance charges and fees(5)..................................... 17.62% 16.90%
Yield from interchange(6).................................................. 4.05% 4.26%
---------------- ----------------
Yield from finance charges fees and interchange............................ 21.67% 21.16%
================ ================
Net yield from finance charges, fees and interchange after deducting accrued
cost of funds(7) ......................................................... 15.12% 15.41%
================ ================
</TABLE>
Notes:
(1) All percentage data are presented on an annualised basis.
(2) Finance charges and fees are comprised of monthly periodic finance
charges, annual fees and other card fees.
(3) Accrued finance charges and fees are presented net of adjustments made
pursuant to Barclaycard's normal servicing procedures.
(4) Average receivables outstanding is the average monthly receivable balance
during the periods indicated.
(5) Yield from finance charges and fees is the result of dividing the
annualised accrued finance charges and fees by the average receivables
outstanding for the period.
(6) Yield from Interchange is the result of dividing annualised revenue
attributable to interchange received during the period by the average
receivables outstanding for the period.
(7) Yield from finance charges, fees and interchange, after deducting accrued
cost of funds, has been adjusted to reflect the financing costs involved in
running the card operation of Barclaycard.
40
<PAGE>
The Receivables Trust
General Legal Structure
The receivables trust is a trust formed under English law by the
receivables trustee as trustee and Barclays as trust cash manager, initial
transferor beneficiary and excess interest beneficiary. The receivables trust
has been declared for the financings described in this prospectus. The terms
and conditions of the receivables trust are contained in the declaration of
trust and trust cash management agreement, which is governed by English law.
This section will describe to you the material terms of the receivables trust
and declaration of trust and trust cash management agreement. The terms of the
declaration of trust and trust cash management agreement may be varied or added
to by executing a supplement -- but only for the series of investor
certificates issued under the supplement. A precondition to the receivables
trustee entering into a supplement is obtaining confirmation from the rating
agencies that entering into the supplement will not result in any rating agency
withdrawing or downgrading its rating of any debt that is ultimately secured by
the receivables in the receivables trust. Under the declaration of trust and
trust cash management agreement, the receivables trustee holds all of the
receivables trust's property on trust for:
* the initial transferor beneficiary and the excess interest
beneficiary as the initial beneficiaries of the trust; and
* for any other person who may become an additional transferor
beneficiary or additional beneficiary of the trust as allowed by
the declaration of trust and trust cash management agreement.
Other than the excess interest beneficiary and the transferor beneficiary,
the two categories of beneficiary are:
* an investor beneficiary, which may include any investor
beneficiary subordinate to another investor beneficiary as a
provider of credit enhancement; or
* an enhancement provider for a series of investor certificates, if
provided for in the supplement for that series.
The excess interest beneficiary and the initial transferor beneficiary
will be the initial beneficiaries of the receivables trust. Any subsidiary of
the initial transferor that, with the prior written consent of all existing
beneficiaries of the receivables trust, accedes to the receivables
securitisation agreement as an additional transferor will upon its accession
become an additional transferor beneficiary of the receivables trust.
By making payments to the receivables trustee as a contribution to the
receivables trust's property, as set out in the declaration of trust and trust
cash management agreement, other persons can form a series of the receivables
trust. These persons are called additional beneficiaries. When payment is made,
the additional beneficiaries will be given a certificate evidencing a
beneficial interest in the receivables trust to show that they are an investor.
This process is called an acquisition and the certificate is called an investor
certificate. When an acquisition takes place a notice will be given that will
list the parties to the acquisition and anyone who is providing credit
enhancement for the series of investor certificates, called an enhancement
provider. A new supplement to the declaration of trust and trust cash
management agreement will govern each new series of the receivables trust that
is created.
Two types of acquisition may be made:
* The transferor beneficiary, upon receiving payment from a new
series of additional beneficiaries, may direct the receivables
trustee to trade the certificate it holds showing its entitlement
to the receivables trust's property -- called the "transferor
certificate" -- for a new series of investor certificates and a
reissued transferor certificate evidencing the transferor's
reduced beneficial entitlement to the receivables trust's
property. This is known as a "transferor acquisition".
Series 99-1 will be the first series of investor certificates
issued by the receivables trust and will be created by a
transferor acquisition occurring on the closing date.
* The second type of acquisition which may be made is an investor
acquisition where, if the supplement permits, an investor
beneficiary together with the transferor beneficiary may direct
the receivables trustee to trade their investor certificates and
the transferor certificate for one or more new investor
certificates and a reissued transferor certificate. The supplement
for series 99-1 does not permit for an investor acquisition.
The receivables trustee will authenticate and deliver a series of investor
certificates only when it has first received:
* a supplement signed by the parties to the new series, including
the receivables trustee and the transferor beneficiary, specifying
the principal terms of the series;
41
<PAGE>
* the credit enhancement, if any, and any agreement by which
an enhancement provider agrees to provide credit
enhancement -- series 99-1 has subordination as credit
enhancement and will not have an enhancement provider or an
enhancement agreement;
* a solvency certificate from the transferor and any
additional transferors;
* written confirmation from the rating agencies that the
proposed acquisition will not result in the reduction or
withdrawal of their ratings on any notes issued by the
issuer or any other issuer of further series of notes that
is ultimately secured by the receivables in the receivables
trust -- called "related beneficiary debt";
* written confirmation from each additional beneficiary and
enhancement provider, if any, that:
(1) its usual place of abode is in the United Kingdom and
it will be liable for United Kingdom corporation tax
for all amounts regarded as interest for UK tax
purposes received by it under the transactions
contemplated by the series of investor certificates;
or
(2) it is a bank, as defined for purposes of Section
349(3)(a) of the Income and Corporation Taxes Act
1988, and it will be liable for United Kingdom
corporation tax for all amounts regarded as interest
for UK tax purposes received by it under the series
of investor certificates;
* the existing transferor certificate and, if it is an
investor acquisition, the applicable investor certificates;
* an officer's certificate provided by the transferor
certifying either:
(1) that:
* each class of related beneficiary debt issued
as part of the acquisition and described in
the related supplement will be rated in one of
the three highest rating categories by at
least one rating agency recognised in the
United Kingdom;
* each investor beneficiary -- other than any
enhancement provider -- will have associated
with it, either directly or indirectly, a
class of related beneficiary debt; and
* the enhancement for each series will be
provided by any combination of subordination,
a letter of credit, a cash collateral loan, a
surety bond, an insurance policy, or a spread
or reserve account funded from excess finance
charge collections ultimately reverting to the
excess interest beneficiary to the extent not
utilised as enhancement, but through no other
means; or
(2) it has determined that, based on legal advice, the
acquisition is in the best interests of the
transferor beneficiary and its affiliates.
Each supplement to the declaration of trust and trust cash management
agreement will specify the principal terms for its series of investor
certificates, including the accumulation period or amortisation period for the
payment of principal. For each series these may be of different lengths and
begin on different dates. Enhancement is specific to each series and will be
held and used by the receivables trustee only for the benefit of the relevant
series. Certain series may be subordinated to other series, and classes within
a series may have different priorities. Whether or not a series or class is
subordinated will be set out in the related supplement. Series 99-1 will not be
subordinate to any other series, but will have classes of investor certificates
that are subordinated to other classes of investor certificates. There will be
no limit on the number of acquisitions that may be performed.
The receivables trustee will not be able to arrange for additional
supplements without obtaining the consent of all the beneficiaries constituting
each existing series. Even if the receivables trustee receives all these
consents, no acquisition will be effective unless the rating agencies confirm
that the additional supplement will not result in the reduction or withdrawal
of their rating of any related beneficiary debt.
The Receivables Trust's Property
The property of the receivables trust will include all present and future
receivables arising under all MasterCard and VISA credit and charge card
accounts of Barclaycard's individual cardholders that have not been identified
as non-designated accounts and that are denominated in pounds sterling with a
billing address within England, Wales, Scotland, Northern Ireland or a
permitted additional jurisdiction or a restricted additional
42
<PAGE>
jurisdiction. We refer to these accounts as the "designated accounts". See "The
Receivables: Representations". The receivables will be assigned to the
receivables trustee under the receivables securitisation agreement between
Barclaycard as transferor and the receivables trustee. The receivables
securitisation agreement will be governed by English law. Occasionally some
accounts may be removed from the pool of designated accounts. These accounts we
refer to in this prospectus as the "redesignated accounts".
The transferor is required to ensure that any of Barclaycard's credit and
charge card accounts that are to be excluded from the offer to the receivables
trustee under the receivables securitisation agreement or that are to be
removed from the pool of designated accounts are identified on its computer
system prior to the date of offer or the date of removal.
The property of the receivables trust will also include:
* all monies due in payment of the receivables under designated
accounts from time to time;
* all proceeds of the receivables and proceeds of any guarantees and
insurance policies for the receivables -- to the extent that they
are capable of assignment -- including proceeds of disposals by
the receivables trustee of charged-off receivables to Barclaycard;
* the benefit of any Acquired Interchange; see "The Receivables:
Interchange";
* all monies on deposit in the Trust Accounts -- including any
permitted investments in which the monies are invested but
excluding investment earnings on these monies;
* any credit enhancement for the benefit of any series or class;
* all monies provided by beneficiaries of the receivables trust to
fund the purchase of receivables, until these monies are applied
as intended; and
The receivables are divided into eligible receivables and ineligible
receivables. Each investor beneficiary, the excess interest beneficiary and the
transferor beneficiary are beneficially entitled to interests in the pool of
eligible receivables.
The transferor beneficiary is beneficially entitled to the entire pool of
ineligible receivables and is solely entitled to all collections of ineligible
receivables.
The total principal amount of the interest of the investor benefciary in a
series is called the "investor interest" of that series and reflects the total
amount of the proportional entitlement to principal receivables allocated to
that series.
The total amount of the transferor beneficiary in the receivables trust is
called the "Transferor Interest" and is based on the total amount of the
proportional entitlement to principal receivables not allocated to each
outstanding series.
General Entitlement of Beneficiaries to Trust Property
The transferor beneficiary and each investor beneficiary will acquire
undivided interests in the receivables trust by making payments in favour of
the receivables trustee. Some of the receivables trust's property that will
constitute credit enhancement may be specified as being the beneficial
entitlement of particular beneficiaries or particular series only. The
beneficiaries of the receivables trust are each beneficially entitled to share
in the receivables trust's property and each beneficiary, other than an
enhancement provider, has or will acquire interests in the pool of eligible
receivables -- called the "Eligible Receivables Pool". See "Series 99-1" for a
description of the beneficial entitlement of the issuer to receivables and for
a description of the manner in which collections will be allocated to the
issuer.
The beneficial entitlement of Barclaycard as the excess interest
beneficiary to the property of the receivables trust at any time is called the
"Excess Interest". The Excess Interest consists of a beneficial entitlement to
the finance charge collections and Acquired Interchange for each monthly period
which can be allocated to any series after finance charge collections are
allocated to each beneficiary forming part of that series or group of series,
if applicable, and have been used to make payments to the enhancement provider,
if it is not a beneficiary. These payments will include amounts deemed to
represent finance charge collections as stated in the supplement for the
series.
To understand the beneficial entitlement of the transferor beneficiary and
each additional transferor beneficiary you have to understand the definition of
"Transferor Percentage". The Transferor Percentage is the percentage equal to
100 per cent. less the sum of the applicable Investor Percentages of each
outstanding series.
The aggregate beneficial entitlement of the transferor beneficiary at any
time consists of the following:
* the Transferor Percentage of eligible principal receivables; the
Transferor Percentage is calculated for this purpose using the
Floating Investor Percentage as the Investor Percentage of each
series;
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* the Transferor Percentage of finance charge receivables; the
Transferor Percentage is calculated for this purpose using the
Floating Investor Percentage as the Investor Percentage for each
series;
* all ineligible receivables; and
* all monies held in the Trust Accounts that represent investment
earnings on permitted investments made using monies deposited in
those Trust Accounts, unless something else is provided for in the
supplement; the supplement for series 99-1 does not provide for
something else.
"Permitted investments" means the following:
* demand or time deposits, certificates of deposit and other short-
term unsecured debt obligations at or of any institution that has
unsecured and unguaranteed debt obligations of A-1+ and P-1 by
Standard & Poor' and Moody's; and
* short-term unsecured debt obligations -- including commercial
paper -- issued or guaranteed by any body corporate whose
unsecured and unguaranteed debt obligations are A-1+ and P-1 by
Standard & Poor's and Moody's.
The aggregate beneficial entitlement of the transferor beneficiary to any
other trust property at any time is equal to the proportion that the Transferor
Interest bears to the amount of eligible principal receivables at that time.
The initial transferor beneficiary's and each additional transferor
beneficiary's entitlement to the aggregate beneficial entitlement of the
transferor beneficiary will be equal to its proportionate share described in
the transferor certificate.
Allocation and Application of Collections
Initially, the following accounts will be opened by the receivables
trustee at 1234 Pavillion Drive, Northampton, NN4 7SGF, England:
* a collection account called the "Trustee Collection Account",
which is where principal collections and finance charge
collections are credited; and
* the acquisition account called the "Trustee Acquisition Account",
which is where amounts are credited that can be used to purchase
beneficial interests in receivables for the investor or transferor
beneficiaries.
The Trustee Acquisition Account, the Trustee Collection Account and any
additional bank accounts of the receivables trust that the receivables trustee
may open for particular beneficiaries are collectively called "Trust Accounts".
The receivables trustee will have legal title to the funds on deposit in each
Trust Account.
Collections from cardholders for designated accounts and cardholders for
other card accounts of Barclaycard are initially paid to Barclaycard's bank
accounts before being cleared on a same-day basis to a bank account called the
"Barclaycard Operating Account". Initially, the Barclaycard Operating Account
will be held by Barclaycard at its branch located at 1234 Pavillion Drive,
Northampton NN4 FSG, England. The transferor has declared a trust over the
Barclaycard Operating Account.
All money in the Barclaycard Operating Account will be transferred to the
Trustee Collection Account within two business days after processing. All money
in the Trustee Collection Account will be treated as collections from
receivables of designated accounts unless it has been incorrectly paid into the
account. Incorrect payments will be deducted from the appropriate collections
on the business day on which the error is notified to the receivables trustee.
Amounts incorrectly categorised as principal collections of eligible
receivables but which are really collections of ineligible receivables will be
given back to the transferor beneficiary, after making adjustments for errors
but before allocating amounts of principal collections that are property of the
receivables trust. The trustee will treat all money deposited in the Trustee
Collection Account as property of the receivables trust unless notified
otherwise by the trust cash manager.
The Eligible Receivables Pool and the Transferor Interest are increased or
decreased, as applicable, to account for the errors made.
Eligible principal receivables in defaulted accounts are allocated between
the transferor beneficiary and each series of investor certificates in
accordance with their respective beneficial entitlements to the property of the
receivables trust at the time the account becomes a defaulted account. Credit
adjustments for principal receivables are allocated to the transferor
beneficiary as a reduction of the Transferor Interest until the Transferor
Interest reaches zero. Ineligible principal receivables in defaulted accounts
reduce the transferor's interest in ineligible receivables -- called the
"Transferor Ineligible Interest" -- until it reaches zero.
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Collections that are property of the receivables trust are categorised as:
* principal collections;
* finance charge collections; or
* ineligible collections.
If a Discount Percentage is nominated by the transferor, the Discount
Percentage of principal collections will be treated as finance charge
collections. The transferor has no current intention to nominate a Discount
Percentage. See "The Receivables: Discount Option Receivables".
If the related supplement says so, each series will also be entitled to a
portion of Acquired Interchange. Series 99-1 will be allocated a portion of
Acquired Interchange as described in "Series 99-1". To the extent that any
Acquired Interchange is not allocated to any series, it will be allocated to
the transferor beneficiary.
Each series will be entitled to receive varying percentages of principal
collections, finance charge collections and receivables in defaulted accounts.
Each of these percentages is called an "Investor Percentage". The transferor
beneficiary will be entitled to its applicable Transferor Percentage of
principal collections and finance charge collections and receivables in
defaulted accounts. The excess interest beneficiary is entitled to finance
charge collections allocated to a series that are:
* not allocated to any other beneficiary, whether or not a member of
that series; or
* any enhancement provider, as set out in the supplement relating to
that series.
Each supplement will set out, for its series, the entitlement of each
investor beneficiary to principal collections, finance charge collections and
Acquired Interchange.
The transferor may fulfil any obligation to make payments to the
receivables trustee for principal receivables for which it has breached a
warranty by:
* reducing the Transferor Interest -- but not below zero; and
* increasing the Transferor Ineligible Interest.
However, if the Transferor Interest would be reduced below zero, the
transferor must make a similar payment in immediately available funds to the
receivables trustee under the declaration of trust and trust cash management
agreement and the receivables securitisation agreement.
The receivables trustee will pay the trust cash management fee to the
trust cash manager from payments made by the beneficiaries and this amount will
be deducted from the transferor beneficiary's and each series' portion of the
finance charge collections.
The receivables trustee will transfer money daily from the Trustee
Collection Account in the following priority:
(1) the amount of any incorrect payments notified to the receivables trustee
not previously allocated as collections, to the Barclaycard Operating
Account, after which the transferor beneficiary will own the money
absolutely;
(2) the amount of ineligible collections notified to the receivables trustee
not previously allocated as principal collections, to the Barclaycard
Proceeds Account, after which the transferor beneficiary will own the
money absolutely;
(3) the total amount of principal collections allocated to the investor
interest of any outstanding series, minus the Investor Cash Available for
Acquisition of that series, from the Principal Collections Ledger to the
account specified in the supplement for that series;
(4) the total amount of Investor Cash Available for Acquisition and
Transferor Cash Available for Acquisition needed on that day from the
ledger of the Trustee Collection Account for principal collections --
called the "Principal Collections Ledger", to the Trustee Acquisition
Account;
(5) the Transferor Percentage of finance charge collections and the amount of
Acquired Interchange deposited in the Trustee Collection Account not
allocated to the investor interest of any outstanding series, from the
ledger of the Trustee Collection Account for finance charge collections
-- called the "Finance Charge Collections Ledger", to the Barclaycard
Proceeds Account, or as the transferor beneficiary may direct, after
which the money will be owned by the transferor beneficiary absolutely;
and
(6) each finance charge amount and all Acquired Interchange allocable to any
outstanding series, from the Finance Charge Collections Ledger to any
account that may be specified in the supplement for that series.
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Acquiring Additional Entitlements to Trust Property and Payments for
Receivables
To understand what a revolving period is, see "Series 99-1: Allocation,
Calculation and Distribution of Principal Collections to the MTN Issuer".
During the revolving period for a series, the receivables trustee will use
the portion of principal collections allocated to the investor beneficiaries of
that series and which is available to fund the acquisition of the beneficial
entitlement to receivables to pay for the purchase of the beneficial
entitlement to receivables that are eligible. These available principal
collections are called "Investor Cash Available for Acquisition". No Investor
Cash Available for Acquisition will be used to fund ineligible receivables.
On any day a series may be allocated more money for acquisitions than is
needed to purchase existing or future receivables that are eligible and
available for a series to fund. In that case, that series will use the excess
Investor Cash Available for Acquisition to acquire available Transferor
Interest from the transferor beneficiary and, if allowed under its supplement,
investor interest from other designated series. Any money left over will be
used to fund acquisitions on subsequent business days.
The transferor beneficiary will fund the amount payable by the receivables
trustee for all the existing and future receivables that all series are unable
to fund plus the amount of any ineligible receivables that need to be funded.
Consequently, the amount payable by the receivables trustee to the transferor
for all existing and future receivables it is purchasing on any business day
will be funded first by the series to the extent of all of the Investor Cash
Available for Acquisition and then by the transferor beneficiary to the extent
of the Transferor Cash Available for Acquisition. "Transferor Cash Available
for Acquisition" for any day means an amount equal to the Transferor Percentage
of principal collections processed on that day.
On each business day the beneficial interest of each series in the
Eligible Receivables Pool:
* will be decreased by the amount of principal collections allocated
to that series that constitutes Investor Cash Available for
Acquisition; and
* will be increased by the amount of Investor Cash Available for
Acquisition used by the receivables trustee to pay for existing
and future receivables and the amount of Investor Cash Available
for Acquisition allocated to the Transferor Interest or the
investor interest of other series to increase the proportion of
the beneficial interest of that series.
These changes will not effect the beneficial entitlement of:
* any beneficiary to monies credited to any Trust Account to which
it is beneficially entitled; or
* any series to monies credited to any Trust Account to which the
beneficiaries constituting that series are together beneficially
entitled.
On each business day after making all adjustments, the beneficial interest
of the transferor beneficiary in the Eligible Receivables Pool:
* will be decreased by the amount of principal collections and
Investor Cash Available for Acquisition allocated to the
transferor beneficiary; and
* will be increased by the amount of Transferor Cash Available for
Acquisition and the increase in the Transferor Interest resulting
from the decrease described in the prior bullet point.
However, any change in the beneficial interest of the transferor
beneficiary in the Eligible Receivables Pool will not affect the beneficial
entitlement of the transferor beneficiary to money credited to any Trust
Account to which it is beneficially entitled.
The investor interest of each series and the beneficial interest in the
receivables trust of each additional beneficiary will increase or decrease as
described in the related supplement.
On each business day, after making all adjustments, the Transferor
Interest:
* will be decreased by the amount of Transferor Cash Available for
Acquisition not used to pay for new receivables and Investor Cash
Available for Acquisition transferred to the transferor
beneficiary by credit to the Barclaycard Proceeds Account; and
* will be increased by the purchase price payable to the transferor
by the receivables trustee to be funded by the transferor
beneficiary.
These changes will not affect the beneficial entitlement of the transferor
beneficiary to money credited to any Trust Account to which it is beneficially
entitled.
Other adjustments to the Transferor Interest are explained in "The
Receivables Trust: Allocation and Application of Collections".
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Non-Petition Undertaking of Beneficiaries
Each beneficiary of the receivables trust, including Barclaycard as
transferor beneficiary and excess interest beneficiary, the transferor, the
trust cash manager and any successor trust cash manager, by entering into a
supplement, will agree with the receivables trustee for itself and as trustee
that it will not attempt to take any action or legal proceedings for the
winding up, dissolution or re-organisation of, or for the appointment of a
receiver, administrator, administrative receiver, trustee, liquidator,
sequestrator or similar officer for, any investor beneficiary, the receivables
trustee or the receivables trust. These parties will also agree not to seek to
enforce any judgements against any of those persons.
Trust Pay Out Events
The following is a list of what we refer to in this prospectus as the
"Trust Pay Out Events":
(1) the transferor consents or takes any corporate action to appoint a
receiver, administrator, administrative receiver, liquidator, trustee or
similar officer of it or over all or substantially all of its revenues
and assets;
(2) proceedings are started against the transferor under any applicable
liquidation, insolvency, composition or re-organisation or similar laws
for its winding up, dissolution, administration or re-organisation and
the proceedings are not discharged within 60 days, or a receiver,
administrator, administrative receiver, liquidator, trustee or similar
officer of it or relating to all or substantially all of its revenues and
assets is legally and validly appointed and is not discharged within 14
days;
(3) a duly authorised officer of the transferor admits in writing that the
transferor beneficiary or excess interest beneficiary is unable to pay
its debts when they fall due within the meaning of Section 123(1) of the
Insolvency Act 1986 or the transferor makes a general assignment for the
benefit of or a composition with its creditors or voluntarily suspends
payment of its obligations to generally readjust or reschedule its debt;
(4) the transferor cannot transfer receivables in the designated accounts to
the receivables trust in the manner described in the receivables
securitisation agreement;
(5) the transferor stops being either a resident in the United Kingdom for
tax purposes or liable for United Kingdom corporation tax; or
(6) either:
* a change in law or its interpretation or administration results in
the receivables trustee becoming liable to make any payment on
account of tax -- other than stamp duty payable in the United
Kingdom for the transfer of receivables under the receivables
securitisation agreement; or
* any tax authority asserts a tax liability or takes other actions
against Barclays or any of its subsidiaries in relation to the
transaction which would have a material adverse affect on them.
For this Trust Pay Out Event, Barclays is required to obtain an
opinion of counsel stating that the tax liability would be due
before this Trust Pay Out Event can occur. This Trust Pay Out
Event will occur when Barclays, as transferor beneficiary, gives
written notice of it to the receivables trustee.
The Trust Pay Out Events in paragraphs (1), (2) and (3) are called
"Insolvency Events". If an Insolvency Event occurs, a pay out event will occur
for each series, each beneficiary within a series and for the transferor
beneficiary. If any other Trust Pay Out Event occurs, a pay out event will
occur for each series and each beneficiary within a series. Trust Pay Out
Events will occur without any notice or other action on the part of the
receivables trustee or any beneficiary, as soon as the event happens.
A "Pay Out Event" for series 99-1 means a Trust Pay Out Event or one of
the events listed in "Series 99-1: Series 99-1 Pay Out Events".
After an Insolvency Event, future receivables, other than finance charge
receivables accruing for principal receivables that have been assigned to the
receivables trustee, will no longer be assigned to the receivables trustee. The
receivables trustee will not be obligated or entitled to accept any more offers
of receivables after an Insolvency Event. Finance charge receivables accruing
on principal receivables that have been assigned to the receivables trustee
before the Insolvency Event will still be part of the receivables trust's
property and finance charge collections from them will continue to be allocated
and applied as set out in the declaration of trust and trust cash management
agreement and each supplement.
The receivables trustee will notify each beneficiary if an Insolvency
Event occurs and will dispose of the receivables on commercially reasonable
terms, unless within 60 days of that notice beneficiaries representing more
than 50 per cent. of the investor interest of every series, both the transferor
beneficiary and the excess interest beneficiary -- in each case, if not subject
to an Insolvency Event -- and every other person identified in any supplement
disapproves of the liquidation of the receivables and wishes to continue with
the receivables trustee accepting offers and purchasing receivables under the
receivables securitisation agreement. Money from
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this sale will be treated as collections on the receivables and will be
distributed in accordance with the provisions of the declaration of trust and
trust cash management agreement and each supplement. See "Series 99-1".
Termination of the Receivables Trust
If the receivables trust has not already been dissolved after an
Insolvency Event, then, the transferor beneficiary can instruct the receivables
trustee to dissolve the receivables trust on any day on which:
* the total amount of all of the investor interests for each series
is reduced to zero;
* there are no finance charge collections or other trust property
allocated to any beneficiaries other than the transferor
beneficiary or the excess interest beneficiary; and
* no beneficiary is committed to fund payments to the transferor for
purchases of receivables by the receivables trust.
After the receivables trust is dissolved, all of the receivables trust's
property will be controlled by the transferor beneficiary as residual
beneficiary, and the receivables securitisation agreement will be terminated.
For the purposes of Section 1 of the Perpetuities and Accumulations Act
1964, the duration of the perpetuity period for the receivables trust's
property will be a period ending not later than 80 years from the date of
execution of the declaration of trust and trust cash management agreement. Any
property of the receivables trust after this period will vest in the current
beneficiaries in accordance with their entitlements to the receivables trust's
property at that date.
Amendments to the Declaration of Trust and Trust Cash Management Agreement
The declaration of trust and trust cash management agreement may be
amended with the prior consent of each beneficiary. No amendment will be
effective unless each rating agency has confirmed that the amendment will not
result in a reduction or withdrawal of its then current rating of any
outstanding related beneficiary debt.
No investor beneficiary will consent to any proposed amendment unless
instructed to do so by noteholders holding in total not less than two thirds of
the medium term notes then outstanding of each outstanding series adversely
affected. The investor beneficiary may not consent to any proposed amendment
that would:
* reduce or delay required distributions to any investor beneficiary
for the affected series;
* change the definition or the manner of calculating the investor
interest, the Investor Percentage or the investor default amount
of the affected series or any class of the affected series; or
* reduce the percentage required to consent to any amendment unless
instructed to do so by all the noteholders of the medium term
notes then outstanding of the affected series.
Disposals
Beneficiaries may not transfer or dispose of their beneficial entitlements
in the receivables trust or create any encumbrance over its beneficial
entitlement, except that:
* the transferor beneficiary or the excess interest beneficiary may
dispose of the Transferor Interest or the Excess Interest by
transferring all or substantially all of its properties and assets
to any person, if that person also expressly assumes the duties
and obligations of the transferor, the transferor beneficiary and
the excess interest beneficiary under the Trustee Relevant
Documents; after the transfer, the new person will be the person
used to determine if an Insolvency Event has occurred;
* the transferor beneficiary or the excess interest beneficiary may
transfer or create any encumbrance over the whole or any part of
the Transferor Interest or the Excess Interest with the consent of
investor beneficiaries representing in total more than one-half of
the total investor interest of each series; however, the rating
agencies must first confirm that the transfer or encumbrance will
not result in a downgrade or withdrawal of its rating of any
outstanding related beneficiary debt; and
* any beneficiary -- except for the transferor beneficiary or the
excess interest beneficiary -- may transfer all or any part of
their beneficial entitlement or grant an encumbrance over their
beneficial entitlement with the prior written consent of the
transferor beneficiary, which consent will not be unreasonably
withheld; however, the receivables trustee must first receive
confirmation in writing from the person to whom the transfer will
be made or for whom the encumbrance will
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be granted or created, that it complies with the criteria referred
to in the prerequisites to the completion of an acquisition as
referred to in "-- General Legal Structure" above.
The receivables trustee will, upon the direction of each beneficiary of a
series, be authorised to reassign to Barclaycard the interest in defaulted
receivables allocated to that series for a purchase price equal to the amount
received, if any, by Barclaycard from those defaulted receivables less the
fees, costs and expenses in the recovery of that amount.
Trustee Payment Amount
The receivables trustee will be paid its fees, costs and expenses --
including, value added tax on the sums it incurs, any expense incurred from
being indemnified under the declaration of trust and trust cash management
agreement -- out of the property of the receivables trust allocated to the
investor beneficiaries. The receivables trustee will be paid monthly in arrears
on each transfer date the amounts certified by the trust cash manager to the
receivables trustee by the end of any monthly period as being due to it for
that monthly period. This payment is called the "Trustee Payment Amount". The
allocation of the Trustee Payment Amount to series 99-1 and to the MTN issuer
is described in "Series 99-1: Trustee Payment Amount".
Servicing of Receivables and Trust Cash Management
General -- Servicing
Barclaycard has been appointed by the receivables trustee on behalf of the
beneficiaries of the receivables trust as initial servicer under the terms of
the beneficiaries servicing agreement. Any additional transferor beneficiary or
beneficiary must accede to the beneficiaries servicing agreement. The servicer
will service and administer the receivables and request and receive payments on
the receivables using its usual procedures and practices for servicing credit
and charge card receivables comparable to the receivables in the designated
accounts. The servicer has full power and authority, acting alone or through
any other party properly designated, to undertake all actions concerning the
management of the receivables it considers necessary or desirable.
The servicer's duties will include but are not confined to:
* carrying out valuations on the receivables to determine if they
should be charged-off as uncollectable and notifying the
beneficiaries from time to time of the existence of charged-off
receivables and informing the beneficiaries as to whether
Barclaycard wishes to repurchase those charged-off receivables;
* receiving and responding to requests for authorisation of
cardholder transactions;
* reviewing cardholder payment history to decide if credit limits
should be increased or transactions should be authorised;
* keeping records of the functions listed above and providing them
to the beneficiaries when required and preparing the monthly
servicer report;
* monitoring cardholder payments and taking all necessary steps to
request payments.
The servicer will not resign from its obligations and duties as servicer
under the beneficiaries servicing agreement unless its performance is no longer
permitted under applicable law and there is no reasonable action that it can
take to remedy the situation. The servicer's resignation will not be effective
until a successor servicer has been properly appointed. Barclaycard, as initial
servicer, performs account processing and administration in-house, but has
subcontracted some cardholder payment processing services, which are undertaken
on Barclaycard's behalf by Great Universal Stores Home Shopping Ltd. See
"Barclaycard and the Barclaycard Card Portfolio: Description of Great Universal
Stores Home Shopping Ltd.".
The servicer will indemnify each investor beneficiary and the receivables
trust against all reasonable loss, liability, expense, damage or injury caused
by the servicer's fraud, willful misconduct or gross negligence in performing
its servicing functions. However, the servicer will not indemnify any investor
beneficiary:
* if any acts or omissions are caused by the negligence, fraud or
willful misconduct of that investor beneficiary or its agents;
* for any liabilities, costs or other expenses of the receivables
trust for any action taken by the receivables trustee at the
request of any investor beneficiary of any series to which that
investor beneficiary belongs;
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* for any loss or other claims that are incurred by them acting in
their capacity as beneficiaries, including those resulting from
defaulted accounts; or
* for any liabilities or other costs arising under any tax law or
any penalties or interest caused by a failure to comply with any
tax law, payable by it in connection with the beneficiaries
servicing agreement to any tax authority.
The directors, officers and other employees and agents of the servicer and
the servicer itself will not be under any liability to the receivables trustee,
the receivables trust, the investor beneficiaries, any enhancement provider or
any other person under the beneficiaries servicing agreement or under any other
document delivered pursuant to the beneficiaries servicing agreement, except in
the case of intentional wrongdoing, bad faith or gross negligence in performing
its duties under the beneficiaries servicing agreement.
Any person into which the servicer may be merged or consolidated, or any
person succeeding to or acquiring the business of the servicer in whole or in
part, after executing a supplemental agreement to the beneficiaries servicing
agreement and the delivery of a legal opinion, will become the successor to the
servicer or co-servicer with the servicer under the beneficiaries servicing
agreement.
General -- Trust Cash Management
Barclaycard has been appointed by the receivables trustee on behalf of the
beneficiaries of the receivables trust as initial trust cash manager under the
terms of the declaration of trust and trust cash management agreement. The
trust cash manager will carry out cash management functions in relation to the
receivables on behalf of the receivables trustee.
The trust cash manager's duties will include but are not confined to:
* making calculations on the allocations of receivables; and
* advising the receivables trustee to transfer money between the
Trust Accounts and to make withdrawals and payments from the Trust
Accounts as set forth in the declaration of trust and trust cash
management agreement.
The trust cash manager will not resign from its obligations and duties as
trust cash manager under the declaration of trust and trust cash management
agreement unless its performance is no longer permitted under applicable law
and there is no reasonable action that it can take to remedy the situation. The
trust cash manager's resignation will not be effective until a successor trust
cash manager has been properly appointed.
The trust cash manager will indemnify the receivables trustee and the
receivables trust against all reasonable loss, liability, expense, damage or
injury caused by its fraud, willful misconduct or negligence in performing its
cash management functions. However, the trust cash manager will not indemnify
the receivables trustee:
* if any acts or omissions are caused by the negligence, fraud or
willful misconduct of the receivables trustee or its agents;
* for any liabilities, costs or other expenses of the receivables
trust for any action taken by the receivables trustee at the
request of any investor beneficiary of any series to which that
investor beneficiary belongs; or
* for any liabilities or other costs of it or the receivables trust
arising under any tax law or any penalties or interest caused by a
failure to comply with any tax law, payable by it or the
receivables trust in connection with the declaration of trust and
trust cash management agreement to any tax authority.
The directors, officers and other employees and agents of the trust cash
manager and the trust cash manager itself will not be under any liability to
the receivables trustee or the receivables trust or any other person under the
declaration of trust and trust cash management agreement except in the case of
intentional wrongdoing, bad faith or gross negligence in performing its duties
under the declaration of trust and trust cash management agreement.
Any person into which the trust cash manager may be merged or
consolidated, or any person succeeding to or acquiring the business of the
trust cash manager in whole or in part, after executing a supplemental
agreement to the trust and cash management agreement and the delivery of a
legal opinion, will become the successor to the trust cash manager or co-trust
cash manager under the declaration of trust and trust cash management
agreement.
Servicing and Trust Cash Manager Compensation
The servicer is entitled to receive a fee from the beneficiaries for each
monthly period. This fee is called the "servicing fee" and is payable monthly
on each transfer date, to the extent that those monies are available.
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Any amounts payable in respect of servicing fee will be inclusive of VAT, if
any. The servicing fee will be equal to one-twelfth of the product of:
* the weighted average of the percentages specified in each
supplement as being the series servicing fee percentage for each
outstanding series -- weighted by the investor interest for each
series; and
* the average daily total outstanding face amount of principal
receivables during that monthly period.
The share of the servicing fee payable by the receivables trustee to the
servicer for series 99-1 on any transfer date is called the "investor servicing
fee" and will be equal to:
* one-twelfth of the product of:
(1) 0.75%; or
(2) another percentage agreed with the investor beneficiaries
as long as Barclaycard is the servicer provided that the
rating agencies confirm in writing that the new percentage
will not cause them to reduce or withdraw their then
current rating on any related beneficiary debt; and
* the Adjusted Investor Interest as of the last day of the monthly
period before that transfer date.
On the first transfer date, after the closing date, the investor servicing
fee will be L1,011,750.00.
The balance of the servicing fee not payable by series 99-1 or any other
series will be payable by the transferor and is called the "transferor
servicing fee". If the servicer is also the transferor beneficiary in any
monthly period, the transferor servicing fee for that monthly period will not
be paid.
The trust cash manager is entitled to receive a fee from the receivables
trustee for each monthly period. This fee is called the "trust cash management
fee" and is payable monthly on each transfer date, to the extent that those
monies have been received. Any amounts payable for the trust cash manager fee
will be inclusive of VAT, if any. The trust cash management fee will be equal
to one-twelfth of the product of the sum of the annual fees in each supplement
as being the series trust cash management fee for each series.
The share of the trust cash management fee payable by the receivables
trustee to the trust cash manager for series 99-1 on any transfer date is
called the "investor trust cash management fee" and will be equal to one-
twelfth of L6,000.00. The trust cash management fee can be any other amount
that the receivables trustee may agree to as long as Barclaycard is the trust
cash manager provided that the rating agencies confirm in writing that the new
amount will not cause them to reduce or withdraw their then current rating on
any related beneficiary debt.
On the first transfer date, after the closing date, the investor trust
cash management fee will be L1,333.33.
The balance of the trust cash management fee not payable by series 99-1 or
any other series will be payable by the transferor and is called the
"transferor trust cash management fee". If the trust cash manager is also the
transferor beneficiary in any monthly period, the transferor trust cash
management fee for that monthly period will not be paid.
The investor servicing fee allocable to the MTN issuer for each class of
medium term notes on any transfer date will be equal to one-twelfth of the
product of:
* the floating allocation for the relevant class;
* 0.75%; and
* the Adjusted Investor Interest as of the last day of the prior
monthly period.
The investor servicing fee so allocated to the class A MTN, the class B
MTN and the class C MTN will be called the "class A servicing fee", the "class
B servicing fee" and the "class C servicing fee", respectively.
The investor trust cash management fee allocable to the MTN issuer for
each class of medium term notes on any transfer date will be equal to one-
twelfth of the product of:
* the floating allocation for the relevant class; and
* the investor trust cash management fee.
The investor trust cash management fee so allocated to the class A MTN,
the class B MTN and the class C MTN will be called the "class A cash management
fee", the "class B cash management fee" and the "class C cash management fee".
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<PAGE>
Termination of Appointment of Servicer
The appointment of the transferor as servicer under the beneficiaries
servicing agreement and the appointment of any person as joint servicer or to
replace anyone then acting as the servicer -- called a "successor servicer" --
will terminate when a servicer default occurs.
"Servicer default" means any one of the following events:
(1) failure on the part of the servicer duly to observe or perform in any
respect any other covenant or agreement of the servicer contained in the
beneficiaries servicing agreement, or any other relevant documents, that
has a material adverse effect on the interests of the investor
beneficiaries of any outstanding series; this failure will constitute a
servicer default only if it remains unremedied and continues to have a
material adverse effect on the interests of the investor beneficiaries
for 60 days after the receipt of a notice of the failure is given; the
notice of failure will be given by either (1) the receivables trustee to
the servicer, or (2) the investor beneficiaries to the receivables
trustee and the servicer; if the notice is given by the investor
beneficiaries it will be on the instruction of a group of holders of
medium term notes representing more than fifty per cent. of the total
face value of the medium term notes outstanding of any outstanding series
adversely affected;
(2) delegation by the servicer of its duties under the beneficiaries
servicing agreement to any other entity, except as permitted by the
beneficiaries servicing agreement;
(3) any relevant representation, warranty or certification made by the
servicer in the beneficiaries servicing agreement or in any certificate
delivered under the beneficiaries servicing agreement was incorrect when
made, which has a material adverse effect on the interests of the
investor beneficiaries of any outstanding series; this failure will only
be a servicer default if it remains unremedied and continues to have a
material adverse effect on the interests of the investor beneficiaries
for 60 days after the receipt of a notice of the failure is given; the
notice of the failure will be given by either (1) the receivables trustee
to the servicer, or (2) the investor beneficiaries to the receivables
trustee and the servicer; if the notice is given by the investor
beneficiaries it will be on the instruction of holders of MTNs
representing more than fifty per cent. of the total face value of the
MTNs outstanding of any outstanding series adversely affected;
(4) any of the following:
* the servicer agrees to or takes any corporate action to appoint a
receiver, administrative receiver, trustee or similar officer of
it or of substantially all of its revenues and assets; or
* an order of the court is made for its winding-up, dissolution,
administration or re-organisation that has remained in force
undischarged or unstayed for 60 days; or
* a receiver, administrative receiver, trustee or similar officer of
it or all of its revenues and assets, is appointed; and
(5) any of the following:
* a duly authorised officer of the servicer admits in writing that
the servicer is unable to pay its debts as they fall due within
the meaning of Section 123(1) of the Insolvency Act 1986; or
* the servicer makes a general assignment for the benefit of or a
composition with its creditors or it voluntarily suspends payment
of its obligations with a view to the general readjustment or
rescheduling of its indebtedness.
In the case of (1), (2) or (3) above the grace period will be 60 business
days. The grace period is the extra number of days before a servicer default
can be called, allowing the servicer to remedy a servicer default that has been
caused by so-called acts of God or uncontrollable circumstances. These
circumstances are called force majeure events and are listed in the
beneficiaries serving agreement.
Within two business days after the servicer becomes aware of any servicer
default, the servicer must notify the receivables trustee, each rating agency,
each investor beneficiary, the security trustee and any enhancement provider as
soon as possible in writing. The receivables trustee must give each investor
beneficiary and rating agency notice of any removal of the servicer or
appointment of a successor servicer. The receivables trustee must give each
rating agency notice of any removal of the servicer.
Investor beneficiaries acting on the instructions of holders of medium
term notes representing in total more than two-thirds of the total face value
of medium term notes then outstanding of each series adversely affected by any
default by the servicer or the transferor in the performance of its obligations
under the beneficiaries servicing agreement and any other relevant documents,
may waive the default unless it is a failure to make any required deposits, or
payments of interest or principal for the adversely affected series.
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<PAGE>
After the servicer receives a termination notice and a successor servicer
is appointed, the duties of acting as servicer of the receivables under the
beneficiaries servicing agreement will pass from the then servicer to the
successor servicer. The beneficiaries servicing agreement contains the
requirements for the transfer of the servicing role, including the transfer of
authority over collections, the transfer of electronic records and the
disclosure of information.
After it receives a termination notice, the servicer will continue to act
as servicer until agreed by it and the receivables trustee. The receivables
trustee must try to appoint a successor servicer that is an eligible servicer.
If the receivables trustee cannot appoint a successor servicer and the
servicer delivers a certificate that says it cannot in good faith cure the
servicer default, then the receivables trustee will start the process of
selling the receivables. The investor beneficiary will notify any enhancement
providers of the proposed sale of the receivables by the receivables trustee to
a third party and will provide each enhancement provider an opportunity to bid
on purchasing the receivables.
The proceeds of the sale will be deposited in the Trust Accounts for
distribution to the beneficiaries as set out in the declaration of trust and
trust cash management agreement and the series supplements.
An "eligible servicer" means an entity that, when it is servicer:
* is servicing a portfolio of consumer revolving credit or charge
card accounts or other consumer credit accounts;
* is legally qualified and has the capacity to service the
designated accounts;
* is qualified or licensed to use the software that the servicer is
then currently using to service the designated accounts or obtains
the right to use, or has its own, software that is adequate to
perform its duties under the beneficiaries servicing agreement;
and
* has, in the opinion of each rating agency, demonstrated the
ability to service, professionally and competently, a portfolio of
similar accounts in accordance with customary standards of skill
and care.
Termination of Appointment of Trust Cash Manager
The appointment of the transferor as trust cash manager under the
declaration of trust and trust cash management agreement and the appointment of
any person as joint trust cash manager or to replace anyone then acting as the
trust cash manager -- called a "successor cash manager" -- will terminate when
a trust cash manager default occurs.
"Trust cash manager default" means any one of the following events:
(1) any failure by the trust cash manager to direct the making of any
payment, transfer or deposit or to give instructions or notice to the
receivables trustee pursuant to an agreed schedule of collections and
allocations; any failure by the trust cash manager to advise the
receivables trustee to make any required drawing, withdrawal, or payment
under any credit enhancement; these events will be considered failures if
they do not happen within five business days after the date that they
were supposed to happen under the terms of the declaration of trust and
trust cash management agreement or any other relevant document;
(2) failure on the part of the trust cash manager duly to observe or perform
in any respect any other covenant or agreement of the trust cash manager
contained in the declaration of trust and trust cash management
agreement, or any other relevant documents, that has a material adverse
effect on the interests of the investor beneficiaries of any outstanding
series; this failure will constitute a servicer default only if it
remains unremedied and continues to have a material adverse effect on the
interests of the investor beneficiaries for 60 days after the receipt of
a notice of the failure is given; the notice of the failure will be given
by either (1) the receivables trustee to the trust cash manager, or (2)
the investor beneficiaries to the receivables trustee and the trust cash
manager; if the notice is given by the investor beneficiaries it will be
on the instruction of a group of holders of medium term notes
representing more than fifty per cent. of the total face value of the
medium term notes outstanding of any outstanding series adversely
affected;
(3) delegation by the trust cash manager of its duties under the declaration
of trust and trust cash management agreement to any other entity, except
as permitted by the declaration of trust and trust cash management
agreement;
(4) any relevant representation, warranty or certification made by the trust
cash manager in the declaration of trust and trust cash management
agreement or in any certificate delivered under the declaration of
53
<PAGE>
trust and trust cash management agreement was incorrect when made, which
has a material adverse effect on the interests of the investor
beneficiaries of any outstanding series; this failure will only be a
trust cash manager default if it remains unremedied and continues to have
a material adverse effect on the interests of the investor beneficiaries
for 60 days after the receipt of a notice of the failure is given; the
notice of the failure will be given by either (1) the receivables trustee
to the trust cash manager, or (2) the investor beneficiaries to the
receivables trustee and the trust cash manager; if the notice is given by
the investor beneficiaries it will be on the instruction of holders of
medium term notes representing more than fifty per cent. of the total
face value of the medium term notes outstanding of any outstanding series
adversely affected;
(5) any of the following:
* the trust cash manager agrees to or takes any corporate action to
appoint a receiver, administrator, administrative receiver,
liquidator, trustee or similar officer of it or of all of its
revenues and assets; or
* an order of the court is made for its winding-up, dissolution,
administration or re-organisation that has remained in force
undischarged or unstayed for 60 days; or
* a receiver, administrator, administrative receiver, liquidator,
trustee or similar officer of it or all of its revenues and assets
is appointed; and
(6) any of the following:
* a duly authorised officer of the trust cash manager admits in
writing that the trust cash manager is unable to pay its debts as
they fall due within the meaning of Section 123(1) of the
Insolvency Act 1986; or
* the trust cash manager makes a general assignment for the benefit
of or a composition with its creditors it voluntarily suspends
payment of its obligations with a view to the general readjustment
or rescheduling of its indebtedness.
In the case of (1) above the grace period will be 10 business days and in
the case of (2), (3) or (4) above it will be 60 business days. The grace period
is the extra number of days before a trust cash manager default will be
effective, allowing the trust cash manager to remedy a trust cash manager
default that has been caused by so-called acts of God or uncontrollable
circumstances. These circumstances are called force majeure events and are
listed in the declaration of trust and trust cash management agreement.
Within two business days after the trust cash manager becomes aware of any
trust cash manager default, the trust cash manager must notify the receivables
trustee, each rating agency, each investor beneficiary and any enhancement
provider as soon as possible in writing. The receivables trustee must give each
investor beneficiary and rating agency notice of any removal of the trust cash
manager or appointment of a successor cash manager. The receivables trustee
must give each rating agency notice of any removal of the trust cash manager.
Investor beneficiaries acting on the instructions of holders of medium
term notes representing in total more than two-thirds of the total face value
of medium term notes then outstanding of each series adversely affected by any
default by the trust cash manager or the transferor in the performance of its
obligations under the declaration of trust and trust cash management agreement
and any other relevant documents, may waive the default unless it is a failure
to make any required deposits, or payments of interest or principal, for the
adversely affected series.
After the trust cash manager receives a termination notice and a successor
cash manager is appointed, the duties of acting as trust cash manager of the
receivables under the declaration of trust and trust cash management agreement
will pass from the then trust cash manager to the successor cash manager. The
declaration of trust and trust cash management agreement contains the
requirements for the transfer of the cash management role, including the
transfer of authority over collections, the transfer of electronic records and
the disclosure of information.
After it receives a termination notice, the trust cash manager will
continue to act as trust cash manager until a date agreed by the receivables
trustee and the trust cash manager. The receivables trustee must try to appoint
a successor cash manager that is an eligible trust cash manager.
If the receivables trustee cannot appoint a successor cash manager and the
trust cash manager delivers a certificate that says it cannot in good faith
cure the trust cash manager default, then the receivables trustee will start
the process of selling the receivables. The receivables trustee will notify
each enhancement provider of the proposed sale of the receivables by the
receivables trustee to a third party and will provide each enhancement provider
an opportunity to bid on purchasing the receivables.
The proceeds of the sale will be deposited in the Trust Accounts for
distribution to the beneficiaries as set out in the declaration of trust and
trust cash management agreement and the series supplements.
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<PAGE>
An "eligible trust cash manager" means an entity that, when it is trust
cash manager:
* is legally qualified and has the capacity to carry out the cash
management functions as set forth in the declaration of trust and
trust cash management agreement;
* is qualified or licensed to use the software that the trust cash
manager is then currently using to carry out cash management of
the receivables or obtains the right to use, or has its own,
software that is adequate to perform its duties under the
declaration of trust and trust cash management agreement; and
* has, in the opinion of each rating agency, demonstrated the
ability to professionally and competently act as a cash manager
with customary standards of skill and care.
Series 99-1
General
The MTN issuer is an investor beneficiary of the receivables trust and a
member of series 99-1. Series 99-1 is constituted by a series supplement that
is called the "Series 99-1 Supplement". The parties to the Series 99-1
Supplement are the receivables trustee and Barclaycard as the transferor
beneficiary, the excess interest beneficiary, the trust cash manager and the
transferor and:
* the MTN issuer as the beneficiary of the class entitled to the
Class A Investor Interest -- called "Class A";
* the MTN issuer as the beneficiary of the class entitled to the
Class B Investor Interest -- called "Class B"; and
* the MTN issuer as the beneficiary of the class entitled to the
Class C Investor Interest -- called "Class C".
The MTN issuer will become the first investor beneficiary by making the
following payments to the receivables trustee on the closing date:
* for Class A L546,345,000; we call this the "Class A Initial
Investor Interest";
* for Class B L30,352,500; we call this the "Class B Initial
Investor Interest"; and
* for Class C L30,352,500; we call this the "Class C Initial
Investor Interest".
The MTN issuer will receive an investor certificate for each class. These
certificates will be evidence of the initial investor beneficial interests for
series 99-1 in the receivables trust and will be governed by English law.
The MTN issuer will confirm the following in the Series 99-1 Supplement:
* that its usual place of abode is within the United Kingdom for the
purpose of Section 349 of the Income and Corporation Taxes Act
1988; and
* that it has a business establishment -- as defined for the
purposes of the Value Added Tax Act 1994 -- in the United Kingdom
that is either its only business establishment or is its business
establishment at which the services received by it as contemplated
in the declaration of trust and trust cash management agreement
and any Trustee Related Document will be most directly used.
Series 99-1 will be included in group one and will not be subordinated to
any other investor beneficiary or series. See "-- Shared Principal Collections"
for the ramifications of series 99-1 being in group one.
Beneficial Entitlement of the MTN Issuer to Trust Property
In order to understand the beneficial entitlement of the MTN issuer to the
property of the receivables trust you will need to understand the following
definitions.
The "Class A Floating Allocation", the "Class B Floating Allocation" and
the "Class C Floating Allocation" will each be calculated the same way and will
be equal to, for each class and for each monthly period, the following fraction
expressed as a percentage:
The Adjusted Investor Interest for the relevant class
-----------------------------------------------------
Adjusted Investor Interest
where these amounts are calculated on the close of business on the last day of
the monthly period prior to the transfer date.
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<PAGE>
The floating allocation for each class for the first monthly period will
be calculated as follows:
The initial investor interest for the relevant class
----------------------------------------------------
Initial Investor Interest
"Class A Investor Interest" means at any time an amount equal to:
(1) the Class A Initial Investor Interest, minus
(2) the total principal payments made to the MTN issuer on the class A
investor certificates from the property of the receivables trust,
minus
(3) the total amount of Class A Investor Charge-Offs for all prior
transfer dates, plus
(4) the total amount of any reimbursements of Class A Investor Charge-
Offs on all prior transfer dates.
The Class A Investor Interest, however, may not be reduced below zero.
"Class A Adjusted Investor Interest" means, at any time, an amount equal
to the Class A Investor Interest minus the balance on deposit in the Principal
Funding Account, but not more than the Class A Investor Interest.
"Class A Investor Charge-Off" means a reduction in the Class A Investor
Interest on any transfer date by the amount, if any, by which the Class A
Investor Default Amount exceeds the total amount of Class A Available Funds,
Excess Spread, Reallocated Class B Principal Collections, Reallocated Class C
Principal Collections, the Class C Investor Interest and the Class B Investor
Interest, in each case, available and allocated on that transfer date to fund
the Class A Investor Default Amount.
"Adjusted Investor Interest" means the sum of the Class A Adjusted
Investor Interest, the Class B Adjusted Investor Interest and the Class C
Adjusted Investor Interest.
"Investor Interest" means the sum of the Class A Investor Interest, the
Class B Investor Interest and the Class C Investor Interest.
"Initial Investor Interest" means L607,050,000. This equals the sum of the
Class A Initial Investor Interest, the Class B Initial Investor Interest and
the Class C Initial Investor Interest.
"Class B Investor Interest" means, at any time, an amount equal to:
(1) the Class B Initial Investor Interest, minus
(2) the total principal payments made to the MTN issuer on the class B
investor certificates from the property of the receivables trust,
minus
(3) the total amount of Class B Investor Charge-Offs for all prior
transfer dates, minus
(4) the total amount of Reallocated Class B Principal Collections
allocated on all prior transfer dates that have been used to fund
the Class A Required Amount, excluding any Reallocated Class B
Principal Collections that have resulted in a reduction in the
Class C Investor Interest, minus
(5) an amount equal to any reductions in the Class B Investor Interest
on all prior transfer dates to fund the Class A Investor Default
Amount, plus
(6) the total amount of Excess Spread allocated and available on all
prior transfer dates to reimburse amounts deducted under (3), (4)
and (5) above.
The Class B Investor Interest, however, may not be reduced below zero.
"Class B Adjusted Investor Interest" means an amount equal to the Class B
Investor Interest minus the balance on deposit in the Principal Funding Account
in excess of the Class A Investor Interest, but not more than the Class B
Investor Interest.
"Class B Investor Charge-Off" means, at any time, a reduction in the Class
B Investor Interest on any transfer date by the amount, if any, by which the
Class B Investor Default Amount exceeds the total amount of Excess Spread,
Reallocated Class C Principal Collections and the Class C Investor Interest, in
each case available and allocated on that transfer date to fund the Class B
Investor Default Amount.
"Class C Investor Interest" means at any time an amount equal to:
(1) the Class C Initial Investor Interest, minus
(2) the total principal payments made to the MTN issuer on the class C
investor certificates from the property of the receivables trust,
minus
(3) the total amount of Class C Investor Charge-Offs for all prior
transfer dates, minus
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<PAGE>
(4) the total amount of Reallocated Class B Principal Collections
allocable to the Class C Investor Interest and Reallocated Class C
Principal Collections on all prior transfer dates that have been
used to fund the Class A Required Amount and the Class B Required
Amount, minus
(5) any reductions in the Class C Investor Interest on all prior
transfer dates to fund the Class A Investor Default Amount and the
Class B Investor Default Amount, plus
(6) the total amount of Excess Spread allocated and available on all
prior transfer dates to reimburse amounts deducted under (3), (4)
and (5) above.
The Class C Investor Interest, however, may not be reduced below zero.
"Class C Adjusted Investor Interest" means, at any time, an amount equal
to the Class C Investor Interest minus the balance on deposit in the Principal
Funding Account in excess of the sum of the Class A Investor Interest and the
Class B Investor Interest, but not more than the Class C Investor Interest.
"Class C Investor Charge-Off" means a reduction in the Class C Investor
Interest on any transfer date by the amount, if any, by which the Class C
Investor Default Amount exceeds the amount of Excess Spread available and
allocated on that transfer date to fund the Class C Investor Default Amount.
The beneficial entitlement of the MTN issuer as the investor beneficiary
for series 99-1 to eligible principal receivables -- which includes principal
collections that are the property of the receivables trust but excludes the
amount on deposit in the Principal Funding Account -- is equal to the
proportion that the Adjusted Investor Interest bears to the amount of eligible
principal receivables assigned or purported to be assigned to the receivables
trust at any time. However, the beneficial entitlement for each class will not
exceed the Class A Adjusted Investor Interest, the Class B Adjusted Investor
Interest or the Class C Adjusted Investor Interest at any time.
The beneficial entitlement of the MTN issuer as the investor beneficiary
for series 99-1 to finance charge collections during any monthly period is
equal to the proportion that the floating allocation for each class bears to
the Investor Percentage of finance charge collections for such monthly period
credited to the Finance Charge Collections Ledger from time to time during that
monthly period. However, the beneficial entitlement will not exceed the monthly
required expense amount for any class of series 99-1 during any monthly period.
The beneficial entitlement of the MTN issuer as the investor beneficiary
for series 99-1 at any time to any other property of the receivables trust not
separately held or segregated for any other beneficiary or series will be equal
to the proportion that the Class A Adjusted Investor Interest, the Class B
Adjusted Investor Interest or the Class C Adjusted Investor Interest bears to
the amount of eligible principal receivables from time to time assigned or
purported to be assigned to the receivables trust. The MTN issuer will not be
entitled to the benefit of any credit enhancement for any class available only
for any other beneficiary, series other than series 99-1 or classes within a
series other than series 99-1, except to the extent it is an investor
beneficiary for another series.
The MTN issuer will be beneficially entitled to all monies held in any
Trust Account other than:
* the Trustee Collection Account -- except for the Distribution
Ledger for each class; or
* the Trustee Acquisition Account;
that are expressly segregated by separate account or by ledger entry or
otherwise, as allocated to the MTN issuer for each class.
Allocation, Calculation and Distribution of Finance Charge Collections to the
MTN Issuer
On each day on which collections are transferred to the Trustee Collection
Account during the Revolving Period, the Controlled Accumulation Period and, if
applicable, the Regulated Amortisation Period or the Rapid Amortisation Period,
the receivables trustee will credit to the Finance Charge Collections Ledger
for series 99-1 an amount calculated as follows:
A x B
Where:
A = Floating Investor Percentage; and
B = the total amount of finance charge collections processed on
that date.
"Floating Investor Percentage" means, for any monthly period, the
following fraction expressed as a percentage:
A
---------------------
The greater of B or C
Where:
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A = the Adjusted Investor Interest;
B = the total balance of eligible principal receivables in the
receivables trust plus the Investor Cash Available for
Acquisition standing to the credit of in the Trustee
Acquisition Account;
C = the sum of the numerators used to calculate the floating
investor percentages for all outstanding series.
These amounts will be calculated for any monthly period other than the
first monthly period as of the last day of the prior monthly period. For the
first monthly period, they will be calculated as of the closing date. The
Floating Investor Percentage will never exceed 100 per cent.
Notwithstanding the above, for a monthly period in which an addition date
occurs, B in the fraction used to calculate the Floating Investor Percentage
will be:
* for the period from the first day of the monthly period to the
addition date, the total balance of eligible principal receivables
in the receivables trust plus the Investor Cash Available for
Acquisition standing to the credit of the Trustee Acquisition
Account at the close of business on the last day of the prior
monthly period; and
* for the period from the addition date through the last day of the
monthly period, the total balance of eligible principal
receivables in the receivables trust plus the Investor Cash
Available for Acquisition standing to the credit of the Trustee
Acquisition Account on the addition date -- taking into account
the eligible principal receivables added to the receivables trust.
If, in any monthly period the Investor Interest would be zero if the
payments to be made on the distribution date in that monthly period were made
on the last day of the prior monthly period, the Floating Investor Percentage
will be zero.
Class A Investor Interest
To understand the amount of finance charge collections distributable to
the MTN issuer for Class A on any transfer date, you need to understand the
following definitions and cash flows.
The "Class A Monthly Required Expense Amount" for any transfer date will
be the sum of the following items:
* the Class A Trustee Payment Amount plus any unpaid Class A Trustee
Payment Amount from previous transfer dates; see "-- Trustee
Payment Amount";
* the MTN Issuer Costs Amount;
* the Class A Monthly Finance Amount;
* the Class A Deficiency Amount; and
* the Class A Additional Finance Amount.
"Class A Monthly Finance Amount" means the amount calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Days in Calculation Period
-------------------------- X The interestrate on the class X The Class A Debt Amount
365 (366 in a leap year) A MTNs
</TABLE>
"Class A Deficiency Amount" is the excess, if any, of the Class A Monthly
Required Expense Amount for the prior transfer date -- disregarding for this
purpose the Class A Trustee Payment Amount and the MTN Issuer Costs Amount --
over the funds allocable to Class A actually credited to the Class A
Distribution Ledger for payment of the Class A Monthly Required Expense Amount
on that transfer date.
"Class A Additional Finance Amount" means the amount calculated as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Days in Calculation Period The interestrate on the class Any unpaid Class A Deficiency
-------------------------- X A MTNs plus 2.0% X Amount on the prior transfer
365 (366 in a leap year) date
</TABLE>
The first "distribution date" or "interest payment date" will be 15
January, 2000 or, if that day is not a business day, the next business day
after the 15th, and each subsequent distribution date or interest payment date
will be the 15th day of each calendar month, or if that day is not a business
day, the next business day after the 15th.
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<PAGE>
"Calculation Period" means, for any distribution date, the period from and
including the previous distribution date or, in the case of the first
distribution date, from and including the closing date, to but excluding that
distribution date.
"Class A Debt Amount" means the Class A Initial Investor Interest minus
the total principal payments made to the MTN issuer on the class A investor
certificates from the property of the receivables trust. On the series 99-1
termination date, the Class A Debt Amount will be zero.
"MTN Issuer Costs Amount" means the amounts certified by the security
trustee as being required to pay the fees, costs and expenses of the MTN issuer
accrued due and payable on a transfer date. This amount includes the fees,
costs and expenses of the security trustee and any receiver appointed pursuant
to the security trust deed, any fees, costs and expenses remaining unpaid from
previous transfer dates together with any VAT payable on any of the above
items, where relevant.
"Class A Available Funds" for any monthly period equals the sum of the
following amounts credited to the Finance Charge Collections Ledger for that
monthly period:
* the Class A Floating Allocation of finance charge collections
allocated to series 99-1;
* the Class A Floating Allocation of Acquired Interchange allocated
to series 99-1;
* for any monthly period during the Controlled Accumulation Period
before payment in full of the Class A Investor Interest, the
Principal Funding Investment Proceeds -- up to a maximum amount
equal to the Class A Covered Amount; see "-- Principal Funding
Account"; and
* any amounts withdrawn from the Reserve Account; see "-- Reserve
Account".
The amount of Acquired Interchange allocated to series 99-1 for any
monthly period will be the product of the Acquired Interchange and the Floating
Investor Percentage. This allocated Acquired Interchange will be credited to
the Finance Charge Collections Ledger.
On each transfer date, the receivables trustee will withdraw the Class A
Available Funds from the Finance Charge Collections Ledger, and they will be
distributed in the following order:
(1) the Class A Trustee Payment Amount plus any unpaid Class A Trustee
Payment Amounts from prior transfer dates will be used by the receivables
trustee to satisfy the Trustee Payment Amounts;
(2) the MTN Issuer Costs Amount will be credited to the Class A Distribution
Ledger;
(3) the sum of the Class A Monthly Finance Amount, the Class A Deficiency
Amount and the Class A Additional Finance Amount will be credited to the
Class A Distribution Ledger;
(4) the class A servicing fee and class A cash management fee and any due and
unpaid class A servicing fees or class A cash management fees from prior
transfer dates will be distributed to the servicer or trust cash manager,
as applicable;
(5) an amount equal to the Class A Investor Default Amount will be allocated
to Class A and treated as a portion of Investor Principal Collections
allocated to Class A and credited to the Principal Collections Ledger;
and
(6) the balance -- called "Class A Excess Spread" -- will be part of Excess
Spread and will be allocated as described in "-- Excess Spread".
On each distribution date, all amounts credited to the Class A
Distribution Ledger for the amounts in (2) and (3) above will be deposited into
the Series 99-1 Distribution Account and will be owned by the MTN issuer. The
amount in (2) above is called the "Class A Monthly Distribution Amount".
The "Series 99-1 Distribution Account" is a bank account in the name of
the MTN issuer that will be used to deposit amounts distributed to the MTN
issuer for the series 99-1 investor certificates from the receivables trust.
The "Class A Distribution Ledger" is a ledger for Class A in the Trustee
Collection Account.
See "-- Distribution Ledgers".
Class B Investor Interest
To understand the amount of finance charge collections distributable to
the MTN issuer for Class B on any transfer date, you need to understand the
following definitions and cash flows.
The "Class B Monthly Required Expense Amount" for any transfer date will
be the sum of the following items:
* the Class B Trustee Payment Amount plus any unpaid Class B Trustee
Payment Amounts from previous transfer dates; see "-- Trustee
Payment Amount";
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<PAGE>
* the Class B Monthly Finance Amount;
* the Class B Deficiency Amount; and
* the Class B Additional Finance Amount.
"Class B Monthly Finance Amount" means the amount calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Days in Calculation Period
-------------------------- X The interestrate on the class X The Class B Debt Amount
365 (366 in a leap year) B MTNs
</TABLE>
"Class B Deficiency Amount" is the excess, if any, of the Class B Monthly
Required Expense Amount for the prior transfer date -- disregarding for this
purpose the Class B Trustee Payment Amount -- over the funds allocable to Class
B actually credited to the Class B Distribution Ledger for payment of the Class
B Monthly Required Expense Amount on that transfer date.
"Class B Additional Finance Amount" means the amount calculated as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Days in Calculation Period Any unpaid Class B Deficiency
-------------------------- X The interestrate on the class X Amount on the prior transfer
365 (366 in a leap year) B MTNs plus 2.0% date
</TABLE>
"Class B Debt Amount" means the Class B Initial Investor Interest minus
the total principal payments made to the MTN issuer on the class B investor
certificates from the property of the receivables trust. On the series 99-1
termination date, the Class B Debt Amount will be zero.
"Class B Available Funds" for any monthly period equals the sum of the
following amounts credited to the Finance Charge Collections Ledger for that
monthly period:
* the Class B Floating Allocation of finance charge collections
allocated to series 99-1; and
* the Class B Floating Allocation of Acquired Interchange allocated
to series 99-1.
On each transfer date, the receivables trustee will withdraw the Class B
Available Funds from the Finance Charge Collections Ledger, and they will be
distributed in the following order:
(1) the Class B Trustee Payment Amount plus any unpaid Class B Trustee
Payment Amounts from prior transfer dates will be used by the
receivables trustee to satisfy the Trustee Payment Amounts;
(2) the sum of the Class B Monthly Finance Amount, the Class B
Deficiency Amount and the Class B Additional Finance Amount will
be credited to the Class B Distribution Ledger;
(3) the class B servicing fee and class B cash management fee and any
due and unpaid class B servicing fees and class B cash management
fees from prior transfer dates will be distributed to the servicer
or trust cash manager, as applicable; and
(4) the balance -- called "Class B Excess Spread" -- will be part of
Excess Spread and will be allocated as described in "-- Excess
Spread".
On each distribution date, all amounts credited to the Class B
Distribution Ledger for the amounts in (2) above -- called the "Class B Monthly
Distribution Amount" -- will be deposited into the Series 99-1 Distribution
Account and will be owned by the MTN issuer.
The "Class B Distribution Ledger" is a ledger for Class B in the Trustee
Collection Account. See
"-- Distribution Ledgers".
Class C Investor Interest
To understand the amount of finance charge collections distributable to
the MTN issuer for Class C on any transfer date, you need to understand the
following definitions and cash flows.
The "Class C Monthly Required Expense Amount" will be the sum of the
following items:
* the Class C Trustee Payment Amount plus any unpaid Class C Trustee
Payment Amounts from previous transfer dates; see "-- Trustee
Payment Amount";
* the Class C Monthly Finance Amount;
* the Class C Deficiency Amount; and
* the Class C Additional Finance Amount.
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<PAGE>
"Class C Monthly Finance Amount" means the amount calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Days in Calculation Period The interestrate on the class X The Class C Debt Amount
-------------------------- X C MTNs
365 (366 in a leap year)
</TABLE>
"Class C Deficiency Amount" is the excess, if any, of the Class C Monthly
Required Expense Amount for the prior transfer date -- disregarding for this
purpose the Class C Trustee Payment Amount -- over the funds allocable to Class
C actually credited to the Class C Distribution Ledger for payment of the Class
C Monthly Required Expense Amount on that transfer date.
"Class C Additional Finance Amount" means the amount calculated as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Days in Calculation Period The interestrate on the class Any unpaid Class C Deficiency
-------------------------- X C MTNs plus 2.0% X Amount on the prior transfer
365 (366 in a leap year) date
</TABLE>
"Class C Debt Amount" means the Class C Initial Investor Interest minus
the total principal payments made to the MTN issuer on the class C investor
certificates from the property of the receivables trust. On the series 99-1
termination date the Class C Debt Amount will be zero.
"Class C Available Funds" for any monthly period equals the sum of the
following amounts credited to the Finance Charge Collections Ledger for that
monthly period:
* the Class C Floating Allocation of finance charge collections
allocated to series 99-1; and
* the Class C Floating Allocation of Acquired Interchange allocated
to series 99-1.
On each transfer date, the receivables trustee will withdraw the Class C
Available Funds from the Finance Charge Collections Ledger, and they will be
distributed in the following order:
(1) the Class C Trustee Payment Amount plus any unpaid Class C Trustee
Payment Amounts from prior transfer dates will be used by the receivables
trustee to satisfy the Trustee Payment Amounts;
(2) the class C servicing fee and class C cash management fee and any due and
unpaid class C servicing fees or class C cash management fees from prior
transfer dates will be distributed to the beneficiaries servicer or trust
cash manager, as applicable; and
(3) the balance -- called "Class C Excess Spread" -- will be part of Excess
Spread and will be allocated as described in "-- Excess Spread".
The "Class C Distribution Ledger" is a ledger for Class C in the Trustee
Collection Account. See "-- Distribution Ledgers".
Revolving Period
The "Revolving Period" for series 99-1 is the period from the closing date
to the start of the Controlled Accumulation Period or, if earlier, the start of
the Rapid Amortisation Period or the Regulated Amortisation Period.
During the Revolving Period, principal collections allocable daily to the
Class A Investor Interest will be used by the receivables trustee as Shared
Principal Collections and, to the extent not used as Shared Principal
Collections, to make payments to the transferor:
* to accept new offers of receivables made by the transferor to the
receivables trustee, and
* to make payments to the transferor for future receivables assigned
by the transferor to the receivables trustee by offers that have
already been made and accepted.
Principal collections allocable to the Class B Investor Interest and the
Class C Investor Interest will be used by the receivables trustee as described
in the previous paragraph on the next following transfer date to the extent not
required to fund shortfalls for the Class A Investor Interest and -- for
principal collections allocable to the Class C Investor Interest -- the Class B
Investor Interest.
Controlled Accumulation Period
The "Controlled Accumulation Period" for series 99-1 is the period
scheduled to begin on the close of business on 30 October, 2001 and ending when
the Investor Interest is paid in full, unless a Pay Out Event occurs and the
Regulated Amortisation Period or the Rapid Amortisation Period begins. If the
Regulated Amortisation Period or the Rapid Amortisation Period begins before
the start of the Controlled Accumulation Period, there will not be a Controlled
Accumulation Period for series 99-1. The start of the Controlled Accumulation
Period may
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<PAGE>
be delayed until no later than the close of business on 30 September, 2002. See
"-- Postponement of Controlled Accumulation Period".
During the Controlled Accumulation Period the principal collections
allocated to the Investor Interest for series 99-1, up to the Controlled
Deposit Amount, will be accumulated by the receivables trustee in a trust
account called the "Principal Funding Account" for distribution to the MTN
issuer as the investor beneficiary for Class A, Class B and Class C on the
November 2002 distribution date -- called the "series 99-1 scheduled redemption
date". Any principal collections allocated to the Investor Interest for series
99-1 over the amount that will be deposited in the Principal Funding Account
will be used by the receivables trustee first as Shared Principal Collections
and then to make payments to the transferor as described above under "--
Revolving Period".
The "Controlled Deposit Amount" for any transfer date for the Controlled
Accumulation Period or the Regulated Amortisation Period will be L50,587,500,
which equals the Initial Investor Interest divided by 12, or for a Regulated
Amortisation Period, will be an amount not exceeding 1/12 of the total sum of
all investor interests of all series in group one that are not companion series
that are scheduled to be in their revolving periods. If the start of the
Controlled Accumulation Period is delayed as described in "-- Postponement of
Controlled Accumulation Period", the Controlled Deposit Amount will be greater
than L50,587,500. This higher amount will be determined by the servicer based
on the principal payment rates on the designated accounts and on the investor
interests of series in group one that are not Companion Series that are
scheduled to be in their revolving periods. In any case, the Controlled Deposit
Amount will be the amount that, if deposited in the Principal Funding Account
on each transfer date for the Controlled Accumulation Period, will cause the
balance of the Principal Funding Account to equal the Investor Interest on the
series 99-1 scheduled redemption date. The Controlled Deposit Amount for any
transfer date will include the amount of any shortfall in payment of the
Controlled Deposit Amount for the previous transfer date.
Regulated Amortisation Period
A "Regulated Amortisation Period" will start on the day, if there is one,
that any of the following Series 99-1 Pay Out Events occur, each of which we
refer to as a "Regulated Amortisation Trigger Event":
* the average Portfolio Yield for any three consecutive monthly
periods is less than the average Expense Rate for those periods
or, on any determination date before the end of the third monthly
period from the closing date, the Portfolio Yield is less than the
average Expense Rate for that period; or
* Either:
(1) over any period of thirty consecutive days, the Transferor
Interest averaged over that period is less than the Minimum
Transferor Interest for that period and the Transferor
Interest does not increase on or before the tenth business
day following that thirty day period to an amount so that
the average of the Transferor Interest as a percentage of
the Average Principal Receivables for such thirty day
period, computed by assuming that the amount of the
increase of the Transferor Interest by the last day of that
ten business day period, as compared to the Transferor
Interest on the last day of the thirty day period, would
have existed in the receivables trust during each day of
the thirty day period, is at least equal to the Minimum
Transferor Interest; or
(2) on the last day of any monthly period the total balance of
eligible principal receivables is less than the Minimum
Aggregate Principal Receivables, adjusted for any series
having a Companion Series as described in the supplement
for that series and the Companion Series, and the total
balance of eligible principal receivables fails to increase
to an amount equal to or greater than the Minimum Aggregate
Principal Receivables on or before the tenth business day
following that last day.
The Regulated Amortisation Period will continue until the earlier of:
* the start of the Rapid Amortisation Period; and
* the series 99-1 termination date.
During the Regulated Amortisation Period the amount of principal
collections allocated to the Investor Interest for series 99-1, up to the
Controlled Deposit Amount, will be paid each month to the MTN issuer first for
the Class A Investor Interest, second for the Class B Investor Interest and
third for the Class C Investor Interest until the series 99-1 termination date.
Any principal collections allocated to the Investor Interest for series 99-1
over the Controlled Deposit Amount paid to the MTN issuer will be used by the
receivables trustee first as Shared Principal Collections and then to make
payments to the transferor as described above under "-- Revolving Period".
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<PAGE>
Rapid Amortisation Period
A "Rapid Amortisation Period" will start on the day that any Pay Out
Event other than a Regulated Amortisation Trigger Event occurs.
The Rapid Amortisation Period will continue until the earlier of:
* the series 99-1 termination date; or
* the dissolution of the receivables trust following the occurrence
of an Insolvency Event; see "The Receivables Trust: Trust Pay Out
Events".
During the Rapid Amortisation Period, principal collections allocable to
the Investor Interest of series 99-1 will be paid each month to the MTN issuer
first for the Class A Investor Interest, second for the Class B Investor
Interest and third for the Class C Investor Interest until the series 99-1
termination date.
The "series 99-1 termination date" is the earlier of the distribution date
on which the Investor Interest has been reduced to zero and the November 2004
distribution date.
Allocation, Calculation and Distribution of Principal Collections to the MTN
Issuer
During the Revolving Period, principal collections will be allocated to
the Investor Interest on the basis of the Floating Investor Percentage. During
the Controlled Accumulation Period, the Regulated Amortisation Period and the
Rapid Amortisation Period, principal collections will be allocated to the
Investor Interest on the basis of the Fixed Investor Percentage. The amount of
principal collections allocated to the Investor Interest at any time will be
credited to the Principal Collections Ledger for series 99-1. The principal
collections credited to the Principal Collections Ledger from time to time that
will be allocated to the MTN issuer will be:
* during the Revolving Period, equal to the total of the floating
allocations for each class;
* during the Controlled Accumulation Period, the Regulated
Amortisation Period and the Rapid Amortisation Period, equal to
the total of the fixed allocations for each class.
"Fixed Investor Percentage" means, for any monthly period, the following
calculation expressed as a percentage:
A
---------------------
the greater of B or C
Where:
A = the Investor Interest calculated at the close of business
on the last day of the Revolving Period;
B = the total balance of eligible principal receivables in the
receivables trust plus the Investor Cash Available for
Acquisition standing to the credit of the Trustee
Acquisition Account; and
C = the sum of the numerators used to calculate the fixed
Investor Percentages for all outstanding series.
Items B and C above will be calculated for any monthly period as of the last
day of the prior monthly period. For the first monthly period, they will be
calculated as of the closing date. The Fixed Investor Percentage will never
exceed 100 per cent.
Notwithstanding the above, for a monthly period in which an addition date
occurs, B in the fraction used to calculate the Fixed Allocation Percentage
above, will be:
* for the period from the first day of the monthly period to the
addition date, the total balance of eligible principal receivables
in the receivables trust plus the Investor Cash Available for
Acquisition standing to the credit of the Trustee Acquisition
Account at the close of business on the last day of the prior
monthly period; and
* for the period from the addition date to the last day of the
monthly period, the total balance of eligible principal
receivables in the receivables trust plus the Investor Cash
Available for Acquisition standing to the credit of the Trustee
Acquisition Account on the addition date, taking into account the
eligible principal receivables added to the receivables trust.
If in any monthly period the Investor Interest would be zero if the
payments to be made on the distribution date during that monthly period were
made on the last day of the prior monthly period, the Fixed Investor Percentage
will be zero.
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<PAGE>
The "Class A Fixed Allocation", the "Class B Fixed Allocation" and the
"Class C Fixed Allocation" will each be calculated the same way and will be
equal to, for each class and for any monthly period after the end of the
Revolving Period, the following fraction expressed as a percentage:
Investor Interest for the relevant Class
----------------------------------------
Investor Interest
This percentage, never to exceed 100%, will be calculated using these
amounts on the close of business on the last day of the Revolving Period.
On each business day during the Revolving Period which is not a transfer
date, the Reinvested Investor Principal Collections for that day will be
distributed in the following priority:
* the Reinvested Investor Principal Collections will be applied as
Shared Principal Collections and allocated to other outstanding
series in group one; see "-- Shared Principal Collections"; and
* the balance remaining will be applied as Investor Cash Available
for Acquisition in the manner described in "The Receivables Trust:
Acquiring Additional Entitlements to Trust Property and Payments
for Receivables".
"Reinvested Investor Principal Collections" means, for any business day:
* principal collections credited to the Principal Collections Ledger
identified for series 99-1, after adjustments for Unavailable
Principal Collections during the Controlled Accumulation Period,
the Regulated Amortisation Period and the Rapid Amortisation
Period -- for any day called the "Daily Investor Principal
Collections"; minus
* an amount equal to the product of the Class B Floating Allocation
and the Daily Investor Principal Collections; minus
* an amount equal to the product of the Class C Floating Allocation
and the Daily Investor Principal Collections.
"Available Investor Principal Collections" means, for any monthly period:
* the Investor Principal Collections; minus
* the Investor Cash Available for Acquisition that has been
calculated as being available to be used during that monthly
period; minus
* the Reallocated Class C Principal Collections that are required to
fund the Class A Required Amount or the Class B Required Amount;
minus
* the Reallocated Class B Principal Collections for that monthly
period that are required to fund the Class A Required Amount; plus
* the Shared Principal Collections allocated from other series in
group one that are allocated to series 99-1; plus
* for a monthly period in which the Rapid Amortisation Period
starts, any previously identified Investor Cash Available for
Acquisition that was not used to acquire receivables.
"Investor Principal Collections" means, for any monthly period, the sum of:
* principal collections credited to the Principal Collections Ledger
identified for series 99-1, after adjustments for Unavailable
Principal Collections during the Controlled Accumulation Period,
the Regulated Amortisation Period and the Rapid Amortisation
Period; plus
* amounts treated as Investor Principal Collections up to the Class
A Investor Default Amount and distributed out of Class A Available
Funds, Excess Spread, Reallocated Class C Principal Collections
and Reallocated Class B Principal Collections; plus
* amounts treated as Investor Principal Collections up to the Class
B Investor Default Amount and distributed out of Excess Spread and
Reallocated Class C Principal Collections; plus
* amounts treated as Investor Principal Collections up to the Class
C Investor Default Amount and distributed out of Excess Spread;
plus
* Excess Spread treated as Investor Principal Collections used to
reimburse Class A Investor Charge-Offs, any reductions in the
Class B Investor Interest and any reductions in the Class C
Investor Interest; plus
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<PAGE>
* Unavailable Principal Collections credited to the Principal
Collections Ledger and to be treated as Investor Principal
Collections; see "-- Unavailable Principal Collections".
On each transfer date for the Controlled Accumulation Period, the
Regulated Amortisation Period or the Rapid Amortisation Period, the receivables
trustee will withdraw the Class A Monthly Principal Amount from the Principal
Collections Ledger and:
* for a transfer date for the Controlled Accumulation Period,
deposit it into the Principal Funding Account; or
* for a transfer date during the Rapid Amortisation Period or
Regulated Amortisation Period, credit it to the Class A
Distribution Ledger.
The "Class A Monthly Principal Amount" is the least of:
* the Available Investor Principal Collections standing to the
credit of the Principal Collections Ledger on that transfer date;
* for each transfer date for the Controlled Accumulation Period or
the Regulated Amortisation Period before the series 99-1 scheduled
redemption date, the Controlled Deposit Amount for that transfer
date; and
* the Class A Adjusted Investor Interest -- adjusted to account for
any unreimbursed Class A Investor Charge-Offs.
The first distribution date (1) for the Controlled Accumulation Period, on
which an amount equal to the Class A Investor Interest has been deposited in
the Principal Funding Account, or (2) during the Rapid Amortisation Period or
the Regulated Amortisation Period, on which the Class A Investor Interest is
paid in full, is called the "Class B Principal Commencement Date."
Starting with the Class B Principal Commencement Date, to the extent there
are funds remaining after distributing the Class A Monthly Principal Amount,
the receivables trustee will withdraw the Class B Monthly Principal Amount from
the Principal Collections Ledger and:
* for a transfer date for the Controlled Accumulation Period,
deposit it into the Principal Funding Account; or
* for a transfer date during the Rapid Amortisation Period or the
Regulated Amortisation Period, credit it to the Class B
Distribution Ledger.
The "Class B Monthly Principal Amount" is the lesser of:
* the Available Investor Principal Collections standing to the
credit of the Principal Collections Ledger on that transfer date
minus, if applicable, the Class A Monthly Principal Amount; and
* the Class B Adjusted Investor Interest -- adjusted to take into
account any unreimbursed reductions in the Class B Investor
Interest for reasons other than principal payments.
The first distribution date (1) for the Controlled Accumulation Period, on
which an amount equal to the sum of the Class A Investor Interest and the Class
B Investor Interest has been deposited in the Principal Funding Account, or (2)
during the Rapid Amortisation Period or the Regulated Amortisation Period, on
which the Class B Investor Interest is paid in full, is called the "Class C
Principal Commencement Date".
Starting with the Class C Principal Commencement Date, to the extent there
are funds remaining after distributing the Class A Monthly Principal Amount and
the Class B Monthly Principal Amount, as applicable, the receivables trustee
will withdraw the Class C Monthly Principal Amount from the Principal
Collections Ledger and:
* for a transfer date for the Controlled Accumulation Period,
deposit it into the Principal Funding Account; or
* for a transfer date during the Rapid Amortisation Period or the
Regulated Amortisation Period, credit it to the Class C
Distribution Ledger.
The "Class C Monthly Principal Amount" is the lesser of:
* the Available Investor Principal Collections standing to the
credit of the Principal Collections Ledger on that transfer date
minus, if applicable, the Class A Monthly Principal Amount and the
Class B Monthly Principal Amount; and
* the Class C Adjusted Investor Interest -- adjusted to take into
account any unreimbursed reductions in the Class C Investor
Interest for reasons other than principal payments.
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<PAGE>
On the earlier of (1) the first distribution date during the Rapid
Amortisation Period or the Regulated Amortisation Period and (2) the series 99-
1 scheduled redemption date, and on each distribution date after that, the
receivables trustee will distribute the following amounts in the following
priority:
(1) from the Principal Funding Account, an amount equal to the lesser of:
* the amount on deposit in the Principal Funding Account; and
* the Class A Investor Interest,
will be deposited to the Series 99-1 Distribution Account for Class A and
will be owned by the MTN issuer. The MTN issuer will use this amount to
redeem the class A MTNs in whole, if the amount distributed is equal to
the Class A Investor Interest, or to repay principal outstanding on the
class A MTNs if the amount is less;
(2) from the Class A Distribution Ledger an amount equal to the lesser of:
* the amount credited to the Class A Distribution Ledger; and
* the Class A Investor Interest, after taking into account the
amount described in clause (1) above;
will be deposited to the Series 99-1 Distribution Account for class A and
will be owned by the MTN issuer. The MTN issuer will use this amount to
redeem the class A MTNs in whole, if the amount distributed is equal to
the Class A Investor Interest, or to repay principal outstanding on the
class A MTNs if the amount is less.
Starting on the earlier of (1) if the amount on deposit in the Principal
Funding Account exceeds the Class A Investor Interest, the series 99-1
scheduled redemption date and (2) during the Rapid Amortisation Period or the
Regulated Amortisation Period, the Class B Principal Commencement Date, and on
each distribution date after that, the receivables trustee will distribute the
following amounts in the following priority:
(1) from the Principal Funding Account, an amount equal to the lesser of:
* the amount on deposit in the Principal Funding Account in excess
of the Class A Investor Interest; and
* the Class B Investor Interest;
will be deposited to the Series 99-1 Distribution Account for Class B and
will be owned by the MTN issuer. The MTN issuer will use this amount to
redeem the class B MTNs in whole, if the amount distributed is equal to
the Class B Investor Interest, or to repay principal outstanding on the
class B MTNs if the amount is less;
(2) from the Class B Distribution Ledger an amount equal to the lesser of:
* the amount credited to the Class B Distribution Ledger; and
* the Class B Investor Interest, after taking into account the
amount described in clause (1) above;
this amount will be deposited to the Series 99-1 Distribution Account for
Class B and will be owned by the MTN issuer. The MTN issuer will use this
amount to redeem the class B MTNs in whole, if the amount distributed is
equal to the class B Investor Interest, or to repay principal outstanding
on the Class B MTNs if the amount is less.
Starting on the earlier of (1) if the amount on deposit in the Principal
Funding Account exceeds the sum of the Class A Investor Interest and the Class
B Investor Interest, the series 99-1 scheduled redemption date, and (2) during
the Rapid Amortisation Period or the Regulated Amortisation Period, the Class C
Principal Commencement Date, and on each distribution date after that, the
receivables trustee will distribute the following amounts in the following
priority:
(1) from the Principal Funding Account, an amount equal to the lesser of:
* the amount on deposit in the Principal Funding Account in excess
of the sum of the Class A Investor Interest and the Class B
Investor Interest; and
* the Class C Investor Interest;
will be deposited to the Series 99-1 Distribution Account for Class C and
will be owned by the MTN issuer. The MTN issuer will use this amount to
redeem the class C MTNs in whole, if the amount distributed is equal to
the Class C Investor Interest, or to repay principal outstanding on the
class C MTNs if the amount is less;
(2) from the Class C Distribution Ledger, an amount equal to the lesser of;
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<PAGE>
* the amount credited to the Class C Distribution Ledger; and
* the Class C Investor Interest after taking into account the amount
described in clause (1) above;
will be deposited to the Series 99-1 Distribution Account for Class C and
will be owned by the MTN issuer. The MTN issuer will use this amount to
redeem the class C MTNs in whole if the amount distributed is equal to
the Class C Investor Interest, or to repay principal outstanding on the
class C MTNs, if the amount is less.
Postponement of Controlled Accumulation Period
The Controlled Accumulation Period is scheduled to begin on the close of
business on 31 October, 2001. If the Controlled Accumulation Period Length,
which is explained in the next paragraph, is less than 12 months, the Revolving
Period may be extended and the start of the Controlled Accumulation Period will
be postponed. The Controlled Accumulation Period will, in any event, begin no
later than the close of business on
30 September, 2002.
On the determination date right before the distribution date in July 2001,
and on each determination date after that, until the Controlled Accumulation
Period begins, the servicer will determine the "Controlled Accumulation Period
Length". This is the number of months that the servicer expects will be needed
to fully fund the Principal Funding Account no later than the series 99-1
scheduled redemption date. This calculation is based on:
* the expected monthly principal collections that the servicer
calculates will be available to the investor interests of all
series other than excluded series, assuming a principal payment
rate no greater than the lowest monthly principal payment rate on
the receivables for the twelve months before; and
* the amount of principal expected to be distributable to the
investor interests of all series in group one -- other than
Companion Series -- that are not expected to be in their revolving
periods during the Controlled Accumulation Period.
If the Controlled Accumulation Period Length is less than twelve months,
the servicer may, at its option, postpone the start of the Controlled
Accumulation Period such that the number of calendar months in the Controlled
Accumulation Period will be at least equal to the Controlled Accumulation
Period Length.
The effect of this is to permit the reduction of the length of the
Controlled Accumulation Period based on the investor interest of future series
that are scheduled to be in their revolving periods during the Controlled
Accumulation Period and on increases in the principal payment rate occurring
after the closing date. The length of the Controlled Accumulation Period will
not be less than one month.
Unavailable Principal Collections
If:
* during the Controlled Accumulation Period or the Regulated
Amortisation Period, the amount credited to the Principal
Collections Ledger identified for series 99-1 during any monthly
period minus the amount of Investor Cash Available for Acquisition
calculated for series 99-1 for that monthly period, exceeds the
sum of:
(1) the Adjusted Investor Interest as of the last day of the
prior monthly period, after taking into account any
deposits to be made to the Principal Funding Account on the
transfer date for that monthly period, any unreimbursed
Investor Charge-Offs for any class and any other
adjustments to the Investor Interest for that monthly
period; and
(2) any Reallocated Class B Principal Collections or
Reallocated Class C Principal Collections on the transfer
date for that monthly period; or
* during the Rapid Amortisation Period, the amount credited to the
Principal Collections Ledger identified for series 99-1 during any
monthly period exceeds the sum of:
(1) the Investor Interest as of the last day of the prior
monthly period, after taking into account any deposits to
be made to the series 99-1 Distribution Account on the
transfer date for that monthly period, any unreimbursed
Investor Charge-Offs for any class and any other
adjustments to the Investor Interest for that monthly
period; and
(2) any Reallocated Class B Principal Collections or
Reallocated Class C Principal Collections on the transfer
date for that monthly period.
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The amount of any excess -- in either (1) or (2) above -- will be credited
to the Principal Collections Ledger and identified for the transferor
beneficiary.
The amount of any excess will be transferred to the transferor beneficiary
only to the extent that the Transferor Interest on that date is greater than
zero. If the Transferor Interest on that date is not greater than zero, the
amount will be identified as unavailable transferor principal collections
credited to the Principal Collections Ledger. This sum, together with any
unavailable investor principal collections that have been credited to the
Principal Collections Ledger, will be identified as "Unavailable Principal
Collections". Unavailable investor principal collections are principal
collections allocable to the transferor beneficiary but not transferred to the
transferor beneficiary because the Transferor Interest at the relevant date is
not greater than zero.
Unavailable Principal Collections will, during the Revolving Period,
remain allocated to the transferor beneficiary but will be transferred to the
transferor beneficiary only if and to the extent that the Transferor Interest
at that time is greater than zero. On each transfer date for the Controlled
Accumulation Period, Regulated Amortisation Period or the Rapid Amortisation
Period, any Unavailable Principal Collections credited to the Principal
Collections Ledger will be included as Investor Principal Collections to be
distributed as Available Investor Principal Collections.
Shared Principal Collections
Principal collections for any monthly period allocated to the Investor
Interest of series 99-1 will first be used to cover:
* until the series 99-1 scheduled redemption date, for any monthly
period during the Controlled Accumulation Period, deposits of the
Controlled Deposit Amount to the Principal Funding Account;
* during the Regulated Amortisation Period, deposits of the
Controlled Deposit Amount to the Series 99-1 Distribution Account
for series 99-1; and
* during the Controlled Accumulation Period, on the series 99-1
scheduled redemption date, and during the Rapid Amortisation
Period, payments to the MTN issuer for series 99-1.
The receivables trustee will determine the amount of principal collections
for any monthly period allocated to the Investor Interest remaining after
covering required distributions to the MTN issuer for each class of series 99-1
and any similar amount remaining for any other outstanding series in group one.
These remaining principal collections are called "Shared Principal
Collections". The receivables trustee will allocate the Shared Principal
Collections to cover any scheduled or permitted principal distributions to
beneficiaries, and deposits to principal funding accounts, if any, for any
series in group one that have not been covered out of the principal collections
allocable to that series. These uncovered principal distributions and deposits
are called "Principal Shortfalls". Shared Principal Collections will not be
used to cover investor charge-offs for any class of any series.
If Principal Shortfalls exceed Shared Principal Collections for any
monthly period, Shared Principal Collections will be allocated in proportion
among the outstanding series in group one based on the amounts of Principal
Shortfalls for each series. To the extent that Shared Principal Collections
exceed Principal Shortfalls, the balance will in the normal course be paid to
the transferor beneficiary.
Defaulted Receivables; Investor Charge-Offs
On each transfer date, the receivables trustee will calculate the Investor
Default Amount for the previous monthly period. The "Investor Default Amount"
will be the total of, for each defaulted account, the product of the Floating
Investor Percentage and the default amount.
The "default amount" for any defaulted account will be the amount of
eligible principal receivables in the defaulted account on the day the account
became a defaulted account.
The Investor Default Amount will be allocated to each class of series 99-1
based on its floating allocation during the monthly period. These allocations
will be called the "Class A Investor Default Amount," the "Class B Investor
Default Amount" and the "Class C Investor Default Amount."
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On each transfer date, if the Class A Investor Default Amount for the
prior monthly period exceeds the sum of:
* Class A Available Funds;
* Excess Spread;
* Reallocated Class C Principal Collections; and
* Reallocated Class B Principal Collections;
in each case, to the extent available to cover the Class A Investor Default
Amount, then the Class C Investor Interest will be reduced by the amount of the
excess, but not by more than the remaining Class A Investor Default Amount.
This reduction to the Class C Investor Interest will be made only after giving
effect to reductions to the Class C Investor Interest for any Class C Investor
Charge-Offs, any Reallocated Class B Principal Collections and any Reallocated
Class C Principal Collections.
If this reduction would cause the Class C Investor Interest to be a
negative number, it will be reduced to zero. In this case, the Class B Investor
Interest will be reduced by the amount by which the Class C Investor Interest
would have been reduced below zero, but not by more than the Class A Investor
Default Amount not covered by a reduction in the Class C Investor Interest.
This reduction in the Class B Investor Interest will be made only after giving
effect to reductions for any Class B Investor Charge-Offs and Reallocated Class
B Principal Collections not covered by a reduction in the Class C Investor
Interest.
If this reduction would cause the Class B Investor Interest to be a
negative number, the Class B Investor Interest will be reduced to zero. In this
case, the Class A Investor Interest will be reduced by the amount by which the
Class B Investor Interest would have been reduced below zero, but not by more
than the remaining Class A Investor Default Amount not covered by a reduction
in the Class C Investor Interest or the Class B Investor Interest. This is
called a "Class A Investor Charge-Off" and may have the effect of slowing or
reducing the return of principal to the MTN issuer for Class A.
If the Class A Investor Interest has been reduced by any Class A Investor
Charge-Offs, it will be reimbursed on any transfer date by the amount of Excess
Spread allocated and available for that purpose, but not by more than the total
amount by which the Class A Investor Interest has been reduced. See "-- Excess
Spread".
On each transfer date, if the Class B Investor Default Amount for the
prior monthly period exceeds the sum of:
* Excess Spread; and
* Reallocated Class C Principal Collections;
in each case to the extent available to cover the Class B Investor Default
Amount, then the Class C Investor Interest will be reduced by the amount of the
excess, but not by more than the remaining Class B Investor Default Amount.
This reduction to the Class C Investor Interest will be made only after giving
effect to any reductions to the Class C Investor Interest for any Class C
Investor Charge-Offs, any Reallocated Class B Principal Collections, any
Reallocated Class C Principal Collections and any reductions in the Class C
Investor Interest to cover the Class A Investor Default Amount.
If this reduction would cause the Class C Investor Interest to be a
negative number, it will be reduced to zero. In this case, the Class B Investor
Interest will be reduced by the amount by which the Class C Investor Interest
would have been reduced below zero, but not by more than the remaining Class B
Investor Default Amount not covered by a reduction to the Class C Investor
Interest. This is called a "Class B Investor Charge-Off" and may have the
effect of slowing or reducing the return of principal to the MTN issuer for
Class B.
If the Class B Investor Interest has been reduced for any reasons other
than the payment of principal, it will be reimbursed on any transfer date by
the amount of Excess Spread allocated and available for that purpose, but not
by more than the total amount by which the Class B Investor Interest has been
reduced. See "-- Excess Spread".
On each transfer date, if the Class C Investor Default Amount for the
prior monthly period exceeds the amount of Excess Spread available to cover the
Class C Investor Default Amount, the Class C Investor Interest will be reduced
by the amount of the excess, but not by more than the Class C Investor Default
Amount. This is called a "Class C Investor Charge-Off", which may have the
effect of slowing or reducing the return of principal to the MTN issuer for
Class C.
If the Class C Investor Interest has been reduced for any reasons other
than the payment of principal, it will be reimbursed on any transfer date by
the amount of Excess Spread allocated and available for that purpose,
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but not by more than the total amount by which the Class C Investor Interest
has been so reduced. See "-- Excess Spread".
"Reallocated Class B Principal Collections" means, for any transfer date,
the principal collections allocable to the Class B Investor Interest for the
related monthly period in an amount not to exceed the Class A Required Amount,
after applying Excess Spread and Reallocated Class C Principal Collections to
cover the Class A Required Amount. Reallocated Class B Principal Collections
cannot exceed the Class B Investor Interest after giving effect to any
unreimbursed Class B Investor Charge-Offs. Reallocated Class B Principal
Collections not covered by a reduction in the Class C Investor Interest will
reduce the Class B Investor Interest.
"Reallocated Class C Principal Collections" means, for any transfer date,
the principal collections allocable to the Class C Investor Interest for the
related monthly period in an amount not to exceed the Class A Required Amount
and the Class B Required Amount after applying Excess Spread to cover the Class
A Required Amount and the Class B Required Amount. Reallocated Class C
Principal Collections cannot exceed the Class C Investor Interest after giving
effect to any unreimbursed Class C Investor Charge-Offs. Reallocated Class C
Principal Collections will reduce the Class C Investor Interest.
The "Class A Required Amount" for any transfer date will be the amount, if
any, by which the sum of:
* the Class A Monthly Required Expense Amount;
* the total amount of the class A servicing fee and the class A cash
management fee for the prior monthly period and any due and unpaid
class A servicing fees and class A cash management fees; and
* the Class A Investor Default Amount;
exceeds the Class A Available Funds.
The "Class B Required Amount" for any transfer date will be the sum of (1)
the amount, if any, by which the sum of:
* the Class B Monthly Required Expense Amount; and
* the total amount of the class B servicing fee and the class B cash
management fee for the prior monthly period; and any due and
unpaid class B servicing fees or class B cash management fees;
exceeds the Class B Available Funds, and (2) the Class B Investor Default
Amount.
Excess Spread
"Excess Spread" for any transfer date will be the sum of Class A Excess
Spread, Class B Excess Spread and Class C Excess Spread.
On each transfer date, the receivables trustee will apply Excess Spread to
make the following distributions in the following priority:
(1) an amount equal to the Class A Required Amount, if any, will be used to
fund the Class A Required Amount; if the Class A Required Amount is more
than the amount of Excess Spread, Excess Spread will be applied in the
order of priority in which Class A Available Funds are to be distributed;
(2) an amount equal to the total amount of Class A Investor Charge-Offs that
have not been previously reimbursed will be used to reinstate the Class A
Investor Interest, treated as a portion of Investor Principal Collections
allocated to Class A and credited to the Principal Collections Ledger;
(3) an amount equal to the Class B Required Amount will be used to fund the
Class B Required Amount; if the Class B Required Amount is more than the
amount of Excess Spread available, Excess Spread will be applied first in
the order of priority with which Class B Available Funds are to be
distributed on any transfer date and then to fund the Class B Investor
Default Amount; any amount available to pay the Class B Investor Default
Amount will be allocated to Class B and treated as a portion of Investor
Principal Collections allocated to Class B and credited to the Principal
Collections Ledger;
(4) an amount equal to the total amount by which the Class B Investor
Interest has been reduced below the Class B Initial Investor Interest for
reasons other than the payment of principal -- but not in excess of the
aggregate amount of such reductions which have not been previously
reimbursed -- will be used to reinstate the Class B Investor Interest,
treated as a portion of Investor Principal Collections and credited to
the Principal Collections Ledger;
(5) an amount equal to the sum of the Class C Monthly Finance Amount, the
Class C Deficiency Amount and the Class C Additional Finance Amount --
called the "Class C Monthly Distribution Amount" -- will be credited to
the Class C Distribution Ledger;
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(6) an amount equal to the Class C Investor Default Amount will be allocated
to Class C and treated as a portion of Investor Principal Collections
allocated to Class C and credited to the Principal Collections Ledger;
(7) an amount equal to the total amount by which the Class C Investor
Interest has been reduced below the Class C Initial Investor Interest for
reasons other than the payment of principal -- but not in excess of the
total amount of the reductions that have not been previously reimbursed
-- will be used to reinstate the Class C Investor Interest, and treated
as a portion of Investor Principal Collections and credited to the
Principal Collections Ledger;
(8) on each transfer date from and after the Reserve Account Funding Date,
but before the date on which the Reserve Account terminates, an amount up
to the excess, if any, of the Required Reserve Account Amount over the
amount on deposit in Reserve Account will be allocated to the MTN issuer
and deposited into the Reserve Account;
(9) if the available spread account amount is less than the required spread
account amount, an amount up to any excess will be allocated to the MTN
issuer and deposited into the spread account, established for the benefit
of Class C;
(10) an amount equal to any Aggregate Investor Indemnity Amount for series 99-
1 will be paid to the transferor and will then cease to be property of
the receivables trust; and
(11) the Series 99-1 Extra Amount will be paid into the Series 99-1
Distribution Account and will be owned by the MTN issuer; and
the balance, if any, after giving effect to the payments made under paragraphs
(1) through (11) above will be paid to the excess interest beneficiary and will
then cease to be property of the receivables trust.
Extra Amount
The "Series 99-1 Extra Amount" is calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Days in Calculation Period
-------------------------- X 0.02 per cent. X The Investor Interest
365 (366 in a leap year)
</TABLE>
Aggregate Investor Indemnity Amount
By each transfer date, the receivables trustee will calculate the
Aggregate Investor Indemnity Amount for each outstanding series. The "Aggregate
Investor Indemnity Amount" is the sum of all Investor Indemnity Amounts for the
related monthly period.
An "Investor Indemnity Amount" means for any series, the amount of any
Transferor Section 75 Liability claimed from the receivables trustee by the
transferor under the trust section 75 indemnity allocated to that series,
calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Transferor Section 75 Liability X Floating Investor Percentage for that series
</TABLE>
The "Transferor Section 75 Liability" is the liability that the transferor
has for any designated account because of Section 75 of the Consumer Credit
Act. The Transferor Section 75 Liability cannot exceed the original outstanding
face amount of the principal receivable relating to the transaction giving rise
to the liability. See "Risk Factors: Application of Consumer Credit Act 1974
May Impede Collection Efforts and Could Cause Early Redemption of Your Notes or
a Loss on Your Notes".
Aggregate Investor Indemnity Amounts for series 99-1 will be payable only
if amounts are available from Excess Spread to pay them. See "-- Excess
Spread". If Excess Spread available on any transfer date is not enough to pay
the Aggregate Investor Indemnity Amount for series 99-1 otherwise payable on
that date, the excess will be carried forward and paid on subsequent transfer
dates to the extent amounts of Excess Spread are available to pay them.
Principal Funding Account
The receivables trustee will establish and maintain the Principal Funding
Account at a Qualified Institution -- currently Barclays Bank PLC at its branch
located at 1234 Pavilion Drive Northampton NN4 7SG -- as a segregated Trust
Account held for the benefit of the MTN issuer as the investor beneficiary for
series 99-1. During the Controlled Accumulation Period, the receivables trustee
will transfer the amounts described under "-- Allocation, Calculation and
Distribution of Principal Collections to the MTN Issuer" to the Principal
Funding Account.
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Funds on deposit in the Principal Funding Account will be invested to the
following transfer date by the receivables trustee in permitted investments.
Investment earnings, net of investment losses and expenses, on funds on deposit
in the Principal Funding Account are called "Principal Funding Investment
Proceeds".
Principal Funding Investment Proceeds will be used to pay the Class A
Covered Amount.
The "Class A Covered Amount" is calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Days in Calculation Period The amount on deposit
- -------------------------- X Class A Finance Rate X in the Principal Funding
365 (366 in a leap year) Account
</TABLE>
where the amount on deposit in the Principal Funding Account is calculated as
of the last day of the monthly period before the monthly period in which the
relevant transfer date occurs.
Principal Funding Investment Proceeds up to the Class A Covered Amount
will be transferred to the Trustee Collection Account by each transfer date and
credited to the Finance Charge Collections Ledger for application as Class A
Available Funds.
If on any transfer date during the Controlled Accumulation Period, the
Principal Funding Investment Proceeds exceeds the Class A Covered Amount, that
excess will be paid to the transferor beneficiary. If the Principal Funding
Investment Proceeds are less than the Class A Covered Amount, a withdrawal will
be made from the Reserve Account -- to the extent funds are available -- and
will be deposited in the Finance Charge Collections Ledger, for application as
Class A Available Funds. The amount of this withdrawal will be reduced to the
extent Excess Spread would be available for deposit in the Reserve Account. See
"-- Reserve Account" and "-- Excess Spread".
Reserve Account
The receivables trustee will establish and maintain a reserve account at a
Qualified Institution -- currently, Barclays Bank PLC at its branch located at
54 Lombard Street, London EC3P 3AH -- as a Trust Account segregated for the
benefit of series 99-1. This account is called the "Reserve Account". The
Reserve Account will be established to assist with the payment distribution of
the Class A Monthly Finance Amount to the MTN issuer during the Controlled
Accumulation Period.
On each transfer date from and after the Reserve Account Funding Date, but
before the termination of the Reserve Account, the receivables trustee will
apply Excess Spread in the order of priority described in "-- Excess Spread"
to increase the amount on deposit in the Reserve Account, up to the Required
Reserve Amount.
The "Reserve Account Funding Date" will be the transfer date that starts
no later than three months before the start of the Controlled Accumulation
Period. This date will be an earlier date if the Portfolio Yield decreases
below levels described in the Series 99-1 Supplement. In any case, this date
will be no earlier than 12 months before the start of the Controlled
Accumulation Period.
The "Required Reserve Amount" for any transfer date on or after the
Reserve Account Funding Date will be:
* 0.50 per cent. of the Class A Investor Interest; or
* subject to the conditions described in the next paragraph, any
other amount designated by the transferor beneficiary;
If, on or before the Reserve Account Funding Date, the transferor
beneficiary designates a lesser amount, it must provide the servicer and the
receivables trustee with evidence that each rating agency has notified the
transferor, the servicer and the receivables trustee that that lesser amount
will not result in the rating agency reducing or withdrawing its then existing
rating of any outstanding related beneficiary debt. Also, the transferor
beneficiary must deliver to the receivables trustee an officer's certificate to
the effect that, based on the facts known to that officer at that time, in the
reasonable belief of the transferor beneficiary, the designation will not cause
a Pay Out Event to occur or an event that, after the giving of notice or the
lapse of time, would cause a Pay Out Event to occur.
On each transfer date, after giving effect to any deposit to be made to,
and any withdrawal to be made from, the Reserve Account on that transfer date,
the receivables 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 Amount. The receivables trustee will distribute this amount to
the transferor beneficiary and it will cease to be the property of the
receivables trust.
All amounts on deposit in the Reserve Account on any transfer date will be
invested by the receivables trustee in permitted investments to the following
transfer date. This will be done after giving effect to any
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deposits to, or withdrawals from, the Reserve Account to be made on that
transfer date. The interest and other income -- net of investment expenses and
losses -- earned on the investments will be retained in the Reserve Account if
the amount on deposit in the Reserve Account is less than the Required Reserve
Amount. If the amount on deposit is equal to or more than the Required Reserve
Amount, it will be credited to the Finance Charge Collection Ledger to be
included in Class A Available Funds.
By each transfer date for the Controlled Accumulation Period before the
series 99-1 scheduled redemption date and on the first transfer date during the
Regulated Amortisation Period or the Rapid Amortisation Period, the receivables
trustee will withdraw an amount from the Reserve Account and deposit it in the
Trustee Collection Account for credit to the Finance Charge Collections Ledger
to be included in Class A Available Funds. This amount will be equal to the
lesser of:
* the available amount on deposit in the Reserve Account; and
* the amount, if any, by which the Class A Covered Amount is greater
than the Principal Funding Investment Proceeds.
The amount of this withdrawal will be reduced to the extent Excess Spread
would be available for deposit in the Reserve Account.
The Reserve Account will be terminated following the earlier to occur of:
* the termination of the receivables trust; and
* the earlier of the first transfer date after the start of the
Regulated Amortisation Period or the Rapid Amortisation Period and
the transfer date right before the series 99-1 scheduled
redemption date.
When the Reserve Account terminates, all amounts still on deposit in the
Reserve Account will be distributed to the transferor beneficiary and will no
longer be the property of the receivables trust.
Distribution Ledgers
The receivables trustee will establish Distribution Ledgers for each class
of series 99-1 in the Trustee Collection Account. On each transfer date it will
credit and debit amounts to these ledgers as described throughout this section
of this prospectus. All amounts credited to the Class A Distribution Ledger,
the Class B Distribution Ledger and the Class C Distribution Ledger will be
regarded as being segregated for the benefit of the MTN issuer.
Trustee Payment Amount
The share of the Trustee Payment Amount payable on any transfer date that
is allocable to series 99-1 -- called the "Investor Trustee Payment" -- will be
calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Investor Interest for series 99-1
----------------------------------------------------------- X Trustee Payment Amount
Total of Investor Interests of series for which the Trustee
Payment Amount was incurred
</TABLE>
The share of the Investor Trustee Payment allocable to the Investor
Interest for each class is equal to the product of:
* the floating allocation for the relevant class; and
* the Investor Trustee Payment.
This will be called the "Class A Trustee Payment Amount", the "Class B
Trustee Payment Amount" and the "Class C Trustee Payment Amount", respectively.
The Investor Trustee Payment for any class will be payable from amounts
available for distribution for that purpose out of available funds for each
class and Excess Spread. See " -- Allocation, Calculation and Distribution of
Finance Charge Collections to the MTN Issuer" and -- "Excess Spread".
The portion of the Trustee Payment Amount not allocated to series 99-1
will be paid from cashflows under the receivables trust allocated to other
outstanding series, and in no event will series 99-1 be liable for these
payments.
Qualified Institutions
If the bank or banks at which any of the accounts listed below are held
cease to be a Qualified Institution, then the receivables trustee will, within
10 business days, establish a new account to replace the affected account or
accounts, and will transfer any cash and interest to that new account or
accounts. The accounts referred to above are:
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* Trustee Collection Account;
* Trustee Acquisition Account;
* Reserve Account;
* Principal Funding Account; or
* Series 99-1 Distribution Account.
The receivables trustee may in its discretion elect to move any or all of
these accounts and the amounts credited to them from the Qualified Institution
at which they are kept as at the date of this document to another or other
Qualified Institutions.
"Qualified Institution" means (1) an institution which at all times has a
short-term unsecured debt rating of at least A-1+ by Standard & Poor's and P-1
by Moody's or (2) an institution acceptable to each rating agency.
Series 99-1 Pay Out Events
The events described below are called "Series 99-1 Pay-Out Events":
(1) failure on the part of the transferor:
* to make any payment or deposit required by the terms of the
receivables securitisation agreement within five business days
after the date that the payment or deposit is required to be made;
or
* duly to observe or perform any covenants or agreements of the
transferor in the receivables securitisation agreement or the
Series 99-1 Supplement that has a material adverse effect on the
interests of the MTN issuer in respect of series 99-1 and which
continues unremedied for a period of 60 days after the date on
which written notice of the failure, requiring it to be remedied,
is given to the transferor by the receivables trustee, or is given
to the transferor and the receivables trustee by the investor
beneficiary for series 99-1 acting on the instructions of holders
of MTNs representing together 50 per cent. or more of the total
balance of MTNs issued and outstanding at that time for series 99-
1, and which unremedied, continues during that 60 day period to
have a material adverse effect on the interests of the MTN issuer
in respect of series 99-1 for that period;
(2) any representation or warranty made by the transferor in the receivables
securitisation agreement or the Series 99-1 Supplement, or any
information contained in a computer file or microfiche list required to
be delivered by the transferor under the receivables securitisation
agreement:
* proves to have been incorrect in any material respect when made or
when delivered and continues to be incorrect in any material
respect for a period of 60 days after the date on which written
notice of the error, requiring it to be remedied, is given to the
transferor by the receivables trustee, or is given to the
transferor and the receivables trustee by the investor beneficiary
for series 99-1 acting on the instructions of holders of loan MTNs
representing together 50 per cent. or more of the total balance of
MTNs issued and outstanding in respect of series 99-1; and
* as a result of which there is a material adverse effect on the
interests of the MTN issuer in respect of series 99-1 and which
unremedied continues during that 60 day period to have a material
adverse effect for that period;
(3) the average Portfolio Yield for any three consecutive monthly periods is
less than the average Expense Rate for that period or, on any
determination date before the end of the third monthly period from the
closing date, the Portfolio Yield is less than the average Expense Rate
for that period;
(4) either:
* over any period of thirty consecutive days, the Transferor
Interest averaged over that period is less than the Minimum
Transferor Interest for that period and the Transferor Interest
does not increase on or before the tenth business day following
that thirty day period to an amount so that the average of the
Transferor Interest as a percentage of the Average Principal
Receivables for such thirty day period, computed by assuming that
the amount of the increase of the Transferor Interest by the last
day of the ten business day period, as compared to the Transferor
Interest on the last day of the thirty day period, would have
existed in the receivables trust during each day of the thirty day
period, is at least equal to the Minimum Transferor Interest; or
* on the last day of any monthly period the total balance of
eligible receivables is less than the Minimum Aggregate Principal
Receivables, adjusted for any series having a Companion Series as
described in the supplement for that series, and the total balance
of eligible receivables fails to
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increase to an amount equal to or greater than the Minimum
Aggregate Principal Receivables on or before the tenth business
day following that last day;
(5) any servicer default or trust cash manager default occurs that would have
a material adverse effect on the MTN issuer in respect of series 99-1;
(6) the Investor Interest is not reduced to zero on the series 99-1 scheduled
redemption date;
(7) the early termination, without replacement, of any of the swap agreements
as described in this prospectus under "The Swap Agreements: Common
Provisions of the Swap Agreements";
(8) the issuer has or will become obligated to deduct or withhold amounts
from payments to be made to the swap counterparty in respect of the swap
agreements on the next interest payment date, for or on account of any
tax, assessment or other governmental charge by any jurisdiction as a
result of any change in the laws of such jurisdiction or any political
subdivision or taxing authority thereof which change becomes effective on
or after the closing date and (1) such obligation to deduct or withhold
cannot be avoided by the use of reasonable measures available to the
issuer and (2) the swap counterparty has notified the note trustee and
the servicer that such deduction or withholding will constitute a Series
99-1 Pay Out Event; or
(9) the MTN issuer is required to withhold or deduct any amounts for or on
account of tax on the payment of any principal or interest in respect of
the medium term notes or any of the swap agreements.
If any event described in paragraphs (1), (2) or (5) then, after the
applicable grace period, either (1) the receivables trustee or (2) the investor
beneficiary may declare that a Series 99-1 Pay Out Event has occurred if the
correct notice has been given. If the investor beneficiary declares that a
Series 99-1 Pay Out Event has occurred, it must have acted on the instructions
of holders of MTNs representing, together, 50 per cent. or more of the MTNs
issued and outstanding at that time in respect of series 99-1. The investor
beneficiary must give a written notice to the transferor, the servicer and the
receivables trustee that a Series 99-1 Pay Out Event has occurred. If the
receivables trustee declares that a Series 99-1 Pay Out Event has occurred it
must give a written notice to this effect to the transferor, the servicer and
the trust cash manager. The Series 99-1 Pay Out Event will be effective as of
the date of the relevant notice. If any event in paragraphs (3), (4), (6), (7)
or (8) occurs, a Series 99-1 Pay Out Event will occur without any notice or
other action on the part of the receivables trustee or the investor
beneficiary.
"Portfolio Yield" means, for any monthly period:
(A+B+C+D) -- E
------------------
F
where:
A = the finance charge collections allocable to series 99-1:
B = Acquired Interchange allocable to series 99-1:
C = Principal Funding Investment Proceeds up to the Class A Covered
Amount;
D = the amount, if any, to be withdrawn from the Reserve Account that is
included in Class A Available
Funds;
E = the Investor Default Amount; and
F = the Investor Interest.
"Expense Rate" means, for any transfer date:
A+B+C
-------
D
where:
A = the sum of the Class A Monthly Required Expense Amount, the Class B
Monthly Required Expense
Amount and the Class C Monthly Required Expense Amount;
B = the investor servicing fee;
C = the investor trust cash management fee; and
D = the Investor Interest.
"Minimum Transferor Interest" means 5 per cent. of the Average Principal
Receivables. The transferor may reduce the Minimum Transferor Interest in the
following circumstances:
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* upon 30 days prior notice to the receivables trustee, each rating
agency and any enhancement provider entitled to receive notice
under its supplement;
* upon written confirmation from each rating agency that the
reduction will not result in the reduction or withdrawal of the
ratings of the rating agency for any outstanding related
beneficiary debt -- including, for series 99-1, the notes; and
* delivery to the receivables trustee and each enhancement provider
of an officer's certificate stating that the transferor reasonably
believes that the reduction will not, based on the facts known to
the officer at the time of the certification, cause, at that time
or in the future, a pay out event to occur for any investor
beneficiary.
The Minimum Transferor Interest will never be less than 2 per cent. of the
Average Principal Receivables.
"Minimum Aggregate Principal Receivables" means, an amount equal to the
sum of the numerators used in the calculation of the investor percentages for
principal collections for all outstanding series on that date. For any series
in its rapid accumulation period, as defined in its supplement, with an
investor interest as of that date of determination equal to the balance on
deposit in the principal funding account for that series, the numerator used in
the calculation of the investor percentage for principal collections for that
eligible series will, only for the purpose of the definition of Minimum
Aggregate Principal Receivables, be zero.
"Average Principal Receivables" means, for any period, an amount equal to:
* the sum of the total balance of eligible principal receivables at
the end of each day during that period divided by;
* the number of days in that period.
"Companion Series" means:
* each series that has been paired with another series so that the
reduction of the investor interest of the paired series results in
the increase of the investor interest of the other series, as
described in the related supplements; and
* the other series.
Your Payment Flows
On any distribution date, the receivables trustee will transfer from
available funds in the Trustee Collection Account the sum of:
* the Class A Monthly Distribution Amount;
* the Class B Monthly Distribution Amount; and
* the Class C Monthly Distribution Amount;
and deposit that sum into the Series 99-1 Distribution Account held by the
MTN issuer.
The MTN issuer will credit the amount received in respect of the monthly
distribution amounts for each class to the respective MTN coupon ledger for
each class.
The MTN issuer will then transfer from the Series 99-1 Distribution
Account:
* the amounts credited to the class A MTN coupon ledger and the
class B MTN coupon ledger and the class C MTN coupon ledger; minus
* the costs and expenses of the MTN issuer for the relevant monthly
period and an amount equal to 1/24 of the Series 99-1 Extra
Amount;
and deposit these amounts into the Series 99-1 Issuer Account. The Series 99-1
Issuer Account is held by the issuer.
The issuer will credit the amount received from the MTN Coupon Ledger for
each class to the Notes Coupon Ledger for the respective class.
Before the termination of the swap agreements, on each interest payment
date, the issuer will pay:
* from the class A notes coupon ledger, the interest due and payable
to the swap counterparty under the class A swap agreement for the
relevant Calculation Period, to the swap counterparty;
* from the class B notes coupon ledger, the interest due and payable
to the swap counterparty under the class B swap agreement for the
relevant Calculation Period, to the swap counterparty; and
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* from the class C notes coupon ledger, the interest due and payable
to the swap counterparty under the class C swap agreement in
respect of the relevant Calculation Period, to the swap
counterparty;
less, in each case, an amount equal to 1/24 of the Series 99-1 Extra
Amount.
Under the terms of each swap agreement, the swap counterparty will pay to
the principal paying agent on each interest payment date an amount equal to the
interest on the applicable class of notes, converted into dollars, subject to
the deferral of interest as described in "Terms and Conditions of the Notes"
and "The Swap Agreements".
On the earlier of the series 99-1 scheduled redemption date and the first
distribution date for the Regulated Amortisation Period or the Rapid
Amortisation Period, and on each distribution date after that, the receivables
trustee will transfer the following amounts and deposit them into the Series
99-1 Distribution Account:
* from the Principal Funding Account, the lesser of (1) the amount
in the Principal Funding Account on that date and (2) the Class A
Investor Interest; and
* from the Class A Distribution Ledger, the lesser of (1) during the
Rapid Amortisation Period, the amount in the Class A Distribution
Ledger or, during the Regulated Amortisation Period, the
Controlled Deposit Amount; and (2) the Class A Investor Interest
-- after taking into account the amount distributed from the
Principal Funding Account as described above.
On the later to occur of the Class B Principal Commencement Date and the
series 99-1 scheduled redemption date and each distribution date after, the
receivables trustee will transfer the following amounts and deposit them into
the Series 99-1 Distribution Account:
* from the Principal Funding Account, the lesser of (1) the amount
on deposit in the Principal Funding Account in excess of the Class
A Investor Interest and (2) the Class B Investor Interest; and
* from the Class B Distribution Ledger, the lesser of the amount on
deposit in the Class B Distribution Ledger and the Class B
Investor Interest -- after taking into account the amount
distributed from the Principal Funding Accounts described above.
On the later to occur of the Class C Principal Commencement Date and the
series 99-1 scheduled redemption date and each distribution date after, the
receivables trustee will transfer the following amounts and deposit them into
the Series 99-1 Distribution Account:
* from the Principal Funding Account, the lesser of (1) the amount
in the Principal Funding Account in excess of the sum of the Class
A Investor Interest and the Class B Investor Interest and (2) the
Class C Investor Interest; and
* from the Class C Distribution Ledger, the lesser of the amount on
deposit in the Class C Distribution Ledger and the Class C
Investor Interest -- after taking into account the amount
distributed from the Principal Funding Account as described above.
The MTN issuer will credit the amount received for each class of Investor
Interest to the MTN Principal Ledger, for that respective class.
On the series 99-1 scheduled redemption date and each distribution date
after, the MTN issuer will transfer for same day value from the Series 99-1
Distribution Account the amount in the MTN Principal Ledger, for each class,
respectively, and deposit them into the Series 99-1 Issuer Account.
The issuer will credit each amount received from the MTN Coupon Ledger for
each class respectively to the notes coupon ledger, for that class.
Before the termination of the swap agreements, on the Series 99-1
scheduled redemption date or any interest payment date after, the issuer will
pay:
* from the class A notes principal ledger, an amount equal to the
lesser of (1) the amount in the class A notes principal ledger;
and (2) the sterling equivalent of the principal due on the class
A notes, to the swap counterparty;
* from the class B notes principal ledger, an amount equal to the
lesser of (1) the amount in the class B notes principal ledger and
(2) the sterling equivalent of the principal due on the class B
notes, to the swap counterparty; and
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* from the class C notes principal ledger, an amount equal to the
lesser of (1) the amount in the class C notes principal ledger and
(2) the sterling equivalent of the principal due on the class C
notes, to the swap counterparty.
The swap counterparty will pay to the principal paying agent, in dollars,
principal for distribution to the noteholders converted into dollars, at the
fixed exchange rate.
The Trust Deed
The principal agreement governing the notes will be the trust deed. The
trust deed has four primary functions:
* it constitutes the notes;
* it sets out the covenants of the issuer in relation to the notes;
* it sets out the enforcement and post-enforcement procedures relating to
the notes; and
* it sets out the appointment, powers and responsibilities of the note
trustee.
Each function is summarised below.
The trust deed sets out the form of the global notes and the definitive
notes. It also sets out the terms and conditions of the notes, and the
conditions for the issue of definitive notes and/or the cancellation of any
notes. It stipulates that the notes will be deposited with the depository and
that the paying agents and the agent bank will be appointed. The UK detailed
provisions regulating these appointments are contained in the depository
agreement and the paying agency and agent bank agreement.
The trust deed also contains covenants made by the issuer in favour of the
note trustee and the noteholders. The main covenants are that the issuer will
pay interest, and repay principal on each of the notes when due. Covenants are
included to ensure that the issuer remains insolvency remote, and to give the
note trustee access to all information and reports that it may need in order to
discharge its responsibilities in relation to the noteholders. Some of the
covenants also appear in the terms and conditions of the notes, see "Terms and
Conditions of the Notes". The issuer also covenants that it will do all things
necessary to maintain the listing of the notes on the London Stock Exchange and
to keep in place a depository, paying agents and agent bank.
The trust deed sets out the general procedures by which the note trustee
may take steps to enforce the security created by the issuer in the deed of
charge so that the note trustee can protect the interests of the noteholders in
accordance with the terms and conditions. The trust deed gives the note trustee
a general discretion to enforce the security, but also provides for meetings of
the noteholders at which the noteholders can determine the action taken by the
note trustee in relation to the enforcement of the notes. The trust deed
provides that the class A noteholders' interests take precedence for so long as
the class A notes are outstanding, and after that, the interests of the class B
noteholders take precedence over the interests of class C noteholders, until no
more class B notes remain outstanding. Certain basic terms of each class of
notes may not be amended without the consent of the majority of the holders of
that class of note. This is described further in the "Terms and Conditions of
the Notes".
The trust deed also sets out the priority in which the note trustee will
pay out any monies that it receives under the notes after the security has been
enforced. This is also set out in the deed of charge and the priority of
payments is summarised in the terms and conditions of the notes.
The trust deed also sets out the terms on which the note trustee is
appointed, the indemnification of the note trustee, the payment it receives and
the extent of the note trustee's authority to act beyond its statutory powers
under English Law. The note trustee is also given the ability to appoint a
delegate or agent in the execution of any of its duties under the trust deed.
The trust deed also sets out the circumstances in which the note trustee may
resign or retire.
The trust deed is governed by English Law.
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The Notes And The Global Notes
The issue of the notes will be authorised by a resolution of the board of
directors of the issuer passed prior to the closing date. The notes will be
constituted by a trust deed to be dated the closing date, between the issuer
and the note trustee, as trustee for, among others, the holders for the time
being of the notes and of any interest coupons for the notes. The trust deed
includes provisions which enable it to be modified or supplemented and any
reference to the trust deed is a reference also to the document as modified or
supplemented in accordance with its terms.
The statements set out below include summaries of, and are subject to, the
detailed provisions of the trust deed. The trust deed will include the form of
the global notes and the form of definitive notes. The offered global notes
will be deposited on the closing date with The Bank of New York in New York,
acting as depository under the terms of the depository agreement. A paying
agency and agent bank agreement between the issuer, the note trustee, The Bank
of New York in London as principal paying agent, the other paying agents and
the agent bank, regulates how payments will be made on the notes and how
determinations and notifications will be made. It will be dated as of the
closing date and the parties will include, on an ongoing basis, any successor
party appointed in accordance within its terms.
As a noteholder, you will be entitled to the benefit of, will be bound by
and will be deemed to have notice of, all the provisions of the trust deed, the
depository agreement and the paying agency and agent bank agreement. You can
see copies of these agreements at the principal office for the time being of
the note trustee, which is, as of the date of this document, One Canada Square,
London E145AL and at the specified office for the time being of each of the
paying agents.
The class A notes and the class B notes will be represented initially by
global notes in bearer form, without coupons, in the principal amount of
respectively $900,000,000 and $50,000,000. The global notes will be deposited
on your behalf with The Bank of New York in New York, as the depository under
the depository agreement, on the closing date. The depository will issue
certificateless depository interests, representing interests in the class A
notes and the class B notes, to Cede & Co as nominee of the Depository Trust
Company -- called DTC.
On confirmation from the depository that DTC holds the offered global notes
DTC, when it has accepted the certifcateless depository interests -- which will
be described in a letter called the DTC letter of representations sent by the
issuer and the depository to DTC -- will record book-entry interests in your
account or the participant account through which you hold your interests in the
notes. These book-entry interests will represent your beneficial entitlement to
the certificateless depository interest which in turn represent your interest
in the offered notes.
When reference in this section is made to the notes or note owners it is
to the beneficial ownership of them in the form of certificateless depository
interests.
You may hold your interests in the notes through DTC, in the United
States, or indirectly through Cedelbank or the Euroclear System, in Europe, or
indirectly through organizations that are participants in any of those systems.
Cede & Co., as nominee for DTC, will hold the certificateless depository
interests. Cedelbank and Euroclear will hold omnibus positions on behalf of
their respective participants, through customers' securities accounts in
Cedelbank's and Euroclear's names on the books of their respective
depositaries. The depositaries in turn will hold the positions in customers'
securities accounts in the depositaries' names on the books of DTC.
DTC has advised us and the underwriters that it is:
* A limited-purpose trust company organized under the New York
Banking Law;
* A "banking organization" within the meaning of the New York
Banking Law;
* A member of the Federal Reserve System;
* A "clearing corporation" within the meaning of the New York
Uniform Commercial Code; and
* A "clearing agency" registered under the provisions of Section 17A
of the Exchange Act.
DTC holds securities for its participants and facilitates the clearance
and settlement among its participants of securities transactions, including
transfers and pledges, in deposited securities through electronic book-entry
changes in its participants' accounts. This eliminates the need for physical
movement of securities certificates. DTC participants include securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations. Indirect access to the DTC system is also available to others
including securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the SEC.
Transfers between participants on the DTC system will occur under DTC
rules. Transfers between participants on the Cedelbank system and participants
on the Euroclear system will occur under their rules and operating procedures.
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Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
participants or Euroclear participants, on the other, will be effected by DTC
under DTC rules on behalf of the relevant European international clearing
system by that system's depositary. However, these cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in that system under its rules and
procedures and within its established deadlines, European time. The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment under normal procedures for same-day
funds settlement applicable to DTC. Cedelbank participants and Euroclear
participants may not deliver instructions directly to their system's
depositary.
Because of time-zone differences, credits of securities in Cedelbank 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. The credits for any transactions in these
securities settled during this processing will be reported to the relevant
Cedelbank participant or Euroclear participant on that business day. Cash
received in Cedelbank or Euroclear as a result of sales of securities by or
through a Cedelbank participant or a Euroclear participant to a DTC participant
will be received and available on the DTC settlement date. However, it will not
be available in the relevant Cedelbank or Euroclear cash account until the
business day following settlement in DTC.
Purchases of notes under the DTC system must be made by or through DTC
participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each actual note owner is in turn to be recorded on the
DTC participants' and indirect participants' records. Note owners will not
receive written confirmation from DTC of their purchase. However, note owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the DTC
participant or indirect participant through which the note owner entered into
the transaction. Transfer of ownership interests in the notes are to be
accomplished by entries made on the books of DTC participants acting on behalf
of note owners. Note owners will not receive certificates representing their
ownership interest in notes unless use of the book-entry system for the notes
is discontinued.
To facilitate subsequent transfers, all securities deposited by DTC
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of securities with DTC and their registration in the name of Cede &
Co. does not change beneficial ownership. DTC has no knowledge of the actual
note owners of the notes. DTC's records reflect only the identity of the DTC
participants to whose accounts the notes are credited, which may or may not be
the actual beneficial owners of the notes. The DTC participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC participants,
by DTC participants to indirect participants, and by DTC participants and
indirect participants to note owners will be governed by arrangements among
them and by any statutory or regulatory requirements in effect from time to
time.
Neither DTC nor Cede & Co. will consent or vote on behalf of the notes.
Under its usual procedures, DTC mails an omnibus proxy to the issuer as soon as
possible after the record date, which assigns Cede & Co.'s consenting or voting
rights to those DTC participants to whose accounts the notes are credited on
the record date, identified in a listing attached to the proxy.
Principal and interest payments on the notes will be made to DTC. DTC's
practice is to credit its participants' accounts on the applicable distribution
date according to their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on that distribution
date. Payments by DTC participants to note owners will be governed by standing
instructions, customary practice, and any statutory or regulatory requirements
as may be in effect from time to time, these payments will be the
responsibility of the DTC participant and not of DTC, the trustee or the
issuer. Payment of principal and interest in DTC is the responsibility of the
trustee, DTC is responsible for disbursing payments made to it to DTC
participants and indirect participants.
DTC management is aware that some computer applications, systems and the
like for processing data that are dependent upon calendar dates, including
dates before, on and after January 1, 2000, may encounter year 2000 problems.
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its systems
relating to the timely payment of distributions to securityholders, book-entry
deliveries, and settlement of trades within DTC will continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's program includes a testing
phase, which it expects to complete within appropriate time frames.
DTC's ability to perform its services properly is also dependent upon
other parties. Third parties include issuers and their agents, DTC's direct and
indirect participants, vendors from whom DTC's licenses software and hardware,
and vendors on whom DTC relies for information or services, including
telecommunication and
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electrical utility service providers. DTC has informed us that it is
contacting, and will continue to contact, third party vendors from whom DTC
acquires services to:
* impress upon them the importance of these services being Year 2000
compliant; and
* determine the extent of their efforts for Year 2000 remediation
and testing for their services.
Additionally, DTC is in the process of developing contingency plans as it
deems appropriate.
According to DTC, the foregoing information about DTC has been provided to
us for informational purposes only and is not a representation, warranty, or
contract modification of any kind.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depositary. Cedelbank holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
Cedelbank participants through electronic book-entry changes in accounts of
Cedelbank participants, thereby eliminating the need for physical movement of
notes. Transactions may be settled in Cedelbank in any of 38 currencies,
including United States dollars.
Cedelbank participants are financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
and clearing corporations. Indirect access to Cedelbank is also available to
others, including banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Cedelbank participant,
either directly or indirectly.
The Euroclear system was created in 1968 to hold securities for its
participants and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment. This eliminates the need for physical movement of certificates.
Transactions may be settled in any of 32 currencies, including United States
dollars.
The Euroclear System is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, the Euroclear operator, under contract with
Euroclear Clearance System, Societe Cooperative, a Belgium co-operative
corporation, the Euroclear co-operative. All operations are conducted by the
Euroclear operator. All Euroclear securities clearance accounts and Euroclear
cash accounts are accounts with the Euroclear operator, not the Euroclear co-
operative. The board of the Euroclear co-operative establishes policy for the
Euroclear System.
Euroclear participants include banks -- including central banks --
securities brokers and dealers and other professional financial intermediaries.
Indirect access to the Euroclear System is also available to other firms that
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
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. These 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 for 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 these terms and conditions only on behalf of Euroclear participants
and has no record of or relationship with persons holding through Euroclear
participants.
Distributions on the notes held indirectly through Cedelbank or Euroclear
will be credited to the cash accounts of Cedelbank participants or Euroclear
participants according to the relevant system's rules and procedures, to the
extent received by its depositary. These distributions must be reported for tax
purposes under United States tax laws and regulations. Cedelbank or the
Euroclear operator, as the case may be, will take any other action permitted to
be taken by a noteholder on behalf of its participants only as permitted by its
rules and procedures and only if its depositary is able to take these actions
on its behalf through DTC.
Although DTC, Cedelbank and Euroclear have agreed to these procedures to
facilitate transfers of notes among participants of DTC, Cedelbank and
Euroclear, they are not obligated to perform these procedures. Additionally,
these procedures may be discontinued at any time.
So long as the depository or its nominee is the holder of the offered
global notes underlying the book-entry interests, they will be considered the
global noteholder under the trust deed. Because of this, each person holding a
book-entry interest must rely on the procedures of the depository, DTC,
Euroclear and/or Cedelbank or other intermediary though which the interests are
held, to exercise any rights and obligations of noteholders under the trust
deed.
The certificateless depository interests held by DTC may not be
transferred, until they are exchanged for definitive certificates, unless as a
whole, to their respective successors, validly appointed.
Payment of principal and interest on the offered global notes will be
made, in U.S. dollars, by the swap counterparty on behalf of the issuer to the
depository as the global noteholder. You and any other beneficial owners of
notes must look only to DTC, Euroclear or Cedelbank, as applicable, for your
beneficial entitlement to the notes.
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As the holder of book-entry interests you will not have the right under
the trust deed to act on solicitations by the issuer for action by noteholders.
You will only be able to act to the extent you receive the appropriate proxies
to do so from DTC, Euroclear or Cedelbank. No assurances are made about these
procedures or their adequacy for ensuring timely exercise of remedies under the
trust deed.
You and other holders of book-entry interests will be entitled to receive
definitive notes, in the form and under the circumstances, issued under the
trust deed and the terms and conditions of the notes.
If any of the following events occur, you will be entitled to receive
definitive notes for your book-entry interests:
* as a result of a change in UK law, the issuer or any paying agent
is or will be required to make any deduction or withholding on
account of tax from any payment on the notes that would not be
required if the notes were in definitied form; or
* DTC, has notified the issuer that is unwilling or unable to hold
the certificateless depository interests or to continue as a
clearing agency under the United States Securities and Exchange
Act of 1934 and the issuer cannot appoint a successor;
* if the depository notifies the issuer that it is at any time
unwilling or unable to continue as depository and the issuer
cannot appoint a successor;
* the principal amount of the notes is accelerated because an event
of default has occurred.
Any definitive notes issued on exchange for book-entry interests will be
registered by a registrar as directed by the depository on instructions --
which are expected to be based on the ownership of the relevant book-entry
interests -- from DTC, Euroclear or Cedelbank.
You should be aware that, under current UK tax law, following the issuance
of definitive notes, payments of interest will be subject to UK withholding tax
- -- currently at a rate of 20 per cent. -- subject to the terms of any
applicable double tax treaty.
Terms and Conditions of the Notes
The material terms of the notes are described in the body of the
prospectus. The terms and conditions attached as Appendix D, which are
incorporated into this prospectus and form a part of this prospectus, are in
the form in which they appear in the trust deed. They summarise some of the
terms of the trust deed, paying agency and agent bank agreement, depository
agreement and deed of charge. The conditions are therefore subject to the
detailed provisions of those agreements.
The following is a summary of the material terms and conditions of the
notes, the trust deed, the paying agency and agent bank agreement, the deed of
charge and the depository agreement, and is numbered 1 to 16, using the same
numbering format as the terms and conditions of the notes attached at Appendix
G. This summary does not need to be read with Appendix G in order to learn all
the material terms and conditions of the offered notes.
The offered notes together with the class C notes that are not being
offered in this prospectus, are the subject of the following documents:
* a trust deed dated the closing date between the issuer and the
note trustee;
* a paying agency and agent bank agreement dated the closing date
among the issuer, the principal paying agent and the agent bank,
the other paying agents, the transfer agent and the note trustee;
* a deed of charge dated the closing date among the expenses loan
provider, the issuer and the note trustee; and
* a depositary agreement dated the closing date among the issuer,
the swap counterparty, the note trustee and the note depository.
When we refer to the parties to the documents listed above, the reference
includes any successor to that party validly appointed.
Initially the parties will be as follows:
* Gracechurch Card Funding (No. 1) PLC as issuer;
* The Bank of New York as principal paying agent and agent bank,
transfer agent, depository and note trustee; and
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* Barclays Bank PLC as expenses loan provider and swap counterparty.
You are bound by and deemed to have notice of all of the provisions of the
trust deed, the paying agency and the agent bank agreement, the deed of charge,
the depository agreement and the swap agreements, which are applicable to you.
You can view those documents at the principal place of business of the note
trustee or the specified office of any of the paying agents.
1. Form Denomination and Title
(1) The offered notes will be initially offered and sold globally in minimum
denominations of U.S.$1,000. They are initially in global bearer form,
without coupons attached. The class C notes are being offered and sold
outside the United States to non-U.S. persons in accordance with
Regulation S or inside the United States only to qualified institutional
buyers within the meaning of Rule 144A under the Securities Act in
transactions exempt from the Securities Act. If notes in definitive form
are issued in respect of the offered notes, they will be issued in an
aggregate principal amount equal to the principal amount outstanding of
the relevant global notes, in registered form.
(2) Transfers and exchanges of beneficial interests in global notes are made
in accordance with the paying agency and agent bank agreement.
(3) Title to the global notes will pass by delivery. Title to definitive
notes will pass on registration in the register maintained by the
depository. The holder of any global or definitive note is the absolute
owner of that note unless, in the case of definitive notes, evidence to
the contrary can be shown by a duly executed transfer endorsed on the
note.
2. Status
Payments on the offered notes will be made equally amongst all notes of
the same class.
3. Security and Swap Agreement
The security for the payment of amounts due under your notes, together
with the expenses which validly arise during the transaction, is created by the
deed of charge. The security is created in favour of the note trustee who will
hold it on your behalf and on the behalf of other secured creditors of the
issuer. The security consists of the following:
(1) an assignment by way of first fixed security of the issuer's right, title
and interest in and to the medium term notes;
(2) an assignment by way of first fixed security of the issuer's right,
title, interest and benefit in and to issuer related documents except the
trust deed and deed of charge
(3) an assignment by way of first fixed security of the issuer's right,
title, interest and benefit in and to all monies credited to the Series
99-1 Issuer Account or to any bank or other account in which the issuer
may at any time have any right, title, interest or benefit; and
(4) a first floating charge over the issuer's business and assets not charged
under (1), (2) or (3) above,
The security is described in detail in the deed of charge.
The deed of charge sets out how money is distributed between the secured
parties if the security is enforced. The order of priority it sets out is as
follows:
* in no order of priority between them but in proportion to the
respective amounts due, to pay fees which are due to any receiver
appointed under the deed of charge or the trust deed and all
amounts due for legal fees and other costs, charges, liabilities,
expenses, losses, damages, proceedings, claims and demands which
have been incurred by the note trustee under the documents listed
in the third bullet point under number 4 below and in enforcing or
perfecting title to the security together with interest due on
these amounts;
* in order of priority between them, the respective amounts due:
in payment of all amounts due and unpaid, following the
applications in the first bullet point above, to the note trustee
and/or anyone appointed by them under the trust deed; and
towards payment of amounts due and unpaid on the class A notes, to
interest then to principal after having paid any amounts due to
the swap counterparty under the terms the class A swap agreement;
* towards payment of amounts due on the class B notes, having paid
any amounts due to the swap counterparty under the terms of class
B swap agreement, to interest then to principal;
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* towards payments of amounts due on the class C notes, having paid
any amounts due to the swap counterparty under the terms of the
class C swap agreement, to interest then to principal;
* towards payment of any sums that the issuer must pay to any tax
authority;
* towards payment of any amount due to the swap counterparty which
arises as a result of a termination of any swap agreement --
called the "termination payment";
* towards payment of any sums due to third parties under obligations
incurred in the course of the issuer's business;
* towards payment of any dividends due and unpaid to shareholders of
the issuer; and
* in payment of the balance, if any, to the liquidator of the
issuer.
The security becomes enforceable when an event of default occurs. These
events are described in number 9 below. If an event of default occurs, the
redemption of notes will not necessarily be accelerated as described in number
6 below.
The issuer has entered into three swap agreements the material terms of
which are described under the heading "The Swap Agreements" in this prospectus.
4. Negative Covenants of the Issuer
If any note is outstanding, the issuer will not, unless it is permitted by
the terms of the issuer related documents or by the written consent of the
trustee:
* create or permit to subsist any mortgage, charge, pledge, lien or
other security interest, including anything which amounts to any
of these things under the laws of any jurisdiction, on the whole
or any part of its present or future business, assets or revenues,
including uncalled capital;
* carry on any business other than relating to the issue of the
notes, as described in this prospectus; in carrying on that
business, the issuer will not engage in any activity or do
anything at all except:
(1) preserve and/or exercise and/or enforce any of its rights and perform and
observe its obligations under the notes and coupons, the deed of charge,
the paying agency and agent bank agreement, the trust deed, the
depository agreement the expenses loan agreement, each swap agreement,
the series 99-1 medium term notes, the corporate services agreement, the
class A and class B underwriting agreement, the class C subscription
agreement, the bank agreement and any bank mandate regarding the Series
99-1 Issuer Account -- collectively called the "issuer related
documents".
(2) use, invest or dispose of any of its property or assets in the manner
provided in or contemplated by the issuer related documents; or
(3) perform any act incidental to or necessary in connection with (1) or (2)
above;
* have any subsidiaries, subsidiary business, business of any other
kind, employees, premises or interests in bank accounts other than
the Series 99-1 Issuer Account unless the account is charged to
the note trustee on acceptable terms;
* have any indebtedness, other than indebtedness permitted under the
terms of its articles of association or any of the issuer related
documents;
* give any guarantee or indemnity in respect of any obligation of
any person;
* repurchase any shares of its capital stock or declare or pay any
dividend or other distributions to its shareholders;
* consolidate with or merge with or into any person or liquidate or
dissolve on a voluntary basis;
* be a member of any group of companies for the purposes of value
added tax;
* waive or consent to the modification or waiver of any of the
provisions of the issuer related documents without the prior
written consent of the note trustee; or
* offer to surrender to any company any amounts which are available
for surrender by way of group relief.
5. Interest
Each note will bear interest on its principal amount outstanding from, and
including, the closing date. Interest on the offered notes and the class C
notes will be paid in arrear in U.S. dollars on each interest payment date.
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If there is a shortfall between the amounts received by the issuer from
the swap counterparty and the amount of interest due on the relevant offered
notes on that interest payment date, that shortfall will be borne by each class
of note in a proportion equal to the proportion that the interest outstanding
on the relevant note bears to the total amount of interest outstanding on the
notes of the same class. This will be determined on the interest payment date
on which the shortfall arises. The shortfall will be deferred until the next
interest payment date on which funds are available to the issuer, from payments
made to it from the swap counterparty on that interest payment date, to make
the payment. The shortfall will accrue interest at the rate described for each
class of note below plus a margin of 2.0 per cent. per annum, and payment of
that interest will also be deferred until the next interest payment date on
which funds are available to the issuer to make the payment.
Each period beginning on, and including, the closing date or any interest
payment date and ending on, but excluding, the next interest payment date is
called an interest period. The first interest payment for the offered notes
will be made on 17 January, 2000 for the interest period from and including the
closing date to but excluding 17 January, 2000.
Interest will stop accruing on any part of the principal amount
outstanding of a note from the date it is due to redeem unless, when it is
presented, payment of principal is improperly withheld or refused. If this
happens it will continue to bear interest in accordance with this condition,
both before and after any judgement is given, until whichever is the earlier of
the following:
* the day on which all sums due in respect of that note, up to that
day, are received by or on behalf of the relevant noteholder; and
* the day which is seven days after the principal paying agent or
the note trustee has notified the relevant class of noteholders,
either in accordance with number 14 or individually, that it has
received all sums due in respect of the relevant class of notes up
to that day, except to the extent that there is any subsequent
default in payment,
The rate of interest applicable to the notes for each interest period will
be determined by the agent bank on the following basis:
(1) on the quotation date for each class of note, the agent bank will
determine the offered quotation to leading banks in the London interbank
market for one-month U.S. dollar deposits.
This will be determined by reference to the British Bankers Association
LIBOR Rates display as quoted on the Dow Jones/Telerate Screen No. 3750. If the
Telerate Screen No. 3750 stops providing these quotations, the replacement
service for the purposes of displaying this information will be used. If the
replacement service stops displaying the information, any page showing this
information will be used. If there is more than one service displaying the
information, the one previously approved in writing by the Trustee will be
used;
In each case above, the determination will be made as at or about 11.00
a.m., London time, on that date. These are called the screen rates for the
respective classes;
A "quotation date" means the second business day before the first day of
an intererst period.
(2) if, on any interest determination date, the screen rate is unavailable,
the agent bank will:
* request the principal London office of each of four major banks --
called "reference banks" -- in the London interbank market
selected by the issuer to provide the agent bank with its offered
quotation to leading banks of the equivalent of the screen rate on
that interest determination date in an amount that represents a
single transaction in that market at that time; and
* calculate the arithmetic mean, rounded upwards to four decimal
places of those quotations;
(3) if on any interest determination date the screen rate is unavailable and
only two or three of the reference banks provide offered quotations, the
rate of interest for that interest period will be the arithmetic mean of
the quotations as last calculated in (2) above; and
(4) if fewer than two reference banks provide quotations, the agent bank will
determine the arithmetic mean, rounded upwards to four decimal places of
the rates quoted by major banks in London, selected by the agent bank at
approximately 11.00 a.m. London time on the relevant quotations date, to
leading European banks for a period equal to the relevant interest period
and in an amount that is representative for a single transaction in that
market at that time, for loans in U.S. dollars.
The rate of interest for each interest period for the class A notes will
be the sum of:
* [*] per cent. per annum; and
* the screen rate or the arithmetic mean calculated to replace the
screen rate.
The rate of interest for each interest period for the class B notes will
be the sum of:
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* [*] per cent. per annum; and
* the screen rate or the arithmetic mean calculated to replace the
screen rate.
The rate of interest for each interest period for the class C notes will
be the sum of:
* [*] per cent. per annum; and
* the screen rate or the arithmetic mean calculated to replace the
screen rate.
If the agent bank is unable to determine the screen rate or an arithmetic
mean to replace it, as described in (2) and (3), the rates of interest for any
interest period will be as follows:
* for the class A notes the rate will be the sum of [*] per cent.
per annum and the screen rate or arithmetic mean last determined
for the class A notes;
* for the class B notes the rate will be the sum of [*] per cent.
per annum and the screen rate or arithmetic mean last determined
for the class B notes; and
* for the class C notes the rate will be the sum of [*] per cent.
per annum and the screen rate or arithmetic mean last determined
for the class C notes.
The agent bank will, as soon as it can after the quotation date for each
interest period, calculate the amount of interest payable on each note for that
interest period. The amount of interest will be calculated by applying the rate
of interest for that interest period to the principal amount outstanding of
that note during that interest period, multiplying the product by the actual
number of days in that interest period divided by 360 and rounding to the
nearest U.S. dollars 0.01, half a cent being rounded upwards.
On each interest payment date, the agent bank will determine the actual
amount of interest which will be paid on the notes on that interest payment
date and the amount of any shortfall on the notes for that interest period and
the amount of interest on any shortfall which will be paid on that interest
payment date. The amount of any interest on the shortfall will be calculated by
applying the relevant rate of interest for those notes, plus a margin of 2 per
cent. per annum, to the sum of the shortfall and accrued interest on shortfall
from prior interest periods which remains unpaid, multiplying by the actual
number of days in the relevant interest period and dividing by 360 and rounding
to the nearest U.S. dollars 0.01, half a cent being rounded upwards.
If, on any interest payment date, the amount received from the swap
counterparty is insufficient to pay in full the amount of interest due on the
relevant class of notes, any outstanding shortfall and accrued interest on
shortfall, due on that interest payment date, that amount will be applied first
to the payment of the interest due on the relevant class of notes, secondly to
the payment of any outstanding shortfall and thereafter to the payment of any
accrued interest on shortfall for that class of notes.
The rates and amounts determined by the agent bank will be notified to the
issuer, trustee and paying agent and published in accordance with number 14 as
soon as possible after these parties have been notified.
The issuer, the paying agents, the note trustee, the reference banks, the
agent bank and the noteholders will be bound by the determinations properly
made as described above and none of the reference banks, the agent bank or the
note trustee will be liable in connection with the exercise or non-exercise by
them of their powers, duties and discretions for those purposes.
If the agent bank fails to make a determination or calculation required as
described above, the note trustee, or its appointed agent, without accepting
any liability for it, will make the determination or calculation in as
described above. If this happens, the determination or calculation will be
deemed to have been made by the agent bank.
The issuer will ensure that there will be four reference banks while there
are notes outstanding.
6. Redemption and Purchase
The issuer is only entitled to redeem the notes as provided in paragraphs
(1), (2), and (3) below.
(1) Scheduled Redemption
Class A notes:
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or Rapid Amortisation Period has already started, all class
A notes will be redeemed on the series 99-1 scheduled redemption date, from
amounts paid to the swap counterparty, before the class A swap agreement is
terminated, from the Series 99-1 Issuer Account.
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If, on the series 99-1 scheduled redemption date, there is a shortfall
between the amount in the Series 99-1 Issuer Account and the total amount
payable to the swap counterparty under the class A swap agreement, then the
Rapid Amortisation Period will begin.
Class B notes:
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or the Rapid Amortisation Period has already started, the
class B notes will be redeemed on the series 99-1 scheduled redemption date
from amounts paid to the swap counterparty, before the class B swap agreement
is terminated, from the Series 99-1 Issuer Account. The payments will be made,
only after payment in full of all principal and interest due and payable on the
class A notes, in no order of preference and proportionately between all class
B notes:
If, on the series 99-1 scheduled redemption date, there is a shortfall
between the amount in the Series 99-1 Issuer Account, after payment of all
interest and principal due and payable on the class A notes, and the amount due
and payable to the swap counterparty under the class B swap agreement, then the
Rapid Amortisation Period will begin.
Class C notes:
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or the Rapid Amortisation Period has already started, the
class C notes will be redeemed on the series 99-1 scheduled redemption date
from amounts paid to the swap counterparty, before the class C swap agreement
is terminated, from the Series 99-1 Issuer Account. The payments will be made,
only after payment in full of all principal and interest due and payable on the
class A notes and the class B notes:
If, on the series 99-1 scheduled redemption date, there is a shortfall
between the amount in the Series 99-1 Issuer Account, after payment of all
interest and principal due and payable on the class A notes and the class B
notes, and the amount due and payable to the swap counterparty under the class
C swap agreement, then the Rapid Amortisation Period will begin.
If the Rapid Amortisation Period begins as a result of there being
insufficient funds to repay principal and pay interest on the class A notes,
the class B notes or the class C notes, as described above, then on each
interest payment date after that, the class A notes, the class B notes or the
class C notes as applicable, will be redeemed in part, to the extent of amounts
paid to the by the swap counterparty from the Series 99-1 Issuer Account, in
the proportion that their principal amount outstanding bears to the total
principal amount outstanding of their class of note. This will happen until the
earlier of the time when each class of notes has been paid in full and the
November 2004 interest payment date.
On each interest payment date, the agent bank will determine the
following:
* the amount of each principal payment payable on each note; and
* the principal amount outstanding of each note of that class on the
first day of the next interest period, after deducting any
principal payment due to be made on each of that class of notes on
that interest payment date.
The amounts and dates determined by the agent bank will be notified to the
issuer, paying agents and note trustee and published in accordance with number
14 as soon as possible after these parties have been notified.
The issuer, the paying agents, the note trustee and the noteholders will
be bound by the determinations properly made as described above and neither the
agent bank nor the note trustee will be liable in connection with the exercise
or non-exercise by it of its powers, duties and discretions for those purposes.
If the agent bank fails to make a determination as described above, the
note trustee will calculate the principal payment or principal amount
outstanding as described above, and each of these determinations or
calculations will be deemed to have been made by the agent bank. If this
happens, the determination will be deemed to have been made by the agent bank.
(2) Mandatory Early Redemption
If the Regulated Amortisation Period or the Rapid Amortisation Period
begins in respect of any class of notes before the series 99-1 scheduled
redemption date, then on each interest payment date after that, during the
Regulated Amortisation Period or, as the case may be, the Rapid Amortisation
Period, each note of that class will be redeemed, in the proportion that its
principal amount outstanding bears to the total principal amount outstanding of
that class of note, to the extent of the amount which is deposited into the
Series 99-1 Issuer Account towards redemption of the corresponding class of
medium term note -- after the amount has been exchanged for dollars under the
relevant swap agreement. This will happen until the earliest of:
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* the date on which the relevant class of notes has been redeemed in full;
or
* 15 November 2004 -- or if that day is not a business day the next
following business day.
If the Rapid Amortisation Period begins as a result of the termination of
any or all of the Swap Agreements because withholding tax is imposed -- see
"Swap Agreements" -- then the absolute amount payable on redemption of each
note will be adjusted by an amount called the "Notional Swap Termination
Amount". This is an amount notionally payable on termination of a hypothetical
currency and rate transaction -- called the "Notional Swap" -- referable to
that class of notes -- divided by the number of the relevant class of notes
outstanding. The Notional Swap referable to each class of notes -- will be
deemed to be a "Swap Transaction" for the purpose of the 1991 ISDA Definitions,
as supplemented by the 1998 Supplement, and to have been entered into between
one party -- "Notional Party A" -- and the other party -- "Notional Party B" --
pursuant to a multicurrency -- cross border ISDA Master Agreement, notionally
dated the closing date, and for the purpose of Section 6(e) of each Notional
Swap, "Second Method and Market Valuation" shall notionally apply.
If the Notional Swap Termination Amount in respect of any class of notes:
* equals zero, there will be no adjustment to the absolute amount payable
on redemption of that class; or
* is a negative figure, which means that Notional Party A notionally owes a
payment to Notional Party B, then an amount in dollars equal to the
absolute value of that negative amount will be added to the absolute
amount payable on redemption of that class; or
* is a positive figure, which means that Notional Party B notionally owes a
payment to Notional Party A, then an amount in dollars equal to the
absolute value of that positive amount will be deducted from the absolute
amount payable on redemption of that class.
The resulting amount is called the "adjusted amount" for each relevant
class.
The terms of the Notional Swap for each class of notes are as follows:
* the effective date for each class is the closing date;
* the termination date for each class is 15 November 2002, or the next
following business day if this is not a business day;
* in each case, Notional Party A will notionally pay Notional Party B on
the 15th day of each month, starting on 15 January 2000 or the next
following business day if this is not a business day, an amount in
dollars calculated in accordance with the relevant Notional Swap at a
floating rate -- determined in accordance with one month USD-LIBOR-BBA
plus a margin of [*]% for class A, [*]% for class B or [*]% for class C,
per annum on the principal amount outstanding of the relevant class of
notes;
* in each case Notional Party B will notionally pay to Notional Party A on
the 15th day of each month, starting on 15 January 2000 or the next
following business day if this is not a business day, an amount in
sterling calculated in accordance with the relevant Notional Swap at a
floating rate -- determined in accordance with one month GBP-LIBOR-BBA
plus a margin of [*]% for class A, [*]% for class B or [*]% for class C,
per annum on a notional sterling amount of L546,345,000 for class A,
L30,352,500 for class B or L30,352,000 for class C, as applicable.
The agent bank will cause the adjusted amount for any class to be
published in accordance with number 14 and to be notified to the note trustee
and each of the paying agents and to the noteholders of the relevant class as
soon as possible after determination. If the agent bank does not at any time
for any reason determine the adjusted amount for any class the note trustee
will do so and that determination will be deemed to have been made by the agent
bank. In doing so, the note trustee will apply all of the provisions described
above, to the extent that, in its opinion, it can do so. In all other respects
it will do so in the manner it deems fair and reasonable in all the
circumstances. Any determination or calculation made by the note trustee will
be binding on the relevant class of noteholders.
(3) Final Redemption
If the notes have not previously been purchased and cancelled or redeemed
in full as described in number 6, the notes will be finally redeemed at their
then principal amount outstanding or, where applicable, their adjusted amounts
on 15 November 2004 or the next following business day if this is not a
business day, together with, in each case, all accrued and unpaid interest,
shortfall or interest on shortfall, if any.
The issuer, and/or related companies of it may buy notes at any price. Any
notes that are redeemed or purchased pursuant to these provisions shall be
cancelled at that time and may not be reissued or resold.
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You are required, at its request, to sell all of your notes to Gracechurch
Card (Holdings) Limited, pursuant to the option granted to it by the note
trustee, on your behalf. The option is granted to acquire all of the notes,
plus accrued interest on them, for one penny per note, on the earlier of the
following:
* any date falling after the interest payment date in November 2004;
and
* in the event that the security is enforced, the date on which the
note trustee determines that the proceeds of that enforcement are
insufficient, after payment of all other claims ranking in
priority to the notes, to pay in full any amount due on the notes.
This is called the post maturity call option.
You acknowledge that the note trustee has the authority and the power to
bind you in accordance with the terms and conditions set out in the post
maturity call option and, by subscribing for your note(s), you agree to be
bound in this way.
7. Payments
Payments of principal and interest on your notes will be made only when
they are presented and, in the case of final redemption, provided that payment
is made in full, surrendered at the specified office of the paying agent by
transfer to a U.S. dollar account.
All payments on your notes are subject to any applicable fiscal or other
laws and regulations. You will not be charged commissions or expenses on these
payments.
If the due date for payment of any amount on your notes is not a business
day in the place it is presented, you will not be entitled to payment of the
amount due in that place until the next business day in that place and you
shall not be entitled to any further interest or other payment as a result of
that delay.
If a paying agent makes a partial payment on your note, that paying agent
will endorse on that note, as applicable, a statement indicating the amount and
date of that payment.
Payments on your notes are subject to the operating rules of DTC and
Euroclear or Cedelbank, if applicable.
8. Taxation
Payments of interest and principal will be made without making any
deductions for any tax imposed by any jurisdiction having power to tax unless a
deduction is required by the law of the relevant jurisdiction which has power
to tax. If a deduction for tax is made, the paying agent will account to the
relevant authority for the amount deducted. Neither the issuer nor the paying
agents are required to make any additional payments to noteholders for any
deductions made for tax.
9. Events of Default
If any of the following events occurs and is continuing it is called an
"event of default':
* the issuer fails to pay any amount of principal on the notes
within 7 days of the date payment is due or fails to pay any
amount of interest on the notes within 15 days of the date payment
is due; or
* the issuer fails to perform or observe any of its other
obligations under the notes, the trust deed, the deed of charge or
the paying agency and agent bank agreement, other than any
obligation to pay any principal or interest on the notes, and,
except where that failure is incapable of remedy, it remains
unremedied for 30 days after the note trustee has given written
notice of it to the issuer, certifying that the default is, in its
opinion, materially prejudicial to the interests of the
noteholders; or
* the early termination, without replacement, of any of the swap
agreements as described in this prospectus under "The Swap
Agreements: Common Provisions of the Swap Agreements"; or
* a judgement or order for the payment of any amount is given
against the issuer and continues unsatisfied and unstayed for a
period of 30 days after it is given or, if a later date is
specified for payment, from that date; or
* a secured party and/or encumbrancer takes possession or a
receiver, administrative receiver, administrator, examiner,
manager or other similar officer is appointed, of the whole or any
part of the business, assets and revenues of the issuer or an
enforcement action is begun for unpaid rent or executions levied
against any of the assets of the issuer; or
* the issuer becomes insolvent or is unable to pay its debts as they
fall due;
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* an administrator or liquidator of the issuer or the whole or any
part of the business, assets and revenues of the issuer is
appointed, or an application for an appointment is made;
* the issuer takes any action for a readjustment or deferment of any
of its obligations or makes a general assignment or an arrangement
or composition with or for the benefit of its creditors or
declares a moratorium in respect of any of its indebtedness or any
guarantee of indebtedness given by it; or
* the issuer stops or threatens to stop carrying on all or any
substantial part of its business; or
* an order is made or an effective resolution is passed for the
winding up, liquidation or dissolution of the issuer; or
* any action, condition or thing at any time required to be taken,
fulfilled or done in order:
(1) to enable the issuer lawfully to enter into, exercise its rights
and perform and comply with its obligations under and in respect
of the notes and the issuer related documents; or
(2) to ensure that those obligations are legal, valid, binding and
enforceable, except as that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganisation or
other similar laws affecting the enforcement of the rights of
creditors generally and that that enforceability may be limited by
the effect of general principles of equity;
is not taken, fulfilled or done; or
* it is or will become unlawful for the issuer to perform or comply
with any of its obligations under or in respect of the notes or
the issuer related documents; or
* all or any substantial part of the business, assets and revenues
of the issuer is condemned, seized or otherwise appropriated by
any person acting under the authority of any national, regional or
local government; or
* the issuer is prevented by any person acting under the authority
of any national, regional or local government from exercising
normal control over all or any substantial part of its business,
assets and revenues.
If an event of default occurs then the note trustee may give an
enforcement notice or appoint a receiver if it chooses and if it is indemnified
to its satisfaction .
If an event of default occurs then the note trustee shall be bound to give
an enforcement notice if it is indemnified to its satisfaction and it is:
* required to by the swap counterparty;
* required to by holders of at least one-quarter of the aggregate
principal amount outstanding of the class A notes, if any remain
outstanding, and if none remain outstanding, the class B notes and
if none of these remain outstanding, the class C notes; or
* directed by an Extraordinary Resolution, as defined in the trust
deed, of holders of outstanding class A notes, and if there are
none, of holders of outstanding class B notes, and if there are
none, of holders of outstanding class C notes.
An "enforcement notice" is a written notice to the issuer declaring the
notes to be immediately due and payable. When it is given, the notes will
become immediately due and payable at their principal amount outstanding
together with accrued interest without further action or formality. Notice of
the receipt of an enforcement notice shall be given to the noteholders as soon
as possible. A declaration that the notes have become immediately due and
payable will not, of itself, accelerate the timing or amount of redemption of
the notes as described in number 6.
10. Prescription
Your notes will become void if they are not presented within the time
limit for payment. That time limit is ten years from their due date. If there
is a delay in the principal paying agent receiving the funds, the due date, for
the purposes of this time limit, is the date on which it notifies you, in
accordance with number 14, that it has received the relevant payment.
11. Replacement of Notes
If your notes are lost, stolen, mutilated, defaced or destroyed, you can
replace them at the specified office of the principal paying agent. You will be
required to both pay the expenses of producing a replacement and
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comply with the issuer's reasonable requests for evidence, security and
indemnity. You must surrender any defaced or mutilated notes before
replacements will be issued.
12. Note Trustee and Agents
The note trustee is entitled to be indemnified and relieved from
responsibility in certain circumstances and to be paid its costs and expenses
in priority to your claims.
In the exercise of its powers and discretions under the conditions and the
trust deed, the note trustee will consider the interests of the noteholders as
a class and will not be responsible for any consequence to you individually as
a result of you being connected in any way with a particular territory or
taxing jurisdiction.
In acting under the paying agency and agent bank agreement, and in
connection with your notes, the paying agents and the agent bank act only as
agents of the issuer and the note trustee and do not assume any obligations
towards or relationship of agency or trust for or with you.
The note trustee and its related companies are entitled to enter into
business transactions with the issuer, Barclays Bank PLC or related companies
of either of them without accounting for any profit resulting from those
transactions.
The issuer can, at any time, vary or terminate the appointment of any
paying agent or the agent bank and can appoint successor or additional paying
agents or a successor agent bank. If the issuer does this it must ensure that
it maintains the following:
* a principal paying agent;
* a paying agent, if and for so long as any of the notes are listed
on the London Stock Exchange, in London; and
* an agent bank.
Notice of any change in the paying agents, agent bank or their specified
offices shall be promptly given to you in accordance with Number 14.
13. Meetings of Noteholders, Modification and Waiver, Substitution and
Addition.
(a) Meetings of Noteholders
The trust deed contains provisions for convening single and separate
meetings of each class of noteholders to consider matters relating to the
notes, including the modification of any provision of the conditions or the
trust deed. Any modification may be made if sanctioned by an extraordinary
resolution.
The quorum for any meeting convened to consider an extraordinary
resolution will be two or more persons holding or representing a clear majority
of the aggregate principal amount outstanding of the relevant class of notes --
and in the case of a separate meeting, the class A notes, the class B notes or
the class C notes, as the case may be -- for the time being outstanding.
Certain terms including, the date of maturity of the notes, any day for
payment of interest on the notes, reducing or cancelling the amount of
principal or the rate of interest payable in respect of the notes or altering
the currency of payment of the notes, require a quorum for passing an
extraordinary resolution of two or more persons holding or representing in
total not less than 75 per cent. of the total principal amount outstanding of
the relevant class of notes. These modifications are called "Basic Terms
Modifications".
Any extraordinary resolution duly passed shall be binding on all
noteholders, whether or not they are present at the meeting at which such
resolution was passed. The majority required for an extraordinary resolution
shall be 75 per cent. of the votes cast on that extraordinary resolution.
Modification and Waiver
The note trustee may agree, without the consent of the noteholders, (1) to
any modification -- except a Basic Terms Modification -- of, or to the waiver
or authorisation of any breach or proposed breach of, the notes or any other
related agreement, which is not, in the opinion of the note trustee, materially
prejudicial to the interests of the noteholders or (2) to any modification of
any of the provisions of the terms and conditions or any of the related
agreements which, in the opinion of the note trustee, is of a formal, minor or
technical nature or is to correct a manifest error. Any of those modifications,
authorisations or waivers will be binding on the noteholders and, unless the
note trustee agrees otherwise, shall be promptly notified by the issuer to the
noteholders in accordance with number 14.
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Substitution and Addition
The note trustee may also agree to the substitution of any other body
corporate in place of the issuer as principal debtor under the trust deed and
the notes and in the case of such a substitution or addition the note trustee
may agree, without the consent of the noteholders, to a change of the law
governing the notes and/or the trust deed provided that such change would not
in the opinion of the trustee be materially prejudicial to the interests of the
noteholders. Any such substitution or addition will be promptly notified to the
noteholders in accordance with number 14.
Enforcement
At any time after the notes become due and repayable and without prejudice
to its rights of enforcement in relation to the security, the note trustee may,
at its discretion and without notice, institute such proceedings as it thinks
fit to enforce payment of the notes, including the right to repayment of the
notes together with accrued interest thereon, and shall be bound to do so only
if :
It has been so directed by an extraordinary resolution of the noteholders
of the relevant class. No extraordinary resolution of the class B noteholders
or class C noteholders or any request of the class B noteholders or class C
noteholders will be effective unless there is an extraordinary resolution of
the class A noteholders or a direction of the class A noteholders to the same
effect or none of the class A notes remain outstanding.
No noteholder may institute any proceedings against the issuer to enforce
its rights under or in respect of the notes or the trust deed unless (1) the
note trustee has become bound to institute proceedings and has failed to do so
within a reasonable time and (2) the failure is continuing. Notwithstanding the
previous sentence and notwithstanding any other provision of the trust deed,
the right of any noteholder to receive payment of principal of and interest on
its notes on or after the due date for the principal or interest, or to
institute suit for the enfocement of payment of that interest or principal, may
not be impaired or affected without the consent of that noteholder.
14. Notices
Notices to you will be deemed to have been validly given if published in a
leading English language daily newspaper in London -- which is expected to be
the Financial Times -- and will be deemed to have been given on the date of
first publication.
Any notices specifying a rate of interest, an interest amount, an amount
of shortfall or interest on it, principal payment or a principal amount
outstanding will be treated as having been duly given if the information
contained in that notice appears on the relevant page of the Reuters Screen or
other similar service approved by the note trustee and notified to you. The
notice will be deemed given when it first appears on the screen. If it cannot
be displayed in this way, it will be published as described in the previous
paragraph.
Copies of all notices given in accordance with these provisions will be
sent to the London Stock Exchange Company Announcements Office and DTC.
15. Currency Indemnity
You can be indemnified against losses you suffer from the use of an
exchange rate to convert sums recovered by you in litigation against the
issuer, which is different to the rate you ordinarily use. You must request
this indemnity in writing from the issuer.
This indemnity constitutes a separate and independent obligation of the
issuer and shall give rise to a separate and independent cause of action.
16. Governing Law and Jurisdiction
The notes, swap agreements and trust deed are governed by English Law and
the courts have non-exclusive jurisdiction in connection with the notes.
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The Swap Agreements
General
The only swap agreements that the issuer will enter into are the class A
swap agreement, the class B swap agreement and the class C swap agreement --
called collectively the "swap agreements". There is no separate interest rate
cap agreement for any of the notes.
Under the class A swap agreement between the issuer and the swap
counterparty, the issuer will pay to the swap counterparty:
* an initial payment of dollars, on the closing date, in an amount
equal to the initial balance of the class A notes; and
* on each transfer date after the closing date, the sterling amount
equal to the interest and principal, if any, received by the
issuer from the MTN issuer on the class A MTN.
The swap counterparty will pay to the issuer:
* an initial payment in sterling, on the closing date, in an amount
equal to the dollar amount of the initial balance of the class A
notes converted into sterling at the fixed exchange rate; and
* on each interest payment date after the closing date, sums in
dollars equal to the interest payable and principal repayable, if
any, to holders of the class A notes on that interest payment
date, as set out in the terms and conditions of the class A notes.
Under the class B swap agreement between the issuer and the swap
counterparty, the issuer will pay to the swap counterparty:
* an initial payment of dollars, on the closing date, in an amount
equal to the initial balance of the class B notes; and
* on each transfer date after the closing date, the sterling amount
equal to the interest and principal, if any, received by the
issuer from the MTN issuer on the class B MTN.
The swap counterparty will pay to the issuer:
* an initial payment in sterling, on the closing date, in an amount
equal to the dollar amount of the initial balance of the class B
notes converted into sterling at the fixed exchange rate; and
* on each interest payment date after the closing date, sums in
dollars equal to the interest payable and principal repayable, if
any, to holders of the class B notes on that interest payment
date, as set out in the terms and conditions of the class B notes.
Under the class C swap agreement between the issuer and the swap
counterparty, the issuer will pay to the swap counterparty:
* an initial payment of dollars, on the closing date, in an amount
equal to the initial balance of the class C notes; and
* on each transfer date after the closing date, the sterling amount
equal to the interest and principal, if any, received by the
issuer from the MTN issuer on the class C MTN.
The swap counterparty will pay to the issuer;
* an initial payment in sterling, on the closing date, in an amount
equal to the dollar amount of the initial balance of the class C
notes converted into sterling at the fixed exchange rate; and
* on each interest payment date after the closing date, sums in
dollars equal to the interest payable and principal repayable, if
any, to holders of the class C notes on that interest payment
date, as set out in the terms and conditions of the class C notes.
The swap agreements provide that payments made under it are to be reduced
in the event that any amount due and payable to the issuer under the class A
MTN, the class B MTN or the class C MTN, as applicable, is deferred by the MTN
issuer under the terms of the relevant class of the MTNs. This is to prevent
that amount in dollars being received by the issuer before it receives the
corresponding amount payable under the relevant class of MTNs. The amount in
dollars will be increased for any interest payment date on which the deferred
amount is subsequently received by the issuer.
The fixed sterling to dollar exchange rate, which we refer to as the
"fixed exchange rate", in the dollar swap agreements will be L0.60705 per one
dollar.
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Common Provisions of the Swap Agreements
The swap agreements provide that if the short-term unsecured debt rating
of the swap counterparty is withdrawn or reduced below "A-1+" by Standard &
Poor's or if the long-term unsecured debt rating of the swap counterparty is
withdrawn or reduced below "Aa3" by Moody's, then within 30 days following that
event, the swap counterparty will be required to take one of the following
steps:
* Post collateral equal to the amount necessary to defease the
obligations of the swap counterparty under the swap agreement, as
confirmed in writing by the rating agencies;
* Assign its obligations under the swap agreement to a substitute
swap counterparty having long-term unsecured debt ratings of "AAA"
by Standard & Poor's and "Aaa" by Moody's or, with the prior
written confirmation of the rating agencies that such action will
not result in a reduction or withdrawal of the rating of the
applicable class of notes, a substitute swap counterparty that has
a lesser rating; or
* Arrange for the appointment of a joint and several swap
counterparty with a long-term unsecured debt rating that, when
combined with the long-term unsecured debt ratings of the swap
counterparty, are assessed as sufficient to maintain the then-
current ratings of the applicable class of notes.
Termination of the Swap Agreements
The swap agreements will terminate on the earlier of:
* the distribution date on which there is no further obligation to
make a payment under the relevant class of medium term notes;
* the November 2004 interest payment date; and
* the occurrence of an early swap termination event as described
below.
The swap agreements may be terminated early in the following circumstances
- -- each called an "early swap termination event":
* At the option of one party, if there is a failure by the other
party to pay any amounts due under the swap agreement;
* If an event of default under the notes occurs or if there is no
further obligation to make a payment under the relevant class of
medium term notes before the series 99-1 scheduled redemption
date;
* Upon the occurrence of an insolvency of either party, merger
without an assumption of the obligations under the swap
agreements, or changes in law resulting in illegality;
* If as a result of a change in applicable law, withholding taxes
would be imposed by any jurisdiction on any payments made or
required to be made by the swap counterparty to the issuer under
the swap agreement and there are no reasonable measures that the
swap counterparty can take to avoid their imposition; and
* The issuer determines that the note trustee or the paying agent
has or will become obligated to deduct or withhold amounts from
payments on the related class of notes to be made to any of the
noteholders on the next interest payment dates, for any tax
assessment or other governmental charge imposed by the United
Kingdom or any political subdivision or taxing authority of the
United Kingdom on the payments as a result of any change in its
laws or regulations or rulings, or any change in official position
regarding the application or interpretation of its laws,
regulations or rulings, which change or amendment becomes
effective on or after the date the notes are issued, and there are
no reasonable measures the issuer can take to avoid the tax or
assessment.
The swap agreements may be terminated following the events described in
either of the last two bullet points above only if the issuer is directed to
terminate the swap agreements by an Extraordinary Resolution of the holders of
the class A notes or, if there are no class A notes outstanding, the holders of
the class B notes or, if there are no class B notes outstanding, the holders of
the class C notes.
Upon the occurrence of an early swap termination event, the issuer or the
swap counterparty may be liable to make a termination payment to the other.
This termination payment will be calculated and made in sterling. The amount of
any termination payment will be based on the market value of the swap agreement
based on market quotations of the cost of entering into a swap transaction with
the same terms and conditions that would have the effect of preserving the
respective full payment obligations of the parties. Any such termination
payment could, if the sterling/dollar exchange rates have changed
significantly, be substantial.
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In the case of an early swap termination event described in either of the
last two bullet points above:
* any termination payment payable by the swap counterparty to the
issuer under the swap agreements will be paid to the relevant
class of noteholders and will not reduce the amount of interest or
principal otherwise payable to that class of noteholders or cause
a reduction in the outstanding principal balance of the related
class of medium term notes or a reduction in the investor interest
of the related class; and
* any termination payment payable by the issuer to the swap
counterparty will be made from principal payable on the relevant
class of medium term notes and, ultimately from Available Investor
Principal Collections payable on the investor interest of the
related class; it will be treated as a payment of principal to the
relevant class of noteholders and will cause a reduction in the
principal balances of that class of notes and the related class of
medium term notes and will cause a reduction in the investor
interest of the related class; if the principal payable on the
relevant class of medium term notes is insufficient to pay the
termination payment on any transfer date, the balance of the
termination payment will be paid on the next interest payment date
with interest thereon to the extent of principal payable on the
relevant class of medium term notes.
If there is an event of default by the swap counterparty under one of the
swap agreements, then any termination payment to be paid to the swap
counterparty by the issuer under the early termination provisions of the swaps
will be subordinated to any claims of the noteholders.
If an early swap termination event occurs, on each interest payment date
thereafter, payments of interest and principal payable on the relevant class of
medium term notes allocated and available to make payments on the related class
of notes will be converted into dollars by the note trustee at the then
exchange spot prevailing rate in the City of London for sterling purchases of
dollars, which will then be used to pay principal and interest on the related
class of notes. Any dollar amounts so distributed may not be equal to the
dollar amounts then due and owing on that class of notes, in which case any
shortfall will be borne equally by each noteholder of that class. Any dollar
amounts so converted in excess of interest due and payable on that class of
notes will be shared equally by each noteholder of that class.
Taxation
Neither the issuer nor the swap counterparty is obliged under the swap
agreements to gross up if withholding taxes are imposed on payments made under
the swap agreements.
If any withholding tax is imposed on payments due to the issuer on the
class A MTN or payments by the issuer under the swap agreements, the swap
counterparty will be entitled to deduct amounts in the same proportion from
subsequent payments due from it. If that happens amounts applicable to the
issuer to make payments on the notes will be reduced by the amount so deducted.
If any withholding tax is imposed on payments due by the swap counterparty
under the swap agreements the issuer will not be entitled to deduct amounts
from subsequent payments due from it and amounts applicable to the issuer to
make payments on the notes will be reduced by the amount so withheld by the
swap counterparty.
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The Medium Term Notes
On the closing date the MTN issuer will issue three interest bearing
medium term notes to the issuer. These will be the class A MTN, the class B MTN
and the class C MTN. Each medium term note will mature for redemption on the
series 99-1 scheduled redemption date. The Bank of New York, acting out of its
London Branch at One Canada Square, Canary Wharf, London E14 5AL will act as
trustee, custodian, issue agent and principal paying agent in relation to the
series 99-1 medium term notes.
Under the terms of the security trust and cash management deed, Barclays,
acting through its corporate lending division at 54 Lombard Street, London,
EC3P 3AH, will initially be appointed as cash manager for the medium term notes
- -- called the "MTN cash manager".
Application has been made to list the medium term notes on the London
Stock Exchange.
The medium term notes will be issued on a non-syndicated continuous basis
in series. Medium term notes issued in respect of any series may differ as to
principal, interest and recourse to security. Each series must be constituted
by a supplemental deed to the security trust and cash management deed that will
also specify any enhancement provider for that series and whether that
enhancement provider is to be a beneficiary. The transferor beneficiary may
direct the receivables trustee to create one or more new series within the
receivables trust by making an acquisition.
Each new series may differ from any other series in its principal terms
and the manner, timing and amounts of distributions made to beneficiaries
within it. The MTN issuer may, by executing a further series trust supplement,
become an investor beneficiary in that new series. The MTN issuer shall not
issue any further medium term notes in respect of an existing series without
the prior consent of the holders of the existing medium term notes in that
series, unless the further medium term notes are fungible with the existing
ones.
The MTN issuer will pay the proceeds of the medium term notes to the
receivables trustee for the purpose of the receivables trust which would permit
the receivables trustee to acquire separate undivided beneficial interests in
the receivables trust for each class of medium term notes. See "The Receivables
Trust" and "Use of Proceeds". The initial principal amount of each undivided
beneficial interest acquired is the Investor Interest for each class of
investor certificates. These interests will be represented by an investor
certificate for each class, which will be issued to the MTN issuer by the
receivables trustee. See "Series 99-1: General".
The receivables trustee will be permitted to use the proceeds of the
medium term notes paid to it, together with monies paid to it by other
beneficiaries and other trust property, to accept an offer to assign by the
transferor all present and future amounts arising on the designated accounts.
By becoming the initial investor beneficiary of the receivables trust, the MTN
issuer will be entitled to receive payment, at specified times, of a portion of
collections of the receivables assigned by the transferor to the receivables
trustee. These payments will be used by the MTN issuer in and towards
redemption of, first, the class A MTN, second, the class B MTN and third, the
class C MTN.
The ability of the MTN issuer to meet its obligations to pay principal of
and interest on the medium term notes will be entirely dependent on the receipt
by it of funds from the receivables trust.
The MTN issuer and the security trustee will have no recourse to Barclays
other than:
* against Barclaycard as transferor under the receivables
securitisation agreement for any breach of representations and
obligations in respect of the receivables; and
* against Barclaycard as MTN cash manager under the security trust
and cash management deed for any breach of obligations of the MTN
cash manager.
The obligations of the MTN issuer and certain other rights of the MTN
issuer under each series of medium term notes and under the documents relating
to them, will be secured under the security trust and cash management deed, by
security interests over the investor certificates. The security for each series
will be granted by the MTN issuer in favour of the security trustee. If the net
proceeds of the enforcement of security for a series following a mandatory
redemption -- after meeting the expenses of the trustee, the paying agents, the
custodian and any receiver -- are insufficient to make all payments due on the
medium term notes of that series, the assets of the MTN issuer securing other
series of medium term notes will not be available for payment of that
shortfall.
If the security trust and cash management deed is enforced, the monies
paid to the MTN issuer by the receivables trustee on each transfer date will be
applied:
* first to meet payments due to any receiver appointed under it;
then
* to the extent not met above, to meet the fees, costs and expenses
of the MTN issuer and the security trustee; then
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* to meet payments of interest and then principal on the class A
MTNs, then on the class B MTNs and finally on the class C MTNs.
The interest rate on the medium term notes will be determined by the agent
bank in accordance with the medium term note conditions. This is done by
reference to the screen rate or other rate set by the agent bank for three-
month deposits for pounds sterling plus a margin. The margin will be [*] per
cent. per annum for the class A MTN, [*] per cent. per annum for the class B
MTN and [*] per cent. per annum for the class C MTN. The interest rate for the
first interest period will be determined on the closing date. Interest in
respect of the medium term notes will be payable in arrear in sterling on each
interest payment date. Interest on each class of MTNs will be paid monthly on
each distribution date falling during or upon the expiry of each quarterly
interest period.
If any withholding or deduction for any taxes, duties, assessments or
government charges is imposed, levied, collected, withheld or assessed on
payments of principal or interest on the medium term notes by Jersey, Channel
Islands or the United Kingdom or any political subdivision or authority in or
of them having power to tax, neither the MTN issuer nor the principal paying
agent will be required to make any additional payments to holders of the medium
term notes for that withholding or deduction.
The occurrence and continuation of the following events is called an MTN
event of default:
* the MTN issuer fails to pay any amount of principal of the medium
term notes within 7 days of the due date for its payment or fails
to pay any amount of interest on the medium term notes within 15
days of its due date; or
* the MTN issuer fails to perform or observe any of its other
obligations under the medium term notes, the MTN trust supplement,
or the security trust and cash management deed and, except where
the failure is incapable of remedy, it remains unremedied for 30
days after the security trustee has given written notice to the
MTN issuer, certifying that the failure is, in the opinion of the
security trustee, materially prejudicial to the interests of the
medium term note holders; or
* the early termination, without replacement, of any of the swap
agreements as described in this prospectus under "The Swap
Agreements: Common Provisions of the Swap Agreements".
* a judgement or order for the payment of any amount is given
against the MTN issuer and continues unsatisfied and unstayed for
a period of 30 days after the date it is given or the date
specified for payment, if later; or
* a secured party takes possession or a receiver, administrative
receiver, administrator, examiner, manager or other similar
officer is appointed, of the whole or any part of the undertaking,
assets and revenues of the MTN issuer or an enforcement action is
begun for unpaid rent or executions levied against any of the
assets of the MTN issuer; or
* the MTN issuer becomes insolvent or is unable to pay its debts as
they fall due or an administrator or liquidator of the MTN issuer
or the whole or any part of its business, assets and revenues is
appointed, or application for any appointment is made, or the MTN
issuer takes any action for a readjustment or deferment of any of
its obligations or makes a general assignment or an arrangement or
composition with or for the benefit of its creditors or declares a
moratorium in respect of any of its indebtedness or any guarantee
of indebtedness given by it or ceases or threatens to cease to
carry on all or any substantial part of its business; or
* an order is made or an effective resolution is passed for the
winding up, liquidation or dissolution of the MTN issuer; or
* any action, condition or thing at any time required to be taken,
fulfilled or done in order to enable the MTN issuer lawfully to
enter into, exercise its rights and perform and comply with its
obligations under and in respect of the medium term notes and the
documents relating to them or to ensure that those obligations are
legal, valid, binding and enforceable, except as the
enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganisation or other similar laws
affecting the enforcement of the rights of creditors generally and
as that enforceability may be limited by the effect of general
principles of equity; or
* it is or will become unlawful for the MTN issuer to perform or
comply with any of its obligations under or in respect of the
medium term notes or the documents relating to them; or
* all or any substantial part of the business, assets and revenues
of the MTN issuer is condemned, seized or otherwise appropriated
by any person acting under the authority of any national, regional
or local government or the MTN issuer is prevented by any of these
people from exercising normal control over all or any substantial
part of its business, assets and revenues,
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If an MTN event of default occurs then the security trustee may give an
enforcement notice if it chooses and if it is indemnified to its satisfaction .
If an MTN event of default occurs then the security trustee shall be bound
to give an enforcement notice if it is indemnified to its satisfaction and it
is:
* required to by holders of at least one-quarter of the aggregate
principal amount outstanding of the class A MTN, if any remain
outstanding, and if none remain outstanding, the class B MTN, and
if none of these remain outstanding, the class C MTN; or
* directed by an Extraordinary Resolution, as defined in the
security trust and cash management deed, of holders of outstanding
class A MTN, and if there are none, of holders of outstanding
class B MTNs, and if there are none, of holders of outstanding
class C MTN.
An MTN enforcement notice is a written notice to the MTN issuer declaring
the medium term notes to be immediately due and payable. When it is given, the
medium term notes will become immediately due and payable at their principal
amount outstanding together with accrued interest without further action or
formality. Notice of the receipt of an MTN enforcement notice shall be given to
the medium term note holders as soon as possible. A declaration that the medium
term notes have become immediately due and payable will not, of itself,
accelerate the timing or amount of redemption of the medium term notes.
When reference is made to the MTN cash manager it includes any successor
to Barclaycard as MTN cash manager. The security trust and cash management deed
provides that, as MTN cash manager, Barclaycard will service and administer the
Series 99-1: Distribution Account.
Barclaycard, and any successor MTN cash manager to the MTN issuer, will be
entitled to receive the fee for acting as MTN cash manager, payable by the MTN
issuer from amounts received as MTN Issuer Costs Amounts from the Series 99-1
Distribution Account.
The MTN cash manager may not resign, apart from in certain circumstances.
The resignation of the MTN cash manager shall only become effective once a
replacement has assumed all of the responsibilities of the MTN cash manager set
out in the security trust and cash management deed.
Material Legal Aspects of the Receivables
Consumer Credit Act 1974
A significant number of the credit transactions that occur on a designated
account will be for items of credit extended to a cardholder for an amount up
to L25,000. The Consumer Credit Act applies to these transactions and, in whole
or in part, the credit or charge card agreement establishing each designated
account. This has certain consequences for the designated accounts, including
the following:
Enforcement of improperly executed or modified card agreements
If a credit or charge card agreement has not been executed or modified in
accordance with the Consumer Credit Act, it may be unenforceable against a
cardholder without a court order -- and sometimes may be completely
unenforceable. As is common with many other UK credit and charge card issuers,
some of Barclaycard's credit and charge card agreements do not comply in all
respects with the Consumer Credit Act or other related legislation. As a
result, these agreements may be unenforceable by Barclaycard against the
cardholders without a court order. The transferor gives no guarantee that a
court order could be obtained if required. Barclaycard estimates that this
could apply to approximately 1% of the aggregate principal receivables in the
designated accounts on 30 September, 1999 will be completely unenforceable.
This proportion is not expected to grow materially. Barclaycard does not
anticipate any material increase in this percentage of receivables in the
securitised portfolio. The accounts that do not comply with the Consumer Credit
Act are still legal, valid and binding obligations of the relevant cardholder
and it will still be possible to collect payments and demand arrears from
cardholders willing to pay their debt and demand arrears from cardholders who
are falling behind with their payments. The transferor will have no obligation
to repay or account to a cardholder for any payments received by a cardholder
because of this noncompliance with the Consumer Credit Act. However, if losses
arise on these accounts, they will be written off and borne by the investor
beneficiary and transferor beneficiary based on their respective interests in
the receivables trust.
Liability for supplier's misrepresentation or breach of contract
Transactions involving the use of a credit or charge card in the United
Kingdom may constitute transactions under debtor-creditor-supplier agreements.
A debtor-creditor-supplier agreement includes an
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agreement where the creditor, with knowledge of its purpose, advances funds to
finance a purchase by the debtor of goods or services from a supplier.
Section 75 of the Consumer Credit Act provides that, if the supplier is in
breach of the contract -- whether such contract is express or implied by law --
between the supplier and a cardholder in a debtor-creditor-supplier agreement
or if the supplier has made a misrepresentation about that contract, the
creditor may also be liable to the cardholder for the breach or
misrepresentation. The liability of the transferor for a designated account is
called a "Transferor Section 75 Liability". In these circumstances, the
cardholder may have the right to reduce the amount owed to the transferor under
his or her credit or charge card account. This right would survive the sale of
the receivables to the receivables trustee. As a result, the receivables
trustee may not receive payments from cardholders that it might otherwise
expect to receive. As a result, the receivables trustee may not receive the
full amount otherwise owed by a cardholder. However, the creditor will not be
liable where the cash price of the item or service supplied concerning the
claim is less than L100 or greater than L30,000.
The receivables trustee has agreed to indemnify the transferor for any
loss suffered by the transferor arising from any claim under section 75 of the
Consumer Credit Act. This indemnity cannot exceed the original outstanding
principal balance of the affected charges on the designated account.
The receivables trustee's Indemnity will be payable from excess spread on
the receivables. Any amounts that Barclaycard recovers from the supplier will
reduce Barclaycard's loss for purposes of the receivables trustee's indemnity.
Barclaycard will have rights of indemnity against suppliers under section 75 of
the Consumer Credit Act. Barclaycard may also be able to charge-back the
transaction in dispute to the supplier under the operating regulations of VISA
or Mastercard.
If Barclaycard's loss for purposes of the receivables trustee's indemnity
exceeds the excess spread available to satisfy the loss, the amount of the
excess will reduce the Transferor Interest accordingly.
Transfer of Benefit of Receivables
The transfer by the transferor to the receivables trustee of the benefit
of the receivables is governed by English law and takes effect in equity only.
Notice to the cardholders of the assignment to the receivables trustee
would perfect the legal title of the receivables trustee to the receivables.
The receivables trustee has agreed that notice will not be given to
cardholders, unless the transferor's long-term senior unsecured indebtedness as
rated by Moody's, Standard & Poor's or Fitch were to fall below Baa2, BBB or
BBB, respectively. The lack of notice has several legal consequences.
Until notice is given to the cardholders, each cardholder will discharge
his or her obligations under the designated account by making payment to the
transferor. Notice to cardholders would mean that cardholders should no longer
make payment to the transferor as creditor under the card agreement but should
instead make payment to the receivables trustee as assignee of the receivables.
If notice is given, and a cardholder ignores it and makes payment to the
transferor for its own account, that cardholder would nevertheless still be
bound to make payment to the receivables trustee. The transferor, having
transferred the benefit of the receivables to the receivables trustee, is the
bare trustee of the receivables trustee for the purposes of the collection of
the receivables that are the property of the receivables trust and is
accountable to the receivables trustee accordingly.
Before the insolvency of the transferor, until notice is given to a
cardholder who is a depositor or other creditor of the transferor, equitable
set-offs may accrue in favour of that cardholder against his or her obligation
to make payments under the card agreement to the transferor. These rights of
set-off may result in the receivables trustee receiving less monies than
anticipated from the receivables.
The transfer of the benefit of receivables to the receivables trustee has
been and will continue to be subject both to any prior equities that have
arisen in favour of the cardholder and to any equities that may arise in the
cardholder's favour after the assignment. Where notice of the assignment is
given to a cardholder, certain rights of set-off may not arise after the date
of the notice.
Under the terms of the receivables securitisation agreement, the
transferor represents that each receivable assigned to the receivables trust is
an eligible receivable -- unless the receivable is specified as being an
ineligible receivable. The eligibility criteria include that each receivable
constitutes the legal, valid and binding obligations of the cardholder
enforceable -- unless they are not in compliance with the Consumer Credit Act
in which case they may only be enforceable with a court order and, in a small
number of cases, may be unenforceable -- against the cardholder in accordance
with its terms. They also include that each receivable is not, save as
specifically contemplated by any rule of English law, currently subject to any
defence, dispute, set-off or counterclaim or enforcement orders apart from in
the limited cases described in the previous sentence.
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Notice to the cardholder would perfect the transfer so that the
receivables trustee would take priority over any interest of a later
encumbrancer or transferee of the transferor's rights who has no notice of the
transfer to the receivables trustee.
Notice to the cardholder would prevent the card agreement from being
amended by the transferor or the cardholder without the consent of the
receivables trustee.
Lack of notice to the cardholder means that, for procedural purposes, the
receivables trustee will have to join the transferor as a party to any legal
action that the receivables trustee may want to take against any cardholder.
United Kingdom Taxation Treatment Of The Notes
Overview
UK legal advisers, Clifford Chance, have filed an opinion that, subject to
finalisation of documents in a form which is satisfactory to them and not
inconsistent with the descriptions in this prospectus other than the exhibits
to this prospectus, and based on certain assumptions which cannot be verified
before closing, the following summary is true in all material respects in
relation to the matters expressly addressed. The summary set out below
describes certain material United Kingdom tax consequences of acquiring,
holding and disposing of the offered notes.
The comments below are, based on current United Kingdom law and practice.
They relate only to the position of persons who are the absolute beneficial
owners of their notes and may not apply to certain classes of persons,
including dealers who carry on a trade in the UK and persons who own the notes
as trustee, nominee or otherwise on behalf of another person, but otherwise
will, subject to the following paragraph, apply to US holders who beneficially
own the notes and coupons.
The comments below do not necessarily apply where the interest or any
other income on the notes is deemed for UK tax purposes to be the income of a
person other than the absolute beneficial owner of the notes in question, for
example where a person ordinarily resident in the UK transfers assets to a non-
resident company for the purpose of avoiding UK tax.
It is suggested that any noteholders who are in doubt as to their position
consult their professional advisers.
Taxation of US Residents
As discussed in more detail below, a US holder who is not resident in the
UK for UK tax purposes may obtain payment of interest on their notes without
deduction of tax if and for so long as the notes are quoted Eurobonds, if
either:
* he obtains payment on the notes from a recognised clearing system,
which has received the payments without deduction of UK tax,
otherwise than through a collecting agent in the UK, or;
* if payment is made by or through a paying agent in the UK, or
through a collecting agent in the UK, he has filed or procured
that a valid declaration in the prescribed form has been filed
with the appropriate agent confirming that he is the absolute
beneficial owner of his notes and the interest on his notes and he
is not resident in the UK for UK tax purposes.
Definitive notes will be in registered form and therefore will not
constitute quoted Eurobonds. Interest on definitive notes will be subject to
deduction of tax at the lower rate, currently 20%, unless relief is available
under the terms of an applicable double tax treaty.
Under the terms of the Convention of 31 December 1975 between the United
Kingdom and the United States of America -- called "the Convention" -- a person
who is a US resident for the purposes of the Convention -- called a U.S.
noteholder, will not be subject to UK tax on any coupon beneficially owned by
him, unless he carries on business in the UK through a permanent establishment
situated in the UK, or performs in the UK independent personal services from a
fixed base situated therein, and the notes are effectively connected with such
permanent establishment or fixed base, or in certain other circumstances
specified in the Convention where relief is not available.
A US noteholder who is an individual will not be subject to United Kingdom
tax on any gain on any disposal of the notes unless they are held by or for a
trade, profession or vocation carried on by him through a branch or agency in
the UK -- subject to any relief which may be available under the Convention or
which may be available under UK law.
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Taxation of Interest Paid
Under current Inland Revenue practice, the notes will be treated as
"quoted Eurobonds" -- as defined in Section 124 of the Income and Corporation
Taxes Act 1988 -- so long as they are represented by the global notes in bearer
form and are listed on a recognised stock exchange within the meaning of
Section 841 of the Income and Corporation Taxes Act 1988. The London Stock
Exchange is recognised for this purpose. Therefore, so long as the notes are
represented by global notes in bearer form and continue to be listed on a
recognised stock exchange and held within a recognised clearing system,
payments of interest on the notes by any paying agent may, under current law
and practice, be made without withholding or deduction for or on account of
United Kingdom income tax where:
* payment is made direct to the recognised clearing system; or
* in a case where payment is made to, or at the direction of, a
depositary for the recognised clearing system the paying agent
obtains a valid declaration in the prescribed form from the
depositary; or
* the paying agent has obtained a notice from the Inland Revenue
directing the paying agent to pay the interest with no tax
deducted.
For the purposes of Section 124 of the Income and Corporation Taxes Act
1988, DTC, Euroclear and Cedelbank have been designated as recognised clearing
systems.
Any definitive notes will not be quoted Eurobonds. In addition, the notes
will not be, or will cease to be, quoted Eurobonds on which interest can be paid
gross as described above in any other case where:
* the notes are not in bearer form; or
* the notes do not carry a right to interest; or
* the notes are not listed on a recognised stock exchange; or
* the notes are not held in a recognised clearing system.
In any of the cases referred to in this paragraph, interest on the
relevant notes will be payable subject to deduction or withholding of United
Kingdom income tax at the lower rate, currently 20 per cent., except that (1)
the withholding is subject to any direction to the contrary by the Inland
Revenue pursuant to the provisions of any applicable double taxation treaty;
and (2) even if the relevant notes are not held in a recognised clearing
system, interest may be payable gross if it is paid through a paying agent who
is outside the United Kingdom.
If the notes are quoted Eurobonds and a person in the United Kingdom in
the course of a trade or profession:
* by means of coupons, warrants or bills of exchange, collects or
secures payment of or receives interest on the notes for a
noteholder; or
* arranges to collect or secure payment of interest on the notes for
a noteholder; or
* acts as a custodian of the notes and receives interest on the
notes or directs that interest on the notes is paid to another
person or consents to that payment.
- other than solely by clearing a cheque or arranging for the clearing of
a cheque - that person, called the "collecting agent", will be required to
withhold United Kingdom income tax at the lower rate - currently 20 per cent.,
subject to certain exceptions, including the following:
* the notes are held in a recognised clearing system and either:
(1) the collecting agent pays or accounts for the interest directly to
the recognised clearing system; or
(2) in a case where payment is made to, or at the direction of, a
depositary for the recognised clearing system, the collecting
agent obtains a valid declaration in the prescribed form from the
depositary; or
(3) the collecting agent acts as a depositary for the recognised
clearing system; or
* the person beneficially entitled to the interest owns the notes
and is not resident in the United Kingdom and the collecting agent
either:
(1) holds a valid declaration in the prescribed form from that person;
or
(2) holds a valid declaration in the prescribed form from a person --
other than a beneficial owner of the notes -- to whom the interest
is payable or who is entitled to arrange for the interest to be
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collected without deduction of United Kingdom tax and who is not a
collecting agent in the United Kingdom; or
* the interest is payable to trustees of certain trusts, -- called
"qualifying discretionary and accumulation trusts", where
essentially neither the trustees nor the beneficiaries are
resident in the United Kingdom and the collecting agent has
obtained a valid declaration in the prescribed form from the
trustee; or
* the person beneficially entitled to the interest is eligible for
certain reliefs from tax for the interest -- for example,
charities or pension funds -- and the collecting agent has
obtained a valid declaration in the prescribed form from that
person; or
* the collecting agent has obtained a notice from the Inland Revenue
directing the collecting agent to pay the interest with no tax
deducted.
In certain circumstances, a bank in the United Kingdom which sells coupons
or a dealer in coupons may also be subject to the collecting agent rules
described above.
Any declaration made as referred to above will not have effect in relation
to any given interest payments or receipts where:
* the person who made the declaration has notified the paying agent
or collecting agent that the declaration does not apply, or has
ceased to apply, to the payments or receipts in question; or
* the paying agent or collecting agent has reason to believe that
the declaration is or has become incorrect as regards the relevant
payments or receipts; or
* the paying agent or collecting agent has received notice from the
Inland Revenue directing that the relevant payments or receipts
arising after a specified date are chargeable payments or
receipts.
Interest on the notes will have a United Kingdom source and accordingly
will be within the charge to United Kingdom tax even if paid without
withholding or deduction except that exemption from or reduction in any United
Kingdom tax payable on the interest might be available in appropriate
circumstances under the provisions of an applicable double taxation convention.
By way of exception to the charge described in the paragraph right above,
interest on the notes received without deduction or withholding for United
Kingdom income tax will not be chargeable to United Kingdom income tax in the
hands of a noteholder who is not resident for tax purposes in the United
Kingdom unless that holder carries on a trade, profession or vocation in the
United Kingdom through a United Kingdom branch or agency in connection with
which the interest is received or to which the notes are attributable. There
are exemptions for interest received by certain categories of agent -- such as
some brokers and investment managers.
Proposed European Directive on the Taxation of Savings
In May 1998, the European Commission presented to the Council of Ministers
of the European Union a proposal to oblige member states to adopt either a
withholding tax system or an information reporting system for interest,
discounts and premiums. It is unclear whether this proposal will be adopted,
and if it is adopted, whether it will be adopted in its current form. The
withholding tax system would require a paying agent established in a member
state to withhold tax at a minimum rate of 20 percent. from any interest,
discount or premium paid to an individual resident in another member state,
unless the individual presents a certificate obtained from the tax authorities
of the member state in which the individual is resident confirming that those
authorities are aware of the payment due to that individual. The information
reporting system would require a member state to supply, to other member
states, details of any payment of interest, discount or premium made by paying
agents within its jurisdiction to an individual resident in another member
state. For these purposes, the term paying agent is widely defined and includes
an agent who collects interest, discounts or premiums on behalf of an
individual beneficially entitled thereto. If this proposal is adopted, it will
not apply to payments of interest, discounts and premiums made before 1 January
2001.
Neither the issuer nor any paying agent is required to make any payments
to noteholders to compensate them for any withholding tax imposed on payments
under the notes.
Ownership and Disposal, Including Redemption, of the Notes by United Kingdom
Tax Payers
(1) Corporate Noteholders
Noteholders which are companies within the charge to United Kingdom
corporation tax -- other than authorised unit trusts -- will normally be taxed
on their returns from the notes, including interest and returns attributable to
movements in value, whether income or capital in nature, as income, which is
calculated in
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accordance with an authorised accruals or mark-to-market basis of accounting.
Relief may be available for related expenses on a similar basis.
Such noteholders may also be subject to taxation with respect to foreign
exchange gains and losses on their notes, with all such gains and losses being
computed by translating the relevant amounts into sterling at year-ends and
other "translation times".
(2) Other Noteholders
Accrued income scheme
On transfer of a note, a noteholder who is not liable to corporation tax
and who is resident or ordinarily resident in the United Kingdom or carrying on
a trade in the United Kingdom through a branch or agency to which that note is
attributable, may be chargeable to UK income tax on an amount treated, by rules
known as the accrued income scheme contained in Chapter II or Part XVII of the
Income and Corporation Taxes Act 1988, as representing interest accrued on the
note from the last interest payment date to the time of transfer.
Taxation of capital gains
A disposal of a note by a noteholder who is not liable to corporation tax
and who is resident or ordinarily resident in the United Kingdom or who carries
on a trade, profession or vocation in the United Kingdom to which that note is
attributable, may give rise to a chargeable gain or allowable loss for the
purposes of the taxation of capital gains. However in calculating any gain or
loss of this sort the consideration for disposal of the note will be reduced by
any amount on which the noteholder is chargeable to income tax on the transfer
of the note under the accrued income scheme as described above.
Stamp Duty and Stamp Duty Reserve Tax
No United Kingdom stamp duty or stamp duty reserve tax is payable on the
issue of the global notes or on the issue or transfer of a note in definitive
form, provided that the note does not at any time carry (1) a right to
interest, the amount of which exceeds a reasonable commercial return on the
nominal amount of the capital of the note; or (2) a right on repayment to an
amount which exceeds the nominal amount of the capital of the note and is not
reasonably comparable with what is generally repayable, in respect of a similar
nominal amount of capital, under the terms of issue of loan capital listed in
the official list of the London Stock Exchange.
United Kingdom Inheritance Tax
Where a note is held by an individual who is domiciled, or deemed
domiciled for inheritance tax purposes, in the UK there may be a charge to UK
inheritance tax on the individual's death or on certain transfers of the note,
including gifts to some settlements and gifts made within seven years of the
death of the individual.
U.S. Holders should be aware that the definitive notes could be regarded
as property situated in the UK and therefore be subject to UK inheritance tax on
death or on certain transfers of the definitive notes, including gifts to some
settlements and gifts made within seven years of death.
These provisions are subject to any relief provided by the U.S./UK double tax
convention relating to estate and capital taxes.
Taxation of the MTN issuer and the issuer
The MTN issuer and the issuer will be subject to UK corporation tax, at a
maximum rate, currently of 30 per cent. on the profit reflected in their
respective profit and loss accounts as increased by the amounts of any
non-deductible expenses or losses. The profit in the profit and loss account
will not exceed 1 basis point of the principal amount outstanding on the MTNs in
the case of the MTN issuer, or on the notes in the case of the issuer. Examples
of non-deductible expenses and losses may include, for the MTN issuer:
* amounts paid by the MTN issuer to the receivables trustee to cover
the receivables trustee's fee and expenses; and
* any losses of principal which cannot be met out of excess spread
and are not reflected by account-specific provisions in the MTN
issuer's statutory accounts; and for the issuer, certain expenses
related to cash management.
Taxation of receivables trustee
The receivables trustee will have no United Kingdom tax liabilities apart
from a liability to United Kingdom income tax or corporation tax on any
amounts, such as trustee fees, which are paid to receivables trustee for its
own benefit; and accordingly, the receivables trustee will have no liability to
United Kingdom tax in relation to amounts which it receives on behalf of the
MTN issuer or amounts which it is obliged to pay the MTN issuer.
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United States Federal Income Tax Consequences
Overview
The following summary describes the material United States federal income
tax consequences of acquiring, holding and disposing of the class A notes and
class B notes. This summary has been prepared and reviewed by Orrick,
Herrington & Sutcliffe LLP, special United States federal income tax counsel to
the Issuer -- called "special U.S. tax counsel".
This summary does not discuss all aspects of United States federal tax
law. In particular, except as specifically indicated in this summary, it
addresses only purchasers in the original offering who hold class A notes and/
or class B notes as capital assets within the meaning of Section 1221 of the
United States Internal Revenue Code of 1986, called the "Code". It does not
address special United States federal income tax considerations that may be
important to particular investors in light of their individual investment
circumstances or to certain types of investors subject to special tax rules --
for example, financial institutions, insurance companies, tax-exempt
institutions, persons whose functional currency is not the United States
dollar, dealers in securities or currencies, non-U.S. persons, or investors
holding the notes as part of a conversion transaction, as part of a hedge or
hedging transaction, or as a position in a straddle for tax purposes, or
persons whose functional currency, as defined in Code Section 985, is not the
US dollar.
Further, this discussion does not address alternative minimum tax
consequences or any tax consequences to holders of interests in a noteholder. In
addition, this summary does not discuss any foreign, state, local or other tax
considerations. This summary is based on the Code, and administrative and
judicial authorities, all as in effect on the date of this prospectus and all
of which are subject to change, possibly on a retroactive basis.
Special U.S. tax counsel has prepared and reviewed this summary of
material United States federal income tax consequences, and is of the opinion
that it is correct in all material respects. Special U.S. tax counsel also
opines that, as described below, each of the receivables trust, the MTN issuer
and the issuer will not be treated as engaged in a trade or business within the
United States for U.S. federal income tax purposes and that each of those
entities will not be subject to United States federal income tax. Except as set
forth in the preceding sentences, special U.S. tax counsel will render no other
opinions about the acquisition, holding and disposition of the notes. Further,
an opinion of special U.S. tax counsel is not binding on the IRS or the courts,
and no ruling on any of the consequences or issues discussed below will be
sought from the IRS. Moreover, there are no authorities on similar transactions
involving securities issued by an entity with terms similar to those of the
notes. Accordingly, the issuer suggests that persons considering the purchase
of class A notes and/or class B notes consult their own tax advisors about the
United States federal income tax consequences of an investment in the notes and
the application of United States federal tax laws, as well as the laws of any
state, local or foreign taxing jurisdictions, to their particular situations.
For the purposes of this summary, a "United States holder" means a
beneficial owner of notes who is a "United States person" as described in
Section 7701(a)(30) of the Code, generally including;
* an individual who is a citizen or resident of the United States;
* a corporation or partnership created in or under the laws of the
United States, any state or any political subdivision of any state
-- including the District of Columbia; and
* an estate or trust whose income is includible in gross income for
United States federal income tax purposes without regard to
source. A "non-United States holder" means a beneficial owner of
notes that is not a United States holder.
Tax Status of the Receivables Trust, the MTN Issuer and the Issuer
It is presently contemplated that each of the receivables trust, the MTN
issuer and the issuer will conduct their respective activities, including
activities undertaken on their behalf, such as servicing activities, entirely
outside of the United States. In that regard, assuming that the activities of
each of the receivables trust, the MTN issuer and the issuer are, as
contemplated, conducted entirely outside of the United States, and assuming
each of these entities makes no investments that are subject to withholding of
U.S. federal income tax, special U.S. tax counsel is of the opinion that,
although no transaction closely comparable to that contemplated herein has been
the subject of a Treasury regulation, revenue ruling or judicial decision and
hence the matter cannot be free from doubt, each of the receivables trust, the
MTN issuer and the issuer will not be treated as engaged in a trade or business
within the United States for U.S. federal income tax purposes and that each of
these entities will not be subject to United States federal income tax.
Prospective investors should understand that such determination of whether
a person is engaged in a U.S. trade or business is based on a highly factual
analysis, there is no direct guidance as to which activities constitute being
engaged in a trade or business within the United States, and it is unclear how
a court would construe the
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existing indirect authorities. A foreign corporation deemed to be so engaged
would be subject to U.S. federal income tax, as well as the branch profits tax,
on its income which is treated as effectively connected with the conduct of that
trade or business. Such income tax, if imposed, would be based on effectively
connected income computed in a manner generally analogous to that applied to the
income of a domestic corporation, except that a foreign corporation would be
entitled to deductions and credits for a taxable year only if it files, on a
timely basis, an income tax return for that year, which none of the receivables
trust, MTN issuer and issuer intend to do, even as a protective measure. The
maximum U.S. federal income tax rates are currently 35% for a corporation's
effectively connected income and 30% for the branch profits tax, resulting in an
effective maximum U.S. federal income tax rate of 54.5%. The branch profits tax
is imposed each year on a corporation's effectively connected earnings and
profits, with certain adjustments, deemed repatriated out of the United States.
United States Holders
There are no regulations, published rulings or judicial decisions
addressing the characterisation for United States federal income tax purposes
of securities with terms substantially the same as the notes. The issuer
intends to treat the offered notes as debt of the issuer for United States
federal income tax purposes. However, no ruling will be obtained from the IRS
on the characterisation of the notes for federal income tax purposes and there
can be no assurance that the IRS or the courts will agree with the conclusions
of the issuer. Furthermore, for the reasons discussed below, special U.S. tax
counsel is unable to render any legal opinion with respect to whether the notes
will be treated as debt for United States federal income tax purposes, and it
is possible that the notes might be viewed as equity interests in the issuer
for such purposes.
In determining whether a security -- such as a note -- represents
indebtedness for United States federal income tax purposes, United States
courts and the IRS have applied a number of factors. The most significant of
these factors are:
* a fixed maturity date;
* the right to receive fixed payments;
* the right of a holder to enforce payment on a default;
* the degree of subordination;
* the intent of the parties;
* the level of capitalisation;
* the extent to which the owner of the assets has transferred the
opportunity for gain if the assets increase in value;
* the risk of loss if the assets decrease in value; and
* the extent to which the investors in the security have obtained the
economic benefits and burdens of ownership of the assets.
Based on these factors, among others, the issuer intends to treat the
notes as debt for United States federal income tax purposes. However, Special
U.S. tax counsel has advised the issuer that certain considerations raise the
possibility that the notes might be viewed as equity. First among those
considerations, the issuer is only nominally capitalized. Second, although a
class of notes subordinated to another more senior class of notes arguably
represents capital with respect to the senior notes, in general the
subordination is effected at the receivables trust level rather than
within the issuer. Third, because the notes by their terms provide for an
addition or deduction from the amount due in the event of a termination of the
Swap Agreements, it is unclear that their principal amount would be regarded as
fixed.
Based on the absence of relevant legal authority and the adverse impact of
the foregoing considerations on the debt analysis applied by the courts and the
IRS as set forth above, special U.S. tax counsel is unable to render any legal
opinion with regard to the treatment of the class A notes or class B notes as
debt for the United States federal income tax purposes. The issuer nonetheless
believes that, based primarily on the form and credit rating of the class A
notes and class B notes, treatment of such notes as debt is reasonable, and,
except as otherwise stated, the discussion herein assumes that such notes will
constitute debt of the issuer for such purposes. However, were such notes not
treated as debt, they might be viewed as equity interests in the issuer, and in
that case the taxation of income, gain, and loss to a United States holder could
be different from that applicable to a note treated as debt. See "Investment in
a Passive Foreign Investment Issuer" below. The issuer suggests that prospective
investors consult their tax advisors regarding the tax consequences of investing
in the notes.
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Interest Payments and Distributions
The offered notes may be treated as having been issued with original issue
discount -- "OID" -- for United States federal income tax purposes, in which
case the OID will be taxed as described below. However, in the absence of any
OID on notes, interest on the offered notes will be taxable to a United States
holder as ordinary income at the time it is received or accrued, in accordance
with the holder's regular method of accounting for United States federal income
tax purposes.
The total amount of OID on a note is the excess of its stated redemption
price at maturity over its issue price. The issue price for the offered notes
is the price -- including any accrued interest -- at which a substantial
portion of the relevant notes are first sold to the public. In general, the
stated redemption price at maturity is the sum of all payments made on the note
other than payments of interest that (1) are actually payable at least annually
over the entire life of the note and (2) are based on a single fixed rate or
variable rate -- or certain combinations of fixed and variable rates.
If any of the offered notes are issued at a discount of an amount equal to
or greater than 0.25 per cent of that note's stated redemption price at
maturity multiplied by the note's weighted average maturity, called its "WAM",
then that note will be deemed to bear OID. The WAM of a note is computed based
on the number of full years each distribution of principal -- or other amount
included in the stated redemption price at maturity -- is scheduled to be
outstanding. Further, the IRS could take the position based on Treasury
regulations that none of the interest payable on an offered note is
unconditionally payable and so that all of that interest should be included in
the note's stated redemption price at maturity. In addition, if on the closing
date there is a differential of more than 25 basis points between the initial
fixed interest rate and the current value of the variable interest rate that
follows, then the IRS may take the position that the note bears OID and the
holder of the note will be required to accrue OID into income as described
below.
A United States holder -- including a cash basis holder -- of an offered
note deemed to bear OID generally would be required to accrue OID on the
relevant note for United States federal income tax purposes on a constant yield
basis. This would require the inclusion of OID in income in advance of the
receipt of cash attributable to that income. 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 notes
is unclear.
Sourcing: Interest payments or distributions on a note generally will
constitute foreign source income for United States federal income tax purposes.
Subject to certain limitations, UK withholding tax, if any, imposed on these
payments will generally be treated as foreign tax eligible for credit against a
United States holder's United States federal income tax. For foreign tax credit
purposes, it is expected that interest will generally be treated as passive
income or, in the case of some United States holders, financial services
income.
Disposition or Retirement of Investment
Subject to the discussion of the PFIC rules below, upon the sale, exchange
or retirement of an offered note -- including pursuant to a redemption by the
issuer prior to its maturity date -- the United States holder will recognise
gain or loss equal to the difference between the amount realised and the United
States holder's "adjusted tax basis" in the relevant note. In general, a United
States holder's adjusted tax basis in an OID debt instrument is equal to the
United States holder's cost for such debt instrument, plus any OID accrued and
less the amount of any payments received by the holder that are not "qualified
stated interest" payments under United States Treasury regulations about OID.
A United States holder's adjusted tax basis in a debt instrument with no
OID is generally equal to the holder's cost less the amount of any principal
payments made before the date of disposition. A United States holder's adjusted
tax basis in stock is generally equal to the United States holder's cost for the
stock. In general, any gain or loss realised by the holder will be capital gain
or loss. Under certain circumstances, capital gains derived by individuals are
taxed at preferential rates. The deductibility of capital losses is subject to
limitations.
Sourcing: Gain realised by a United States holder on the sale, exchange or
retirement of a note generally will be treated as a United States source gain.
Under recently issued United States Treasury regulations governing losses
recognised on the sale of personal property, loss from the sale, exchange or
retirement of a note generally will also be treated as a United States source
loss. Exceptions to the application of these regulations' sourcing provisions
include exceptions for certain losses attributable to foreign exchange
fluctuations, accrued but unpaid interest, and foreign offices of U.S.
residents, among others. Some other exceptions to the regulations' general rule
apply to notes treated as equity in the issuer. The issuer suggests that United
States holders consult their own tax advisors about the proper treatment of
losses for foreign tax credit purposes.
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Investment in a Passive Foreign Investment Company
Primarily because of the capitalisation of the issuer, special
U.S. tax counsel renders no opinion with respect to whether the notes will be
treated as debt for United States federal income tax purposes, and it is
possible that the notes -- and especially the class C notes and, to a lesser
extent, the class B notes and class A notes -- might be viewed as equity
interests -- in other words stock -- in the issuer. Because of the nature of
the income of the issuer, the issuer could constitute a passive foreign
investment company -- or "PFIC". Accordingly, United States holders of the
class A notes and class B notes may be shareholders in a PFIC and, if any
other class of the notes were not treated as debt but rather were treated as
equity of the issuer for United States federal income tax purposes, direct or
indirect United States holders of these notes could also be considered United
States shareholders of a PFIC.
In general, United States holders treated as shareholders of a PFIC
constituted by the issuer will be subject to special tax rules on excess
distributions made to them by the issuer, including a ratable inclusion of
excess distributions in the United States holder's gross income as ordinary
income and requirement for the payment of an interest charge on tax that is
deemed to have been deferred on these excess distributions. Excess
distributions would generally include, (1) some distributions on a United
States shareholder's equity interest in the issuer for a taxable year, if the
total of those amounts exceeds 125% of the average amount of distributions from
the issuer made during a specified base period, and (2) gain from the
disposition of the equity interest in the issuer. United States holders
generally may avoid these unfavourable consequences if they make either of two
specific elections available under the Code with respect to shares in a PFIC.
The first such mitigating election is a "qualified electing fund," or
"QEF," election pursuant to Code Section 1295. If a United States holder makes a
QEF election with respect to a Class A note or Class B note, that United States
holder generally would be required to include its pro rata share of the issuer's
ordinary income and net capital gains in income for each taxable year and pay
tax thereon, even if such income and gain is not distributed to the United
States holder. Further, any losses of the issuer will not be deductible by the
United States holder. If the issuer later distributes the income or gain on
which a United States holder has already paid tax, amounts so distributed will
not be further taxable to the United States holder. A United States holder's tax
basis in its class A notes or class B notes will be increased by the amount so
included and decreased by the amount of nontaxable distributions thereon. In
general, a United States holder making a QEF election will recognize, on a
disposition of its notes, capital gain or loss equal to the difference, if any,
between the amount realized upon such disposition and the tax basis in such
notes. In general, a QEF election would be required to be made on or before the
due date for filing a United States holders' federal income tax return for the
first taxable year for which it holds a note. The QEF election is effective only
if certain required information is made available by the issuer to an investor.
The issuer will, upon request, endeavour to provide the requesting United States
holder with information that the Issuer deems reasonably necessary for such
United States holder to make an effective QEF election.
A United States holder that holds marketable stock in a PFIC may, in lieu
of making a QEF election, also avoid certain unfavourable consequences of the
PFIC rules by electing to mark the PFIC stock to market as of the close of each
taxable year. A United States holder that makes the mark-to-market election is
required to include in income each year as ordinary income an amount equal to
the excess, if any, of the fair market value of the stock at the close of the
year over the United States holder's adjusted tax basis in the stock. For this
purpose, a United States holder's adjusted basis will generally be the holder's
cost for the stock, increased by the amount previously included in the holder's
income pursuant to this mark-to-market election and decreased by any amount
previously allowed to the United States holder as a deduction pursuant to this
election. If, at the close of the year, the United States holder's adjusted tax
basis exceeds the fair market value of the stock, then the United States holder
may deduct this excess from ordinary income, but only to the extent of net
mark-to-market gains previously included in income. Any gain from the actual
sale of the PFIC stock will be treated as ordinary income, and any loss will be
treated as ordinary loss to the extent of net mark-to-market gains previously
included in income. Stock is considered marketable if it is regularly traded on
an exchange that the IRS determines to be qualified for these purposes. In that
regard, the IRS recently proposed regulations articulating definitions of
regularly traded and qualified exchange under these mark-to-market provisions,
as to which the issuer suggests that prospective investors consult their
advisors. Although the proposed regulations generally take effect only
following their promulgation as final regulations, shareholders in a PFIC also
may elect current application of the proposed regulations. Although the issuer
believes that each class of notes will be listed on a qualified exchange, there
is uncertainty as to whether they will be regularly traded, and hence, there
can be no assurance -- and no representation is made -- that the notes will be
eligible for mark-to-market election.
Although the issuer the QEF election to be available to an investor to
mitigate the effect of the PFIC provisions, United States holders should be
aware of the potentially adverse tax consequences arising under the PFIC
provisions discussed above should neither of the two elections be effectively
made. First, all or a portion of both distributions and gains on notes generally
would be taxable to holders as ordinary income, and would be taxable at the
highest marginal rates applicable to current and prior years during the holding
period. Further, all
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or a portion of the distributions and gains could be subject to the additional
"interest charge" tax. Such interest charge tax -- computed in the manner
described above on "excess distributions" and gains -- generally is intended to
eliminate the value of any tax deferral arising from an investment in notes.
Although the issuer does not expect there to be any significant deferral of tax
arising from an investment in notes and consequently does not expect that the
interest charge tax computation would normally produce a substantial additional
tax liability, in some circumstances, it could do so. For example, the interest
charge computation could produce an interest charge tax with respect to a
floating rate note if the floating rate on the note increased substantially over
an investor's holding period. Alternatively, the computation could produce such
a tax with respect to a fixed rate note if that note was sold by a United States
holder at a substantial gain due to fluctuations in the general level of
interest rates. No assurance is possible that such circumstances will not occur.
Certain additional adverse consequences can flow to indirect investors in
a PFIC. More specifically, the ownership of the notes by a non-United States
holder may be attributed to a United States holder notwithstanding that such
United States holder holds no note and receives no cash in respect of a note.
Code Section 1298(a) generally treats notes held directly or indirectly by a
foreign partnership, corporation, trust or estate as owned by such entity's
partners, shareholders or beneficiaries, as applicable; it also may treat any
of various option arrangements as conferring ownership of notes on United
States holders. Hence, a United States holder treated as owning notes held by a
non-United States holder generally would be subject to tax on indirect gains
and distributions attributable to the notes in the manner described above.
Finally, an investor who pledges shares in a PFIC as security for a loan
should be aware that such a pledge is treated as a disposition of the related
shares, and any gain would be subject to the rules applicable to distributions
and gains with respect to shares in a PFIC described above.
Sourcing: For sourcing of payments for a note treated as stock in the
issuer and gain or loss on sale of an interest in this stock, see " -- Interest
Payments and Distributions -- Sourcing" and "-- Disposition or Retirement of
Investments -- Sourcing" above.
Controlled Foreign Corporation Status
It is possible that the issuer might be treated as a controlled foreign
corporation for United States federal income tax purposes. In this event,
United States holders of equity interests that are treated as owning 10 per
cent. or more of the combined voting power of the issuer would be required to
include in income their pro rata share of the earnings and profits of the
issuer, and generally would not be subject to the rules described above about
PFICs. The issuer suggests that prospective investors consult with their tax
advisors concerning the potential effect of the controlled foreign corporation
provisions.
Non-United States Holders
An investment in the notes by non-United States holders generally will not
give rise to any United States federal income tax to these holders, unless the
income received on, or any gain recognised on the sale or other disposition of
their notes is:
* treated as effectively connected with the conduct of a trade or
business in the United States; or
* in the case of gain recognised by an individual, the individual is
present in the United States for 183 days or more and has a tax
home -- as defined in the Code -- in the United States during the
taxable year.
Backup Withholding and Information Reporting
Information reporting to the IRS generally will be required for
distributions or payments of principal or interest -- including any OID -- on
the notes and on proceeds of the sale of the notes within the United States to
United States holders other than corporations and certain other exempt
recipients. A 31 per cent. backup withholding tax will apply to those payments
if the United States holder fails to provide certain identifying information --
for example, the holder's taxpayer identification number -- or the holder is
notified by the IRS that it has failed to report all interest and dividends
required to be shown on its United States federal income tax returns. Non-
United States holders may be required to comply with applicable certification
procedures to establish that they are not United States holders in order to
avoid the application of these information reporting requirements and backup
withholding.
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The United States Treasury recently released regulations that will revise
the procedures for backup withholding and information reporting described above
for payments on the notes and payments of proceeds of the sale of the notes
made after 31st December, 2000. The issuer suggests that prospective investors
consult with their tax advisers concerning the potential effect of these
regulations on their ownership of the notes.
ERISA Considerations
The U.S. Employee Retirement Income Security Act of 1974, as amended --
called "ERISA"-, and Section 4975 of the Code impose requirements on employee
benefit plans and some other plans and arrangements, including individual
retirement accounts and annuities, Keogh plans and certain collective
investment funds or insurance company general or separate accounts in which
these plans, accounts or arrangements are invested, that are subject to the
fiduciary responsibility provisions of ERISA or Section 4975 of the Code. We
call these entities "Plans." ERISA also imposes requirements on persons who are
fiduciaries of Plans for the investment of "plan assets" of any Plan -- called
"Plan Assets." ERISA generally imposes on Plan fiduciaries certain general
fiduciary requirements, including those of investment prudence and
diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan.
General
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons -- called "Parties in Interest" -- who have
specified relationships to a Plan or its Plan Assets, unless an exemption is
available or an exception applies under U.S. Department of Labor -- called "DOL
- -- Regulation Section 2510.3-101 -- called the "Plan Asset Regulation." Parties
in Interest that participate in a prohibited transaction may be subject to a
penalty imposed under ERISA or an excise tax imposed under Section 4975 of the
Code, unless an exemption is available or an exception applies under the Plan
Asset Regulation. The details of these prohibited transactions are contained in
Section 406 of ERISA and Section 4975 of the Code.
Subject to the considerations described below, you may purchase only the
class A notes with Plan Assets of any Plan.
The class B notes may not be acquired by or on behalf of any Plan or any
entity acting on behalf of or with Plan Assets. You will be deemed to have
represented by your purchase and holding of a class B note that no part of the
funds being used to pay the purchase price for that class B note constitutes
Plan Assets of any Plan.
The Plan Asset Regulation treats the assets of an entity in which a Plan
holds an equity interest as Plan Assets of such Plan. If the class A notes are
treated as equity interests and you use Plan Assets to purchase the class A
notes, the assets of the Issuer and the receivables trust would be treated as
Plan Assets of the investing Plan. This would subject the Issuer and the
receivables trust's assets to the fiduciary rules of ERISA and the prohibited
transaction rules of ERISA and Section 4975 of the Code and could result in
penalties and/or excise taxes under those rules. The term "equity interest" is
defined under the Plan Asset Regulation as any interest in an entity other than
an instrument which is treated as indebtedness under applicable local law and
has no substantial equity features. It is not certain whether the class A notes
are properly classified as debt or equity interests under the Plan Asset
Regulation.
If you are considering whether to purchase class A notes with Plan Assets
of any Plan, you should determine whether the purchase would result in a non-
exempt prohibited transaction under ERISA or Section 4975 of the Code because
any of Barclays Bank PLC, the issuer, the servicer, the receivables trustee or
any other party may be a Party in Interest as to the investing Plan and may be
deemed to be benefiting from the issuance of class A notes. If Barclays Bank
PLC, the issuer or the servicer is a Party in Interest as to Plan Assets you
are investing, the issuer suggests that you consult with your counsel about the
availability of exemptive relief under one of the following "DOL Prohibited
Transaction Class Exemptions -- called "PTCEs":
* 96-23, relating to transactions determined by in-house asset managers;
* 95-60, relating to transactions involving insurance company general
accounts;
* 91-38, relating to transactions involving bank collective investment
funds;
* 90-1, relating to transactions involving insurance company pooled
separate accounts; or
* 84-14, relating to transactions determined by independent qualified
professional asset managers.
You should be aware, however, that even if you meet the conditions specified in
one or more of the above-referenced exemptions, the scope of the exemptive
relief provided by the exemption might not cover all acts that might be
construed as prohibited transactions.
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Equity Treatment
If the class A notes are treated as equity (rather than debt) interests
under the Plan Asset Regulation despite the agreement of the Issuer and the
note holders to treat the class A notes as debt instruments, the assets of the
Issuer would be treated as Plan Assets of the investing Plans for purposes of
ERISA and Section 4975 of the Code and result in non-exempt prohibited
transactions unless one of the following exceptions applies.
The first exception applies to interests that qualify as "publicly-offer
securities" under the Plan Asset Regulation. A publicly-offered security is a
security that is:
* freely transferable;
* part of a class of securities that is owned, immediately subsequent to
the initial offering, by 100 or more investors who are independent of the
Issuer and of one another -- called "Independent Investors"; and
* either is:
(i) part of a class of securities registered under Section 12(b) or 12(g)
of the Exchange Act, or
(ii) sold to the Plan as part of an offering of securities to the public
pursuant to an effective registration statement under the Securities Act and
the class of securities of which such security is a part is registered under
the Exchange Act within 120 days (or such later time as may be allowed by the
SEC) after the end of the fiscal year of the Issuer during which the offering
of such securities to the public occurred.
For purposes of the 100 Independent Investor condition, each class of
notes should be deemed to be a "class" of securities that would be tested
separately from any other securities that may be issued by the Issuer.
It is anticipated that each of the class A notes will meet the criteria
for treatment as "publicly-offered securities" as described above. No
restrictions will be imposed on the transfer of the class A notes. It is
expected that class A notes will be held by at least 100 Independent Investors
at the conclusion of the offering made by this prospectus. However, no
assurance can be given, and no monitoring or other measures will be taken to
ensure, that the 100 Independent Investor condition is satisfied. The class A
notes will be sold as part of an offering pursuant to an effective registration
statement under the Securities Act and then will be timely registered under the
Exchange Act.
A second exception applies if equity participation in an equity by Plans,
other employee benefit plans not subject to ERISA -- such as governmental or
foreign plans -- and as entities holding assets deemed to be Plan Assets --
called "Benefit Plan Investors" -- is not "significant." Benefit Plan
Investors' equity participation in the Issuer would not be significant on any
if, immediately after the most recent acquisition of any equity interest in the
Issuer, less than 25% of the value of each class of equity interests in the
Issuer -- excluding interests held by the Barclays Bank PLC, the Issuer, the
servicer, the receivables trustee or any of their affiliates -- is held by
Benefit Plan Investors. No assurance can be given as to whether the value of
each class of equity interests in the notes held by Benefit Plan Investors will
be "significant" upon completion of the offering of any notes or other
securities by the issuer or thereafter, and no monitoring or other measures
will be taken to determine whether the conditions to this exception are
satisfied.
Further Considerations
In light of the above discussion, if you are considering the purchase of
class A notes with Plan Assets of any Plan, you should consult your own counsel
regarding whether the assets of the Issuer represented by the class A notes
would be considered Plan Assets, the consequences that would apply if the
Issuer's assets were considered Plan Assets, the availability of exemptive
relief from the prohibited transaction rules under one of the PTCEs mentioned
above, and the applicability of an exception under the Plan Asset Regulation.
You should also consider the fiduciary standards under ERISA or other
applicable law in the context of the Plan's particular circumstances before
authorizing an investment of Plan Assets in the class A notes. Among other
factors, you should consider whether the investment (1) satisfies the
diversification requirement of ERISA or other applicable law, (2) is consistent
with the Plan's governing instruments, and (3) is prudent in light of the "Risk
Factors" and other factors discussed in this Prospectus.
You must not purchase the class A notes with your Plan Assets of any Plan,
if any of the issuer, Barclays Bank PLC, the servicer, the receivables trustee
or any of their affiliates (1) has investment or administrative discretion for
those Plan Asset; (2) has authority or responsibility to give, or regularly
gives, investment advice for those Plan Assets, for a fee and under an
agreement or understanding that the advice will serve as a primary basis for
investment decisions for the Plan Assets, and will be based on the particular
investment needs of the Plan; or (3) unless PTCE 95-60, 91-38 or 90-1 is
applicable, is an employer maintaining or contributing to the Plan. You will be
deemed to have represented by your purchase and holding of a class A note that
you are not subject to this limitation.
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Some employee benefit plans, such as governmental plans -- as defined in
Section 3(32) of ERISA -- and some church plans -- as defined in Section 3(33)
of ERISA -- are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of these plans may be invested in the notes without
regard to the ERISA considerations described in this prospectus, but subject to
the provisions of other applicable federal and state law. However, any of these
plans that are qualified and exempt from taxation under Sections 401(a) and
501(a) of the Code are subject to the prohibited transaction rules set forth in
Section 503 of the Code.
Enforcement of Foreign Judgements in England and Wales
The issuer is incorporated with limited liability in England and Wales
under the Companies Act 1985. Any final and conclusive judgement of either a
New York state or United States Federal court that has jurisdiction recognised
by England and Wales regarding obligations of the issuer for the offered notes,
which is for a debt or a fixed sum of money and which has not been stayed or
fully satisfied, can be enforced by action against the issuer in the courts of
England and Wales without re-examining the merits of the issues determined by
the proceedings unless:
* the proceedings in New York state or the United States Federal
court involved a denial of the principles of natural justice;
* the judgement goes against to the public policy of England and
Wales;
* the judgement was obtained by fraud, duress or was based on a
clear mistake of fact;
* the judgement is a penal or revenue judgement; or
* there has been an earlier judgement in another court between the
same parties on the same issues as are dealt within the judgement
to be enforced.
A judgement by a court may be sometimes given in pounds sterling. The
issuer expressly submits to the jurisdiction of New York state and the United
States Federal courts sitting in the Borough of Manhattan in the City of New
York for the purpose of any suit, action or proceedings arising out of this
offering. The following parties have been appointed to receive legal documents
for the issuer and the transferor, servicer and trust cash manager.
* for the issuer:
[*]
* for the transferor, servicer and trust cash manager:
[*]
Most of the directors and executive officers of the issuer and some of the
experts named in this document live outside the United States. Most of their
assets are located outside the United States. Because of this, the holders of
the offered notes may not be able to serve notice of legal action on them or to
enforce judgements against them. The issuer has been advised by its English
counsel, Clifford Chance, that because of this, they may not be able to enforce
in England and Wales, in original actions or in actions for enforcement of
judgements of United States courts, civil liabilities based on the Federal
securities laws of the United States.
Underwriting
The issuer has agreed to sell and Barclays Bank PLC and [*], [*], [*] and
[*] have agreed to purchase the principal amount of the class A3 notes listed in
the table below. The issuer has agreed to sell and Barclays Bank PLC have agreed
to purchase the entire principal amount of the class B notes. The terms of these
purchases are governed by an underwriting agreement between the issuer and
Barclays Bank PLC for itself and as representative for all of the underwriters.
Underwriters of the class A notes Principal Amount of the
Class A Notes
Barclays Bank PLC
[*]
[*]
[*]
[*]
Underwriter of the Class B Notes Principal Amount of the
Class B Notes
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Barclays Bank PLC
The price to the public and underwriting discounts and commissions as a
percentage of the principal balance of the class A notes will be 100% and
0.25%, respectively.
The underwriters have agreed to purchase all of the offered notes if any
of them are purchased.
Barclays Bank PLC, as representative of the underwriters of the class A
notes, has advised the issuer that the underwriters propose initially to offer
the class A notes to the public at the public offering price stated on the
cover page of this prospectus, and to some dealers at that price, less a
concession up to _____% for each class A note. The underwriters may allow, and
those dealers may reallow, concessions up to _____% of the principal balance of
the class A notes to some brokers and dealers.
The price to the public and underwriting discounts and commissions as a
percentage of the principal balance of the class B notes will be 100% and
0.25%, respectively.
Barclays Bank PLC have advised the issuer that they propose initially to
offer the class B notes to the public at the public offering price stated on
the cover page of this prospectus, and to some dealers at that price, less a
concession up to _____% for each class B note. Barclays Bank PLC may
allow, and those dealers may reallow, concessions up to _____% of the
principal balance of the class B notes to some brokers and dealers.
Additional offering expenses are estimated to be $2,515,975.
The issuer and Barclays Bank PLC will indemnify the underwriters against
liabilities -- including liabilities under the United States Securities Act --
caused by (1) any untrue statement or alleged untrue statement of a material
fact contained in this prospectus or the related registration statement or (2)
any omission or alleged omission to state a material fact required to be stated
in this prospectus or the related registration statement or necessary to make
the statements in this prospectus or the related registration statement not
misleading. The issuer and Barclays Bank PLC will not, however, indemnify the
underwriters against liabilities caused by any untrue statement or omission,
real or alleged, made in reliance upon and in conformity with information
relating to and provided by any underwriter for use in this prospectus and the
related registration statement.
The underwriters may engage in over-allotment transactions, stablising
transactions, syndicate covering transactions and penalty bids for the offered
notes under Regulation M under the United States Exchange Act.
* Over-allotment transactions involve syndicate sales in excess of the
offering size, which creates a syndicate short position.
* Stablising transactions permit bids to purchase the offered notes so long
as the stablising bids do not exceed a specified maximum.
* Syndicate covering transactions involve purchases of the offered notes in
the open market after the distribution has been completed in order to
cover syndicate short positions.
* Penalty bids permit the underwriters to reclaim a selling concession from
a syndicate member when the offered notes originally sold by that
syndicate member are purchased in a syndicate covering transaction.
These transactions may cause the prices of the offered notes to be higher
than they would otherwise be in the absence of those transactions. Neither the
issuer nor any of the underwriters represent that the underwriters will engage
in any of those transactions or that those transactions, once begun, will not
be discontinued without notice at any time.
The offered notes will be registered under the Securities Act. Barclays
Bank PLC and Deutschebank AG London have agreed that they will sell the offered
notes within the United States through their U.S. registered broker dealers.
Each underwriter will represent and agree that:
* it has not offered or sold, and, before the expiry of six months from the
closing date, will not offer or sell, any offered notes 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 purposes of their business, 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 Public Offers of Securities
Regulations 1995;
* it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the offered notes in, from or otherwise involving the United
Kingdom;
* if it is an authorised person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will only promote
(as that term is defined in Regulation 1.02(2) of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991) to any person in the
United Kingdom the scheme
112
<PAGE>
described in this prospectus if that person is of a kind described either
in Section 76(2) of the Financial Services Act 1986 or in Regulation 1.04
of the Financial Services (Promotion of Unregulated Schemes) Regulations
1991; and
* it is a person of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 (as amended) or is a person to whom the
document may otherwise lawfully be issued or passed on.
This prospectus may be used by Barclays Bank PLC -- the transferor and
servicer -- for offers and sales related to market-making transactions in the
offered notes. Barclays Bank PLC may act as principal or agent in these
transactions. These sales will be made at prices relating to prevailing market
prices at the time of sale. Barclays Bank PLC has no obligation to make a
market in the offered notes, and any market-making may be discontinued at any
time without notice. Barclays Bank PLC is among the underwriters participating
in the initial distribution of the offered notes.
Barclays Bank PLC will be the initial transferor, the servicer, the cash
manager for the receivables trust and the medium term notes, the transferor
beneficiary and excess interest beneficiary, the swap counterparty and the
lender under the expenses loan agreement.
Ratings of the Offered Notes
It is a condition to issuing the class A notes that they be rated in the
highest rating category by four nationally recognised rating agencies.
It is a condition to issuing the class B notes that they be rated at least
"A" by four nationally recognised rating agencies.
Any rating of your notes by a rating agency will indicate:
* its view on the likelihood that you will receive interest payments
and principal payments by the series 99-1 termination date; and
* its evaluation of the receivables and the availability of the
credit enhancement for your notes.
What a rating will not indicate is:
* the likelihood that principal payments will be paid on a scheduled
redemption date before the series 99-1 termination date;
* the likelihood that a Pay Out Event will occur;
* the likelihood that a withholding tax will be imposed on
noteholders;
* the marketability of your notes;
* the market price of your notes; or
* whether your notes are an appropriate investment for you.
A rating will not be a recommendation to buy, sell or hold the notes. A
rating may be lowered or withdrawn at any time.
The issuer will request a rating of the offered notes from four nationally
recognized rating agencies. Rating agencies other than those requested could
assign a rating to the offered notes, and its rating could be lower than any
rating assigned by a rating agency chosen by the issuer.
Experts
The balance sheet of the issuer and the MTN issuer as of 30 September,
1999, are included in this prospectus in reliance on the reports of
PricewaterhouseCoopers, independent accountants, given on the authority of the
said firm as experts in auditing and accounting.
113
<PAGE>
Legal Matters
Matters of UK law and certain aspects of U.S. Law relating to the validity
of the issuance of the notes will be passed upon for the issuer by Clifford
Chance, London, England and New York, New York. Legal matters will be passed
upon for the underwriters by Orrick, Herrington & Sutcliffe, London, England
who will also act as counsel to the issuer as to U.S. tax matters.
Reports to Noteholders
The servicer will prepare monthly and annual reports that will contain
information about the offered notes. The financial information contained in the
reports will not be prepared in accordance with generally accepted accounting
principles. Unless and until definitive notes are issued, the reports will be
sent to the depository, the holder of the offered notes. No reports will be
sent to you.
Where You Can Find More Information
We filed a registration statement for the offered notes with the SEC. This
prospectus is part of the registration statement, but the registration
statement includes additional information.
The servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the offered notes.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room in Washington, D.C. You can request copies
of these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at (800) SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings also are available to the public
on the SEC internet site (http://www.sec.gov).
Listing And General Information
We have made an application to the London Stock Exchange Limited to admit
the offered notes to the Official List. Listing particulars with regard to the
issuer and the offered notes in accordance with the listing rules made under
Part IV of the Financial Services Act, have been delivered to the Registrar of
Companies in England and Wales for registration in accordance with Section 149
of the Financial Services Act.
The listing of the offered notes on the London Stock Exchange is expected
to be granted on [*] November 1999 subject only to the issue of the offered
notes in global bearer form. The listing of the offered notes will not become
effective if any of the offered notes in global bearer form are not issued.
Before official listing, however, dealings in the offered notes will be
permitted by the London Stock Exchange in accordance with its rules.
Authorisation
The issue of the offered notes was authorised by resolutions dated [*]
November 1999 of the board of directors of the issuer.
Litigation and Change in Circumstances
Other than as described in the section "The Issuer" there have been no
material adverse changes in the financial position of the issuer nor has the
issuer been involved in, or expects, any litigation which has had or may have a
significant effect on its financial position, for the twelve months preceding
the date of this prospectus.
Other than as described in the section "The MTN Issuer" there have been no
material adverse changes in the financial position of the MTN issuer nor has
the MTN issuer been involved in, or expects, any litigation which has had or
may have a significant effect on its financial position, for the twelve months
preceding the date of this prospectus.
114
<PAGE>
Documents Available for Inspection
You may inspect copies of the following documents at the offices of
Clifford Chance, 200 Aldersgate Street, London EC1A 4JJ during usual business
hours on any weekday, apart from Saturdays, Sundays and public holidays, during
the period of 21 days from the date of this prospectus:
* master definition schedule;
* receivables securitisation agreement;
* declaration of trust and trust cash management agreement;
* series 99-1 supplement to declaration of trust and trust cash
management agreement;
* beneficiaries servicing agreement;
* trust section 75 indemnity;
* security trust and cash management deed;
* series 99-1 supplement to security trust and cash management deed;
* MTN paying agency and agent bank agreement;
* expenses loan agreement;
* class A swap agreement;
* class B swap agreement;
* class C swap agreement
* corporate services agreement;
* underwriting agreement
* MTN dealership agreement;
* depository agreement;
* paying agency and agent bank agreement;
* trust deed;
* deed of charge;
* post maturity call option;
* form of class A global note;
* form of class B global note;
* memorandum and articles of association of the issuer;
* accountant's report on the issuer;
* memorandum and articles of association of the MTN issuer;
* accountant's report on the MTN issuer;
* memorandum and articles of association of the receivables trustee;
and
* accountant's report on the receivables trustee.
115
<PAGE>
ISSUER
Gracechurch Card Funding (No.1) PLC
200 Aldersgate Street
London EC1A 4JJ
BARCLAYS, TRANSFEROR RECEIVABLES TRUSTEE
INITIAL SERVICER AND INITIAL CASH Gracechurch Receivables Trustee Ltd
MANAGER Normandy House, Grenville Street
Barclays Bank PLC St. Helier, Jersey JE2 4UF
1234 Pavilion Drive
Northampton NN4 7SG
NOTE TRUSTEE AND SECURITY TRUSTEE
The Bank of New York, London Branch
One Canada Square
London E14 5AL
PRINCIPAL PAYING AGENT OTHER PAYING AGENTS
The Bank of New York, London Branch The Bank of New York Company, Inc.
One Canada Square One Wall Street
London E14 5AL New York, New York 10286
LEGAL ADVISERS
To the Issuer, the MTN Issuer,
the Receivables Trustee and Barclays
as to English law and United States law
Clifford Chance
200 Aldersgate Street
London EC1A 4JJ
To the Lead Manager as to To the Receivables Trustee as to
English law Jersey law
Linklaters & Alliance Bedell & Cristin
One Silk Street Normandy House, Grenville Street
London EC2Y 8HQ St. Helier, Jersey JE2 4UF
To the Note Trustee, Security
Trustee and to the Lead Manager
as to United States law
Orrick, Herrington & Sutcliffe
1 Threadneedle Street
London EC2R 8AW
AUDITORS
To the Issuer To the Receivables Trustee
PricewaterhouseCoopers PricewaterhouseCoopers
Southwark Towers Twenty Two Colomberie
32 London Bridge Street St Helier,
London SE1 9SY Jersey JE1 4XA
LISTING AGENT
Barclays Bank PLC
5 The North Colonnade
Canary Wharf
London E14 4BB
116
<PAGE>
Index of Terms for Prospectus
<TABLE>
<CAPTION>
Page
<S> <C>
$..................................................................... 18
Acquired Interchange.................................................. 33
addition date......................................................... 30
additional accounts................................................... 30
adjusted amount....................................................... 86
Adjusted Investor Interest............................................ 56
adjusted tax basis.................................................... 108
Aggregate Investor Indemnity Amount................................... 71
Available Investor Principal Collections.............................. 64
average principal receivables......................................... 76
bank portfolio........................................................ 27
[Barclaycard Proceeds Account......................................... 46]
Basic Terms Modification.............................................. 91
business day.......................................................... 31
Calculation Period.................................................... 58
cancelled account..................................................... 32
Class A............................................................... 55
Class A Additional Finance Amount..................................... 58
Class A Adjusted Investor Interest.................................... 56
Class A Available Funds............................................... 60
Class A cash management fee........................................... 51
Class A Covered Amount................................................ 72
Class A Debt Amount................................................... 59
*Class A Deficiency Amount............................................ *
Class A Distribution Ledger........................................... 59
Class A Fixed Allocation.............................................. 64
Class A Floating Allocation........................................... 55
Class A Investor Interest............................................. 55
Class A Initial Investor Interest..................................... 55
*Class A investor beneficiary......................................... *
Class A Investor Charge-Offs.......................................... 57, 64
Class A Investor Default Amount....................................... 68
Class A Monthly Distribution Amount................................... 59
[Class A Monthly Finance Amount....................................... 58]
Class A Monthly Principal Amount...................................... 65
Class A Monthly Required Expense Amount............................... 58
Class A Percentage.................................................... 93
Class A Required Amount............................................... 70
class A servicing fee................................................. 51
Class A Trustee Payment Amount........................................ 73
Class B............................................................... 55
Class B Additional Finance Amount..................................... 60
Class B Adjusted Investor Interest.................................... 56
Class B Available Funds............................................... 60
Class B cash management fee........................................... 51
Class B Debt Amount................................................... 60
*Class B Deficiency Amount............................................ *
Class B Distribution Ledger........................................... 60
Class B Excess Spread................................................. 60
Class B Fixed Allocation.............................................. 64
Class B Floating Allocation........................................... 55
Class B Initial Investor Interest..................................... 55
Class B Investor Charge-Off........................................... 57
Class B Investor Default Amount....................................... 68
Class B Investor Interest............................................. 56
Class B Monthly Distribution Amount................................... 61
Class B Monthly Finance Amount........................................ 60
Class B Monthly Principal Amount...................................... 65
Class B Monthly Required Expense Amount............................... 59
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Class B Principal Commencement Date................................... 65
Class B Required Amount............................................... 70
class B servicing fee................................................. 51
Class B Trustee Payment Amount........................................ 73
Class C............................................................... 55
Class C Additional Finance Amount..................................... 61
Class C Adjusted Investor Interest.................................... 57
Class C Available Funds............................................... 61
class C cash management fee........................................... 51
Class C Debt Amount................................................... 61
*Class C Deficiency Amount............................................ *
Class C Distribution Ledger........................................... 61
Class C Excess Spread................................................. 61
Class C Fixed Allocation.............................................. 64
Class C Floating Allocation........................................... 55
Class C Initial Investor Interest..................................... 55
Class C Investor Charge-Off........................................... 58
Class C Investor Default Amount....................................... 68
Class C Investor Interest............................................. 56
Class C Monthly Distribution Amount................................... 71
Class C Monthly Finance Amount........................................ 61
Class C Monthly Principal Amount...................................... 65
Class C Monthly Required Expense Amount............................... 60
Class C Principal Commencement Date................................... 65
class C servicing fee................................................. 51
Class C Trustee Payment Amount........................................ 74
closing date.......................................................... 19
Code.................................................................. 102
Companion Series...................................................... 76
Controlled Accumulation Period........................................ 96
Controlled Accumulation Period Length................................. 67
Controlled Deposit Amount............................................. 63
collecting agent...................................................... 100
Daily Investor Principal Collections.................................. 64
defaulted account..................................................... 32
designated accounts................................................... 43
Discount Option Receivables........................................... 32
Discount Percentage................................................... 32
distribution date..................................................... 58
DOL................................................................... 107
eligible account...................................................... 34
eligible receivable................................................... 35
Eligible Receivables Pool............................................. 43
eligible servicer..................................................... 53
eligible trust cash manager........................................... 54
enforcement notice.................................................... 89
ERISA................................................................. 106
Excess Interest....................................................... 43
excess distribution................................................... 111
Excess Spread......................................................... 71
expenses loan agreement............................................... 75
Expense Rate.......................................................... 76
[Extraordinary Resolution............................................. 90]
event of default...................................................... 89
Finance Charge Collections Ledger..................................... 46
finance charge receivables............................................ 31
Fixed Investor Percentage............................................. 64
Floating Percentage................................................... 58
ineligible receivables................................................ 36
117
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Insolvency Events..................................................... 47
interchange........................................................... 33
interest payment date................................................. 58
interest period....................................................... 85
Investor Cash Available for Acquisition............................... 46
investor cash management fee.......................................... 52
Investor Charge-Offs.................................................. 68
investor certificates................................................. 20
Investor Default Amount............................................... 69
Investor Indemnity Amount............................................. 72
Investor Interest..................................................... 56
Investor interest..................................................... 44
Investor Percentage................................................... 44
Investor Principal Collections........................................ 64
investor servicing fee................................................ 52
Investor Trustee Payment.............................................. 74
issuer related documents.............................................. 84
Minimum Aggregate Principal Receivables............................... 76
Minimum Transferor Interest........................................... 76
MTN Issuer Costs Amount............................................... 59
MTN issuer............................................................ 18
MTN's................................................................. 18
MTN cash manager...................................................... 95
MTN enforcement notice................................................ 97
notice of assignment.................................................. 35
Notional Party A...................................................... 87
Notional Party B...................................................... 87
Notional Swap......................................................... 85
Notional Swap Termination Amount...................................... *
OID................................................................... 104
Parties in Interest................................................... 107
Pay Out Event......................................................... 48
payment date.......................................................... 39
permitted additional jurisdiction..................................... 35
permitted investments................................................. 45
PFIC.................................................................. 105
Plan Asset Regulation................................................. 108
Plan Assets........................................................... 107
Plans................................................................. 107
pool selection date................................................... 34
Portfolio Yield....................................................... 76
pounds................................................................ 18
pounds sterling....................................................... 18
Principal Collections Ledger.......................................... 46
Principal Funding Account............................................. 62
Principal Funding Investment Proceeds................................. 72
Principal Shortfalls.................................................. 69
PTCE.................................................................. 107
QEF................................................................... 105
Qualified Institution................................................. 74
qualified stated interest............................................. 105
qualifying discretionary and accumulation trust....................... 101
quotation date........................................................ 86
quoted Eurobonds...................................................... 100
Rapid Amortisation Period............................................. 63
Reallocated Class B Principal Collections............................. 70
Reallocated Class C Principal Collections............................. 70
redesignated accounts................................................. 44
Reinvested Investor Principal Collections............................. 65
relevant documents.................................................... 21
Regulated Amortisation Period......................................... 65
Regulated Amortisation Trigger Event.................................. 63
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
related beneficiary debt.............................................. 45
Required Reserve Amount............................................... 73
Reserve Account....................................................... 73
Reserve Account Funding Date.......................................... 73
Revolving Period...................................................... 62
securitised portfolio................................................. 27
Series 99-1 Distribution Account...................................... 60
Series 99-1 Extra Amount.............................................. 72
[Series 99-1 Issuer Account........................................... 77]
Series 99-1 Pay-Out Events............................................ 75
series 99-1 scheduled redemption date................................. 62
Series 99-1 Supplement................................................ 56
series 99-1 termination date.......................................... 62, 64
servicer default...................................................... 53
servicing fee......................................................... 51
Shared Principal Collections.......................................... 69
successor cash manager................................................ 54
successor servicer.................................................... 52
swap agreements....................................................... 92
swap termination event................................................ 94
termination payment................................................... 83
transferor acquisition................................................ 42
transferor cash management fee........................................ 52
transferor certificate................................................ 42
Transferor Ineligible Interest........................................ 45
Transferor Cash Available for Acquisition............................. 47
Transferor Interest................................................... 44
Transferor Percentage................................................. 44
Transferor Section 75 Liability....................................... 72
transferor servicing fee.............................................. 52
Trust Accounts........................................................ 45
trust cash manager default............................................ 54
trust cash management fee............................................. 52
Trust Pay Out Events.................................................. 48
Trustee Acquisition Account........................................... 45
Trustee Collection Account............................................ 45
Trustee Payment Amount................................................ 50
Unavailable Investor Principal Collections............................ 69
Unavailable Principal Collections..................................... 69
WAM................................................................... 104
zero balance account.................................................. 32
118
</TABLE>
<PAGE>
Index of Appendices
The appendices are an integral part of this prospectus.
Page
A Report of Independent Accountants for Gracechurch Card
Funding (No.1) PLC.......................................... A-1
B Financial Statements of Gracechurch Card Funding (No.1) PLC B-1
C Notes to Financial Statements.............................. C-1
D Report of Independent Accountants for Barclaycard Funding
PLC......................................................... D-1
E Financial Statements of Barclaycard Funding PLC............ E-1
F Notes to Financial Statements.............................. F-1
G Terms and Conditions of the Notes.......................... G-1
119
<PAGE>
Gracechurch Card Funding (No.1) PLC
BALANCE SHEET
AS OF 30 SEPTEMBER, 1999
TOGETHER WITH AUDITORS' REPORT
A-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of :
Gracechurch Card Funding (No.1) PLC
We have audited the accompanying balance sheet of Gracechurch Card Funding
(No.1) PLC (a public limited company incorporated in England and Wales) as of
30 September, 1999. This financial statement is the responsibility of that
company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the balance
sheet is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position as of Gracechurch Card Funding
(No.1) PLC as of 30 September, 1999, in conformity with generally accepted
accounting principles in the United States of America.
/s/ PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
London, England
October 20, 1999
A-2
<PAGE>
Appendix B
Gracechurch Card Funding (No.1) PLC
BALANCE SHEET-AS OF 30 SEPTEMBER, 1999
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Cash......................................... L 12,502
=============
Common stock (authorised, 50,000 shares,
L1.00 par
value, Issued and outstanding, 50,000 shares
comprising 2 fully paid and 49,998 quarter
paid......................................... (4)) L 12,502
-------------
Total liabilities and shareholder's equity... L 12,502
=============
</TABLE>
The accompanying notes are an integral part of this statement.
B-1
<PAGE>
Appendix C
Gracechurch Card Funding (No. 1) PLC
NOTES TO FINANCIAL STATEMENT
30 September, 1999
1. Accounting policies
The balance sheet has been prepared in accordance with the historical cost
convention.
2. Nature of Operations
The Company was incorporated in England and Wales on 24 June, 1999. The
principal purpose of the Company is, among other things, to issue asset backed
floating rate notes and enter into all financial arrangements in that
connection.
3. Trading activity
The Company did not trade during the period from incorporation on 24 June,
1999 to 30 September, 1999 nor did it receive any income nor did it incur any
expenses or pay any dividends. Consequently, no profit and loss account has
been prepared.
4. Share capital
The Company was incorporated with an authorised share capital of L50,000,
comprising 50,000 Ordinary shares of L1 each. Two Ordinary Shares were allotted
for cash, and fully paid, on incorporation. On 10 September, 1999, 49,998
Ordinary Shares were allotted quarter paid.
C-1
<PAGE>
Barclaycard Funding PLC
BALANCE SHEET
AS OF 30 SEPTEMBER, 1999
TOGETHER WITH AUDITORS' REPORT
D-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Barclaycard Funding PLC:
We have audited the accompanying balance sheet of Barclaycard Funding PLC
(a public limited company incorporated in England and Wales) as of September
30, 1999. This financial statement is the responsibility of that company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the balance
sheet is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of Barclaycard Funding PLC as of
September 30, 1999, in conformity with generally accepted accounting principles
in the United States of America.
PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
London, England
October 14, 1999
D-2
<PAGE>
Barclaycard Funding PLC
BALANCE SHEET -- AS OF 30 SEPTEMBER 1999
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Debtors:
Balance with Barclays Bank PLC L2
=============
</TABLE>
SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C>
Common stock (authorized, 100 shares of L1 each,
Issued and outstanding, two shares of L1 each) L2
-------------
Total liabilities and shareholders' equity L2
=============
</TABLE>
The accompanying notes are an integral part of this document.
E-1
<PAGE>
Barclaycard Funding PLC
NOTES TO FINANCIAL STATEMENT
30 SEPTEMBER 1999
1. Accounting policies
The balance sheet has been prepared in accordance with the historical cost
convention.
2. Nature of Operations
The Company was incorporated in England and Wales on 13 August 1990. The
principal purpose of the Company is, among other things, to issue asset backed
medium term notes and enter into all financial arrangements in that connection.
3. Trading activity
The Company did not trade during the period from incorporation on 13
August 1990 to 30 September 1999 nor did it receive any income nor did it incur
any expenses or pay any dividends. Consequently, no profit and loss account has
been prepared.
4. Share capital
The Company was incorporated with an authorised share capital of L2,
comprising two Ordinary shares of L1 each. Issued share capital comprises two
Ordinary shares which were allotted for cash, and fully paid, on incorporation.
5. Subsequent Events
On 8 October 1999, the Company passed special resolutions to re-register
as a public company and that the name of the Company be changed to from
Exshelfco (BDC) Limited to Barclaycard Funding PLC.
On 8 October 1999, the Company passed ordinary resolutions to convert the
existing share capital of 100 ordinary shares of L1 to A ordinary shares of L1
each and to increase the authorised share capital to L50,000 by the creation of
37,400 A ordinary shares of L1 each and 12,500 B ordinary shares of L1 each.
F-1
<PAGE>
Terms and Conditions of the Notes
The following is the text of the terms and conditions of the Notes which
(subject to completion and amendment) will be endorsed on each Note in
definitive form if Notes in definitive form are issued. While the Notes are
represented by the Global Notes the same terms and conditions govern them
except to the extent that they are appropriate only to Definitive Notes. There
will appear at the foot of the Conditions endorsed on each Note the names and
specified offices of the Paying Agents as set out at the end of this Document.
Terms and Conditions of the Notes
The L[*] Class A1 Asset Backed Floating Rate Notes due [*] (the "Class A1
Notes"), the Euro [*] Class A2 Asset Backed Floating Rate Notes (the "Class A2
Notes"), the US$[*] Class A3 Asset Backed Floating Rate Notes, (the "Class A3
Notes" and the Class A1 Notes, the Class A2 Notes and the Class A3 Notes
together the "Class A Notes"), the US$[*] Class B Asset Backed Floating Rate
Notes (the "Class B Notes") and the US$[*] Class C Asset Backed Floating Rate
Notes (the "Class C Notes" and the Class A Notes, the Class B Notes and the
Class C Notes together, the "Notes" and the Class 1 Notes, the Class A2 Notes,
the Class A3 Notes, the Class B Notes and the Class C Notes each a "Class" of
Notes) of the Issuer are the subject of (a) a trust deed dated [*] 1999 (the
"Trust Deed") between the Issuer and The Bank of New York, London Branch, as
trustee (the "Note Trustee", which expression includes any successor trustee(s)
appointed from time to time in connection with the Notes), (b) a depository
agreement in respect of the Class A3 Notes, the Class B Notes and the Rule 144A
Class C Notes dated [*] 1999 (the "Depository Agreement") between the Issuer,
the Note Trustee and the Bank of New York, New York, as depository (the
"Depository") and (c) a paying agency and agent bank agreement dated [*] 1999
(the "Paying Agency and Agent Bank Agreement") between the Issuer, The Bank of
New York, London Branch, as principal paying agent, common depositary and as
agent bank (in such respective capacities the "Principal Paying Agent" or the
"Agent Bank", "Common Depository" which expressions include any successor
principal paying agent or agent bank appointed from time to time in connection
with the Notes), the other paying agents named therein (together with the
Principal Paying Agent, the "Paying Agents", which expression includes any
successor or additional paying agents appointed from time to time in connection
with the Notes) and the Note Trustee. The security for the Notes is created
pursuant to, and on the terms and conditions set out in a deed of charge (the
"Deed of Charge") as from time to time modified in accordance with the
provisions therein contained) to be dated [*] November 1999 made between, inter
alios, the Issuer and the Note Trustee. Certain provisions of these Conditions
are summaries of the Trust Deed, the Depository Agreement, the Paying Agency
and Agent Bank Agreement and the Deed of Charge and subject to the detailed
provisions of those documents. The holders of the Class A1 Notes (the "Class A1
Noteholders") and the holders of the related interest coupons (the "Class A1
Couponholders" and the "Class A1 Coupons" respectively), the holders of the
Class A2 Notes (the "Class A2 Noteholders") and the holders of the related
interest coupons (the "Class A2 Couponholders" and the "Class A2 Coupons"
respectively), the holders of the Class A3 Notes (the "Class A3 Noteholders")
and the holders of the related interest coupons (the "Class A3 Couponholders"
and the "Class A3 Coupons" respectively), the holders of the Class B Notes (the
"Class B Noteholders") and the holders of the related interest coupons (the
"Class B Couponholders" and the "Class B Coupons" respectively) and the holders
of the Class C Notes (the "Class C Noteholders" and together with the Class A1
Noteholders, the Class A2 Noteholders, the Class A3 Noteholders and the Class B
Noteholders, the "Noteholders") and the holders of the related interest coupons
(the "Class C Couponholders" (and the Class C Couponholders together with the
Class A Couponholders and the Class B Couponholders, the "Couponholders") and
the "Class C Coupons" respectively, and the Class C Coupons together with the
Class A1 Coupons, the Class A2 Coupons, the Class A3 Coupons and the Class B
Coupons, the "Coupons") are bound by, and are deemed to have notice of, all the
provisions of the Trust Deed, the Paying Agency and Agent Bank Agreement and
the Deed of Charge applicable to them. Copies of the Trust Deed, the Depository
Agreement, the Paying Agency and Agent Bank Agreement and the Deed of Charge
are available for inspection at the principal place of business for the time
being of the Note Trustee and at the specified office of each Paying Agent.
1. Form, Denomination and Title
(a) The Class A1 Notes, the Class A2 Notes, the Class A3 Notes and the Class
B Notes are each serially numbered and are issued in bearer form in the
denomination of L1,000 each (in the case of the Class A1 Notes, Euro
1,000 each, in the case of the Class A2 Notes, and, in the case of the
Class A3 Notes and the Class B Notes, in the denomination of US$ 1,000
each) with Class A1 Coupons, Class A2 Coupons, Class A3 Coupons, Class B
Coupons, respectively, attached at the time of issue and a grid endorsed
thereon for the recording of all payments of principal in accordance with
the provisions of Condition 7. The Class C Notes are each serially
numbered and are issued in bearer form in the denomination of
US$1,000,000 each with Class C Coupons attached at the time of issue and
a grid endorsed thereon for the recording of all payments of principal in
accordance with the provisions of Condition 7. Title to the Notes and the
Coupons will pass by delivery.
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(b) The holder of each Coupon (whether or not such Coupon is attached to a
Note) in its capacity as such shall be subject to and bound by all the
provisions contained in the relevant Note.
(c) The holder of any Note or Coupon shall (except as otherwise required by
applicable law) be treated as its absolute owner for all purposes
(whether or not it is overdue and regardless of any notice of ownership,
trust or any other interest therein, any writing thereon or any notice of
any previous loss or theft thereof) and no person shall be liable for so
treating such holder.
2. Status
The Notes and the Coupons are constituted by the Trust Deed and are
direct, secured and unconditional obligations of the Issuer which will at all
times rank pari passu without preference or priority amongst the Notes and
Coupons of the same Class.
3. Security and Swap Agreement
(a) Security
As security for the payment of all monies payable (a) in respect of the
Notes and otherwise under the Trust Deed and the Swap Agreements (as defined in
Condition 3(b) below), including the remuneration, expenses and any other
claims of the Note Trustee and any Receiver (as defined in the Deed of Charge)
appointed under the Deed of Charge and (b) in respect of certain amounts
payable to Barclays Bank PLC (the "Expenses Loan Provider") pursuant to an
expenses loan agreement expected to be dated on or before the Closing Date (the
"Expenses Loan Agreement"), the Issuer will enter into the Deed of Charge
creating the following security (the "Security") in favour of the Note Trustee
for itself and on trust for, inter alios, the Noteholders, the Swap
Counterparty (as defined in Condition 4) and the Expenses Loan Provider:
(i) an assignment by way of first fixed security of the Issuer's right, title
and interest in and to the Series 99-1 MTNs;
(ii) an assignment by way of first fixed security of the Issuer's right,
title, interest and benefit in and to any agreements or documents to
which the Issuer is a party (except for the Trust Deed and the Deed of
Charge);
(iii) an assignment by way of first fixed security of the Issuer's right,
title, interest and benefit in and to all monies credited to the Series
99-1 Issuer Account or to any bank or other account in which the Issuer
may at any time have any right, title, interest or benefit; and
(iv) a first floating charge over the Issuer's undertaking and assets not
charged under (i), (ii) or (iii) above,
(all as more particularly described in the Deed of Charge).
(b) Swap Agreements
The Issuer has entered into the Swap Agreements with the Swap Counterparty
under which the Issuer will make certain payments to the Swap Counterparty and
the Swap Counterparty will make certain payments to the Issuer all as set out
in the relevant Swap Agreement. The swap transactions evidenced by the Swap
Agreements terminate on [* November 2002] unless terminated earlier or extended
in accordance with the terms of the relevant Swap Agreement. In the event of an
early termination of a Swap Agreement, the Swap Counterparty or the Issuer may
be required to make a termination payment to the other party. In addition,
certain events including, without limitation, failure to pay or deliver,
misrepresentation, insolvency or bankruptcy pertaining to the Swap Counterparty
(each of such events pertaining to the Swap Counterparty, a "Swap Counterparty
Event of Default") may result in the early termination of a Swap Agreement. A
copy of each Swap Agreement will be available for inspection at the principal
office of the Trustee and the specified offices of the Paying Agents.
"Dollar A3 Swap Agreement" means an agreement dated on or before [*]
November 1999 between the Issuer, the Swap Counterparty and the Note Trustee,
which provides for certain receipts of the Issuer under or in respect of the
Class A MTN denominated in sterling to be converted into dollars, and vice-
versa, by the Swap Counterparty.
"Dollar B Swap Agreement" means an agreement dated on or before [*]
November 1999 between the Issuer, the Swap Counterparty and the Note Trustee,
which provides for receipts of the Issuer under or in respect of the Class B
MTN denominated in sterling to be converted into dollars, and vice-versa, by
the Swap Counterparty.
"Dollar C Swap Agreement" means an agreement dated on or before [*]
November 1999 between the Issuer, the Swap Counterparty and the Note Trustee,
which provides for receipts of the Issuer under or in respect of the Class C
MTN denominated in sterling to be converted into dollars, and vice-versa, by
the Swap Counterparty.
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"Dollar Swap Agreements" means the Dollar A3 Swap Agreement, the Dollar B
Swap Agreement and the Dollar C Swap Agreement and "Dollar Swap Agreement"
means any one of them, as the context may require.
"Euro Swap Agreement" means an agreement dated on or before [*] November
1999 between the Issuer, the Swap Counterparty and the Note Trustee, which
provides for certain receipts of the Issuer under or in respect of the Class A
MTN denominated in sterling to be converted into Euro, and vice-versa, by the
Swap Counterparty.
"Sterling Amount" means an amount denominated in sterling paid by or on
behalf of the Issuer to the Swap Counterparty under the terms of any Swap
Agreement.
"Swap Counterparty" means Barclays Bank PLC.
"Swap Agreements" means the Euro Swap Agreement and all or any of the
Dollar Swap Agreements as the context may require.
(c) Application of Proceeds
The Deed of Charge will contain provisions regulating the priority of
application of amounts forming part of the Security among the persons entitled
thereto on enforcement of the Deed of Charge in the following order of
priority:
(i) first, in no order of priority inter se but pro rata to the respective
amounts then due, to pay remuneration then due to any receiver appointed
pursuant to the Deed of Charge or the Note Trustee and all amounts due in
respect of legal fees and other costs, charges, liabilities, expenses,
losses, damages, proceedings, claims and demands then incurred by the
Note Trustee under and in respect of the Related Documents (as defined in
Condition 4(a)) and in enforcing the security created by or pursuant to
the Deed of Charge or in perfecting title to the Security, together with
interest thereon as provided in any such document;
(ii) secondly, (subject to (iii) below) in payment or satisfaction of all
costs, charges, liabilities, expenses, losses, damages, proceedings,
claims and demands of the Swap Counterparty in relation to each Swap
Agreement;
(iii) thirdly, in order of priority inter se, the respective amounts then due:
(A) FIRST (to the extent not covered in (a) above) in payment or
satisfaction of all costs, charges, liabilities, expenses, losses,
damages, proceedings, claims and demands of the Note Trustee under
the Trust Deed; and
(B) SECONDLY in or towards payment pari passu and rateably of all
principal, premium (if any) and interest then due and unpaid in
respect of the Class A after, in the case of the Class A2 Notes
and the Class A3 Notes having paid any Sterling Amounts required
to be paid to the Swap Counterparty under the terms of the Euro
Swap Agreement and the Dollar A3 Swap Agreement respectively;
(iv) fourthly, in or towards payment pari passu and rateably of all principal,
premium (if any) and interest then due and unpaid in respect of the Class
B Notes after having paid any Sterling Amounts required to be paid to the
Swap Counterparty under the Dollar B Swap;
(v) fifthly, in or towards payment pari passu and rateably of all principal,
premium (if any) and interest then due and unpaid in respect of the Class
C Notes after having paid any Sterling Amounts required to be paid to the
Swap Counterparty under the Dollar C Swap Agreement;
(vi) sixthly, in or towards payment of (a) interest and (b) principal, due and
unpaid under the Expenses Loan Agreement;
(vii) seventhly, in or towards payment of any sums due from (or required to be
provided for by) the Issuer to meet its liabilities to any taxation
authority (including in respect of corporation tax to the Inland
Revenue);
(viii) eighthly, in the event that any Swap Agreement is terminated as a result
of a Swap Counterparty Event of Default, in meeting the claims of the
Swap Counterparty in respect of any termination payment to be paid to the
Swap Counterparty by the Issuer in accordance with the early termination
provisions of such Swap Agreement;
(ix) ninthly in or towards payment of any sums due to third parties under
obligations incurred in the course of the Issuer's business;
(x) tenthly, in or towards payment of any dividends due and unpaid to
shareholders of the Issuer; and
(xi) eleventhly, in payment of the balance (if any) to the liquidator of the
Issuer.
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The Security will become enforceable upon the occurrence of an Event of
Default (as defined in Condition 9), provided however that the occurrence of
the Security becoming enforceable will not, of itself, accelerate the timing or
amount of redemption of the Notes as described in Condition 6.
4. Negative Covenants of the Issuer
So long as any of the Notes remains outstanding (as defined in the Trust
Deed), the Issuer shall not, save to the extent permitted by the Related
Documents (as defined below) or with the prior written consent of the Note
Trustee:
(a) create or permit to subsist any mortgage, charge, pledge, lien or other
security interest including, without limitation, anything analogous to
any of the foregoing under the laws of any jurisdiction upon the whole or
any part of its present or future undertaking, assets or revenues
(including uncalled capital);
(b) carry on any business other than as described in the Offering Circular
dated [*] November 1999 relating to the issue of the Notes and in respect
of that business shall not engage in any activity or do anything
whatsoever except:
(i) preserve and/or exercise and/or enforce any of its rights and
perform and observe its obligations under the Notes and the
Coupons appertaining thereto, the Deed of Charge, the Paying
Agency and Agent Bank Agreement, the Trust Deed, the Depository
Agreement the Expenses Loan Agreement, each Swap Agreement, the
Series 99-1 MTNs (as defined below), the Corporate Services
Agreement (as defined below), the Class A Subscription Agreements
(as defined below), the Class B Subscription Agreement, (as
defined below), the Class C Subscription Agreement (as defined
below), the Bank Agreement (as defined below) and any bank mandate
regarding the Series 99-1 Issuer Account (as defined below)
(together the "Related Documents");
(ii) use, invest or dispose of any of its property or assets in the
manner provided in or contemplated by the Related Documents; and
(iii) perform any act incidental to or necessary in connection with (i)
or (ii) above;
(c) have or form, or cause to be formed, any subsidiaries or subsidiary
undertakings or undertakings of any other nature or have any employees or
premises or have an interest in a bank account other than the Series 99-1
Distribution Account unless such account or interest therein is charged
to the Note Trustee on terms acceptable to it;
(d) create, incur or suffer to exist any indebtedness (as defined in the
Trust Deed) (other than indebtedness permitted to be incurred under the
terms of its Articles and pursuant to or as contemplated in any of the
Related Documents) or give any guarantee or indemnity in respect of any
obligation of any person;
(e) repurchase any shares of its capital stock or declare or pay any dividend
or other distribution to its shareholders;
(f) consolidate with or merge with or into any person or liquidate or
dissolve on a voluntary basis;
(g) be a member of any group of companies for the purposes of value added
tax;
(h) waive, modify or amend, or consent to any waiver, modification or
amendment of, any of the provisions of the Related Documents without the
prior written consent of the Note Trustee; or
(i) offer to surrender to any company any amounts which are available for
surrender by way of group relief.
"Bank Agreement" means an agreement expected to be dated on or before the
Closing Date between the Issuer, the Note Trustee and Barclays Bank PLC,
whereby Barclays Bank PLC has agreed to operate the Series 99-1 Issuer Account
on the terms and conditions set out therein, or any replacement for such
agreement if the Series 99-1 Distribution Account is no longer held at Barclays
Bank PLC.
"Class A MTN" means the Class A medium term note issued by the MTN Issuer in
respect of Series 99-1 pursuant to the MTN Programme.
"Class A Subscription Agreements" means together the Subscription Agreement
dated [*] November 1999 between the Issuer and the Manager (as defined therein)
in respect of the Class A1 Notes and the Class A2 Notes and the Indemnity
Agreement dated [*] November 1999 between the Issuer and the Underwriter (as
defined therein) in respect of the Class A3 Notes.
"Class B MTN" means a Class B medium term note issued by the MTN Issuer in
respect of Series 99-1 pursuant to the MTN Programme.
"Class B Subscription Agreement" means the Subscription Agreement dated [*]
November 1999 between the Issuer and the Manager (as defined therein) in
respect of the Class B Notes.
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"Class C MTN" means a Class C medium term note issued by the MTN Issuer in
respect of Series 99-1 pursuant to the MTN Programme.
"Class C Subscription Agreement" means the Subscription Agreement dated [*]
November 1999 between the Issuer and the Manager (as defined therein) in
respect of the Class C Notes.
"Corporate Services Agreement" means an agreement dated on or before [*]
November 1999 between [*] and the Issuer, under which [*] and has agreed to
provide certain corporate services to the Issuer.
"MTN Issuer" means Barclaycard Funding PLC, a public limited company
incorporated in England and Wales with registered number [*];
"MTN Programme" means the secured medium term note issuance programme
established by the MTN Issuer.
"Security Trust and Cash Management Deed" means the Security Trust and Cash
Management Deed dated [*] November 1999 between the MTN Issuer, Gracechurch
Receivables Trustee Limited, The Bank of New York, London branch and Barclays
Bank PLC.
"Series 99-1" is the series constituted by the Series 99-1 Supplement.
"Series 99-1 Issuer Account" means a bank account in the name of the Issuer
opened for the purpose of receiving certain distributions of principal and
interest in respect of the Series 99-1 MTNs, and currently located at Barclays
Bank PLC at its branch at 54 Lombard Street, London.
"Series 99-1 MTNs" means each of the Class A MTN, the Class B MTN and the Class
C MTN.
"Series 99-1 Supplement" means the Series 99-1 Supplement to the MTN Programme
dated [*] November 1999 between Gracechurch Receivables Trustee Limited,
Barclays Bank PLC and the MTN Issuer.
5. Interest
(a) Accrual of interest
Each Note bears interest on its Principal Amount Outstanding (as defined
in Condition 6(c)) from (and including) [*] November 1999 (the "Issue Date").
Interest in respect of the Class A1 Notes is payable in arrear in pounds
sterling; interest in respect of the Class A2 Notes is payable in arrear in
Euro; and interest in respect of the Class A3 Notes, the Class B Notes and the
Class C Notes is payable in arrear in US$ on each Interest Payment Date.
"Interest Payment Date" means the following dates:
(i) with respect to the Class A1 Notes and the Class A2 Notes during the
Revolving Period or the Controlled Accumulation Period, the third
Distribution Date following the preceding Interest Payment Date, or, in
the case of the first Interest Payment Date, 15 February 2000 (or, if 15
February 2000 is not a Business Day, the next succeeding Business Day);
or
(ii) (a) at all times with respect to the Class A3 Notes, the Class B Notes
and the Class C Notes each Distribution Date and (b) with respect to the
Class A1 Notes and the Class A2 Notes, during the Rapid Amortisation
Period or the Regulated Amortisation Period each Distribution Date which
falls during such periods.
To the extent that the aggregate of the monies which are paid to the
Issuer under the Series 99-1 MTNs by the MTN Issuer on each Distribution Date
during an Interest Period (as defined below) is insufficient to pay the full
amount of interest on the Class A Notes or the Class B Notes or the Class C
Notes, respectively on the corresponding Interest Payment Date, payment of the
shortfall ("Deferred Interest"), which will be borne by each Class A Note,
Class B Note or Class C Note, as the case may be, in a proportion equal to the
proportion that the Principal Amount Outstanding of the relevant Note bears to
the aggregate Principal Amount Outstanding of all the Notes of the same class
(in each case as determined on the Interest Payment Date on which such Deferred
Interest arises), will be deferred until the earlier of (a) the Interest
Payment Date thereafter on which funds are available to the Issuer (by being
paid to the Issuer under the Series 99-1 MTNs on each Distribution Date during
the relevant Interest Period) to pay such Deferred Interest to the extent of
such available funds and (b) [* 200*]. Such Deferred Interest will accrue
interest ("Additional Interest") at the then applicable Rate of Interest
(calculated as provided in Condition 5(b)) plus a margin of 2 per cent. per
annum, and payment of any Additional Interest will also be deferred until the
Interest Payment Date thereafter on which funds are available to the Issuer to
pay such Additional Interest to the extent of such available funds.
Each period beginning on (and including) the Issue Date or any Interest
Payment Date and ending on (but excluding) the next Interest Payment Date is
herein called an "Interest Period"; Provided, however, that with respect to an
Interest Period that commences during the Revolving Period or the Controlled
Accumulation Period and ends during the Rapid Amortisation Period, such
Interest Period will end on the originally scheduled Interest Payment Date. The
first interest payment on each of the Notes other than the Class A1 Notes and
the Class A2 Notes will be made on the Interest Payment Date falling on 15
February 2000 (or, if 15 February 2000 is not a
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Business Day, the next succeeding Business Day) in respect of the Interest
Period from (and including) the Issue Date to (but excluding) 15 February 2000
(or, if 15 February 2000 is not a Business Day, the next succeeding Business
Day) and, in the case of the Class A3 Notes, the Class B Notes and the Class C
Notes on the Interest Payment Date falling on 15 January 2000 or, if 15 January
2000 is not a Business Day, the next succeeding Business Day) in respect of the
Interest Period from and including the Issue Date to (but excluding) 15 January
2000 (or, if 15 January 2000 is not a Business Day, the next succeeding
Business Day).
Interest will cease to accrue on any part of the Principal Amount
Outstanding of a Note from the due date for redemption unless, upon due
presentation, payment of principal is improperly withheld or refused, in which
case it will continue to bear interest in accordance with this Condition (as
well after as before judgment) until whichever is the earlier of (i) the day on
which all sums due in respect of such Note up to that day are received by or on
behalf of the relevant Noteholder and (ii) the day which is seven days after
the Principal Paying Agent or the Note Trustee has notified the relevant class
of Noteholders either in accordance with Condition 14 or individually that it
has received all sums due in respect of the relevant class of Notes up to such
seventh day (except to the extent that there is any subsequent default in
payment).
"Controlled Accumulation Period" means (unless the Regulated Amortisation
Period or the Rapid Amortisation Period has commenced) the period commencing on
the close of business on [*] or such later date as is determined in accordance
with the provisions of the Series 99-1 Supplement (such later date falling no
later than [*]), and ending (for the purposes of these Conditions) on the first
to occur of (a) the commencement of the Rapid Amortisation Period, (b) the day
the Investor Interest is reduced to zero and (c) the Distribution Date falling
in [*].
"Distribution Date" means 15 January 2000 and the 15th day of each
calendar month thereafter or, if such day is not a Business Day, the next
succeeding Business Day.
"Quotation Date" means, in relation to any period for which an interest
rate is to be determined in respect of the Class A1 Notes, the first day of
such period, in relation to any period for which an interest rate is to be
determined in respect of the Class A2 Notes, the second Target Settlement Date
before the first day of the period and, in relation to any period for which an
interest rate is to be determined in respect of the Class A3 Notes, the Class B
Notes and/or the Class C Notes, the second Business Day before the first day of
such period.
"Rapid Amortisation Period" means the period commencing on the day on
which a Pay Out Event (not being a Regulated Amortisation Trigger Event) is
deemed to occur pursuant to the provisions of the Series 99-1 Supplement, and
ending (for the purposes of these Conditions) on the earlier of (i) the day on
which the Investor Interest is reduced to zero and (ii) the Distribution Date
falling in [*] [200*].
"Regulated Amortisation Period" means the period commencing on the day on
which a Regulated Amortisation Trigger Event is deemed to occur pursuant to the
provisions of the Series 99-1 Supplement and ending (for the purposes of these
Conditions) on the earlier of (i) the day on which the Investor Interest is
reduced to zero and (ii) the Distribution Date falling in [*].
"Revolving Period" means the period from and including the Issue Date to,
but not including the earlier of the date of commencement of (a) the Controlled
Accumulation Period (b) the Regulated Amortisation Period and (c) the Rapid
Amortisation Period.
(b) Rate of Interest
The rate of interest applicable to each Class of the Notes (the "Rate of
Interest") for each Interest Period will be determined by the Agent Bank on the
following basis:
(i) the Agent Bank will
(A) determine the offered quotation to leading banks in the London
interbank market for three-month sterling deposits (in the case of
the Class A1 Notes) and one-month US$ deposits (in the case of the
Class A3 Notes, the Class B Notes and the Class C Notes) by
reference to the display designated as the British Bankers
Association LIBOR Rates as quoted on the Dow Jones/Telerate Screen
No. 3750 (or (aa) such other page as may replace Telerate Screen
No. 3750 on that service for the purposes of displaying such
information or (bb) if that service ceases to display such
information, such page as displays such information on such
service (or, if more than one, that one previously approved in
writing by the Trustee) as may replace the Dow Jones/Telerate
Monitor); and
(B) (in respect of the Class A2 Notes) determine the offered quotation
to leading banks in the euro-zone interbank market for three-month
euro deposits by reference to the display designated as the
EURIBOR Rates as quoted on the Dow Jones/Telerate Screen No. 248
(or (aa) such other page as may replace Telerate Screen No. 248 on
that service for the purposes of displaying such information or
(bb) if that service ceases to display such information, such page
as displays such
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information on such service (or, if more than one, that one
previously approved in writing by the Trustee) as may replace the
Dow Jones/Telerate Monitor),
in each case as at or about 11.00 a.m. (London time) on the relevant
Quotation Date therefor, (each such rate hereinafter referred to as the
"Screen Rate");
(ii) if, on any Quotation Date, the Screen Rate is unavailable, the Agent Bank
will:
(A) in respect of any quotation for sterling and/or dollars request
the principal London office of each of four major banks selected
by the Agent Bank (together the "Reference Banks") to provide the
Agent Bank with its offered quotation to leading banks in the
London interbank market for three-month sterling deposits (in the
case of the Class A1 Notes) and one month US$ deposits (in the
case of the Class A3 Notes, the Class B Notes and the Class C
Notes) as at approximately 11.00 a.m. (London time) on the
Quotation Date in question and in an amount that is representative
for a single transaction in that market at that time and determine
the arithmetic mean (rounded upwards to four decimal places) of
such quotations; and
(B) in respect of any quotation for euro, request the principal euro-
zone office of each of four major banks in the euro-zone interbank
market to provide a quotation of the rate at which deposits in
euro are effected by it at approximately 11.00 a.m. (London time)
on the Quotation Date in question to prime banks in the euro-zone
interbank market for three month euro deposits and in an amount
that is representative for a single transaction in the market at
that time and determine the arithmetic mean (rounded, if necessary
to the nearest one hundred thousandth of a percentage point,
0.000005 being rounded upwards) of such quotations;
(iii) if on any Quotation Date the Screen Rate is unavailable and two or three
only of the Reference Banks provide offered quotations, the Rate of
Interest for the relevant Interest Period shall be determined in
accordance with the provisions of paragraph (ii) on the basis of the
arithmetic mean (rounded in the case of sterling or dollar quotations
upwards to four decimal places or, in the case of a euro quotation, to
the nearest one hundred thousandth of a percentage point (0.00005 being
rounded upwards)) of the offered quotations of those Reference Banks or,
as the case may be, euro-zone banks providing the offered quotations; and
(iv) if fewer than two such quotations are provided by the Reference Banks or,
in the case of euros, the euro-zone banks, as requested, the Agent Bank
will determine the arithmetic mean (rounded if necessary as aforesaid) of
the rates quoted by major banks in London or (in the case of quotations
for euro), in the euro-zone, selected by the Agent Bank, at approximately
11.00 a.m. (London time) on the relevant Quotation Date for loans in
pounds sterling (in the case of the Class A1 Notes), loans in euro (in
the case of the Class A2 Notes) and loans in US$ (in the case of the
Class A3 Notes, the Class B Notes and the Class C Notes) to leading
European banks for a period equal to the relevant Interest Period and in
an amount that is representative for a single transaction in that market
at that time,
and the Rate of Interest for such Interest Period shall be the sum of (a) (i)
in the case of the Class A1 Notes [*] per cent. per annum, (ii) in the case of
the Class A2 Notes [*] per cent. per annum, (iii) in the case of the Class A3
Notes [*] per cent. per annum, (iv) in the case of the Class B Notes [*] per
cent. per annum and (v) in the case of the Class C Notes [*] per cent. per
annum (each such percentage a "relevant margin") and (b) the Screen Rate or, as
the case may be, the arithmetic mean so determined; provided that if the Agent
Bank is unable to determine the Screen Rate or, as the case may be, an
arithmetic mean in accordance with the above provisions in relation to any
Interest Period, the Rate of Interest applicable to each Class of Note during
such Interest Period will be the sum of the relevant margin and the Screen Rate
or, as the case may be, the arithmetic mean last determined in relation to such
Class of Notes in respect of a preceding Interest Period.
(c) Calculation of Interest Amount
The Agent Bank will, as soon as practicable after 11.00 a.m. (London time)
the Quotation Date in relation to each Interest Period, calculate the amount of
interest (the "Interest Amount") payable in respect of each Note for such
Interest Period. The Interest Amount will be calculated by applying the Rate of
Interest for such Interest Period to the Principal Amount Outstanding of such
Note during such Interest Period, multiplying the product by the actual number
of days in such Interest Period divided by, in the case of the Class A1 Notes,
365 (or 366 in the case of an Interest Period ending in a leap year) or, in the
case of the Class A2 Notes, the Class A3 Notes, the Class B Notes and the Class
C Notes divided by 360 and rounding the resulting figure to (i) in the case of
the Class A1 Notes the nearest penny (half a penny being rounded upwards); (ii)
in the case of the Class A2 Notes the nearest euro 0.01 (half a cent being
rounded upwards); and (iii), in the case of the Class A3 Notes, the Class B
Notes and the Class C Notes the nearest US$ 0.01 (half a cent being rounded
upwards). On each Interest Payment Date, the Agent Bank shall determine the
actual amount of interest which will be paid on the Notes on that Interest
Payment Date and the amount of Deferred Interest (if any) on the Notes in
respect of the related Interest Period and the amount of Additional Interest
(if any) which will be paid on such Interest Payment Date.
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The amount of Additional Interest shall be calculated by applying the relevant
Rate of Interest for the Notes (plus a margin of 2 per cent. per annum) to the
Deferred Interest and any Additional Interest from prior Interest Periods which
remains unpaid, multiplying by the actual number of days in the relevant
Interest Period and dividing, by, in the case of the Class A1 Notes, 365 or, in
the case of an Interest Period ending in a leap year, 366 or, in the case of
the Class A2 Notes, the Class A3 Notes, the Class B Notes and the Class C Notes
dividing by 360 and rounding the resultant figure to (i), in the case of the
Class A1 Notes the nearest penny (half a penny being rounded upwards); (ii) in
the case of the Class A2 Notes the nearest euro 0.01 (half a cent being rounded
upwards); and (iii), the case of the Class A3 Notes, the Class B Notes and the
Class C Notes the nearest US$ 0.01 (half a cent being rounded upwards). In the
event that, on any Interest Payment Date, the amount of monies which are paid
to the Issuer by the MTN Issuer in respect of the MTNs are insufficient to pay
in full the Interest Amount in respect of the relevant class of Notes, any
outstanding Deferred Interest and any Additional Interest due on such Interest
Payment Date, such monies will be applied first to the payment of such Interest
Amount, secondly to the payment of any outstanding Deferred Interest and
thereafter the payment of any Additional Interest in respect of the relevant
class of Notes.
(d) Publication
The Agent Bank will cause each Rate of Interest, Interest Amount, amount
of Deferred Interest (if any) and amount of Additional Interest (if any)
determined by it, together with the relevant Interest Payment Date, to be
notified to the Issuer, the Paying Agents, the Note Trustee and, for so long as
the Notes are listed on the London Stock Exchange Limited (the "London Stock
Exchange"), the London Stock Exchange as soon as practicable after such
determination but in any event not later than the seventh day thereafter or
such earlier day as the London Stock Exchange may require and will cause the
same to be published in accordance with Condition 14 as soon as possible
thereafter. The Agent Bank will be entitled to recalculate any Interest Amount
and amount of Additional Interest (on the basis of the foregoing provisions)
without notice in the event of an extension or shortening of the relevant
Interest Period.
(e) Notifications etc.
All notifications, opinions, determinations, certificates, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
this Condition, whether by the Reference Banks (or any of them) or the Agent
Bank or the Note Trustee will (in the absence of wilful default, bad faith or
manifest error) be binding on the Issuer, the Paying Agents, the Note Trustee,
the Reference Banks, the Agent Bank, the Noteholders and the Couponholders and
(subject as aforesaid) no liability to any such person will attach to the
Reference Banks, the Agent Bank or the Note Trustee in connection with the
exercise or non- exercise by them or of them of their powers, duties and
discretions for such purposes.
(f) Interpretation
(i) In this Condition, "Business Day" means a day other than a Saturday, a
Sunday or a day on which banking institutions in London, England and New
York, New York are authorised or obliged by law or executive order to be
closed and which is also a Target Settlement Date (as defined below); and
(ii) "Target Settlement Date" means any day on which the Trans-European
Automated Real-time Group Settlement Express Transfer (TARGET) System is
open.
(g) Failure of Agent Bank
If the Agent Bank fails at any time to determine a Rate of Interest or to
calculate an Interest Amount, amount of Deferred Interest (if any) or amount of
Additional Interest (if any), as aforesaid, the Note Trustee (or its appointed
agent), without accepting any liability therefor, will determine such Rate of
Interest as it considers fair and reasonable in the circumstances (having such
regard as it thinks fit to paragraph (b) above) or (as the case may be)
calculate such Interest Amount, amount of Deferred Interest (if any) or amount
of Additional Interest (if any), in accordance with paragraph (c) above, and
each such determination or calculation shall be deemed to have been made by the
Agent Bank.
(h) Reference Banks
The Issuer will ensure that, so long as any of the Notes remain
outstanding, there will at all times be four Reference Banks.
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6. Redemption and Purchase
(a) Scheduled Redemption
(i) Class A Notes
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or the Rapid Amortisation Period has earlier
commenced, the Class A1 Notes, the Class A2 Notes and the Class A3
Notes will be redeemed on the Interest Payment Date which falls in
November 2002 (the "Series 99-1 Scheduled Redemption Date") pari
passu, pro rata, to their respective Class Percentages to the
extent of the principal amount deposited in the Series 99-1 Issuer
Account by the MTN Issuer on the Series 99-1 Scheduled Redemption
Date in accordance with the terms and conditions of the Class A
MTN. If the principal amount deposited to the Series 99-1
Scheduled Redemption Date by the MTN Issuer in the Series 99-1
Issuer Account is less than the aggregate of (a) the Principal
Amount Outstanding of the Class A1 Notes, (b) the final exchange
amount payable by the Issuer to the Swap Counterparty on the
Series 99-1 Scheduled Redemption Date under the Euro Swap
Agreement and (c) the final exchange amount payable by the Issuer
to the Swap Counterparty on the Series 99-1 Scheduled Redemption
Date under the Dollar A3 Swap Agreement, then the Rapid
Amortisation Period will commence with effect from the Series 99-1
Scheduled Redemption Date.
(ii) Class B Notes
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or the Rapid Amortisation Period has earlier
commenced, the Class B Notes will be redeemed on the Series 99-1
Scheduled Redemption Date pari passu, pro rata to the extent of
the principal amount deposited in the Series 99-1 Issuer Account
by the MTN Issuer on the Series 99-1 Scheduled Redemption Date in
accordance with the terms and conditions of the Class B MTN. If
the principal amount deposited to the Series 99-1 Scheduled
Redemption Date by the MTN Issuer in the Series 99-1 Issuer
Account is less than the final exchange amount payable by the
Issuer to the Swap Counterparty on the Series 99-1 Scheduled
Redemption Date under the Dollar B Swap Agreement then the Rapid
Amortisation Period will commence with effect from the Series 99-1
Scheduled Redemption Date.
(iii) Class C Notes
Unless previously purchased and cancelled or unless the Rapid
Amortisation Period has earlier commenced, the Class C Notes will
be redeemed on Series 99-1 Scheduled Redemption Date pari passu,
pro rata to the extent of the principal amount deposited in the
Series 99-1 Issuer Account by the MTN Issuer on the Series 99-1
Scheduled Redemption Date in accordance with the terms and
conditions of the Class C MTN. If the principal amount deposited
on the Series 99-1 Scheduled Redemption Date by the MTN Issuer to
the Series 99-1 Issuer Account is less than the final exchange
amount payable by the Issuer to the Swap Counterparty on the
Series 99-1 Scheduled Redemption Date under the Dollar C Swap
Agreement then the Rapid Amortisation Period will commence with
effect from the Series 99-1 Scheduled Redemption Date.
If the Rapid Amortisation Period commences in the circumstances referred
to in (i) above, then on each Interest Payment Date which thereafter occurs
during the Rapid Amortisation Period, the Class A1 Notes, the Class A2 Notes
and the Class A3 Notes will be redeemed in part pari passu, pro rata to their
respective Class Percentages to the extent of the amount deposited to the
Series 99-1 Issuer Account in respect of the Class A MTN until the earlier of
(a) such time as the Class A1 Notes, the Class A2 Notes and the Class A3 Notes
have been paid in full and [*] [200*].
If the Rapid Amortisation Period commences in the circumstances referred
to in (ii) above, then on each Interest Payment Date which thereafter occurs
during the Rapid Amortisation Period, the Class B Notes occurs during the Rapid
Amortisation Period, the Class B Notes will be redeemed pro rata, in part to
the extent of the amount which is deposited to the Series 99-1 Issuer Account
in respect of the Class B MTN until the earlier of (a) such time as the Class B
Notes have been paid in full and (b) [*][200*].
If the Rapid Amortisation Period commences in the circumstances referred
to in (iii) above, then on each Interest Payment Date which thereafter occurs
during the Rapid Amortisation Period, the Class C Notes will be redeemed pro
rata in part to the extent of the amount which is deposited to the Series 99-1
Issuer Account in respect of the Class C MTN until the earlier of (a) such
time as the Class C Notes have been paid in full and (b) [*] [200*].
With respect to any Interest Payment Date (including the Series 99-1
Scheduled Redemption Date) on which the MTN Issuer deposits monies into the
Series 99-1 Issuer Account Issuer to be applied in or towards redemption of any
Class of Notes as referred to in this Condition 6(a) or in Condition 6(b), the
amount so
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deposited shall be the "Available Sterling Redemption Funds" of such Class for
such Interest Payment Date. On each Interest Payment Date, the Agent Bank shall
determine (i) the amount of each "Principal Payment" payable on each Note, and
(ii) the Principal Amount Outstanding of each Note of that Class on the first
day of the next following Interest Period (after deducting any Principal
Payment due to be made in respect of each of that Class of Notes on the
Interest Payment Date).
The Principal Payment payable on each Class A1 Note, each Class A2 Note
and each Class A3 Note shall be determined in accordance with the formula set
out below
PP = SR (CP x ASRF) x 1
---
N
Where:
PP = Principal Payment
SR = the euro, or as the case may be, dollar exchange rate specified in the
relevant Swap Agreement for converting on such date sterling sums into
euro or, as the case may be, dollars under the Euro Swap Agreement or,
as the case may be, the Dollar A3 Swap Agreement provided that in the
case of the Class A1 Notes, "SR" shall equal 1.
CP = the applicable Class Percentage for each Class A1 Note, Class A2 Note
or, as the case may be, Class A3 Note.
ASRF = Available Sterling Redemption Funds for the relevant class of Notes.
N = the number of Class A1 Notes, Class A2 Notes or, as the case may be,
Class A3 Notes outstanding.
The Principal Payment Payable on each Class B Note shall be equal to the
product of (a) the dollar exchange rate specified in the Dollar B Swap
Agreement for converting on such date sterling sums into dollars and (b) the
Available Sterling Redemption Funds for the Class B Notes divided by the number
of Class B Notes then outstanding.
The Principal Payment Payable on each Class C Note shall be equal to the
product of (a) the dollar exchange rate specified in the Dollar C Swap
Agreement for converting on such date sterling sums into dollars and (b) the
Available Sterling Redemption Funds for the Class C Notes divided by the number
of Class C Notes then outstanding.
The Agent Bank will cause each Principal Payment and Principal Amount
Outstanding to be notified to the Issuer, the Paying Agents, the Note Trustee
and, for so long as the Notes are listed on the London Stock Exchange, the
London Stock Exchange, as soon as practicable after such determination, but in
any event not later than the seventh day thereafter or such earlier day as the
London Stock Exchange may require and will cause the same to be published in
accordance with Condition 14 as soon as possible thereafter.
All notifications, opinions, determinations, certificates, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
this Condition by the Agent Bank will (in the absence of wilful default, bad
faith or manifest error) be binding on the Issuer, the Paying Agents, the Note
Trustee, the Noteholders and the Couponholders and (subject as aforesaid) no
liability to any such person will attach to the Agent Bank in connection with
the exercise or non-exercise by it of its powers, duties and discretions for
such purposes.
If the Agent Bank fails at any time to determine a Principal Payment or
Principal Amount Outstanding as aforesaid, the Note Trustee shall, without
accepting any liability therefore, calculate such Principal Payment or
Principal Amount Outstanding in accordance with the above provisions of this
Condition, and each such determination or calculation shall be deemed to have
been made by the Agent Bank. Any such determination or calculation will be
binding on the Issuer, the Paying Agents, the Note Trustee, the Noteholders and
the Couponholders.
In this Condition 6(a) and in Condition 6(b) "Class Percentage" means (a)
[*] per cent. in respect of the Class A1 Notes, (b) [*] per cent. in respect of
the Class A2 Notes and (c) [*] per cent. in respect of the Class A3 Notes.
(b) Mandatory Early Redemption
If the Regulated Amortisation Period or the Rapid Amortisation Period
commences in respect of the Class A Notes prior to the Series 99-1 Scheduled
Redemption Date, then on each Interest Payment Date which thereafter occurs
during the regulated Amortisation Period, the Class A1 Notes, the Class A2
Notes and the Class A3 Notes will be redeemed pari passu, pro rata to their
respective Class Percentages to the extent of the amount which is deposited
into the Series 99-1 Issuer Account by way of redemption of the Class A MTN
until the earlier
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of (a) such time as the Class A1 Notes, the Class A2 Notes and the Class A3
Notes have has been redeemed in full and (b) [*][200*].
If the Regulated Amortisation Period or the Rapid Amortisation Period
commences in respect of the Class B Notes prior to the Series 99-1 Scheduled
Redemption Date, then on each Interest Payment Date which thereafter occurs,
during the Regulated Amortisation Period or, as the case may be, the Rapid
Amortisation Period, the Class B Notes will be redeemed pro rata to the extent
of the amount which is deposited into the Series 99-1 Issuer Account by way of
redemption of the Class B MTN until the earlier of (a) such time as the Class B
Notes have been redeemed in full and (b) [*][200*].
If the Regulated Amortisation Period or the Rapid Amortisation Period
commences in respect of the Class C Notes prior to the Series 99-1 Scheduled
Redemption Date, then on each Interest Payment Date which thereafter occurs
during the Regulated Amortisation Period, or as the case may be, the Rapid
Amortisation Period, the Class C Notes will be redeemed pro rata to the extent
of the amount which is deposited into the Series 99-1 Issuer Account by way of
redemption of the Class C MTN until the earlier of (a) such time as the Class C
Notes have been redeemed in full and (b) [*][200*].
If the Rapid Amortisation Period commences as a result of the termination of
any or all of the Swap Agreements, the amount falling due for redemption on the
next following Interest Payment Date in respect of the Class A2 Notes, the
Class A3 Notes, the Class B Notes and the Class C Notes will be adjusted by the
amount (the "Notional Swap Termination Amount") notionally payable on
termination of a hypothetical currency and rate transaction (the "Notional
Swap") referable to such class or sub-class of Notes, the principal terms of
which are described below.
If the Notional Swap Termination Amount in respect of any class or sub-
class of Notes:
(a) equals zero (neither Notional Party A (as defined below), nor Notional
Party B (as defined below) having a right to payment), the amount falling
due for redemption on such class or sub-class of Notes will not be
adjusted; or
(b) is a negative figure (Notional Party A owing a payment to Notional Party
B) an amount in euros (in the case of the Class A2 Notes) or dollars (in
the case of the Class A3 Notes, the Class B Notes and the Class C Notes)
equal to the absolute value of such negative amount will be added to the
amount falling due for redemption on such class or sub-class of Notes;
and
(c) is a positive figure (Notional Party B owing a payment to Notional Party
A) an amount in euros (in the case of the Class A2 Notes) or dollars (in
the case of the Class A3 Notes, the Class B Notes and the Class C Notes)
equal to the absolute value of such positive amount will be deducted from
the amount falling due for redemption on such class or sub-class of
Notes,
and such adjusted amount falling due for redemption on the Class A2 Notes, the
Class A3 Notes, the Class B Notes and/or the Class C Notes shall be
respectively the "Adjusted A2 Redemption Amount", the "Adjusted A3 Redemption
Amount", the "Adjusted B Redemption Amount" and the "Adjusted C Redemption
Amount" which adjusted redemption amount may be more or less than the Principal
Amount Outstanding of the relevant class or sub-class of Note.
Under the terms of a Notional Swap with an Effective Date of [*] November
1999 and a Termination Date of [*][200*]:
(A) one party ("Notional Party A") will notionally pay to the other party
("Notional Party B") on 15 February, 15 May, 15 August and 15 November of
each year commencing on 15 February 2000 an amount calculated in
accordance with the Notional Swap at a floating rate (determined in
accordance with 3 month EUR-LIBOR-BBA) plus a margin of [*]% per annum on
the Principal Amount Outstanding on the Class A2 Notes; and
(B) Notional Party B will notionally pay to Notional Party A on the 15th day
of each month of each year commencing on 15 January 2000 an amount
calculated in accordance with the Notional Swap at a floating rate
(determined in accordance with 3 month GBP-LIBOR-BBA) plus a margin of
[*]% per annum on a notional sterling amount of L[*].
Under the terms of a Notional Swap with an Effective Date of [*] November
1999 and a Termination Date of [*][200*]:
(A) one party ("Notional Party A") will notionally pay to the other party
("Notional Party B") on the 15th day of each month of year commencing on
15 January 2000 an amount (determined in accordance with one month USD-
LIBOR-BBA) plus a margin of [*]% per annum on the Principal Amount
Outstanding of the Class A3 Notes; and
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(B) Notional Party B will notionally pay to Notional Party A on the 15th day
of each month of each year commencing on 15 January 2000 an amount
calculated in accordance with the Notional Swap at a floating rate
(determined in accordance with 3 month GBP-LIBOR-BBA) plus a margin of
[*]% per annum on a notional sterling amount of L[*].
Under the terms of a Notional Swap with an Effective Date of [*] November
1999 and a Termination Date of [*][200*]:
(A) one party ("Notional Party A") will notionally pay to the other party
("Notional Party B") on the 15th day of each month of year commencing on
15 January 2000 an amount (determined in accordance with one month USD-
LIBOR-BBA) plus a margin of [*]% per annum on the Principal Amount
Outstanding of the Class B Notes; and
(B) Notional Party B will notionally pay to Notional Party A on the 15th day
of each month of each year commencing on 15 January 2000 an amount
calculated in accordance with the Notional Swap at a floating rate
(determined in accordance with 3 month GBP-LIBOR-BBA) plus a margin of
[*]% per annum on a notional sterling amount of L[*].
Under the terms of a Notional Swap with an Effective Date of [*] November
1999 and a Termination Date of [*][200*]:
(A) one party ("Notional Party A") will notionally pay to the other party
("Notional Party B") on the 15th day of each month of year commencing on
15 January 2000 an amount (determined in accordance with one month USD-
LIBOR-BBA) plus a margin of [*]% per annum on the Principal Amount
Outstanding of the Class C Notes; and
(B) Notional Party B will notionally pay to Notional Party A on the 15th day
of each month of each year commencing on 15 January 2000 an amount
calculated in accordance with the Notional Swap at a floating rate
(determined in accordance with 3 month GBP-LIBOR-BBA) plus a margin of
[*]% per annum on a notional sterling amount of L[*].
The Agent Bank will cause the Adjusted A2 Redemption Amount, the Adjusted
A3 Redemption Amount, the Adjusted B Redemption Amount and the Adjusted C
Redemption Amount to be published in accordance with Condition 14 and to be
notified to the Note Trustee and each of the Paying Agents and to Noteholders
of the relevant class as soon as possible after determination. If the Agent
Bank does not at any time for any reason so determine the Adjusted A2
Redemption Amount the Adjusted A3 Redemption Amount, the Adjusted B Redemption
Amount or the Adjusted C Redemption Amount, the Note Trustee shall do so and
such determination or calculation shall be deemed to have been made by the
Agent Bank. In doing so, the Note Trustee shall apply all of the provisions of
this Condition, to the extent that, in its opinion, it can do so. In all other
respects it shall do so in such manner as it shall deem fair and reasonable in
all the circumstances. Any such determination or calculation made by the Note
Trustee shall be binding on the relevant class of Noteholders.
(c) Final Redemption
If the Notes have not previously been purchased and cancelled or redeemed
in full pursuant to Condition 6(a) or Condition 6(b) above, the Notes will be
finally redeemed at their then Principal Amount Outstanding or, where
applicable in respect of the Class A2 Notes, the Class A3 Notes, the Class B
Notes and the Class C Notes, respectively at the Adjusted A2 Redemption Amount,
the Adjusted A3 Redemption Amount, the Adjusted B Redemption Amount and the
Adjusted C Redemption Amount on the Distribution Date falling in [*][200*].
In these Conditions, "Principal Amount Outstanding" means, in relation to a
Note on any date, the principal amount of that Note on the Issue Date less the
aggregate amount of all principal payments in respect of that Note that have
been paid by the Issuer to the Noteholder concerned under this Condition 6
prior to such date in accordance with these Conditions.
(d) Redemption for Taxation and Other Reasons
If:
(i) (A) the Issuer, on the occasion of the next date for payment in
respect of any class of the Notes or Coupons, would be
required to make any withholding or deduction as referred
to in Condition 8 or would suffer tax in respect of its
income, profits or gains so that in any such case it would
be unable to make payment of the full amount due; or
(B) the Issuer, on the occasion of the next date for payment in
respect of any of the Swap Agreements, would be required to
make any withholding or deduction as referred to in
Condition 8 (applying the said Condition to such amount
mutatis mutandis for this purpose); or
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(C) the amount receivable by the Issuer in respect of the
Series 99-1 MTNs or any Swap Agreement is (or will be on
the next payment date in respect thereof) reduced as the
result of a withholding or deduction as referred to in
Condition 8 (applying the said Conditions to such amount
mutatis mutandis for this purpose),
the Issuer shall forthwith upon becoming aware of such
circumstance so inform the Note Trustee and the Swap Counterparty
and shall consult in good faith with the Note Trustee and the Swap
Counterparty as to whether the Issuer is able to take any steps to
avoid the relevant deduction or withholding referred to in (A),
(B) or (C) above (including arranging) the substitution of another
company incorporated in another jurisdiction approved by the Note
Trustee as the principal debtor under the Notes, or changing its
tax residence to another jurisdiction approved by the Note Trustee
and the Swap Counterparty under the Swap Agreement. The Issuer
shall be under no obligation to take any such steps and in
particular (but without limitation) shall not take any such steps
which would directly or indirectly prejudice the position of the
issuer or any Noteholder or Couponholder, but not so as in any
event to prejudice the position of the Swap Counterparty under any
Swap Agreement. If such circumstances shall not, in the opinion of
the Issuer and the Note Trustee, have been avoided within 20 days
of notification by the Issuer to the Note Trustee and the Swap
Counterparty, then it shall give notice thereof to the Noteholders
in accordance with Condition 14 and the Noteholders may, within a
period of 60 days from the date of such notice, by Extraordinary
Resolution require the Issuer to redeem all, but not some only, of
the Notes a their then Principal Amount Outstanding on the
Interest Payment Date next following such Extraordinary
Resolution; or
(ii) The Swap Counterparty shall forthwith upon becoming aware of such
circumstance so inform the Issuer and the Note Trustee and shall
use its best endeavours (Provided that using its best endeavours
will not require it to incur any loss, excluding immaterial,
incidental expenses) to arrange the substitution of an affiliate
incorporated in another jurisdiction as the Swap Counterparty
under the Swap Agreement or to change the office through which it
acts as Swap Counterparty, but not so as, in any event, to (1)
result in the ratings of the Notes by any Agency then rating the
Notes to be reduced or adversely affected by reference to the
ratings which would otherwise have applied to the Notes if such
circumstance described in this Condition 6(d)(ii) had not occurred
or (2) otherwise prejudice the position of the Issuer under such
Swap Agreement. If the Swap Counterparty is unable to arrange such
substitution or change, the Swap Counterparty shall so inform the
Issuer and the Note Trustee and shall use its best endeavours
(which will not require the Swap Counterparty to incur a loss,
excluding immaterial, incidental expenses) to arrange the
substitution of another company incorporated in another
jurisdiction to act as the Swap Counterparty under the Swap
Agreement but not as in any event to (X) result in the ratings of
the Notes by any rating agency to be reduced or adversely affected
by reference to the ratings which would otherwise have applied to
the Notes if such circumstance described in this Condition
6(d)(ii) had not occurred or (Y) otherwise prejudice the position
of the Issuer under such Swap Agreement. If such circumstance
shall not, in the opinion of the Issuer and the Note Trustee, have
been avoided within 20 days of notification by the Swap
Counterparty to the Issuer and the Note Trustee then the Issuer
shall give notice thereof to the Noteholders in accordance with
Condition 14 and the Noteholders may, within a period of 60 days
from the date of such notice, by Extraordinary Resolution require
the Issuer to redeem all, but not some only, of the Notes at their
then Principal Amount Outstanding on the Interest Payment Date
next following such Extraordinary Resolution.
Notwithstanding the foregoing, if any withholding or deduction referred to
in Condition 6(d)(i)(A) arises by reason of the failure by the relevant
Noteholder to comply with any applicable procedures required to establish non-
residence or other similar claim for exemption from such tax, then Condition 8
shall apply and such Noteholder shall have no right to be included in any
Noteholders calling for redemption of the Notes under this Condition 6(d).
(e) Other Redemption
The Issuer shall not be entitled to redeem the Notes otherwise than as
provided in paragraphs (a), (b), (c) and (d) above.
(f) Purchase
The Issuer, and/or related companies of it may at any time purchase Notes
in the open market or otherwise at any price, provided that all unmatured
Coupons relating thereto are surrendered and purchased therewith.
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(g) Cancellation
All Notes redeemed or purchased pursuant to the foregoing provisions and
any unmatured Coupons attached to or surrendered with them shall be cancelled
forthwith and may not be reissued or resold.
(h) Post Maturity Call Option
All of the Noteholders will, at the request of Gracechurch Card (Holdings)
Limited, sell all (but not some only) of their holdings of Notes to Gracechurch
Card (Holdings) Limited, pursuant to the option granted to it by the Note
Trustee (on behalf of the Noteholders) (the "Post Maturity Call Option") to
acquire all (but not some only) of the Notes (plus accrued interest thereon),
for the consideration of one penny per Note, on the earlier of (i) any date
falling after [*][200*] and (ii) in the event that the Security is enforced,
the date on which the Note Trustee determines that the proceeds of such
enforcement are insufficient after payment of all other claims ranking in
priority to the Notes to pay in full any amount due in respect of the Notes,
after paying in full any amounts available to pay amounts outstanding under the
Notes.
Furthermore, each of the Noteholders acknowledges that the Note Trustee
has the authority and the power to bind Noteholders in accordance with the
terms and conditions set out in the Post Maturity Call Option and each
Noteholder, by subscribing for the relevant Note(s), agrees to be so bound.
7. Payments
(a) Principal
Payments of principal in respect of the Notes shall be made only against
presentation and (in the case of final redemption, provided that payment is
made in full) surrender of Notes at the specified office of any Paying Agent
(in the case of the Class A1 Notes and the Class A2 Notes) outside the United
States of America or (in the case of the Class A3 Notes, the Class B Notes and
the Class C Notes) inside the United States of America by sterling cheque (or,
in the case of the Class A2 Notes by euro cheque or in the case, of the Class
A3 Notes, the Class B Notes and the Class C Notes by US dollar cheque) drawn
on, or by transfer to a sterling account, Euro or US dollar account, as the
case may be maintained by the payee with, a bank in London, or in the case of
the Class A3 Notes, the Class B Notes and the Class C Notes) in New York.
(b) Interest
Payments of interest shall, subject to paragraph (g) below, be made only
against presentation and (provided that payment is made in full) surrender of
the appropriate Coupons at the specified office of any Paying Agent in the
manner described in paragraph (a) above.
(c) Payments subject to fiscal laws
All payments in respect of the Notes are subject in all cases to any
applicable fiscal or other laws and regulations, but without prejudice to the
provisions of Condition 8. No commissions or expenses shall be charged to the
Noteholders or Couponholders in respect of such payments.
(d) Unmatured Coupons void
On the due date for redemption of any Note, all unmatured Coupons relating
thereto (whether or not still attached) shall become void and no payment will
be made in respect thereof.
(e) Payments on business days
If the due date for payment of any amount in respect of any Note or Coupon
is not a business day in the place of presentation, the holder shall not be
entitled to payment in such place of the amount due until the next following
business day in such place and shall not be entitled to any further interest or
other payment in respect of any such delay.
In this paragraph, "business day" means, in respect of any place of
presentation, any day (other than a Saturday or Sunday) which is a Target
Settlement Date and on which banks are open for business in London, New York
and in such place of presentation and, in the case of payment by transfer to a
sterling or euro account as referred to above, on which dealings in foreign
currencies may be carried on in London and in such place of presentation and,
in the case of payment by transfer to a dollar account as referred to above, on
which dealings in foreign currencies may be carried out in New York and in such
place of presentation.
(f) Payments other than in respect of matured Coupons
Payments of interest other than in respect of matured Coupons shall be
made only against presentation of the relevant Notes at the specified office of
any Paying Agent in the manner described in paragraph (a) above.
G-14
<PAGE>
(g) Partial payments
If a Paying Agent makes a partial payment in respect of any Note or Coupon
presented to it for payment, such Paying Agent will endorse on such Note (in
respect of payments of principal) or on the Coupon (in respect of payments of
interest) a statement indicating the amount and date of such payment.
8. Taxation
All payments of principal and interest in respect of the Notes and the
Coupons shall be made free and clear of, and without withholding or deduction
for or on account of, any taxes, duties, assessments or governmental charges of
whatsoever nature imposed, levied, collected, withheld or assessed by any
jurisdiction (a "Relevant Jurisdiction") or any political subdivision or any
authority in or of any Relevant Jurisdiction having power to tax, unless such
withholding or deduction is required by the law (or by the authorities) of the
Relevant Jurisdiction. In that event the Issuer or the Paying Agents shall make
such payment after such withholding or deduction has been made and shall
account to the relevant authorities for the amount so required to be withheld
or deducted. Notwithstanding anything in these Conditions, neither the Issuer
nor the Paying Agents will be required to make any additional payments to
holders of Notes or, if Definitive Notes are issued, Coupons in respect of such
withholding or deduction whatsoever applicable to any payment of principal or
interest.
9. Events of Default
If any of the following events (each an "Event of Default") occurs and is
continuing:
(a) Non-payment: the Issuer fails to pay any amount of principal in respect
of the Notes within 7 days of the due date for payment thereof or fails
to pay any amount of interest in respect of the Notes within 15 days of
the due date for payment thereof; or
(b) Breach of other obligations: the Issuer defaults in the performance or
observance of any of its other obligations under or in respect of the
Notes, the Trust Deed, the Deed of Charge (other than, in any such case,
any obligation for the payment of any principal or interest on the Notes)
or the Paying Agency and Agent Bank Agreement and (except where such
default is incapable of remedy) such default remains unremedied for 30
days after the Note Trustee has given written notice thereof to the
Issuer, certifying that such default is, in the opinion of the Note
Trustee, materially prejudicial to the interests of the Noteholders; or
(c) Unsatisfied judgment: a judgment or order for the payment of any amount
is rendered against the Issuer and continues unsatisfied and unstayed for
a period of 30 days after the date thereof or, if later, the date therein
specified for payment; or
(d) Security enforced: a secured party and/or encumbrancer takes possession
or a receiver, administrative receiver, administrator, examiner, manager
or other similar officer is appointed, of the whole or any part of the
undertaking, assets and revenues of the Issuer or a distress or execution
is levied; or
(e) Insolvency etc: (i) the Issuer becomes insolvent or is unable to pay its
debts as they fall due, (ii) an administrator or liquidator of the Issuer
or the whole or any part of the undertaking, assets and revenues of the
Issuer is appointed (or application for any such appointment is made),
(iii) the Issuer takes any action for a readjustment or deferment of any
of its obligations or makes a general assignment or an arrangement or
composition with or for the benefit of its creditors or declares a
moratorium in respect of any of its indebtedness or any guarantee of
indebtedness given by it or (iv) the Issuer ceases or threatens to cease
to carry on all or any substantial part of its business; or
(f) Winding up etc: an order is made or an effective resolution is passed for
the winding up, liquidation or dissolution of the Issuer; or
(g) Failure to take action etc: any action, condition or thing at any time
required to be taken, fulfilled or done in order (i) to enable the Issuer
lawfully to enter into, exercise its rights and perform and comply with
its obligations under and in respect of the Notes and the Related
Documents or (ii) to ensure that those obligations are legal, valid,
binding and enforceable (except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganisation or other
similar laws affecting the enforcement of the rights of creditors
generally and as such enforceability may be limited by the effect of
general principles of equity); or
(h) Unlawfulness: it is or will become unlawful for the Issuer to perform or
comply with any of its obligations under or in respect of the Notes or
the Related Documents; or
(i) Government intervention: (i) all or any substantial part of the
undertaking, assets and revenues of the Issuer is condemned, seized or
otherwise appropriated by any person acting under the authority of any
national, regional or local government or (ii) the Issuer is prevented by
any such person from exercising normal control over all or any
substantial part of its undertaking, assets and revenues; or
G-15
<PAGE>
(j) a Swap Agreement is for any reason terminated early,
then the Note Trustee may at its discretion and, if so required by (a) the Swap
Counterparty or (b) holders of at least one-quarter of the aggregate Principal
Amount Outstanding of (i) the Class A Notes so long as any of the Class A Notes
remain outstanding, (ii) thereafter the Class B Notes so long as any of the
Class B Notes remain outstanding, and (iii) thereafter the Class C Notes or if
so directed by an Extraordinary Resolution as defined in the Trust Deed of (x)
the Class A Noteholders so long as any of the Class A Notes remain outstanding,
(y) thereafter by an Extraordinary Resolution of the Class B Notes so long as
any of the Class B Notes remain outstanding and (z) thereafter by an
Extraordinary Resolution of the Class C Notes (subject in each case to being
indemnified to its satisfaction), shall be bound to, give written notice (an
"Enforcement Notice") to the Issuer declaring the Notes to be immediately due
and payable, whereupon they shall become immediately due and payable at their
Principal Amount Outstanding together with accrued interest without further
action or formality. Notice of any such declaration shall promptly be given to
the Noteholders. A declaration that the Notes have become immediately due and
payable (as referred to above) will not, of itself, accelerate the timing or
amount of redemption of the Notes as described in Condition 6.
10. Prescription
Claims for principal shall become void unless the relevant Notes are
presented for payment within ten years of the appropriate Relevant Date (as
defined below). Claims for interest shall become void unless the relevant
Coupons are presented for payment within five years of the appropriate Relevant
Date. After the date on which a Note or Coupon becomes void in its entirety no
claim may be made in respect thereof.
In these Conditions, "Relevant Date" means whichever is the later of (a)
the date on which the payment in question first becomes due and (b) if the full
amount payable has not been received in London by the Principal Paying Agent in
London with respect to payments in sterling and euro and in New York with
respect to payments in dollars or the Note Trustee on or prior to such due
date, the date on which (the full amount having been so received) notice to
that effect has been given to the Noteholders in accordance with Condition 14.
11. Replacement of Notes and Coupons
If any Note or Coupon is lost, stolen, mutilated, defaced or destroyed, it
may be replaced at the specified office of the Principal Paying Agent, subject
to all applicable laws and stock exchange requirements, upon payment by the
claimant of the expenses incurred in connection with such replacement and on
such terms as to evidence, security, indemnity and otherwise as the Issuer may
reasonably require. Mutilated or defaced Notes or Coupons must be surrendered
before replacements will be issued.
12. Note Trustee and Agents
The Note Trustee is entitled to be indemnified and relieved from
responsibility in certain circumstances and to be paid its costs and expenses
in priority to the claims of the Noteholders.
In the exercise of its powers and discretions under these Conditions and
the Trust Deed, the Note Trustee will have regard to the interests of the
Noteholders as a class and will not be responsible for any consequence for
individual holders of Notes or Coupons as a result of such holders being
connected in any way with a particular territory or taxing jurisdiction.
In acting under the Paying Agency and Agent Bank Agreement, and in
connection with the Notes and the Coupons, the Paying Agents and the Agent Bank
act solely as agents of the Issuer and (to the extent provided therein) the
Note Trustee and do not assume any obligations towards or relationship of
agency or trust for or with any of the Noteholders or Couponholders.
The Note Trustee and its related companies are entitled to enter into
business transactions with the Issuer, Barclays Bank PLC/or related companies
of either of them without accounting for any profit resulting therefrom.
The initial Paying Agents and their initial specified offices are listed
below. The Issuer reserves the right at any time to vary or terminate the
appointment of any Paying Agent or the Agent Bank and to appoint successor or
additional paying agents or a successor agent bank; Provided that the Issuer
shall at all times maintain (a) in the case of the Class A1 Notes and the Class
A2 Notes a Principal Paying Agent outside the United States of America, (b) in
the case of the Class A3 Notes, the Class B Notes and the Class C Notes a
Principal Paying Agent inside the United States of America (c) a Paying Agent,
if and for so long as any of the Notes are listed on the London Stock Exchange,
in London and (d) an Agent Bank. Notice of any change in the Paying Agents, in
the specified office of any Paying Agent or in the Agent Bank shall promptly be
given to the Noteholders in accordance with Condition 14.
G-16
<PAGE>
13. Meetings of Noteholders, Modification and Waiver, Substitution and Addition
(a) Meetings of Noteholders
The Trust Deed contains provisions for convening joint and separate
meetings of Class A Noteholders, Class B Noteholders and Class C Noteholders to
consider any matter affecting their interests, including the sanctioning by an
Extraordinary Resolution of such Noteholders of the relevant class of any
modification of the Notes of the relevant class (including these Conditions as
they relate to the Notes) of such relevant class) or the provisions of any of
the Related Documents, Provided that no modification of certain terms by the
Noteholders of any class including, inter alia, the maturity date of the Notes
of the relevant class or a modification which would have the effect of
postponing any day for payment of interest in respect of such Notes, the
reduction or cancellation of the amount of principal or premium payable in
respect of such Notes, the alteration of the Rate of Interest in respect of the
currency of payment of such Notes or any alteration of the priority of
redemption of such Notes (any such modification in respect of any such class of
Notes being referred to below as a "Basic Terms Modification") shall be
effective unless such modification is sanctioned by an Extraordinary Resolution
of the Noteholders of the other classes of Notes.
The quorum at any meeting of the Noteholders of any class of Notes for
passing an Extraordinary Resolution shall be two or more persons holding or
representing a clear majority of the aggregate Principal Amount Outstanding of
the Notes of the relevant class; Provided however, that, at any meeting the
business of which includes the sanctioning of a Basic Terms Modification, the
necessary quorum for passing an Extraordinary Resolution shall be two or more
persons holding or representing 75 per cent., or more of the aggregate
Principal Amount Outstanding of the Notes of the relevant class.
An Extraordinary Resolution of the Class B Noteholders or the Class C
Noteholders shall only be effective if the Note Trustee is of the opinion that
it will not be materially prejudicial to the interests of the Class A
Noteholders or (if the Note Trustee is not of that opinion) it is sanctioned by
an Extraordinary Resolution of the Class A Noteholders or there are no Class A
Notes then outstanding. Except in certain circumstances, the Trust Deed imposes
no such limitations on the powers of the Class A Noteholders, the exercise of
which will be binding on the Class B Noteholders and the Class C Noteholders,
irrespective of the effect on their interests.
An Extraordinary Resolution of the Class C Noteholders shall only be
effective if the Note Trustee is of the opinion that it will not be materially
prejudicial to the interests of the Class B Noteholders or (if the Note Trustee
if not of that opinion) it is sanctioned by an Extraordinary Resolution of the
Class B Noteholders or there are no Class B Notes then outstanding. Except in
certain circumstances, the Trust Deed imposes no such limitations on the powers
of the Class B Noteholders, the exercise of which will be binding on the Class
C Noteholders irrespective of the effect on their interests.
An Extraordinary Resolution passed at any meeting of the Noteholders of
any class of Notes shall be binding on all Noteholders of the relevant class,
whether or not they are present at the meeting. The majority required for an
Extraordinary Resolution, including the sanctioning of the Basic Terms
Modification, shall be 75 per cent. of the votes case on that Extraordinary
Resolution.
(b) Modification or Waiver
The Note Trustee may agree, without the consent of the Noteholders, or
Couponholders or the Swap Counterparty to (a) any modification (except a Basic
Term Modification) of, or to the waiver or authorisation of any breach or
proposed breach of, the Notes including these Conditions, or any other Related
Document, which is not, in the opinion of the Trustee, materially prejudicial
to the interests of the Noteholders the Couponholders or the Swap Counterparty
or (b) any modification of the Notes, or Coupons (including these Conditions)
or any of the Related Documents, which in the Note Trustees' opinion is to
correct a manifest error or is of a formal minor or technical nature. Any such
modification, waiver, authorisation or determination shall be binding on the
Noteholders, the Couponholders and the Swap Counterparty and, unless the Note
Trustee agrees otherwise, any such modification shall be notified to the
Noteholders in accordance with Condition 14 as soon as practicable thereafter.
(c) Substitution and Addition
As more fully set forth in the Trust Deed and the Swap Agreements (and
subject to the conditions and qualifications therein) subject to such amendment
of the Trust Deed and such other conditions as the Note Trustee, in the case of
the Trust Deed, and the Swap Counterparty, in the case of the Swap Agreements
may require, but without the consent of the Noteholders, the Note Trustee may
also agree to the substitution of any other body corporate in place of the
Issuer as principal debtor under the Trust Deed and the Notes and in the case
of such a substitution or addition the Note Trustee may agree, without the
consent of the Noteholders, to a change of the law governing the Notes and/or
the Trust Deed provided that such change would not in the opinion of the
Trustee be materially prejudicial to the interests of the Noteholders. Any such
substitution or addition shall be notified to the Noteholders in accordance
with Condition 14 as soon as practicable thereafter.
G-17
<PAGE>
(d) Enforcement
At any time after the Notes become due and repayable and without prejudice
to its rights of enforcement in relation to the Security, the Note Trustee may,
at its discretion and without notice, institute such proceedings as it thinks
fit to enforce payment of the Notes and Coupons (including the right to
repayment of the Notes together with accrued interest thereon) and shall be
bound to do so if (and only if):
(i) the security has become enforceable by reason of any Swap
Agreement being terminated; or
(ii) the security has become enforceable by reason of the Notes
becoming payable pursuant to Condition 6(b) or Condition 9(e); or
(iii) it shall have been so directed by an Extraordinary Resolution of
the Noteholders of the relevant class provided that (1) no
Extraordinary Resolution of the Class B Noteholders or Class C
Noteholders or any request of the Class B Noteholders or Class C
Noteholders shall be effective unless there is an Extraordinary
Resolution of the Class A Noteholders or a direction of the Class
A Noteholders to the same effect or none of the Class A Notes
remain outstanding (2) no Extraordinary Resolution of the Class C
Noteholders or any request of the Class C Noteholders shall be
effective unless there is an Extraordinary Resolution of the Class
B Noteholders or a direction of the Class B Notes remain
outstanding; and
(iv) it shall have been indemnified or provided with security to its
satisfaction.
No Noteholder or Couponholder may institute any proceedings against the
Issuer to enforce its rights under or in respect of the Notes, the Coupons or
the Trust Deed unless (i) the Note Trustee has become bound to institute
proceedings and has failed to do so within a reasonable time and (ii) such
failure is continuing.
14. Notices
Notices to the Noteholders shall be deemed to have been duly validly given
if published in a leading English language daily newspaper published in London
(which is expected to be the Financial Times). Any such notice shall be deemed
to have been given on the date of first publication.
Until such time as any Definitive Notes are issued, there may, so long as
the Global Note(s) is or are held in its or their entirety on behalf of
Euroclear and Cedelbank, be substituted for such publication in such newspaper
the delivery of the relevant notice to Euroclear and Cedelbank for
communication by them to the holders of the Notes. Any such notice shall be
deemed to have been given to the holders of the Notes on the seventh day after
the day on which such notice was given to Euroclear and Cedelbank.
Any notices specifying a Rate of Interest, an Interest Amount, an amount
of Additional Interest or of Deferred Interest, a Principal Payment or a
Principal Amount Outstanding shall be deemed to have been duly given if the
information contained in such notice appears on the relevant page of the
Reuters Screen (presently page [*]) or such other medium for the electronic
display of data as may be approved by the Note Trustee and notified to
Noteholders (the "Relevant Screen"). Any such notice shall be deemed to have
been given on the first date on which such information appeared on the Relevant
Screen. If it is impossible or impracticable to give notice in accordance with
this paragraph, then notice of the matters referred to in this Condition shall
be given in accordance with the preceding paragraph.
Copies of all notices given in accordance with these provisions shall be
sent to the London Stock Exchange Company Announcements Office and Euroclear
and Cedelbank.
15. Currency Indemnity
If any sum due from the Issuer in respect of the Notes or the Coupons or
any order or judgment given or made in relation thereto has to be converted
from the currency (the "first currency") in which the same is payable under
these Conditions or such order or judgment into another currency (the "second
currency") for the purpose of (a) making or filing a claim or proof against the
Issuer, (b) obtaining an order or judgment in any court or other tribunal or
(c) enforcing any order or judgment given or made in relation to the Notes, the
Issuer shall indemnify each Noteholder, on the written demand of such
Noteholder addressed to the Issuer and delivered to the Issuer or to the
specified office of the Principal Paying Agent, against any loss suffered as a
result of any discrepancy between (i) the rate of exchange used for such
purpose to convert the sum in question from the first currency into the second
currency and (ii) the rate or rates of exchange at which such Noteholder may in
the ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or in part,
of any such order, judgment, claim or proof.
This indemnity constitutes a separate and independent obligation of the
Issuer and shall give rise to a separate and independent cause of action.
G-18
<PAGE>
16. Governing Law and Jurisdiction
The Notes, the Coupons, the Swap Agreements and the Trust Deed are
governed by, and shall be construed in accordance with, English law.
The Trust Deed provides for the courts of England to have non-exclusive
jurisdiction in connection with the Notes.
G-19
<PAGE>
- -------------------------------------------------------------------------------
Gracechurch Card Funding (No. 1) PLC
Issuer
Barclays Bank PLC
Transferor and Servicer
$900,000,000 Class A Floating Rate Asset-Backed Notes
$50,000,000 Class B Floating Rate Asset-Backed Notes
------------------
Prospectus
------------------
Underwriters of the Class A Notes
Barclays Capital
Underwriter of the Class B Notes
Barclays Capital
You should rely only on the information contained in this prospectus. We
have not authorised anyone to provide you with different information.
We are not offering the offered notes where the offer is not permitted.
Dealers will deliver a prospectus when acting as underwriters of the
offered notes and with respect to their unsold allotments or subscriptions. In
addition, all dealers selling the offered notes will not deliver a prospectus
until * *, 1999.
- -------------------------------------------------------------------------------
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemised list of the estimated expenses (expressed in
U.S. dollars on an exchange rate of L0.60705 to U.S.$1.00) to be incurred in
connection with the offering of the securities being offered in this prospectus
other than underwriting discounts and commissions.
<TABLE>
<CAPTION>
<S> <C>
Registration Statement Fee $264,100*
Printing and Engraving Expenses............................... 98,839
Trustee's Fees and Expenses................................... 45,301
Legal Fees and Expenses....................................... 1,224,776
Accountants' Fees and Expenses................................ 82,366
Rating Agency Fees............................................ 543,613
Listing Fees.................................................. 49,419
Miscellaneous Fees and Expenses............................... 207,561
-------------
Total........................................................ $ 2,515,975
=============
</TABLE>
* Actual.
Item 15. Indemnification of Directors and Officers.
Indemnification. Under the laws which govern the organization of the
registrant, the registrant has the power and in some instances may be required
to provide an agent, including an officer or director, who was or is a party or
is threatened to be made a party to certain proceedings, with indemnification
against certain expenses, judgements, fines, settlements and other amounts
under certain circumstances.
Issuer
Pursuant to section 142 of the Articles of Association of Gracechurch Card
Funding (No. 1) PLC, every person who is or was a director, alternate director
or secretary of the issuer shall be indemnified out of the assets of the issuer
against all costs, charges, losses and liabilities incurred by him in the
proper execution of his duties or the proper exercise of his powers,
authorities and discretions. This includes a liability incurred:
* defending proceedings, whether civil or criminal, in which judgement is
given in his favour or in which he is acquitted, or which are otherwise
disposed of without a finding or admission of material breach of duty on
his part; or
* in connection with any application in which relief is granted to him by
the court from liability for negligence, default, breach of duty or
breach of trust in relation to the affairs of the issuer.
The board of directors may exercise all powers of the issuer to purchase
and maintain insurance for the benefit of a person who is or was:
* a director, alternate director, secretary or auditor of the issuer or of
a company which is or was a subsidiary undertaking of the issuer or in
which the issuer has or had an interest whether direct or indirect: or
* trustee of a retirement benefits scheme or other trust in which a person
referred to in the preceding paragraph is or has been interested,
* indemnifying him against liability for negligence, default, breach of
duty or breach of trust or other liability which may lawfully be insured
against by the issuer.
MTN Issuer
Pursuant to section 43 of the Articles of Association of Barclaycard Funding
PLC, each person who is a director, alternate director or secretary of the MTN
issuer must be indemnified out of the assets of the MTN issuer against all
costs, charges, losses and liabilities incurred by him in the proper execution
of his duties or the proper exercise of his powers, authorities and
discretions. This includes a liability incurred:
* defending proceedings, whether civil or criminal, in which judgement is
given in his favour or in which he is acquitted, or which are otherwise
disposed of without a finding or admission of material breach of duty on
his part; or
* in connection with any application in which relief is granted to him by
the court from liability for negligence, default, breach of duty or
breach of trust in relation to the affairs of the MTN issuer.
II-1
<PAGE>
The board of directors may exercise all the powers of the MTN issuer to
purchase and maintain insurance for the benefit of a person who is or was:
* a director, alternate director, secretary or auditor of the MTN issuer or
of a company which is or was a subsidiary undertaking of the MTN issuer
or in which the MTN issuer has or had an interest whether direct or
indirect: or
* trustee of a retirement benefits scheme or other trust in which a person
referred to in the preceding paragraph is or has been interested,
indemnifying him against liability for negligence, default, breach of duty or
breach of trust or other liability which may lawfully be insured against by the
MTN issuer.
Directors and Officers' Liability Insurance
Directors serving at the behest of Barclays are covered to the extent of claims
made against them for any of the following actual or alleged breach of duty,
error, neglect, mis-statement, misleading statement, omission, breach of
warranty of authority or other act committed or attempted by any director in
that capacity or any matter claimed against them by reason of their status as a
director. This cover -- of up to L20,000,000 -- operates only in excess of any
directors' cover or indemnity provided by the company of which it is acting as
director.
Item 16. Exhibits.
<TABLE>
<CAPTION>
<S> <C>
1.1 --- Form of Underwriting Agreement for the Class A Notes and Class B Notes**.
3.1 --- Memorandum and Articles of Association of Gracechurch Card Funding (No.1) PLC.*
3.2 --- Memorandum and Articles of Association of Barclaycard Funding PLC.*
3.3 --- Memorandum and Articles of Association of Gracechurch Receivables Trustee Limited.
4.1 --- Form of Declaration of Trust and Trust Cash Management Agreement.*
4.2 --- Form of Series 99-1 Supplement to Declaration of Trust and Trust Cash Management
Agreement.*
4.3 --- Form of Security Trust and Cash Management Deed.*
4.4 --- Form of Trust Deed.*
4.5 --- Form of Deed of Charge.*
4.6 --- Form of Paying Agency and Agent Bank Agreement.*
4.7 --- Form of Class A Note.*
4.8 --- Form of Class A MTN.*
4.9 --- Form of Class B Note.*
4.10 --- Form of Class B MTN.*
4.11 --- Form of Series 99-1 MTN Supplement.*
4.12 --- Form of Depository Agreement.
4.13 --- Form of Beneficiaries Servicing Agreement.*
5.1 --- Opinion of Clifford Chance with respect to validity.
8.1 --- Opinion of Orrick Herrington & Sutcliffe LLP with respect to U.S. tax matters.*
8.2 --- Opinion of Clifford Chance with respect to U.K. tax matters.
10.1 --- Form of Receivables Securitisation Agreement.*
10.2 --- Form of Class A Dollar Swap Agreement.*
10.3 --- Form of Class B Dollar Swap Agreement.*
10.4 --- Form of Expenses Loan Agreement.
23.1 --- Consent of Clifford Chance (included in Exhibits 5.1 and 8.2).
23.2 --- Consent of Orrick Herrington & Sutcliffe LLP (included in Exhibit 8.1).*
23.3 --- Consent of PriceWaterhouseCoopers.*
24.1 --- Powers of Attorney.*
25.1 --- Statement of Eligibility of Trustee (form T-1).
</TABLE>
* Previously filed.
** To be filed by amendment.
II-2
<PAGE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes as follows:
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers, and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission this indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
these liabilities, other than payment by a 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 that 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 the indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of the issue.
(b) For purposes of determining any liability under the Act, the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(c) For purposes of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered in it,
and the offering of those securities at that time will be deemed to be
the initial bona fide offering of them.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Gracechurch
Card Funding (No. 1) PLC, a Registrant, certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form F-1
and has duly caused this Amendment No. 2 to the Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorised, in the City
of London, England, on October 28, 1999
Gracechurch Card Funding (No. 1) PLC,
As Issuer of the Notes
By: /s/ Peter Crook
-----------------------------------
Name: Peter Crook
Title: Director
As required by the Securities Act of 1933, this Amendment No. 2 to the
Registration Statement has been signed on October 28, 1999 by the following
persons in the capacities for Gracechurch Card Funding (No. 1) PLC indicated.
Signature Title
--------- -----
/s/ Peter Crook Director (Principal Financial Officer,
- ----------------------------------- Principal Executive Officer and
Peter Crook Principal Accounting Officer)
* Director
- -----------------------------------
David Roger Finney
* Director
- -----------------------------------
Brian Donald Needham
*By: /s/ Peter Crook
------------------------------
Peter Crook
Attorney-in-Fact
Powers of Attorney appointing Peter Crook to execute the Registration
Statement and any amendments thereto on behalf of the above-named individuals
were previously filed with the Securities and Exchange Commission.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Barclaycard
Funding PLC, a Registrant, certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form F-1 and has duly
caused this Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorised, in the City of London,
England, on October *, 1999
Barclaycard Funding PLC
As Issuer of the Medium Term Notes.
By: /s/ Peter Crook
-----------------------------------
Name: Peter Crook
Title: Director
As required by the Securities Act of 1933, this Amendment No. 2 to the
Registration Statement has been signed on October *, 1999 by the following
persons in the capacities for Barclaycard Funding PLC indicated.
Signature Title
--------- -----
/s/ Peter Crook Director (Principal Financial Officer,
- ----------------------------------- Principal Executive Officer and
Peter Crook Principal Accounting Officer)
* Director
- -----------------------------------
David Roger Finney
* Director
- -----------------------------------
Brian Donald Needham
*By: /s/ Peter Crook
------------------------------
Peter Crook
Attorney-in-Fact
Powers of Attorney appointing Peter Crook to execute the Registration
Statement and any amendments thereto on behalf of the above-named individuals
were previously filed with the Securities and Exchange Commission.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Gracechurch
Receivables Trustee Limited, a Registrant, certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form F-1
and has duly caused this Amendment No. 2 to the Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorised, in the City of
London, England, on October *, 1999
Gracechurch Receivables
Trustee Limited
on behalf of the receivables trust
By:
-----------------------------------
Name:
Title: Director
As required by the Securities Act of 1933, this Amendment No. 2 to the
Registration Statement has been signed on October *, 1999 by the following
persons in the capacities for Gracechurch Receivables Trustee Limited indicated.
Signature Title
--------- -----
Director (Principal Financial Officer,
- ----------------------------------- Principal Executive Officer and
Principal Accounting Officer)
Director
- -----------------------------------
II-6
<PAGE>
AUTHORIZED REPRESENTATIVE
/s/ Michael J. Wade
------------------------------
Michael J. Wade
As the duly authorized representative in the United States of both Barclaycard
Funding PLC and Gracechurch Card Funding (No.1) PLC,
Date: October 28, 1999
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------ -----------------------
<S> <C>
1.1 --- Form of Underwriting Agreement for the Class A Notes and Class B Notes**.
3.1 --- Memorandum and Articles of Association of Gracechurch Card Funding (No.1) PLC.*
3.2 --- Memorandum and Articles of Association of Barclaycard Funding PLC.*
3.3 --- Memorandum and Articles of Association of Gracechurch Receivables Trustee Limited.
4.1 --- Form of Declaration of Trust and Trust Cash Management Agreement.*
4.2 --- Form of Series 99-1 Supplement to Declaration of Trust and Trust Cash Management
Agreement.*
4.3 --- Form of Security Trust and Cash Management Deed.*
4.4 --- Form of Trust Deed.*
4.5 --- Form of Deed of Charge.*
4.6 --- Form of Paying Agency and Agent Bank Agreement.*
4.7 --- Form of Class A Note.*
4.8 --- Form of Class A MTN.*
4.9 --- Form of Class B Note.*
4.10 --- Form of Class B MTN.*
4.11 --- Form of Series 99-1 MTN Supplement.*
4.12 --- Form of Depository Agreement.
4.13 --- Form of Beneficiaries Servicing Agreement.*
5.1 --- Opinion of Clifford Chance with respect to validity.
8.1 --- Opinion of Orrick Herrington & Sutcliffe LLP with respect to U.S. tax matters.*
8.2 --- Opinion of Clifford Chance with respect to U.K. tax matters.
10.1 --- Form of Receivables Securitisation Agreement.*
10.2 --- Form of Class A Dollar Swap Agreement.*
10.3 --- Form of Class B Dollar Swap Agreement.*
10.4 --- Form of Expenses Loan Agreement.
23.1 --- Consent of Clifford Chance (included in Exhibits 5.1 and 8.2).
23.2 --- Consent of Orrick Herrington & Sutcliffe LLP (included in Exhibit 8.1).*
23.3 --- Consent of PriceWaterhouseCoopers.*
24.1 --- Powers of Attorney.*
25.1 --- Statement of Eligibility of Trustee (form T-1).
</TABLE>
* Previously filed.
** To be filed by amendment.
II-8
CONFORMED COPY
COMPANIES (JERSEY) LAW 1991
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
- OF -
GRACECHURCH RECEIVABLES TRUSTEE LIMITED
1. The name of the company is Gracechurch Receivables Trustee Limited (the
"Company").
2. The share capital of the Company is L2.00 divided into two shares of
L1.00 each.
3. The liability of each member is limited.
4. The Company shall exist until dissolved by special resolution or
otherwise according to law.
5. The Company is established for the sole purpose of participating in a
securitisation programme (the "Programme") relating to certain
receivables originated or to be originated by "Barclaycard", a business
unit of Barclays Bank PLC, in particular:
(1) to enter into and perform:
(a) a Receivables Securitisation Agreement expected to be made
between the Company and Barclays Bank PLC;
(b) a Declaration of Trust and Trust Cash Management Agreement
expected to be made between the Company and Barclays Bank
PLC;
(c) a Series 99-1 Supplement to the Declaration of Trust and
Trust Cash Management Agreement expected to be made between
the Company, Barclays Bank PLC and Barclaycard Funding PLC;
(d) further supplements to the Declaration of Trust and Trust
Cash Management Agreement expected to be entered into by,
inter alia, the Company and Barclays Bank PLC from time to
time;
(e) all other agreements and documents relating thereto;
(2) to enter into and perform all agreements, and to take all steps,
required:
(a) to amend, vary, replace or supplement the documents
specified above from time to time in order to give effect
to changes within the Programme; and
(b) to ensure the due administration of the Company under the
laws of Jersey; and
1
<PAGE>
(3) to do all things as may be deemed incidental or conducive to the
attainment of the above in connection with the Programme.
2
<PAGE>
We the limited liability companies whose names and addresses are set out
below and whose common seals are hereunto affixed are desirous of being
formed into a limited liability company and we respectively agree to take
the number of shares in the capital of the Company set opposite our
respective names.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Names and addresses of Shares Common seals
subscribers taken
-------------------------------------------------------------------------------
<S> <C> <C>
Premier Circle Limited One The common seal of
Normandy House Premier Circle Limited
Grenville Street was hereunto affixed in the
St. Helier presence of:
Jersey
Channel Islands. Alan Dart Director
Garry Toy/ Michael Robinson Secretary
Second Circle Limited One The common seal of
Normandy House Second Circle Limited
Grenville Street was hereunto affixed in the
St. Helier presence of:
Jersey
Channel Islands. Alan Dart Director
Garry Toy/ Michael Robinson Secretary
-------------------------------------------------------------------------------
</TABLE>
Witness to all the above signatures:
Signature: L.J. Monticelli
Full name: Lucinda Jane Monticelli
Normandy House
Grenville Street
St. Helier
Jersey
Channel Islands.
3
<PAGE>
INDEX
<TABLE>
<CAPTION>
Article Page
<S> <C> <C>
1. Interpretation 1
1. Share Capital 2
1. Modification of Rights 2-3
1. Shares 3
1. Lien 3-4
1. Calls on Shares 4-5
1. Transfer and Transmission of Shares 5-6
1. Forfeiture of Shares 6-7
1. General Meetings 7
1. Proceedings at General Meetings 8-9
1. Votes of Members 9
1. Corporations Acting by Representatives at Meetings 10
1. Appointment of Directors 10-11
1. Resignation Disqualification and Removal of Directors 11
1. Alternate Directors 11
1. Executive Directors 11-12
1. Powers of Directors 12
1. Proceedings of Directors 12-14
1. Directors' Conflicts of Interes 14-15
1. Seal 15
1. Secretary 15
1. Dividends and Reserve 15-16
1. Capitalisation of Reserves etc. 16-17
1. Accounts 17
1. Notices 18
1. Winding up 18-19
1. Indemnity 19
</TABLE>
4
<PAGE>
CONFORMED COPY
COMPANIES (JERSEY) LAW 1991
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
-- OF --
GRACECHURCH RECEIVABLES TRUSTEE LIMITED
1. INTERPRETATION
(1) The Standard Table shall be excluded from application in its
entirety to the Company and the following provisions shall
constitute the articles of the Company in place of the Standard
Table.
(2) In these articles unless the context otherwise requires:
"debenture" includes debenture stock;
"Directors" means the directors for the time being of the
Company;
"Interpretation Law" means the Interpretation (Jersey) Law
1954 and any statutory modification or re-enactment thereof
for the time being in force;
"Law" means the Companies (Jersey) Law 1991 and any
statutory modification or re-enactment thereof for the time
being in force;
"month" means calendar month;
"office" means the registered office of the Company situate
in the Island of Jersey;
"ordinary resolution" means a resolution passed by a
majority of the members present in person or by proxy and
voting at a general meeting;
"paid up" includes credited as paid up;
"Register" means the register of members required to be
kept by Article 41 of the Law;
"Seal" means the common seal of the Company;
"Secretary" means and includes any person appointed to
perform the duties of secretary to the Company and includes
an assistant or deputy secretary.
Words in the singular shall include the plural and words in the
plural shall include the singular and words denoting any gender
shall include all genders.
5
<PAGE>
Words importing individuals shall include corporations.
Save as defined herein or in the memorandum of the Company and
unless the context otherwise requires words or expressions
contained in these articles shall bear the same meaning as in the
Law and in the Interpretation Law.
2. SHARE CAPITAL
(1) Without prejudice to any special rights for the time being
conferred on the holders of any shares or class of shares (which
special rights shall not be varied or abrogated except with such
consent or sanction as is hereinafter provided) any share or class
of shares in the share capital of the Company may be authorised
for issue with such preferred deferred or other special rights or
such restrictions whether in regard to dividend return of capital
voting or otherwise as the Company may from time to time by
special resolution determine.
(2) Where the Company allots shares at a premium the aggregate amount
of all premiums on shares allotted as and when the premiums are
paid up shall be transferred to an account called the share
premium account which may be applied for any of the purposes
permitted by and under the provisions of the Law.
(3) The Company may by special resolution alter its share capital as
stated in its memorandum in any of the ways permitted or provided
for under the Law.
(4) Subject to confirmation by the court and the provisions of the Law
the Company may by special resolution reduce its share capital in
any way.
(5) The Company may from time to time subject to the provisions of the
Law:
(a) issue; or
(b) convert existing non-redeemable shares whether issued or
not into
shares which are to be redeemed or are liable to be redeemed at
the option of the Company or the holder thereof.
3. MODIFICATION OF RIGHTS
(1) Subject to the provisions of the Law whenever the share capital of
the Company is divided into different classes of shares the
special rights attached to any class (unless otherwise provided by
the terms of issue of the shares of that class) may be varied or
abrogated at any time with the consent in writing of the holders
of two-thirds of the issued shares of that class or with the
sanction of a special resolution passed at a separate meeting of
the holders of the shares of that class. To every such separate
meeting all the provisions of these articles relating to general
meetings of the Company or to the proceedings thereat shall
mutatis mutandis apply except that the necessary quorum shall be
persons holding or representing by proxy at least one-third in
nominal amount of the issued shares of that class (but so that if
at any adjourned meeting of such holders a quorum as above defined
is not present one person
6
<PAGE>
present holding shares of that class or his proxy shall be a
quorum) and that the holders of shares of that class or their duly
appointed proxies shall on a poll have one vote in respect of
every share of that class held by them respectively.
(2) The special rights conferred upon the holders of any shares or
class of shares issued with preferred deferred or other special
rights shall (unless otherwise expressly provided by the
conditions of issue of such shares) be deemed not to be varied by
the creation or issue of further shares ranking pari passu
therewith.
4. SHARES
(1) The shares shall be at the disposal of the Directors who may
subject to the provisions of the Law allot grant options over or
otherwise deal with or dispose of them to such persons at such
times and generally on such terms and conditions as they think
proper. Save as provided in the Law each share in the Company
shall be distinguished by its appropriate number.
(2) The Company may pay a commission to a person in consideration of
his subscribing or agreeing to subscribe for shares in the Company
or procuring or agreeing to procure subscriptions for shares in
the Company as provided in the Law.
(3) The Company shall keep a Register in accordance with the
provisions of the Law.
(4) Unless the conditions of allotment shall otherwise provide every
person whose name is entered as a member in the Register shall be
entitled without payment to a certificate under the Seal
specifying the share or shares held by him and the amount paid up
thereon provided that in respect of a share or shares held jointly
by several persons the Company shall not be bound to issue more
than one certificate and delivery of a certificate for a share to
one of several joint holders shall be sufficient delivery to all
and certificates shall be completed and be ready for delivery
within two months after the allotment of the relevant shares or
the date on which a transfer is lodged with the Company.
(5) If a share certificate be worn out defaced lost or destroyed a
duplicate certificate may be issued on payment of such fee (if
any) not exceeding ten pounds and on such terms (if any) as to
evidence and indemnity as the Directors think fit.
5. LIEN
(1) The Company shall have a lien on every share (not being a fully
paid share) for all moneys (whether presently payable or not)
called or payable at a fixed time in respect of that share and the
Company shall also have a lien on all shares (other than fully
paid shares) standing registered in the name of a single person
for all moneys presently payable by him or his estate to the
Company but the Directors may at any time declare any shares to be
wholly or in part exempt from the provisions of this article. The
Company's lien (if any) on a share shall extend to all dividends
payable thereon.
7
<PAGE>
(2) The Company may sell in such manner as the Directors think fit any
shares on which the Company has a lien but no sale shall be made
unless some sum in respect of which the lien exists is payable nor
until the expiration of fourteen days after a notice in writing
stating and demanding payment of such part of the amount in
respect of which the lien exists as is presently payable has been
given to the registered holder for the time being of the share or
the person entitled by reason of his death or bankruptcy to the
share. For the purpose of giving effect to any such sale the
Directors may authorise some person to transfer to the purchaser
thereof the shares so sold.
(3) The proceeds of sale shall be applied in payment of such part of
the amount in respect of which the lien exists as is presently
payable and the residue shall (subject to a like lien for sums not
presently payable as existed upon the shares prior to the sale) be
paid to the person entitled to the shares at the date of the sale.
The purchaser shall be registered as the holder of the shares and
he shall not be bound to see to the application of the purchase
money nor shall his title to the shares be affected by any
irregularity or invalidity in the proceedings in reference to the
sale.
6. CALLS ON SHARES
(1) Subject to the terms of allotment the Directors may make calls
upon the members in respect of any moneys unpaid on their shares
(whether in respect of nominal value or premium) and each member
shall (subject to receiving at least fourteen clear days' notice
specifying when and where payment is to be made) pay to the
Company as required by the notice the amount called on his shares.
A call may be required to be paid by instalments. A call may,
before receipt by the Company of any sum due thereunder, be
revoked in whole or part and payment of a call may be postponed in
whole or part. A person upon whom a call is made shall remain
liable for calls made upon him notwithstanding the subsequent
transfer of the shares in respect whereof the call was made.
(2) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed and
proof of the resolution shall be sufficient evidence of the call
having been made.
(3) The joint holders of a share shall be jointly and severally liable
to pay all calls and other moneys due in respect thereof.
(4) If a sum called in respect of a share is not paid before or on the
day appointed for payment thereof the person from whom the sum is
due shall pay interest upon the sum at a rate fixed by the
Directors from the day appointed for the payment thereof to the
time of the actual payment but the Directors shall be at liberty
to waive the payment of that interest wholly or in part.
(5) Any sum or premium which by the terms of allotment of a share is
made payable upon allotment or at any fixed date shall for
8
<PAGE>
all the purposes of these articles (save as herein otherwise
expressly provided) be deemed to be a call duly made and payable
on the date fixed for payment and in case of non-payment the
provisions of these articles as to payment of interest and
expenses forfeiture and the like and all other relevant provisions
of these articles shall apply as if the same were a call duly made
and notified as hereby provided.
(6) The provisions of these articles as to payment of interest shall
apply in the case of non-payment of any sum which by the terms of
issue of a share becomes payable at a fixed time whether on
account of the amount of the share or by way of premium as if the
same had become payable by virtue of a call duly made and
notified.
(7) The Company may if the Directors think fit receive from any member
willing to advance the same all or any part of the money uncalled
and unpaid upon any shares held by him and upon all or any of the
moneys so advanced may (until the same would but for such advance
become presently payable) pay interest at such rate (not exceeding
without the sanction of the Company in general meeting ten per
centum per annum) as may be agreed upon between the member paying
the sum in advance and the Directors.
7. TRANSFER AND TRANSMISSION OF SHARES
(1) Save as otherwise permitted under the provisions of the Law all
transfers of shares shall be effected using an instrument of
transfer. The instrument of transfer of any fully paid share shall
unless the Directors otherwise resolve be signed by the transferor
alone and in the case of any partly paid share the instrument of
transfer shall be signed by the transferor and by the transferee.
The transferor shall be deemed to remain the holder of such share
until the name of the transferee is entered in the Register in
respect thereof.
(2) The instrument of transfer of any share shall be in writing in any
usual common form or any form approved by the Directors and shall
specify the full name and address of the transferee.
(3) The Directors may in their absolute discretion refuse to register
any transfer of any share (whether fully paid or not). Without
prejudice to the generality of the foregoing, the Directors may
refuse to register a transfer unless the instrument of transfer:
(a) is lodged at the office or at such other place as the
Directors may appoint and is accompanied by the certificate
for the shares to which it relates and such other evidence
as the Directors may reasonably require to show the right
of the transferor to make the transfer; and
(b) is in respect of only one class of shares.
(4) If the Directors refuse to register any transfer of any share they
shall give notice thereof to the proposed transferor and
transferee within two months after the date
9
<PAGE>
on which the instrument of transfer of such share is lodged with
the Company.
(5) The registration of transfers of shares or of transfers of any
class of shares may be suspended at such times and for such
periods as the Directors may determine.
(6) No fee shall be charged for the registration of any instrument of
transfer or other document relating to or affecting the title to
any share.
(7) The Company shall be entitled to retain any instrument of transfer
of any share which is registered, but any instrument of transfer
of any share which the Directors refuse to register shall be
returned to the person lodging it when notice of the refusal is
given.
(8) If a member dies, the survivor or survivors, where the deceased
was a joint holder, and the executors, administrators or other
legal personal representatives of the deceased, where the deceased
was a sole or only surviving holder, shall be the only persons
recognised by the Company as having any title to the interest of
the deceased in the shares; but nothing herein contained shall
release the estate of a deceased member from any liability in
respect of any share which had been jointly held by him.
(9) A minor or an interdict may not become a member of the Company
unless the shares were transmitted to him on the death of the
holder thereof.
(10) Any guardian of a minor member and any curator appointed by the
Royal Court or other person appointed by a court of competent
jurisdiction to administer to the affairs of any member of unsound
mind, and any person becoming entitled to a share in consequence
of the death or bankruptcy of a member may, upon such evidence
being produced as the Directors may properly require, elect either
to become the registered holder of the share or to have some
person nominated by him registered as the holder thereof. If he
elects to become the holder he shall give notice to the Company to
that effect. If he elects to have another person registered he
shall execute an instrument of transfer of the share to that
person. All the limitations restrictions and provisions of these
articles relating to the transfer of shares shall apply to the
notice or instrument of transfer as if it were an instrument of
transfer executed by the member and as if the member had been a
person of full age or not of unsound mind or as if the death or
bankruptcy of the member had not occurred.
(11) A person becoming entitled to a share in consequence of the death
or bankruptcy of a member shall have the rights to which he would
be entitled if he were the registered holder of the share, except
that he shall not, before being registered as the holder thereof,
be entitled in respect of the share to vote at any meeting of the
Company or at any separate meeting of the holders of any class of
shares in the Company.
10
<PAGE>
8. FORFEITURE OF SHARES
(1) If a member fails to pay any call or instalment of a call on the
day appointed for payment thereof the Company may at any time
thereafter during such time as any part of such call or instalment
remains unpaid serve a notice on him requiring payment of so much
of the call or instalment as is unpaid together with any interest
which may have accrued and any expenses that may have been
incurred by reason of such non-payment.
(2) The notice shall name a further day (not earlier than the
expiration of fourteen days from the date of the notice) on or
before which the payment required by the notice is to be made and
shall state that in the event of non-payment at or before the time
and at the place appointed the shares in respect of which the call
or instalment is unpaid will be liable to be forfeited.
(3) If the requirements of any such notice as aforesaid are not
complied with any share in respect of which the notice has been
given may at any time thereafter before the payment required by
the notice has been made be forfeited by a resolution of the
Directors to that effect.
(4) Any share forfeited shall become the property of the Company and
may be re-allotted sold or otherwise disposed of on such terms and
in such manner as the Directors think fit and notwithstanding any
such forfeiture as aforesaid the Directors may at any time before
the forfeited share has been disposed of permit the share so
forfeited to be redeemed upon the terms of payment of all calls
and interest due upon and expenses incurred in respect of the
share and upon such further terms (if any) as they shall think
fit. The Directors may if necessary authorise some person to
transfer a forfeited share to the purchaser thereof.
(5) A record in the minute book of the Company to the effect that a
share has been duly forfeited in pursuance of these articles and
stating the time when it was forfeited shall as against all
persons claiming to be entitled to the share adversely to the
forfeiture thereof be conclusive evidence of the facts therein
stated and such record together with a certificate of
proprietorship of the share under the Seal delivered to the
purchaser or allottee thereof shall constitute a good title to the
share and the new holder thereof shall be discharged from all
calls made prior to such purchase or allotment and shall not be
bound to see to the application of the purchase money nor shall
his title to the share be affected by any past omission or
irregularity relating to or connected with the proceedings in
reference to the forfeiture re-allotment sale or other disposal of
the share.
(6) A person whose shares have been forfeited shall cease to be a
member in respect of the forfeited shares but shall
notwithstanding remain liable to pay to the Company all moneys
which at the date of the forfeiture were presently payable to the
Company by him in respect of the shares.
11
<PAGE>
(7) The provisions of these articles as to forfeiture shall apply in
the case of non-payment of any sum which by the terms of issue of
a share becomes payable at a fixed time whether on account of the
amount of the share or by way of premium as if the same had been
payable by virtue of a call duly made and notified.
9. GENERAL MEETINGS
(1) Subject to Article 87 (4) of the Law the Company shall hold a
general meeting as its annual general meeting once in every
calendar year at such time and such place as may be determined by
the Directors and so that not more than twenty-two months shall be
allowed to elapse between any two such general meetings provided
that so long as the Company holds its first annual general meeting
within eighteen months of its incorporation it need not hold it in
the year of its incorporation or in the following year.
(2) The above mentioned general meeting shall be called the "Annual
General Meeting". All other general meetings shall be called
"Extraordinary General Meetings".
(3) The Directors may whenever they think fit convene an Extraordinary
General Meeting and Extraordinary General Meetings shall also be
convened on a requisition made in accordance with the Law in
writing and signed by members holding in the aggregate not less
than one-tenth in nominal value of the shares carrying the right
to vote at the meeting. If at any time there are not within the
Island of Jersey sufficient Directors capable of acting to form a
quorum any Director or any member of the Company may convene an
Extraordinary General Meeting in the same manner as nearly as
possible as that in which meetings may be convened by the
Directors.
10. PROCEEDINGS AT GENERAL MEETINGS
(1) Twenty-one days' notice at least in the case of an Annual General
Meeting or a meeting for the passing of a special resolution and
in the case of any other general meetings fourteen days' notice at
least (in either case exclusive of the day on which the notice is
deemed to be served and the day for which notice is given)
specifying the place the day and the hour of the meeting and the
general nature of the business to be transacted shall be given in
manner hereinafter mentioned or in such other manner (if any) as
may be prescribed by the Company in general meeting to such
persons as are under the articles entitled to receive such notices
from the Company but the non-receipt of the notice by any such
persons shall not invalidate the proceedings at any general
meeting. With the consent of all the members for the time being
entitled to be present and to vote at an Annual General Meeting
such meeting may be convened on a shorter notice than twenty-one
days and in the case of any other general meeting with the consent
of a majority in number of the members entitled to attend and vote
thereat such majority together holding not less than 95 per centum
in nominal value of the shares which give the right to attend and
vote thereat such meeting may be convened on a shorter notice than
either twenty-one days in the case of a meeting
12
<PAGE>
at which a resolution will be proposed as a special resolution or
fourteen days in the case of any other meeting.
(2) Notice of every general meeting shall be given in accordance with
the provisions of article 25 hereof, but the accidental omission
to give notice of a meeting to, or the non-receipt of notice of a
meeting by, any person entitled to receive notice shall not
invalidate the proceedings at the meeting.
(3) No business shall be transacted at any general meeting unless a
quorum of members is present at the time when the meeting proceeds
to business. Two persons entitled to vote upon the business to be
transacted, each being a member or a proxy for a member or a duly
authorised representative of a body corporate, shall be a quorum
provided that if at any time all of the issued shares in the
Company are held by or by a nominee for a holding company, such
single member present in person by duly authorised representative
of a body corporate or by proxy shall constitute a quorum.
(4) Any member may participate in a general meeting by means of a
conference telephone or similar communications equipment whereby
all the members participating in the general meeting can hear each
other and the members participating in this manner shall be deemed
to be present in person at such meeting for all the purposes of
these articles.
(5) If within half-an-hour from the time appointed for the meeting a
quorum is not present the meeting shall stand adjourned to the
place time and day in the next week to be appointed by the
chairman or if no place time and day is so appointed to the same
day in the next week at the same time and place and if at the
adjourned meeting a quorum as above defined is not present within
half-an-hour from the time appointed for the meeting one member
present or his proxy shall constitute a quorum.
(6) The chairman (if any) of the Directors shall preside as chairman
at every general meeting of the Company or if there is no such
chairman or if he shall not be present within fifteen minutes
after the time appointed for the holding of the meeting or is
unwilling to act the Directors present shall elect one of their
number to be chairman of the meeting.
(7) If at any meeting no Director is willing to act as chairman or if
no Director is present within fifteen minutes after the time
appointed for holding the meeting the members present shall choose
one of their number to be chairman of the meeting.
(8) The chairman may with the consent of any meeting at which a quorum
is present adjourn the meeting from time to time and from place to
place but no business shall be transacted at any adjourned meeting
other than the business left unfinished at the meeting from which
the adjournment took place. When a meeting is adjourned for ten
days or more notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid it shall not be
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necessary to give any notice of an adjournment or of the business
to be transacted at an adjourned meeting.
(9) At any general meeting a resolution put to the vote of the meeting
shall be decided on a show of hands unless a poll is (before or on
the declaration of the result of the show of hands) decided upon
by the chairman or demanded by at least five members having the
right to vote on the question or by any member or members
representing at least one-tenth of the total voting rights of all
members having a right to vote on the question and unless a poll
is so demanded a declaration by the chairman that a resolution has
on a show of hands been carried or carried unanimously or by a
particular majority or lost and an entry to that effect in the
minutes of the proceedings of the meeting shall be conclusive
evidence of the fact without proof of the number or proportion of
the votes recorded in favour of or against such resolution.
(10) A resolution in writing signed by all the members of the Company
for the time being entitled to receive notice of and to attend and
vote at general meetings or their duly appointed attorneys shall
be as valid and effectual as if it had been passed at a meeting of
the members duly convened and held. Any such resolution may
consist of several documents in the like form signed by one or
more of the members or their attorneys and signature in the case
of a corporate body which is a member shall be sufficient if made
by a director thereof or its duly appointed attorney.
(11) If a poll is duly demanded it shall be taken in such manner as the
chairman directs and the result of the poll shall be deemed to be
the resolution of the meeting at which the poll was demanded.
(12) In the case of an equality of votes whether on a show of hands or
on a poll the chairman of the meeting at which the show of hands
takes place or at which the poll is demanded shall be entitled to
a second or casting vote.
(13) A poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken at such time as the chairman of the
meeting directs.
(14) A demand for a poll shall not prevent the continuance of a meeting
for the transaction of any business other than the question on
which a poll has been demanded.
11. VOTES OF MEMBERS
(1) Subject to any special rights restrictions or prohibitions as
regards voting for the time being attached to any shares on a show
of hands every member present in person or by proxy or (in the
case of a corporation) by duly authorised representative shall
have one vote and on a poll every member shall have one vote for
each share of which he is the holder.
(2) In the case of joint holders unless such joint holders shall have
chosen one of their number to represent them and so notified the
Company in writing the vote of the most senior who tenders a vote
whether in person or by proxy shall be
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accepted to the exclusion of the votes of the other joint holders
and for this purpose seniority shall be determined by the order in
which the names stand in the Register.
(3) Where a member is of unsound mind his curator appointed by the
Royal Court or the person appointed by a court of competent
jurisdiction to administer to his affairs may vote whether on a
show of hands or on a poll and may on a poll vote by proxy.
Evidence to the satisfaction of the Directors of the authority of
such curator or other person may be required by the Directors
prior to any vote being exercised by such curator or other person.
(4) No member shall be entitled to vote at any general meeting unless
all calls or other sums presently payable by him in respect of
shares in the Company of which he is holder or one of the joint
holders have been paid.
(5) On a poll votes may be given either personally or by proxy.
(6) The instrument appointing a proxy shall be in writing under the
hand of the appointor or of his attorney duly authorised in
writing or if the appointor is a corporation either under its
common seal or under the hand of an officer or attorney so
authorised. A proxy need not be a member of the Company.
(7) The instrument appointing a proxy and the power of attorney or
other authority (if any) under which it is signed or a notarially
certified copy of that power or authority shall be deposited at
the office or at such other place as is specified for that purpose
by the notice convening the meeting not less than forty-eight
hours before the time for holding the meeting or adjourned meeting
at which the person named in the instrument proposes to vote or in
the case of a poll not less than forty-eight hours before the time
appointed for taking the poll and in default the instrument of
proxy shall not be treated as valid.
(8) An instrument appointing a proxy shall be in any usual common form
or in any form of which the Directors shall approve.
(9) The instrument appointing a proxy shall be deemed to confer
authority to demand or join in demanding a poll.
(10) A vote given or act done in accordance with the terms of an
instrument of proxy shall be valid notwithstanding the previous
death or insanity of the appointor or revocation of the proxy or
of the authority under which the proxy was executed or the
transfer of the share in respect of which the proxy is given
unless notice in writing of such death insanity revocation or
transfer as aforesaid shall have been received by the Company at
the office before the commencement of the meeting or adjourned
meeting or poll at which the vote was given or the act was done.
12. CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS
Any corporation which is a member of the Company may by resolution of its
directors or other governing body authorise such person as it thinks fit
to act as its representative at any meeting of the Company or of any
class of members of the Company
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and the person so authorised shall be entitled to exercise the same
powers on behalf of the corporation which he represents as that
corporation could exercise if it were an individual member of the
Company.
13. APPOINTMENT OF DIRECTORS
(1) The first Directors shall be appointed in writing by the
subscribers to the memorandum or a majority of them.
(2) A Director need not be a member of the Company.
(3) The Directors shall have power at any time and from time to time
to appoint subject to the provisions of the Law any person to be a
Director either to fill a casual vacancy or as an additional
Director.
(4) The Company may by ordinary resolution appoint any person to
office as a Director.
14. RESIGNATION DISQUALIFICATION AND REMOVAL OF DIRECTORS
A Director shall cease to hold office if he:
(1) ceases to be a Director by virtue of any provisions of the Law or
becomes prohibited by law from or disqualified by law for being a
director; or
(2) resigns his office by instrument in writing under his hand left at
the office; or
(3) becomes bankrupt or makes any arrangement or composition with his
creditors generally; or
(4) is removed by ordinary resolution of the Company; or
(5) is removed by notice to the Company in writing signed by the
holders of more than half the issued shares of the Company and
deposited at the office.
15. ALTERNATE DIRECTORS
(1) Any Director may at his discretion and at any time and from time
to time appoint either another Director or any other person (other
than a person prohibited by law from or disqualified by law or by
these articles for being a director) to act as an alternate
director in his place and may at his discretion remove from office
an alternate director so appointed by him.
(2) An alternate director shall (except as regards power to appoint an
alternate and remuneration) be subject in all respects to the
terms conditions and provisions existing with reference to the
Directors and each alternate director while so acting shall
exercise and discharge all the functions powers and duties as a
Director of his appointor in such appointor's absence. In
particular, without prejudice to the generality of the foregoing,
an alternate director shall be entitled to receive the same notice
of meetings of Directors and of all meetings of committees
appointed pursuant to article 18 (6) hereof of which his appointor
is a member as his appointor is entitled to receive and to attend
and vote at any such meetings at
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which the Director appointing him is not personally present.
(3) An alternate director shall ipso facto cease to hold office as
such if his appointor ceases for any reason to be a Director or if
and when the term of his appointment expires or if any of the
circumstances described in article 14 (1) (2) and (3) hereof apply
to him.
(4) Any appointment and any removal of an alternate director by his
appointor shall be by notice in writing to the Company and to the
alternate director signed by the Director making or revoking the
appointment.
16. EXECUTIVE DIRECTORS
(1) The Directors may from time to time appoint one or more of their
number to the office of managing director or to any other
executive office under the Company. Any such appointment may be
made upon such terms and for such periods as the Directors may
determine. The appointment of any Director to an executive office
shall terminate if he ceases to be a Director but without
prejudice to any claim to damages for breach of any contract of
service between him and the Company.
(2) The Directors may entrust to and confer upon any managing director
or any director holding any other executive office any of the
powers exercisable by the Directors, upon such terms and
conditions and with such restrictions as they think fit, and
either collaterally with or to the exclusion of their own powers
and may from time to time revoke withdraw alter or vary all or any
of such powers.
17. POWERS OF DIRECTORS
(1) The business of the Company shall be managed by the Directors who
may pay all expenses incurred in getting up and registering the
Company and who may exercise all such powers of the Company as are
not by the Law the memorandum of the Company or these articles or
any directions given by special resolution required to be
exercised by the Company in general meeting. No alteration of the
memorandum of the Company or these articles and no such direction
shall invalidate any prior act of the Directors which would have
been valid if that alteration had not been made or that direction
had not been given. The powers given by this article shall not be
limited by any special power given to the Directors by these
articles. A meeting of the Directors at which a quorum is present
may exercise all powers and discretions exercisable by the
Directors.
(2) The Directors may, by power of attorney or otherwise, appoint any
person to be the agent of the Company for such purposes and on
such conditions as they determine, including authority for the
agent to delegate all or any of his powers. A power of attorney
may be executed under the Seal or otherwise as the Directors may
resolve.
(3) The Directors may provide benefits, whether by the payment of
gratuities or pensions or by insurance or otherwise, for any
Director who has held but no longer holds any executive
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office or employment with the Company or with any body corporate
which is or has been a subsidiary of the Company or a predecessor
in business of the Company or of any such subsidiary, and for any
member of his family (including a spouse and a former spouse) or
any person who is or who was dependent on him, and may (as well
before as after he ceases to hold such office or employment)
contribute to any fund and pay premiums for the purchase or
provision of any such benefit.
18. PROCEEDINGS OF DIRECTORS
(1) Where there are no other Directors a single Director shall cause
to be prepared written memoranda of the resolutions adopted by him
from time to time in or about the transaction of the business of
the Company which shall be entered in the books or registers
maintained pursuant to the provisions of article 18 (10) hereof.
Where there are two or more Directors the provisions of articles
18 (2) to 18 (8) hereof shall apply to regulate the meetings and
proceedings of the Directors.
(2) The Directors may meet together for the despatch of business
adjourn and otherwise regulate their meetings and proceedings as
they think fit and may determine the quorum necessary for the
transaction of business which in default of such determination
shall be two. A person who holds office only as an alternate
director shall, if his appointor is not present, be counted in the
quorum. A Director who is also appointed an alternate director
shall, if his appointor is not present, be counted as two
Directors for the purpose of making a quorum of Directors when
such quorum exceeds two so that, when the quorum is two, not fewer
than two individuals shall be present.
(3) Any Director may participate in a meeting of the Directors or in a
committee thereof by means of a conference telephone or similar
communications equipment whereby all the Directors participating
in the meeting can hear each other and the Directors participating
in this manner shall be deemed to be present in person at such
meeting for all the purposes of these articles.
(4) A Director may at any time (and the Secretary upon the request of
a Director shall) convene a meeting of the Directors. Questions
arising at any meeting shall be decided by a majority of votes and
in case of an equality of votes the chairman shall have a second
or casting vote. A Director who is also an alternate director
shall be entitled in the absence of his appointor to a separate
vote on behalf of his appointor in addition to his own vote.
(5) The Directors may elect a chairman of their meetings and determine
the period for which he is to hold office but if no such chairman
is elected or if at any meeting the chairman is not present at the
time appointed for holding the same the Directors present shall
choose one of their number to be chairman of such meeting.
(6) The Directors may delegate any of their powers to any committee
consisting of one or more Directors and (if
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thought fit) one or more other persons, but a majority of the
members of the committee shall be Directors. No resolution of such
a committee shall be effective unless a majority of those present
when it is passed are Directors. Any committee so formed shall in
the exercise of the powers so delegated conform to any regulations
that may be imposed upon it by the Directors. The meetings and
proceedings of any such committee shall be governed by the
provisions of these articles regulating the meetings and
proceedings of the Directors so far as the same are applicable and
are not superseded by any regulations made by the Directors under
this article.
(7) All acts done by any meeting of the Directors or of a committee
appointed by the Directors or by any person acting as a Director
shall notwithstanding that it be afterwards discovered that there
was some defect in the appointment of any such Directors or
committee or person acting as aforesaid or that they or any of
them were disqualified or had vacated office be as valid as if
every such person had been duly appointed and was qualified and
had continued to be a Director or a member of a committee
appointed by the Directors.
(8) A resolution in writing signed by all the Directors for the time
being entitled to receive notice of a meeting of the Directors, or
by all the members of a committee appointed pursuant to article 18
(6) hereof, shall be as valid and effectual as if it had been
passed at a meeting of the Directors or (as the case may be) at a
meeting of such a committee duly convened and held and may consist
of several documents in the like form each signed by one or more
Directors or (as the case may be) committee members.
(9) The Directors shall be paid out of the funds of the Company their
travelling and other expenses properly and necessarily expended by
them in attending meetings of the Directors (or of committees
appointed pursuant to article 18 (6) hereof) or members or
otherwise on the affairs of the Company. They shall also be paid
by way of remuneration for their services such sum as the
Directors shall determine subject to any rates or limits (if any)
fixed by the Company in general meeting. If any of the Directors
shall be appointed agent or to perform extra services or to make
any special exertions or to go or reside abroad for any of the
purposes of the Company the Directors may remunerate such Director
therefor either by a fixed sum or by commission or participation
in profits or otherwise or partly in one way and partly in another
as they think fit. Such remuneration may be either in addition to
or substitution for his remuneration hereinbefore provided.
(10) The Directors shall cause minutes or records to be made and kept
in books or registers provided for the purpose:
(a) of all appointments of Directors and Secretaries in
accordance with the provisions of the Law;
(b) of all resolutions and proceedings of all meetings of the
Company class meetings of members and meetings of
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the Directors and of committees appointed pursuant to
article 18 (6) hereof; and
(c) of the names of the persons present at each meeting
referred to in article 18 (10) (b) hereof.
19. DIRECTORS CONFLICTS OF INTEREST
(1) A Director may be or become a director or other officer of or
otherwise interested in any company promoted by the Company or in
which the Company may be interested as member or otherwise and no
such Director shall be accountable to the Company for any
remuneration or other benefits received by him as a director or
officer of or from his interests in such other company unless the
Company otherwise directs.
(2) No Director shall be disqualified by his office from contracting
with the Company either as vendor purchaser or otherwise nor
subject to the provisions of the Law and article 19 (3) hereof
shall any such contract or any contract or arrangement entered
into by or on behalf of the Company in which any Director shall be
in any way interested be avoided or liable to be set aside.
(3) A Director who has directly or indirectly an interest in a
transaction entered into or proposed to be entered into by the
Company or by a subsidiary of the Company which to a material
extent conflicts or may conflict with the interests of the Company
and of which he has actual knowledge shall disclose to the Company
(by notice to the Directors) the nature and extent of his
interest. Subject thereto any such Director shall not be liable to
account to the Company for any profit or gain realised by him on
such transaction.
(4) A notice in writing given to the Company by a Director that he is
to be regarded as interested in a transaction with a specified
person is sufficient disclosure of his interest in any such
transaction entered into after the notice is given.
(5) Subject to article 19 (3) hereof a Director may vote in respect of
any such transaction and if he does so vote his vote shall be
counted and he shall be capable of being counted towards the
quorum at any meeting of the Directors at which any such
transaction shall come before the Directors for consideration.
(6) Subject to the provisions of the Law a Director may hold any other
office or place of profit under the Company in conjunction with
his office of Director for such period and on such terms (as to
remuneration and otherwise) as the Directors may determine.
(7) Subject to the provisions of the Law any Director may act by
himself or his firm in a professional capacity for the Company and
he or his firm shall be entitled to remuneration for professional
services as if he were not a Director.
20. SEAL
The Directors shall provide for the safe custody of the Seal which shall
only be used by the authority of the Directors or of a committee of the
Directors authorised by the Directors in that
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behalf and every instrument to which the Seal shall be affixed shall
unless otherwise determined by resolution of the Directors be signed by
one Director. Where the Company engages in business outside the Island of
Jersey the Company may if the Directors so determine have for use in any
country territory or place outside Jersey an official seal which shall be
a facsimile of the Seal with the addition on its face either of the words
"Branch Seal" or the name of the country territory or place where it is
to be used and which shall be affixed in the same manner as the Seal or
as provided under the Law.
21. SECRETARY
The Secretary shall be appointed by the Directors upon such terms and
subject to such conditions as they may think fit and any Secretary so
appointed may be removed by them.
22. DIVIDENDS AND RESERVE
(1) The Company in general meeting may declare dividends but no
dividend shall exceed the amount recommended by the Directors in
accordance with the respective rights of the members and the
declaration of the Directors as to the amount of the profits shall
be conclusive.
(2) The Directors may from time to time pay to the members such
interim dividends as appear to the Directors to be justified by
the profits of the Company. If the share capital is divided into
different classes, the Directors may pay interim dividends on
shares which confer deferred or non-preferred rights with regard
to dividend as well as on shares which confer preferential rights
with regard to dividend, but no interim dividend shall be paid on
shares carrying deferred or non-preferred rights if, at the time
of payment, any preferential dividend is in arrear. The Directors
may also pay at intervals settled by them any dividend payable at
a fixed rate if it appears to them that the profits available for
distribution justify the payment. Provided the Directors act in
good faith, they shall not incur any liability to the holders of
shares conferring preferred rights for any loss they may suffer by
the lawful payment of an interim dividend on any shares having
deferred or non-preferred rights.
(3) No dividend shall be paid otherwise than out of profits and in
accordance with the provisions of Article 114 of the Law.
(4) Subject to any rights or privileges for the time being attached to
any shares in the capital of the Company having preferential
deferred or other special rights in regard to dividends the
profits of the Company which it shall from time to time be
determined to distribute by way of dividend shall be applied in
payment of dividends upon the shares of the Company in proportion
to the amounts paid up thereon respectively otherwise than in
advance of calls.
(5) All dividends shall be apportioned and paid pro rata according to
the amounts paid up on the shares during any portion or portions
of the period in respect of which the dividend is paid except that
if any share is issued on terms providing that it shall rank for
dividend as if paid up (in
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whole or in part) as from a particular date (either past or
future) such share shall rank for dividend accordingly.
(6) The Directors may before recommending any dividend set aside out
of the profits of the Company such sums as they think proper as a
reserve or reserves which shall at their discretion be applicable
for any purpose to which the profits of the Company may be
properly applied and pending such application may at the like
discretion either be employed in the business of the Company or be
invested in such investments as the Directors may from time to
time think fit. The Directors may also without placing the same to
reserve carry forward any profits which they may think prudent not
to divide.
(7) The Directors may deduct from any dividend payable to any member
all such sums of money (if any) as may be due and payable by him
to the Company on account of calls or otherwise.
(8) If several persons are registered as joint holders of any share
any one of them may give effectual receipts for any dividend
payable on the share.
(9) Notice of any dividend that may have been declared shall be given
in manner hereinafter mentioned to the person entitled to share
therein.
(10) No dividend shall bear interest against the Company.
(11) Unless otherwise directed any dividend may be paid by cheque or
warrant sent through the post to the registered address of the
member entitled or in the case of joint holders to that one whose
name stands first on the Register in respect of their joint
holding and every cheque or warrant so sent shall be made payable
to the order of the person to whom it is sent and the Company
shall not be responsible for any loss in transmission and payment
by cheque or warrant as provided herein shall be a good discharge
to the Company.
23. CAPITALISATION OF RESERVES ETC.
Subject to any necessary sanction or authority being obtained the Company
in general meeting may at any time and from time to time pass a
resolution that any sum not required for the payment or provision of a
fixed dividend with or without further participation in profits and (a)
for the time being standing to the credit of any reserve fund of the
Company including premiums received on the issue of any shares or
debentures of the Company or (b) being undivided profits in the hands of
the Company be capitalised and that such sum be appropriated as capital
to and amongst the members in the shares and proportions in which they
would have been entitled thereto if the same had been distributed by way
of dividend and in such manner as the resolution may direct and the
Directors shall in accordance with such resolution apply such sum in
paying up in full or in part (where permitted by the Law) any unissued
shares or debentures of the Company on behalf of such members and
appropriate such shares or debentures to and distribute the same credited
as fully paid up or partly paid up (where permitted by the Law) amongst
them in the proportions aforesaid in
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satisfaction of their shares and interests in the said capitalised sum or
shall apply such sum or any part thereof on behalf of such members in
paying up the whole or part of any uncalled balance which shall for the
time being be unpaid in respect of any issued shares or debentures held
by them. Where any difficulty arises in respect of any such distribution
the Directors may settle the same as they think expedient and in
particular they may fix the value for distribution of any fully paid up
shares or debentures make cash payments to any members on the footing of
the value so fixed in order to adjust rights and vest any such shares or
debentures in trustees upon such trusts for or for the benefit of the
persons entitled to share in the appropriation and distribution as may
seem just and expedient to the Directors.
24. ACCOUNTS
(1) The Directors shall cause accounting records to be kept which are
sufficient to show and explain the Company's transactions and are
such as to disclose with reasonable accuracy at any time the
financial position of the Company at that time and enable the
Directors to ensure that any accounts prepared by the Company
comply with the requirements of the Law.
(2) The accounting records shall be kept at the office or at such
other place or places as the Directors think fit and shall always
be open to the inspection of the Directors the Secretary and any
liquidator of the Company. Subject to the provisions of the Law
such accounting records shall be preserved for a period of at
least ten years from the date on which they are made.
(3) The Directors shall determine and may vary the accounting
reference date for the Company by resolution of the Directors and
shall cause to be prepared accounts for the Company for periods of
not more than eighteen months (a) beginning on the date of
incorporation of the Company or (b) if the Company has previously
prepared a profit and loss account beginning at the end of the
period covered by the most recent account or (c) if the Company
has not prepared such an account for a period ending within twelve
months before the entry into force of Article 104 of the Law
beginning on a date to be determined by the Directors not later
than the date of entry into force of Article 104. Such accounts
shall be prepared in accordance with generally accepted accounting
principles and show a true and fair view of the profit or loss of
the Company for the period and of the state of the Company's
affairs at the end of the period and comply with any other
requirements of the Law.
(4) The Company's accounts shall be approved by the Directors and
signed on their behalf by at least one Director.
(5) Subject always to the provisions of the Law within ten months
after the end of the financial period the accounts of the Company
for that period shall be prepared and save where the members have
entered an agreement dispensing with the holding of Annual General
Meetings by the Company laid before a general meeting with a copy
of the auditors' report (if any).
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25. NOTICES
(1) Any notice to be given to or by any person pursuant to these
articles shall be in writing save that a notice calling a meeting
of the Directors need not be in writing.
(2) A notice may be given by the Company to any member personally or
by sending it either by post to him at his registered address or
to the address supplied by him to the Company for the giving of
notices to him or by sending it by facsimile to him at any
facsimile number supplied by him to the Company specifically for
the purpose of serving formal notices on him.
(3) A member present, either in person or by proxy, at any meeting of
the Company or of the holders of any class of shares in the
Company shall be deemed to have received due notice of the meeting
and, where requisite, of the purposes for which it was called.
(4) Any notice shall be deemed to have been served in the case of
posting in the Island of Jersey to an address in the Island on the
second day following the date of posting and in the case of
posting in the Island to an address outside the Island on the
fifth day following the date of posting. In the case of service of
any notice by facsimile such notice shall be deemed to have been
served immediately on transmission of such notice.
(5) In proving service of any notice by post it shall be sufficient to
prove that the notice was properly addressed stamped and posted.
In the case of service of any notice by facsimile it shall be
sufficient to prove receipt by the sender of a confirmed facsimile
transmission report.
(6) A notice may be given by the Company to the joint holders of a
share by giving notice to the joint holder named first in the
Register in respect of the share.
(7) A notice may be given to the guardian of a minor member or to the
curator appointed by the Royal Court or other person appointed by
a court of competent jurisdiction to administer to the affairs of
any member of unsound mind or to the persons entitled to a share
in consequence of the death or bankruptcy of a member by sending
it through the post in a prepaid letter addressed to such persons
by name or by the title of guardian or curator appointed by the
Royal Court or other person appointed by a court of competent
jurisdiction to administer to the affairs of such member of
unsound mind or representatives of the deceased or trustee of the
bankrupt or by any like description at the address supplied for
the purpose by such persons. Until such an address has been
supplied, a notice may be given in any manner in which it might
have been given if the member in question had not been a minor or
of unsound mind, or if the death or bankruptcy of the member in
question had not occurred.
(8) Subject to the provisions of these articles, notice of every
general meeting shall be given to every member, to each Director
and to such other persons as the Directors shall at any time and
from time to time determine.
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26. WINDING UP
(1) Subject to the claims of any secured creditors and to the
provisions of any enactment as to preferential payments the
Company's property shall on winding up be realised and applied in
satisfaction of the Company's liabilities pari passu and subject
thereto any surplus shall then be distributed amongst the members
according to their rights and interests in the Company. Subject to
the rights of the holders of shares issued upon special conditions
if the assets available for distribution to members shall be
insufficient to pay the whole of the paid up capital such assets
shall be shared on a pro rata basis amongst members by reference
to the number of fully paid up shares held by each member
respectively at the commencement of the winding up.
(2) If the Company shall be wound up the liquidator or where there is
no liquidator the Directors may with the sanction of a special
resolution divide amongst the members in specie any part of the
assets of the Company or vest the same in trustees upon such
trusts for the benefit of the members as the liquidator or the
Directors (as the case may be) with the like sanction shall think
fit.
27. INDEMNITY
(1) Every Secretary agent servant and employee of the Company shall be
indemnified by the Company against and it shall be the duty of the
Directors out of the funds of the Company to pay the costs charges
losses liabilities damages and expenses which any such person may
incur in the course of the discharge by him of his duties as
Secretary agent servant or employee of the Company as the case may
be provided that this indemnity shall not be applicable in
circumstances where any such person has incurred such costs
charges losses liabilities damages and expenses through his own
fraud wilful misconduct or gross negligence.
(2) In so far as the Law allows every present or former officer of the
Company shall be indemnified out of the assets of the Company
against any loss or liability incurred by him by reason of being
or having been such an officer.
(3) The Directors are empowered to arrange for the purchase and
maintenance in the name and at the expense of the Company of
insurance cover for the benefit of any officer or former officer
of the Company the Secretary and any agent servant or employee of
the Company against any liability which is incurred by any such
person by reason of the fact that he is or was an officer of the
Company the Secretary or an agent servant or employee of the
Company.
25
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Names and addresses
of subscribers Common seals
----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Premier Circle Limited The common seal of
Normandy House Premier Circle Limited
Grenville Street was hereunto affixed in the
St. Helier presence of:
Jersey
Channel Islands. Alan Dart Director
Garry Toy/ Michael Robinson Secretary
Second Circle Limited The common seal of
Normandy House Second Circle Limited
Grenville Street was hereunto affixed in the
St. Helier presence of:
Jersey
Channel Islands. Alan Dart Director
Garry Toy/ Michael Robinson Secretary
</TABLE>
Witness to all the above signatures:
Signature: L.J. Monticelli
Full name: Lucinda Jane Monticelli
Normandy House
Grenville Street
St. Helier
Jersey
Channel Islands.
26
Draft Date: 13 October 1999
Dated * November 1999
GRACECHURCH CARD FUNDING (NO.1 ) PLC
as Issuer
THE BANK OF NEW YORK, LONDON BRANCH
as Note Trustee
THE BANK OF NEW YORK, NEW YORK
as Depository
---------------------------------
DEPOSITORY AGREEMENT
---------------------------------
CLIFFORD CHANCE
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Clause Page
<S> <C> <C>
1. Definitions And Other General Provisions...............................3
2. Book-Entry Interests...................................................6
2.1 Deposit Of The Global Notes....................................6
2.2 Book-Entry System..............................................6
2.3 Registration Of Transfer Of The Cdis...........................6
2.4 The Depository And The Global Notes............................7
2.5 Definitive Notes...............................................7
2.6 Payments In Respect Of The Cdis And Global Notes...............8
2.7 Payments In Respect Of The Global Notes........................9
2.8 Transfers And Exchanges Of Global Notes........................9
2.9 Change In Principal Amount Of Outstanding Of Global Notes.....12
2.10 Surrender And Cancellation Of The Global Notes................12
2.11 Record Date...................................................13
2.12 Action In Respect Of The Cdis Or The Global Notes.............13
2.13 Reports.......................................................13
2.14 Tax...........................................................14
3. The Depository........................................................15
3.1 Certain Duties And Responsibilities...........................15
3.2 Notice Of Default.............................................16
3.3 Certain Rights Of Depository..................................16
3.4 Not Responsible For Recitals Of Note Proceeds.................17
3.5 Money Held In Trust...........................................17
3.6 Fees And Expenses.............................................17
3.7 Depository Required; Eligibility..............................18
3.8 Resignation And Removal; Appointment Of Successor.............18
3.9 Acceptance Of Appointment By Successor........................19
3.10 Merger, Conversion, Consolidation Or Succession To Business...20
4. Miscellaneous Provisions..............................................21
4.1 Notices To Depository, Issuer Or The Note Trustee.............21
4.2 Notice To Holder; Waiver......................................21
4.3 Successors And Assigns........................................22
4.4 Separability Clause...........................................22
4.5 Benefits Of Agreement.........................................22
4.6 Governing Law.................................................22
4.7 Jurisdiction..................................................22
4.8 Counterparts..................................................23
4.9 Inspection Of Agreement.......................................23
4.10 Satisfaction And Discharge....................................23
4.11 Amendments....................................................23
4.12 Depository To Sign Amendments.................................24
</TABLE>
<PAGE>
SCHEDULE 1 EXHIBIT A...............................................26
SCHEDULE 2 EXHIBIT B...............................................28
SCHEDULE 3 EXHIBIT C FORM OF TRANSFER CERTIFICATE -................30
SCHEDULE 4 EXHIBIT D...............................................32
SCHEDULE 5 EXHIBIT E...............................................34
<PAGE>
THIS DEPOSITORY AGREEMENT is made on this [*] day of November 1999
BETWEEN
(1) GRACECHURCH CARD FUNDING (NO.1) PLC, a company incorporated in England
and Wales with company number 3794757 and having its registered office
at 200 Aldersgate Street, London EC1A 4JJ (the "Issuer");
(2) THE BANK OF NEW YORK, LONDON BRANCH, a New York banking corporation
whose London branch is located at One Canada Square, London E14 5AL (the
"Note Trustee", which expression shall include such company and all
other persons for the time being acting as the Note Trustee or Note
Trustees under the Trust Deed (as defined below) and as transfer agent
(the "Transfer Agent", which expression shall include any successor
Transfer Agent appointed under the [*])); and
(3) THE BANK OF NEW YORK, a New York banking corporation, as Depository (the
"Depository", which expression shall include any Successor Depository
appointed hereunder).
WHEREAS:
(A) The Issuer has authorised the creation and issue of the Notes (as
defined below) constituted by a trust deed dated [*] November 1999
between the Issuer and the Note Trustee (the "Trust Deed").
(B) The Depository has agreed to act as the Depository in respect of the
Notes (as defined below), subject to and in accordance with this
Agreement.
(C) The Issuer, the Note Trustee and the Depository wish to record certain
arrangements which they have made in relation to the Notes.
ARTICLE I
1. DEFINITIONS AND OTHER GENERAL PROVISIONS
Terms not defined herein have the meanings ascribed to them in the Trust Deed.
The following terms, as used herein, have the following meanings:
"Authorised Denominations" means $100,000 and integral multiples thereof;
"Book-Entry Interest" means a beneficial interest in the Notes shown on records
maintained in book-entry form by DTC;
"Book-Entry Register" has the meaning ascribed thereto in Section 2.3;
"Business Day" means a day on which commercial banks and foreign exchange
markets settle payments in London and New York and the city where the Specified
Office of the relevant Paying Agent is located;
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<PAGE>
"Certificateless Depository Interests" or "CDI" means collectively, in respect
of the Notes, the beneficial interests that shall, at all times prior to the
issuance of Definitive Notes in respect thereof, represent the right to receive
100% of the principal, premium (if any) and interest of the underlying SEC
Global Notes and the beneficial interests that shall, at all times prior to the
issuance of Definitive Notes in respect thereof, represent the right to receive
100% of the principal, premium (if any) and interest of the underlying Rule 144A
Global Note and that in each case is issued to the Holder or its nominee by the
Depository;
"Closing Date" means [*] November 1999;
"DTC" means The Depository Trust Company or its nominee;
"Exchange Act" means the Securities Exchange Act of 1934, as amended;
"Global Notes" means the global notes issued in respect of Notes pursuant to the
Trust Deed, initially in the form of a Rule 144A Global Note in respect of the
Class C Notes and an SEC Global Note in respect of the Class A3 Notes and an SEC
Global Note in respect of the Class B Notes;
"Holder" means, in respect of each CDI, the person in whose name such CDI is
recorded on the Book-Entry Register, being in every case, DTC or any successor
thereto;
"Issuer's Certificate" means a certificate signed in the name of the Issuer by
two directors of the Issuer;
"Issuer Order" means a written order or request signed in the name of the Issuer
by two directors of the Issuer;
"Letter of Representations" means the Letter of Representations to DTC dated [*]
November 1999, from the Depository and the Issuer;
"Notes" means the bearer notes in the minimum denomination of $100,000 which
comprise the $[*] Class A3 Asset Backed Floating Rate Notes due November 2002
("Class A3 Notes"), $[*] Class B Asset Backed Floating Rate Notes due November
2002 ("Class B Notes") and $[*] Class C Asset Backed Floating Rate Notes due
November 2002 ("Class C Notes") constituted by a Trust Deed dated [*] November
1999 between the Issuer and the Note Trustee, or any of them, and, unless stated
to the contrary, includes each Global Note and any Definitive Notes issued in
respect thereof;
"Opinion of Counsel" means a written opinion from legal counsel, who may be an
employee of or counsel to the Issuer and who shall otherwise be satisfactory to
the Depository and the Note Trustee;
"Responsible Officer", with respect to the Depository, means the chairman or
vice-chairman of the board of directors, the chairman or vice-chairman of the
executive committee of the board of directors, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any senior trust officer, any
trust officer or assistant trust officer, the controller and any assistant
controller or any other officer of the Depository customarily performing
functions similar to those performed
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<PAGE>
by any of the above-designated officers and also means, with respect to a
particular corporate trust or agency matter, any other officer to whom such
matter is referred to because of his or her knowledge and familiarity with the
particular subject;
"Restricted Period" means the period up to and including the 40th day after the
later of the commencement of the offering of the Notes and the Closing Date;
"Specified Event" has the meaning ascribed thereto in Section 2.5;
"Specified Office" means [*] or such other office in the same city as such
office as the Depository may specify by notice to the Issuer and the Note
Trustee; and
"Successor" means in relation to the Depository, such other person as may from
time to time be appointed as Depository under this Agreement by the Issuer with
the prior written approval of the Note Trustee.
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<PAGE>
ARTICLE II
2. BOOK-ENTRY INTERESTS
2.1 Deposit of the Global Notes
On or prior to the Issue Date, the Issuer shall deliver or procure delivery of
the Global Notes to or to the order of the Depository on terms that the
Depository shall hold such Global Notes subject to and in accordance with this
Agreement. The Depository hereby agrees to accept custody of the Global Notes
and to act as Depository in respect thereof in accordance with this Agreement.
Each Global Note shall be held on behalf of the Depository by [*] or by or on
behalf of the Depository at such place or places as it shall determine with the
consent of the Issuer and the Note Trustee and shall issue the CDIs in
accordance with the Letter of Representations.
2.2 Book-Entry System
(a) Upon acceptance by DTC of the CDIs for entry into its book-entry
settlement system in accordance with the terms of the Letter of
Representations, Book-Entry Interests will be issued by DTC and traded
through DTC's book-entry system, and ownership of such Book-Entry
Interests shall be shown in, and the transfer of such ownership shall
be effected only through, records maintained by (i) DTC or its
successors or (ii) institutions that have accounts with DTC or its
successors. Book-Entry Interests shall only be transferable in amounts
representing Authorised Denominations of the Notes.
(b) The CDIs shall only be issuable to DTC or successors of DTC or their
respective nominees. Except as provided in Section 2.5, no owner of a
Book-Entry Interest shall be entitled to receive a Definitive Note on
account of such Book-Entry Interest, and such beneficial owner's
interest therein shall be shown only in accordance with the procedures
of DTC as set forth in the Letter of Representations.
2.3 Registration of Transfer of the CDIs
The Depository shall maintain at its Specified Office a register (the
"Book-Entry Register") in which the Depository shall (i) record DTC as the
initial registered owner of the CDIs and (ii) record the registration and
transfer of the CDIs. The CDIs shall not be transferred unless such transfer is
recorded on the Book-Entry Register. The Depository shall not constitute the
agent of the Issuer for any other purpose and, in particular, it shall not
constitute the agent of the Issuer in relation to any payments it may make to
the Holder of the CDIs or be authorised to undertake any obligations on behalf
of the Issuer. At any time after an Event of Default in respect of the Notes or
any of them shall have occurred and be continuing, the Depository shall, if so
required by notice in writing given by the Note Trustee to the Depository (i)
thereafter act as the agent of the Note Trustee, on the terms mutatis mutandis
contained in this Agreement (save that the Note Trustee's liability under any
provision in this Agreement for the remuneration and indemnification of the
Depository shall be limited to the amounts from
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<PAGE>
time to time held by the Note Trustee on the trusts of the Trust Deed which are
available to be applied by the Note Trustee for such purposes) and hold on
behalf of the Note Trustee the Global Notes and all sums, documents and records
held by it in respect thereof (including the Book-Entry Register) and/or (ii)
deliver up all Global Notes and all sums, documents and records held by it in
respect thereof (including the Book-Entry Register) to the Note Trustee or as
the Note Trustee shall direct in such notice; Provided, however, that such
notice shall be deemed not to apply to any document or record which the
Depository is obliged not to release by any applicable law or regulation.
The foregoing paragraph shall not:
(a) impose an obligation on the Depository to record the interests in, or
transfers of, Book-Entry Interests held by institutions that have
accounts with DTC or its successors or persons that may hold Book-Entry
Interests through such institutions; or
(b) restrict transfers of such Book-Entry Interests held by such
institutions or persons.
The person in whose name the CDIs are registered on the Book-Entry Register
shall be the "Holder" of the CDIs for the purposes of this Agreement. The
Depository shall treat the Holder or its nominee or their respective successors
as the absolute owner thereof for all purposes whatsoever and shall not be bound
or affected by any notice to the contrary, other than an order of a court having
jurisdiction over the Depository.
2.4 The Depository and the Global Notes
The Depository shall hold each Global Note in custody for the benefit of the
Holder thereof. The Depository shall not transfer, sell or otherwise dispose of
a Global Note or any interest therein except (i) in respect of the Class C Notes
to reduce the Principal Amount Outstanding of a Class C Global Note and to
increase the Principal Amount Outstanding of the other Global Note as provided
in Section 2.8 of this Agreement (ii) to transfer a Global Notes as a whole to a
Successor Depository with the consent of the Issuer and the Note Trustee.
Notwithstanding the foregoing, the Holder may not under any circumstances
request the Depository to surrender or deliver the Global Notes or any of them
to the Holder.
2.5 Definitive Notes
(a) If:
(i) DTC is unwilling or unable to act as Depository or ceases to be, a
clearing agency under the Exchange Act and a successor Depository
registered as a clearing agency under the Exchange Act is not appointed
by the Depository at the request of the Issuer within 60 days; or
(ii) the Depository notifies the Issuer and the Note Trustee under Section
3.8 that it is at any time unwilling or unable to continue as
Depository and no Successor Depository has been appointed by the Issuer
within 60 days of such notification; or
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<PAGE>
(iii) an Event of Default occurs and is continuing, upon the request
delivered in writing to DTC by the owner of a Book-Entry Interest; or
(iv) if, by reason of any change in the laws of the United Kingdom or the
United States of America, the Issuer is or will be required to make any
withholding or deduction from any payment in respect of the Notes which
would not be required if the Notes were in definitive form;
(each, a "Specified Event"), then DTC or the Depository (as the case may by)
shall promptly notify the Issuer and the Note Trustee of such Specified Event
and the Issuer shall promptly issue Definitive Notes subject to and in
accordance with the Trust Deed; or
(b) If any of the events specified in Clause 3 of the Trust Deed occurs,
the Issuer shall forthwith notify the Depository thereof and shall
issue Definitive Notes subject to and in accordance with the Trust
Deed.
If Definitive Notes are issued, the beneficial interests represented by the SEC
Global Notes shall be exchanged by the Issuer for SEC Definitive Notes and the
beneficial interests represented by the Class C Rule 144A Global Note shall be
exchanged by the Issuer for Rule 144A Definitive Notes, in each case, in an
aggregate principal amount equal to the Principal Amount Outstanding of the
relevant SEC Global Note or Rule 144A Global Note, as the case may be.
All Definitive Notes issued in exchange for the Global Note relating thereto
shall be registered in such name or names and in such Authorised Denominations
as the Depository shall instruct the Principal Paying Agent based on the written
instructions of the Holder. Whenever a Global Note is exchanged in full for
Definitive Notes, subject to receipt by the Depository of Definitive Notes in
accordance with Clause [4.1] of the Trust Deed (and if such exchange of the
Global Note is in part, a new Global Note reflecting the appropriate principal
reduction) the Depository shall surrender such Global Note to or to the order of
the Principal Paying Agent for cancellation in accordance with the Agency
Agreement. A Global Note may not be exchanged for Definitive Notes other than as
provided in this Section 2.5.
2.6 Payments in respect of the CDIs and Global Notes
(a) On receipt by the Depository of any payment in respect of a Global
Note, the Depository shall forthwith distribute such payment to the
Holder on the due date for such payment. So long as DTC is the Holder,
such payments shall be made in accordance with the Letter of
Representations.
(b) The Depository shall forward to the Issuer or its Agents such
information from its records as the Issuer may reasonably request to
enable the Issuer or its Agents to comply with the provisions of the
Trust Deed and the Agency Agreement and to file necessary reports with
governmental agencies, and the Issuer or its Agents may (but shall not
be required to) file any such reports necessary to obtain benefits
under any applicable tax treaties for the Holder, or beneficial owners
of interests in, the CDIs. In no event shall the Depository be
responsible for filing such reports.
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<PAGE>
2.7 Payments in respect of the Global Notes
(c) Subject to receipt by the Depository of written instructions from the
Holder on or prior to the fifth day following the Record Date (as
defined in Section 2.11) that payments in respect of the Global Notes
will be made to or to the order of the Holder, payments in by the
Depository in respect of such Global Notes will be made on the due date
for payment thereof.
2.8 Transfers and Exchanges of Global Notes
(a) Notwithstanding any other provisions of this Agreement, the Trust Deed
or the Notes, transfers and exchanges of interests in a Class C Global
Note of the kinds described in clauses (1), (2), (3), (4) and (5) below
and exchanges of interests in a Class C Global Note or of other Notes
as described in clause (6) below, shall only be made in accordance with
the relevant clause of this Section 2.8.
(1) Transfers of the Class C Rule 144A Global Note to the
Class C Reg S Global Note during the Restricted
Period. If the holder of a beneficial interest in the
Class C Rule 144A Global Note wishes at any time
during the Restricted Period to transfer such
interest to a person who wishes to take delivery
thereof in the form of a beneficial interest in the
Class C Reg S Global Note relating thereto, such
transfer may be effected, subject to the rules and
procedures of DTC, Euroclear and Cedelbank, to the
extent applicable (the "Applicable Procedures"), only
in accordance with the provisions of this Section
2.8(a)(1). Upon receipt by the Depository and the
Transfer Agent with respect to a transfer of a
beneficial interest in such Class C Rule 144A Global
Note during the Restricted Period of a certificate in
substantially the form set forth in Exhibit A given
by the transferor, the Depository shall present the
Class C Rule 144A Global Note and the Transfer Agent
shall present the Class C Reg S Global Note to the
Principal Paying Agent to reduce the Principal Amount
Outstanding of the Class C Rule 144A Global Note and
to increase the Principal Amount Outstanding of the
Class C Reg S Global Note, by the principal amount of
the beneficial interest in the Class C Rule 144A
Global Note to be so transferred, by annotation
thereon.
(2) Transfers of the Class C Rule 144A Global Note to the
Class C Reg S Global Note after the expiration of the
Restricted Period. If the holder of a beneficial
interest in the Class C Rule 144A Global Note wishes
at any time after the expiration of the Restricted
Period to transfer such interest to a person who
wishes to take delivery thereof in the form of a
beneficial interest in the Class C Reg S Global Note
relating thereto, such transfer may be effected,
subject to the Applicable Procedures, only in
accordance with this Section 2.8(a)(2). Upon receipt
by the Depository and the Transfer Agent of a
certificate in
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<PAGE>
substantially the form set forth in Exhibit B given
by the transferor, the Depository shall present the
Class C Rule 144A Global Note and the Transfer Agent
shall present the Class C Reg S Global Note to the
Principal Paying Agent to reduce the Principal Amount
Outstanding of such Class C Rule 144A Global Note,
and to increase the Principal Amount Outstanding of
such Class C Reg S Global Note, by the principal
amount of the beneficial interest in such Class C
Rule 144A Global Note to be so transferred, by
annotation thereon.
(3) Transfers of the Class C Reg S Global Note to the
Class C Rule 144A Global Note during the Restricted
Period. If the holder of a beneficial interest in the
Class C Reg S Global Note wishes at any time during
the Restricted Period to transfer such interest to a
person who wishes to take delivery thereof in the
form of a beneficial interest in the Class C Rule
144A Global Note relating thereto, such transfer may
be effected, subject to the Applicable Procedures,
only in accordance with this Section 2.8(a)(3). Upon
receipt by the Depository and the Transfer Agent with
respect to a transfer of a beneficial interest in
such Class C Reg S Global Note during the Restricted
Period of a certificate in substantially the form set
forth in Exhibit C given by the transferor, the
Depository shall present the Class C Rule 144A Global
Note and the Transfer Agent shall present the Class C
Reg S Global Note to the Principal Paying Agent to
reduce the Principal Amount Outstanding of such Class
C Reg S Global Note, and to increase the Principal
Amount of Outstanding of such Class C Rule 144A
Global Note, by the principal amount of the
beneficial interest in such Class C Reg S Global Note
to be so transferred, by annotation thereon. In
addition, the Issuer reserves the right to refuse to
recognise the transfer (or require the resale to
non-U.S. persons) of any Notes, or any beneficial
interest therein, if in the Issuer's sole judgement
such transfer could result in the Notes being
beneficially owned by U.S. persons that are not
qualified purchasers.
(4) Transfers of the Class C Reg S Global Note to the
Class C Rule 144A Global Note after the Restricted
Period
If the holder of a beneficial interest in the Class C
Reg S Global Note wishes at any time after the
Restricted Period to transfer such interest to a
person who wishes to take delivery thereof in the
form of a beneficial interest in the Class C Rule
144A Global Note relating thereto, such transfer may
be effected subject only to the Applicable
Procedures.
(5) Exchanges of the Class C Rule 144A Global Note for
the Class C Reg S Global Note.
If the holder of a beneficial interest in the Class C
Rule 144A Global Note wishes at any time to exchange
such interest for a beneficial interest in the Class
C Reg S Global Note relating thereto, such
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<PAGE>
exchange may be effected, subject to the Applicable
Procedures, only in accordance with the provisions of
this Section 2.8(a)(5). Upon receipt by the
Depository and the Transfer Agent of a certificate in
substantially the form set forth in Exhibit D, given
by the holder of the beneficial interest, the
Depository shall present the Class C Rule 144A Global
Note and the Transfer Agent shall present the Class C
Reg S Global Note to the Principal Paying Agent to
reduce the Principal Amount Outstanding of such Class
C Rule 144A Global Note, and to increase the
Principal Amount Outstanding of such Reg S Global
Note, by the principal amount of the beneficial
interest in such Class C Rule 144A Global Note to be
so exchanged, by annotation thereon.
(6) Exchanges of the Class C Reg S Global Note for the
Class C Rule 144A Global Note. If the holder of a
beneficial interest in the Class C Reg S Global Note
wishes at any time to exchange such interest for a
beneficial interest in the Class C Rule 144A Global
Note relating thereto, such exchange may be effected,
subject to the Applicable Procedures, only in
accordance with the provisions of this Section
2.8(a)(6). Upon receipt by the Depository and the
Transfer Agent of a certificate in substantially the
form set forth in Exhibit E, given by the holder of
the beneficial interest, the Depository shall present
the Class C Rule 144A Global Note to and the Transfer
Agent shall present the Class C Reg S Global Note to
the Principal Paying Agent to reduce the Principal
Amount Outstanding of such Class C Reg S Global Note,
and to increase the Principal Amount Outstanding of
such Class C Rule 144A Global Note, by the principal
amount of the beneficial interest in such Class C Reg
S Global Note to be so exchanged, by annotation
thereon. In addition, the Issuer reserves the right
to refuse to recognise the transfer (or require the
resale to non-U.S. persons) of any Notes, or any
beneficial interest therein, if in the Issuer's sole
judgement such transfer could result in the Notes
being beneficially owned by U.S. persons that are not
qualified purchasers.
(7) Other Exchanges. In the event that a Global Note is
exchanged for Definitive Notes pursuant to Section
2.5, any Definitive Notes in respect thereof may only
be transferred in accordance with any restrictions on
transfer set forth on such Definitive Notes and (in
respect of Class C Rule 144A Definitive Notes) the
[Agency Agreement] and the Regulations set out in the
Second Schedule thereto. In addition, the Issuer
reserves the right to refuse to recognise the
transfer (or require the resale to non-U.S. persons)
of any Notes, or any beneficial interest therein, if
in the Issuer's sole judgement such transfer could
result in the Notes being beneficially owned by U.S.
persons that are not qualified purchasers.
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<PAGE>
(8) For the avoidance of doubt, all references in this
Section 2.8 to transfers and exchanges of beneficial
interests in the Class C Reg S Global Note or the
Class C Rule 144A Global Note shall be construed, in
respect of the holders of Book-Entry Interests, as
references to a transfer or exchange of the
Book-Entry Interests in the CDI's attributable to the
Class C Rule 144A Global Note, as the case may be.
(9) Notwithstanding any other provisions of this
Agreement, the Trust Deed or the Notes, transfers and
exchanges of interests in a Class C Global Note of
the kinds described in clauses (1), (2), (3), (4) and
(5) below and exchanges of interests in a Class C
Global Note or of other Notes as described in clause
(6) below, shall only be made in accordance with the
relevant clause of this Section 2.8.
(b) Transfers of interests in an SEC Global Note. If the holder of
a beneficial interest in an SEC Global Note wishes at any time
to transfer such interest to a person who wishes to take
delivery thereof such transfer shall be effected subject to
the Applicable Procedures.
2.9 Change in Principal Amount of Outstanding of Global Notes
(a) Upon transfer or exchange of a beneficial interest in a Class
C Global Note to the other Class C Global Note as provided in
Section 2.8(a), the Depository shall adjust accordingly the
principal amounts of the CDIs relating to the Class C Rule
144A Global Note and shall confirm such adjustments with the
Holder.
(b) In the event that the Issuer exercises any right of redemption
in respect of any Notes constituting a part of a Global Note
or purchases any Notes constituting a part of a Global Note,
upon receipt by the Depository of written notification to the
Depository by the Issuer of such redemption or purchase the
Depository shall promptly deliver such Global Note to the
Principal Paying Agent and request the Principal Paying Agent
to endorse the relevant Schedule to such Global Note to
reflect the reduction in the Principal Amount Outstanding of
such Global Note as a result of such redemption or purchase.
The redemption price or purchase price payable in connection
with the redemption or purchase of a portion of such Global
Note shall be equal to the amount received by the Depository
in respect of the aggregate principal amount of the Notes so
redeemed or purchased. The Depository shall allocate
reductions in the Principal Amount Outstanding on a pro rata
basis among the relevant CDIs.
Whenever the Principal Amount Outstanding of a Global Note
held by the Depository is increased or decreased in accordance
with this Agreement, the Depository shall notify the Holder of
the corresponding change in the Principal Amount Outstanding
of the related CDI.
2.10 Surrender and Cancellation of the Global Notes
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In the event of the redemption, payment or purchase in full or exchange in full
for Definitive Notes of all the Notes represented by the relevant Global Note,
such Global Note shall become void and the Depository shall surrender such
Global Note to the Principal Paying Agent for cancellation in accordance with
the [Agency Agreement].
2.11 Record Date
Whenever any payment is to be made in respect of a Global Note or the Depository
shall receive written notice of any action to be taken by the Holder, or
whenever the Depository otherwise deems it appropriate in respect of any other
matter, the Depository shall fix a record date (a "Record Date") (in the case of
payments only, 15 days prior to the due date for such payment) for the
determination of the Holder who shall be entitled to receive payment in respect
of the CDIs or to take any such action or to act in respect of any such matter.
Subject to the provisions of this Agreement, only the Holder who is registered
on the Book-Entry Register at the close of business on such Record Date shall be
entitled to receive any such payment, to give instructions as to such action or
to act in respect of any such matter.
2.12 Action in respect of the CDIs or the Global Notes
(a) Not later than 10 days after receipt by the Depository of written
notice of any solicitation of consents or request for a waiver or other
action by the Holder under this Agreement or the Trust Deed, the
Depository shall mail to the Holder a notice containing (i) such
information as is contained in such notice, (ii) a statement that the
Holder at the close of business on a specified Record Date (established
in accordance with Section 2.11) will be entitled, subject to the
provisions of or governing the CDI or Global Notes, as the case may be,
to instruct the Depository as to the consent, waiver or other action,
if any, pertaining to the CDIs or Global Notes, as the case may be, and
(iii) a statement as to the manner in which such instructions may be
given. Upon the written request of the Holder received on or before the
Record Date established by the Depository for such purpose, the
Depository shall endeavour insofar as practicable and permitted under
the provisions of or governing the CDIs or Global Notes, as the case
may be, to take such action regarding the requested consent, waiver or
other action in respect of such CDIs or Global Notes, as the case may
be, in accordance with any instructions set forth in such request. The
Depository shall not itself exercise any discretion in the granting of
consents or waivers or the taking of any other action in respect of the
CDIs or Global Notes.
(b) Subject to Sections 3.1(e) and 3.3(f) the Holder may by written
direction to the Depository direct the time, method and place of
conducting any proceeding for any remedy available to the Depository or
of exercising any trust or power conferred on the Depository. However,
the Depository may refuse to follow any direction that conflicts with
law or this Agreement or the Trust Deed or, subject to Section 3.1, that
the Depository determines could expose it to personal liability.
2.13 Reports
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Notwithstanding the provisions of Condition 14, while the Notes are in global
form, the Issuer shall forthwith send to the Depository a copy of any notices,
reports and other communications to be sent to the Depository in its capacity as
holder of the Global Notes.
The Depository shall promptly (and in no event later than 10 days from receipt
thereof) send to the Holder a copy of any such notices, reports and other
communications received by it in accordance with this Section 2.12.
2.14 Tax
All payments made by the Depository pursuant to this Agreement shall be made
without deduction or withholding for, or on account of, any present or future
taxes, duties, assessments or governmental charges of whatever nature
(collectively, "Taxes") imposed or levied by or on behalf of the United Kingdom
or any political subdivision thereof or any authority having power to tax
therein (each a "U.K. Tax Authority"), unless the withholding or deduction of
such Taxes is then required by law. If any deduction or withholding for, or on
account of, any Taxes or any U.K. Tax Authority shall at any time be required on
any distributions in respect of the CDIs by the Depository to the Holder of any
payments in respect of principal or interest on a Global Note, the Depository
shall not be obliged to pay any additional amounts in respect thereof. If any
such deduction or withholding is required, the Issuer shall, at least 10 days
prior to the date on which payment on the CDIs is to be made, furnish the
Depository with an Issuer's Certificate specifying the amount to be withheld on
such payments to the Holder. The Depository shall be entitled to rely absolutely
on any such Issuer's Certificate and the Issuer shall indemnify the Depository
for, and hold it harmless against, any loss, liability or reasonable expense
incurred without negligence or bad faith on its part arising out of or in
connection with actions taken or omitted by it in reliance on any Issuer's
Certificate furnished to it pursuant to this Section 2.14.
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ARTICLE III
3. THE DEPOSITORY
3.1 Certain Duties and Responsibilities
(a) The Depository shall only be liable to perform such duties as are
expressly set forth in this Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Depository from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that:
(i) the duties and obligations of the Depository with respect to
the CDIs and the Global Notes shall be determined solely by
the express provisions of this Agreement and the Depository
shall only be liable for the performance of such duties and
obligations as are expressly set forth in this Agreement, and
no implied covenants or obligations shall be read into this
Agreement against the Depository; and
(ii) in the absence of bad faith, wilful misconduct or negligence
on its part, the Depository may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any statements, certificates or
opinions furnished to the Depository and conforming to the
requirements of this Agreement, but in the case of any such
statements, certificates or opinions that by any provision
hereof are specifically required to be furnished to the
Depository, the Depository shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Agreement.
(c) In the absence of bad faith, wilful misconduct or negligence, the
Depository shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Depository.
(d) The Depository shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction
of the Holder relating to the time, method and place of conducting any
proceeding for any remedy available to the Depository, or exercising any
power conferred upon the Depository, under this Agreement or the Trust
Deed.
(e) No provision of this Agreement shall require the Depository to expend or
risk its own funds or otherwise incur any financial liability in the
proper performance of any of its duties hereunder, or in the proper
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
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(f) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or
affording protection to the Depository shall be subject to the
provisions of this Section 3.1.
(g) The Depository owes no fiduciary duty to any person by virtue of this
Agreement except as expressly set forth herein.
(h) Notwithstanding anything in this Agreement to the contrary, in no event
shall the Depository be liable under or in connection with this
Agreement for indirect, special, or consequential losses or damages of
any kind, including lost profits, even if the Depository has been
advised of the possibility thereof and regardless of the form of action
by which such losses or damages may be claimed.
3.2 Notice of Default
The Depository shall promptly after receiving notice of the occurrence of any
Event of Default in respect of the Notes (a "Note Default"), notify the Holder
in the manner provided in Section 4.2, of such Note Default, unless such Note
Default shall have been cured or waived.
3.3 Certain Rights of Depository
Subject to the provisions of Section 3.1:
(a) the Depository may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, security or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the Issuer mentioned herein
shall be sufficiently evidenced by an Issuer's Certificate and any
resolution of the Board of Directors of the Issuer (a "Board
Resolution"), as the case may be, may be sufficiently evidenced by an
Issuer's Certificate certifying to such Board Resolution;
(c) the Depository may consult with counsel of its selection and the advice
of such counsel or any opinion of such counsel shall be full and
complete authorisation and protection with respect to any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(d) the Depository shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security or other paper or
document;
(e) the Depository may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys,
and the Depository shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed with due
care by it hereunder;
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(f) the Depository shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or the Trust Deed at
the request, order or direction of the Holder pursuant to this
Agreement, unless the Holder shall have offered to the Depository
reasonable security or indemnity against the costs, expenses and
liabilities that might be properly incurred by it in compliance with
such request or direction and the Depository shall have concluded that
such request, order or direction shall not expose the Depository to
personal liability;
(g) the Depository shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorised or within the
discretion, rights or powers conferred upon it by this Agreement; and
(h) whenever in the administration of its duties under this Agreement the
Depository shall deem it necessary or desirable that a matter be proved
or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Depository, be deemed to be conclusively
proved and established by an Issuer's Certificate delivered to the
Depository, and such certificate, in the absence of negligence or bad
faith on behalf of the Depository, shall be full warranty to the
Depository for any action taken, suffered or omitted by it under the
provisions of the Agreement.
3.4 Not Responsible for Recitals of Note Proceeds
The recitals contained in the Trust Deed and in the Notes shall be taken as the
statements of the Issuer and the Depository assumes no responsibility for their
correctness. The Depository makes no representations as to the validity or
sufficiency of this Agreement or the Notes. The Depository shall not be
accountable for the use or application by the Issuer of the proceeds of the
issue of the Notes.
3.5 Money held in Trust
All monies held by the Depository in respect of the Notes shall be held by the
Depository in trust for the benefit of the Holder but such monies need not be
segregated from other funds held by the Depository, except to the extent
required by law. The Depository shall be under no obligation to invest or pay
interest on any money received by it hereunder, except as otherwise agreed in
writing with the Issuer. Any interest accrued on funds deposited with the
Depository under this Agreement shall be paid to the Issuer from time to time
and the Holder shall have no claim to any such interest.
3.6 Fees and Expenses
The Issuer agrees:
(a) to pay to the Depository from time to time such remuneration as the
Issuer, the Note Trustee and the Depository shall from time to time
agree in writing for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law with regard
to the compensation of a Note Trustee or an express trust);
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(b) except as otherwise expressly provided herein, to reimburse the
Depository and any predecessor Depository upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Depository in accordance with any provision of this Agreement
(including the reasonable compensation and the reasonable expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Depository and any predecessor Depository for, and to
hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this Agreement and
its duties hereunder, including the costs and expenses of defending
itself against or investigating any claim of liability in connection
with the exercise or performance of any of its powers or duties
hereunder.
The obligations of the Issuer under this Section 3.6 to compensate and indemnify
the Depository and any predecessor Depository and to pay or reimburse the
Depository and any predecessor Depository for expenses, disbursements and
advances shall survive the satisfaction and discharge of this Agreement.
3.7 Depository Required; Eligibility
At all times when there is a Depository hereunder, such Depository shall be a
corporation organised and doing business under the laws of the United States of
America, any state thereof or the District of Columbia or such other
jurisdiction acceptable to the Issuer, having, together with its parent, a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by Federal, state or District of Columbia authority and willing to
act on reasonable terms. Such corporation shall have its principal place of
business in the Borough of Manhattan, The City of New York, if there be such a
corporation in such location willing to act upon reasonable and customary terms
and conditions. If such corporation, or its parent, publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 3.7, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Depository shall cease to
be eligible in accordance with the provisions of this Section 3.7, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
3.8 Resignation and Removal; Appointment of Successor
(a) No resignation or removal of the Depository and no appointment of a
Successor Depository pursuant to this Article shall become effective
until (i) the acceptance of appointment by the Successor Depository in
accordance with the applicable requirements of Section 3.9 hereof or
(ii) the issuance of Definitive Notes in accordance with Section 2.5
and the Trust Deed.
(b) The Depository may resign by giving written notice thereof to the
Issuer, the Note Trustee and the Holder, in accordance with Section 4.1
and Section 4.2 hereof, 60 days prior to the effective date of such
resignation. The Depository may be removed at
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any time upon 90 days' notice by the filing with it of an instrument in
writing signed on behalf of the Issuer and specifying such removal and
the date when it is intended to become effective. If the instrument of
acceptance by a Successor Depository required by Section 3.9 hereof
shall not have been delivered to the Depository within 30 days after
the giving of such notice of resignation or removal, the resigning
Depository may petition any court of competent jurisdiction for the
appointment of a Successor Depository.
(c) If at any time:
(i) the Depository shall cease to be eligible under Section 3.7
hereof or shall fail to resign after written request therefor
by the Issuer (made in accordance with 3.8(b) hereof), or
(ii) the Depository shall become incapable of acting with respect
to the CDIs or shall be adjudged a bankrupt or insolvent, or a
receiver or liquidator of the Depository or of its property
shall be appointed or any public officer shall take charge or
control of the Depository or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer, by Board Resolution, may remove
the Depository and appoint a Successor Depository, or (ii) the Holder
may, on behalf of itself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Depository
and the appointment of a Successor Depository or Depositories, unless
Definitive Notes have been issued in accordance with the Trust Deed.
Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Depository and appoint a Successor
Depository.
(d) If the Depository shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Depository for any
cause, the Issuer, by Board Resolution, shall promptly appoint a
Successor Depository (other than the Issuer) and shall comply with the
applicable requirements of Section 3.9. If no Successor Depository
shall have been so appointed by the Issuer and accepted appointment in
the manner required by Section 3.9, Holder may, on behalf of itself and
all others similarly situated, petition any court of competent
jurisdiction for the appointment of a Successor Depository unless
Definitive Notes have been issued in accordance with the Trust Deed.
(e) The Issuer shall give, or shall cause such Successor Depository to
give, notice of each resignation and each removal of a Depository and
each appointment of a Successor Depository to the Holder and the Note
Trustee in accordance with Section 4.2. Each notice shall include the
name of the Successor Depository and of its Specified Office.
3.9 Acceptance of Appointment by Successor
(a) In case of the appointment hereunder of a Successor Depository, every
such Successor Depository so appointed shall execute, acknowledge and
deliver to the Issuer and the Note Trustee and to the retiring
Depository an instrument accepting such appointment,
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and thereupon the resignation or removal of the retiring Depository
shall become effective and such Successor Depository, without any
further act, deed or conveyance, shall become vested with all the
rights (except the right to receive payments owing to the retiring
Depository pursuant to Section 3.6), powers, agencies and duties of the
retiring Depository, with like effect as if originally named as
Depository hereunder; but, on the request of the Issuer or the
Successor Depository, such retiring Depository shall, upon payment of
all amounts due and payable to it pursuant to Section 3.6, execute and
deliver an instrument transferring to such Successor Depository all the
rights and powers of the retiring Depository and shall duly assign,
transfer and deliver to such Successor Depository all property and
money held by such retiring Depository hereunder.
(b) Upon request of any such Successor Depository, the Issuer shall execute
any and all instruments for more fully and certainly vesting in and
confirming to such Successor Depository all such rights, powers and
agencies referred to in paragraph (a) of this Section 3.9.
(c) No Successor Depository shall accept its appointment unless at the time
of such acceptance such Successor Depository shall be eligible under
this Article.
(d) Upon acceptance of appointment by any Successor Depository as provided
in this Section 3.9, the Issuer shall give notice thereof to the Holder
in accordance with Section 4.2 with a copy to the Successor Depository.
If the acceptance of appointment is substantially contemporaneous with
the resignation of the Depository, then the notice called for by the
preceding sentence may be combined with the notice called for by
Section 3.8(b). If the Issuer fails to give such notice within 10 days
after acceptance of appointment by the Successor Depository, the
Successor Depository shall cause such notice to be given at the expense
of the Issuer.
3.10 Merger, Conversion, Consolidation or Succession to Business
Any corporation into which the Depository may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Depository shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Depository, shall be the Successor Depository hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
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ARTICLE IV
4. MISCELLANEOUS PROVISIONS
4.1 Notices to Depository, Issuer or the Note Trustee
Any request, demand, authorisation, direction, notice, consent, or waiver or
other document provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with,
(a) the Depository, by the Holder, the Note Trustee or the Issuer shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, to it at
its Specified Office, or at any other address previously furnished in
writing by the Depository to the Holder, the Note Trustee and the
Issuer or sent by facsimile to the Depository, Attention [*]; or
(b) the Issuer, by the Depository, the Note Trustee or the Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid to it at
its registered office at 200 Aldersgate Street, London EC1A 4JJ or any
other address previously furnished in writing by the Issuer to the
Depository, the Note Trustee or the Holder or sent by facsimile to the
Issuer, Attention: The Directors, facsimile no. [*]; or
(c) the Note Trustee, by the Depository, the Issuer or the Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid to it at
its principal office at [One Canada Square, London E14 5AL] or at any
other address previously furnished in writing by the Note Trustee to
the Depository, the Issuer or the Holder or sent by facsimile to the
Note Trustee, Attention: The Directors, facsimile no. [*].
4.2 Notice to Holder; Waiver
Where this Agreement provides for notice to the Holder of any event, such notice
shall be sufficiently given (unless otherwise herein expressly provided or as
provided in the Letter of Representations) if in writing and mailed (first-class
postage prepaid) or sent by facsimile to the Holder at the address or facsimile
number notified to the Depository, the Issuer and the Note Trustee in each case
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. Where this Agreement provides for
notice in any manner, such notice may be waived in writing by the person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by the Holder
shall be filed with the Depository, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
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In case by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Depository shall
constitute a sufficient notification for every purpose hereunder.
4.3 Successors and Assigns
All covenants and agreements in this Agreement and the Notes by the Issuer shall
bind its successors and assigns, whether so expressed or not.
4.4 Separability Clause
In case any provision in this Agreement or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
4.5 Benefits of Agreement
Nothing in this Agreement, the Notes, or the Trust Deed, express or implied,
shall give to any person, other than the parties hereto and their successors
hereunder, any benefits or any legal or equitable right, remedy or claim under
this Agreement.
4.6 Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
4.7 Jurisdiction
The Issuer agrees for the benefit of the Note Trustee and the Depository that
any legal suit, action or proceeding against the Issuer brought by the
Depository or the Note Trustee arising out of or based upon this Agreement may
be instituted in any state or Federal court in the Borough of Manhattan, The
City of New York, and waives any objection which it may now or hereafter have to
the laying of venue of any such proceeding and irrevocably submits to the
nonexclusive jurisdiction of such courts in any suit, action or proceeding. The
Issuer has appointed [CT Corporation at its offices at 1633 Broadway, New York,
New York, 10019] as its authorised agent (the "Authorised Agent") upon whom
process may be served in any legal suit, action or proceeding arising out of or
based upon this Agreement which may be instituted in any state or Federal court
in the Borough of Manhattan, The City of New York, by the Holder, the Note
Trustee or the Depository and expressly accepts the nonexclusive jurisdiction of
any such court in respect of any such action. Such appointment shall be
irrevocable.
The Issuer represents and warrants that the Authorised Agent has agreed to act
as said agent for service of process, and the Issuer agrees to take any and all
action, including the filing of any and all documents and instruments, that may
be necessary to continue such appointment in full force and effect as aforesaid.
Service of process upon the Authorised Agent shall be deemed, in every respect,
effective service of process upon the Issuer. Notwithstanding the
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foregoing, any action based on this Agreement may be instituted by the
Depository or the Note Trustee in any competent court in England.
4.8 Counterparts
This Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts each of which, when executed and
delivered, shall constitute an original, but all the counterparts shall together
constitute but one and the same instrument provided, however, that this
Agreement shall have no force or effect until it is executed by the last party
to execute the same.
4.9 Inspection of Agreement
A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Specified Office of the Depository for inspection
by the Holder upon reasonable notice to the Depository.
4.10 Satisfaction and Discharge
This Agreement, upon Issuer Order shall cease to be of further effect, and the
Depository, at the expense of the Issuer shall execute proper instruments
acknowledging satisfaction and discharge of this Agreement, when the Depository
has received an Issuer Certificate certifying that (i) the Trust Deed has been
satisfied and discharged pursuant to the provisions thereof or Definitive Notes
have been issued and the Global Notes have been cancelled in accordance with the
provisions of Section 2.9 and the Trust Deed, (ii) the Issuer has paid or caused
to be paid all sums payable hereunder by the Issuer and (iii) the Issuer has
delivered to the Depository an Issuer's Certificate and an Opinion of Counsel,
stating that all conditions precedent herein provided relating to the
satisfaction and discharge of this Agreement have been complied with.
4.11 Amendments
The Issuer, the Note Trustee and the Depository may amend this Agreement without
the consent of the Holder:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to add to the covenants and agreements of the Depository or the Issuer;
(c) to effectuate the assignment of the Depository's rights and duties to a
qualified Successor, as provided herein;
(d) to comply with any requirements of the Securities Act, the Exchange Act
or the U.S. Investment Company Act of 1940; or
(e) to modify, alter, amend or supplement this Agreement in any other manner
that is not materially adverse to the Holder or the holders of
Book-Entry Interests.
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Except as set forth in this Section 4.11, no amendment that materially adversely
affects the Holder or the holders of Book-Entry Interests may be made to this
Agreement or the Book-Entry Interests without the consent of the Holder.
4.12 Depository to Sign Amendments
The Depository shall sign any amendment authorised pursuant to Section 4.11 if
the amendment does not adversely affect the rights, duties, liabilities or
immunities of the Depository. The Depository may but need not sign any other
amendment. In signing any amendment the Depository shall be entitled to receive
indemnity reasonably satisfactory to it and shall be fully protected in
reasonably relying upon an Issuer's Certificate (which need only cover the
matters set forth in clause (a) below) and an Opinion of Counsel stating that:
(a) such amendment is authorised or permitted by this Agreement;
(b) the Issuer has all necessary corporate power and authority to execute
and deliver the amendment and that the execution, delivery and
performance of such amendment has been duly authorised by all necessary
corporate action;
(c) the execution, delivery and performance of the amendment do not
conflict with, or result in the breach of or constitute a default under
any of the terms, conditions or provisions of (i) this Agreement, (ii)
the Memorandum or Articles of Association of the Issuer, (iii) any law
or regulation applicable to the Issuer, (iv) any material order, writ,
injunction or decree of any court or governmental instrumentality
applicable to the Issuer or (v) any material agreement or instrument
(including the terms and conditions of the Notes) to which the Issuer
is subject; and
(d) such amendment has been duly and validly executed and delivered by the
Issuer, and this Agreement after giving effect to such amendment
constitutes a legal, valid and binding obligation of the Issuer
enforceable against the Issuer in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first written above.
GRACECHURCH CARD FUNDING (NO.1) PLC
By:
BANK OF NEW YORK, LONDON BRANCH
By:
BANK OF NEW YORK, NEW YORK
By:
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SCHEDULE 1
EXHIBIT A
FORM OF TRANSFER CERTIFICATE -
RULE 144A GLOBAL NOTE TO
REG S GLOBAL NOTE
DURING THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.8(a)(1) of the Depository Agreement)
[*] as Depository
Attention: [*]
Re: Gracechurch Card Funding (No.1) Plc
Reference is hereby made to the Trust Deed dated as of [*] November 1999 (the
"Trust Deed"), between Gracechurch Card Funding (No.1) Plc (the "Issuer") and
Bank of New York as Note Trustee. Capitalised terms used but not defined herein
shall have the meanings given to them in the Trust Deed.
This letter relates to [ ] aggregate principal amount of the Notes which are
evidenced by the Rule 144A Global Note (CUSIP No. [*]) and held by you on behalf
of The Depository Trust Company who in turn is holding an interest therein on
behalf of the undersigned (the "Transferor"). The Transferor has requested a
transfer of such beneficial interest in the Notes to a Person who, during the
Restricted Period, will take delivery thereof in the form of an equal aggregate
principal amount of the Notes evidenced by the Reg S Global Note (ISIN No. [*]),
which amount, immediately after such transfer, is to be held with the Depository
through Euroclear or Cedelbank or both.
In connection with such request and in respect of such Notes, the Transferor
does hereby certify that such transfer has been effected pursuant to and in
accordance with Rule 903 or Rule 904 under the Securities Act and accordingly
the Transferor does hereby further certify that:
(1) the offer of the Notes was not made to a person in the United States or
to or for the account or benefit of a U.S. person;
(2) either:
(A) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person
acting on its behalf reasonably believed that the transferee
was outside the United States; or
(B) the transaction was executed in, on or through the facilities
of a designated offshore securities market and neither the
Transferor nor any person acting on
-26-
<PAGE>
its behalf knows that the transaction was pre-arranged with a
buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above will be held with the Depository through
Euroclear or Cedelbank or both.
This certificate and the statements contained herein are made for the benefit of
the Issuer and the Manager. Terms used in this certificate and not otherwise
defined in the Trust Deed have the meanings set forth in Regulation S under the
Securities Act.
Dated: [Insert Name of Transferor]
By:
-------------------------------------------
Name:
Title:
(If the transferor is a
corporation, partnership or fiduciary, the title to the Person signing on behalf
of such transferor must be stated.)
-27-
<PAGE>
SCHEDULE 2
EXHIBIT B
FORM OF TRANSFER CERTIFICATE -
RULE 144A GLOBAL NOTE TO
REG S GLOBAL NOTE
AFTER THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.8(a)(2) of the Depository Agreement)
[*], as Depository
Attention: [*]
Re: Gracechurch Card Funding (No.1) Plc
Reference is hereby made to the Trust Deed dated as of [*] November 1999 (the
"Trust Deed"), among Gracechurch Card Funding (No.1) Plc (the "Issuer") and Bank
of New York BT Note Trustees (Jersey) Limited as Note Trustee. Capitalised terms
used but not defined herein shall have the meanings given to them in the Trust
Deed.
This letter relates to [ ] aggregate principal amount of the Notes which are
evidenced by the Rule 144A Global Note (CUSIP No. [*]) and held by you on behalf
of The Depository Trust Company who in turn is holding an interest therein on
behalf of the undersigned (the "Transferor"). The Transferor has requested a
transfer of such beneficial interest in the Notes to a Person who will take
delivery thereof in the form of an equal aggregate principal amount of the Notes
evidenced by the Reg S Global Note (ISIN No. [*])
In connection with such request and in respect of such Notes, the Transferor
does hereby certify that such transfer has been effected pursuant to and in
accordance with Rule 903 and Rule 904 under the Securities Act and accordingly
the Transferor does hereby certify that:
(1) the offer of the Notes was not made to a person in the United States or
to or for the account or benefit of a U.S. person;
(2) either:
(A) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person
acting on its behalf reasonably believed that the transferee
was outside the United States; or
(B) the transaction was executed in, on or through the facilities
of a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United
States;
-28-
<PAGE>
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;
and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
This certificate and the statements contained herein are made for the benefit of
the Issuer and the Manager. Terms used in this certificate and not otherwise
defined in the Trust Deed have the meanings set forth in Regulation S under the
Securities Act.
Dated: [Insert Name of Transferor]
By:
-------------------------------------------
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
-29-
<PAGE>
SCHEDULE 3
EXHIBIT C
FORM OF TRANSFER CERTIFICATE -
REG S GLOBAL NOTE TO
RULE 144A GLOBAL NOTE
DURING THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.8(a)(3) of the Depository Agreement)
[*], as Depository
Attention: [*]
Re: Gracechurch Card Funding (No.1) Plc
Reference is hereby made to the Trust Deed dated as of [*] November 1999 (the
"Trust Deed"), among Gracechurch Card Funding (No.1) Plc (the "Issuer") and Bank
of New York as Note Trustee. Capitalised terms used but not defined herein shall
have the meanings given to them in the Trust Deed.
This letter relates to [ ] aggregate principal amount of the Notes which are
evidenced by the Reg S Global Note (ISIN No. [*]) and held by you through
Euroclear or Cedelbank or both on behalf of The Depository Trust Company who in
turn is holding an interest therein on behalf of the undersigned (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Notes to a Person who, and during the Restricted Period, will
take delivery thereof in the form of an equal principal amount of the Notes
evidenced by the Rule 144A Global Note (CUSIP No. [*]).
In connection with such request and in respect of such Notes, the Transferor
does hereby certify that such transfer has been effected pursuant to and in
accordance with Rule 144A under the Securities Act and accordingly the
Transferor does hereby further certify that the Notes are being transferred to a
person that the Transferor reasonably believes is purchasing the Notes for its
own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such account is a
"qualified purchaser" (as defined in Section 2(a)(51)(A) of the Investment
Company Act of 1940) that is a "qualified institutional buyer" (as defined in
Rule 144A), in each case in a transaction in compliance with Section 3(c)(7) of
the Investment Company Act and Rule 144A and in accordance with any applicable
securities laws of any state of the United States. The Issuer reserves the right
to refuse to recognise the transfer (or require the resale to non-U.S. persons)
of any Notes, or any beneficial interest therein, if in the Issuer's sole
judgement such transfer could result in the Notes being beneficially owned by
U.S. persons that are not qualified purchasers.
This certificate and the statements contained herein are made for the benefit of
the Issuer and the Manager.
-30-
<PAGE>
Dated: [Insert Name of Transferor]
By:
-------------------------------------------
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
-31-
<PAGE>
SCHEDULE 4
EXHIBIT D
FORM OF EXCHANGE CERTIFICATE -
NOTES ACQUIRED PURSUANT TO RULE 144A
(Exchange Pursuant to Section 2.8(a)(5)
of the Depository Agreement)
[*], as Depository
Attention: [*]
Re: Gracechurch Card Funding (No.1) Plc
Reference is hereby made to the Trust Deed dated as of [*] November 1999 (the
"Trust Deed"), among Gracechurch Card Funding (No.1) Plc (the "Issuer") and Bank
of New York as Note Trustee. Capitalised terms used but not defined herein shall
have the meanings given to them in the Trust Deed.
This letter relates to [ ] aggregate principal amount of the Notes which are
evidenced by the Rule 144A Global Note (CUSIP No. [*]) and held by you on behalf
of The Depository Trust Company who in turn is holding an interest therein on
behalf of the undersigned (the "Beneficial Owner"). The Beneficial Owner has
requested that its beneficial interest in the Notes be exchanged for a
beneficial interest in an equal aggregate principal amount of the Notes
evidenced by the Reg S Global Note (ISIN No. [*]).
In connection with such request and in respect of the Notes, the Beneficial
Owner does hereby certify that (a) upon such exchange, it will be the beneficial
owner of the Notes, (b) it is not a U.S. person (as defined in Regulation S
under the Securities Act) and is located outside the United States (within the
meaning of Regulation S) and acquired, or has agreed to acquire and upon such
exchange will have acquired, such Notes outside the United States [, (c) it is
not an "affiliate" (as defined in Rule 144A under the Securities Act) of the
Issuer or a person acting on behalf of such an affiliate and (d) it is not in
the business of buying and selling securities or, if it is in such business, it
did not acquire such Notes from the Issuer or any affiliate thereof in the
initial distribution of the Notes].* [In addition, the Beneficial Owner hereby
agrees that it will not, on or before the 40th day after the later of the
commencement of the offering and the Closing Date, offer, sell, pledge or
otherwise transfer the Notes issued in such exchange except (a) to a Person who
is a "qualified purchaser" (as defined in Section 2(a)(51)(A) of the Investment
Company Act of 1940 (the "Investment Company Act")) who is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction in compliance with Section 3(c)(7) of the Investment Company Act and
Rule 144A and in accordance with any applicable securities laws of any state of
the United States, or (b) in an offshore transaction meeting the requirements of
Rule 903 or Rule 904 under the
-32-
<PAGE>
Securities Act.]* The Issuer reserves the right
to refuse to recognise the transfer (or require the resale to non-U.S. persons)
of any Notes, or any beneficial interest therein, if in the Issuer's sole
judgement such transfer could result in the Notes being beneficially owned by
U.S. persons that are not qualified purchasers.
This certificate and the statements contained herein are made for the benefit of
the Issuer and the Manager.
Dated: [Insert Name of Beneficial Owner]
By:
-------------------------------------------
Name:
Title:
(If the Beneficial Owner is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such Beneficial
Owner must be stated.)
*Insert these bracketed provisions only if the exchange will occur
during the Restricted Period.
-33-
<PAGE>
SCHEDULE 5
EXHIBIT E
FORM OF EXCHANGE CERTIFICATE -
NOTES ACQUIRED PURSUANT TO REGULATION S
(Exchange Pursuant to Section 2.8(a)(6) of the Depository Agreement)
[*], as Depository
Attention: [*]
Re: Gracechurch Card Funding (No.1) Plc
Reference is hereby made to the Trust Deed dated as of [*] November 1999 (the
"Trust Deed"), among Gracechurch Card Funding (No.1) Plc (the "Issuer") and Bank
of New York as Note Trustee. Capitalised terms used but not defined herein shall
have the meanings given to them in the Trust Deed.
This letter relates to [ ] aggregate principal amount of the Notes which are
evidenced by the Reg S Global Note (ISIN No. [*]) and held by you on behalf of
The Depository Trust Company who in turn is holding an interest therein on
behalf of the undersigned (the "Beneficial Owner"). The Beneficial Owner has
requested that its beneficial interest in the Notes be exchanged for a
beneficial interest in an equal aggregate principal amount of the Notes
evidenced by the Rule 144A Global Note (CUSIP No. [*]).
In connection with such request and in respect of the Notes, as the Beneficial
Owner we acknowledge (or if we are acting for the account of another Person,
such Person has confirmed to us in writing that it acknowledges) that the Notes
have not been and will not be registered under the Securities Act.
We certify that we are (or it is) the beneficial owner of the Notes and that we
are (or it is) a "qualified purchaser" (as defined in the Investment Company Act
of 1940 (the "Investment Company Act"), is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) acting for our own account or for
the account of one or more qualified purchasers that are qualified institutional
buyers, and, accordingly, we agree (or if we were acting for the account of one
or more qualified purchasers that are qualified institutional buyers, each such
qualified purchasers that are qualified institutional buyers has confirmed to us
that it agrees) that we (or it) will not offer, sell, pledge or otherwise
transfer the Notes except (A) to a Person who is a qualified purchaser who is a
qualified institutional buyer in compliance with Rule 144A under the Securities
Act and Section 3(c)(7) of the Investment Company Act, or (B) in an offshore
transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S, in
each case in accordance with any applicable securities laws of the states of the
United States. The Issuer reserves the right to refuse to recognise the transfer
(or
-34-
<PAGE>
require the resale to non-U.S. persons) of any Notes, or any beneficial
interest therein, if in the Issuer's sole judgement such transfer could result
in the Notes being beneficially owned by U.S.
persons that are not qualified purchasers.
If we are a broker-dealer, we further certify that we are acting for the account
of our customer and that our customer has confirmed the accuracy of the
representations contained herein that are applicable to it (including the
representations with respect to beneficial ownership).
This certificate and the statements contained herein are made for the benefit of
the Issuer and the Managers. Terms used in this certificate and not otherwise
defined in the Trust Deed have the meanings set forth in Regulation S under the
Securities Act.
Dated: [Insert Name of Beneficial Owner]
By:
-------------------------------------------
Name:
Title:
(If the Beneficial Owner is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such Beneficial
Owner must be stated.)
-35-
B1227/19155/KPI 28 October 1999
Gracechurch Card Funding (No.1) PLC
200 Aldersgate Street
London EC1A 4JJ
Ladies and Gentlemen:
Re: Gracechurch Card Funding (No.1) PLC
We have acted as special outside counsel of Gracechurch Card Funding (No.1) PLC
(the "Seller") and have examined the Registration Statement on Form F-1
(Registration No. 333-10970) (the "Registration Statement") filed by the Seller
with the Securities and Exchange Commission (the "Commission") with respect to
the issuance by the Seller of a series of its Floating Rate Asset Backed Class
A3 Notes and Class B Notes, Series 99-1 (the Class A3 Notes and the Class B
Notes, together the "Notes"). The Notes to be issued by the Seller are
constituted pursuant to the Trust Deed (the "Trust Deed"), a form of which is
attached to the Registration Statement as Exhibit 4.5. Terms used herein and not
defined herein shall have the meaning set forth in the Trust Deed.
We are familiar with the proceedings to date with respect to the proposed
offering and sale to the public of the Notes and have examined such records,
documents and matters of law and satisfied ourselves as to such matters of fact
as we have considered relevant for the purposes of this opinion.
Based on the foregoing, it is our opinion that when:
1. the Trust Deed pertaining to the Notes shall have been duly executed and
delivered by the parties thereto,
2. the Notes shall have been duly executed by the Seller and authenticated
by the Note Trustee in accordance with the Trust Deed and delivered by
the Seller, in the case of the Class A3 Notes, in accordance with the
Class A3 Note Subscription Agreement (the "A3 Subscription Agreement"),
and, in the case of the Class B Notes, the Class B Note Subscription
Agreement (the "B Subscription Agreement"), a form of each of which is
attached to the Registration Statement as Exhibit 1.1,
1
<PAGE>
3. the Seller shall have received the agreed purchase price for the Notes,
in the case of the Class A3 Notes, in accordance with the A3
Subscription Agreement and, in the case of the Class B Notes, in
accordance with the B Subscription Agreement, and
4. the Registration Statement shall have been declared effective by the
Commission under the Securities Act of 1933, as amended (the "Securities
Act"),
the Notes will be legally issued, fully paid and non-assessable, will be binding
obligations of the Issuer and will be entitled to the benefits of the Trust
Deed.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Prospectus which forms a part of the Registration Statement, and
to the filing of this consent as an exhibit to the Registration Statement. In
giving such consent, we do not consider that we are in the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission promulgated thereunder.
Very truly yours,
/s/Clifford Chance
2
27 October 1999
Gracechurch Card Funding (No.1) PLC
200 Aldersgate Street, London
EC1A 4JJ, United Kingdom
Re:Gracechurch Card Funding (No.1) PLC
Ladies and Gentlemen:
We have acted as U.S. tax counsel for Gracechurch Card Funding (No.1) PLC,
a public limited company incorporated in England and Wales (the "Issuer"), in
connection with the preparation of the Registration Statement on Form F-1 (the
"Registration Statement"), which has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), for the
registration under the Act of class A notes and class B notes (the "Notes")
representing asset backed obligations of the Issuer. The Notes are to be issued
pursuant to a trust deed, governed by English law (the "Trust Deed") between the
Issuer and the Bank of New York acting through its London branch, as trustee,
substantially in the form filed as exhibit 4.4 to the Registration Statement.
We hereby confirm that the statements set forth in the prospectus relating
to the Notes (the "Prospectus") forming a part of the Registration Statement
under the headings "Prospectus Summary: United States Federal Income Tax Status"
and "United States Federal Income Tax Consequences", to the extent that they
constitute matters of law or legal conclusions with respect thereto, are correct
in all material respects. We further hereby confirm and adopt the opinions as to
the material federal tax consequences of the purchase, ownership and disposition
of the notes set forth in the Prospectus under the heading "United States
Federal Income Tax Consequences". The statements concerning federal income tax
consequences contained in the prospectus do not purport to discuss all possible
United States income tax ramifications of the proposed issuance. In particular,
no opinion is given as to the characterisation of the Notes as debt or equity
for United States Federal income tax purposes.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to Orrick, Herrington &
Sutcliffe LLP under the captions "Legal Matters", "Prospectus Summary: United
States Federal Income Tax Status" and "United States Federal Income Tax
Consequences" in the Prospectus. 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.
Respectfully submitted,
/s/ORRICK, HERRINGTON & SUTCLIFFE LLP
1
HMS/B1227/19290/SES/JAE 28 October 1999
Gracechurch Card Funding (No.1) PLC
200 Aldersgate Street
London
EC1A 4JJ
Dear Sirs
Gracechurch Card Funding (No.1) PLC
1. We have acted as United Kingdom tax counsel for Gracechurch Card Funding
(No.1) PLC, a public limited company incorporated in England and Wales
(The "Issuer"), in connection with the preparation of the Registration
Statement on Form F-1 (the "Registration Statement"), which has been
filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (The "Act"), for the Registration Under the Act
of Class a Notes and Class B Notes (together, the "Notes") representing
asset backed obligations of the Issuer. The Notes are to be issued
pursuant to a trust deed, governed by English law (the "Trust Deed")
between the Issuer and the Bank of New York acting through its London
branch, as trustee, substantially in the form filed as exhibit 4.5 to
the Registration Statement.
2. Based on certain assumptions which cannot be verified before closing,
and subject to (a) finalisation of documents in a form which is
satisfactory to us and not inconsistent with the descriptions in the
prospectus (the "Prospectus") relating to the Notes, other than the
exhibits to the Registration Statement, and (b) the reservations below,
we are of the opinion that, under current UK law, the statements set
forth in the Prospectus under the headings "Prospectus Summary: United
Kingdom Tax Status" and "United Kingdom Taxation Treatment of the
Notes", to the extent that they constitute matters of law or legal
conclusions with respect thereto, are correct in all material respects.
3. The opinion set forth is subject to the following reservations:
1
<PAGE>
(a) the statements concerning United Kingdom tax consequences
contained in the Prospectus do not purport to discuss all
possible United Kingdom tax ramifications of the proposed
issuance and are limited to the matters expressly referred to in
those statements; and
(b) our opinion is confined to the matters expressly referred to 2.
above and is based on United Kingdom law and Inland Revenue
practice as at today's date. For the avoidance of doubt, we do
not express any opinion on the laws of any jurisdiction other
than the UK, or in relation to any UK tax or legal aspects
(other than the matters expressly referred to in 2. above).
4. We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to Clifford
Chance under the captions "Legal Matters", "Prospectus Summary: United
Kingdom Tax Status" and "United Kingdom Taxation Treatment of the Notes"
in the Prospectus. 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.
5. This opinion is addressed solely to the addressee named above and it may
not be relied upon by any other person, firm or corporation whatsoever
(although you may supply a copy to the United States Securities and
Exchange Commission). This opinion shall be governed by and construed in
accordance with English law.
Yours faithfully
\s\Clifford Chance
Clifford Chance
2
CLIFFORD CHANCE
Draft Date: 15 October 1999
[o] November 1999
Barclays bank plc
as Lender
GRACECHURCH CARD FUNDING (NO. 1) PLC
as Issuer
- and -
THE BANK OF NEW YORK
as Note Trustee
---------------------------------
EXPENSES LOAN AGREEMENT
---------------------------------
<PAGE>
CONTENTS
Clause Page
1. Definitions.............................................................1
2. The Facility............................................................5
3. Interest................................................................5
4. Payments................................................................5
5. Repayment...............................................................5
6. Prepayment..............................................................6
7. Representations Of The Issuer...........................................6
8. Enforcement Event.......................................................6
9. Enforcement And Subordination...........................................6
10. Notices.................................................................7
11. Fees....................................................................8
12. Invalidity..............................................................8
13. Assignment And Variation................................................8
14. Remedies And Waivers....................................................8
15. Information, Benefit And Variation......................................8
16. Section 349 Bank........................................................9
17. Counterparts............................................................9
18. Entire Agreement........................................................9
19. Governing Law And Jurisdiction..........................................9
SCHEDULE 1 MANDATORY COSTS..........................................11
<PAGE>
THIS EXPENSES LOAN AGREEMENT is made on [o] November 1999
BETWEEN:
(1) BARCLAYS BANK PLC, a company incorporated in England and Wales having
its registered office at 54 Lombard Street, London, EC3P 3AH (the
"Lender");
(2) GRACECHURCH CARD FUNDING (No.1) PLC, a company incorporated in England
and Wales having its registered office at 200 Aldersgate Street, London,
EC1A 4JJ (the "Issuer"); and
(3) THE BANK OF NEW YORK whose London Branch is at One Canada Square, London
E14 5AL (the "Note Trustee", which expression shall, whenever the
context so admits, include any other trustee or trustees for the time
being pursuant to the Trust Deed referred to below).
WHEREAS:
(A) The Issuer proposes to issue Notes pursuant to a trust deed dated the
Closing Date between the Issuer and the Note Trustee (the "Trust Deed").
(B) The Lender is willing to advance funds to the Issuer, to be used to meet
certain expenses incurred by the Issuer in regard to the issue of the
Notes, all on the terms and subject to the conditions contained herein.
(C) The Note Trustee is the trustee for the holders of the Notes.
IT IS HEREBY AGREED as follows:-
1. Definitions
1.1 In this Agreement and in the Recitals hereto, except so far as the
context otherwise requires:-
"Advance" shall have the meaning set out in Clause 2;
"Barclaycard" means Barclays Bank PLC, acting through its business unit
"Barclaycard";
"Barclays Capital" means Barclays Bank PLC, acting through its investment
banking unit, Barclays Capital;
"Business Day" shall mean any day other than a Saturday, a Sunday or a day on
which banking institutions in London, England are authorised or obliged by law
or executive order to be closed;
"Closing Date" shall mean 15 November 1999 or such other date as shall be agreed
between all relevant parties for the closing of the issue of the Notes;
"Conditions" means the terms and conditions applicable to the Notes in the form
or substantially in the form set out in the Seventh Schedule of the Trust Deed
and any reference in these presents to a particular numbered Condition shall be
construed accordingly;
1
<PAGE>
"Declaration of Trust and Cash Management Agreement" means the declaration of
trust and cash management agreement dated on or about the Closing Date between
the Receivables Trustee and Barclaycard;
"Deed of Charge" means the deed of charge dated on or about the Closing Date
between the Issuer, the Note Trustee and the Lender;
"Depositary Agreement" means the depositary agreement dated on or about the
Closing Date and made between the Issuer, the Depository Trust Company as
depositary and the Note Trustee;
"Enforcement Notice" means a notice given by the Note Trustee to the Issuer
under Condition 9 of the Notes;
"Excess Spread" has the meaning given to it in the Series 99-1 Supplement;
"Expenses Loan" means the principal amount of the Advance from time to time
outstanding as such amount is reduced from time to time by repayments hereunder;
"Facility" means the subordinated expenses loan facility the terms and
conditions of which are set out in this Agreement;
"Final Repayment Date" means the Interest Payment Date on which the Issuer makes
the final payment of interest and principal in respect of the Notes;
"Interest Payment Date" means the 15th day of each calendar month, Provided that
the first Interest Payment Date shall fall on 15 January 2000;
"Interest Period" shall mean, for the purposes of this Agreement with respect to
any Interest Payment Date, the period from and including the Interest Payment
Date immediately preceding such Interest Payment Date to but excluding such
Interest Payment Date; Provided that the initial Interest Period shall commence
on and include the Closing Date and end on but exclude 15 January 2000;
"Issuer's Account" shall mean the account with Barclays Bank PLC at 54 Lombard
Street, London, EC3P 3AH with account number [o];
"LIBOR" shall mean, for any Interest Period, the London interbank offered rate
for one-month sterling deposits determined by or on behalf of the Lender for
each Interest Period on the following basis:
(i) on the first day of the Interest Period for which the rate will apply
(or if such day is not a Business Day, the next succeeding Business
Day), the offered quotation to leading banks in the London Interbank
Market for one-month sterling deposits by reference to the display
designated as the British Bankers Association LIBOR Rates as quoted on
the Bridge/Telerate Screen No. 3750 (or (aa) such other page as may
replace Telerate Screen No. 3750 on that service for the purposes of
displaying such information or (bb) if that service ceases to display
such information, such page as displays such
2
<PAGE>
information on such service as may replace the Bridge/Telerate Monitor)
as at or about 11.00 a.m. (London time) on that date (the "Screen
Rate");
(ii) if, on the relevant date, the Screen Rate does not appear on the Reuter
Monitor Money Rates Service page or the Telerate Screen page, as
aforesaid, the Lender will:
(A) request the principal London office of each of [o], Barclays
Bank PLC, [o] and [o] or any duly appointed substitute reference
bank(s) as may be appointed by the Lender (together the
"Reference Banks") to provide the Lender with its offered
quotation to leading banks in the London Interbank Market for
one-month sterling deposits as at approximately 11.00 a.m.
(London time) on the relevant date in question and in an amount
that is representative for a single transaction in that market
at that time; and
(B) determine the arithmetic mean (rounded upwards to four decimal
places) of such quotations; and
(iii) if on the relevant date the Screen Rate is unavailable and two or three
only of the Reference Banks provide offered quotations, the rate of
interest for the relevant Interest Period shall be determined in
accordance with the provisions of paragraph (ii) on the basis of the
arithmetic mean (rounded upwards to four decimal places) of the offered
quotations of those Reference Banks providing the offered quotations;
(iv) if fewer than two such quotations are provided by the Reference Banks as
requested, the Lender will determine the arithmetic mean (rounded
upwards to four decimal places) of the rates quoted by major banks in
London, selected by the Lender, at approximately 11.00 a.m. (London
time) on the first day of the relevant Interest Period for loans in
pounds sterling to leading European banks for a period equal to the
relevant Interest Period and in amount that is representative for a
single transaction in that market at that time,
Provided, that if the Lender is unable to determine the Screen Rate or, as the
case may be, the arithmetic mean in accordance with provisions in relation to
any Interest Period, LIBOR during such Interest Period will be the Screen Rate
or, as the case may be, the arithmetic mean last determined in relation to this
Agreement in respect of a preceding Interest Period;
"Manager" means Barclays Capital in its capacity as manager for the issue of the
Notes;
"Mandatory Cost Rate" means the rate determined in accordance with Schedule 1
(Mandatory Costs);
"Margin" means [o] per cent. per annum;
"Notes" means the (pound)[o] Class A1 Asset Backed Floating Rate Notes due
November 2002, Euro [o] Class A2 Asset Backed Floating Rate Notes due November
2002, $[o] Class A3 Asset Backed Floating Rate Notes due November 2002, $[o]
Class B Asset Backed Floating Rate Notes due November 2002, and $[o] Class C
Asset Backed Floating Rate Notes due November 2002 constituted by the Trust
Deed;
3
<PAGE>
"Paying Agency and Agent Bank Agreement" means the paying agency and agent bank
agreement dated on or about the Closing Date between the Issuer, the Lender, in
its capacity as Agent Bank, and The Bank of New York;
"Rapid Amortisation Period" has the meaning given to it in the Series 99-1
Supplement;
"Receivables Securitisation Agreement" means the receivables securitisation
agreement dated between Barclaycard and the Receivables Trustee;
"Receivables Trustee" means Gracechurch Receivables Trustee Limited as
receivables trustee pursuant to the Declaration of Trust and Cash Management
Agreement and its permitted successors;
"Regulated Amortisation Period" has the meaning given to it in the Series 99-1
Supplement;
"Relevant Documents" means the Paying Agency and Agent Bank Agreement, the
Depositary Agreement, the Trust Deed, the Declaration of Trust and Cash
Management Agreement, the Series 99-1 Supplement, the Receivables Securitisation
Agreement, this Agreement, the Subscription Agreements and any mandate or other
agreement relating to the Series 99-1 Distribution Account;
"Repayment Amount" has the meaning given to it in Clause 5.1 of this Agreement;
"Repayment Date" has the meaning given to it in Clause 5.1 of this Agreement;
"Series 99-1 Distribution Account" means a bank account in the name of the
Issuer to be used in accordance with the provisions of the Series 99-1
Supplement;
"Series 99-1 Supplement" means the supplement for Series 99-1 dated the Closing
Date between, inter alios, the Receivables Trustee and the MTN Issuer;
"Subscription Agreements" means each of the several subscription agreements for
the Notes dated [o] November 1999 between, inter alios, the Issuer, Barclaycard,
the managers named therein and the Receivables Trustee; and
"Trust Deed" means the trust deed for the Notes dated on or about the Closing
Date between the Note Trustee and the Issuer.
1.2 Terms defined in the Trust Deed shall, unless otherwise defined herein
or the context otherwise requires, bear the same meanings herein.
1.3 The headings in this Agreement shall not affect its interpretation.
1.4 Words denoting the singular number only shall include the plural number
also and vice versa; words denoting one gender only shall include the
other genders and words denoting persons only shall include firms and
corporations and vice versa.
1.5 Save where the contrary is indicated, any reference in this Agreement to
this Agreement or any other agreement or document shall be construed as
a reference to this Agreement or, as the case may be, such other
agreement or document as the same
4
<PAGE>
may have been, or may from time to time be amended, varied, novated or
supplemented.
2. The Facility
Simultaneously with the completion of the issue of the Notes on the
Closing Date, the Lender will advance to the Issuer for the credit of
the Issuer's Account an amount of (pound)[ ] (the "Advance") of which
(pound)[ ] will be applied to meet certain costs and expenses to the
Issuer arising in respect of the issue of Notes. Any amount of the
Facility remaining after the Advance has been made shall be cancelled.
3. Interest
3.1 The period for which the Advance is outstanding hereunder shall be
divided into periods which shall correspond with the Interest Periods.
3.2 Subject to Clause 8, the Issuer shall pay interest on the Advance, at
the rate per annum which is the aggregate of (i) the Margin, (ii) LIBOR
for the relevant Interest Period and (iii) the Mandatory Cost Rate in
respect thereof. Interest will accrue from day to day and will be
calculated on the basis of actual days elapsed and a year of 365 days
(or 366 days if the relevant Interest Period ends in a leap year) and
will be (subject to Clause 8) payable in arrear on each Interest Payment
Date.
3.3 Any payments made by the Issuer under this Agreement shall be paid after
deduction of withholding for tax where such deduction or withholding is
required by law.
3.4 The Lender shall promptly notify the Issuer of each determination of
LIBOR made pursuant to this Agreement.
3.5 A statement made by the Lender as to any amount of interest payable
pursuant to this Clause shall in the absence of manifest error, be
conclusive.
4. Payments
All payments required to be made by the Issuer hereunder shall be
calculated without reference to any set-off or counterclaim and shall be
made in sterling in immediately available funds. If any sum falls due
hereunder on a day which is not a Business Day it shall be paid on the
next Business Day and no additional interest will be payable in respect
of such delay.
5. Repayment
Subject to Clause 8 and Clause 5.2 below, the Advance shall be repaid in
full on the Final Repayment Date.
To the extent insufficient funds are available in the Series 99-1
Distribution Account on the Final Repayment Date to pay in full the
principal amount then due (after taking into account all other payments
to be made therefrom on such date in accordance with the Trust Deed),
the Advance will be re-paid on the next and each subsequent Interest
Payment Date to the extent funds are available for such purpose.
5
<PAGE>
6. Prepayment
The Issuer may not prepay the whole or any part of the Expenses Loan.
7. Representations of the Issuer
The Issuer represents and warrants to the Lender on the date hereof
that:
(a) the Issuer is a company duly authorised under the laws of the
England;
(b) the Issuer has full power and authority to deliver and perform
this Agreement, and has taken all necessary action to authorise
the execution, delivery and performance by it of this Agreement;
and
(c) this Agreement has been duly executed and delivered by the
Issuer and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms subject to bankruptcy,
insolvency, reorganisation, receivership and other laws relating
to, or affecting generally, the enforcement of creditors' rights
and remedies as the same may be applied in the event of the
bankruptcy, insolvency, reorganisation, receivership or
liquidation or a similar event of the Issuer or a moratorium
applicable to the Issuer and to general principles of equity.
8. Enforcement Event
If the Note Trustee serves an Enforcement Notice on the Issuer pursuant
to the Trust Deed it shall forthwith provide a copy thereof to the
Lender and the Expenses Loan, together with all interest thereon, shall,
subject always to Clause 9, become immediately due and repayable.
9. Enforcement and Subordination
9.1 The Lender agrees with the Note Trustee and the Issuer to be bound by
the terms of the Ninth Schedule to the Trust Deed (relating to priority
of payments) and in particular confirms that no sum, whether in respect
of principal or interest or otherwise relating to the Expenses Loan,
shall be due and payable by the Issuer except in accordance with the
Deed of Charge and the Ninth Schedule to the Trust Deed unless and until
all sums thereby required to be paid or provided for in priority thereto
have been paid or will be discharged in full.
9.2 The Lender shall not take any steps for the purpose of receiving any
debts whatsoever owing to it by the Issuer in connection with this
Agreement or enforcing any rights arising out of this Agreement against
the Issuer or procuring the winding-up, administration or liquidation of
the Issuer in respect of any of its liabilities whatsoever.
9.3 The Lender agrees that its rights against the Issuer under this
Agreement are limited to the extent that the Lender will not take any
action or proceedings against the Issuer to recover any amounts due and
payable by the Issuer to the Lender under this Agreement, except to the
extent that the Issuer has sufficient assets to meet the Lender's claim
in full having taken into account all other liabilities both actual and
6
<PAGE>
contingent of the Issuer which rank in priority to its liabilities to
the Lender under this Agreement and so that the Issuer shall not be
obliged to make any payment to the Lender hereunder if and to the extent
that the making of such payment would cause the Issuer to be or become
unable to pay its debts within the meaning of Section 123 of the
Insolvency Act 1986.
9.4 Without prejudice to the foregoing provisions of this Clause, the Lender
hereby covenants with the Issuer and the Note Trustee that if, whether
in the liquidation of the Issuer or otherwise (and notwithstanding the
provisions of this Clause 9.4), any payment (which shall include any
set-off, combination or withholding) is received by it in respect of the
Expenses Loan or any interest thereon other than in accordance with the
Trust Deed the amount so paid shall be paid over to the Note Trustee
forthwith upon receipt Provided, however, that this Clause 9.4 shall
have effect only to the extent that it does not constitute or create and
is not deemed to constitute or create any mortgage, charge or other
security interest of any kind, Provided, further, that as between the
Note Trustee and the Issuer or any liquidator thereof such amounts paid
under this Clause 9.4 shall be deemed to be paid and as between the
Lender and the Issuer or any liquidator thereof such amounts paid under
this Clause 9.4 shall be deemed not to have been paid.
9.5 The Lender hereby covenants with the Note Trustee that it will not set
off or claim to set off the Expenses Loan or any interest thereon or any
part of either thereof against any liability owed by it to the Issuer.
10. Notices
(i) Each communication to be made hereunder shall, unless otherwise
stated, be made in writing but, unless otherwise stated, may be
made by telex, facsimile or letter; and
(ii) Any communication, notice or document to be made or delivered by
any one person to another pursuant to this Agreement shall
(unless that other person has by fifteen days' written notice to
the other parties hereto specified another address) be made or
delivered to that other person at the address identified below
and shall be deemed to have been made or delivered when
despatched and confirmation of transmission received by the
sending machine (in the case of any communication made by
telefax) or (in the case of any communication made by telex)
when despatched and the appropriate answerback or identification
symbol received by the sender or (in the case of any
communications made by letter) when left at that address or (as
the case may be) ten days after being deposited in the post
postage prepaid in an envelope addressed to it at that address
Provided, however, that each telefax or telex communication made
by one party hereto to another shall be made to that other
person at the telefax or telex number notified to such party by
that other person from time to time:
7
<PAGE>
(a) in the case of the Lender, to its address at 54 Lombard Street,
London EC3P 3AH for the attention of Brian Cook of the Corporate
Treasury Division;
(b) in the case of the Issuer, to its address appearing at the
beginning of this Agreement; and
(c) in the case of the Note Trustee, to its address appearing at the
beginning of this Agreement for the attention of Corporate Trust
Administration,
or to such other address or for the attention of such other person as
may from time to time be notified by either party to the other by
written notice in accordance with the provisions of this Clause.
11. Fees
Each of the parties hereto shall bear its own costs and expenses in
connection with the negotiation, preparation and execution of this
Agreement and no fees shall be payable in connection herewith.
12. Invalidity
If, at any time, any of the provisions of this Agreement are or become
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired.
13. Assignment and Variation
Each of the parties hereto agree that the Lender may not assign its
rights hereunder and that the rights of the Issuer hereunder may be
assigned to the Note Trustee. No variation of this Agreement shall be
effective unless it is in writing and signed by or on behalf of each of
the parties hereto.
14. Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the part of the
Issuer or the Lender, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or
remedy prevent any further or other exercise thereof or the exercise of
any other right or remedy. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
15. Information, Benefit and Variation
15.1 The Lender shall provide to the Note Trustee such information and
evidence in respect of any dealing between the Issuer and the Lender
under this Agreement or otherwise as the Note Trustee may reasonably
request for the purpose of discharging the duties, trusts, powers,
authorities and discretions vested in the Note Trustee in or under the
Relevant Documents or by operation of law and the Issuer hereby waives
any right or duty of confidentiality which it may have or which may be
owed to it by the Lender in respect of such information and evidence.
8
<PAGE>
15.2 No variation of this Agreement shall be effective unless it is duly
executed and delivered by (or by some person duly authorised by) each of
the parties.
16. Section 349 Bank
The Lender warrants that it is a Bank as defined for the purposes of
Section 349(3)(a) of the Income and Corporation Taxes Act 1988 and will
be within the charge to United Kingdom corporation tax as respects all
amounts regarded as interest for United Kingdom tax purposes received by
it under this Agreement.
17. Counterparts
This Agreement may be executed in any number of copies, and by the
different parties hereto on the same or separate counterparts, each of
which shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.
18. Entire Agreement
This Agreement constitutes the entire agreement between the parties in
respect of the subject matter hereof. Any previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement. Nothing in this Agreement, expressed or implied, is intended
to confer upon any party other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
19. Governing Law and Jurisdiction
19.1 This Agreement, shall be governed by, and is to be construed in
accordance with, English Law. 19.2 Each of the parties hereto
irrevocably agrees for the benefit of each other party that the
courts of England shall have exclusive jurisdiction to hear and
determine any suit, action or proceeding, and to settle any disputes,
which may arise out of or in connection with this Agreement, and, for
such purposes, irrevocably submits to the exclusive jurisdiction of such
courts.
19.3 Each party hereto irrevocably waives any objection which it might now or
hereafter have to the courts of England referred to above being
nominated as the forum to hear and determine any suit, action or
proceeding, and to settle any dispute, which may arise out of or in
connection with this Agreement and agrees not to claim that any such
court is not a convenient or appropriate forum.
19.4 Each party hereto (if it is not incorporated in England) irrevocably
appoints the person specified against it name on the execution pages
hereto below to accept service of any process on its behalf and further
undertakes to the other parties hereto that it will at all times during
the continuance of this Agreement maintain the appointment of some
person in England as its agent for the service of process and
irrevocably agrees that service of any writ, notice or other document
for the purposes of any suit, action or proceeding in the courts of
England shall be duly served upon it if delivered or sent by
9
<PAGE>
registered post to the address of such appointee (or to such other
address in England as that party may notify to the other parties
hereto).
IN WITNESS WHEREOF the parties hereto have signed and executed this Agreement
the day and year first above written.
10
<PAGE>
SCHEDULE 1
MANDATORY COSTS
1. The Mandatory Cost Rate is an addition to the interest rate to
compensate the Bank for the cost of compliance with the requirements of
the Bank of England and/or the Financial Services Authority (or, in
either case, any other authority which replaces all or any of its
functions).
2. On the first day of each Interest Period (or as soon as possible
thereafter) the Bank shall calculate the Mandatory Cost Rate as a
percentage rate in accordance with the formulae set out below.
3. The Mandatory Cost Rate will be calculated as follows:
(a) in relation to sterling Advances:
[OBJECT OMITTED]per cent. per annum
(b) in relation to Advances in any currency other than sterling:
[OBJECT OMITTED]per cent. per annum.
Where:
A is the percentage of eligible liabilities (assuming these to be
in excess of any stated minimum) which the Bank is from time to
time required to maintain as an interest free cash ratio deposit
with the Bank of England to comply with cash ratio requirements.
B is the percentage rate of interest (excluding the Margin and the
Mandatory Cost Rate) payable for the relevant Interest Period on
the Advance.
C is the percentage (if any) of eligible liabilities which the
Bank is required from time to time to maintain as interest
bearing special deposits with the Bank of England.
D is the percentage rate per annum payable by the Bank of England
to the Bank on interest bearing special deposits.
E is the rate of charge payable by the Bank to the Financial
Services Authority pursuant to the Fee Regulations (but, for
this purpose, ignoring any minimum fee required pursuant to the
Fee Regulations) and expressed in pounds per (pound)1,000,000 of
the Fee Base of the Bank.
For the purposes of this Schedule:
11
<PAGE>
(a) "eligible liabilities" and "special deposits" have the meanings
given to them from time to time under or pursuant to the Bank of
England Act 1998 or (as may be appropriate) by the Bank of
England;
(b) "Fee Regulations" means the Banking Supervision (Fees)
Regulations 1999 or such other law as may be in force from time
to time in respect of the payment of fees for banking
supervision; and
"Fee Base" has the meaning given to it, and will be calculated
in accordance with, the Fee Regulations.
In application of the above formulae, A, B, C and D will be
included in the formulae as percentages (i.e. 5 per cent. will
be included in the formula as 5 and not as 0.05). A negative
result obtained by subtracting D from B shall be taken as zero.
The resulting figures shall be rounded to four decimal places.
4. The Bank may from time to time, after consultation with the Borrower,
determine and notify to all parties any amendments or variations which
are required to be made to any of the formulae set out above in order to
comply with any change in law or any requirements from time to time
imposed by the Bank of England or the Financial Services Authority (or,
in either case, any other authority which replaces all or any of its
functions) and any such determination shall, in the absence of manifest
error, be conclusive and binding on all the parties hereto.
12
<PAGE>
LENDER
SIGNED for and on behalf of )
BARCLAYS BANK PLC )
ISSUER
SIGNED for and on behalf of )
GRACECHURCH CARD FUNDING )
(NO.1) PLC )
NOTE TRUSTEE
SIGNED for and on behalf of )
THE BANK OF NEW YORK )
Acting through its London Branch )
13
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |_|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-------------
Gracechurch Card Funding (No. 1) PLC
(Exact name of obligor as specified in its charter)
England and Wales None
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
200 Aldersgate Street
London EC1A 4JJ
United Kingdom
(Address of principal executive offices) (Zip code)
Barclayoard Funding PLC
(Exact name of obligor as specified in its charter)
England and Wales None
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
54 Lombard Street
London EC3P 3AH
United Kingdom
(Address of principal executive offices) (Zip code)
-------------
Floating Rate Asset-Backed Notes, Class A3
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of 2 Rector Street, New York,
the State of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. 33-6215, Exhibits
1a and 1b to Form T-1 filed with Registration Statement No.
33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 19th day of October, 1999.
THE BANK OF NEW YORK
By: /s/ JANIE J. KIM
-------------------------------
Name: JANIE J. KIM
Title: ASSISTANT TREASURER
<PAGE>
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS In Thousands
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. $5,597,807
Interest-bearing balances........................... 4,075,775
Securities:
Held-to-maturity securities......................... 785,167
Available-for-sale securities....................... 4,159,891
Federal funds sold and Securities purchased under
agreements to resell................................ 2,476,963
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............38,028,772
LESS: Allowance for loan and
lease losses............568,617
LESS: Allocated transfer risk
reserve........................16,352
Loans and leases, net of unearned income,
allowance, and reserve............................ 37,443,803
Trading Assets......................................... 1,563,671
Premises and fixed assets (including capitalized
leases)............................................. 683,587
Other real estate owned................................ 10,995
Investments in unconsolidated subsidiaries and
associated companies................................ 184,661
Customers' liability to this bank on acceptances
outstanding......................................... 812,015
Intangible assets...................................... 1,135,572
Other assets........................................... 5,607,019
-----------
Total assets........................................... $64,536,926
===========
LIABILITIES
Deposits:
In domestic offices................................. $26,488,980
Noninterest-bearing.......................10,626,811
Interest-bearing..........................15,862,169
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 20,655,414
Noninterest-bearing..........................156,471
Interest-bearing..........................20,498,943
Federal funds purchased and Securities sold under
agreements to repurchase............................ 3,729,439
Demand notes issued to the U.S.Treasury................ 257,860
Trading liabilities.................................... 1,987,450
Other borrowed money:
With remaining maturity of one year or less......... 496,235
With remaining maturity of more than one year
through three years............................... 465
With remaining maturity of more than three years.... 31,080
Bank's liability on acceptances executed and
outstanding......................................... 822,455
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,846,649
Total liabilities...................................... 58,624,027
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 815,314
Undivided profits and capital reserves................. 4,001,767
Net unrealized holding gains (losses) on
available-for-sale securities....................... ( 7,956)
Cumulative foreign currency translation adjustments...
( 31,510)
Total equity capital................................... 5,912,899
-----------
Total liabilities and equity capital................... $64,536,926
===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni
Alan R. Griffith Directors
Gerald L. Hassell
- --------------------------------------------------------------------------------
