SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal quarter ended July
31, 1999.
FEDERATED DEPARTMENT STORES, INC.
151 West 34th Street
New York, New York 10001
(212) 494-1602
and
7 West Seventh St.
Cincinnati, Ohio 45202
(513) 579-7000
Delaware 1-13536 13-3324058
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification Number)
The Registrant has filed all reports required to be filed by
Section 12, 13 or 15 (d) of the Act during the preceding 12
months and has been subject to such filing requirements for the
past 90 days.
209,940,549 shares of the Registrant's Common Stock, $.01 par
value, were outstanding as of August 28, 1999.
PART I -- FINANCIAL INFORMATION
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Income
(Unaudited)
(millions, except per share figures)
13 Weeks Ended 26 Weeks Ended
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
Net Sales $ 4,111 $ 3,523 $ 7,818 $ 6,979
Cost of sales 2,409 2,101 4,675 4,207
Selling, general and
administrative expenses 1,384 1,155 2,600 2,324
Operating Income 318 267 543 448
Interest expense (87) (76) (165) (159)
Interest income 2 2 5 8
Income Before Income Taxes 233 193 383 297
Federal, state and local income
tax expense (96) (86) (159) (130)
Net Income $ 137 $ 107 $ 224 $ 167
Basic earnings per share $ .65 $ .51 $ 1.07 $ .80
Diluted earnings per share $ .61 $ .47 $ 1.02 $ .74
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Consolidated Balance Sheets
(Unaudited)
(millions)
July 31, January 30, August 1,
1999 1999 1998
ASSETS:
Current Assets:
Cash $ 357 $ 307 $ 281
Accounts receivable 3,512 2,209 2,111
Merchandise inventories 3,635 3,259 3,361
Supplies and prepaid expenses 221 117 118
Deferred income tax assets 142 80 105
Total Current Assets 7,867 5,972 5,976
Property and Equipment - net 6,689 6,572 6,381
Intangible Assets - net 1,807 631 677
Other Assets 516 289 317
Total Assets $16,879 $13,464 $13,351
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term debt $ 1,402 $ 524 $ 34
Accounts payable and accrued
liabilities 2,905 2,446 2,517
Income taxes 46 98 67
Total Current Liabilities 4,353 3,068 2,618
Long-Term Debt 4,704 3,057 3,890
Deferred Income Taxes 1,240 1,060 977
Other Liabilities 586 570 557
Shareholders' Equity 5,996 5,709 5,309
Total Liabilities and
Shareholders' Equity $16,879 $13,464 $13,351
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(millions)
26 Weeks Ended 26 Weeks Ended
July 31, 1999 August 1, 1998
Cash flows from operating activities:
Net income $ 224 $ 167
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 324 298
Amortization of intangible assets 36 13
Amortization of financing costs 3 4
Amortization of unearned restricted stock - 1
Changes in assets and liabilities:
Decrease in accounts receivable 178 331
Increase in merchandise inventories (211) (122)
Increase in supplies and prepaid expenses (19) (3)
(Increase) decrease in other assets not
separately identified (20) 4
Increase in accounts payable and accrued
liabilities not separately identified 30 45
Decrease in current income taxes (52) (21)
Increase (decrease) in deferred
income taxes 1 (9)
Decrease in other liabilities not
separetly identified (7) (8)
Net cash provided by operating
activities 487 700
Cash flows from investing activities:
Acquisition of Fingerhut Companies, Inc.,
net of cash acquired (1,539) -
Purchase of property and equipment (241) (189)
Capitalized software (21) -
Investments in affiliated companies (49) -
Disposition of property and equipment 23 22
Decrease in notes receivable - 200
Net cash provided (used) by
investing activities (1,827) 33
Cash flows from financing activities:
Debt issued 1,299 300
Financing costs (10) (7)
Debt repaid (31) (851)
Increase in outstanding checks 81 79
Acquisition of treasury stock - (154)
Issuance of common stock 51 39
Net cash provided (used) by
financing activities 1,390 (594)
(Continued)
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(millions)
26 Weeks Ended 26 Weeks Ended
July 31, 1999 August 1, 1998
Cash flows from
Net increase in cash $ 50 $ 139
Cash at beginning of period 307 142
Cash at end of period $ 357 $ 281
Supplemental cash flow information:
Interest paid $ 144 $ 147
Interest received 4 11
Income taxes paid (net of refunds received) 194 150
Schedule of non cash investing and
financing activities:
Debt assumed in acquisition 125 -
Equity issued in acquisition 12 -
Consolidation of net assets and debt of
previously unconsolidated subsidiary 1,132 -
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies
A description of the Company's significant accounting policies
is included in the Company's Annual Report on Form 10-K for
the fiscal year ended January 30, 1999 (the "1998 10-K"). The
accompanying Consolidated Financial Statements should be read
in conjunction with the Consolidated Financial Statements and
notes thereto in the 1998 10-K.
Because of the seasonal nature of the general merchandising
business, the results of operations for the 13 and 26 weeks
ended July 31, 1999 and August 1, 1998 (which do not include
the Christmas season) are not indicative of such results for
the fiscal year.
Substantially all department store merchandise inventories are
valued by the retail method and stated on the LIFO (last-in,
first-out) basis, which is generally lower than market.
Direct-to-customer merchandise inventories are stated at the
lower of FIFO (first-in, first-out) cost or market.
The Consolidated Financial Statements for the 13 and 26 weeks
ended July 31, 1999 and August 1, 1998, in the opinion of
management, include all adjustments (consisting only of normal
recurring adjustments) considered necessary to present fairly,
in all material respects, the consolidated financial position
and results of operations of the Company and its subsidiaries.
2. Acquisition
On March 18, 1999, the Company purchased Fingerhut Companies,
Inc. ("Fingerhut"), a database marketing company that sells a
broad range of products and services directly to consumers via
catalogs, direct marketing and the Internet. The total
purchase price of the Fingerhut acquisition was approximately
$1,720 million, including the assumption of $125 million of
debt and transaction costs.
The Fingerhut acquisition is being accounted for under the
purchase method of accounting and, accordingly, the Company's
results of operations do not include any revenues or expenses
related to the acquisition prior to the closing date and the
purchase price has been allocated to Fingerhut's assets and
liabilities based on the estimated fair value of these assets
and liabilities as of that date.
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
3. Segment Data
The Company conducts its business through two segments,
department stores and direct-to-customer. The Company
operates over 400 department stores throughout the country
that sell a wide range of merchandise, including men's,
women's and children's apparel and accessories, cosmetics,
home furnishings and other consumer goods. On March 18, 1999,
the Company acquired Fingerhut which, together with
Bloomingdale's By Mail, Macy's By Mail, macys.com and certain
other direct marketing activities, comprises its direct-to-
customer segment. This segment sells a broad range of
products and services directly to consumers via catalogs,
direct marketing and the Internet. Corporate and other
consists of the assets and liabilities, and related income or
expense, associated with the corporate office and certain
items managed on a company-wide basis (e.g., intangibles,
financial instruments, income taxes, retirement benefits and
properties held for sale or disposition).
The financial information for each segment is reported on the
basis used internally by the Company to evaluate performance
and allocate resources. Prior year results have not been
restated to conform to the current presentation as it is not
practicable to do so.
13 Weeks Ended 26 Weeks Ended
July 31, August 1, July 31, August 1,
(millions) 1999 1998 1999 1998
Revenues by segment were
as follows:
Department Stores $3,674 $3,523 $7,218 $6,979
Direct-to-Customer 437 - 600 -
Total $4,111 $3,523 $7,818 $6,979
Operating income by segment
was as follows:
Department Stores $ 398 $ 299 $ 671 $ 519
Direct-to-Customer (27) - (29) -
Total segment operating income 371 299 642 519
Corporate and other (53) (32) (99) (71)
Operating income $ 318 $ 267 $ 543 $ 448
Depreciation and amortization
by segment was as follows:
Department Stores $ 151 $ 148 $ 304 $ 295
Direct-to-Customer 14 - 17 -
Corporate and other 22 8 39 16
Total $ 187 $ 156 $ 360 $ 311
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
26 Weeks Ended
July 31, August 1,
(millions) 1999 1998
Year-to-date capital expenditures
(purchase of property and equipment)
by segment were as follows:
Department Stores $ 235 $ 187
Direct-to-Customer 6 -
Corporate and other - 2
Total $ 241 $ 189
Total assets for each segment at the
end of the reporting period were as follows:
Department Stores $12,214 $12,119
Direct-to-Customer 2,288 -
Corporate and other 2,377 1,232
Total $16,879 $13,351
4. Earnings Per Share
The following tables set forth the computation of basic and
diluted earnings per share:
13 Weeks Ended
July 31, 1998 August 1, 1998
(millions, except per share data) Shares Income Shares Income
Net income and average number
of shares outstanding 209.5 $ 137 210.2 $ 107
Shares to be issued under deferred
compensation plans .4 - .3 -
209.9 $ 137 210.5 $ 107
Basic earnings per share $ .65 $ .51
Effect of dilutive securities:
Warrants 8.8 8.9
Stock options 3.2 2.8
Convertible notes - - 10.2 2
221.9 $ 137 232.4 $ 109
Diluted earnings per share $ .61 $ .47
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
13 Weeks Ended
July 31, 1998 August 1, 1998
(millions, except per share data) Shares Income Shares Income
Net income and average number
of shares outstanding 209.0 $ 224 210.3 $ 167
Shares to be issued under deferred
compensation plans .4 - .3 -
209.4 $ 224 210.6 $ 167
Basic earnings per share $1.07 $ .80
Effect of dilutive securities:
Warrants 7.3 8.5
Stock options 2.5 2.7
Convertible notes - - 10.2 5
219.2 $ 224 232.0 $ 172
Diluted earnings per share $1.02 $ .74
In addition to the warrants and stock options reflected in
the foregoing tables, warrants and stock options to purchase
.8 million and .6 million shares of common stock at prices
ranging from $52.94 to $79.44 per share were outstanding at
July 31, 1999 and August 1, 1998, respectively, but were not
included in the computation of diluted earnings per share
because the exercise price thereof exceeded the average
market price and would have been antidilutive.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
The Company acquired Fingerhut on March 18, 1999. The
acquisition is being accounted for under the purchase method
of accounting and, accordingly, the Company's results of
operations do not include any revenues or expenses related to
the acquisition prior to the closing date. The results of
operations of Fingerhut have been grouped with the Company's
Bloomingdale's By Mail, Macy's By Mail and macys.com
operations and certain other direct marketing activities as
the direct-to-customer segment.
For purposes of the following discussion, all references to
"second quarter of 1999" and "second quarter of 1998" are to
the Company's 13-week fiscal periods ended July 31, 1999 and
August 1, 1998, respectively, and all references to "1999" and
"1998" are to the Company's 26-week fiscal periods ended July
31, 1999 and August 1, 1998, respectively.
Results of Operations
Comparison of the 13 Weeks Ended July 31, 1999 and August 1,
1998
Net sales for the second quarter of 1999 totaled $4,111
million, compared to net sales of $3,523 million for the
second quarter of 1998, an increase of 16.7%. Net sales for
department stores for the second quarter of 1999 were $3,674
million compared to $3,523 million for the second quarter of
1998, an increase of 4.2%. On a comparable store basis (sales
from stores opened prior to February 1, 1998), net sales for
the second quarter of 1999 increased 5.9% compared to the
second quarter of 1998. Net sales for the direct-to-customer
segment were $437 million for the second quarter of 1999.
Cost of sales was 58.6% of net sales for the second quarter of
1999, compared to 59.6% for the second quarter of 1998. Cost
of sales as a percent of net sales for department stores
improved 0.3% in the second quarter of 1999 compared to the
same period a year ago, benefiting from the continued
favorable economic environment. The lower cost of sales from
the direct-to-customer segment in the second quarter of 1999,
compared to cost of sales for department stores, along with
the improvement in the cost of sales rate for department
stores contributed to the overall 1.0% decrease in the cost of
sales rate. Cost of sales was not impacted by the valuation
of department store merchandise inventory on the last-in,
first-out basis in the second quarter of 1999 or in the second
quarter of 1998.
Selling, general and administrative ("SG&A") expenses were
33.7% of net sales for the second quarter of 1999 compared to
32.8% for the second quarter of 1998. Department store SG&A
expenses improved 2.0% as a percent of department store net
sales, reflecting the impact of higher sales with flat
nonpayroll expenses and lower bad debt expense, which was
partially offset by reduced finance charge income resulting
from lower average receivable balances. The higher SG&A
expense rate for the direct-to-customer segment, including
recently launched businesses, and higher amortization expense
due to the Fingerhut acquisition combined to offset the strong
department store performance and produce a 0.9% increase in
the SG&A expense rate compared to the second quarter of 1998.
Net interest expense was $85 million for the second quarter of
1999, compared to $74 million for the second quarter of 1998.
The higher interest expense for the second quarter of 1999 is
due mainly to the increased outstanding debt resulting from
the Fingerhut acquisition.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
The Company's effective income tax rate of 41.3% for the
second quarter of 1999 differs from the federal income tax
statutory rate of 35.0% principally because of the effect of
state and local income taxes and permanent differences arising
from the amortization of intangible assets and from other non-
deductible items.
Comparison of the 26 Weeks Ended July 31, 1999 and August 1,
1998
Net sales for 1999 totaled $7,818 million, compared to net
sales of $6,979 million for 1998, an increase of 12.0%. Net
sales for department stores for 1999 were $7,218 million
compared to $6,979 million for 1998, an increase of 3.4%. On
a comparable store basis (sales from stores opened prior to
February 1, 1998), net sales for 1999 increased 5.0% compared
to 1998. Net sales for the direct-to-customer segment were
$600 million for 1999.
Cost of sales was 59.8% of net sales for 1999, compared to
60.3% for 1998. Cost of sales as a percent of net sales for
department stores in 1999 was relatively flat compared to
1998. The lower cost of sales from the direct-to-customer
segment in 1999, compared to cost of sales for department
stores, contributed to the 0.5% improvement in the cost of
sales rate. Cost of sales was not impacted by the valuation
of department store merchandise inventory on the last-in,
first-out basis in 1999 or in 1998.
SG&A expenses were 33.3% of net sales for 1999 and 1998.
Department store SG&A expenses improved 2.0% as a percent of
department store net sales, reflecting the impact of higher
sales with flat nonpayroll expenses and lower bad debt
expense, which was partially offset by reduced finance charge
income resulting from lower average receivable balances. The
higher SG&A expense rate for the direct-to-customer segment,
including recently launched businesses, and higher
amortization expense due to the Fingerhut acquisition combined
to offset the strong department store performance.
Net interest expense was $160 million for 1999, compared to
$151 million for 1998. The higher interest expense for 1999
is due mainly to the increased outstanding debt resulting from
the Fingerhut acquisition.
The Company's effective income tax rate of 41.6% for 1999
differs from the federal income tax statutory rate of 35.0%
principally because of the effect of state and local income
taxes and permanent differences arising from the amortization
of intangible assets and from other non-deductible items.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Liquidity and Capital Resources
The Company's principal sources of liquidity are cash from
operations, cash on hand and certain available credit
facilities.
Net cash provided by operating activities in 1999 was $487
million, a decrease of $213 million compared to the $700
million provided in 1998. The improved operating results were
more than offset by smaller reductions in customer accounts
receivable, mainly as a result of higher credit sales, and
greater increases in merchandise inventories principally due
to seasonal fluctuations of Fingerhut inventories.
Net cash used by investing activities was $1,827 million for
1999, including the purchase of Fingerhut. Investing
activities for 1999 also included purchases of property and
equipment totaling $241 million and $49 million invested in
affiliated companies. During 1999, the Company opened two new
department stores and plans to open two additional department
stores and two new furniture galleries during the remainder of
1999.
Net cash provided by the Company from all financing activities
was $1,390 million for 1999. The Company funded the
acquisition of Fingerhut through a combination of cash on hand
and short-term borrowings. During March of 1999, the Company
issued $350 million of 6.3% Senior Notes due 2009 and $400
million of 6.9% Senior Debentures due 2029, the proceeds of
which were used to refinance a portion of the short-term
borrowings used by the Company to acquire Fingerhut.
In July 1999, the Company took certain actions which required
the consolidation of the Fingerhut Master Trust for financial
reporting purposes. The principle assets and liabilities of
the Fingerhut Master Trust, which were not included in the
Company's Consolidated Financial Statements prior to July 31,
1999, consisted of accounts receivable transferred from
Fingerhut in transactions treated as sales under Statement of
Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," and the related debt issued
by the Trust. As a result of the Company's actions, the
transfer of receivables and debt are being treated as secured
borrowings as of and subsequent to July 31, 1999. At July 31,
1999, these actions increased net assets by $1,132 million,
short-term debt by $232 million and long-term debt by $900
million.
Management believes the department store business and other
retail businesses will continue to consolidate. Accordingly,
the Company intends from time to time to consider additional
acquisitions of, and investments in, department stores,
Internet-related companies, catalog companies and other
complementary assets and companies.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Management of the Company believes that, with respect to its
current operations, cash on hand and funds from operations,
together with its credit facilities, will be sufficient to
cover its reasonably foreseeable working capital, capital
expenditure and debt service requirements. Acquisition
transactions, if any, are expected to be financed through a
combination of cash on hand and from operations and the
possible issuance from time to time of long-term debt or other
securities. Depending upon conditions in the capital markets
and other factors, the Company will from time to time consider
the issuance of debt or other securities, or other possible
capital markets transactions, the proceeds of which could be
used to refinance current indebtedness or for other corporate
purposes.
Year 2000
The Company relies on computer-based technology and utilizes
a variety of third-party hardware and proprietary and third-party
software. The Company's retail functions, such as merchandise
procurement and distribution, inventory control, point-of-sale
information systems and proprietary credit card account servicing,
generally use proprietary software, with third-party software
being used more extensively for administrative functions,
such as accounting and human resource management. In
addition to such information technology ("IT") systems, the
Company's operations rely on various non-IT equipment and
systems that contain embedded computer technology, such as
elevators, escalators and energy management systems. Third
parties with whom the Company has commercial relationships,
including vendors of merchandise for resale by the Company and
of products and services used by the Company in its operations
(such as banking and financial services, data processing
services, telecommunications services and utilities), are also
highly reliant on computer-based technology.
In February 1996, the Company commenced an assessment of the
potential effects of the Year 2000 issue on the Company's
business, financial condition and results of operations. In
conjunction with such assessment, the Company developed and
commenced the implementation of the compliance program
described below.
As discussed separately under the caption "Fingerhut" below,
Fingerhut undertook a similar program prior to being
acquired by the Company.
The Company's Year 2000 Compliance Program
Proprietary IT Systems. Pursuant to the Company's Year 2000
compliance program, the Company has undertaken an examination
of the Company's proprietary IT systems. All such systems
that have been identified as relating to a critical function
and as not being Year 2000 compliant have been substantially
remediated or replaced. The Company believes that the
remediation of its proprietary IT systems is substantially
complete, and nearly all of the proprietary IT systems that
have been remediated have been installed and placed into
production. The Company commenced testing of such remediated
systems for Year 2000 compliance in August 1998 and has
completed a comprehensive, integrated test of all of its main-
frame and mid-range IT systems (including third-party and
proprietary hardware, software, network components and
interfaces) and has substantially completed varying levels of
follow-up testing of selected systems.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Third-Party IT Systems. The strategy instituted by the
Company to identify and address Year 2000 issues affecting
third-party IT systems used by the Company includes contacting
all third-party providers of computer hardware and software to
secure appropriate representations to the effect that such
hardware or software is or will timely be Year 2000 compliant.
The Company has received Year 2000 compliant versions of
almost all third-party software and has substantially
completed testing of those third-party software programs that
have been identified as being critical to the Company's
operations.
Non-IT Systems. The Company has undertaken a review of its
non-IT systems and has substantially completed the remediation
of those systems that are within the Company's control. In
addition, the Company's centralized real estate department has
communicated to the developers, landlords and property
managers of all of the Company's properties the Company's
expectation that the systems utilized in the management and
operation of such properties that are not within the Company's
control are or will timely be Year 2000 compliant. As a
further step, the Company has engaged in written or oral
communications with its key developers, landlords and property
managers in order to assess the Year 2000 readiness of such
systems. These communications have not revealed to the
Company any information that has caused the Company to believe
that such systems will fail to timely be Year 2000 compliant
in any respect that is material to the Company's business,
financial condition or results of operations.
Non-IT Vendors and Suppliers. The Company procures its
merchandise for resale and supplies for operational purposes
from a vast network of vendors located both within and outside
the United States, and is not dependent on any one vendor for
more than 5% of its merchandise purchases. The Company
procures its private label merchandise, which constitutes
approximately 15% of the Company's total sales, principally
from manufacturers located outside the United States. All of
the Company's vendors have been notified in writing of the
Company's expectation that the systems and operations of such
vendors will timely be Year 2000 compliant. As a further
step, the Company has engaged in written or oral
communications with selected key vendors in order to assess
the Year 2000 readiness of their respective operations. These
communications have not revealed to the Company any
information that has caused the Company to believe that the
operations of such vendors will fail to timely be Year 2000
compliant in any respect that is material to the Company's
business, financial condition or results of operations.
Contingency Planning. The Company's Year 2000 compliance
program is directed primarily towards ensuring that the
Company will be able to continue to perform three critical
functions: (i) effect sales, (ii) order and receive
merchandise, and (iii) pay its employees. The Company has
substantially completed the development of a contingency plan
intended to address, to the extent within the Company's
reasonable control, the potential effects on these mission
critical functions of a failure of the Company's Year 2000
compliance program to be fully effective. The Company has
designed its contingency plan as an extension of its current
business recovery plan, which prescribes the measures to be
taken upon the occurrence of a variety of contingencies. In
addition to relying on the fundamental
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
principles of recovery contained in the Company's business
recovery plan, the Company's Year 2000 contingency plan
focuses on assuring that key personnel - including managerial,
technical, maintenance, security and other personnel employed
at its stores and in its IT and logistics support functions -
will be available to identify and seek to rectify as promptly
as possible any disruptions that may result from the date
change on January 1, 2000. The Company's contingency plan
also provides for assuring its ability to pay its employees by
preprinting payroll checks covering a few pay periods
following December 31, 1999 and utilizing electronic time
clock data or historical data in the event it is unable to
access current payroll data. The Company currently is engaged
in disseminating its contingency plan Company-wide and taking
appropriate steps to ensure the proper execution of such plan
if necessary.
Fingerhut. Fingerhut implemented a program to address the
effects of the Year 2000 issue prior to being acquired by the
Company. The actions contemplated by Fingerhut's Year 2000
compliance program, including contingency planning, have been
substantially completed and substantially all of the costs
Fingerhut expected to incur have been incurred. The foregoing
discussion of the Company's Year 2000 compliance program does
not address Fingerhut's systems or vendors or any aspect of
Fingerhut's Year 2000 compliance program. However, the
discussion below of risks associated with the Year 2000 issue
apply equally to the Company and Fingerhut and their
respective Year 2000 compliance programs.
Costs. The Company (excluding Fingerhut) has incurred to
date approximately $33 million of costs to implement its Year
2000 compliance program, of which approximately 20%
represents capitalized expenditures for hardware purchases.
The Company does not expect that future expenditures relating
to its Year 2000 compliance program will be material. All of
the Company's Year 2000 compliance costs have been or are
expected to be funded from operating cash flows. The
Company's Year 2000 compliance budget does not include
material amounts for hardware replacement because the Company
has historically employed a strategy to continually upgrade
its main-frame and mid-range computer systems and to install
state of the art point-of-sale systems with respect to both
pre-existing operations and in conjunction with the
acquisitions and mergers effected by the Company in recent
years. Consequently, the Company's Year 2000 budget has not
required the diversion of funds from or the postponement of
the implementation of other planned IT projects.
Risks. The novelty and complexity of the issues presented
and the proposed solutions therefor and the Company's
dependence on the technical skills of employees and
independent contractors and on the representations and
preparedness of third parties are among the factors that could
cause the Company's Year 2000 compliance efforts to be less
than fully effective. Moreover, Year 2000 issues present a
number of risks that are beyond the Company's reasonable
control, such as the failure of utility companies to deliver
electricity, the failure of telecommunications companies to
provide voice and data services, the failure of financial
institutions to process transactions and transfer funds, the
failure of vendors to deliver merchandise or perform services
required by the Company and the collateral effects on the
Company of the effects of Year 2000 issues on the economy in
general or on the Company's business partners and customers in
particular. Although the Company believes that its Year 2000
compliance program, including its contingency plan, are
designed to appropriately identify and address those Year 2000
issues that are subject to the Company's reasonable control,
there can be no assurance that the Company's efforts in this
regard will be fully effective or that Year 2000 issues will
not have a material adverse effect on the Company's business,
financial condition or results of operations.
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC.
Item 5. Other Information
This report and other reports, statements and
information previously or subsequently filed by the
Company with the Securities and Exchange Commission
(the "SEC") contain or may contain forward-looking
statements. Such statements are based upon the beliefs
and assumptions of, and on information available to,
the management of the Company at the time such
statements are made. The following are or may
constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act
of 1995: (i) statements preceded by, followed by or
that include the words "may," "will," "could,"
"should," "believe," "expect," "future," "potential,"
"anticipate," "intend," "plan," "estimate," or
"continue" or the negative or other variations thereof
and (ii) statements regarding matters that are not
historical facts. Such forward-looking statements are
subject to various risks and uncertainties, including
(i) risks and uncertainties relating to the possible
invalidity of the underlying beliefs and assumptions,
(ii) possible changes or developments in social,
economic, business, industry, market, legal and
regulatory circumstances and conditions, and (iii)
actions taken or omitted to be taken by third parties,
including customers, suppliers, business partners,
competitors and legislative, regulatory, judicial and
other governmental authorities and officials. In
addition to any risks and uncertainties specifically
identified in the text surrounding such forward-looking
statements, the statements in the immediately preceding
sentence and the statements under captions such as
"Risk Factors" and "Special Considerations" in reports,
statements and information filed by the Company with
the SEC from time to time constitute cautionary
statements identifying important factors that could
cause actual amounts, results, events and circumstances
to differ materially from those reflected in such
forward-looking statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Second Amended and Restated Credit Agreement,
dated as of July 26, 1999, by and among the
Company, the Initial Lenders named therein,
Citibank, N.A., as Administrative Agent and Paying
Agent, The Chase Manhattan Bank, as Administrative
Agent, BankBoston, N.A., as Syndication Agent, and
The Bank of America, National Trust & Savings
Association, as Documentation Agent.
10.2 Second Amendment to the Series 1998-3 Supplement,
dated as of July 29, 1999, by and among Fingerhut
Receivables, Inc., as Transferor, Axsys National
Bank (formerly Fingerhut National Bank), as
Servicer, and The Bank of New York (Delaware), as
Trustee.
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC. (Company)
10.3 Security Purchase Agreement, dated as of July 30,
1998, by and among Fingerhut Receivables, Inc.
(the "Transferor"), Kitty Hawk Funding Corporation
("Kitty Hawk"), Falcon Asset Securitization
Corporation ("Falcon"), Four Winds Funding
Corporation ("Four Winds" and, collectively with
Kitty Hawk and Falcon, the "Conduit Purchasers"),
Bank of America, N.A. ("BofA" or the
"Administrative Agent"), The First National Bank
of Chicago ("First Chicago"), Norddeutsche
Landesbank Girozentrale, New York Branch and/or
Cayman Island Branch ("Norddeutsche"), and
Commerzbank Aktiengesellschaft, Chicago Branch
("Commerzbank" and collectively with BofA, First
Chicago and Norddeutsche, the "Alternate
Purchasers" and collectively with BofA and First
Chicago, the "Managing Agents").
10.4 First Amendment Agreement to Fingerhut
Receivables, Inc. Security Purchase Agreement,
dated as of July 29, 1999, by and among Fingerhut
Receivables, Inc., Kitty Hawk, Falcon, Four Winds,
the Conduit Purchasers, the Alternate Purchasers
and the Managing Agents.
10.5 Series 1999-1 Variable Funding Supplement, dated
as of July 6, 1999, to the Pooling and Servicing
Agreement by and among Prime II Receivables
Corporation, as Transferor, FDS National Bank, as
Servicer, and The Chase Manhattan Bank, as
Trustee.
10.6 Class A Certificate Purchase Agreement, dated as
of July 6, 1999, by and among Prime II Receivables
Corporation, as Transferor, FDS National Bank, as
Servicer, The Class A Purchasers, and PNC Bank,
National Association, as Agent and Administrative
Agent.
10.7 First Amendment to Class A Certificate Purchase
Agreement, dated as of August 3, 1999, by and
among Prime II Receivables Corporation, as
Transferor, FDS National Bank, as Servicer, The
Class A Purchasers, and PNC Bank, National
Association, as Agent and Administrative Agent.
10.8 Class B Certificate Purchase Agreement, dated as
of July 6, 1999, by and among Prime II Receivables
Corporation, as Transferor, FDS National Bank, as
Servicer, The Class A Purchasers, and PNC Bank,
National Association, as Agent and Administrative
Agent.
10.9 First Amendment to Class B Certificate Purchase
Agreement, dated as of August 3, 1999, by and
among Prime II Receivables Corporation, as
Transferor, FDS National Bank, as Servicer, The
Class A Purchasers, and PNC Bank, National
Association, as Agent and Administrative Agent.
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC. (Company)
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter
ended July 31, 1999.
FEDERATED DEPARTMENT STORES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunder duly authorized.
FEDERATED DEPARTMENT
STORES, INC.
Date September 14, 1999 /s/ Dennis J. Broderick
Dennis J. Broderick
Senior Vice President,
General Counsel and Secretary
/s/ Joel A. Belsky
Joel A. Belsky
Vice President and Controller
(Principal Accounting Officer)
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of July 26, 1999
FEDERATED DEPARTMENT STORES, INC., a Delaware corporation
(the "Borrower"), the banks, financial institutions and other
institutional lenders (collectively, the "Initial Lenders") party
hereto, CITIBANK, N.A., as an administrative agent (together with
any successor thereto appointed pursuant to Article VII of the
Existing Credit Agreement referred to below, in such capacity, an
"Administrative Agent") for the Lenders (as defined in the Existing
Credit Agreement referred to below) and as paying agent (in such
capacity, the "Paying Agent") for the Lenders and as joint book
manager and joint lead arranger, THE CHASE MANHATTAN BANK, as an
administrative agent (together with any successor thereto appointed
pursuant to Article VII of the Existing Credit Agreement referred
to below, in such capacity, an "Administrative Agent"; the
Administrative Agents and the Paying Agent being, collectively, the
"Agents") for the Lenders and as joint book manager and joint lead
arranger, BANKBOSTON, N.A., as syndication agent, and THE BANK OF
AMERICA, NATIONAL TRUST & SAVINGS ASSOCIATION, as documentation
agent, hereby agree as follows:
PRELIMINARY STATEMENTS
(1) The Borrower is party to a 364-Day Amended and
Restated Credit Agreement dated as of July 27, 1998 (as amended,
supplemented or otherwise modified from time to time to (but not
including) the date of this Amendment and Restatement, the
"Existing Credit Agreement") with the banks, financial institutions
and other institutional lenders party thereto and Citibank, N.A.
and The Chase Manhattan Bank, as Agents for the Lenders and such
other lenders. Capitalized terms not otherwise defined in this
Amendment and Restatement shall have the same meanings as specified
in the Existing Credit Agreement.
(2) The parties to this Amendment and Restatement desire
to amend the Existing Credit Agreement as set forth herein and to
restate the Existing Credit Agreement in its entirety to read as
set forth in the Existing Credit Agreement with the following
amendments.
(3) The Borrower has requested that the Lenders agree to
extend credit to it from time to time in an aggregate principal
amount of up to $500,000,000 for general corporate purposes of the
Borrower and its Subsidiaries not otherwise prohibited under the
terms of this Amendment and Restatement. The Lenders have
indicated their willingness to agree to extend credit to the
Borrower from time to time in such amount on the terms and
conditions of this Amendment and Restatement.
SECTION 1. Amendments to the Existing Credit Agreement.
(a) Section 1.01 of the Existing Credit Agreement is,
effective as of July 26, 1999 and subject to the satisfaction of the
conditions precedent set forth in Section 2, hereby amended by
deleting the definition of "Revolver Termination Date" set forth
therein and replacing it with the following new definition thereof:
"Revolver Termination Date" means the earlier of (a) July
24, 2000 (subject to the extension thereof pursuant to
Section 2.15) and (b) the date of termination in whole of the
Revolving Credit Commitments pursuant to Section 2.04 or 6.01;
provided, however, that the Revolver Termination Date of any Lender
that is a Non-Consenting Lender to any requested extension pursuant
to Section 2.15 shall be the Revolver Termination Date in effect
immediately prior to the applicable Extension Date for all purposes
of this Agreement and any Notes.
(b) Section 1.01 of the Existing Credit Agreement is,
effective as of July 26, 1999 and subject to the satisfaction of
the conditions precedent set forth in Section 2, hereby amended by
adding the following definition of "Applicable Utilization Fee":
"Applicable Utilization Fee" means, as of any date on
which the aggregate Advances exceed 33.3% of the aggregate
Commitments, a percentage equal to 0.20% per annum.
(c) Section 2.06(a)(i) and (ii) of the Existing Credit
Agreement are, effective as of July 26, 1999 and subject to the
satisfaction of the conditions precedent set forth in Section 2,
hereby amended in full to read as follows:
"(i) Base Rate Advances. During such periods as
such Advance is a Base Rate Advance, a rate per annum
equal at all times to the sum of (x) the Base Rate in
effect from time to time plus (y) the Applicable Margin
in effect from time to time plus (z) the Applicable
Utilization Fee, if any, in effect from time to time,
payable in arrears quarterly on the last day of each
March, June, September and December during such periods
and on the date such Base Rate Advance shall be Converted
or paid in full.
(ii) Eurodollar Rate Advances. During such periods
as such Advance is a Eurodollar Rate Advance, a rate per
annum equal at all times during each Interest Period for
such Advance to the sum of (x) the Eurodollar Rate for
such Interest Period for such Advance plus (y) the
Applicable Margin in effect from time to time plus (z)
the Applicable Utilization Fee, if any, in effect from
time to time, payable in arrears on the last day of such
Interest Period and, if such Interest Period has a
duration of more than three months, on each day that
occurs during such Interest Period every three months
from the first day of such Interest Period and on the
date such Eurodollar Rate Advance shall be Converted or
paid in full."
(d) Section 2.15(c)(i) of the Existing Credit Agreement
is, effective as of July 26, 1999 and subject to the satisfaction
of the conditions precedent set forth in Section 2, hereby amended
in full to read as follows:
"(i) any such Consenting Lender or Assuming Lender
shall have paid to such Non-Consenting Lender (A) the
aggregate principal amount of, and any interest accrued
and unpaid to the effective date of the assignment on,
the outstanding Revolving Credit Advances, if any, of
such Non-Consenting Lender plus (B) any accrued but
unpaid facility fees or utilization fees owing to such
Non-Consenting Lender as of the effective date of such
assignment;"
(e) Schedule I to the Existing Credit Agreement is,
effective as of July 26, 1999 and subject to the satisfaction of
the conditions precedent set forth in Section 2, deleted in its
entirety and replaced with Schedule I to this Amendment and
Restatement.
SECTION 2. Conditions of Effectiveness of this Amendment
and Restatement. This Amendment and Restatement shall become
effective as of the date first above written (the "Amendment
Effective Date") when and only if:
(a) The Paying Agent shall have received counterparts of
this Amendment and Restatement executed by the Borrower, the
Agents and all of the Initial Lenders or, as to any of the
Initial Lenders, advice satisfactory to the Paying Agent that
such Initial Lender has executed this Amendment and
Restatement.
(b) The Paying Agent shall have received on or before
July 26, 1999 the following, each dated such date and (unless
otherwise specified below) in form and substance satisfactory
to the Paying Agent and in sufficient copies for each Initial
Lender: the Revolving Credit Notes payable to the order of
each of the Lenders that have requested Revolving Credit Notes
prior to July 26, 1999.
(c) The representations and warranties contained in
Section 4.01 of the Existing Credit Agreement shall be correct
on and as of the Amendment Effective Date, before and after
giving effect to the Amendment Effective Date, as though made
on and as of such date.
(d) No event shall have occurred and be continuing, or
shall occur as a result of the occurrence of the Amendment
Effective Date, that constitutes a Default.
SECTION 3. Reference to and Effect on the Existing
Credit Agreement and the Notes.
(a) On and after the effectiveness of this Amendment and
Restatement, each reference in the Existing Credit Agreement to
"this Agreement", "hereunder", "hereof" or words of like import
referring to the Existing Credit Agreement, and each reference in
the Notes to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Existing Credit Agreement,
shall mean and be a reference to the Existing Credit Agreement, as
amended by this Amendment and Restatement.
(b) The Existing Credit Agreement and the Notes, as
specifically amended by this Amendment and Restatement, are and
shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed.
(c) Without limiting any of the other provisions of the
Existing Credit Agreement, as amended by this Amendment and
Restatement, any references in the Existing Credit Agreement to the
phrases "on the date hereof", "on the date of this Agreement" or
words of similar import shall mean and be a reference to July 28,
1997.
(d) Upon the effectiveness of this Amendment and
Restatement pursuant to Section 2(a), the Commitments under the
Existing Credit Agreement are automatically terminated and the
Commitments under this Amendment and Restatement are automatically
effective.
SECTION 4. Costs and Expenses. The Borrower agrees to
pay on demand all reasonable out-of-pocket costs and expenses of
the Agents in connection with the preparation, execution, delivery
and administration, modification and amendment of this Amendment
and Restatement, the Notes and the other documents to be delivered
hereunder (including, without limitation, the reasonable and
documented fees and expenses of counsel for the Agents with respect
hereto and thereto) in accordance with the terms of Section 8.04 of
the Existing Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment
and Restatement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this
Amendment and Restatement by telecopier shall be effective as
delivery of a manually executed counterpart of this Amendment and
Restatement.
SECTION 6. Governing Law. This Amendment and
Restatement shall be governed by, and construed in accordance with,
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Restatement to be executed by their respective
officers thereunto duly authorized, as of the date first above
written.
THE BORROWER
FEDERATED DEPARTMENT STORES, INC.,
By /s/ Karen M. Hoguet
Name: Karen M. Hoguet
Title: Senior Vice President and
Chief Financial Officer
THE AGENTS
CITIBANK, N.A.,
as an Administrative Agent and
as Paying Agent
By /s/ Laura A. Siracuse
Name: Laura A. Siracuse
Title:
THE CHASE MANHATTAN BANK,
as an Administrative Agent
By /s/ Barry K. Bergman
Name: Barry K. Bergman
Title: Vice President
BANKBOSTON, N.A.,
as Syndication Agent
By /s/ Judith C.E. Kelly
Name: Judith C.E. Kelly
Title: Vice President
THE BANK OF AMERICA, NT & SA,
as Documentation Agent
By /s/ Bridget Garavalia
Name: Bridget Garavalia
Title: Managing Director
THE INITIAL LENDERS
CITIBANK, N.A.
By /s/ Laura A. Siracuse
Name: Laura A. Siracuse
Title:
THE CHASE MANHATTAN BANK
By /s/ Barry K. Bergman
Name: Barry K. Bergman
Title: Vice President
BANKBOSTON, N.A.
By /s/ Judith C.E. Kelly
Name: Judith C.E. Kelly
Title: Vice President
THE BANK OF AMERICA, NT & SA
By /s/ Bridget Garavalia
Name: Bridget Garavalia
Title: Managing Director
ARAB BANK PLC, GRAND CAYMAN
By /s/ Nosal Barbar
Name: Nosal Barbar
Title:
THE BANK OF NEW YORK
By /s/ Michael Flnnery
Name: Michael Flannery
Title: Vice President
NATIONSBANK
By /s/ Bridget Garavalia
Name: Bridget Garavalia
Title: Managing Director
CREDIT AGRICOLE INDOSUEZ
By /s/ David Bouhl
Name: David Bouhl
Title: First Vice President and
Managing Director
By /s/ Theodore D. Tice
Name: Theodore D. Tice
Title: Senior Relationship Manager
COMERICA BANK
By /s/ Lisa M. Kotula
Name: Lisa M. Kotula
Title: Account Officer
CREDIT SUISSE FIRST BOSTON
By /s/ Bill O'Daly
Name: Bill O'Daly
Title: Vice President
By /s/ Chris T. Horgan
Name: Chris T. Horgan
Title: Vice President
THE FIFTH THIRD BANK
By /s/ Tom Welch
Name: Tom Welch
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Catherine A. Muszyniski
Name: Catherine A. Muszynsky
Title: Vice President
ALLFIRST BANK
By /s/ Robert M. Beaver
Name: Robert M. Beaver
Title: Vice President
FLEET NATIONAL BANK
By /s/ Christopher J. Kampe
Name: Christopher J. Kampe
Title: Vice President
MELLON BANK, N.A.
By /s/ Richard J. Soherish
Name: Richard J. Soherish
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Robert Bottamedi
Name: Robert Bottamedi
Title: Senior Vice President
NATIONAL BANK OF KUWAIT SAK -
NEW YORK
By /s/ Muhammad Kamal
Name: Muhammad Kamal
Title: General Manager
By /s/ Robert J. McNeill
Name: Robert J. McNeill
Title: Executive Manager
PNC BANK, OHIO, NATIONAL ASSOCIATION
By /s/ Bruce A. Kintner
Name: Bruce A. Kintner
Title: Vice President
STANDARD CHARTERED BANK, N.A.
By /s/ Shaflq Ur Rahman
Name: Shaflq Ur Rahman
Title: Standard Chartered Bank
By /s/ Peter G.R. Dodds
Name: Peter G.R. Dodds
Title: Coin 98/62
FIRSTAR BANK, N.A.
By /s/ Derek S. Roudebush
Name: Derek S. Roudebush
Title: Vice President
SUMITOMO BANK, LIMITED
By /s/ J. Bruce Meredith
Name: J. Bruce Meredith
Title: Senior Vice President
SUNTRUST BANK CENTRAL FLORIDA, N.A.
By /s/ Margaret A. Jaketic
Name: Margaret A. Jaketic
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By /s/ Timothy P. Streb
Name: Timothy P. Streb
Title: Vice President
WACHOVIA BANK, N.A.
By /s/ Brad Walkins
Name: Brad Walkins
Title: Vice President
WELLS FARGO BANK, N.A.
By /s/ Suzanne Morys
Name: Suzanne Morys
Title: Vice President
By /s/ Bradley A. Hardy
Name: Bradley A. Hardy
Title: Vice President
SCHEDULE I TO THE AMENDMENT AND RESTATEMENT
COMMITMENTS AND APPLICABLE LENDING OFFICES
Name of Revolving Domestic Lending Eurodollar Lending
Initial Credit Office Office
Lender Commitment
Citibank, $55,000,000 Credit: Credit:
N.A. 399 Park Avenue, 399 Park Avenue,
12th Floor 12th Floor
New York, NY 10043 New York, NY 10043
Attn: Marc Merlino Attn: Marc Merlino
Phone: (212) 559- Phone: (212) 559-
1875 1875
Fax: (212) 793- Fax: (212) 793-
7585 7585
Administrative: Administrative:
2 Penns Plaza 2 Penns Plaza
Suite 200 Suite 200
New Castle, DE New Castle, DE
19720 19720
Attn: Leonard Attn: Leonard
Sarcona Sarcona
Phone: (718) 248- Phone: (718) 248-
4536 4536
Fax: (718) 248- Fax: (718) 248-
4844 4844
The Chase $55,000,000 Credit: Credit:
Manhattan 270 Park Avenue, 270 Park Avenue,
Bank, N.A. 48th Fl. 48th Fl.
New York, NY New York, NY
10017 10017
Attn: Barry Attn: Barry
Bergman Bergman
Phone: (212) 270- Phone: (212) 270-
0203 0203
Fax: (212) 270- Fax: (212) 270-
5646 5646
Administrative: Administrative:
1 Chase Manhattan 1 Chase Manhattan
Plaza Plaza
8th Floor 8th Floor
New York, NY New York, NY
10081 10081
Attn: Amy Attn: Amy Labinger
Labinger Phone: (212) 552-
Phone: (212) 552- 4025
4025 Fax: (212) 552-
Fax: (212) 552- 7500
7500
BankBoston, $42,000,000 Credit: Credit:
N.A. 100 Federal Street 100 Federal Street
Mail Stop 01-09-05 Mail Stop 01-09-05
Boston, MA 02106 Boston, MA 02106
Attn: Judy Kelly Attn: Judy Kelly
Phone: (617) 434- Phone: (617) 434-
5280 5280
Fax: (617) 434- Fax: (617) 434-
6685 6685
Administrative: Administrative:
100 Federal Street 100 Federal Street
Mail Stop 01-21- Mail Stop 01-21-
01 01
Boston, MA Boston, MA
02110 02110
Attn: Michelle Attn: Michelle
Taglione Taglione
Phone: (617) Phone: (617)
434-4039 434-4039
Fax: (617) 434- Fax: (617) 434-
6685 6685
The Bank of $50,500,000 Credit: Credit:
America, NT & 231 South LaSalle 231 South LaSalle
SA Street Street
Chicago, IL 60697 Chicago, IL 60697
Attn: Sandy Ober Attn: Sandy Ober
Phone: (312) 828- Phone: (312) 828-
1307 1307
Fax: (312) 987- Fax: (312) 987-
0303 0303
Administrative: Administrative:
231 South LaSalle 231 So. LaSalle
Street Street
Chicago, IL Chicago, IL
60697 60697
Attn: Sandra Attn: Sandra
Kramer Kramer
Phone: (312) Phone: (312)
828-6645 828-6645
Fax: (312) 987- Fax: (312) 987-
5833 5833
The Bank of $24,000,000 Credit: Credit:
New York One Wall Street, One Wall Street,
22nd Floor 22nd Floor
New York, NY New York, NY
10286 10286
Attn: Paula Regan Attn: Paula Regan
Phone: (212) 635- Phone: (212) 635-
7867 7867
Fax: (212) 635- Fax: (212) 635-
1483 1483
Administrative: Administrative:
One Wall Street, One Wall Street,
22nd Floor 22nd Floor
New York, NY New York, NY
10286 10286
Attn: Susan Attn: Susan
Baratta Baratta
Phone: (212) Phone: (212)
635-6761 635-6761
Fax: (212) 635- Fax: (212) 635-
6397 6397
Credit Suisse $24,000,000 Credit: Credit:
First Boston 11 Madison Ave., 11 Madison Ave.,
19th Fl. 19th Fl.
New York, NY New York, NY
10010 10010
Attn: Chris Hogan Attn: Chris Hogan
Phone: (212) 325- Phone: (212) 325-
9157 9157
Fax: (212) 325- Fax: (212) 325-
8309 8309
Administrative: Administrative:
11 Madison Ave. 11 Madison Ave.
New York, NY New York, NY
10010 10010
Attn: Gina Attn: Gina
Manginello Manginello
Phone: (212) 325- Phone: (212) 325-
9149 9149
Fax: (212) 325- Fax: (212) 325-
8319 8319
Fleet $24,000,000 Credit: Credit:
National Bank One Federal Street One Federal Street
MA OF 0320 MA OF 0320
Boston, MA 02110 Boston, MA 02110
Attn: Richard Attn: Richard
Seufert Seufert
Phone: (617) 346- Phone: (617) 346-
0611 0611
Fax: (617) 346- Fax: (617) 346-
0689 0689
Administrative: Administrative:
One Federal Street One Federal Street
MA OF 0308 MA OF 0308
Boston, MA 02110 Boston, MA 02110
Attn: Michael Attn: Michael
Araujo Araujo
Phone: (617) 346- Phone: (617) 346-
0601 0601
Fax: (617) 346- Fax: (617) 346-
0595 0595
PNC Bank, $24,000,000 Credit: Credit:
Ohio, 201 East 5th 201 East 5th
National Street Street
Association Cincinnati, OH Cincinnati, OH
45202 45202
Attn: Joe Attn: Joe
Richardson Richardson
Phone: (513) 651- Phone: (513) 651-
8688 8688
Fax: (513) 651- Fax: (513) 651-
8951 8951
Administrative: Administrative:
201 E. 5th Street 201 E. 5th Street
Cincinnati, OH Cincinnati, OH
45202 45202
Attn: Sandy Wilson Attn: Sandy Wilson
Phone:(513) 651- Phone: (513)
8984 651- 8984
Fax: (513) 651- Fax: (513) 651-
8951 8951
Sumitomo $20,000,000 Credit: Credit:
Bank, Limited U.S. Corporate U.S. Corporate
Dept. Dept.
277 Park Avenue, 277 Park Avenue,
6th Floor 6th Floor
New York, NY New York, NY
10172 10172
Attn: Rohn Attn: Rohn
Laudenschlager Laudenschlager
Phone: (212) 224- Phone: (212) 224-
4226 4226
Fax (212) 418-4384 Fax (212) 418-4384
Administrative: Administrative:
International International
Finance Dept. Finance Dept.
277 Park Avenue, 277 Park Avenue,
6th Floor 6th Floor
New York, NY New York, NY
10172 10172
Attn: Ivelesse Attn: Ivelesse
Mena-Garcia Mena-Garcia
Phone: (212) 224- Phone: (212) 224-
4150 4150
Fax (212) 224-5197 Fax (212) 224-5197
Union Bank of $23,750,000 Credit: Credit:
California, 350 California 350 California
N.A. St., 11th Fl. St., 11th Fl.
San Francisco, CA San Francisco, CA
94104 94104
Attn: Timothy P. Attn: Timothy P.
Streb, VP Streb, VP
Phone: (415) 705- Phone: (415) 705-
7021 7021
Fax: (415) 705- Fax: (415) 705-
7085 7085
Administrative: Administrative:
350 California 350 California
St., 11th Fl. St., 11th Fl.
San Francisco, CA San Francisco, CA
94104 94104
Attn: Richard A. Attn: Richard A.
Sutter, VP Sutter, VP
Phone: (415) 705- Phone: (415) 705-
7090 7090
Fax: (415) 705- Fax: (415) 705-
7085 7085
Mellon Bank, $19,000,000 Credit: Credit:
N.A. One Mellon Bank One Mellon Bank
Center, Room 370 Center, Room 370
Pittsburgh, PA Pittsburgh, PA
15258-0001 15258-0001
Attn: Rick Schaich Attn: Rick Schaich
Phone: (412) 234- Phone: (412) 234-
4420 4420
Fax: (412) 236- Fax: (412) 236-
1914 1914
Administrative: Administrative:
Three Mellon Bank Three Mellon Bank
Center Center
Room 2305 Room 2305
Pittsburgh, PA Pittsburgh, PA
15259-0003 15259-0003
Attn: Greg Klino Attn: Greg Klino
Phone: (412) 234- Phone: (412) 234-
1867 1867
Fax: (412) 234- Fax: (412) 234-
5049 5049
Credit $12,500,000 Credit: Credit:
Agricole 55 E. Monroe 55 E. Monroe
Indosuez Street Street
Suite 4700 Suite 4700
Chicago, IL Chicago, IL
60603 60603
Attn: Ray Attn: Ray
Falkenberg Falkenberg
Phone: (312) Phone: (312)
917-7426 917-7426
Fax: (312) 372- Fax: (312) 372-
3724 3724
Administrative: Administrative:
55 E. Monroe 55 E. Monroe
Street Street
Suite 4700 Suite 4700
Chicago, IL Chicago, IL
60603 60603
Attn: James Attn: James
Barrett Barrett
Phone: (312) Phone: (312)
917-7429 917-7429
Fax: (312) 372- Fax: (312) 372-
4421 4421
The First $21,250,000 Credit: Credit:
National Bank One First National One First National
of Chicago Plaza Plaza
Chicago, IL 60670 Chicago, IL 60670
Attn: Diane Stark Attn: Diane Stark
Phone: (312) 732- Phone: (312) 732-
8251 8251
Fax: (312) 336- Fax: (312) 336-
4380 4380
Administrative: Administrative:
One First National One First National
Plaza Plaza
Chicago, IL 60670 Chicago, IL 60670
Attn: Karen Attn: Karen
Hannusch Hannusch
Phone: (312) 732- Phone: (312) 732-
9868 9868
Fax: (312) 732- Fax: (312) 732-
2715 2715
Morgan $15,000,000 Credit: Credit:
Guaranty 60 Wall Street 60 Wall Street
Trust Company New York, NY 10260- New York, NY 10260-
of New York 0060 0060
Attn: Deborah Attn: Deborah
Boodheim Boodheim
Phone: (212) 648- Phone: (212) 648-
8063 8063
Fax: (212) 648- Fax: (212) 648-
5018 5018
Administrative: Administrative:
500 Stanton 500 Stanton
Christiana Ctr. Christiana Ctr.
Newark, DE 19713- Newark, DE 19713-
2107 2107
Attn: Vickie Attn: Vickie
Fedele Fedele
Phone: (302) 634- Phone: (302) 634-
4225 4225
Fax: (302) 634- Fax: (302) 634-
1852 1852
Standard $15,000,000 Credit: Credit:
Chartered 7 World Trade 7 World Trade
Bank Center Center
27th Floor 27th Floor
New York, NY New York, NY
10048 10048
Attn: David Attn: David
Cutting Cutting
Phone: (212) 667- Phone: (212) 667-
0469 0469
Fax: (212) 667- Fax: (212) 667-
0225 0225
Administrative: Administrative:
707 Wilshire 707 Wilshire
Blvd., W-8-33 Blvd., W-8-33
Los Angeles, CA Los Angeles, CA
90017 90017
Attn: Qustanti Attn: Qustanti
Shiber Shiber
Phone: (213) 614- Phone: (213) 614-
5037 5037
Fax: (213) 614- Fax: (213) 614-
4270 4270
Wachovia Bank $10,000,000 Credit: Credit:
of Georgia, 191 Peachtree 191 Peachtree
N.A. Street, N.E. Street, N.E.
28th Floor, GA-370 28th Floor, GA-
Atlanta, GA 30303 370
Attn: Brad Watkins Atlanta, GA
Phone: (404) 332- 30303
7093 Attn: Brad
Fax: (404) 332- Watkins
6898 Phone: (404)
Administrative: 332-7093
191 Peachtree Fax: (404) 332-
Street, N.E. 6898
28th Floor, GA-370 Administrative:
Atlanta, GA 30303 191 Peachtree
Attn: Christy N. Street, N.E.
Howard 28th Floor, GA-
Phone: (404) 332- 370
6261 Atlanta, GA
Fax: (404) 332- 30303
6898 Attn: Christy
N. Howard
Phone: (404)
332-6261
Fax: (404) 332-
6898
Comerica Bank $7,500,000 Credit: Credit:
500 Woodward Ave. 500 Woodward Ave.
MC 3268 MC 3268
Detroit, MI 48226 Detroit, MI 48226
Attn: Hugh Porter Attn: Hugh Porter
Phone (313) 222- Phone (313) 222-
6192 6192
Fax: (312) 222- Fax: (312) 222-
9514 9514
Administrative: Administrative:
500 Woodward Ave. 500 Woodward Ave.
MC 3268 MC 3268
Detroit, MI 48226 Detroit, MI 48226
Attn: Beverly Attn: Beverly
Jones Jones
Phone (313) 222- Phone (313) 222-
3805 3805
Fax: (312) 222- Fax: (312) 222-
3351 3351
National Bank $7,500,000 Credit: Credit:
of Kuwait SAK 299 Park Avenue 299 Park Avenue
- - New York New York, NY New York, NY
10171-0023 10171-0023
Attn: Jeff Ganter Attn: Jeff Ganter
Phone: (212) 303- Phone: (212) 303-
9828 9828
Fax: (212) 319- Fax: (212) 319-
8269 8269
Administrative: Administrative:
299 Park Avenue 299 Park Avenue
New York, NY New York, NY
10171-0023 10171-0023
Attn: Jeff Ganter Attn: Jeff Ganter
(212) 303-9868 (212) 303-9868
(212) 319-8269 (212) 319-8269
Arab Bank $6,250,000 Credit: Credit:
PLC, Grand 520 Madison Ave. 520 Madison Ave.
Cayman New York, NY New York, NY
10022 10022
Attn: Samer Tamimi Attn: Samar Tamimi
Phone: (212) 715- Phone: (212) 715-
9712 9712
Fax: (212) 593- Fax: (212) 593-
4632 4632
Administrative: Administrative:
520 Madison Ave. 520 Madison Ave.
New York, NY New York, NY
10022 10022
Attn: Justo Attn: Justo
Huapaya Huapaya
Phone: (212) 715- Phone: (212) 715-
9713 9713
Fax: (212) 593- Fax: (212) 593-
4632 4632
The Fifth- $6,250,000 Credit: Credit:
Third Bank 38 Fountain 38 Fountain
Square Plaza Square Plaza
Cincinnati, OH Cincinnati, OH
45263 45263
Attn: Andy Hauck Attn: Andy Hauck
Phone: (513) Phone: (513)
579-4178 579-4178
Fax: (513) 579- Fax: (513) 579-
5226 5226
Administrative: Administrative:
38 Fountain 38 Fountain
Square Plaza Square Plaza
Cincinnati, OH Cincinnati, OH
45263 45263
Attn: Daniel Attn: Daniel
Mullen Mullen
Phone: (513) Phone: (513)
579-4104 579-4104
Fax: (513) 579- Fax: (513) 579-
4226 4226
Allfirst Bank $7,500,000 Credit: Credit:
25 S. Charles 25 S. Charles
Street Street
Baltimore, MD Baltimore, MD
21201 21201
Attn: Jerome Attn: Jerome
Ratliffe Ratliffe
Phone: (410) Phone: (410)
244-4852 244-4852
Fax: (410) 545- Fax: (410) 244-
2047 2047
Administrative: Administrative:
25 S. Charles 25 S. Charles
Street Street
Baltimore, MD Baltimore, MD
21201 21201
Attn: Emilia Attn: Emilia
Schwartz Schwartz
Phone: (410) Phone: (410)
244-4201 244-4201
Fax: (410) 244- Fax: (410) 244-
4294 4294
Firstar Bank, $7,500,000 Credit: Credit:
N.A. 425 Walnut Street, 425 Walnut Street,
ML: 8160 ML: 8160
Cincinnati, OH Cincinnati, OH
45202 45202
Attn: Derek Attn: Derek
Roudebush Roudebush
Phone: (513) 632- Phone: (513) 632-
4010 4010
Fax: (513) 762- Fax: (513) 762-
2068 2068
Administrative: Administrative:
425 Walnut Street 425 Walnut Street
Cincinnati, OH Cincinnati, OH
45202 45202
Attn: Patty Attn: Patty
Gambert Gambert
Phone: (513) Phone: (513)
632-4034 632-4034
Fax: (513) 632- Fax: (513) 632-
3099 3099
SunTrust $6,250,000 Credit: Credit:
Bank, N.A. 200 S. Orange Ave. 200 S. Orange Ave.
MC 0-1043 MC 0-1043
Orlando, FL 32801 Orlando, FL 32801
Attn: Stephen L. Attn: Stephen L.
Leister Leister
Phone: (407) 237- Phone: (407) 237-
4705 4705
Fax: (407) 237- Fax: (407) 237-
6894 6894
Administrative: Administrative:
200 S. Orange Ave. 200 S. Orange Ave.
MC 0-1043 MC 0-1043
Orlando, FL 32801 Orlando, FL 32801
Attn: Lois Keezel Attn: Lois Keezel
Phone: (407) 237- Phone: (407) 237-
4855 4855
Fax: (407) 237- Fax: (407) 237-
6894 6894
Wells Fargo $16,250,000 Credit: Credit:
Bank, N.A. 230 W. Monroe St. 230 W. Monroe St.
Suite 2900 Suite 2900
Chicago, IL 60606 Chicago, IL 60606
Attn: Suzanne Attn: Suzanne
Morys, V.P. Morys, V.P.
Phone: 312-845- Phone: 312-845-
8605 8605
Fax: 312-553-4783 Fax: 312-553-4378
Administrative: Administrative:
707 Wilshire Blvd. 707 Wilshire Blvd.
MAC 2818-165 MAC 2818-165
Los Angeles, CA Los Angeles, CA
90017 90017
Attn: Matt Frey Attn: Matt Frey
Phone: 213-614- Phone: 213-614-
5038 5038
Fax: 213-623-5674 Fax: 213-623-5674
___________
TOTAL OF COMMITMENTS: $500,000,000
FINGERHUT RECEIVABLES, INC.,
Transferor
AXSYS NATIONAL BANK
(formerly Fingerhut National Bank),
Servicer
and
THE BANK OF NEW YORK (DELAWARE),
Trustee
on behalf of Series 1998-3 Securityholders
of the Fingerhut Master Trust
SECOND AMENDMENT
Dated as of July 29, 1999
to
SERIES 1998-3 SUPPLEMENT
Dated as of July 30, 1998
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of March 18, 1998
SECOND AMENDMENT dated as of July 29, 1999 ("Second
Amendment") to SERIES 1998-3 SUPPLEMENT, by and among Fingerhut
Receivables, Inc., as Transferor (the "Transferor"), Axsys
National Bank (formerly named Fingerhut National Bank), as
Servicer (the "Servicer") and The Bank of New York (Delaware), as
Trustee (the "Trustee"). Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Agreement
(as hereinafter defined).
WHEREAS, the Transferor, the Servicer and the Trustee
have heretofore executed and delivered the Amended and Restated
Pooling and Servicing Agreement dated as of March 18, 1998, by
and among the Transferor, the Servicer and the Trustee, as
supplemented by the Series 1998-3 Supplement dated as of July 30,
1998 to the Pooling and Servicing Agreement, as amended by the
First Amendment dated March 17, 1999 (the "Series Supplement").
The Pooling and Servicing Agreement, as supplemented by the
Series Supplement is referred to herein as the "Agreement"); and
WHEREAS, the Section 13.1(b) of the Pooling and
Servicing Agreement provides that the Transferor, the Servicer
and the Trustee with the consent of the Holders of Investor
Securities representing not less than 66-2/3% of the Invested
Amount of each and every Series or Participation adversely
affected, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Pooling
and Servicing Agreement, or of modifying in any manner the rights
of the Investor Securityholders of any Series then issued and
outstanding, provided, however, that no such amendment shall
(i) reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any Investor
Security of such Series without the consent of all of the related
Investor Securityholders, (ii) change the definition of or the
manner of calculating the interest of any Investor Securityholder
of such Series without the consent of the related Investor
Securityholder or (iii) reduce the aforesaid percentage required
to consent to any such amendment, in each case without the
consent of all such Investor Securityholders.
NOW, THEREFORE, the Transferor, the Servicer and the
Trustee hereby amend the Series Supplement as follows:
SECTION 1.1 The definitions of "Bank Rate," "Capped
Interest Rate," "Class A Facility Usage Fee," "Class A Program
Fee," "Class B Facility Usage Fee," "Class B Program Fee," "Class
C Facility Usage Fee," "Class C Program Fee," "Facility Unused
Fee," "Interest Component," "Required Senior Securityholders" and
"Specified Termination Date" from Section 2 of the Series
Supplement are hereby amended and restated in their entirety to
read as follows:
"`Bank Rate" shall mean, for any Funding
Period, an interest rate per annum equal to the sum of
(a) LIBOR and (b) 0.50% per annum, provided, however,
that:
"(i) if any Purchaser or Liquidity
Provider determines that (A) it would be
contrary to law or to the directive of any
central bank or other governmental authority
to obtain United Stated dollars in the London
interbank market to fund its investment in a
Senior Security for such Funding Period, or
(B) it is unable, by reason of circumstances
affecting the London interbank market
generally, to obtain United States dollars in
such market to fund its investment in such
Senior Security for such Funding Period, then
the Bank Rate for such Funding Period shall
be the Federal Funds Effective Rate plus
0.50%; and
(ii) following the occurrence and
during the continuance of a Pay Out Event,
the Bank Rate shall be an interest rate per
annum equal to the sum of (A) the Prime Rate
and (B) two percent (2%) per annum."
"`Capped Interest Rate" shall mean LIBOR plus
0.50%."
"`Class A Facility Usage Fee" shall mean, for
any Business Day, an amount equal to the product of (i)
a fraction the numerator of which is the actual number
of days from and including the preceding Business Day
to but excluding such Business Day and the denominator
of which is 360, (ii) 0.150% and (iii) the Class A
Invested Amount on the preceding Business Day."
"`Class A Program Fee" shall mean, for any
Business Day, an amount equal to the product of (i) a
fraction the numerator of which is the actual number of
days from and including the preceding Business Day to
but excluding such Business Day and the denominator of
which is 360, (ii) 0.100% and (iii) the Class A
Invested Amount on the preceding Business Day."
"`Class B Facility Usage Fee" shall mean, for
any Business Day, an amount equal to the product of (i)
a fraction the numerator of which is the actual number
of days from and including the preceding Business Day
to but excluding such Business Day and the denominator
of which is 360, (ii) 0.2125% and (iii) the Class B
Invested Amount on the preceding Business Day."
"`Class B Program Fee" shall mean, for any
Business Day, an amount equal to the product of (i) a
fraction the numerator of which is the actual number of
days from and including the preceding Business Day to
but excluding such Business Day and the denominator of
which is 360, (ii) 0.275% and (iii) the Class B
Invested Amount on the preceding Business Day."
"`Class C Facility Usage Fee" shall mean, for
any Business Day, an amount equal to the product of (i)
a fraction the numerator of which is the actual number
of days from and including the preceding Business Day
to but excluding such Business Day and the denominator
of which is 360, (ii) 0.2125% and (iii) the Class C
Invested Amount on the preceding Business Day."
"`Class C Program Fee" shall mean, for any
Business Day, an amount equal to the product of (i) a
fraction the numerator of which is the actual number of
days from and including the preceding Business Day to
but excluding such Business Day and the denominator of
which is 360, (ii) 0.475% and (iii) the Class C
Invested Amount on the preceding Business Day."
"`Facility Unused Fee" shall mean, for any
Business Day, an amount equal to the sum of (A) the
product of (i) a fraction the numerator of which is the
actual number of days from and including the preceding
Business Day to but excluding such Business Day and the
denominator of which is 360, (ii) 0.150% and (iii) the
excess of (a) the Class A Maximum Invested Amount minus
the Class A Invested Amount as of the preceding
Business Day and (B) the product of (i) a fraction the
numerator of which is the actual number of days from
and including the preceding Business Day to but
excluding such Business Day and the denominator of
which is 360, (ii) 0.2125% and (iii) the excess of
(x)the sum of the Class B Maximum Invested Amount and
the Class C Maximum Invested Amount over (y) the sum of
the Class B Invested Amount and the Class C Invested
Amount, each as of the preceding Business Day."
"`Interest Component" shall mean, with
respect to any Commercial Paper (i) issued on a
discount basis, the portion of the face amount of such
Commercial Paper representing the discount incurred in
respect thereof and (ii) issued on an interest-bearing
basis, the interest payable on such Commercial Paper
(in each case including the related Commercial Paper
dealer fees payable in connection with the issuance of
such Commercial Paper and any fees due and owing
pursuant to Section 2.03 of the Security Purchase
Agreement)."
"`Required Senior Securityholders' shall mean
(a) prior to the Specified Termination Date, the
Holders of Senior Securities whose Purchaser Group
Percentages aggregate more than 50% and (b) after the
Specified Termination Date, the Holders of Senior
Securities evidencing undivided interests aggregating
more than 50% of the sum of the Class A Invested
Amount, the Class B Invested Amount and the Class C
Invested Amount."
"`Specified Termination Date' shall mean
July 27, 2000, or such later date to which the
Specified Termination Date may be extended pursuant to
Section 2.05 of the Security Purchase Agreement."
SECTION 1.2 The definition of "Purchaser Group
Funded Portion" is hereby added to Section 2 of the
Series Supplement:
"`Purchaser Group Funded Portion" shall mean
at any time, with respect to any Purchaser Group, the
aggregate amount of the Class A Invested Amount, the
Class B Invested Amount or the Class C Invested
Amount, as the case may be, held by such Purchaser
Group at such time."
SECTION 1.3 The first paragraph of Subsection 6.15(b)
of the Agreement is hereby amended and restated in its entirety
to read as follows:
"(b) Notwithstanding anything in Section
6.15(a) hereof to the contrary, any acquisition of
Additional Invested Amounts pursuant to Section 6.15(a)
hereof may be allocated other than pursuant to the
Purchaser Group Percentages; provided, however, that in
no event shall the Purchaser Group Funded Portion of
the Senior Securities held at any one time by Four
Winds Funding Corporation and its related Purchaser
Group exceed the Purchaser Group Funded Portion of the
Senior Securities held at such time by Kitty Hawk
Funding Corporation and its related Purchaser Group;
provided, further, that no Series 1998-3 Securityholder
shall be allocated more than the Purchaser Group
Percentage of the Facility Limit; and provided,
further, that the Invested Amounts of each Class of
Series 1998-3 Securities are increased
proportionately."
SECTION 1.4 Subsection 10(n) of the Series Supplement
is hereby amended and restated in its entirety to read as
follows:
"(n) Each of the Transferor and the Servicer
hereby agrees and consents to the assignment by each
Conduit Purchaser from time to time of all or any part
of its rights under, interest in and title to this
Agreement and the Senior Securities of its Purchaser
Group to any Liquidity Provider or Program Support
Provider for such Conduit Purchaser. In addition, each
of the Transferor and the Servicer hereby consents to
the assignment by each Conduit Purchaser of all of its
rights under, interest in and title to its Purchaser
Group Funded Portion of the Class A Invested Amount,
the Class B Invested Amount and/or the Class C Invested
Amount, as applicable, to the related Alternate
Purchaser in the event such Conduit Purchaser
determines not to fund any Additional Invested Amount
hereunder. Notwithstanding anything to the contrary in
this subsection 10(n), the Transferor and the Servicer
do not consent to the assignment by each Conduit
Purchaser of all or any part of its rights under,
interest in and title to (i) the Senior Securities of
its Purchaser Group or (ii) its Purchaser Group Funded
Portion of the Class A Invested Amount, the Class B
Invested Amount and/or the Class C Invested Amount, as
applicable, in each case if (A) such attempted
assignment will cause the number of Persons in any
Purchaser Group holding any interests described above
to exceed five (5) or (B) such attempted transfer would
cause the number of Targeted Holders to exceed one-
hundred."
SECTION 2. Ratification of Agreement. As amended by
this Second Amendment, the Series Supplement is in all respects
ratified and confirmed, and the Series Supplement as so amended
by this Second Amendment shall be read, taken and construed as
one and the same instrument.
SECTION 3. No Waiver. The execution and delivery of
this Second Amendment shall not constitute a waiver of a past
default under the Agreement or impair any right consequent
thereon.
SECTION 4. Counterparts. The Second Amendment may be
executed in two or more counterparts including telecopy
transmission thereof (and by different parties on separate
counterparts), each of which shall be an original, but all of
which together shall constitute one and the same instrument.
SECTION 5. GOVERNING LAW. THIS SECOND AMENDMENT SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 6. Effective Date. This Second Amendment
shall automatically become effective as of the date upon which it
has been executed by the Transferor, the Trustee, and the
Servicer, and has been consented to by the holders of all of the
Senior Securityholders.
IN WITNESS WHEREOF, the Transferor, the Servicer, the
Trustee and the Senior Securityholders have caused this Second
Amendment to be duly executed by their respective officers,
thereunto duly authorized, as of the day and year first above
written.
FINGERHUT RECEIVABLES, INC.,
as Transferor
By: /s/ Brian M. Szames
Name: Brian M. Szames
Title: President
AXSYS NATIONAL BANK
(formerly named Fingerhut National Bank),
as Servicer
By: /s/ Brian M. Szames
Name: Brian M. Szames
Title: Treasurer
THE BANK OF NEW YORK (Delaware),
as Trustee
By: /s/ Reyne A. Macadaeg
Name: Reyne A. Macadaeg
Title: Assistant Vice President
By signing this Second Amendment, the following Senior
Securityholders hereby consent to such Second Amendment.
BANK OF AMERICA, N.A.,
as Senior Securityholder
By: /s/ Elliott T. Lemon
Name: Elliott T. Lemon
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Senior Securityholder
By: /s/ Brooks P. Crankshaw
Name: Brooks P. Crankshaw
Title: First Vice President
COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO
BRANCH, as Senior Securityholder
By: /s/ Carl H. Jackson
Name: Carl H. Jackson
Title: Vice President
By: /s/ James F. Ahern
Name: James F. Ahern
Title: Vice President
Execution Copy
=================================================================
SECURITY PURCHASE AGREEMENT
among
FINGERHUT RECEIVABLES, INC.,
as the Transferor,
and
KITTY HAWK FUNDING CORPORATION,
FALCON ASSET SECURITIZATION CORPORATION,
FOUR WINDS FUNDING CORPORATION,
as Conduit Purchasers,
and
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO,
as Alternate Purchasers,
and
NATIONSBANK, N.A.,
THE FIRST NATIONAL BANK OF CHICAGO,
COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO BRANCH,
as Managing Agents,
and
NATIONSBANK, N.A.,
as Administrative Agent for the Purchasers
Dated as of July 30, 1998
=================================================================
TABLE OF CONTENTS
ARTICLE IDEFINITIONS
Section 1.01 Certain Defined Terms 2
Section 1.02 Other Rules of Construction 5
Section 1.03 Computation of Time Periods 6
ARTICLE IIPURCHASE OF SENIOR SECURITIES
Section 2.01 Sale and Delivery of the Senior Securities 6
Section 2.02 Increases and Decreases in the Invested
Amount 7
Section 2.03 Selection of Funding Periods 8
Section 2.04 Distribution of Interest and Principal
Payments 8
Section 2.05 Extension of Term 10
Section 2.06 Certain Payment 10
ARTICLE IIICONDITIONS PRECEDENT
Section 3.01 Conditions Precedent to the Obligations
of the Purchasers 10
ARTICLE IVREPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties of the
Transferor 11
Section 4.02 Representations, Warranties and Covenants
of the Purchasers 13
ARTICLE VCOVENANTS OF THE TRANSFEROR
Section 5.01 Access to Information 15
Section 5.02 Reporting Requirements of the Transferor 15
ARTICLE VIINDEMNIFICATION; EXPENSES; RELATED MATTERS
Section 6.01 Indemnities by the Transferor 16
Section 6.02 Indemnity for Taxes, Reserves and Expenses 17
Section 6.03 Taxes 18
Section 6.04 Other Costs, Expenses and Related Matters 20
Section 6.05 Indemnity for Breakage Costs 20
ARTICLE VIITHE ADMINISTRATIVE AGENT; MANAGING AGENTS
Section 7.01 Authorization and Action of Administrative
Agent 21
Section 7.02 Administrative Agent's Reliance, Etc. 21
Section 7.03 Credit Decision 22
Section 7.04 Indemnification of the Administrative Agent 22
Section 7.05 Successor Administrative Agent 22
Section 7.06 Payments by the Administrative Agent 23
Section 7.07 Authorization and Action of Managing Agent 23
Section 7.08 Managing Agent's Reliance, Etc. 24
Section 7.09 Credit Decision 24
Section 7.10 Indemnification of the Managing Agent 25
Section 7.11 Successor Managing Agent 25
Section 7.12 Payments by a Managing Agent 26
ARTICLE VIIIASSIGNMENTS AND PARTICIPATIONS
Section 8.01 Assignments. 26
Section 8.02 Participations 30
ARTICLE VIIIMISCELLANEOUS
Section 9.01 Termination of Agreement; Survival 30
Section 9.02 Waivers; Amendments 31
SECTION 9.03 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL. 31
Section 9.04 Integration 32
Section 9.05 Counterparts 32
Section 9.06 Headings 32
Section 9.07 Notices 32
Section 9.08 Successors and Assigns 33
Section 9.09 Severability of Provisions 33
Section 9.10 Further Assurances 34
Section 9.11 Non-Petition Covenant 34
Section 9.12 Limited Recourse Against Transferor 34
SCHEDULES AND EXHIBITS
Schedule I -- List of Closing Documents
Schedule II -- Alternate Purchaser Commitments
Exhibit A -- Form of Assignment and Assumption Agreement
Exhibit B -- Form of Investment Letter
SECURITY PURCHASE AGREEMENT
THIS SECURITY PURCHASE AGREEMENT, entered into and
dated as of July 30, 1998 (as hereinafter amended, restated,
supplemented or otherwise modified from time to time, the
"Agreement"), is by and among FINGERHUT RECEIVABLES, INC., a
Delaware corporation (the "Transferor"), KITTY HAWK FUNDING
CORPORATION, a Delaware corporation ("Kitty Hawk"), as a Conduit
Purchaser, FALCON ASSET SECURITIZATION CORPORATION, a Delaware
corporation ("Falcon"), as a Conduit Purchaser, FOUR WINDS
FUNDING CORPORATION, a Delaware corporation ("Four Winds"), as a
Conduit Purchaser, NATIONSBANK, N.A., a national banking
association ("NationsBank"), in its capacity as a Managing Agent
and individually as an Alternate Purchaser, THE FIRST NATIONAL
BANK OF CHICAGO, a national banking association ("FNBC"), in its
capacity as a Managing Agent and individually as an Alternate
Purchaser, COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO BRANCH, a bank
organized under the laws of the Republic of Germany, acting
through its Chicago branch ("Commerzbank"), in its capacity as a
Managing Agent and individually as an Alternate Purchaser, THE
OTHER FINANCIAL INSTITUTIONS PARTIES HERETO FROM TIME TO TIME, as
Alternate Purchasers, and NATIONSBANK, as Administrative Agent
for the Purchasers.
WITNESSETH:
WHEREAS, the Transferor has conveyed and proposes to
convey Receivables and certain other assets to the Fingerhut
Master Trust (the "Trust") pursuant to an Amended and Restated
Pooling and Servicing Agreement dated as of March 18, 1998, among
the Transferor, Fingerhut National Bank, a national banking
association, in its capacity as servicer (the "Servicer"), and
The Bank of New York, in its capacity as trustee (the "Trustee")
of the Trust (as amended, restated, supplemented or otherwise
modified from time to time, the "Pooling and Servicing
Agreement").
WHEREAS, on the Closing Date, the Transferor will be
the owner of Class A Securities, Series 1998-3 representing a
fluctuating principal amount of not more than $336,363,636 (the
"Class A Securities"), Class B Securities, Series 1998-3
representing a fluctuating principal amount of not more than
$9,090,909 (the "Class B Securities"), and Class C Securities,
Series 1998-3 representing a fluctuating principal amount of not
more than $54,545,455 (the "Class C Securities", and together
with the Class A Securities and the Class B Securities,
collectively, the "Senior Securities"), each as issued by the
Trust pursuant to the Series 1998-3 Supplement dated as of July
30, 1998 among the Transferor, the Servicer and the Trustee (as
amended, restated, supplemented or otherwise modified from time
to time, the "Series Supplement") to the Pooling and Servicing
Agreement.
WHEREAS, the Transferor wishes to sell to the
Purchasers and the Purchasers wish to buy from the Transferor,
the Senior Securities on the terms and conditions stated herein.
NOW, THEREFORE, In consideration of the premises and
the mutual covenants herein contained, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. All capitalized
terms used and not otherwise defined herein shall have the
meanings assigned to them in the Pooling and Servicing Agreement
or in the Series Supplement, as applicable. As used in this
Agreement, the terms defined in the foregoing paragraphs shall
have their defined meanings when used herein, and the following
terms shall have the following meanings:
"Accredited Investor" shall mean an accredited investor
within the meaning of Rule 501(a) under the Securities Act.
"Administrative Agent" shall mean NationsBank or any
successor administrative agent appointed as herein provided.
"Alternate Purchaser" shall mean, individually, each of
(i) with respect to the Purchaser Group of which Kitty Hawk
is a member, NationsBank and its respective successors and
assigns, (ii) with respect to the Purchaser Group of which
Falcon is a member, FNBC and its respective successors and
assigns, (iii) with respect to the Purchaser Group of which
Four Winds is a member, Commerzbank and its respective
successors and assigns, and (iv) with respect to any other
Purchaser Group, the financial institutions specified as
such in any supplement hereto and their respective
successors and permitted assigns, and "Alternate Purchasers"
shall mean, collectively, all of the foregoing.
"Assignment" shall mean, with respect to each Purchaser
Group, an assignment pursuant to an Assignment and
Assumption Agreement by which a Conduit Purchaser or
Alternate Purchaser may assign its interests in one or more
Classes of the Senior Securities of its Purchaser Group
pursuant to Section 8.01 hereof.
"Assignment Amount" shall mean, at any time with
respect to an Assignment:
(a) by a Conduit Purchaser in the Purchaser Group with
respect to which NationsBank is the Managing Agent to an
Alternate Purchaser in such Purchaser Group, an amount equal
to the sum of (i) the lesser of (A) such Alternate
Purchaser's Pro Rata Share of the portion of the related
Purchaser Group Percentage of the Class A Invested Amount,
if any, being assigned at such time and (B) such Alternate
Purchaser's unused Class A Commitment Amount, (ii) the
lesser of (A) such Alternate Purchaser's Pro Rata Share of
the portion of the related Purchaser Group Percentage of the
Class B Invested Amount, if any, being assigned at such time
and (B) such Alternate Purchaser's unused Class B Commitment
Amount and (iii) the lesser of (A) such Alternate
Purchaser's Pro Rata Share of the portion of the related
Purchaser Group Percentage of the Class C Invested Amount,
if any, being assigned at such time and (B) such Alternate
Purchaser's unused Class C Commitment Amount;
(b) by a Conduit Purchaser in the Purchaser Group with
respect to which FNBC is the Managing Agent to an Alternate
Purchaser in such Purchaser Group, an amount determined in
accordance with the Liquidity Provider Agreement with
respect to such Conduit Purchaser; and
(c) by a Conduit Purchaser in the Purchaser Group with
respect to which Commerzbank is the Managing Agent to an
Alternate Purchaser in such Purchaser Group, an amount
determined in accordance with the Liquidity Provider
Agreement with respect to such Conduit Purchaser.
"Assignment and Assumption Agreement" shall mean an
Assignment and Assumption Agreement substantially in the
form of Exhibit A attached hereto.
"Class A Commitment Amount" shall mean, with respect to
each Alternate Purchaser, the maximum amount of the Class A
Invested Amount to be funded by such Alternate Purchaser as
set forth on Schedule II hereto or in an Assignment and
Assumption Agreement, as such amount may be reduced as a
result of an Assignment and/or pursuant to a reduction in
the Facility Limit in accordance with the proviso of the
definition of the term "Facility Limit" in the Series
Supplement.
"Class B Commitment Amount" shall mean, with respect to
each Alternate Purchaser, the maximum amount of the Class B
Invested Amount to be funded by such Alternate Purchaser as
set forth on Schedule II hereto or in an Assignment and
Assumption Agreement, as such amount may be reduced as a
result of an Assignment and/or pursuant to a reduction in
the Facility Limit in accordance with the proviso of the
definition of the term "Facility Limit" in the Series
Supplement.
"Class C Commitment Amount" shall mean, with respect to
each Alternate Purchaser, the maximum amount of the Class C
Invested Amount to be funded by such Alternate Purchaser as
set forth on Schedule II hereto or in an Assignment and
Assumption Agreement, as such amount may be reduced as a
result of an Assignment and/or pursuant to a reduction in
the Facility Limit in accordance with the proviso of the
definition of the term "Facility Limit" in the Series
Supplement.
"Conduit Assignee" shall mean, with respect to any
Purchaser Group, any commercial paper conduit administered
by the applicable Managing Agent and designated from time to
time to accept an Assignment from the related Conduit
Purchaser (and thus becoming a Conduit Purchaser hereunder)
of all or a portion of the related Purchaser Group
Percentage of the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount.
"Conduit Purchaser" shall mean, individually, each of
(i) with respect to the Purchaser Group of which Kitty Hawk
is a member, Kitty Hawk and any related Conduit Assignee,
(ii) with respect to the Purchaser Group of which Falcon is
a member, Falcon and any related Conduit Assignee, and (iii)
with respect to the Purchaser Group of which Four Winds is a
member, Four Winds and any related Conduit Assignee, and
"Conduit Purchasers" shall mean, collectively, all of the
foregoing.
"Excluded Taxes" has the meaning given to such term in
Section 6.03(a) hereof.
"Fee Letter" shall mean the letter agreement of even
date herewith, among the Transferor, the Administrative
Agent and each Managing Agent, regarding certain fees
payable by the Transferor under or in connection with this
Agreement, as the same may be amended, restated or otherwise
modified from time to time.
"Funding Period" shall mean each period determined
pursuant to Section 2.03 to which all or a portion of each
Purchaser Group Percentage of the Invested Amount is
allocated for the purposes of determining the Cost of Funds
for such Invested Amount.
"Increased Costs" shall mean Indemnified Amounts,
Section 6.02 Costs, Taxes and any amounts payable pursuant
to Section 6.05 hereof, as applicable.
"Indemnified Amounts" has the meaning given to such
term in Section 6.01(a) hereof.
"Indemnified Claim" has the meaning given to such term
in Section 6.01(b) hereof.
"Indemnified Parties" has the meaning given to such
term in Section 6.01(a) hereof.
"Interest Payment" has the meaning given to such term
in Section 2.04(a) hereof.
"Liquidity Provider" shall mean the Person or Persons
who will provide liquidity support to a Conduit Purchaser
pursuant to a Liquidity Provider Agreement.
"Liquidity Provider Agreement" shall mean an agreement
between a Conduit Purchaser and a Liquidity Provider
evidencing the obligation of such Liquidity Provider to
provide liquidity support to such Conduit Purchaser in
connection with the issuance by such Conduit Purchaser of
Commercial Paper.
"Managing Agents" shall mean, (i) with respect to the
Purchaser Group of which Kitty Hawk is a member,
NationsBank, (ii) with respect to the Purchaser Group of
which Falcon is a member, FNBC, (iii) with respect to the
Purchaser Group of which Four Winds is a member,
Commerzbank, and (iv) with respect to any other Purchaser
Group, the financial institution or other Person identified
as such in any supplement hereto for such Purchaser Group.
"Principal Agreements" shall mean this Agreement, the
Pooling and Servicing Agreement, the Series Supplement and
the Senior Securities.
"Program Support Agreement" shall mean an agreement
between a Conduit Purchaser and a Program Support Provider
evidencing the obligation of such Program Support Provider
to provide liquidity or credit enhancement or asset purchase
facilities for or in respect of any assets or liabilities of
any Conduit Purchaser in connection with the issuance by
such Conduit Purchaser of Commercial Paper.
"Program Support Provider" shall mean the Person or
Persons who will provide program support to a Conduit
Purchaser pursuant to a Program Support Agreement.
"Pro Rata Share" shall mean, with respect to each
Alternate Purchaser at any time, (i) with respect to the
Class A Securities, a percentage equal to such Alternate
Purchaser's Class A Commitment Amount at such time divided
by the aggregate Class A Commitment Amounts of all Alternate
Purchasers in the same Purchaser Group as such Alternate
Purchaser at such time; (ii) with respect to the Class B
Securities, a percentage equal to such Alternate Purchaser's
Class B Commitment Amount at such time divided by the
aggregate Class B Commitment Amounts of all Alternate
Purchasers in the same Purchaser Group as such Alternate
Purchaser at such time; and (iii) with respect to the Class
C Securities, a percentage equal to such Alternate
Purchaser's Class C Commitment Amount at such time divided
by the aggregate Class C Commitment Amounts of all Alternate
Purchasers in the same Purchaser Group as such Alternate
Purchaser at such time.
"Purchaser Group" shall mean each group of Purchasers
consisting of a Conduit Purchaser and any Conduit
Assignee(s) of such Conduit Purchaser, the related Alternate
Purchaser, the related Liquidity Provider(s) and Program
Support Provider(s), if any, the related Managing Agent and
their respective assigns and participants.
"Purchaser" shall mean a Conduit Purchaser or an
Alternate Purchaser, as the context requires, and
"Purchasers" shall mean all of the Conduit Purchasers and
Alternate Purchasers, collectively.
"Section 6.02 Costs" has the meaning given to such term
in Section 6.02(c) hereof.
"Specified Termination Date" shall mean July 29, 1999,
or such later date to which the Specified Termination Date
may be extended in accordance with Section 2.05 hereof.
"Taxes" has the meaning given to such term in Section
6.03(a) hereof.
Section 1.02 Other Rules of Construction. References
in this Agreement to sections, schedules and exhibits are to
sections of and schedules and exhibits to this Agreement unless
otherwise indicated. The words "hereof", "herein", "hereunder"
and comparable terms refer to the entirety of this Agreement and
not to any particular article, section or other subdivision
hereof or attachment hereto. Words in the singular include the
plural and in the plural include the singular. The word "or" is
not exclusive. The word "including" shall be deemed to mean
"including, without limitation". The section and article
headings and table of contents contained in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Except as otherwise
specified herein, all references herein (a) to any Person shall
be deemed to include such Person's successors and assigns and (b)
to any law, rule or regulation of any Governmental Authority
specifically defined or referred to herein shall be deemed
references to such law, rule or regulation as the same may be
supplemented, amended, waived, consolidated, replaced or modified
from time to time, but only to the extent permitted by, and
effected in accordance with, the terms thereof.
Section 1.03 Computation of Time Periods. Unless
otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding."
ARTICLE II
PURCHASE OF SENIOR SECURITIES
Section 2.01 Sale and Delivery of the Senior
Securities. (a) On the terms and subject to the conditions set
forth in this Agreement, the Pooling and Servicing Agreement and
the Series Supplement, and in reliance on the covenants, repre
sentations, warranties and agreements set forth herein, the
Pooling and Servicing Agreement and the Series Supplement, the
Transferor agrees to sell to each Managing Agent on behalf of the
Purchasers in the related Purchaser Group, and each Conduit
Purchaser, acting through its Managing Agent, may, in its
discretion, and the related Alternate Purchasers, acting through
the applicable Managing Agent, shall, if the related Conduit
Purchaser determines not to so purchase, purchase from the
Transferor, on the Closing Date, (i) a Class A Security issued to
its Managing Agent having an aggregate maximum face amount equal
to the related Purchaser Group Percentage of the Class A Maximum
Invested Amount, (ii) a Class B Security issued to its Managing
Agent having an aggregate maximum face amount equal to the
related Purchaser Group Percentage of the Class B Maximum
Invested Amount and (iii) a Class C Security issued to its
Managing Agent having an aggregate maximum face amount equal to
the related Purchaser Group Percentage of the Class C Maximum
Invested Amount. Without limiting any other provision of this
Agreement, the obligation of any Purchaser to purchase an
interest in the Senior Securities of its Purchaser Group on the
Closing Date is subject to the satisfaction of the conditions
precedent set forth in Section 3.01 hereof. On the Closing Date,
the Transferor shall deliver to each Managing Agent on behalf of
the Purchasers in the related Purchaser Group a Class A Security,
a Class B Security and a Class C Security as described above,
each duly executed by the Transferor and duly authenticated by
the Trustee, registered in the name of (x) with respect to the
Purchaser Group of which Kitty Hawk is a member, "NationsBank,
N.A., in its capacity as Managing Agent for the members of the
Purchaser Group of which Kitty Hawk Funding Corporation and
NationsBank, N.A. are members", (y) with respect to the Purchaser
Group of which Falcon is a member, "The First National Bank of
Chicago, in its capacity as Managing Agent for the members of the
Purchaser Group of which Falcon Asset Securitization Corporation
and The First National Bank of Chicago are members", and (z) with
respect to the Purchaser Group of which Four Winds is a member,
"Commerzbank Aktiengesellschaft, Chicago branch, in its capacity
as Managing Agent for the members of the Purchaser Group of which
Four Winds Funding Corporation and Commerzbank
Aktiengesellschaft, Chicago branch, are members".
(b) On the Closing Date, as payment in full for the
Senior Securities being delivered to it pursuant to Section
2.01(a) of this Agreement, each Managing Agent on behalf of the
Purchasers in the related Purchaser Group shall deliver to the
Transferor or, at the direction of the Transferor, to any account
or entity as specified by the Transferor, by the wire transferor
of immediately available funds, an amount equal to such Purchaser
Group Percentage of the sum of the Class A Initial Invested
Amount, the Class B Initial Invested Amount and the Class C
Initial Invested Amount. It is understood and agreed that the
obligation of the Transferor to deliver the Senior Securities to
each Managing Agent on behalf of the Purchasers in the related
Purchaser Group is conditioned upon the Transferor's receipt of
such payment from such Managing Agent.
(c) Each Managing Agent on behalf of the Purchasers in
the related Purchaser Group agrees to execute and deliver to the
Transferor and the Trustee on the Closing Date an Investment
Letter in the form attached hereto as Exhibit B with respect to
the Senior Securities.
Section 2.02 Increases and Decreases in the Invested
Amounts. (a) Each Conduit Purchaser, through its respective
Managing Agent, may (but is not committed to), prior to the
Increase Termination Date and subject to the provisions of
Section 6.15 of the Pooling and Servicing Agreement, purchase the
related Purchaser Group Percentage of any Additional Class A
Invested Amount, Additional Class B Invested Amount and
Additional Class C Invested Amount from time to time requested by
the Transferor from the Purchasers in accordance with the
procedures described in Section 6.15 of the Pooling and Servicing
Agreement. If any Conduit Purchaser chooses at any time not to
purchase such Purchaser Group Percentage of any Additional Class
A Invested Amount, Additional Class B Invested Amount and/or
Additional Class C Invested Amount when requested by the
Transferor, each related Alternate Purchaser, through the
applicable Managing Agent, shall, prior to the Increase
Termination Date and subject to the provisions of Section 6.15 of
the Pooling and Servicing Agreement, purchase its Pro Rata Share
of the related Purchaser Group Percentage of such Additional
Class A Invested Amount, Additional Class B Invested Amount
and/or Additional Class C Invested Amount, as applicable.
(b) As payment in full for each purchase by a
Purchaser of the Additional Invested Amounts pursuant to Section
2.02(a), on the date of such purchase each Managing Agent on
behalf of the Purchasers in the related Purchaser Group shall
deliver to the Transferor, the amount equal to the related
Purchaser Group Percentage of the Additional Invested Amounts
determined in accordance with Section 6.15 of the Pooling and
Servicing Agreement at the time and in the manner set forth in
such Section.
(c) Each Purchaser agrees that its Class A Invested
Amount, Class B Invested Amount and Class C Invested Amount may
be decreased from time to time pursuant to subsections 4.9(b) and
4.9(c) and Section 4.12 of the Pooling and Servicing Agreement
and Section 9A of the Series Supplement; provided, however, that
the Class A Invested Amount, the Class B Invested Amount or the
Class C Invested Amount shall in no event be reduced below zero.
Section 2.03 Selection of Funding Periods. With
respect to any portion of the Invested Amount which is funded by
a Conduit Purchaser through the issuance of Commercial Paper, the
Transferor may, subject to the applicable Managing Agent's
approval and the limitations described below, request that the
Invested Amount so funded by a Conduit Purchaser be allocated
among one or more Funding Periods, so that the aggregate amounts
so allocated with respect to such Conduit Purchaser at all times
shall equal the Invested Amount held by such Conduit Purchaser.
No such Funding Period applicable to Invested Amounts funded by
the issuance of Commercial Paper shall be longer than 270 days
and no such Funding Period applicable to Invested Amounts funded
other than by the issuance of Commercial Paper shall be longer
than one month. The Transferor shall give each Managing Agent
irrevocable notice by telephone of the new requested Funding
Period(s) at least one (1) Business Days prior to the expiration
of any then existing Funding Period; provided, however, that the
applicable Conduit Purchaser or the related Managing Agent may
select any such new Funding Period if (1) the Transferor fails to
provide such notice on a timely basis or (ii) such Conduit
Purchaser or the related Managing Agent determines, in its sole
discretion, that the Funding Period requested by the Transferor
is unavailable or for any reason commercially undesirable.
Section 2.04 Distribution of Interest and Principal
Payments. (a) On each day on which the Administrative Agent
receives a payment under the Pooling and Servicing Agreement or
Series Supplement in respect of interest on the Senior Securities
(an "Interest Payment"), the Administrative Agent shall
distribute such amounts as follows:
(i) to the extent such Interest Payment relates to the
accrued Interest Component of Commercial Paper of a Conduit
Purchaser maturing on such day, to the applicable Managing
Agent, for the benefit of such Conduit Purchaser, an amount
equal to such accrued Interest Component;
(ii) to the extent such Interest Payment relates to the
interest accrued on amounts borrowed by a Conduit Purchaser
under a Liquidity Provider Agreement which have been
allocated to a Funding Period maturing on such day, to the
applicable Managing Agent, for the benefit of such Conduit
Purchaser, an amount equal to such accrued interest;
(iii) to the extent such Interest Payment relates
to the interest accrued on amounts funded by an Alternate
Purchaser which have been allocated to a Funding Period
maturing on such day, to the applicable Managing Agent, for
the benefit of such Alternate Purchaser, an amount equal to
such accrued interest; and
(iv) to the extent such Interest Payment is made on a
Distribution Date under Section 4.11(b) of the Pooling and
Servicing Agreement in respect of the accrued Interest
Component of Commercial Paper of a Conduit Purchaser,
interest accrued on amounts borrowed by a Conduit Purchaser
under a Liquidity Provider Agreement or interest accrued on
amounts funded by an Alternate Purchaser, in each case,
which interest does not relate to maturing Commercial Paper
or the last day of a Funding Period, to the applicable
Managing Agent(s) for the benefit of the applicable
Purchaser(s), the portion of such interest payment as
notified by each Managing Agent to the Administrative Agent.
In the event that the Interest Payment received by the
Administrative Agent on any day is insufficient to fully pay the
accrued and unpaid interest described in clauses (i), (ii) and
(iii) above, such Interest Payment shall be allocated pro rata
among the applicable Purchaser Groups (based upon each Purchaser
Group's funded portion of the Class A Invested Amount, the Class
B Invested Amount and the Class C Invested Amount, as applicable)
and further allocated pro rata among the Purchasers within each
Purchaser Group (based upon each Purchaser Group's funded portion
of the Class A Invested Amount, the Class B Invested Amount and
the Class C Invested Amount, as applicable) unless otherwise
agreed among the Purchasers in such Purchaser Group.
(b) On each day on which the Administrative Agent
receives a payment under the Pooling and Servicing Agreement or
Series Supplement in respect of Program Fees, Class A Facility
Usage Fees, Class B Facility Usage Fees, Class C Facility Usage
Fees or Facility Unused Fees, the Administrative Agent shall
distribute such amounts to the applicable Managing Agent, for the
benefit of the applicable Purchaser(s) in the related Purchaser
Group, an amount equal to such Purchaser Group's pro rata share
of such fees.
(c) On each day on which the Administrative Agent
receives a payment under the Pooling and Servicing Agreement or
Series Supplement in respect of Increased Costs, the
Administrative Agent shall distribute such amounts to the
applicable Managing Agent, for the benefit of the applicable
Purchaser(s) in the related Purchaser Group, an amount equal to
the Increased Costs for such Purchaser Group.
(d) On each Business Day on which the Administrative
Agent receives a payment in respect of the principal of the
Senior Securities pursuant to the Pooling and Servicing
Agreement, the Administrative Agent shall distribute, to each
Managing Agent, for the benefit of the applicable Purchaser(s) in
the related Purchaser Group, the related Purchaser Group's pro
rata share of the Class A Principal, the Class B Principal and
the Class C Principal (based upon each Purchaser Group's funded
portion of the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount, as applicable); provided,
however, that, with respect to each such Business Day which
occurs prior to the Early Amortization Period and to the extent
that any Purchaser Group's funded portion of the Class A Invested
Amount, the Class B Invested Amount and/or the Class C Invested
Amount exceeds such Purchaser Group's pro rata share thereof
(based on the applicable Purchaser Group Percentage), such
payments of principal shall be paid to the applicable Managing
Agent, for the benefit of the applicable Purchaser(s) in such
Purchaser Group, on a non-pro rata basis to the extent necessary
to return the related Purchaser Group to its pro rata status
based on the applicable Purchaser Group Percentage.
(e) All distributions by the Administrative Agent to
the Managing Agents hereunder shall be made by wire transfer of
immediately available funds to such depository account as each
such Managing Agent directs the Administrative Agent in writing
prior to the applicable Distribution Date. Each Managing Agent
shall further distribute the amounts received by it in accordance
with subsection (a) , (b), (c) and (d) of this Section 2.04 to
the applicable members of its related Purchaser Group.
Section 2.05 Extension of Term. The Transferor may,
at any time during the period which is no more than sixty (60)
days or less than thirty (30) days immediately preceding the
Specified Termination Date (as such date may have previously been
extended pursuant to this Section 2.05), request that the then
applicable Specified Termination Date be extended for an
additional 364 days; provided, however, that with respect to the
first extension hereunder, the Transferor may request such
extension between February 1, 1999 and March 31, 1999. Any such
request shall be in writing and delivered to each Managing Agent,
and shall be subject to the following conditions: (i) at no time
will this Agreement have a remaining term of more than 364 days
and, if any such request would result in a remaining term of more
than 364 days, such request shall be deemed to have been made for
such number of days so that, after giving effect to such
extension from the date approved, such remaining term will not
exceed 364 days, (ii) no Purchaser shall have any obligation to
extend the Specified Termination Date at any time, and (iii) any
such extension shall be effective only upon the written agreement
of the Administrative Agent, each Managing Agent, each Purchaser
and the Transferor. Each Managing Agent will (on behalf of the
applicable Purchasers) respond to any such request within thirty
(30) days of its receipt of such request, provided, that a
failure by any Managing Agent to respond within such 30-day
period shall be deemed to be a rejection of the requested
extension.
Section 2.06 Certain Payment. In consideration of the
agreements of the Purchasers hereunder, the Transferor agrees
that if on any Transfer Date the portion of the Facility Unused
Fee payable on the next succeeding Distribution Date exceeds the
aggregate amount of funds available pursuant to the applicable
provisions of the Series Supplement to pay such Facility Unused
Fee, the Transferor shall pay to the Administrative Agent, for
distribution to each Managing Agent for each Purchaser Group, on
such Distribution Date an amount equal to such excess; provided,
however, that, notwithstanding the foregoing, in no event shall
the amount of any payment made pursuant to this Section 2.06 on
any date exceed the remaining principal amount of the FCI Note on
such date. All payments pursuant to this Section 2.06 shall be
made in immediately available funds.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent to the Obligations
of the Purchasers. The Purchasers' obligations hereunder to
purchase the Senior Securities on the Closing Date shall be
subject to the satisfaction (or waiver by the Administrative
Agent and the Managing Agents) of the following conditions
precedent:
(a) All the terms, covenants, agreements and
conditions of this Agreement and the other Principal Agreements
to be complied with and performed by the Transferor and the
Servicer by the Closing Date shall have been complied with and
performed in all material respects.
(b) Each of the representations and warranties of the
Transferor and the Servicer contained in this Agreement and the
other Principal Agreements, as applicable, shall be true and
correct in all material respects on and as of the Closing Date as
if made on and as of such date, except to the extent such
representations and warranties expressly relate to a particular
date, in which case such representations and warranties shall be
true and correct on and as of such date.
(c) On or before the Closing Date, each of the
documents listed on Schedule I to this Agreement shall have been
duly authorized and executed by each signatory thereto (other
than the Purchasers, Managing Agents and Administrative Agent)
and delivered to the Administrative Agent in form and substance
satisfactory to the Administrative Agent and its counsel.
(d) On or before the Closing Date, the Transferor
shall have paid to the extent due all reasonable fees and out-of-
pocket costs and expenses (including, without limitation,
reasonable legal fees and expenses) required to be paid hereunder
and under the other Principal Agreements, including amounts due
under the Fee Letter.
(e) No change shall have occurred on or before the
Closing Date in any law, rule or regulation that would prohibit
the consummation of any transaction contemplated hereby.
(f) On or before the Closing Date, the Transferor
shall have provided the Administrative Agent with written
confirmation from Moody's that the Class A Securities, the Class
B Securities and the Class C Securities have been rated at least
"Aa2", "A2", and "Baa2", respectively.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties of the
Transferor. The Transferor hereby represents and warrants to
each Purchaser, each Managing Agent and the Administrative Agent
as of the date of this Agreement and as of the Closing Date, with
reference to the facts and circumstances then existing, as
follows:
(a) Due Authorization and No Conflict. The execution,
delivery and performance by the Transferor of this Agreement, and
the transactions contemplated hereby, are within its corporate
powers, have been duly authorized by all necessary corporate
action on its part, do not contravene (i) its charter or by-laws,
(ii) any law, rule or regulation applicable to it, (iii) any
material contractual restriction contained in any material inden
ture, loan or credit agreement, lease, mortgage, security agree
ment, bond, note, or other material agreement or instrument
binding on it or its property or (iv) any material order, writ,
judgment, award, injunction or decree binding on it or its
property, and do not result in or require the creation of any
Lien upon or with respect to any of its properties pursuant to
any material indenture, loan or credit agreement, lease,
mortgage, security agreement, bond, note or other material
agreement binding on it or its properties. This Agreement has
been duly executed and delivered on behalf of the Transferor.
(b) Governmental Consent. Assuming the correctness
and accuracy of the representations of each Purchaser contained
herein, to the Transferor's knowledge, other than those obtained,
no authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body is
required for the due execution, delivery and performance by the
Transferor of this Agreement or any other agreement, document or
instrument to be delivered by it hereunder.
(c) Enforceability of This Agreement. This Agreement
constitutes the legal, valid and binding obligation of the
Transferor enforceable against it in accordance with its
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity
(whether considered in a suit at law or equity).
(d) No Litigation. There are no actions, suits or
proceedings pending, or to the knowledge of the Transferor
threatened in writing, against or affecting the Transferor, or
its property, in any court, or before any arbitrator of any kind,
or before or by any governmental body, which (i) assert the
invalidity of this Agreement or any action to be taken by the
Transferor in connection herewith, or (ii) seek to prevent the
consummation of the transactions contemplated by this Agreement.
(e) Accuracy of Information. No certificate, report
or statement, furnished or to be furnished by the Transferor to
the Administrative Agent or the Managing Agents in connection
with this Agreement is or shall be inaccurate in any material
respect as of the date it is or shall be dated or as of the date
so furnished (except as otherwise disclosed to the Administrative
Agent or the Managing Agents, as the case may be, at such time
or, after such time, as otherwise corrected by the Transferor
prior to such inaccuracy having a material adverse effect on (i)
the interests of the Purchasers, the Managing Agents or the
Administrative Agent under this Agreement, (ii) the interests of
the Purchasers in the Trust Property or any Senior Security, or
(iii) the ability of the Transferor to perform its obligations
hereunder or under the other Principal Agreements).
(f) Senior Securities. Each of the Senior Securities
has been duly and validly authorized, and, when executed and
authenticated in accordance with the terms of the Pooling and
Servicing Agreement and the Series Supplement and delivered to
and paid for by each Managing Agent on behalf of the Purchasers
in the related Purchaser Group in accordance with this Agreement,
will be duly and validly issued and outstanding, and will be
entitled to the benefits of the Pooling and Servicing Agreement
and the Series Supplement.
(g) Absence of Material Adverse Change. Since
December 31, 1997, there shall not have occurred any event which
would reasonably be expected to have a material adverse effect on
(i) the interests of the Purchasers in the Trust Property or any
Senior Security or (ii) the ability of the Transferor to perform
its obligations hereunder or under the other Principal
Agreements.
In addition to the foregoing, the representations and
warranties of the Transferor set forth in the Pooling and
Servicing Agreement and the Series Supplement are hereby
incorporated herein by reference for the benefit of the
Administrative Agent, the Purchasers and the Managing Agents.
Section 4.02 Representations, Warranties and Covenants
of the Purchasers. Each Purchaser hereby represents and warrants
to the Transferor that as of the date hereof and the Closing
Date:
(a) Such Purchaser understands that the Senior
Securities have not been and will not be registered under the
Securities Act or any other applicable securities law and agrees
that the Senior Securities may not be offered or sold by it
except in accordance with Rule 144A under the Securities Act or
pursuant to any other exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act
and, accordingly, that the Senior Securities may not be offered,
sold, transferred, pledged, hypothecated or otherwise disposed of
except as permitted herein, the Pooling and Servicing Agreement
and the Series Supplement.
(b) It is an Accredited Investor and it has such
knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of an investment
in the Senior Securities. It is aware that it may be required to
bear the economic risk of an investment in the Senior Securities
for an indefinite period of time, and it is able to bear such
risk until the Series 1998-3 Termination Date.
(c) Neither the Transferor nor any person representing
the Transferor has made any representation to it with respect to
the Transferor or the offer or sale of the Senior Securities
other than as set forth in this Agreement and the other Principal
Agreements (and in any document delivered pursuant to this
Agreement), which have been delivered to it, and upon which it is
relying in making its investment decision with respect to the
Senior Securities (it being understood that copies of any
nonpublic document received by it pursuant to this Agreement or
any other Principal Agreement are solely for it and are not to be
distributed or furnished to any other Person other than the
members of its Purchaser Group and other Persons on a need to
know basis). It has had the opportunity to ask questions and to
obtain information concerning the Transferor, the Servicer, the
Trust and the Senior Securities, it has received adequate
information concerning the Transferor, the Servicer, the Trust
and the Senior Securities to make an informed investment decision
with respect to its purchase of the Senior Securities, and it
acknowledges that an investment in the Senior Securities involves
special considerations.
(d) It will not offer, sell, transfer, pledge,
hypothecate or otherwise dispose of the Senior Securities except
in accordance with the applicable provisions of the Series
Supplement, including Section 10 thereof, and the Pooling and
Servicing Agreement, including Article VI thereof.
(e)(i) The securities representing the Class A
Securities, Class B Securities and the Class C Securities held by
it will contain the legends set forth in Section 10 of the Series
Supplement.
(f) It is not subscribing to purchase the Senior
Securities as a result of or subsequent to any advertisement,
article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television
or radio, or presented at any seminar or meeting, or any
solicitation of a subscription by a Person not previously known
to it in connection with investments in securities generally.
(g) The Purchaser represents and warrants (i) it is
duly authorized and empowered to execute, deliver and perform
this Agreement and to purchase the Senior Securities, and has
duly taken all requisite action in connection therewith; (ii) the
Person signing this Agreement on behalf of the Purchaser has been
duly authorized by the Purchaser to do so; (iii) this Agreement
is a valid and binding legal obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws now or hereafter in effect affecting the enforcement
of creditors' rights in general and except as such enforceability
may be limited by general principles of equity (whether
considered in a suit at law or equity); and (iv) the execution,
delivery and performance of this Agreement and the purchase of
the Senior Securities do not and will not breach, violate or
constitute a default under any applicable law or regulation
(without considering the effect of any federal, state or other
securities laws), the Purchaser's constituent documents or any
agreement or arrangement to which the Purchaser is a party or by
which it may be bound.
(h) The Purchaser is not acting in a fiduciary
capacity in purchasing the Senior Securities.
(i) All information which the Purchaser has furnished
and is furnishing to the Transferor, including, without
limitation, the representation as to the Purchaser's status as an
Accredited Investor and all other representations contained in
this Agreement, is correct and complete as of the date of this
Agreement; the Purchaser acknowledges that the Transferor and
others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations and agreements and agrees that,
if any of the acknowledgments, representations or warranties made
or deemed to have been made by it or by its purchase of the
Senior Securities are no longer accurate, it shall promptly
notify the Transferor.
(j) The Purchaser is not an employee benefit plan. No
part of the funds to be used by the Purchaser to pay the purchase
price of the Senior Securities purchased hereunder, directly or
indirectly, constitutes "plan assets" of any employee benefit
plan (or its related trust). The term "employee benefit plan"
shall have the meaning assigned to such term in Section 3 of
ERISA; and the term "plan assets" shall have the meaning
specified in Department of Labor Regulation Section 2510.3-101.
ARTICLE V
COVENANTS OF THE TRANSFEROR
Section 5.01 Access to Information. The Transferor
hereby covenants to each Purchaser, each Managing Agent and the
Administrative Agent that, at any time and from time to time
during regular business hours, on reasonable notice to the
Transferor or the Servicer, as applicable, it will permit the
Administrative Agent, any Managing Agent, or their agents or
representatives, (a) to examine all books, records and documents
(including computer tapes and disks) in the possession or under
the control of the Transferor or the Servicer relating to the
Trust Property, and (b) to visit the offices and properties of
the Transferor or the Servicer for the purpose of examining such
materials described in clause (a) above, and to discuss matters
relating to the Trust Property or the Transferor's or the
Servicer's performance under the Principal Agreements with any of
the officers or employees of the Transferor or the Servicer
having knowledge of such matters. Any nonpublic information
obtained by the Administrative Agent or any Managing Agent
pursuant to this Section 5.01 shall be held in confidence by the
Administrative Agent or such Managing Agent; provided, however,
that any such nonpublic information may be disclosed to the
extent such disclosure is (i) required in order to comply with
any applicable law, order, regulation or ruling, or (ii) required
in response to any summons or subpoena or in connection with any
litigation. Except upon the occurrence and during the
continuation of a Pay Out Event, all requests by the Managing
Agents under this Section 5.01 shall be made through and
coordinated by the Administrative Agent with a view to minimizing
inconvenience to the Transferor.
Section 5.02 Reporting Requirements of the Transferor.
The Transferor will, or will cause the Servicer to, unless the
Administrative Agent and the Managing Agents shall otherwise
consent in writing, furnish to the Administrative Agent and the
Managing Agents:
(a) upon the request of the Administrative Agent or
any Managing Agent, copies of any certificate, report, statement,
notice or other communication provided with respect to Series
1998-3 to the Trustee in connection with the Pooling and
Servicing Agreement or the Series Supplement;
(b) as soon as possible and in any event within five
(5) Business Days after the Transferor obtains actual knowledge
of the occurrence thereof, notice of each Pay Out Event or
Servicer Default or event that with the giving of notice or lapse
of time or both would constitute such a Pay Out Event or Servicer
Default;
(c) the Transferor will cause the Servicer to provide
each Managing Agent prompt written notice of any downgrading of
the rating of Fingerhut Companies, Inc.'s most senior notes; and
(d) promptly, from time to time, such other
information, documents, records, opinions or reports with respect
to the Trust Property or Receivables, as the Administrative Agent
or any Managing Agent may from time to time reasonably request in
order to protect any Purchaser's interests under or contemplated
by the Principal Agreements.
ARTICLE VI
INDEMNIFICATION; EXPENSES; RELATED MATTERS
Section 6.01 Indemnities by the Transferor. (a)
Without limiting any other rights which the Administrative Agent,
the Managing Agents, the Conduit Purchasers or the Alternate
Purchasers may have hereunder or under applicable law, the
Transferor hereby agrees to indemnify each Conduit Purchaser,
each Alternate Purchaser, each Managing Agent, each Liquidity
Provider, each Program Support Provider, the Administrative Agent
and any successors and permitted assigns and any of their
respective directors, officers, employees, agents and
representatives (collectively, the "Indemnified Parties") from
and against any and all damages, losses, claims, liabilities,
costs and expenses, including, without limitation, reasonable
attorneys' fees (which such attorneys may be employees of an
Indemnified Party) and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them in any action or proceeding or
any threatened action or proceeding (whether or not such
Indemnified Party is a party thereto) arising out of or as a
result of this Agreement, the other Principal Agreements, the
ownership or maintenance, either directly or indirectly, by an
Indemnified Party of any interest in the Senior Securities or any
of the other transactions contemplated hereby or thereby,
excluding, however, (i) Indemnified Amounts to the extent
resulting from gross negligence, willful misconduct or bad faith
on the part of such Indemnified Party and (ii) recourse for
amounts due under the Receivables which are uncollectible.
(b) In order for any Indemnified Party to be entitled
to any indemnification provided for under this Section 6.01 in
respect of, arising out of, or involving a claim made by any
Person against the Indemnified Party (a "Indemnified Claim"),
such Indemnified Party must notify the Transferor in writing of
the Indemnified Claim within a reasonable time after receipt by
such Indemnified Party of written notice of the Indemnified Claim
unless the Transferor shall have previously obtained actual
knowledge thereof. Thereafter, the Indemnified Party shall
deliver to the Transferor, within a reasonable time after the
Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified
Party relating to the Indemnified Claim. If an Indemnified Claim
is made against an Indemnified Party, (i) the Transferor will be
entitled to participate in the defense thereof and, (ii) if it so
chooses, to assume the defense thereof with counsel selected by
the Transferor, provided that, in connection with such
assumption, such counsel is not reasonably objected to by the
Indemnified Party. Should the Transferor so elect to assume the
defense of an Indemnified Claim, the Transferor will not be
liable to the Indemnified Party for any legal expenses
subsequently incurred by the Indemnified Party in connection with
the defense thereof except for reasonable out-of-pocket expenses
of such Indemnified Party (including, without limitation,
reasonable travel expenses of such Indemnified Party's personnel
who are required to testify at depositions, hearings and/or trial
or to participate in settlement conferences); provided, however,
that, if one or more defenses are available to such Indemnified
Party with respect to such Indemnified Claim which are not
otherwise available to the Transferor, (i) such Indemnified Party
will be entitled to participate in the defense of such
Indemnified Claim and (ii) the Transferor shall pay for the legal
expenses incurred by such Indemnified Party in connection
therewith; provided, further, that, with respect to subsection
(ii) and to the extent that an Indemnified Claim is made against
two or more Indemnified Parties, the Transferor shall only be
obligated to pay the fees and expenses of one law firm with
respect to all such Indemnified Parties unless there are
conflicts of interest between such Indemnified Parties. If the
Transferor elects to assume the defense of an Indemnified Claim,
the Indemnified Party will (x) cooperate in all reasonable
respects with the Transferor in connection with such defense and
(y) not admit any liability with respect to, or settle,
compromise or discharge such Indemnified Claim without the
Transferor's prior written consent. If the Transferor shall
assume the defense of any Indemnified Claim, the Indemnified
Party shall be entitled to participate in (but not control) such
defense with its own counsel at its own expense. If the
Transferor does not assume the defense of any such Indemnified
Claim, the Indemnified Party may defend the same in such manner
as it may deem appropriate, including settling such claim or
litigation after obtaining the consent of the Transferor, which
consent shall not be unreasonably withheld, to such terms, and
the Transferor will promptly reimburse the Indemnified Party upon
written request.
Section 6.02 Indemnity for Taxes, Reserves and
Expenses. (a) If after the date hereof, the adoption of any law
or bank regulatory guideline or any amendment or change in the
interpretation of any existing or future law or bank regulatory
guideline by any Governmental Authority charged with the
administration, interpretation or application thereof, or the
compliance with any directive of any Governmental Authority (in
the case of any bank regulatory guideline, whether or not having
the force of law):
(i) shall subject any Indemnified Party to any tax,
duty or other charge (other than Excluded Taxes) with
respect to this Agreement, the ownership, maintenance or
financing of the Senior Securities or payments of amounts
due hereunder, or shall change the basis of taxation of
payments to any Indemnified Party of amounts payable in
respect of this Agreement, the ownership, maintenance or
financing of any interest in the Senior Securities or
payments of amounts due hereunder or its obligation to
purchase or to advance funds hereunder, under a Liquidity
Provider Agreement or a Program Support Agreement (except
for changes in the rate of general corporate, franchise, net
income or other income tax imposed on such Indemnified Party
by the jurisdiction in which such Indemnified Party's
principal executive office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System) against
assets of, deposits with or for the account of, or credit
extended by, any Indemnified Party or shall impose on any
Indemnified Party or on the London interbank market any
other condition affecting this Agreement, the ownership,
maintenance or financing of any interest in the Senior
Securities or payments of amounts due hereunder or its
obligation to purchase or to advance funds hereunder or
under a Liquidity Provider Agreement or Program Support
Agreement;
and the result of any of the foregoing is to increase the cost to
such Indemnified Party with respect to this Agreement, the
ownership, maintenance or financing of any interest in the Senior
Securities, the obligations hereunder, the funding of the
purchase or any increases hereunder, a Liquidity Provider
Agreement or a Program Support Agreement, by an amount reasonably
deemed by such Indemnified Party to be material, then, on the
next succeeding Business Day after demand by such Indemnified
Party through the Administrative Agent, such Indemnified Party
shall be entitled to receive, pursuant to Section 4.9(a)(xvi) of
the Pooling and Servicing Agreement, such additional amount or
amounts as will compensate such Indemnified Party for such
increased cost or reduction.
(b) If any Indemnified Party shall have determined
that after the date hereof, the adoption of any applicable law or
bank regulatory guideline regarding capital adequacy, or any
change therein, or any change in the interpretation thereof by
any Governmental Authority, or any directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether
or not having the force of law) of any such Governmental
Authority, has or would have the effect of reducing the rate of
return on capital of such Indemnified Party (or its parent) as a
consequence of such Indemnified Party's obligations hereunder or
under a Liquidity Provider Agreement or Program Support Agreement
or with respect hereto or thereto to a level below that which
such Indemnified Party (or its parent) could have achieved but
for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by
an amount reasonably deemed by such Indemnified Party to be
material, then, on the next succeeding Business Day after demand
by such Indemnified Party through the Administrative Agent, such
Indemnified Party shall be entitled to receive, pursuant to
Section 4.9(a)(xvi) of the Pooling and Servicing Agreement, such
additional amount or amounts as will compensate such Indemnified
Party (or its parent) for such reduction.
(c) Each Indemnified Party will promptly notify the
Administrative Agent and the Administrative Agent will promptly
notify the Transferor upon learning that amounts for which it is
entitled to seek reimbursement under this Section 6.02 ("Section
6.02 Costs") have begun to accrue. A notice by the
Administrative Agent or the applicable Indemnified Party claiming
compensation under this Section 6.02 and setting forth the
additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such
amount, the Administrative Agent or any applicable Indemnified
Party may use any reasonable averaging and attributing methods,
consistent with the averaging and attribution methods generally
used by such Indemnified Party. Each of the Indemnified Parties
further agrees to take such steps as may be reasonably available
to it to avoid the need for, or reduce the amount of, any such
amounts that may thereafter accrue under this Section 6.02;
provided, however, that the Indemnified Parties shall have no
obligation to take any such step that is inconsistent with its
internal policy or legal and regulatory restrictions.
Section 6.03 Taxes. (a) Any and all payments to the
Managing Agents for the benefit of the Purchasers in the related
Purchaser Group with respect to the Senior Securities shall be
made, in accordance with the Pooling and Servicing Agreement,
free and clear of and without deduction for any present or future
excise, stamp or franchise taxes and any other taxes, fees,
duties, withholdings or other charges of any nature whatsoever
imposed by any taxing authority on any recipient (or any assignee
of such parties), but excluding franchise taxes and taxes imposed
on or measured by the recipient's net income or gross receipts
(such excluded items being "Excluded Taxes" and such items other
than Excluded Taxes being "Taxes"). If the Paying Agent or the
Transferor, if such amount is to be paid directly by the
Transferor, shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder or under the other
Principal Agreements with respect to any Purchaser, (i) such
Purchaser shall be entitled to receive, pursuant to Section
4.9(a)(xvi) of the Pooling and Servicing Agreement, an amount
sufficient so that, after making all required deductions
(including deductions applicable to additional sums payable under
this Section 6.03), such Purchaser receives an amount equal to
the sum it would have received had no such deductions been made,
(ii) the Paying Agent or the Transferor, if such amount is to be
paid directly by the Transferor, shall make such deductions and
(iii) the Paying Agent or the Transferor, if such amount is to be
paid directly by the Transferor, shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law. The Purchasers further agree to
take such steps as may be reasonably available to it to avoid the
need for, or reduce the amount of, any such amounts that may
thereafter accrue under this Section 6.03; provided, however,
that the Purchasers shall have no obligation to take any such
step that is inconsistent with its internal policy or legal and
regulatory restrictions.
(b) If as a result of any event or circumstances
similar to those described in subsection (a) above, any Conduit
Purchaser is required to compensate a Liquidity Provider or
Program Support Provider in connection with borrowings,
commitments or purchases under the Liquidity Provider Agreement
or Program Support Agreement, respectively, by such Conduit
Purchaser for the funding or maintenance of such Purchaser's
investment in the Senior Securities hereunder, then within ten
(10) days after demand by the Managing Agent for the account of
such Conduit Purchaser through the Administrative Agent, such
Conduit Purchaser shall be entitled to receive, pursuant to
Section 4.9(a)(xvi) of the Pooling and Servicing Agreement, such
additional amount or amounts as may be necessary to pay such
Liquidity Provider or Program Support Provider, as applicable the
amounts due or to otherwise reimburse such Conduit Purchaser for
amounts paid by it. Such Conduit Purchaser agrees to use its
best efforts to enforce the provisions of the Liquidity Provider
Agreement or Program Support Agreement, as applicable, which
require each Liquidity Provider or Program Support Provider, as
applicable, to take certain actions to reduce the amount of such
compensation due to such Liquidity Provider or Program Support
Provider.
(c) Each Managing Agent and each Purchaser that is
created or organized in or under the laws of a jurisdiction other
than the United States or a state thereof hereby agrees to
complete, execute and deliver to the Trustee from time to time
prior to the initial Distribution Date on which such Person will
be entitled to receive distributions pursuant to the Pooling and
Servicing Agreement, the Series Supplement and this Agreement, as
applicable, Internal Revenue Service Form 4224 (or any successor
form), as applicable, or such other forms or certificates as may
be required under the laws of any applicable jurisdiction in
order to permit the Paying Agent, the Transferor, if such
payments are to be paid directly by the Transferor, or the
Administrative Agent in accordance with Section 2.04 hereof to
make payments to, and deposit funds to or for the account of,
such Person under the Pooling and Servicing Agreement, the Series
Supplement, and this Agreement, as applicable, without any
deduction or withholding for or on account of any tax. Each
Managing Agent and each Purchaser agrees to provide like
additional subsequent duly executed forms on or before the date
that any such form expires or becomes obsolete, or upon the
occurrence of any event requiring an amendment, resubmission or
change in the most recent form previously delivered by it and to
provide such extensions or renewals as may be reasonably
requested by the Transferor or the Trustee. Each Managing Agent
and each Purchaser further agrees that compliance with this
Section 6.03(c) is a condition to the payment of any amount
otherwise due pursuant to Sections 6.03(a) and (b) hereof.
Section 6.04 Other Costs, Expenses and Related
Matters. The Transferor agrees, upon receipt of a written
invoice, to pay or cause to be paid, and to save the Conduit
Purchasers, the Alternate Purchasers, the Managing Agents and the
Administrative Agent harmless against liability for the payment
of, all reasonable out-of-pocket expenses (including, without
limitation, attorneys', accountants' and other third parties'
fees and expenses, any filing fees and expenses incurred by
officers or employees of the Conduit Purchasers, Alternate
Purchasers, Managing Agents and/or the Administrative Agent) or
intangible, documentary or recording taxes incurred by or on
behalf of the Conduit Purchasers, Alternate Purchasers, Managing
Agents and the Administrative Agent (i) in connection with the
negotiation, execution, delivery and preparation of this
Agreement, the other Principal Agreements and any documents or
instruments delivered pursuant hereto and thereto and the
transactions contemplated hereby or thereby and (ii) from time to
time (A) relating to any amendments, waivers or consents under
this Agreement and the other Principal Agreements, (B) relating
to the syndication of the facility contemplated hereby, (C)
arising in connection with any Conduit Purchaser's, any Alternate
Purchaser's, any Managing Agent's or the Administrative Agent's
enforcement or preservation of rights, or (D) arising in
connection with any dispute, disagreement, litigation or
preparation for litigation involving this Agreement or any of the
other Principal Agreements; provided, however, that, with respect
to subsection (i) and subclauses (A) and (B) of subsection (ii)
of the foregoing sentence, the Transferor shall only be liable
for the attorneys' fees and expenses of one law firm with respect
to the Conduit Purchasers, the Alternate Purchasers, the Managing
Agents and the Administrative Agent as a group.
Section 6.05 Indemnity for Breakage Costs. To the
extent the Transferor reduces, on any day other than a day which
occurs on the last day of a Funding Period, the Class A Invested
Amount, the Class B Invested Amount and/or the Class C Invested
Amount allocated to such Funding Period, the Transferor agrees to
pay or cause to be paid the amount, if any, by which (i) the
additional interest which would have accrued on such reductions
during the balance of such Funding Period (as so computed) if
such reductions had not occurred exceeds (ii) the income, if any,
received by the applicable Managing Agent for the benefit of the
applicable Purchaser(s) in the related Purchaser Group, from the
investment by such Person of the proceeds of such reductions.
ARTICLE VII
THE ADMINISTRATIVE AGENT; MANAGING AGENTS
Section 7.01 Authorization and Action of
Administrative Agent. (a) Each Conduit Purchaser and each
Alternate Purchaser hereby appoints and authorizes the
Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the other
Principal Agreements as are delegated to the Administrative Agent
by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. In furtherance, and without
limiting the generality, of the foregoing, each Conduit Purchaser
and each Alternate Purchaser hereby appoints the Administrative
Agent as its agent to execute and deliver all further instruments
and documents, and agrees to take all further action that the
Administrative Agent may deem necessary or appropriate or that a
Conduit Purchaser or an Alternate Purchaser may reasonably
request in order to perfect, protect or more fully evidence the
interests transferred or to be transferred from time to time by
the Transferor hereunder, or to enable any of them to exercise or
enforce any of their respective rights hereunder. With respect
to actions which are incidental to the actions specifically
delegated to the Administrative Agent hereunder, the
Administrative Agent shall not be required to take any such
incidental action hereunder, but shall be required to act or to
refrain from acting (and shall be fully protected in acting or
refraining from acting) upon the direction of the Managing
Agents; provided, however, the Administrative Agent shall not be
required to take any action hereunder if the taking of such
action, in the reasonable determination of the Administrative
Agent, shall be in violation of any applicable law, rule or
regulation or contrary to any provision of this Agreement or
shall expose the Administrative Agent to liability hereunder or
otherwise.
(b) The Administrative Agent shall exercise such
rights and powers vested in it by this Agreement and the other
Principal Agreements, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own
affairs.
Section 7.02 Administrative Agent's Reliance, Etc.
Neither the Administrative Agent nor any of its directors,
officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them as Administrative
Agent under or in connection with this Agreement or any of the
other Principal Agreements, except for its or their own gross
negligence or willful misconduct. Without limiting the
foregoing, the Administrative Agent: (i) may consult with legal
counsel (including counsel for the Transferor and the Servicer),
independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (ii) makes no warranty or
representation to any Conduit Purchaser or any Alternate
Purchaser and shall not be responsible to any Conduit Purchaser
or any Alternate Purchaser for any statements, warranties or
representations made in or in connection with this Agreement;
(iii) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or
conditions of this Agreement or any of the other Principal
Agreements on the part of the Transferor or the Servicer or to
inspect the property (including the books and records) of the
Transferor or the Servicer; (iv) shall not be responsible to any
Conduit Purchaser or any Alternate Purchaser for the due
execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any of the other
Principal Agreements or any other instrument or document
furnished pursuant hereto or thereto; and (v) shall incur no
liability under or in respect of this Agreement or any of the
other Principal Agreements by acting upon any notice (including
notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it to be genuine and
signed or sent by the proper party or parties.
Section 7.03 Credit Decision. Each Conduit Purchaser
and each Alternate Purchaser acknowledges that it has,
independently and without reliance upon the Administrative Agent,
any of the Administrative Agent's Affiliates, any Managing Agent,
any other Alternate Purchaser or any other Conduit Purchaser and
based upon such documents and information as it has deemed
appropriate, made its own evaluation and decision to enter into
this Agreement and the other Principal Agreements to which it is
a party and, if it so determines, to accept the transfer of an
interest in the Senior Securities hereunder. Each Conduit
Purchaser and each Alternate Purchaser also acknowledges that it
will, independently and without reliance upon the Administrative
Agent, any of the Administrative Agent's Affiliates, any Managing
Agent, any other Alternate Purchaser or any other Conduit
Purchaser and based on such documents and information as it shall
deem appropriate at the time, continue to make its own decisions
in taking or not taking action under this Agreement and the other
Principal Agreements to which it is a party.
Section 7.04 Indemnification of the Administrative
Agent. Each Alternate Purchaser agrees to indemnify the
Administrative Agent (to the extent not reimbursed by the
Transferor), ratably in accordance with its respective Purchaser
Group Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted
against the Administrative Agent (in its capacity as such) in any
way relating to or arising out of this Agreement and any of the
other Principal Agreements or such action taken or omitted by the
Administrative Agent hereunder or thereunder; provided, however,
that such Alternate Purchaser shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each
Alternate Purchaser agrees to reimburse the Administrative Agent,
ratably in accordance with its respective Purchaser Group
Percentage, promptly upon demand for any out-of-pocket expenses
(including counsel fees) incurred by the Administrative Agent in
connection with the administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and the other Principal
Agreements, to the extent that such expenses are incurred in the
interests of or otherwise in respect of the Conduit Purchasers or
the Alternate Purchasers hereunder and/or thereunder and to the
extent that the Administrative Agent is not reimbursed for such
expenses by the Transferor.
Section 7.05 Successor Administrative Agent. The
Administrative Agent may resign at any time, effective upon the
appointment and acceptance of a successor Administrative Agent as
provided below, by giving written notice thereof to each Managing
Agent, each Conduit Purchaser, each Alternate Purchaser and the
Transferor. Upon any such resignation, the Managing Agents shall
appoint a successor Administrative Agent. Each Conduit Purchaser
and each Alternate Purchaser agrees that it shall not
unreasonably withhold or delay its approval of the appointment of
a successor Administrative Agent. If no such successor
Administrative Agent shall have been so appointed, and shall have
accepted such appointment, within thirty (30) days after the
retiring Administrative Agent's giving of notice of resignation,
then the retiring Administrative Agent may, on behalf of the
Conduit Purchasers and the Alternate Purchasers, appoint a
successor Administrative Agent with the prior consent of the
Managing Agents (which such consent will not be unreasonably
withheld) which such successor Administrative Agent shall be
either (i) a commercial bank organized under the laws of the
United States or of any state thereof and having a combined
capital and surplus of at least $250,000,000 or (ii) an Affiliate
of such a bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Article VII shall continue to inure
to its benefit as to any actions taken or omitted to be taken by
it while it was Administrative Agent under this Agreement. The
successor Administrative Agent shall promptly notify the
Transferor, the Servicer and the Trustee of its appointment
hereunder.
Section 7.06 Payments by the Administrative Agent.
Unless specifically allocated to a Conduit Purchaser or an
Alternate Purchaser pursuant to Section 2.04 of this Agreement,
all amounts received by the Administrative Agent, if any, on
behalf of the Conduit Purchasers or Alternate Purchasers shall be
paid by the Administrative Agent to the applicable Managing Agent
(at the account specified in writing to Administrative Agent) in
accordance with the related Purchaser Group Percentage on the
Business Day received by the Administrative Agent, unless such
amounts are received after 12:00 noon (New York time) on such
Business Day, in which case the Administrative Agent shall use
its reasonable efforts to pay such amounts to such Managing
Agent, on behalf of the related Purchaser, on such Business Day,
but, in any event, shall pay such amounts to such Managing Agent,
on behalf of the related Purchaser, not later than 11:00 a.m.
(New York time) on the following Business Day.
Section 7.07 Authorization and Action of Managing
Agent. (a) Each Conduit Purchaser and each Alternate Purchaser
of each Purchaser Group hereby appoints and authorizes the
Managing Agent with respect to such Purchaser Group to take such
action as agent on its behalf and to exercise such powers under
this Agreement and the other Principal Agreements as are
delegated to the Managing Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto.
In furtherance, and without limiting the generality, of the
foregoing, each Conduit Purchaser and each Alternate Purchaser
hereby appoints the related Managing Agent as its agent to
execute and deliver all further instruments and documents, and
agrees to take all further action that the related Managing Agent
may deem necessary or appropriate or that a Conduit Purchaser or
an Alternate Purchaser may reasonably request in order to
perfect, protect or more fully evidence the interests transferred
or to be transferred from time to time by the Transferor
hereunder, or to enable any of them to exercise or enforce any of
their respective rights hereunder or under the related Senior
Securities, and such other instruments or notices, as may be
necessary or appropriate for the purposes stated hereinabove.
The Conduit Purchasers and Alternate Purchasers may direct the
related Managing Agent (i) to direct the Administrative Agent to
take any action which is incidental to the actions specifically
delegated to the Administrative Agent hereunder and (ii) not to
take or to cease taking any action which is incidental to the
actions specifically delegated to the Administrative Agent
hereunder. With respect to actions which are incidental to the
actions specifically delegated to a Managing Agent hereunder, a
Managing Agent shall not be required to take any such incidental
action hereunder, but shall be required to act or to refrain from
acting (and shall be fully protected in acting or refraining from
acting) upon the direction of the related Conduit Purchaser and
Alternate Purchaser; provided, however, that no Managing Agent
shall be required to take any action hereunder if the taking of
such action, in the reasonable determination of such Managing
Agent, shall be in violation of any applicable law, rule or
regulation or contrary to any provision of this Agreement or
shall expose such Managing Agent to liability hereunder or
otherwise.
(b) The Managing Agent shall exercise such rights and
powers vested in it by this Agreement and the other Principal
Agreements, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
Section 7.08 Managing Agent's Reliance, Etc. Neither
any Managing Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be
taken by it or them as Managing Agent under or in connection with
this Agreement or any of the other Principal Agreements, except
for its or their own gross negligence or willful misconduct.
Without limiting the foregoing, the Managing Agent: (i) may
consult with legal counsel (including counsel for the Transferor
and the Servicer), independent public accountants and other
experts selected by it and shall not be liable for any action
taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation to any Conduit Purchaser or
any Alternate Purchaser and shall not be responsible to any
Conduit Purchaser or any Alternate Purchaser for any statements,
warranties or representations made in or in connection with this
Agreement; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or any of the other
Principal Agreements on the part of the Transferor or the
Servicer or to inspect the property (including the books and
records) of the Transferor or the Servicer; (iv) shall not be
responsible to any Conduit Purchaser or any Alternate Purchaser
for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the Senior
Securities or any other instrument or document furnished pursuant
hereto or thereto; and (v) shall incur no liability under or in
respect of this Agreement or any of the other Principal
Agreements by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing
(which may be by telex) believed by it to be genuine and signed
or sent by the proper party or parties.
Section 7.09 Credit Decision. Each Conduit Purchaser
and each Alternate Purchaser acknowledges that it has,
independently and without reliance upon the Managing Agent, any
of the Managing Agent's Affiliates, any other Alternate Purchaser
or any other Conduit Purchaser and based upon such documents and
information as it has deemed appropriate, made its own evaluation
and decision to enter into this Agreement and the other Principal
Agreements to which it is a party and, if it so determines, to
accept the transfer of an interest in the Senior Securities
hereunder. Each Conduit Purchaser and each Alternate Purchaser
also acknowledges that it will, independently and without
reliance upon the Managing Agent, any of the Managing Agent's
Affiliates, any other Alternate Purchaser or any other Conduit
Purchaser and based on such documents and information as it shall
deem appropriate at the time, continue to make its own decisions
in taking or not taking action under this Agreement and the other
Principal Agreements to which it is a party.
Section 7.10 Indemnification of the Managing Agent.
Each Alternate Purchaser agrees to indemnify the related Managing
Agent (to the extent not reimbursed by the Transferor), ratably
in accordance with its respective Purchaser Group Percentage,
from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Managing Agent
(in its capacity as such) in any way relating to or arising out
of this Agreement and any of the other Principal Agreements or
such action taken or omitted by the Managing Agent hereunder or
thereunder; provided, however, that such Alternate Purchaser
shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the
Managing Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Alternate Purchaser agrees to
reimburse the Managing Agent, ratably in accordance with its
respective Purchaser Group Percentage, promptly upon demand for
any out-of-pocket expenses (including counsel fees) incurred by
the Managing Agent in connection with the administration,
modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, this Agreement
and the other Principal Agreements, to the extent that such
expenses are incurred in the interests of or otherwise in respect
of the Conduit Purchasers or the Alternate Purchasers hereunder
and/or thereunder and to the extent that the Managing Agent is
not reimbursed for such expenses by the Transferor.
Section 7.11 Successor Managing Agent. A Managing
Agent may resign at any time, effective upon the appointment and
acceptance of a successor Managing Agent as provided below, by
giving written notice thereof to the Administrative Agent, each
Conduit Purchaser, each Alternate Purchaser and the Transferor.
Upon any such resignation, the members of the related Purchaser
Group acting jointly shall appoint a successor Managing Agent.
Each Conduit Purchaser and each Alternate Purchaser agrees that
it shall not unreasonably withhold or delay its approval of the
appointment of a successor Managing Agent. If no such successor
Managing Agent shall have been so appointed, and shall have
accepted such appointment, within thirty (30) days after the
retiring Managing Agent's giving of notice of resignation, then
the retiring Managing Agent may, on behalf of the Conduit
Purchasers and the Alternate Purchasers, appoint a successor
Managing Agent which shall be either (i) a commercial bank
organized under the laws of the United States or of any state
thereof and having a combined capital and surplus of at least
$50,000,000 or (ii) an Affiliate of such a bank. Upon the
acceptance of any appointment as Managing Agent hereunder by a
successor Managing Agent, such successor Managing Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Managing Agent, and
the retiring Managing Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring
Managing Agent's resignation hereunder as Managing Agent, the
provisions of this Article VII shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Managing Agent under this Agreement. The successor
Managing Agent shall promptly notify the Transferor, the Servicer
and the Trustee of its appointment hereunder.
Section 7.12 Payments by a Managing Agent. Unless
specifically allocated to a Conduit Purchaser or an Alternate
Purchaser pursuant to the terms of this Agreement, all amounts
received by a Managing Agent (i) on behalf of the related Conduit
Purchaser(s) shall be paid by such Managing Agent to such Conduit
Purchaser(s) (at an account specified in writing to such Managing
Agent) in accordance with such Conduit Purchaser's pro rata share
of such amounts and (ii) on behalf of the related Alternate
Purchaser(s) shall be paid by such Managing Agent to such
Alternate Purchaser(s) (at an account specified in writing to
such Managing Agent) in accordance with such Alternate
Purchaser's Pro Rata Share of such amounts. All such payments
shall be made on the Business Day received by such Managing
Agent, unless such amounts are received after 12:00 noon (New
York time) on such Business Day, in which case such Managing
Agent shall use its reasonable efforts to pay such amounts, on
such Business Day, but, in any event, shall pay such amounts not
later than 11:00 a.m. (New York time) the following Business Day.
ARTICLE VIII
ASSIGNMENTS AND PARTICIPATIONS
Section 8.01 Assignments. Subject to the applicable
limitations and requirements set forth in the Pooling and
Servicing Agreement and the Series Supplement, the Purchasers may
assign all or a portion of its rights and obligations hereunder
to any other Persons as set forth in this Section 8.01.
(a) At any time prior to the Specified Termination
Date, in the event that any Conduit Purchaser has elected in its
discretion not to fund its portion of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the
Class C Initial Invested Amount or any Additional Invested Amount
as requested under Section 2.02 hereof, then the Transferor shall
have the right to direct the related Managing Agent to designate
the Alternate Purchasers in the related Purchaser Group to fund,
and such Alternate Purchasers shall fund, such Class A Initial
Invested Amount, Class B Initial Invested Amount and/or Class C
Initial Invested Amount or such Additional Invested Amount, as
applicable, subject to the conditions set forth in Section 6.15
of the Pooling and Servicing Agreement. In addition, at any
time, a Conduit Purchaser may elect to assign all or a portion of
its interest in any of the Senior Securities of its Purchaser
Group to the Alternate Purchasers in its Purchaser Group pursuant
to this Section 8.01. Upon any such election by a Conduit
Purchaser or any such direction by the Transferor, such Conduit
Purchaser shall make an Assignment and the Alternate Purchasers
in the related Purchaser Group shall accept such Assignment and
shall assume all or a portion of the obligations of such Conduit
Purchaser hereunder. In connection with an Assignment from any
Conduit Purchaser to the Alternate Purchasers in its Purchaser
Group pursuant to this Section 8.01, each Alternate Purchaser
shall, on the date of such Assignment, pay to such Conduit
Purchaser its Pro Rata Share of the applicable Assignment Amount
against delivery by such Conduit Purchaser of an Assignment and
Assumption Agreement. In the event that the Assignment Amount
paid by the Alternate Purchasers is less than the sum of the
portion of the applicable Purchaser Group Percentage of the
Invested Amount subject to such Assignment plus the interest
component of all outstanding Commercial Paper with respect
thereto, then to the extent payments made hereunder in respect of
the Invested Amount exceed the Assignment Amount, such excess
amounts shall be remitted by the applicable Managing Agent to the
Conduit Purchaser.
Without limiting the foregoing, any Conduit Purchaser
may, from time to time, with prior or concurrent notice to the
Transferor and the Servicer, in one transaction or a series of
transactions, assign to a Conduit Assignee all or a portion of
the related Purchaser Group Percentage of the Class A Invested
Amount, the Class B Invested Amount or the Class C Invested
Amount and such Conduit Purchaser's rights and obligations under
this Agreement and any other Principal Agreements to which it is
a party. Upon and to the extent of such assignment by a Conduit
Purchaser to a Conduit Assignee, (i) such Conduit Assignee shall
be the owner of the assigned portion of the related Purchaser
Group Percentage of the Class A Invested Amount, the Class B
Invested Amount or the Class C Invested Amount, as applicable,
(ii) the related Managing Agent for such Conduit Purchaser will
act as the Managing Agent for such Conduit Assignee, with all
corresponding rights and powers, express or implied, granted to
the related Managing Agent hereunder or under the other Principal
Agreements, (iii) such Conduit Assignee and its Liquidity
Providers and Program Support Providers and other related parties
shall have the benefit of all the rights and protections provided
to such Conduit Purchaser and its Liquidity Providers and Program
Support Providers and other related parties, respectively, herein
and in the other Principal Agreements (including, without
limitation, any limitation on recourse against such Conduit
Purchaser or related parties, any agreement not to file or join
in the filing of a petition to commence an insolvency proceeding
against such Conduit Purchaser, and the right to assign to
another Conduit Assignee as provided in this paragraph), (iv)
such Conduit Assignee shall assume such Conduit Purchaser's right
to fund the assigned portion of the related Purchaser Group
Percentage of any Additional Invested Amount requested by the
Transferor subsequent to the date of such assignment and all
other obligations, if any, of such Conduit Purchaser under and in
connection with this Agreement or any other Principal Agreements,
and such Conduit Purchaser shall be released from such
obligations, in each case to the extent of such assignment, and
the obligations of such Conduit Purchaser and Conduit Assignee
shall be several and not joint, (v) all distributions in respect
of the related Purchaser Group Percentage of the Class A Invested
Amount, the Class B Invested Amount or the Class C Invested
Amount, as applicable, shall be made to the applicable Managing
Agent, on behalf of such Conduit Purchaser and such Conduit
Assignee on a pro rata basis according to their respective
interests, (vi) the defined terms and other terms and provisions
of this Agreement and the other Principal Agreements shall be
interpreted in accordance with the foregoing, and (vii) if
requested by the applicable Managing Agent, the parties will
execute and deliver such further agreements and documents and
take such other actions as such Managing Agent may reasonably
request to evidence and give effect to the foregoing. No
Assignment by a Conduit Purchaser to a Conduit Assignee of all or
any portion of the related Purchaser Group Percentage of the
Class A Invested Amount, the Class B Invested Amount or the Class
C Invested Amount, as applicable, shall in any way diminish the
related Alternate Purchaser's obligation under Section 8.01(a) to
fund any Additional Invested Amount not funded by such Conduit
Purchaser or Conduit Assignee.
(b) In addition to the limitations and requirements
set forth in the Pooling and Servicing Agreement and the Series
Supplement, no Alternate Purchaser (or assignee thereof) may
assign all or a portion of its interests in the Senior Securities
of its Purchaser Group, the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and its rights and
obligations hereunder to any Person unless approved in writing by
the related Managing Agent (in each case such approval not to be
unreasonably withheld or delayed). In the case of an Assignment
by an Alternate Purchaser (or assignee thereof) to another
Person, the assignor shall deliver to the assignee(s) an
Assignment and Assumption Agreement, duly executed, assigning to
the assignee, all or any portion of its interest in the Senior
Securities of its Purchaser Group, the Class A Invested Amount,
the Class B Invested Amount and/or the Class C Invested Amount,
and the assignor's rights and obligations hereunder. Any
assignor hereunder shall promptly execute and deliver all further
instruments and documents required hereby or by the Pooling and
Servicing Agreement, and take all further action, that the
assignee may reasonably request, in order to protect or more
fully evidence the assignee's right, title and interest in and to
such interest and to enable the Administrative Agent, on behalf
of such assignee, to exercise or enforce any rights hereunder and
under the other Principal Agreements to which such assignor is
or, immediately prior to such Assignment, was a party. Upon any
Assignment hereunder, (i) the assignee shall have all of the
rights and obligations of the assignor hereunder and under the
other Principal Agreements to which such assignor is or,
immediately prior to such Assignment, was a party with respect to
such interest for all purposes of this Agreement and such other
Principal Agreements (it being understood that the Alternate
Purchasers (or assignees thereof), as assignees, shall be
obligated to fund Additional Invested Amounts under Section 2.02
in accordance with the terms thereof, notwithstanding that the
Conduit Purchasers were not so obligated), and (ii) the assignor
shall relinquish its rights with respect to such interest for all
purposes of this Agreement and under the other Principal
Agreements to which such assignor is or, immediately prior to
such Assignment, was a party. No such Assignment shall be
effective unless a fully executed copy of the related Assignment
and Assumption Agreement shall be delivered to the Administrative
Agent and the Transferor. All out-of-pocket costs and legal
expenses of the Administrative Agent, the assignor and the
assignee incurred in connection with any Assignment hereunder
shall be borne as agreed among the Transferor, such assignor and
such assignee.
(c) By executing and delivering an Assignment and
Assumption Agreement, the assignor and assignee thereunder
confirm to and agree with each other and the other parties hereto
as follows: (i) other than as provided in such Assignment and
Assumption Agreement, the assignor makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with this Agreement, the other Principal Agreements or
any other instrument or document furnished pursuant hereto or
thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the other
Principal Agreements, the Receivables or other Trust Property or
any such other instrument or document; (ii) the assignor makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of the Transferor or the
Servicer or the performance or observance by the Transferor or
the Servicer of any of their respective obligations under this
Agreement, the other Principal Agreements or any other instrument
or document furnished pursuant hereto or thereto; (iii) such
assignee confirms that it has received a copy of this Agreement,
the Series Supplement, the Pooling and Servicing Agreement and
such other instruments, documents and information as it has
deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Assumption Agreement and to
purchase such interest; (iv) such assignee will, independently
and without reliance upon the Administrative Agent or any of its
Affiliates, the Managing Agents or any of their Affiliates, the
assignor or any other Purchaser and based on such agreements,
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement and the other Principal
Agreements; (v) such assignee appoints and authorizes the
Administrative Agent and the related Managing Agent to take such
action as agent on its behalf and to exercise such powers under
this Agreement, the other Principal Agreements and any other
instrument or document furnished pursuant hereto or thereto as
are delegated to the Administrative Agent or such Managing Agent,
as applicable, by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto and to enforce its
respective rights and interests in and under this Agreement, the
other Principal Agreements and the Trust Property; (vi) such
assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement
and the other Principal Agreements are required to be performed
by it as such assignee; and (vii) such assignee agrees that it
will not institute against any Conduit Purchaser any proceeding
of the type referred to in Section 9.11 prior to the date which
is one year and one day after the payment in full of all
commercial paper and other debt securities issued by any Conduit
Purchaser.
(d) If at any time prior to any assignment by the
Conduit Purchaser in the Purchaser Group with respect to which
NationsBank is the Managing Agent to a related Alternate
Purchaser as contemplated pursuant to this Section 8.01, the
short term debt rating of any Alternate Purchaser shall be "A-2"
or "P-2" from Standard & Poor's or Moody's, respectively, with
negative credit implications, such Alternate Purchaser, upon
request of the Managing Agent, shall, within 30 days of such
request, assign its rights and obligations hereunder to another
financial institution (which institution's short term debt shall
be rated at least "A-2" and "P-2" from Standard & Poor's and
Moody's, respectively, and which shall not be so rated with
negative credit implications). If the short term debt rating of
an Alternate Purchaser shall be "A-3" or "P-3", or lower, from
Standard & Poor's or Moody's, respectively (or such rating shall
have been withdrawn by Standard & Poor's or Moody's), such
Alternate Purchaser, upon request of the Managing Agent, shall,
within five (5) Business Days of such request, assign its rights
and obligations hereunder to another financial institution (which
institution's short term debt shall be rated at least "A-2" and
"P-2" from Standard & Poor's and Moody's, respectively, and which
shall not be so rated with negative credit implications). In
either such case, if any such Alternate Purchaser shall not have
assigned its rights and obligations under this Agreement within
the applicable time period described above, the Conduit Purchaser
shall have the right to require such Alternate Purchaser to
accept the assignment of such Alternate Purchaser's Pro Rata
Share of the Purchaser Group Percentage of the Class A Invested
Amount, the Class B Invested Amount and/or the Class C Invested
Amount; such assignment shall occur in accordance with the
applicable provisions of this Section 8.01. Such Alternate
Purchaser shall be obligated to pay to the Conduit Purchaser, in
connection with such assignment, in addition to the Pro Rata
Share of the Purchaser Group Percentage of the Class A Invested
Amount, the Class B Invested Amount and/or the Class C Invested
Amount, an amount equal to the interest component of the
outstanding Commercial Paper issued to fund the portion of the
Class A Invested Amount, the Class B Invested Amount and/or the
Class C Invested Amount being assigned to such Alternate
Purchaser, as reasonably determined by the Managing Agent.
Notwithstanding anything contained herein to the contrary, upon
any such assignment to a downgraded Alternate Purchaser as
contemplated pursuant to the immediately preceding sentence, the
aggregate available amount of the Facility Limit, solely as it
relates to new Additional Invested Amounts by the Conduit
Purchaser, shall be reduced by the amount of unused Class A
Commitment Amount, Class B Commitment Amount and/or Class C
Commitment Amount of such downgraded Alternate Purchaser; it
being understood and agreed, that nothing in this sentence or the
two preceding sentences shall affect or diminish in any way any
such downgraded Alternate Purchaser's commitment to the
Transferor or such downgraded Alternate Purchaser's other
obligations and liabilities hereunder and under the other
Principal Agreements.
Section 8.02 Participations. (a) Subject to the
limitations and requirements set forth in the Pooling and
Servicing Agreement and the Series Supplement, any Conduit
Purchaser or Alternate Purchaser may sell participations to one
or more Persons in or to all or a portion of its rights and
obligations hereunder; provided, however, that (i) such Conduit
Purchaser's or Alternate Purchaser's obligations under this
Agreement (including, without limitation, any Alternate
Purchaser's commitment to fund its portion of any Additional
Invested Amount hereunder) shall remain unchanged, (ii) such
Conduit Purchaser or Alternate Purchaser shall remain solely
responsible to the Transferor, the other Conduit Purchasers and
Alternate Purchasers and the Administrative Agent for the
performance of such obligations, (iii) the Managing Agent of such
Conduit Purchaser or Alternate Purchaser shall remain the holder
of the Senior Securities (for the benefit of the members of the
related Purchaser Group) for all purposes of this Agreement, and
(iv) the Transferor, Administrative Agent and the other Conduit
Purchasers and Alternate Purchasers shall continue to deal solely
and directly with such Conduit Purchaser or Alternate Purchaser
(or the related Managing Agent) in connection with such Conduit
Purchaser's or Alternate Purchaser's rights and obligations under
this Agreement.
(b) Notwithstanding anything contained herein, no
participant shall be entitled to any payments under Section 6.02
and 6.03 in excess of any amounts which would be payable to the
Conduit Purchaser or Alternate Purchaser from which such
participant acquired its interest herein.
ARTICLE VIII
MISCELLANEOUS
Section 9.01 Termination of Agreement; Survival. This
Agreement shall terminate on the Series 1998-3 Termination Date;
provided, however, that the indemnification and payment
provisions of Article VI hereof, shall be continuing and shall
survive any termination of this Agreement. The provisions of
Sections 9.01 and 9.11 hereof shall survive any termination or
cancellation of this Agreement.
Section 9.02 Waivers; Amendments. No failure or delay
on the part of the Administrative Agent, any Managing Agent or
any Purchaser in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or remedy preclude
any other further exercise thereof or the exercise of any other
power, right or remedy. The rights and remedies herein provided
shall be cumulative and nonexclusive of any rights or remedies
provided by law. Any provision of this Agreement may be amended
or waived if, but only if, such amendment or waiver is in writing
and is signed by the Transferor and the Required Securityholders
(and, if Article VII or the rights or duties of the
Administrative Agent or the Managing Agents are affected thereby,
by the Administrative Agent or the Managing Agents, as
applicable); provided, however, that, no such amendment or waiver
shall, unless signed by each Conduit Purchaser and/or each
Alternate Purchaser directly affected thereby, (A) increase the
Commitment Amount of an Alternate Purchaser, (B) reduce the
amount of the Class A Invested Amount, the Class B Invested
Amount and/or the Class C Invested Amount or rate of interest to
accrue thereon or any fees or other amounts payable hereunder, or
(C) modify the definition of the term "Required Securityholder."
SECTION 9.03 GOVERNING LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES THAT A
FINAL JUDGMENT IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT IN ANY NEW YORK STATE COURT OR ANY FEDERAL COURT OF THE
UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, OR ANY
APPELLATE COURT WITH RESPECT TO ANY OF THE FOREGOING, SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON
THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO
THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT IN ANY NEW YORK STATE OR FEDERAL
COURT, OR ANY APPELLATE COURT WITH RESPECT TO ANY OF THE
FOREGOING. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
(c) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE AMONG ANY OF THEM ARISING
OUT OF, CONNECTED WITH, RELATING TO OR INCIDENTAL TO THE
RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR
THE OTHER PRINCIPAL AGREEMENTS.
Section 9.04 Integration. This Agreement together
with the other Principal Agreements and the Fee Letter contains
the final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and
thereof and shall constitute the entire agreements among the
parties hereto with respect to the subject matter hereof and
thereof superseding all prior oral or written understandings.
Section 9.05 Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken
together shall constitute one and the same Agreement.
Section 9.06 Headings. The headings in this Agreement
are for purposes of reference only and shall not limit or
otherwise affect the meaning or interpretation of any provisions
hereof.
Section 9.07 Notices. Every demand, notice, and
communication under this Agreement shall be in writing and shall
be deemed to have been duly given, made and received (i) one (1)
Business Day after it is delivered against receipt of registered
or certified mail or upon actual receipt of registered or
certified mail, postage prepaid, return receipt requested; (ii)
when delivered by courier with appropriate evidence of receipt;
or (iii) one (1) Business Day after it is transmitted via
facsimile transmission with appropriate evidence of receipt at
the following addresses of the recipient:
(a) in the case of the Transferor, to Fingerhut
Receivables, Inc. 4400 Baker Road, Suite F480, Minnetonka,
Minnesota 55343, Attention: President, Telecopy: (612) 932-
3302;
(b) in the case of the Servicer, to Fingerhut National
Bank, 3904 West Technology Circle, Suite 102, Sioux Falls,
South Dakota 57106, Attention: President, Telecopy: (605)
361-0986; and with a copy to: Fingerhut Companies, Inc.,
4400 Baker Road, Minnetonka, Minnesota 55343, Attention:
Treasurer, Telecopy: (612) 932-3302;
(c) in the case of the Conduit Purchasers, to
(1) Kitty Hawk Funding Corporation, c/o Lord
Securities Corporation, Two Wall Street, New
York, New York 10005, Attention: Richard
Taiano, Telecopy: (212) 346-9012,
(2) Falcon Asset Securitization Corporation, c/o
The First National Bank of Chicago, Suite
0596, 21st Floor, One First National Plaza,
Chicago, Illinois 60670, Attention: Brooks
Crankshaw, Telecopy: (312) 732-3205, and
(3) Four Winds Funding Corporation, 2 World
Financial Center, Attention: Howard Thompson,
Telecopy: (212) 266-7661;
(d) in the case of the Alternate Purchasers and
Managing Agents, to
(1) NationsBank, N.A., NationsBank Corporate
Center, 100 North Tryon Street, 10th Floor,
Charlotte, North Carolina 28255, Attention:
Michelle Heath, Telecopy: (704) 388-9169,
(2) The First National Bank of Chicago, Suite
0596, 21st Floor, One First National Plaza,
Chicago, Illinois 60670, Attention: Brooks
Crankshaw, Telecopy: (312) 732-3205, and
(3) Commerzbank Aktiengesellschaft, Chicago
branch, 311 South Wacker Drive, Suite 5800,
Chicago, Illinois 60606, Attention: Tim
Shortly, Telecopy: (312) 435-1486;
(e) in the case of the Administrative Agent, to
NationsBank, N.A., NationsBank Corporate Center, 100 North
Tryon Street, 10th Floor, Charlotte, North Carolina 28255,
Attention: Michelle Heath, Telecopy: (704) 388-9169; and
(f) in the case of any other Alternate Purchaser party
to this Agreement from time to time, to the address set
forth under such Alternate Purchaser's name on the signature
page to the Assignment and Assumption Agreement executed by
such Alternate Purchaser.
Any party may alter the address to which communications are to be
sent by giving notice of such change of address in conformity
with the provisions of this Section 9.07 for giving notice and by
otherwise complying with any applicable terms of this Agreement.
Section 9.08 Successors and Assigns. This Agreement
shall be binding on, and shall inure to the benefit of, the
parties hereto and their respective successors and assigns;
provided, however, that the Transferor may not assign any of its
rights or delegate any of its duties hereunder without the prior
written consent of the Administrative Agent and the Managing
Agents. No provision of this Agreement shall in any manner
restrict the ability of the Purchasers to assign, participate,
grant security interests in, or otherwise transfer any portion of
the Senior Securities of its related Purchaser Group or any
interest therein.
Section 9.09 Severability of Provisions. If any one
or more of the covenants, agreements, provisions or terms of this
Agreement shall for any reason whatsoever be held invalid, then
such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or
terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of
the Senior Securities or rights of the Administrative Agent,
Managing Agents and/or Purchasers thereof.
Section 9.10 Further Assurances. The Transferor
agrees to do and perform from time to time, any and all acts and
to execute any and all further instruments required or reasonably
requested by the Administrative Agent or the Managing Agents more
fully to effect the purposes of this Agreement in a manner
consistent with this Agreement.
Section 9.11 Non-Petition Covenant. Each party hereto
hereby covenants and agrees that, prior to the date that is one
year and one day after the payment in full, in the case of the
Trust and Transferor, of the Senior Securities, and, in the case
of any Conduit Purchaser, of all commercial paper and other debt
securities issued by such Conduit Purchaser, neither it nor any
Affiliate thereof will file any involuntary petition or otherwise
institute against, or join any other Person or entity in
instituting against, the Trust, Transferor or any Conduit
Purchaser, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under
any federal or state bankruptcy or similar law.
Section 9.12 Limited Recourse Against Transferor.
Notwithstanding anything to the contrary contained in this
Agreement, none of the Purchasers, the Managing Agents or the
Administrative Agent shall have any claim against the Transferor
in respect of any amounts payable on a recourse basis by the
Transferor hereunder, to the extent that there are not funds of
the Transferor available to pay such amounts (it being understood
that funds of the Transferor available for such purpose shall be
limited to all amounts distributed to the Transferor in respect
of the Transferor Interest, all amounts otherwise distributed to
the Transferor pursuant to the Pooling and Servicing Agreement
and Series Supplement and relating to a Series, and, with respect
to any payments made pursuant to Section 2.06 hereof, all amounts
available to be drawn by the Transferor under the FCI Note).
IN WITNESS WHEREOF, the parties have caused this Agree
ment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
FINGERHUT RECEIVABLES, INC.,
as Transferor
By: /s/ James M. Wehman
Name: James M. Wehman
Title: President and Treasurer
KITTY HAWK FUNDING CORPORATION,
as Conduit Purchaser
By: /s/ Richard L. Taiano
Name: Richard L. Taiano
Title: Vice President
FALCON ASSET SECURITIZATION
CORPORATION, as Conduit Purchaser
By: /s/ Brooks P. Crankshaw
Name: Brooks P. Crankshaw
Title: Authorized Signatory
FOUR WINDS FUNDING CORPORATION,
as Conduit Purchaser
By: /s/ Carl H. Jackson
Name: Carl H. Jackson
Title: Vice President
By: /s/ Gerald Levine
Name: Gerald Levine
Title: Vice President
NATIONSBANK, N.A.,
as Alternate Purchaser and Managing Agent
By: /s/ Robert R. Wood
Name: Robert R. Wood
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Alternate Purchaser and Managing Agent
By: /s/ Brooks R. Crankshaw
Name: Brooks R. Crankshaw
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT,
CHICAGO BRANCH, as Alternate Purchaser
and Managing Agent
By: /s/ Paul Karlin
Name: Paul Karlin
Title: Vice President
By: /s/ Carol Otten
Name: Carol Otten
Title: Assistant Vice President
NATIONSBANK, N.A.,
as Administrative Agent for the Purchasers
By: /s/ Robert R. Wood
Name: Robert R. Wood
Title: Vice President
SCHEDULE I
LIST OF CLOSING DOCUMENTS
(Attached).
SCHEDULE II
ALTERNATE PURCHASER COMMITMENT AMOUNTS
Class A Class B Class C
Alternate Purchaser Commitment Amount Commitment Amount Commitment Amount
NationsBank, N.A. $126,136,363.50 $3,409,090.88 $20,454,545.63
The First National
Bank of Chicago 126,136,363.50 3,409,090.88 20,454,545.63
Commerzbank
Aktiengesellschaft,
Chicago branch 84,090.909.00 2,272,727.25 13,636,363.75
Class Maximum
Invested Amount: $336,363,636.00 $9,090,909.00 $54,545,455.00
EXHIBIT A
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Reference is made to the Security Purchase Agreement
dated as of July 30, 1998 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the
"Security Purchase Agreement"), by and among Fingerhut
Receivables, Inc., as Transferor, certain Purchasers and Managing
Agents parties thereto, and NationsBank, N.A., as Administrative
Agent for such Purchasers. To the extent not defined herein,
capitalized terms used herein have the meanings assigned to such
terms in the Security Purchase Agreement.
[_______________], a [____________] corporation, in its
capacity as a [Conduit] [Alternate] Purchaser under the Security
Purchase Agreement (the "Assignor") and [__________], a
[___________] corporation (the "Assignee"), hereby agree as follows:
1. In consideration of the Assignee's payment of
$[___________] (the "Purchase Price"), the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases
and assumes from the Assignor, a [___]% interest in [its interest
in the Senior Securities of its Purchaser Group, the Class A
Invested Amount, the Class B Invested Amount and/or the Class C
Invested Amount,]1 [the related Purchaser Group Percentage of the
Class A Invested Amount, the Class B Invested Amount or Class C
Invested Amount,]2 and to such Assignor's rights and obligations
under the Security Purchase Agreement on [the applicable date]
(the "Purchase Date"). The Purchase Price shall be made on the
Purchase Date.3
2. The Assignor (i) represents and warrants that it
is the legal and beneficial owner of the interest being assigned
by it hereunder and that such interest is free and clear of any
Lien created by it; (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warran
ties or representations made in or in connection with the
Security Purchase Agreement, the other Principal Agreements or
any other instrument or document furnished pursuant thereto or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Security Purchase Agreement, the
other Principal Agreements, the Receivables or other Trust
Property or any such other instrument or document furnished
pursuant thereto; and (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial
condition of Transferor or Servicer or the performance or obser
vance by Transferor or Servicer of any of their respective
obligations under the Security Purchase Agreement, the other
Principal Agreements or any instrument or document furnished
pursuant thereto.
3. The Assignee (i) confirms that it has received a
copy of the Security Purchase Agreement, the Pooling and
Servicing Agreement, the Series Supplement and such other instruments,
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment
and Assumption Agreement and purchase such interest in the
Assignor's rights and obligations under the Security Purchase
Agreement; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent or any of its Affiliates,
the Managing Agents or any of their Affiliates, the Assignor or
any other Purchaser and based on such agreements, documents and
information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action
under the Security Purchase Agreement and the other Principal
Agreements; (iii) appoints and authorizes the Administrative Agent
[and the Managing Agent for the Assignor] to take such action as
agent on its behalf and to exercise such powers under the Security
Purchase Agreement, the other Principal Agreements and any other
instrument or document delivered pursuant thereto as are
delegated to the Administrative Agent [or Managing Agent, if
applicable,] by the terms thereof, together with such powers as
are reasonably incidental thereto and to enforce its respective
rights and interests in and under the Security Purchase Agreement,
the other Principal Agreements and the Trust Property; (iv) agrees
that it will perform in accordance with their terms all of
the obligations which by the terms of the Security Purchase
Agreement and the other Principal Agreements are required to be
performed by it as such Assignee; (vi) specifies as its address for
notices the office set forth beneath its name on the signature
pages hereof; and (vii) agrees that it will not institute against
any Conduit Purchaser any proceeding of the type referred to in
Section 9.11 of the Security Purchase Agreement prior to the date
which is one year and one day after the payment in full of all
commercial paper and other debt securities issued by any Conduit Purchaser.
[__. The Assignee shall have all of the rights and
obligations of the Assignor under the Security Purchase Agreement
and under the other Principal Agreements to which such Assignor
is or, immediately prior to such Assignment, was a party with
respect to such interest for all purposes of the Security
Purchase Agreement and such other Principal Agreements (it being
understood that the Assignee, as an assignee of an Alternate
Purchaser, shall be obligated to fund Additional Invested Amounts
under Section 2.02 of the Security Purchase Agreement in
accordance with the terms thereof, notwithstanding that the
related Conduit Purchaser was not so obligated), and the Assignor
shall relinquish its rights with respect to such interest for all
purposed of the Security Purchase Agreement and under the other
Principal Agreements to which such Assignor is or, immediately
prior to such Assignment, was a party.]4
[__. (i) The Assignee shall be the owner of the
assigned portion of the related Purchaser Group Percentage of the
Class A Invested Amount, the Class B Invested Amount or the Class
C Invested Amount, as applicable, (ii) the related Managing Agent
for such Assignor will act as the Managing Agent for the
Assignee, with all corresponding rights and powers, express or
implied, granted to the related Managing Agent under the Security
Purchase Agreement or under the other Principal Agreements, (iii)
the Assignee and its Liquidity Providers and Program Support
Providers and other related parties shall have the benefit of all
the rights and protections provided to the Assignor and its
Liquidity Providers and Program Support Providers and other
related parties, respectively, in the Security Purchase Agreement
and in the other Principal Agreements (including, without
limitation, any limitation on recourse against the Assignor or
related parties, any agreement not to file or join in the filing
of a petition to commence an insolvency proceeding against the
Assignor, and the right to assign to another assignee as provided
in the Security Purchase Agreement), (iv) the Assignee shall
assume the Assignor's right to fund the assigned portion of the
related Purchaser Group Percentage of any Additional Invested
Amount requested by the Transferor subsequent to the Effective
Date and all other obligations, if any, of the Assignor under and
in connection with the Security Purchase Agreement or any other
Principal Agreements, and the Assignor shall be released from
such obligations, in each case to the extent of this Assignment
and Assumption Agreement, and the obligations of the Assignor and
Assignee shall be several and not joint, (v) all distributions in
respect of the related Purchaser Group Percentage of the Class A
Invested Amount, the Class B Invested Amount or the Class C
Invested Amount, as applicable, shall be made to the applicable
Managing Agent, on behalf of the Assignor and Assignee on a pro
rata basis according to their respective interests, (vi) the
defined terms and other terms and provisions of the Security
Purchase Agreement and the other Principal Agreements shall be
interpreted in accordance with the foregoing, and (vii) if
requested by the applicable Managing Agent, the Assignor and
Assignee will execute and deliver such further agreements and
documents and take such other actions as such Managing Agent may
reasonably request to evidence and give effect to the foregoing.]5
4. This Assignment and Assumption Agreement shall be
effective on the date hereof (the "Effective Date") [upon receipt
by the Administrative Agent and the Transferor of this Assignment
and Assumption Agreement duly executed by Assignor, Assignee and
the Managing Agent for the Assignor]6.
5. As of the Effective Date, (i) the Assignee shall
be a party to the Security Purchase Agreement and, to the extent
provided in this Assignment and Assumption Agreement, have the
rights and obligations of a [Conduit] [Alternate] Purchaser
thereunder and (ii) the Assignor shall, to the extent provided in
this Assignment and Assumption Agreement, relinquish its rights
and be released from its obligations under the Security Purchase
Agreement.
6. Upon such acceptance and recording, from and after
the Effective Date, the Managing Agent shall make all payments
received by it in respect of the interest assigned hereby to the
Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Security Purchase Agreement for
periods prior to the Effective Date directly between themselves.
7. This Assignment and Assumption Agreement may be
executed by one or more of the parties on any number of separate
counterparts, and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.
8. This Assignment and Assumption Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Assumption Agreement to be executed by their
respective officers thereunto duly authorized as of the __ day of
______, 19__.
[ASSIGNOR]
By:_______________________
Name:
Title:
[ASSIGNEE]
By:______________________
_ Name:
Title:
Address for notices:
[NAME]
_____________
_____________
Attn: ___________
Telecopy: (___) ___-____
Consented to this __ day
of ________, 199_
[MANAGING AGENT], as
Managing Agent
By: ________________________
Name:
Title:
[The following acknowledgment only applies with respect to an
Assignment between an Alternate Purchaser and another Person].
Acknowledged to this __ day
of ________, 199_
NATIONSBANK, N.A.,
as Administrative Agent
By: ________________________
Name:
Title:
FINGERHUT RECEIVABLES, INC.,
as Transferor
By: ________________________
Name:
Title:
EXHIBIT B
FORM OF INVESTMENT LETTER
[Date]
Fingerhut Receivables, Inc.
4400 Baker Road
Suite F480
Minnetonka, Minnesota 55343
Attn: Chief Financial Officer
and General Counsel
Bank of New York
White Clay Center
Route 273
Newark, Delaware 19711
Attn: Corporate Trust Specialized
Agency Services
Re: Fingerhut Master Trust; Purchase of the Senior Securities
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by
the undersigned (the "Purchaser") pursuant to Section 2.01(c) of
that certain Security Purchase Agreement dated as of July 30,
1998 (as the same may be amended, restated, supplemented or other
wise modified from time to time, the "Security Purchase
Agreement"), by and among Fingerhut Receivables, Inc., as
transferor (the "Transferor"), Kitty Hawk Funding Corporation, as
a Conduit Purchaser, Falcon Asset Securitization Corporation, as
a Conduit Purchaser, Four Winds Funding Corporation, as a Conduit
Purchaser, NationsBank, N.A., in its capacity as a Managing Agent
and individually as an Alternate Purchaser, The First National
Bank of Chicago, in its capacity as a Managing Agent and
individually as an Alternate Purchaser, Commerzbank
Aktiengesellschaft, Chicago branch, in its capacity as a Managing
Agent and individually as an Alternate Purchaser, and
NationsBank, N.A., as Administrative Agent for such Purchasers.
To the extent not defined herein, capitalized terms used herein
have the meanings assigned to such terms in the Security Purchase
Agreement. The undersigned Purchaser hereby represents to and
agrees with the Transferor as follows:
(a) The Purchaser understands that the Senior
Securities have not been and will not be registered under the
Securities Act or any other applicable securities law and agrees
that the Senior Securities may not be offered or sold by it
except in accordance with Rule 144A under the Securities Act or
pursuant to any other exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act
and, accordingly, that the Senior Securities may not be offered,
sold, transferred, pledged, hypothecated or otherwise disposed of
except as permitted in the Security Purchase Agreement, the
Pooling and Servicing Agreement and the Series Supplement.
(b) The Purchaser is an Accredited Investor and it has
such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an
investment in the Senior Securities. It is aware that it may be
required to bear the economic risk of an investment in the Senior
Securities for an indefinite period of time, and it is able to
bear such risk until the Series 1998-3 Termination Date.
(c) Neither the Transferor nor any person representing
the Transferor has made any representation to the Purchaser with
respect to the Transferor or the offer or sale of the Senior
Securities other than as set forth in the Security Purchase
Agreement and the other Principal Agreements (and in any document
delivered pursuant to the Security Purchase Agreement), which
have been delivered to it, and upon which it is relying in making
its investment decision with respect to the Senior Securities.
The Purchaser has had the opportunity to ask questions and to
obtain information concerning the Transferor, the Servicer, the
Trust and the Senior Securities, has received adequate
information concerning the Transferor, the Servicer, the Trust
and the Senior Securities to make an informed investment decision
with respect to its purchase of an interest in the Senior
Securities, and acknowledges that an investment in the Senior
Securities involves special considerations.
(d) The Purchaser will not offer, sell, transfer,
pledge, hypothecate or otherwise dispose the Senior Securities
except in accordance with the applicable provisions of the Series
Supplement, including Section 10 thereof, and the Pooling and
Servicing Agreement, including Article VI thereof.
(e)(i) The Purchaser understands that each of the
Class A Securities, Class B Securities and the Class C Securities
held by it will contain the following legend:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT
OF FINGERHUT RECEIVABLES, INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"))
THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A
PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE") THAT IS SUBJECT TO SECTION 4975
OF THE CODE, (III) A GOVERNMENTAL PLAN, AS DEFINED IN SECTION
3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH
IS, TO A MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" (AS DEFINED IN 29 C.F.R.
SECTION 2510.3-101 OR OTHERWISE UNDER ERISA) BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING "PLAN
ASSETS" OF ANY SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR
PURPOSES OF CLAUSE (IV) AND THIS CLAUSE (V), ANY INSURANCE
COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES THAT THIS SECURITY MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND
ONLY PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO AN
INSTITUTIONAL INVESTOR THAT THE HOLDER REASONABLY BELIEVES AS A
QUALIFIED INSTITUTIONAL BUYER WITH THE MEANING OF RULE 144A
("QIB") PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR
THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, OR TO THE TRANSFEROR. EACH SECURITY
OWNER BY ACCEPTING A BENEFICIAL INTEREST IN THIS SECURITY IS
DEEMED TO REPRESENT AND WARRANT THAT IT IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER
QIB. THE TRANSFER OF THIS SECURITY IS SUBJECT TO CERTAIN
CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. EACH CLASS [A] [B] [C] SECURITY OWNER BY
ACCEPTING A BENEFICIAL INTEREST IN THIS SECURITY FURTHER
REPRESENTS AND WARRANTS FOR THE BENEFIT OF FINGERHUT RECEIVABLES,
INC. THAT SUCH PURCHASER IS NOT AND WILL NOT BECOME A
PARTNERSHIP, SUBCHAPTER S CORPORATION OR GRANTOR TRUST FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES FOR SO LONG AS SUCH PURCHASER
HOLDS A BENEFICIAL INTEREST IN THIS SECURITY.
THIS SECURITY MAY NOT BE ACQUIRED BY OR SOLD, TRADED OR
TRANSFERRED TO A PERSON WHO IS NOT EITHER (A) (I) A CITIZEN OR
RESIDENT OF THE UNITED STATES, (II) A CORPORATION, PARTNERSHIP OR
OTHER ENTITY ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES
OR ANY POLITICAL SUBDIVISION THEREOF OR (III) A PERSON NOT
DESCRIBED IN (I) OR (II) WHOSE OWNERSHIP OF THE CLASS [A] [B]
[C] SECURITIES IS EFFECTIVELY CONNECTED WITH SUCH PERSON'S
CONDUCT OF A TRADE OR BUSINESS WITHIN THE UNITED STATES (WITHIN
THE MEANING OF THE CODE) AND ITS OWNERSHIP OF ANY INTEREST IN A
CLASS [A] [B] [C] SECURITY WILL NOT RESULT IN ANY WITHHOLDING
OBLIGATION WITH RESPECT TO ANY PAYMENTS WITH RESPECT TO THE CLASS
[A] [B] [C] SECURITIES BY ANY PERSON (OTHER THAN WITHHOLDING,
IF ANY, UNDER SECTION 1446 OF THE CODE) OR (B) AN ESTATE THE
INCOME OF WHICH IS INCLUDIBLE IN GROSS INCOME FOR UNITED STATES
FEDERAL INCOME TAX PURPOSES OR ANY TRUST IF A COURT WITHIN THE
UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER THE
ADMINISTRATION OF THE TRUST AND ONE OR MORE UNITED STATES
FIDUCIARIES HAVE THE AUTHORITY TO CONTROL ALL SUBSTANTIAL
DECISIONS OF THE TRUST.
NO SALE, ASSIGNMENT, PARTICIPATION, PLEDGE, HYPOTHECATION,
TRANSFER OR OTHER DISPOSITION OF THIS SECURITY (OR ANY INTEREST
THEREIN) SHALL BE MADE UNLESS THE TRANSFEROR SHALL HAVE GRANTED
ITS PRIOR CONSENT THERETO, WHICH CONSENT MAY NOT BE UNREASONABLY
WITHHOLD. THIS SECURITY MAY NOT BE ACQUIRED, SOLD, TRADED OR
TRANSFERRED, NOR MAY AN INTEREST IN THIS SECURITY BE MARKETED, ON
OR THROUGH (I) AN "ESTABLISHED SECURITIES MARKET" WITHIN THE
MEANING OF SECTION 7704(b) (1) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER, INCLUDING,
WITHOUT LIMITATION, AN OVER-THE-COUNTER-MARKET OR AN INTERDEALER
QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL
QUOTATIONS OF (II) A "SECONDARY MARKET" WITHIN THE MEANING OF
SECTION 7704(b)(2) OF THE CODE AND ANY PROPOSED, TEMPORARY OR
FINAL TREASURY REGULATION THEREUNDER, INCLUDING A MARKET WHEREIN
INTERESTS IN THE CLASS [A] [B] [C] SECURITIES ARE REGULARLY
QUOTED BY ANY PERSON MAKING A MARKET IN SUCH INTERESTS AND A
MARKET WHEREIN ANY PERSON REGULARLY MAKES AVAILABLE BID OR OFFER
QUOTES WITH RESPECT TO INTERESTS IN THE CLASS [A] [B] [C]
SECURITIES AND STANDS READY TO EFFECT BUY OR SELL TRANSACTIONS AT
THE QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTHERS.
(f) The Purchaser is not subscribing to purchase an
interest in the Senior Securities as a result of or subsequent to
any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any seminar
or meeting, or any solicitation of a subscription by a Person not
previously known to it in connection with investments in
securities generally.
(g) The Purchaser represents and warrants (i) it is
duly authorized and empowered to execute, deliver and perform the
Security Purchase Agreement and to purchase an interest in the
Senior Securities, and has duly taken all requisite action in
connection therewith; (ii) the Person signing the Security
Purchase Agreement on behalf of the Purchaser has been duly
authorized by the Purchaser to do so; (iii) the Security Purchase
Agreement is a valid and binding legal obligation of the
Purchaser, enforceable against the Purchaser in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity
(whether considered in a suit at law or equity); and (iv) the
execution, delivery and performance of the Security Purchase
Agreement and the purchase of an interest in the Senior
Securities do not and will not conflict with, violate or
constitute a default under any applicable law or regulation
(without considering the effect of any federal, state or other
securities laws), the Purchaser's constituent documents or any
agreement or arrangement to which the Purchaser is a party or by
which it may be bound.
(h) The Purchaser is not acting in a fiduciary
capacity in purchasing an interest in the Senior Securities.
(i) All information which the Purchaser has furnished
and is furnishing to the Transferor, including, without
limitation, the representation as to the Purchaser's status as an
Accredited Investor and all other representations contained in
the Security Purchase Agreement, is correct and complete as of
the date of the Security Purchase Agreement; the Purchaser
acknowledges that the Transferor and others will rely upon the
truth and accuracy of the foregoing acknowledgments,
representations and agreements and agrees that, if any of the
acknowledgments, representations or warranties made or deemed to
have been made by it or by its purchase of an interest in the
Senior Securities are no longer accurate, it shall promptly
notify the Transferor.
(j) The Purchaser is not an employee benefit plan. No
part of the funds to be used by the Purchaser to pay the purchase
price of an interest in the Senior Securities purchased under the
Security Purchase Agreement, directly or indirectly, constitutes
"plan assets" of any employee benefit plan (or its related
trust). The term "employee benefit plan" shall have the meaning
assigned to such term in Section 3 of ERISA; and the term "plan
assets" shall have the meaning specified in Department of Labor
Regulation Section 2510.3-101.
(k) This Investment Letter has been duly executed and
delivered and constitutes a valid and binding legal obligation of
the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law
or equity).
Please acknowledge your agreement to the terms of this
letter by signing in the space provided below. This letter may
be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together shall
constitute one and the same instrument.
Very truly yours,
[PURCHASER]
By:___________________________
Name:
Title:
ACKNOWLEDGED TO AS OF THE
DATE FIRST ABOVE WRITTEN:
FINGERHUT RECEIVABLES, INC.,
as Transferor,
By:________________________
Name:
Title:
_______________________________
1 Applicable to an Assignment (a) by a Conduit Purchaser to
an Alternate Purchaser in its Purchaser Group or (b) by an
Alternate Purchaser to another Person.
2 Applicable to an Assignment by a Conduit Purchaser to a
Conduit Assignee.
3 This Section will need to be revised if the Purchase Price
will be made by a Conduit Assignee to the related Conduit
Purchaser on two or more Commercial Paper maturity dates.
4 This Section is applicable if the Assignment is from an
Alternate Purchaser to another Person.
5 This Section is applicable if the Assignment is from a
Conduit Purchaser to a Conduit Assignee.
6 Applicable if the Assignment is from an Alternate Purchaser
to another Person.
FIRST AMENDMENT AGREEMENT
to
FINGERHUT RECEIVABLES, INC.
SECURITY PURCHASE AGREEMENT
This First Amendment Agreement (the "Amendment") is
executed as of the 29th day of July, 1999, by and among Fingerhut
Receivables, Inc. (the "Transferor"), Kitty Hawk Funding
Corporation ("Kitty Hawk"), Falcon Asset Securitization
Corporation ("Falcon"), Four Winds Funding Corporation ("Four
Winds" and, collectively with Kitty Hawk and Falcon, the "Conduit
Purchasers"), Bank of America, N.A. ("BofA" or the
"Administrative Agent"), The First National Bank of Chicago
("First Chicago"), Norddeutsche Landesbank Girozentrale, New York
Branch and/or Cayman Island Branch ("Norddeutsche"), and
Commerzbank Aktiengesellschaft, Chicago Branch ("Commerzbank" and
collectively with BofA, First Chicago and Norddeutsche, the
"Alternate Purchasers" and collectively with BofA and First
Chicago, the "Managing Agents").
W I T N E S S E T H:
WHEREAS, the Transferor, the Conduit Purchasers, the
Managing Agents, the Alternate Purchasers and the Administrative
Agent executed the Security Purchase Agreement dated as of July
30, 1998 (the "Security Purchase Agreement") Capitalized terms
used herein and not otherwise defined shall have the meanings
assigned to such terms in the Security Purchase Agreement.
WHEREAS, the parties hereto have agreed to amend the
Security Purchase Agreement on the terms and conditions
hereinafter set forth:
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendment of the Security Purchase
Agreement. The Security Purchase Agreement is, effective on the
date hereof and subject to the satisfaction of the condition
precedent set forth in Section 2 below, hereby amended as
follows:
1.1 The introductory paragraph and subsection (a) of
the definition of "Assignment Amount" contained in Section 1.01
of the Security Purchase Agreement shall be amended and restated
in its entirety to read as follows:
"Assignment Amount" shall mean, at any time
with respect to an Assignment:
(a) by a Conduit Purchaser in the Purchaser
Group with respect to which NationsBank is the
Managing Agent to an Alternate Purchaser in such
Purchaser Group, an amount equal to the sum of
(i) the lesser of (A) such Alternate Purchaser's
Pro Rata Share of the portion of the related
Purchaser Group Funded Portion of the Class A
Invested Amount, if any, being assigned at such
time and (B) such Alternate Purchaser's unused
Class A Commitment Amount, (ii) the lesser of (A)
such Alternate Purchaser's Pro Rata Share of the
portion of the related Purchaser Group Funded
Portion of the Class B Invested Amount, if any,
being assigned at such time and (B) such
Alternate Purchaser's unused Class B Commitment
Amount and (iii) the lesser of (A) such Alternate
Purchaser's Pro Rata Share of the portion of the
related Purchaser Group Funded Portion of the
Class C Invested Amount, if any, being assigned
at such time and (B) such Alternate Purchaser's
unused Class C Commitment Amount;"
1.2 The definitions of "Conduit Assignee," "Funding
Period," and "Specified Termination Date" contained in Section
1.01 of the Security Purchase Agreement shall be amended and
restated in their entirety to read as follows:
"`Conduit Assignee" shall mean, with respect
to any Purchaser Group, any commercial paper
conduit administered by the applicable Managing
Agent and designated from time to time to accept
an Assignment from the related Conduit Purchaser
(and thus becoming a Conduit Purchaser hereunder)
of all or a portion of the related Purchaser
Group Funded Portion of the Class A Invested
Amount, the Class B Invested Amount and the Class
C Invested Amount."
"`Funding Period" shall mean each period
determined pursuant to Section 2.03 to which all
or a portion of each Purchaser Group Funded
Portion of the Invested Amount is allocated for
the purposes of determining the Cost of Funds for
such Invested Amount."
"`Specified Termination Date" shall mean
July 27, 2000, or such later date to which the
Specified Termination Date may be extended in
accordance with Section 2.05 hereof."
1.3 The first sentence of Section 2.02 of the Security
Purchase Agreement is hereby amended and restated in its entirety
to read as follows:
"Each Conduit Purchaser, through its respective
Managing Agent, may (but is not committed to), prior to
the Increase Termination Date and subject to the
provisions of Section 6.15 of the Pooling and Servicing
Agreement (including the provisions permitting
allocation of Additional Invested Amounts other than by
Purchaser Group Percentage), purchase the related
Purchaser Group Percentage of any Additional Class A
Invested Amount, Additional Class B Invested Amount and
Additional Class C Invested Amount from time to time
requested by the Transferor from the Purchasers in
accordance with the procedures described in Section
6.15 of the Pooling and Servicing Agreement."
1.4 Section 2.03 of the Security Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
"Section 2.03 Selection of Funding Periods.
With respect to any portion of the Invested Amount
which is funded by a Conduit Purchaser through the
issuance of Commercial Paper, the Transferor may,
subject to the applicable Managing Agent's approval and
the limitations described below, request that the
Invested Amount so funded by a Conduit Purchaser be
allocated among one or more Funding Periods, so that
the aggregate amounts so allocated with respect to such
Conduit Purchaser at all times shall equal the Invested
Amount held by such Conduit Purchaser. No such Funding
Period applicable to Invested Amounts funded by the
issuance of Commercial Paper shall be longer than 270
days and no such Funding Period applicable to Invested
Amounts funded other than by the issuance of Commercial
Paper shall be longer than one month. The Transferor
shall give each Managing Agent irrevocable notice by
telephone of the new requested Funding Period(s) at
least one (1) Business Day prior to the expiration of
any then existing Funding Period; provided, however,
that the applicable Conduit Purchaser or the related
Managing Agent may select any such new Funding Period
if (1) the Transferor fails to provide such notice on a
timely basis or (ii) such Conduit Purchaser or the
related Managing Agent determines, in its sole
discretion, that the Funding Period requested by the
Transferor is unavailable or for any reason
commercially undesirable. Notwithstanding the
foregoing, if the Transferor requests that the Invested
Amount then held by any Conduit Purchaser be allocated
to more than one Funding Period during any calendar
week, the Transferor will pay to the Administrative
Agent, for distribution to such Conduit Purchaser, one
hundred dollars ($100.00) for the first additional
Funding Period requested from such Conduit Purchaser
during that week and two hundred fifty dollars
($250.00) for each additional Funding Period requested
from such Conduit Purchaser during that week, such
amount to be paid in accordance with the terms of the
Series Supplement."
1.5 The last sentence of Subsection 2.04(a) of the
Security Purchase Agreement is hereby amended and restated in its
entirety to read as follows:
"In the event that the Interest Payment received by the
Administrative Agent on any day is insufficient to
fully pay the accrued and unpaid interest described in
clauses (i), (ii) and (iii) above, such Interest
Payment shall be allocated pro rata among the
applicable Purchaser Groups (based upon the respective
Purchaser Group Funded Portions of the Class A Invested
Amount, the Class B Invested Amount and the Class C
Invested Amount, as applicable) and further allocated
pro rata among the Purchasers within each Purchaser
Group (based upon each Purchaser's funded portion of
the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount, as applicable)
unless otherwise agreed among the Purchasers in such
Purchaser Group."
1.6 Subsection 2.04(b) of the Security Purchase
Agreement is hereby amended and restated in its entirety to read
as follows:
"(b) On each day on which the Administrative
Agent receives a payment under the Pooling and
Servicing Agreement or Series Supplement in respect of
Program Fees, Class A Facility Usage Fees, Class B
Facility Usage Fees, Class C Facility Usage Fees or
Facility Unused Fees, the Administrative Agent shall
distribute such amounts to the applicable Managing
Agent, for the benefit of the applicable Purchaser(s)
in the related Purchaser Group, an amount equal to such
Purchaser Group's pro rata share of such fees (based
upon the respective Purchaser Group Funded Portions of
the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount, as
applicable)."
1.7 Subsections 2.04(d) and 2.04(e) of the Security
Purchase Agreement are hereby amended and restated in their
entirety to read as follows:
"(d) On each Business Day on which the
Administrative Agent receives a payment in respect of
the principal of the Senior Securities pursuant to the
Pooling and Servicing Agreement, the Administrative
Agent shall distribute, to each Managing Agent, for the
benefit of the applicable Purchaser(s) in the related
Purchaser Group, the related Purchaser Group's pro rata
share of the Class A Principal, the Class B Principal
and the Class C Principal (based upon the respective
Purchaser Group Funded Portions of the Class A Invested
Amount, the Class B Invested Amount and the Class C
Invested Amount, as applicable).
(e) All amounts to be paid or deposited by
the Transferor or the Servicer under this Agreement
shall be paid or deposited in accordance with the terms
hereof no later than 2:00 p.m. (New York City time) on
the day when due. All distributions by the
Administrative Agent to the Managing Agents hereunder
shall be made by wire transfer of immediately available
funds to such depository account as each such Managing
Agent directs the Administrative Agent in writing prior
to the applicable Distribution Date. Each Managing
Agent shall further distribute the amounts received by
it in accordance with subsection (a), (b), (c) and (d)
of this Section 2.04 to the applicable members of its
related Purchaser Group."
1.8 Section 7.06 of the Security Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
"Section 7.06 Payments by the Administrative
Agent. Unless specifically allocated to a Conduit
Purchaser or an Alternate Purchaser pursuant to Section
2.04 of this Agreement, all amounts received by the
Administrative Agent, if any, on behalf of the Conduit
Purchasers or Alternate Purchasers shall be paid by the
Administrative Agent to the applicable Managing Agent
(at the account specified in writing to Administrative
Agent) in accordance with the related Purchaser Group
Funded Portion on the Business Day received by the
Administrative Agent, unless such amounts are received
after 12:00 noon (New York time) on such Business Day,
in which case the Administrative Agent shall use its
reasonable efforts to pay such amounts to such Managing
Agent, on behalf of the related Purchaser, on such
Business Day, but, in any event, shall pay such amounts
to such Managing Agent, on behalf of the related
Purchaser, not later than 11:00 a.m. (New York time) on
the following Business Day."
1.9 Section 7.10 of the Security Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
"Section 7.10 Indemnification of the
Managing Agent. Each Alternate Purchaser agrees to
indemnify the related Managing Agent (to the extent not
reimbursed by the Transferor), ratably in accordance
with its respective Pro Rata Share, from and against
any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the
Managing Agent (in its capacity as such) in any way
relating to or arising out of this Agreement and any of
the other Principal Agreements or such action taken or
omitted by the Managing Agent hereunder or thereunder;
provided, however, that such Alternate Purchaser shall
not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements
resulting from the Managing Agent's gross negligence or
willful misconduct. Without limitation of the
foregoing, each Alternate Purchaser agrees to reimburse
the Managing Agent, ratably in accordance with its
respective Pro Rata Share, promptly upon demand for any
out-of-pocket expenses (including counsel fees)
incurred by the Managing Agent in connection with the
administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and the other
Principal Agreements, to the extent that such expenses
are incurred in the interests of or otherwise in
respect of the Conduit Purchasers or the Alternate
Purchasers hereunder and/or thereunder and to the
extent that the Managing Agent is not reimbursed for
such expenses by the Transferor."
1.10 Subsection 8.01(a) of the Security Purchase
Agreement is hereby amended and restated in its entirety to read
as follows:
"(a) At any time prior to the Specified
Termination Date, in the event that any Conduit
Purchaser has elected in its discretion not to fund its
portion of the Class A Initial Invested Amount, the
Class B Initial Invested Amount and the Class C Initial
Invested Amount or any Additional Invested Amount as
requested under Section 2.02 hereof, then the
Transferor shall have the right to direct the related
Managing Agent to designate the Alternate Purchasers in
the related Purchaser Group to fund, and such Alternate
Purchasers shall fund, such Class A Initial Invested
Amount, Class B Initial Invested Amount and/or Class C
Initial Invested Amount or such Additional Invested
Amount, as applicable, subject to the conditions set
forth in Section 6.15 of the Pooling and Servicing
Agreement. In addition, at any time, a Conduit
Purchaser may elect to assign all or a portion of its
interest in any of the Senior Securities of its
Purchaser Group to the Alternate Purchasers in its
Purchaser Group pursuant to this Section 8.01. Upon
any such election by a Conduit Purchaser or any such
direction by the Transferor, such Conduit Purchaser
shall make an Assignment and the Alternate Purchasers
in the related Purchaser Group shall accept such
Assignment and shall assume all or a portion of the
obligations of such Conduit Purchaser hereunder. In
connection with an Assignment from any Conduit
Purchaser to the Alternate Purchasers in its Purchaser
Group pursuant to this Section 8.01, each Alternate
Purchaser shall, on the date of such Assignment, pay to
such Conduit Purchaser its Pro Rata Share of the
applicable Assignment Amount against delivery by such
Conduit Purchaser of an Assignment and Assumption
Agreement. In the event that the Assignment Amount
paid by the Alternate Purchasers is less than the sum
of the portion of the applicable Purchaser Group Funded
Portion of the Invested Amount subject to such
Assignment plus the interest component of all
outstanding Commercial Paper with respect thereto, then
to the extent payments made hereunder in respect of the
Invested Amount exceed the Assignment Amount, such
excess amounts shall be remitted by the applicable
Managing Agent to the Conduit Purchaser.
Without limiting the foregoing, any Conduit
Purchaser may, from time to time, with prior or
concurrent notice to the Transferor and the Servicer,
in one transaction or a series of transactions, assign
to a Conduit Assignee all or part of the related
Purchaser Group Funded Portion of the Class A Invested
Amount, the Class B Invested Amount or the Class C
Invested Amount and such Conduit Purchaser's rights and
obligations under this Agreement and any other
Principal Agreements to which it is a party. Upon and
to the extent of such assignment by a Conduit Purchaser
to a Conduit Assignee, (i) such Conduit Assignee shall
be the owner of the assigned portion of the related
Purchaser Group Funded Portion of the Class A Invested
Amount, the Class B Invested Amount or the Class C
Invested Amount, as applicable, (ii) the related
Managing Agent for such Conduit Purchaser will act as
the Managing Agent for such Conduit Assignee, with all
corresponding rights and powers, express or implied,
granted to the related Managing Agent hereunder or
under the other Principal Agreements, (iii) such
Conduit Assignee and its Liquidity Providers and
Program Support Providers and other related parties
shall have the benefit of all the rights and
protections provided to such Conduit Purchaser and its
Liquidity Providers and Program Support Providers and
other related parties, respectively, herein and in the
other Principal Agreements (including, without
limitation, any limitation on recourse against such
Conduit Purchaser or related parties, any agreement not
to file or join in the filing of a petition to commence
an insolvency proceeding against such Conduit
Purchaser, and the right to assign to another Conduit
Assignee as provided in this paragraph), (iv) such
Conduit Assignee shall assume such Conduit Purchaser's
right to fund the assigned portion of the related
Purchaser Group Percentage of any Additional Invested
Amount requested by the Transferor subsequent to the
date of such assignment and all other obligations, if
any, of such Conduit Purchaser under and in connection
with this Agreement or any other Principal Agreements,
and such Conduit Purchaser shall be released from such
obligations, in each case to the extent of such
assignment, and the obligations of such Conduit
Purchaser and Conduit Assignee shall be several and not
joint, (v) all distributions in respect of the related
Purchaser Group Funded Portion of the Class A Invested
Amount, the Class B Invested Amount or the Class C
Invested Amount, as applicable, shall be made to the
applicable Managing Agent, on behalf of such Conduit
Purchaser and such Conduit Assignee on a pro rata basis
according to their respective interests, (vi) the
defined terms and other terms and provisions of this
Agreement and the other Principal Agreements shall be
interpreted in accordance with the foregoing, and (vii)
if requested by the applicable Managing Agent, the
parties will execute and deliver such further
agreements and documents and take such other actions as
such Managing Agent may reasonably request to evidence
and give effect to the foregoing. No Assignment by a
Conduit Purchaser to a Conduit Assignee of all or any
portion of the related Purchaser Group Portion of the
Class A Invested Amount, the Class B Invested Amount or
the Class C Invested Amount, as applicable, shall in
any way diminish the related Alternate Purchaser's
obligation under Section 8.01(a) to fund any Additional
Invested Amount not funded by such Conduit Purchaser or
Conduit Assignee."
1.11 Section 8.01(d) of the Security Purchase Agreement
is hereby amended and restated in its entirety to read as
follows:
"(d) If at any time prior to any assignment by the
Conduit Purchaser in the Purchaser Group with respect to
which NationsBank is the Managing Agent to a related
Alternate Purchaser as contemplated pursuant to this Section
8.01, the short term debt rating of any Alternate Purchaser
shall be "A-2" or "P-2" from Standard & Poor's or Moody's,
respectively, with negative credit implications, such
Alternate Purchaser, upon request of the Managing Agent,
shall, within 30 days of such request, assign its rights and
obligations hereunder to another financial institution
(which institution's short term debt shall be rated at least
"A-2" and "P-2" from Standard & Poor's and Moody's,
respectively, and which shall not be so rated with negative
credit implications). If the short term debt rating of an
Alternate Purchaser shall be "A-3" or "P-3", or lower, from
Standard & Poor's or Moody's, respectively (or such rating
shall have been withdrawn by Standard & Poor's or Moody's),
such Alternate Purchaser, upon request of the Managing
Agent, shall, within five (5) Business Days of such request,
assign its rights and obligations hereunder to another
financial institution (which institution's short term debt
shall be rated at least "A-2" and "P-2" from Standard &
Poor's and Moody's, respectively, and which shall not be so
rated with negative credit implications). In either such
case, if any such Alternate Purchaser shall not have
assigned its rights and obligations under this Agreement
within the applicable time period described above, the
Conduit Purchaser shall have the right to require such
Alternate Purchaser to accept the assignment of such
Alternate Purchaser's Pro Rata Share of the Purchaser Group
Funded Portion of the Class A Invested Amount, the Class B
Invested Amount and/or the Class C Invested Amount; such
assignment shall occur in accordance with the applicable
provisions of this Section 8.01. Such Alternate Purchaser
shall be obligated to pay to the Conduit Purchaser, in
connection with such assignment, in addition to the Pro Rata
Share of the Purchaser Group Funded Portion of the Class A
Invested Amount, the Class B Invested Amount and/or the
Class C Invested Amount, an amount equal to the interest
component of the outstanding Commercial Paper issued to fund
the portion of the Class A Invested Amount, the Class B
Invested Amount and/or the Class C Invested Amount being
assigned to such Alternate Purchaser, as reasonably
determined by the Managing Agent. Notwithstanding anything
contained herein to the contrary, upon any such assignment
to a downgraded Alternate Purchaser as contemplated pursuant
to the immediately preceding sentence, the aggregate
available amount of the Facility Limit, solely as it relates
to new Additional Invested Amounts by the Conduit Purchaser,
shall be reduced by the amount of unused Class A Commitment
Amount, Class B Commitment Amount and/or Class C Commitment
Amount of such downgraded Alternate Purchaser; it being
understood and agreed, that nothing in this sentence or the
two preceding sentences shall affect or diminish in any way
any such downgraded Alternate Purchaser's commitment to the
Transferor or such downgraded Alternate Purchaser's other
obligations and liabilities hereunder and under the other
Principal Agreements."
1.12 Section 9.02 of the Security Purchase Agreement is
hereby amended by replacing the term "Required Securityholders"
contained therein with the term "Required Senior
Securityholders."
SECTION 2. Condition Precedent. This Amendment shall
become effective as of the date hereof upon the execution hereof
by all of the parties hereto.
SECTION 3. Miscellaneous.
3.1 Ratification. As amended hereby, the Security
Purchase Agreement is in all respects ratified and confirmed and
the Security Purchase Agreement as so amended by this Amendment
shall be read, taken and construed as one and the same
instrument.
3.2 Representation and Warranty. The Transferor
represents and warrants that this Amendment has been duly
authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general
and by general principles of equity (whether considered in a suit
at law or in equity).
3.3 Governing Law; Parties. THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. Whenever in this Amendment there is a
reference made to any of the parties hereto, such reference shall
also be a reference to the successors and assigns of such party,
including, without limitation, any debtor-in-possession or
trustee. The provisions of this Amendment shall be binding upon
and shall inure to the benefit of the successors and assigns of
the parties hereto.
3.4 Counterparts; Severability. This Amendment may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. In case
any provision in or obligation under this Amendment shall be
invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions
or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
3.5 Expenses. The Transferor agrees to pay all
reasonable out-of-pocket expenses (including, without the fees
and expenses of Sidley & Austin, counsel to the Purchasers)
incurred by the Administrative Agent or the Purchasers in
connection with the negotiation, execution, delivery and
preparation of this Amendment.
IN WITNESS WHEREOF, the Transferor, the Purchasers, the
Managing Agents and the Administrative Agent have caused this
Amendment to be fully executed by their respective officers as of
the day and year first above written.
FINGERHUT RECEIVABLES, INC.,
as Transferor
By: /s/ Brian M. Szames
Name: Brian M. Szames
Title: President
KITTY HAWK FUNDING CORPORATION,
as Conduit Purchaser
By: /s/ Richard L. Taiano
Name: Richard L. Taiano
Title: Vice President
FALCON ASSET SECURITIZATION CORPORATION,
as Conduit Purchaser
By: /s/ Brooks P. Crankshaw
Name: Brooks P. Crankshaw
Title: Managing Director
FOUR WINDS FUNDING CORPORATION,
as Conduit Purchaser
By: /s/ James F. Ahern
Name: James F. Ahern
Title: Vice President
By: /s/ Carl H. Jackson
Name: Carl H. Jackson
Title: Vice President
BANK OF AMERICA, N.A.,
as Alternate Purchaser and Managing Agent
By: /s/ Elliott T. Lemon
Name: Elliott T. Lemon
Title: Vice President
NORDDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH AND/OR CAYMAN ISLAND
BRANCH, as Alternate Purchaser
By: /s/ Josef Haas
Name: Josef Hass
Title: Vice President
By: /s/ Stephanie Finnen
Name: Stephen K. Hunter
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Alternate Purchaser and Managing Agent
By: /s/ Brooks P. Crankshaw
Name: Brooks P. Crankshaw
Title: First Vice President
COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO
BRANCH, as Alternate Purchaser and
Managing Agent
By: /s/ Carl H. Jackson
Name: Carl H. Jackson
Title: Vice President
By: /s/ James F. Ahern
Name: James F. Ahern
Title: Vice President
BANK OF AMERICA, N.A.,
as Administrative Agent for the Purchasers
By: /s/ Elliott T. Lemon
Name: Elliott T. Lemon
Title: Vice President
PRIME II RECEIVABLES CORPORATION
Transferor
FDS NATIONAL BANK
Servicer
and
THE CHASE MANHATTAN BANK
Trustee
on behalf of the Series 1999-1 Certificateholders
____________________________
SERIES 1999-1 VARIABLE FUNDING SUPPLEMENT
Dated as of July 6, 1999
to
POOLING AND SERVICING AGREEMENT
Dated as of January 22, 1997
____________________________
Class A Variable Funding Certificates, Series 1999-1
Class B Variable Funding Certificates, Series 1999-1
PRIME CREDIT CARD MASTER TRUST II
TABLE OF CONTENTS
SECTION 1. Designation 1
SECTION 2. Definitions 1
SECTION 3. Reassignment and Certain Transfer Terms 19
SECTION 4. Delivery and Payment for the Series 1999-1
Certificates 19
SECTION 5. Depositary; Form of Delivery of Series
1999-1 Certificates. 19
SECTION 6. Addition and Removal of Accounts 20
SECTION 7. Article IV of Agreement 21
Section 4.4 Rights of Certificateholders 21
Section 4.5 Collections and Allocation 21
Section 4.6 Application of Funds on Deposit
in the Collection Account for
the Series 1999-1 Certificates 21
Section 4.7 Coverage of Required Amounts
for the Series 1999-1
Certificates 32
Section 4.8 Investor Charge-Offs 34
Section 4.9 Reserve Account 35
Section 4.10 Excess Purchase Account 36
Section 4.11 Principal and Interest Funding
Accounts 37
Section 4.12 Proceeds Account 39
SECTION 8. Article V of the Agreement 40
Section 5.1 Distributions 40
Section 5.2 Monthly Certificateholders'
Statement. 40
Section 5.3 Annual Certificateholders' Tax
Statement 42
SECTION 9. Article VI of Agreement 42
Section 6.15 VFC Additional Invested Amounts 42
Section 6.16 Extension. 44
Section 6.17 Transfers of Class C Certificates;
Legends 45
Section 6.18 Transfers of Variable Funding
Certificates; Legends. 47
SECTION 10. Series 1999-1 Pay Out Events 48
SECTION 11. Successor Servicer and Delegation 51
SECTION 12. Successor Trustee 52
SECTION 13. Notices to Administrative Agent 52
SECTION 14. Charge Account Agreements and Credit
and Collection Policies 52
SECTION 15. Minimum Denominations 53
SECTION 16. Cash Equivalents 53
SECTION 17. Automatic Additional Accounts 53
SECTION 18. Series 1999-1 Termination 54
SECTION 19. Actions by Administrative Agent 54
SECTION 20. Periodic Finance Charges and Other Fees 54
SECTION 21. Rating Agency Condition 54
SECTION 22. Distribution Account 54
SECTION 24. Ratification of Agreement 54
SECTION 25. Counterparts 54
SECTION 26. GOVERNING LAW 55
SECTION 27. The Trustee. 55
SECTION 28. Instructions in Writing. 55
LIST OF EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT A-3 Form of Class C Certificate
EXHIBIT B Form of Extension Notice
EXHIBIT C Form of Investor Certificate Election Notice
EXHIBIT D Form of Investment Letter
EXHIBIT E Form of Servicer Report
SERIES 1999-1 VARIABLE FUNDING SUPPLEMENT, dated as of
July 6, 1999 (this "Variable Funding Supplement") by and among
PRIME II RECEIVABLES CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, as Transferor
(the "Transferor"), FDS NATIONAL BANK, a national banking
association organized and existing under the federal laws of the
United States, as Servicer (the "Servicer"), and THE CHASE
MANHATTAN BANK, a banking corporation organized and existing under
the laws of State of New York, as trustee (together with its
successors in trust thereunder as provided in the Agreement
referred to below, the "Trustee") under the Pooling and Servicing
Agreement dated as of January 22, 1997 (the "Agreement") among the
Transferor, the Servicer and the Trustee.
Section 6.9 of the Agreement provides, among other
things, that the Transferor and the Trustee may at any time and
from time to time enter into a supplement to the Agreement for the
purpose of authorizing the issuance by the Trustee to the
Transferor, for execution and redelivery to the Trustee for
authentication, one or more Series of Certificates.
Pursuant to this Variable Funding Supplement, the
Transferor and the Trustee shall create a new Series of Investor
Certificates and shall specify the Principal Terms thereof.
SECTION 1 Designation. There is hereby created a Series
of Investor Certificates to be issued pursuant to the Agreement
and this Variable Funding Supplement to be known generally as the
"Series 1999-1 Variable Funding Certificates." The Series 1999-1
Variable Funding Certificates shall be issued in two Classes,
which shall be designated generally as the Class A Variable
Funding Certificates, Series 1999-1 (the "Class A Variable Funding
Certificates"), and the Class B Variable Funding Certificates,
Series 1999-1 (the "Class B Variable Funding Certificates"). In
addition, there is also hereby created a third Class of interest
in the Trust which shall be deemed to be an "Investor Certificate"
for all purposes under the Agreement and this Variable Funding
Supplement, except as expressly provided herein, and which shall
be known as the Class C Certificates, Series 1999-1 (the "Class C
Certificates"). The Series 1999-1 Variable Funding Certificates
and the Class C Certificates are collectively referred to
sometimes in this Variable Funding Supplement as the "Series 1999-
1 Certificates". Series 1999-1 shall be included with Series 1997-
1 as a member of Group I. The Class C Certificates shall be
Transferor Retained Certificates so long as and to the extent held
of record by the Transferor.
SECTION 2 Definitions. In the event that any term or
provision contained herein shall conflict with or be inconsistent
with any provision contained in the Agreement, the terms and
provisions of this Variable Funding Supplement shall govern. All
Article, Section or subsection references herein shall mean
Article, Section or subsections of the Agreement, as amended or
supplemented by this Variable Funding Supplement except as
otherwise provided herein. All capitalized terms not otherwise
defined herein are defined in the Agreement. Each capitalized
term defined herein shall relate only to the Series 1999-1
Certificates and no other Series of Certificates issued by the
Trust.
"Administrative Agent" shall mean PNC Bank, National
Association, or any successor designated as the Administrative
Agent in the Class A Certificate Purchase Agreement and the Class
B Certificate Purchase Agreement.
"Amortization Period" shall mean the period commencing on the
Amortization Period Commencement Date and ending on the earlier to
occur of (i) the date of termination of the Trust pursuant to
Section 12.1 of the Agreement or (ii) the Series 1999-1
Termination Date.
"Amortization Period Commencement Date" shall mean, initially,
with respect to the Investor Certificates, the earlier of the
first day of the August 2002 Monthly Period and the Pay Out
Commencement Date, and, with respect to an Extension, the earlier
of the date specified as such in the Extension Notice and the Pay
Out Commencement Date.
"Assignee" shall have the meaning specified in subsection
6.17(a) of the Agreement.
"Annual Portfolio Turnover Rate" shall mean with respect to
any Business Day during a Monthly Period, the aggregate of
Receivables arising under Accounts from sales of goods and
services or cash advances, excluding any portion thereof
representing Periodic Finance Charges, Late Fees, annual
membership fees or other fees and similar charges during each of
the twelve Monthly Periods ending on the last day of the second
preceding Monthly Period divided by the average of the aggregate
Outstanding Balances of Receivables as of the last day of each
such Monthly Period.
"Available Reserve Amount" shall mean, for any Business Day,
the lesser of (i) the amount on deposit in the Reserve Account on
such Business Day (after giving effect to any deposit to, or
withdrawal from, the Reserve Account to be made with respect to
such Business Day), and (ii) the Required Reserve Amount as of
such Business Day.
"Base Rate" shall mean, with respect to the Investor
Certificates, the sum of (i) the weighted average of the
annualized Class A Certificate Rate, the annualized Class B
Certificate Rate and the annualized Class C Certificate Rate and
(ii) the Series Servicing Fee Percentage per annum.
"Carryover Discount Amount" shall mean, for Series 1999-1 for
any Business Day, the excess, if any, of (i) the sum of (A) the
product of the Discount Allocation Percentage and the Discount
Amount and (B) the Carryover Discount Amount for Series 1999-1 for
the preceding Business Day over (ii) the amount of Principal
Collections added to Total Finance Charge Collections for such
Series on such preceding Business Day.
"Class A Additional Payments" shall mean amounts payable
pursuant to Section 2.4 or 2.5 of the Class A Certificate Purchase
Agreement in an aggregate amount not exceeding, for any Business
Day, the product of (i) a fraction, the numerator of which is the
actual number of days from and including the preceding Business
Day to but excluding such Business Day and the denominator of
which is 360, (ii) 0.25% and (iii) the Class A Invested Amount for
such Business Day.
.
"Class A Agent" shall mean PNC Bank, National Association, or
any successor at the time designated as the Agent for the Class A
Certificateholders under the Class A Certificate Purchase
Agreement.
"Class A Carrying Cost Daily Factor" shall mean, on any
Business Day, the Class A Carrying Costs for such Business Day
divided by the Class A Investor Principal Balance for such
Business Day.
"Class A Carrying Costs" shall mean, for any Business Day, the
sum of the accrued Yield since the preceding Business Day on the
outstanding principal amount of the Class A Certificates. It is
understood and agreed that, with respect to any Fixed Period and
any portion of the Class A Investor Principal Balance for which
Yield is calculated based on the Commercial Paper Rate (i) the
Servicer shall make daily allocations of Class A Interest based on
the Commercial Paper Rate applicable to the immediately preceding
Fixed Period (or, in the case of any Fixed Period for which no
portion of the Class A Investor Principal Balance accrued Yield at
the Commercial Paper Rate during the immediately preceding Fixed
Period, the estimate provided by the Class A Agent pursuant to the
last sentence of the definition of Yield in the Class A
Certificate Purchase Agreement), and (ii) on the last day of each
Fixed Period the Servicer, based on the actual Commercial Paper
Rate for such Fixed Period, will adjust the amount of Class A
Interest deposited into the Interest Funding Account during the
related Fixed Period to reflect any difference between the
Commercial Paper Rate used to make daily allocations of Class A
Interest during such Fixed Period and the actual Commercial Paper
Rate for such Fixed Period.
"Class A Certificate Purchase Agreement" shall mean the Class
A Certificate Purchase Agreement, dated as of July 6, 1999, among
the Transferor, the Servicer, the purchasers of Class A
Certificates named therein and PNC Bank, National Association, as
the Class A Agent and the Administrative Agent, as amended from
time to time.
"Class A Certificate Rate" shall mean, with respect to the
Class A Certificates, the Class A Carrying Cost Daily Factor.
"Class A Certificateholder" shall mean any Person in whose
name a Class A Certificate is registered in the Certificate
Register.
"Class A Certificateholders' Interest" shall mean the portion
of the Series 1999-1 Certificateholders' Interest evidenced by the
Class A Certificates.
"Class A Certificates" shall mean any of the Certificates
executed by the Transferor and authenticated by or on behalf of
the Trustee, substantially in the form of Exhibit A-l hereto.
"Class A Daily Principal Amount" shall have the meaning
specified in subsection 4.6(e)(i) of the Agreement.
"Class A Default and Dilution Amount" shall mean, for any
Monthly Period, an amount equal to the summation of the products
of (i) the Class A Floating Allocation Percentage and (ii) the
Default and Dilution Amount, as determined for each Business Day
in that Monthly Period.
"Class A Floating Allocation Percentage" shall mean, with
respect to any Business Day, the percentage equivalent of a
fraction, the numerator of which is the Class A Invested Amount
for such Business Day and the denominator of which is the sum of
the amount of Principal Receivables in the Trust and the amount on
deposit in the Excess Funding Account as of the end of the
preceding Business Day.
"Class A Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class A Certificates on the
Issuance Date.
"Class A Interest" shall mean with respect to any Business Day
an amount equal to the product of the Class A Certificate Rate and
the Class A Investor Principal Balance as of the close of business
on such Business Day.
"Class A Invested Amount" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class A Initial
Invested Amount, plus (b) the aggregate principal amount of any
VFC Additional Class A Invested Amounts purchased by the Class A
Certificateholders through the end of the preceding Business Day
pursuant to Section 6.15 of the Agreement, minus (c) the aggregate
amount of principal payments made to the Class A
Certificateholders prior to such Business Day and minus (d) the
excess, if any, of the aggregate amount of unreimbursed Class A
Investor Charge-Offs for all Distribution Dates preceding such
date over Class A Investor Charge-Offs reimbursed pursuant to
subsection 4.8(c) of the Agreement prior to such Business Day.
"Class A Investor Charge-Off" shall have the meaning specified
in subsection 4.8(c) of the Agreement.
"Class A Investor Percentage" shall mean, for any Business
Day, the Class A Invested Amount as a percentage of the Invested
Amount on such Business Day.
"Class A Investor Principal Balance" shall have the meaning
assigned to such term in the Class A Certificate Purchase
Agreement.
"Class A Program Fee" shall mean the fees or other amounts
payable pursuant to subsection 2.3(a) of the Class A Certificate
Purchase Agreement, to the extent not included in Class A Carrying
Costs.
"Class A Required Amount" shall mean the amount, if any, by
which (x) the sum of the amounts described in subsections
4.6(a)(i), (v), (vi) or (viii) of the Agreement during the
Revolving Period or subsections 4.6(b)(i), (v), (vi) or (viii) or
4.6(c)(i), (v), (vi) or (viii) of the Agreement during the
Amortization Period, as applicable, plus the Class A Investor
Percentage of the amount described in subsection 4.6(a)(iv) of the
Agreement during the Revolving Period, or subsection 4.6(b)(iv) or
4.6(c)(iv) of the Agreement during the Amortization Period, as
applicable, exceeds (y) the Total Finance Charge Collections
available for application thereto pursuant to subsections 4.6(a),
(b) or (c) of the Agreement, as applicable, on any Business Day.
"Class A Supplemental Payments" shall mean, on any Business
Day, the sum of all unpaid amounts owed to the Administrative
Agent, the Class A Agent or any Class A Purchaser (as defined in
the Class A Certificate Purchase Agreement) pursuant to the Class
A Certificate Purchase Agreement which have arisen prior to such
Business Day (including, without limitation, amounts payable
pursuant to Section 2.4 or 2.5 of the Class A Purchase Agreement
on any Business Day in excess of the maximum amount of Class A
Additional Payments for such Business Day), other than Class A
Interest, Class A Additional Payments and the unpaid principal
amount of the Class A Certificates.
"Class A/B Default and Dilution Amount" shall mean, for any
Monthly Period, an amount equal to the summation of the products
of (i) the sum of the Class A Floating Allocation Percentage and
the Class B Floating Allocation Percentage and (ii) the Default
and Dilution Amount, as determined for each Business Day in that
Monthly Period.
"Class B Additional Payments" shall mean amounts payable
pursuant to Section 2.4 or 2.5 of the Class B Certificate Purchase
Agreement in an aggregate amount not exceeding, for any Business
Day, the product of (i) a fraction, the numerator of which is the
actual number of days from and including the preceding Business
Day to but excluding such Business Day and the denominator of
which is 360, (ii) 0.25% and (iii) the Class B Invested Amount for
such Business Day.
"Class B Agent" shall mean PNC Bank, National Association, or
any successor at the time designated as the Agent for the Class B
Certificateholders under the Class B Certificate Purchase
Agreement.
"Class B Carrying Cost Daily Factor" shall mean, on any
Business Day, the Class B Carrying Costs for such Business Day
divided by the Class B Investor Principal Balance for such
Business Day.
"Class B Carrying Costs" shall mean, for any Business Day, the
sum of the accrued Yield since the preceding Business Day on the
outstanding principal amount of the Class B Certificates. It is
understood and agreed that, with respect to any Fixed Period and
any portion of the Class B Investor Principal Balance for which
Yield is calculated based on the Commercial Paper Rate (i) the
Servicer shall make daily allocations of Class B Interest based on
the Commercial Paper Rate applicable to the immediately preceding
Fixed Period (or, in the case of any Fixed Period for which no
portion of the Class B Investor Principal Balance accrued Yield at
the Commercial Paper Rate during the immediately preceding Fixed
Period, the estimate provided by the Class B Agent pursuant to the
last sentence of the definition of Yield in the Class B
Certificate Purchase Agreement), and (ii) on the last day of each
Fixed Period the Servicer, based on the actual Commercial Paper
Rate for such Fixed Period, will adjust the amount of Class B
Interest deposited into the Interest Funding Account during the
related Fixed Period to reflect any difference between the
Commercial Paper Rate used to make daily allocations of Class B
Interest during such Fixed Period and the actual Commercial Paper
Rate for such Fixed Period.
"Class B Certificate Purchase Agreement" shall mean the Class
B Certificate Purchase Agreement, dated as of July 6, 1999, among
the Transferor, the Servicer, the purchasers of Class B
Certificates named therein and PNC Bank, National Association, as
the Class B Agent and the Administrative Agent, as amended from
time to time.
"Class B Certificate Rate" shall mean the Class B Carrying
Cost Daily Factor.
"Class B Certificateholder" shall mean any Person in whose
name a Class B Certificate is registered in the Certificate
Register.
"Class B Certificateholders' Interest" shall mean the portion
of the Series 1999-1 Certificateholders' Interest evidenced by the
Class B Certificates.
"Class B Certificates" shall mean any of the Certificates
executed by the Transferor and authenticated by or on behalf of
the Trustee, substantially in the form of Exhibit A-2 hereto
"Class B Daily Principal Amount" shall have the meaning
specified in subsection 4.6(e)(ii) of the Agreement.
"Class B Fixed/Floating Allocation Percentage" shall mean,
with respect to any Business Day, the percentage equivalent of a
fraction the numerator of which is equal to the Class B Invested
Amount for the day immediately following the last day of the
Revolving Period and the denominator of which is equal to the
greater of (x) the sum of the aggregate amount of Principal
Receivables in the Trust and the amount on deposit in the Excess
Funding Account as of the end of the preceding Business Day and
(y) the sum of the numerators used to calculate the allocation
percentages with respect to Principal Receivables of all Series
outstanding on such Business Day.
"Class B Floating Allocation Percentage" shall mean, with
respect to any Business Day, the percentage equivalent of a
fraction, the numerator of which is the Class B Invested Amount
for such Business Day and the denominator of which is the sum of
the total amount of Principal Receivables in the Trust and the
amount on deposit in the Excess Funding Account as of the end of
the preceding Business Day.
"Class B Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class B Certificates on the
Issuance Date.
"Class B Interest" shall mean, with respect to any Business
Day, an amount equal to the product of the Class B Certificate
Rate and the Class B Investor Principal Balance as of the close of
business on such Business Day.
"Class B Invested Amount" shall mean, when used with respect
to any Business Day, an amount (which shall not be less than zero)
equal to (a) the Class B Initial Invested Amount, plus (b) the
aggregate principal amount of any VFC Additional Class B Invested
Amounts purchased by the Class B Certificateholders through the
end of the preceding Business Day pursuant to Section 6.15 of the
Agreement, minus (c) the aggregate amount of principal payments
made to Class B Certificateholders prior to such Business Day,
minus (d) without duplication, the aggregate amount of (i) Class B
Investor Charge-Offs, (ii) Reallocated Principal Collections for
all prior Business Days (excluding Reallocated Principal
Collections on account of which the Class C Invested Amount has
been reduced to zero) and (iii) reductions to the Class B Invested
Amount made pursuant to the last sentence of subsection 4.7(c)
and plus (e) the aggregate amount allocated to the Class B
Certificates and available on all prior Business Days in
accordance with subsection 4.8(b) of the Agreement, for the
purpose of reimbursing amounts deducted pursuant to the foregoing
clause (d).
"Class B Investor Charge-Off" shall have the meaning specified
in subsection 4.8(b) of the Agreement.
"Class B Investor Percentage" shall mean, for any Business
Day, the Class B Invested Amount as a percentage of the Invested
Amount on such Business Day.
"Class B Investor Principal Balance" shall have the meaning
assigned to such term in the Class B Certificate Purchase
Agreement.
"Class B Principal Payment Commencement Date" shall mean,
following an Amortization Period Commencement Date, the earlier of
(a) the Business Day on which the Class A Invested Amount is paid
in full or, if there are no Principal Collections allocable to the
Series 1999-1 Certificates remaining after payments have been made
to the Class A Certificates on such Business Day, the Business Day
following the Business Day on which the Class A Invested Amount is
paid in full and (b) the Distribution Date following a sale or
repurchase of the Receivables as set forth in Section 2.4(d), 9.2,
10.2, 12.1 or 12.2 of the Agreement or Section 3 of this Variable
Funding Supplement.
"Class B Program Fee" shall mean the fees payable pursuant to
subsection 2.3(a) of the Class B Certificate Purchase Agreement,
to the extent not included in Class B Carrying Costs.
"Class B Required Amount" shall mean the amount, if any, by
which (x) the sum of the amounts described in subsections
4.6(a)(ii), (v), (vii) or (ix) of the Agreement during the
Revolving Period or subsections 4.6(b)(ii), (v), (vii) or (ix) or
4.6(c)(ii), (v), (vii) or (ix) of the Agreement during the
Amortization Period, as applicable, plus the Class B Investor
Percentage of the amount described in subsection 4.6(a)(iv) of the
Agreement during the Revolving Period, or subsection 4.6(b)(iv) or
4.6(c)(iv) of the Agreement during the Amortization Period, as
applicable, exceeds (y) the Total Finance Charge Collections
available for application thereto pursuant to subsections 4.6(a),
(b) or (c) of the Agreement, as applicable, on any Business Day.
"Class B Supplemental Payments" shall mean, on any Business
Day, the sum of all unpaid amounts owed to the Administrative
Agent, the Class B Agent or any Class B Purchaser (as defined in
the Class B Purchase Agreement) pursuant to the Class B
Certificate Purchase Agreement which have arisen prior to such
Business Day (including, without limitation, amounts payable
pursuant to Section 2.4 or 2.5 of the Class B Purchase Agreement
on any Business Day in excess of the maximum amount of Class B
Additional Payments for such Business Day), other than Class B
Interest, Class B Additional Payments and the unpaid principal
amount of the Class B Certificates.
"Class C Additional Interest" shall have the meaning specified
in subsection 6.17(c) of the Agreement.
"Class C Certificate Rate" shall mean 0% per annum; provided,
however, that such rate may be increased pursuant to the terms of
a supplemental agreement entered into in accordance with
subsection 6.17(c) of the Agreement.
"Class C Certificateholder" shall mean any Person in whose
name a Class C Certificate is registered in the Certificate
Register.
"Class C Certificateholders' Interest" shall mean the portion
of the Series 1999-1 Certificateholders' Interest evidenced by the
Class C Certificates.
"Class C Certificates" shall mean any of the Certificates
executed by the transferor and authenticated by or on behalf of
the Trustee, substantially in the form of Exhibit A-3 hereto.
"Class C Daily Principal Amount" shall have the meaning
specified in subsection 4.6(e)(iii) of the Agreement.
"Class C Fixed/Floating Allocation Percentage" shall mean,
with respect to any Business Day, the percentage equivalent of a
fraction the numerator of which is equal to the Class C Invested
Amount for the day immediately following the last day of the
Revolving Period and the denominator of which is equal to the
greater of (x) the sum of the aggregate amount of Principal
Receivables in the Trust and the amount on deposit in the Excess
Funding Account as of the end of the preceding Business Day and
(y) the sum of the numerators used to calculate the allocation
percentages with respect to Principal Receivables of all Series
outstanding on such Business Day.
"Class C Floating Allocation Percentage" shall mean, with
respect to any Business Day, the percentage equivalent of a
fraction, the numerator of which is the Class C Invested Amount
for such Business Day and the denominator of which is the sum of
the total amount of Principal Receivables in the Trust and the
amount on deposit in the Excess Funding Account as of the end of
the preceding Business Day.
"Class C Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class C Certificates on the
Issuance Date.
"Class C Interest" shall have the meaning specified in
subsection 6.17(c) of the Agreement.
"Class C Interest Shortfall" shall have the meaning specified
in subsection 6.17(c) of the Agreement.
"Class C Invested Amount" shall mean, when used with respect
to any Business Day, an amount (which shall not be less than zero)
equal to (a) the Class C Initial Invested Amount, plus (b) the
aggregate principal amount of any VFC Additional Class C Invested
Amounts purchased by the Class C Certificateholders through the
end of the preceding Business Day pursuant to Section 6.15 of the
Agreement, minus (c) the aggregate amount of principal payments
made to Class C Certificateholders prior to such Business Day,
minus (d) without duplication, the aggregate amount of (i) Class C
Investor Charge-Offs, (ii) Reallocated Principal Collections for
all prior Business Days (excluding Reallocated Principal
Collections applied at any time when the Class C Invested Amount
has been reduced to zero) and (iii) reductions to the Class C
Invested Amount made pursuant to the last sentence of subsection
4.7(c) and plus (e) the aggregate amount allocated to the Class C
Certificates and available on all prior Business Days in
accordance with subsection 4.9(b) of the Agreement, for the
purpose of reimbursing amounts deducted pursuant to the foregoing
clause (d).
"Class C Investor Charge-Off" shall have the meaning specified
in subsection 4.8(a) of the Agreement.
"Class C Investor Percentage" shall mean, for any Business
Day, the Class C Invested Amount as a percentage of the Invested
Amount on such Business Day.
"Class C Principal Payment Commencement Date" shall mean,
following an Amortization Period Commencement Date, the earlier of
(a) the Business Day on which the Class A Invested Amount and the
Class B Invested Amount are paid in full or, if there are no
Principal Collections allocable to the Series 1999-1 Variable
Funding Certificates remaining after payments have been made to
the Class A Certificates and the Class B Certificates on such
Business Day, the Business Day following the Business Day on which
the Class A Invested Amount and the Class B Invested Amount are
paid in full and (b) the Distribution Date following a sale or
repurchase of the Receivables as set forth in Section 2.4(d), 9.2,
10.2, 12.1 or 12.2 of the Agreement or Section 3 of this Variable
Funding Supplement.
"Closing Date" shall mean July 6, 1999.
"Commercial Paper Rate" shall, as the context requires, have
the meaning assigned to such term in the (i) Class A Certificate
Purchase Agreement, when used with respect to the Class A
Certificates, or (ii) Class B Certificate Purchase Agreement, when
used with respect to the Class B Certificates.
"Default and Dilution Amount" shall mean, on any Business Day,
an amount equal to the sum of the Default Amounts and Uncovered
Dilution Amounts for all Business Days in the then current Monthly
Period up to and including that Business Day.
"Discount Allocation Percentage" shall mean with respect to
Series 1999-1 and any Business Day the percentage equivalent of a
fraction the numerator of which is the Series 1999-1 Discount
Factor and the denominator of which is the Discount Factor on such
Business Day.
"Discount Amount" shall mean for any Business Day the Discount
Factor multiplied by the Outstanding Balance of Receivables
transferred to the Trust on such Business Day.
"Discount Factor" shall mean for any Business Day an amount
equal to the sum of each Series Discount Factor for all Series
then outstanding on such Business Day.
"Discount Trigger Event" shall mean for any Business Day (i)
the Discount Factor for the second preceding Monthly Period being
in excess of zero, (ii) the Transferor having elected, by not less
than 30 days' prior written notice to the Servicer, the Trustee,
the Rating Agencies and the Administrative Agent, to commence
discounting of purchases of Receivables, and (iii) the Rating
Agencies and the Administrative Agent on behalf of the Class A
Certificateholders and Class B Certificateholders having consented
in writing (a copy of which is delivered to the Trustee) to such
discounting of purchases of Receivables on or prior to such
Business Day and having not revoked such consent in writing (a
copy of which is to be delivered to the Trustee).
"Distribution Date" shall mean the 15th day of each month or,
if such 15th day is not a Business Day, the next succeeding
Business Day, and the Scheduled Series 1999-1 Termination Date,
commencing August 16, 1999.
"Election Date" shall have the meaning specified in subsection
6.16(a) of the Agreement.
"Election Notice" shall have the meaning specified in
subsection 6.16(a) of the Agreement.
"Enhancement" shall mean with respect to the Class A
Certificates, the subordination of the Class B Invested Amount and
the Class C Invested Amount and the Reserve Account and, with
respect to the Class B Certificates, the subordination of the
Class C Invested Amount and the Reserve Account; provided, however
that neither the Holders of the Class B Certificates nor the
Holders of the Class C Certificates nor any provider of amounts on
deposit in the Reserve Account shall be an "Enhancement Provider"
for the purposes of the Agreement or this Supplement.
"Enhancement Percentage" shall mean, 0.0% for each Business
Day from the Closing Date to and excluding the Determination Date
which occurs during the July 1999 Monthly Period, and thereafter
for each Business Day during the period commencing on a
Determination Date to but excluding the next following
Determination Date (an "Enhancement Percentage Determination
Period"), the greater of (i) the sum of the Excess Spread
Enhancement Cap Percentage for the Monthly Period immediately
preceding such Enhancement Percentage Determination Period and the
Payment Rate Enhancement Cap Percentage for such Monthly Period
and (ii) the Enhancement Percentage for the preceding Enhancement
Percentage Determination Period minus 1.0%; provided that so long
as no Reserve Account Increase Notice shall have been delivered,
the Enhancement Percentage shall not exceed 4.0%, and provided
further that if a Reserve Account Increase Notice shall have been
delivered, the Enhancement Percentage shall at all times
thereafter equal 100%.
"Excess Finance Charge Collections" shall mean, with respect
to any Business Day, as the context requires, either (x) the
amount described in subsection 4.6(a)(xvi) of the Agreement during
the Revolving Period or subsection 4.6(b)(xii) or 4.6(c)(xvi) of
the Agreement, as applicable, during the Amortization Period
allocated to the Series 1999-1 Certificates but available to cover
shortfalls in amounts paid from Finance Charge Collections for
other Series, if any, or (y) the aggregate amount of Total Finance
Charge Collections allocable to other Series in excess of the
amounts necessary to make required payments with respect to such
Series, if any, and available to cover shortfalls with respect to
the Series 1999-1 Certificates.
"Excess Purchase Account" shall have the meaning specified in
subsection 4.10(a) of the Agreement.
"Excess Spread Percentage" shall mean, for a Monthly Period,
(a) the lesser of (i) the aggregate Total Finance Charge
Collections deposited in the Collection Account on each Business
Day during such Monthly Period and (ii) the sum for each Business
Day during such Monthly Period of the product of the Floating
Allocation Percentage for Series 1999-1 and the amount of Finance
Charge Collections for such Business Day, minus (b) the sum for
each Business Day during such Monthly Period of the product of the
Floating Allocation Percentage for Series 1999-1 and the amount of
Finance Charge Collections for such Business Day described in
clause (e) of the definition of the term "Finance Charge
Collections" in Section 1.1 of the Agreement, minus (c) the
aggregate amounts withdrawn from the Collection Account during
such Monthly Period pursuant to subsections 4.6(a)(i) through
(vii), (x), (xi) or (xv), 4.6(b)(i) through (vii) or (x) or
4.6(c)(i) through (vii), (x), (xi) or (xv) of the Agreement, as
applicable, during such Monthly Period, expressed as an annualized
percentage of the average daily Invested Amount during such
Monthly Period.
"Excess Spread Enhancement Cap Percentage" shall mean, for any
Monthly Period, if the average of the Excess Spread Percentages
for such Monthly Period and the two preceding Monthly Periods (or
(i) in the case of the July 1999 Monthly Period, for such Monthly
Period, and (ii) in the case of the August 1999 Monthly Period,
for such Monthly Period and the July 1999 Monthly Period) is
greater than the percentage (if any) set forth in the left-hand
column below and less than or equal to the percentage (if any) set
forth in the middle column below, the percentage set forth
opposite such percentages in the right-hand column below:
Three-Month Average
Excess Spread Percentage Excess Spread
> =< Enhancement Cap Percentage
5.00% -- 0.00%
4.00% 5.00% 1.00%
3.00% 4.00% 2.00%
2.00% 3.00% 3.00%
-- 2.00% 4.00%
provided, that following any date on which the Excess Spread
Enhancement Cap Percentage for a Monthly Period shall have
increased from the percentage applicable to the prior Monthly
Period, such increased Excess Spread Enhancement Cap Percentage
shall not thereafter be reduced until the Monthly Period for which
both (i) the average of the Excess Spread Percentages for such
Monthly Period and the two preceding Monthly Periods (or, if less,
the number of Monthly Periods which have been completed following
the July 1999 Monthly Period) and (ii) the average of the Excess
Spread Percentages for such Monthly Period and the five preceding
Monthly Periods (or, if less, the number of Monthly Periods which
have been completed following the July 1999 Monthly Period) would,
based on the percentages (if any) set forth in the left-hand and
middle columns above, have resulted in a lower Excess Spread
Enhancement Cap Percentage in the right-hand column above, and the
amount of any reduction for a Monthly Period shall not exceed
1.00%.
"Extension" shall mean the procedure by which all or a portion
of the Investor Certificateholders consent to the extension of the
Revolving Period to the new Amortization Period Commencement Date
set forth in the Extension Notice, pursuant to Section 6.16 of the
Agreement.
"Extension Date" shall mean the last day of the June 2002
Monthly Period or if an Extension has already occurred, the date
of the next Extension Date set forth in the Extension Notice
relating to the Extension then in effect (or, if any such date is
not a Business Day, the next preceding Business Day).
"Extension Notice" shall have the meaning specified in
subsection 6.16(a) of the Agreement.
"Extension Opinion" shall have the meaning specified in
subsection 6.16(a) of the Agreement.
"Extension Tax Opinion" shall have the meaning specified in
subsection 6.16(a) of the Agreement.
"Fixed/Floating Allocation Percentage" shall mean for any
Business Day the percentage equivalent of a fraction, the
numerator of which is the Invested Amount for the day immediately
following the last day of the Revolving Period and the denominator
of which is the greater of (a) the sum of the aggregate amount of
Principal Receivables in the Trust and the amount on deposit in
the Excess Funding Account as of the end of the preceding Business
Day and (b) the sum of the numerators used to calculate the
allocation percentages with respect to Principal Receivables of
all Series outstanding on such Business Day.
"Fixed Period" shall, as the context requires, have the
meaning assigned to such term in the (i) Class A Certificate
Purchase Agreement, when used with respect to the Class A
Certificates, or (ii) Class B Certificate Purchase Agreement, when
used with respect to the Class B Certificates.
"Floating Allocation Percentage" shall mean for any Business
Day the sum of the applicable Class A Floating Allocation
Percentage, Class B Floating Allocation Percentage and the Class C
Floating Allocation Percentage for such Business Day.
"Initial Invested Amount" shall mean the aggregate initial
principal amount of the Series 1999-1 Certificates on the Issuance
Date.
"Interchange Collections" shall mean, with respect to Series
1999-1 on any Business Day, the product of the Floating Allocation
Percentage for Series 1999-1 and the amount of Interchange for
such Business Day.
"Interest Funding Account" shall have the meaning specified in
subsection 4.11(a) of the Agreement.
"Invested Amount" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A
Invested Amount as of such date, (b) the Class B Invested Amount
as of such date and (c) the Class C Invested Amount as of such
date.
"Investor Certificates" shall mean the Class A Certificates,
the Class B Certificates and the Class C Certificates.
"Investor Charge-Offs" shall mean the sum of Class A Investor
Charge-Offs, Class B Investor Charge-Offs and the Class C Investor
Charge-Offs.
"Investor Default Amount" shall mean, with respect to each
Business Day, an amount equal to the product of the aggregate
Default Amount for all Defaulted Accounts on such Business Day and
the Floating Allocation Percentage applicable for such Business
Day.
"Investor Percentage" shall mean for any Business Day, (a)
with respect to (i) Receivables in Defaulted Accounts or any
Uncovered Dilution Amount at any time, (ii) Finance Charge
Collections so long as no Pay Out Event has occurred with respect
to the Series 1999-1 or any other Series, and (iii) Principal
Collections during the Revolving Period, the Floating Allocation
Percentage and (b) with respect to (i) Finance Charge Collections
if a Pay Out Event has occurred with respect to the Series 1999-1
or any other Series and (ii) Principal Collections during the
Amortization Period, the Fixed/Floating Allocation Percentage.
"Investor Servicing Fee" shall mean for any Business Day, an
amount equal to the product of (i) a fraction, the numerator of
which is the actual number of days from and including the
preceding Business Day to but excluding such Business Day and the
denominator of which is the actual number of days in the year,
(ii) the Series Servicing Fee Percentage and (iii) the Invested
Amount for such Business Day.
"Investor Uncovered Dilution Amount" shall mean, with respect
to each Business Day, an amount equal to the product of the
Uncovered Dilution Amount for such Business Day and the Floating
Allocation Percentage applicable for such Business Day.
"Issuance Date" shall mean the initial date on which the
Investor Certificates are issued.
"Maximum Facility Amount" shall mean for any Business Day, the
sum of (i) the aggregate Commitments, as defined in the Class A
Certificate Purchase Agreement, plus (ii) the aggregate
Commitments, as defined in the Class B Certificate Purchase
Agreement on such Business Day.
"Minimum Transferor Percentage" shall mean 2.0%.
"Monthly Period" shall have the meaning specified in the
Agreement, except that the first Monthly Period with respect to
the Series 1999-1 Certificates shall begin on and include the
Closing Date and shall end on and include July 31, 1999.
"Net Finance Charge Portfolio Yield" shall mean, for Series
1999-1 with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is the
amount of Finance Charge Collections allocable to Series 1999-1
for such Monthly Period, calculated on a cash basis after
subtracting the Investor Default Amount applicable to Series 1999-
1 for such Monthly Period, and the denominator of which is the
average daily Invested Amount of Series 1999-1 during such Monthly
Period.
"Net Principal Collections" shall mean, for Series 1999-1 on
any Business Day, the sum of (i) the product, during the Revolving
Period, of the Floating Allocation Percentage for Series 1999-1
and, during the Amortization Period, of the Fixed/Floating
Allocation Percentage for Series 1999-1 and the amount of
Principal Collections on such Business Day minus on and after the
occurrence of and during the continuance of a Discount Trigger
Event (ii) the lesser of (a) the sum of (x) the product of the
Discount Allocation Percentage for Series 1999-1 and the Discount
Amount for such Business Day and (y) the Carryover Discount Amount
for Series 1999-1 for such Business Day and (b) the amount
determined in clause (i).
"Pay Out Commencement Date" shall mean the date on which a
Trust Pay Out Event is deemed to occur pursuant to Section 9.1 of
the Agreement or a Series 1999-1 Pay Out Event is deemed to occur
pursuant to Section 10 of this Variable Funding Supplement.
"Payment Rate Enhancement Cap Percentage" shall mean, for any
Monthly Period, if the average of the Payment Rate Percentages for
such Monthly Period and the two preceding Monthly Periods (or (i)
in the case of the July 1999 Monthly Period, for such Monthly
Period, and (ii) in the case of the August 1999 Monthly Period,
for such Monthly Period and the July 1999 Monthly Period) is
greater than the percentage (if any) set forth in the left-hand
column below and less than or equal to the percentage (if any) set
forth in the middle column below, the percentage set forth
opposite such percentages in the right-hand column below:
Three-Month Average
Payment Rate Percentage Payment Rate
=> < Enhancement Cap Percentage
30.00% -- 0.00%
25.00% 30.00% 1.00%
-- 25.00% 2.00%
provided, that following any date on which the Payment Rate
Enhancement Cap Percentage for a Monthly Period shall have
increased from the percentage applicable to the prior Monthly
Period, such increased Payment Rate Enhancement Cap Percentage
shall not thereafter be reduced until the Monthly Period for which
both (i) the average of the Payment Rate Percentages for such
Monthly Period and the two preceding Monthly Periods (or, if less,
the number of Monthly Periods which have been completed following
the July 1999 Monthly Period) and (ii) the average of the Payment
Rate Percentages for such Monthly Period and the five preceding
Monthly Periods (or, if less, the number of Monthly Periods which
have been completed following the July 1999 Monthly Period) would,
based on the percentages (if any) set forth in the left-hand and
middle columns above, have resulted in a lower Payment Rate
Enhancement Cap Percentage in the right-hand column above, and the
amount of any reduction for a Monthly Period shall not exceed
1.00%.
"Payment Rate Percentage" shall mean, for a Monthly Period,
the aggregate Net Principal Collections deposited into the
Collection Account during such Monthly Period, expressed as a
percentage of (i) during the Revolving Period, the Floating
Allocation Percentage for Series 1999-1 times the Principal
Receivables on the first day of such Monthly Period, and (ii)
during the Amortization Period, the Fixed/Floating Allocation
Percentage for Series 1999-1 times the Principal Receivables on
the first day of such Monthly Period.
"Portfolio Yield" shall mean for the Series 1999-1
Certificates, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is an
amount equal to the aggregate Total Finance Charge Collections
allocated to the Series 1999-1 Certificates for such Monthly
Period, calculated on a cash basis, minus the aggregate Investor
Default Amounts for each Business Day during such Monthly Period,
and the denominator of which is the average daily Invested Amount
during such Monthly Period.
"Principal Account" shall have the meaning specified in
subsection 4.11(a) of the Agreement.
"Principal Shortfalls" shall mean, as the context requires,
either (a) the amounts specified as such in the Supplement for any
other Series or (b) with respect to the Series 1999-1
Certificates, the amount specified as such in subsection 4.6(f) of
the Agreement.
"Proceeds Account" shall have the meaning specified in Section
4.12 of the Agreement.
"Rating Agency" shall mean each of Moody's and Standard &
Poor's.
"Rating Agency Condition" shall mean, with respect to any
action or series of related actions or proposed transaction or
series or related proposed transactions, that each Rating Agency
shall have notified the Administrative Agent in writing that such
action or series of related actions or proposed transaction or
series or related proposed transactions will not result in a
reduction or withdrawal of the rating of any commercial paper
notes or other short-term or intermediate term obligation issued
by any Structured Purchaser (as defined in either the Class A
Purchase Agreement or the Class B Purchase Agreement) or in a
reduction in any informal long-term rating assigned by such Rating
Agency to the Class A Certificates or the Class B Certificates.
"Reallocated Principal Collections" shall have the meaning
specified in subsection 4.7(c) of the Agreement.
"Required Class B Invested Amount" shall mean, (a) for any
Business Day during the Revolving Period, an amount equal to 12.5%
of the Class A Invested Amount on such Business Day or (b) for any
Business Day if, on or prior to such Business Day, there have been
any reductions in the Class B Invested Amount pursuant to clause
(d) of the definition of such term or if the Amortization Period
shall have commenced, an amount equal to the Required Class B
Invested Amount on the Business Day immediately preceding such
reduction or commencement; provided that from and after the Class
B Principal Payment Commencement Date, the Required Class B
Invested Amount shall equal $0.
"Required Class C Invested Amount" shall mean, (a) for any
Business Day during the Revolving Period, an amount equal to the
greater of (i) 10% of the Invested Amount on such Business Day or
(ii) 5% of the Maximum Facility Amount on such Business Day, or
(b) for any Business Day if, on or prior to such Business Day,
there have been any reductions in the Class C Invested Amount
pursuant to clause (d) of the definition of such term or if the
Amortization Period shall have commenced, an amount equal to the
Required Class C Invested Amount on the Business Day immediately
preceding such reduction or commencement; provided that from and
after the Class C Principal Payment Commencement Date, the
Required Class C Invested Amount shall equal $0.
"Required Reserve Amount" shall mean, with respect to any
Business Day, the product of (i) the Enhancement Percentage for
such Business Day, times (ii) during the Revolving Period, the
Invested Amount on such Business Day or, during the Amortization
Period, the Invested Amount on the last day of the Revolving
Period, provided that during the Amortization Period, the Required
Reserve Amount on any Business Day shall not exceed the Invested
Amount on such Business Day.
"Reserve Account" shall have the meaning specified in
subsection 4.9(a) of the Agreement.
"Reserve Account Increase Notice" shall mean a written notice
delivered by the Administrative Agent to the Servicer pursuant to
the Class A Certificate Purchase Agreement at the instruction of
the Class A Certificateholders or pursuant to the Class B
Certificate Purchase Agreement at the instruction of the Class B
Certificateholders stating that a Termination Event shall have
occurred thereunder and directing that the Enhancement Percentage
be increased to 100%.
"Revolving Period" shall mean (a) the period from and
including the Closing Date to, but not including, the Amortization
Period Commencement Date, or (b) with respect to an Extension, the
period beginning on the Extension Date and ending on the date
specified in the Extension Notice.
"Scheduled Series 1999-1 Termination Date" shall mean July 31,
2004 unless a different date shall be set forth in an Extension
Notice.
"Series 1999-1" shall mean the Series of the Prime Credit Card
Master Trust II represented by the Series 1999-1 Certificates.
"Series 1999-1 Certificateholder" shall mean the Holder of any
Series 1999-1 Certificate.
"Series 1999-1 Certificateholders' Interest" shall have the
meaning specified in Section 4.4 of the Agreement.
"Series 1999-1 Certificates" shall have the meaning specified
in Section 1 of this Variable Funding Supplement.
"Series 1999-1 Discount Factor" shall mean with respect to
Series 1999-1 for any Business Day, the amount for Series 1999-1,
if any, calculated as of the second preceding Monthly Period, by
which either (x) (a) the product of (i) the Base Rate plus one-
half of one percent minus the Net Finance Charge Portfolio Yield
divided by the Annual Portfolio Turnover Rate and (ii) the
Floating Allocation Percentage exceeds (b) zero or, (y) solely at
the option of the Transferor, the amount by which (a) the product
of (i) the Base Rate plus one percent minus the Net Finance Charge
Portfolio Yield divided by the Annual Portfolio Turnover Rate and
(ii) the Floating Allocation Percentage exceeds (b) zero;
provided, however that the Series Discount Factor shall not exceed
4.00%.
"Series 1999-1 Pay Out Event" shall have the meaning specified
in Section 10 of this Variable Funding Supplement.
"Series 1999-1 Shortfall" shall mean the amount, if any, by
which (x) the sum of the amounts described in subsections
4.6(a)(i) through (xv) of the Agreement during the Revolving
Period or subsections 4.6(b)(i) through (xi) or 4.6(c)(i) through
(xv) of the Agreement during the Amortization Period, as
applicable, exceeds (y) the Total Finance Charge Collections
available for application thereto pursuant to subsections 4.6(a),
(b) or (c) of the Agreement, as applicable, on any Business Day.
"Series 1999-1 Termination Date" shall mean the earlier to
occur of (i) the day after the Distribution Date on which the
Series 1999-1 Certificates are paid in full including any
Supplemental Payments, or (ii) the Scheduled Series 1999-1
Termination Date.
"Series 1999-1 Variable Funding Certificates" shall have the
meaning specified in Section 1 of this Variable Funding
Supplement.
"Series Default and Dilution Amount" shall mean: (a) for any
Monthly Period, an amount equal to the summation of the products
of (i) the Floating Allocation Percentage and (ii) the Default and
Dilution Amount, as determined for each Business Day in that
Monthly Period; and (b) for any Business Day in a Monthly Period,
an amount equal to the summation of the products of (i) the
Floating Allocation Percentage and (ii) the Default and Dilution
Amount, as determined for each Business Day in that Monthly Period
up to and including the subject Business Day.
"Series Servicing Fee Percentage" shall mean 2.00%.
"Shared Principal Collections" shall mean, as the context
requires, either (a) the amount allocated to the Series 1999-1
Certificates which, in accordance with subsections 4.6(e)(iii) and
4.6(f) of the Agreement, may be applied to Principal Shortfalls
with respect to other outstanding Series or (b) the amounts
allocated to the investor certificates of other Series which the
applicable Supplements for such Series specify are to be treated
as "Shared Principal Collections" and which may be applied to
cover Principal Shortfalls with respect to the Series 1999-1
Certificates.
"Targeted Holder" shall mean (i) each holder of a right to
receive interest, principal or any other amount with respect to
any Class C Certificate or any other certificates or other
interest in the Trust, excluding any certificates or other
interest in the Trust (including, if applicable, the Class A
Variable Funding Certificates and the Class B Variable Funding
Certificates) with respect to which an opinion is rendered that
such certificates or other such interests will be treated as debt
for federal income tax purposes, and (iii) any holder of a right
to receive any amount in respect of the Transferor Interest;
provided, that any Person holding more than one interest each of
which would cause such Person to be a Targeted Holder shall be
treated as a single Targeted Holder.
"Termination Event" shall mean the occurrence of any event or
condition constituting a "Termination Event" in the Class A
Certificate Purchase Agreement or the Class B Certificate Purchase
Agreement.
"Termination Payment Date" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the
Receivables as a result of an insolvency or bankruptcy event and
the occurrence of the Scheduled Series 1999-1 Termination Date.
"Total Finance Charge Collections" shall mean, with respect to
Series 1999-1 on any Business Day, the sum of (i) the product of
the applicable Investor Percentage for Series 1999-1 and the
amount of Finance Charge Collections for such Business Day, plus
(ii) on and after the occurrence of and during the continuance of
a Discount Trigger Event the lesser of (a) the sum of (x) the
product of the Discount Allocation Percentage for Series 1999-1
and the Discount Amount for such Business Day and (y) the
Carryover Discount Amount for Series 1999-1 for such Business Day
and (b) the product of the applicable Investor Percentage for the
Series 1999-1 and the amount of Principal Collections for such
Business Day, plus (iii) available cash investment earnings for
such Business Day on amounts on deposit in the Reserve Account to
the extent such earnings are to be treated as Total Finance Charge
Collections in accordance with subsection 4.9(b), plus (iv)
available cash investment earnings for such Business Day on
amounts on deposit in the Interest Funding Account, the Principal
Account, the Proceeds Account or the Excess Purchase Account.
"Transfer" shall have the meaning specified in subsection
6.17(a) of the Agreement.
"VFC Additional Class A Invested Amount" shall have the
meaning specified in subsection 6.15(a) of the Agreement.
"VFC Additional Class B Invested Amount" shall have the
meaning specified in subsection 6.15(a) of the Agreement.
"VFC Additional Class C Invested Amount" shall have the
meaning specified in subsection 6.15(a) of the Agreement.
"VFC Additional Invested Amount" shall have the meaning
specified in subsection 6.15(a) of the Agreement.
"VFC Principal Collections" shall mean amounts specified as
such in subsections 4.6(a)(v), 4.6(a)(vi), 4.6(a)(vii), 4.6(a)(x)
and 4.6(d) of the Agreement.
"Yield" shall, as the context requires, have the meaning
assigned to such term in the (i) Class A Certificate Purchase
Agreement, when used with respect to the Class A Certificates, or
(ii) Class B Certificate Purchase Agreement, when used with
respect to the Class B Certificates.
SECTION 3 Reassignment and Certain Transfer Terms.
(a) The Series 1999-1 Certificates shall be subject to
termination by the Transferor, at its option in accordance with
the terms specified in subsection 12.2(a) of the Agreement on any
Distribution Date on which the Invested Amount shall be less than
10% of the highest Invested Amount since the Closing Date. The
deposit required in connection with any such termination and final
distribution shall be equal to the Invested Amount plus (i) all
accrued and unpaid interest on the Series 1999-1 Certificates,
(ii) all accrued and unpaid Class A Program Fees, (iii) all unpaid
Class A Additional Payments and Class A Supplemental Payments,
(iv) all accrued and unpaid Class B Program Fees, and (v) all
unpaid Class B Additional Payments and Class B Supplemental
Payments, through the day prior to the Distribution Date on which
the repurchase occurs.
(b) In no event shall the Class C Certificates or any
interest therein be transferred, sold, exchanged, pledged,
participated or otherwise assigned, in whole or in part, unless
the Transferor shall have consented in writing to such transfer
and unless (l) the Rating Agency Condition shall have been
satisfied, and (2) the Trustee shall have received an Opinion of
Counsel, which shall not be at the expense of the Trustee, that
such transfer does not (i) adversely affect the conclusions
reached in any of the federal income tax opinions dated the
applicable Closing Date issued in connection with the original
issuance of any Series of Investor Certificates or (ii) result in
a taxable event to the holders of any such Series.
(c) Each Series 1999-1 Certificateholder, by accepting
and holding a Series 1999-1 Certificate or interest therein, will
be deemed to have represented and warranted that it is not (i) an
employee benefit plan (as defined in Section 3(3) of ERISA) that
is subject to the provisions of Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Code, or (iii) an entity
whose underlying assets include plan assets by reason of a plan's
investment in the entity.
SECTION 4 Delivery and Payment for the Series 1999-1
Certificates. The Transferor shall execute and deliver the Series
1999-1 Certificates to the Trustee for authentication in
accordance with Section 6.1 of the Agreement. The Trustee shall
deliver the Series 1999-1 Certificates when authenticated in
accordance with Section 6.2 of the Agreement.
SECTION 5 Depositary; Form of Delivery of Series 1999-1
Certificates. The Class A Certificates, the Class B Certificates
and the Class C Certificates shall be delivered as Definitive
Certificates as provided in Section 6.12 of the Agreement.
SECTION 6 Addition and Removal of Accounts.
(a) Paragraph (b) of the definition of "Automatic
Additional Account" in Section 1.1 of the Agreement shall read in
its entirety as follows and shall be applicable only to the Series
1999-1 Certificates:
"(b) any other consumer revolving credit card
account, Receivables from which each Rating Agency
permits to be added automatically to the Trust;
provided:
(i) the Rating Agency Condition shall have
been satisfied with respect to the inclusion of
such accounts as Automatic Additional Accounts
pursuant to this paragraph (b); and
(ii) the Administrative Agent on behalf of the
Class A Certificateholders and Class B
Certificateholders shall have consented in writing
to including as Automatic Additional Accounts any
Accounts the receivables of which have been
purchased (but the accounts of which have not been
originated) by the Originator or any VISAr or
MasterCardr revolving credit card accounts which
have not been originated by the Originator in
accordance with the Credit and Collection Policy
substantially as in effect on the Closing Date
(subject to changes therein which would not
materially and adversely affect the interests of
the Series 1999-1 Certificateholders) with respect
to the retail operating subsidiaries of Federated
as at the Closing Date."
(b) Subsection (viii) of Section 2.6(e) of the
Agreement shall read in its entirety as follows and
shall be applicable only to the Series 1999-1
Certificates:
"(viii) the Administrative Agent on behalf of the
Class A Certificateholders and Class B
Certificateholders shall have consented in writing to
including as Automatic Additional Accounts any Accounts
the receivables of which have been purchased (but the
accounts of which have not been originated) by the
Originator or any VISAr or MasterCardr revolving credit
card accounts which have not been originated by the
Originator in accordance with the Credit and Collection
Policy substantially as in effect on the Closing Date
(subject to changes therein which would not materially
and adversely affect the interests of the Series 1999-1
Certificateholders) with respect to the retail
operating subsidiaries of Federated as at the Closing
Date."
(c) Section 2.7(d) shall read in its entirety as
follows and shall be applicable only to the Series 1999-
1 Certificates:
"Notwithstanding the foregoing, the Transferor will be
permitted to designate Removed Accounts in connection
with the sale by Federated or any Affiliate of Federated
of all or substantially all of the capital stock or
assets of any retail subsidiary of Federated if (A) the
conditions in clauses (i), (iii) and (iv) of subsection
2.7(b) have been met and the Transferor shall have
delivered to the Trustee and the Administrative Agent an
Officer's Certificate confirming the compliance with
such conditions and (B) the Administrative Agent on
behalf of the Class A Certificateholders and the Class B
Certificateholders has consented in writing to such
sale."
SECTION 7 Article IV of Agreement. Sections 4.1, 4.2
and 4.3 of the Agreement shall be read in their entirety as
provided in the Agreement. Article IV of the Agreement (except
for Sections 4.1, 4.2 and 4.3 thereof) shall read in its entirety
as follows and shall be applicable only to the Series 1999-1
Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 Rights of Certificateholders. The
Series 1999-1 Certificates shall represent
Undivided Interests in the Trust, consisting of the
right to receive, to the extent necessary to make
the required payments with respect to such Series
1999-1 Certificates at the times and in the amounts
specified in this Agreement, (a) the Floating
Allocation Percentage and Fixed/Floating Allocation
Percentage (as applicable from time to time) of
Collections received with respect to the
Receivables and (b) funds on deposit in the
Collection Account and the Excess Funding Account
(for such Series, the "Series 1999-1
Certificateholders' Interest"). The Class B
Invested Amount and the Class C Invested Amount
shall be subordinate to the Class A Certificates,
and the Class C Invested Amount shall be
subordinated to the Class B Certificates. From and
after the Amortization Period Commencement Date,
the Class B Certificates will not have the right to
receive payments of principal until the Class A
Invested Amount has been paid in full, and the
Class C Certificates will not have the right to
receive payments of principal until the Class A
Invested Amount and the Class B Invested Amount
have been paid in full. The Exchangeable
Transferor Certificate shall not represent any
interest in the Collection Account or the Excess
Funding Account, except as specifically provided in
this Article IV.
Section 4.5 Collections and Allocation. The
Servicer will apply or will instruct the Trustee to
apply all funds on deposit in the Collection
Account or the Excess Funding Account that are
allocable to the Series 1999-1 Certificates as
described in this Article IV. On each Business
Day, the Servicer shall determine whether a Pay Out
Event is deemed to have occurred with respect to
the Series 1999-1 Certificates, and the Servicer
shall allocate Collections in accordance with the
Daily Report with respect to such Business Day in
accordance with the terms of Section 4.6 of the
Agreement.
Section 4.6 Application of Funds on Deposit in
the Collection Account for the Series 1999-1
Certificates. (a) On each Business Day with
respect to the Revolving Period, the Servicer shall
instruct the Trustee in writing to withdraw and the
Trustee, acting in accordance with such
instructions, shall withdraw, to the extent of
Total Finance Charge Collections, the amounts
required to be withdrawn from the Collection
Account pursuant to subsections 4.6(a)(i) through
4.6(a)(xvi) of the Agreement.
(i) Class A Interest and Program Fees.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account, to the
extent of Total Finance Charge Collections for such
Business Day, an amount equal to sum of the Class A
Interest and the Class A Program Fees accrued since
the preceding Business Day plus any Class A
Interest or Class A Program Fees accrued with
respect to any prior Business Day but not
previously deposited into the Interest Funding
Account, including, without limitation, any amounts
described in the last sentence of the definition of
Class A Carrying Costs.
(ii) Class B Interest and Program Fees.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account, to the
extent of Total Finance Charge Collections for such
Business Day (after giving effect to the
withdrawals pursuant to subsection 4.6(a)(i) of the
Agreement), an amount equal to the sum of the Class
B Interest and the Class B Program Fees accrued
since the preceding Business Day plus any Class B
Interest or Class B Program Fees accrued with
respect to any prior Business Day but not
previously deposited into the Interest Funding
Account, including, without limitation, any amounts
described in the last sentence of the definition of
Class B Carrying Costs.
(iii) Investor Servicing Fee Payable
from Interchange. On each Business Day, the
Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer,
to the extent of the lesser of (A) Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsection 4.6(a)(i) and (ii) of the Agreement) and
(B) Interchange Collections for such Business Day,
the Investor Servicing Fee accrued since the
preceding Business Day plus any Investor Servicing
Fee due with respect to any prior Business Day but
not distributed to the Servicer.
(iv) Investor Servicing Fee. On each
Business Day, if FDSNB or any Affiliate of FDSNB is
not the Servicer, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account and distribute to the
Servicer, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsection
4.6(a)(i) through (iii) of the Agreement), the
Investor Servicing Fee accrued since the preceding
Business Day plus any Investor Servicing Fee due
with respect to any prior Business Day but not
distributed to the Servicer, to the extent not
withdrawn on such Business Day pursuant to
subsection 4.6(a)(iii) of the Agreement.
(v) Investor Default Amount and
Uncovered Dilution Amount. On each Business Day,
the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the
Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsections 4.6(a)(i) through (iv) of the
Agreement), an amount equal to the sum of (A) the
aggregate Investor Default Amount for such Business
Day, plus (B) the unpaid Investor Default Amount
for any previous Business Day, plus (C) the
Investor Uncovered Dilution Amount for such
Business Day, plus (D) the unpaid Investor
Uncovered Dilution Amount for any previous Business
Day, such amount to be treated as VFC Principal
Collections during the Revolving Period.
(vi) Reimbursement of Class A Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection
Account, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsections
4.6(a)(i) through (v) of the Agreement), an amount
equal to the unreimbursed Class A Investor Charge-
Offs, such amount to be treated as VFC Principal
Collections during the Revolving Period.
(vii) Reimbursement of Class B
Reductions. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection
Account, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsections
4.6(a)(i) through (vi) of the Agreement), an amount
equal to the unreimbursed Class B Investor Charge-
Offs and other reductions to the Class B Invested
Amount pursuant to clause (d) of the definition
thereof, such amount to be treated as VFC Principal
Collections during the Revolving Period.
(viii) Class A Additional Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class A Certificateholders, to the extent of
Total Finance Charge Collections for such Business
Day (after giving effect to the withdrawals
pursuant to subsection 4.6(a)(i) through (vii) of
the Agreement), the portion of the Class A
Additional Payments accrued since the preceding
Business Day plus any Class A Additional Payments
due with respect to any prior Business Day but not
distributed to the Class A Certificateholders, with
interest thereon as provided in the Class A
Certificate Purchase Agreement.
(ix) Class B Additional Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class B Certificateholders, to the extent of
Total Finance Charge Collections for such Business
Day (after giving effect to the withdrawals
pursuant to subsection 4.6(a)(i) through (viii) of
the Agreement), the portion of the Class B
Additional Payments accrued since the preceding
Business Day plus any Class B Additional Payments
with respect to any prior Business Day but not
distributed to the Class B Certificateholders, with
interest thereon as provided in the Class B
Certificate Purchase Agreement.
(x) Reimbursement of Class C Reductions.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the
extent of Total Finance Charge Collections for such
Business Day after giving effect to the withdrawals
pursuant to subsections 4.6(a)(i) through (ix) of
the Agreement), an amount equal to the unreimbursed
Class C Investor Charge-Offs and other reductions
to the Class C Invested Amount pursuant to clause
(d) of the definition thereof, such amount to be
treated as VFC Principal Collections during the
Revolving Period.
(xi) Class C Interest. On each Business
Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from
the Collection Account and pay to the Class C
Certificateholders to the extent of Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsections 4.6(a)(i) through (x) of the
Agreement), an amount equal to (x) the amount of
interest which has accrued with respect to the
outstanding aggregate principal amount of the Class
C Certificates at the Class C Certificate Rate but
which has not been paid to the Class C
Certificateholders plus (y) additional interest at
the Class C Certificate Rate for interest that has
accrued on interest that was due pursuant to this
subsection but was not previously paid to the Class
C Certificateholders.
(xii) Required Reserve Amount. On each
Business Day, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account and deposit into the
Reserve Account, to the extent of Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsections 4.6(a)(i) through (xi) of the
Agreement), an amount equal to the excess, if any,
of the Required Reserve Amount (determined after
all deposits, withdrawals, reductions, payments and
adjustments to be made with respect to such date)
over the Available Reserve Amount (without giving
effect to any deposit made on such Business Day
under Section 4.6).
(xiii) Class A Supplemental Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class A Agent, to the extent of Total
Finance Charge Collections for such Business Day
(after giving effect to the withdrawals pursuant to
subsections 4.6(a)(i) through (xii) of the
Agreement), an amount equal to the sum of all
unpaid Class A Supplemental Payments.
(xiv) Class B Supplemental Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class B Agent, to the extent of Total
Finance Charge Collections for such Business Day
(after giving effect to the withdrawals pursuant to
subsections 4.6(a)(i) through (xiii) of the
Agreement), an amount equal to the sum of all
unpaid Class B Supplemental Payments.
(xv) FDSNB Servicing Fee. On each
Business Day, if FDSNB or any Affiliate of FDSNB is
the Servicer, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account and distribute to the
Servicer, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsections
4.6(a)(i) through (xiv) of the Agreement) the
Investor Servicing Fee accrued since the preceding
Business Day plus any Investor Servicing Fee due
with respect to any prior Business Day but not
distributed to the Servicer, to the extent not
withdrawn on such Business Day pursuant to
subsection 4.6(a)(iii) of the Agreement.
(xvi) Excess Finance Charge Collections.
Any amounts remaining in the Collection Account to
the extent of the Total Finance Charge Collections
for such Business Day (after giving effect to the
withdrawals pursuant to subsections 4.6(a)(i)
through (xv) of the Agreement) shall be treated as
Excess Finance Charge Collections allocable to
other Series in Group I, and the Servicer shall
direct the Trustee in writing on each Business Day
to withdraw and the Trustee, acting in accordance
with such instructions, shall withdraw such amounts
from the Collection Account and first make such
amounts available as Excess Finance Charge
Collections to pay to Certificateholders of other
Series in Group I to the extent of shortfalls, if
any, in amounts payable to such certificateholders
from Finance Charge Collections allocated to such
other Series, then pay any unpaid commercially
reasonable costs and expenses of a Successor
Servicer, if any, and then pay any remaining Excess
Finance Charge Collections to the Transferor.
(b) On each Business Day prior to the last
Business Day of any Monthly Period with respect to
the Amortization Period, the Servicer shall
instruct the Trustee in writing to withdraw and the
Trustee, acting in accordance with such
instructions, shall withdraw, to the extent of
Total Finance Charge Collections, the amounts
required to be withdrawn from the Collection
Account pursuant to subsections 4.6(b)(i) through
4.6(b)(xii) of the Agreement.
(i) Class A Interest and Program Fees.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account, to the
extent of Total Finance Charge Collections for such
Business Day, an amount equal to the sum of the
Class A Interest and the Class A Program Fees
accrued since the preceding Business Day plus any
Class A Interest or Class A Program Fees accrued
with respect to any prior Business Day but not
previously deposited into the Interest Funding
Account, including, without limitation, any amounts
described in the last sentence of the definition of
Class A Carrying Costs.
(ii) Class B Interest and Program Fees.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account, to the
extent of Total Finance Charge Collections for such
Business Day (after giving effect to the
withdrawals pursuant to subsection 4.6(b)(i) of the
Agreement), an amount equal to the sum of the Class
B Interest and the Class B Program Fees accrued
since the preceding Business Day plus any Class B
Interest or Class B Program Fees accrued with
respect to any prior Business Day but not
previously deposited into the Interest Funding
Account, including, without limitation, any amounts
described in the last sentence of the definition of
Class B Carrying Costs.
(iii) Investor Servicing Fee Payable
from Interchange. On each Business Day, the
Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer,
to the extent of the lesser of (A) Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsection 4.6(b)(i) and (ii) of the Agreement) and
(B) Interchange Collections for such Business Day,
the Investor Servicing Fee accrued since the
preceding Business Day plus any Investor Servicing
Fee due with respect to any prior Business Day but
not distributed to the Servicer.
(iv) Investor Servicing Fee. On each
Business Day, if FDSNB or any Affiliate of FDSNB is
not the Servicer, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account and distribute to the
Servicer, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsection
4.6(b)(i) through (iii) of the Agreement), the
Investor Servicing Fee accrued since the preceding
Business Day plus any Investor Servicing Fee due
with respect to any prior Business Day but not
distributed to the Servicer, to the extent not
withdrawn on such Business Day pursuant to
subsection 4.6(a)(iii) of the Agreement.
(v) Investor Default Amount and
Uncovered Dilution Amount. On each Business Day,
the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the
Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsections 4.6(b)(i) through (iv) of the
Agreement), an amount equal to the sum of (A) the
aggregate Investor Default Amount for such Business
Day, plus (B) the unpaid Investor Default Amount
for any previous Business Day, plus (C) the
Investor Uncovered Dilution Amount for such
Business Day, plus (D) the unpaid Investor
Uncovered Dilution Amount for any previous Business
Day, such amount to be deposited into the Principal
Account or paid pursuant to subsection 4.6(e) to
the applicable Class or Classes of
Certificateholders on such Business Day.
(vi) Reimbursement of Class A Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection
Account, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsections
4.6(b)(i) through (v) of the Agreement), an amount
equal to the unreimbursed Class A Investor Charge-
Offs, such amount to be deposited into the
Principal Account or paid pursuant to subsection
4.6(e) to the applicable Class or Classes of
Certificateholders on such Business Day.
(vii) Reimbursement of Class B
Reductions. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection
Account, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsections
4.6(b)(i) through (vi) of the Agreement), an amount
equal to the unreimbursed Class B Investor Charge-
Offs and other reductions to the Class B Invested
Amount pursuant to clause (d) of the definition
thereof , such amount to be deposited into the
Principal Account or paid pursuant to subsection
4.6(e) to the applicable Class or Classes of
Certificateholders on such Business Day.
(viii) Class A Additional Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class A Certificateholders, to the extent of
Total Finance Charge Collections for such Business
Day (after giving effect to the withdrawals
pursuant to subsection 4.6(b)(i) through (vii) of
the Agreement), the portion of the Class A
Additional Payments accrued since the preceding
Business Day plus any Class A Additional Payments
due with respect to any prior Business Day but not
distributed to the Class A Certificateholders, with
interest thereon as provided in the Class A
Certificate Purchase Agreement.
(ix) Class B Additional Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class B Certificateholders, to the extent of
Total Finance Charge Collections for such Business
Day (after giving effect to the withdrawals
pursuant to subsection 4.6(b)(i) through (viii) of
the Agreement), the portion of the Class B
Additional Payments accrued since the preceding
Business Day plus any Class B Additional Payments
due with respect to any prior Business Day but not
distributed to the Class B Certificateholders, with
interest thereon as provided in the Class B
Certificate Purchase Agreement.
(x) Reimbursement of Class C Reductions.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the
extent of Total Finance Charge Collections for such
Business Day after giving effect to the withdrawals
pursuant to subsections 4.6(b)(i) through (ix) of
the Agreement), an amount equal to the unreimbursed
Class C Investor Charge-Offs and other reductions
to the Class C Invested Amount pursuant to clause
(d) of the definition thereof, such amount to be
deposited into the Principal Account or paid
pursuant to subsection 4.6(e) to the applicable
Class or Classes of Certificateholders on such
Business Day.
(xi) Required Reserve Amount. On each
Business Day, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account and deposit into the
Reserve Account, to the extent of Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsections 4.6(b)(i) through (x) of the
Agreement), an amount equal to the excess, if any,
of the Required Reserve Amount (determined after
all deposits, withdrawals, reductions, payments and
adjustments to be made with respect to such date)
over the Available Reserve Amount (without giving
effect to any deposit made on such Business Day
under Section 4.6).
(xii) Excess Finance Charge Collections.
The Trustee, acting in accordance with instructions
from the Servicer, shall deposit any amounts
remaining in the Collection Account to the extent
of the Total Finance Charge Collections for such
Business Day (after giving effect to the
withdrawals pursuant to subsections 4.6(b)(i)
through (xi) of the Agreement) into the Collection
Account and shall add such funds to the Total
Finance Charge Collections on each subsequent
Business Day in such Monthly Period until the last
Business Day of the related Monthly Period.
(c) On the last Business Day of each Monthly
Period with respect to the Amortization Period, the
Servicer shall instruct the Trustee in writing to
withdraw and the Trustee, acting in accordance with
such instructions, shall withdraw, to the extent of
Total Finance Charge Collections, the amounts
required to be withdrawn from the Collection
Account pursuant to subsections 4.6(c)(i) through
4.6(c)(xvi) of the Agreement.
(i) Class A Interest and Program Fees.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account, to the
extent of Total Finance Charge Collections for such
Business Day, an amount equal to the sum of the
Class A Interest and Class A Program Fees accrued
since the preceding Business Day plus any Class A
Interest or Class A Program Fees accrued with
respect to any prior Business Day but not
previously deposited into the Interest Funding
Account, including, without limitation, any amounts
described in the last sentence of the definition of
Class A Carrying Costs.
(ii) Class B Interest and Program Fees.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account, to the
extent of Total Finance Charge Collections for such
Business Day (after giving effect to the
withdrawals pursuant to subsection 4.6(c)(i) of the
Agreement), an amount equal to the sum of the Class
B Interest and the Class B Program Fees accrued
since the preceding Business Day plus any Class B
Interest or the Class B Program Fees accrued with
respect to any prior Business Day but not
previously deposited into the Interest Funding
Account, including, without limitation, any amounts
described in the last sentence of the definition of
Class B Carrying Costs.
(iii) Investor Servicing Fee Payable
from Interchange. On each Business Day, the
Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer,
to the extent of the lesser of (A) Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsection 4.6(c)(i) and (ii) of the Agreement) and
(B) Interchange Collections for such Business Day,
the Investor Servicing Fee accrued since the
preceding Business Day plus any Investor Servicing
Fee due with respect to any prior Business Day but
not distributed to the Servicer.
(iv) Investor Servicing Fee. On each
Business Day, if FDSNB or any Affiliate of FDSNB is
not the Servicer, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account and distribute to the
Servicer, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsection
4.6(c)(i) through (iii) of the Agreement), the
Investor Servicing Fee accrued since the preceding
Business Day plus any Investor Servicing Fee due
with respect to any prior Business Day but not
distributed to the Servicer, to the extent not
withdrawn on such Business Day pursuant to
subsection 4.6(c)(iii) of the Agreement.
(v) Investor Default Amount and
Uncovered Dilution Amount. On each Business Day,
the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the
Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsections 4.6(c)(i) through (iv) of the
Agreement), an amount equal to the sum of (A) the
aggregate Investor Default Amount for such Business
Day, plus (B) the unpaid Investor Default Amount
for any previous Business Day, plus (C) the
Investor Uncovered Dilution Amount for such
Business Day, plus (D) the unpaid Investor
Uncovered Dilution Amount for any previous Business
Day, such amount to be deposited into the Principal
Account or paid pursuant to subsection 4.6(e) to
the applicable Class or Classes of
Certificateholders on such Business Day.
(vi) Reimbursement of Class A Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection
Account, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsections
4.6(c)(i) through (v) of the Agreement), an amount
equal to the unreimbursed Class A Investor Charge-
Offs, such amount to be deposited into the
Principal Account or paid pursuant to subsection
4.6(e) to the applicable Class or Classes of
Certificateholders on such Business Day.
(vii) Reimbursement of Class B
Reductions. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection
Account, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsections
4.6(c)(i) through (vi) of the Agreement), an amount
equal to the unreimbursed Class B Investor Charge-
Offs and other reductions to the Class B Invested
Amount pursuant to clause (d) of the definition
thereof, such amount to be deposited into the
Principal Account or paid pursuant to subsection
4.6(e) to the applicable Class or Classes of
Certificateholders on such Business Day.
(viii) Class A Additional Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class A Certificateholders, to the extent of
Total Finance Charge Collections for such Business
Day (after giving effect to the withdrawals
pursuant to subsection 4.6(c)(i) through (vii) of
the Agreement), the portion of the Class A
Additional Payments accrued since the preceding
Business Day plus any Class A Additional Payments
due with respect to any prior Business Day but not
distributed to the Class A Certificateholders, with
interest thereon as provided in the Class A
Certificate Purchase Agreement.
(ix) Class B Additional Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class B Certificateholders, to the extent of
Total Finance Charge Collections for such Business
Day (after giving effect to the withdrawals
pursuant to subsection 4.6(c)(i) through (viii) of
the Agreement), the portion of the Class B
Additional Payments accrued since the preceding
Business Day plus any Class B Additional Payments
due with respect to any prior Business Day but not
distributed to the Class B Certificateholders, with
interest thereon as provided in the Class B
Certificate Purchase Agreement.
(x) Reimbursement of Class C Reductions.
On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the
extent of Total Finance Charge Collections for such
Business Day after giving effect to the withdrawals
pursuant to subsections 4.6(c)(i) through (ix) of
the Agreement), an amount equal to the unreimbursed
Class C Investor Charge-Offs and other reductions
to the Class C Invested Amount pursuant to clause
(d) of the definition thereof, such amount to be
deposited into the Principal Account or paid
pursuant to subsection 4.6(e) to the applicable
Class or Classes of Certificateholders on such
Business Day.
(xi) Class C Interest. On each Business
Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from
the Collection Account and pay to the Class C
Certificateholders to the extent of Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsections 4.6(c)(i) through (x) of the
Agreement), an amount equal to (x) the amount of
interest which has accrued with respect to the
outstanding aggregate principal amount of the Class
C Certificates at the Class C Certificate Rate but
which has not been paid to the Class C
Certificateholders plus (y) additional interest at
the Class C Certificate Rate for interest that has
accrued on interest that was due pursuant to this
subsection but was not previously paid to the Class
C Certificateholders.
(xii) Required Reserve Amount. On each
Business Day, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account and deposit into the
Reserve Account, to the extent of Total Finance
Charge Collections for such Business Day (after
giving effect to the withdrawals pursuant to
subsections 4.6(c)(i) through (xi) of the
Agreement), an amount equal to excess, if any, of
the Required Reserve Amount (determined after all
deposits, withdrawals, reductions, payments and
adjustments to be made with respect to such date)
over the Available Reserve Amount (without giving
effect to any deposit made on such Business Day
under Section 4.6).
(xiii) Class A Supplemental Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class A Agent, to the extent of Total
Finance Charge Collections for such Business Day
(after giving effect to the withdrawals pursuant to
subsections 4.6(c)(i) through (xii) of the
Agreement), an amount equal to the sum of all
unpaid Class A Supplemental Payments.
(xiv) Class B Supplemental Payments. On
each Business Day, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay
to the Class B Agent, to the extent of Total
Finance Charge Collections for such Business Day
(after giving effect to the withdrawals pursuant to
subsections 4.6(c)(i) through (xiii) of the
Agreement), an amount equal to the sum of all
unpaid Class B Supplemental Payments.
(xv) FDSNB Servicing Fee. On each
Business Day, if FDSNB or any Affiliate of FDSNB is
the Servicer, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account and distribute to the
Servicer, to the extent of Total Finance Charge
Collections for such Business Day (after giving
effect to the withdrawals pursuant to subsections
4.6(c)(i) through (xiv) of the Agreement) the
Investor Servicing Fee accrued since the preceding
Business Day plus any Investor Servicing Fee due
with respect to any prior Business Day but not
distributed to the Servicer, to the extent not
withdrawn on such Business Day pursuant to
subsection 4.6(c)(iii) of the Agreement.
(xvi) Excess Finance Charge Collections.
Any amounts remaining in the Collection Account to
the extent of Total Finance Charge Collections for
such Business Day (after giving effect to the
withdrawals pursuant to subsections 4.6(c)(i)
through (xv) of the Agreement), shall be treated as
Excess Finance Charge Collections allocable to
other Series in Group I, and the Servicer shall
direct the Trustee in writing on such Business Day
to withdraw such amounts from the Collection
Account and to first make such amounts available as
Excess Finance Charge Collections to pay to
Certificateholders of other Series in Group I to
the extent of shortfalls, if any, in amounts
payable to such certificateholders from Finance
Charge Collections allocated to such other Series,
then to pay any unpaid commercially reasonable
costs and expenses of a Successor Servicer, if any,
and then pay any remaining Excess Finance Charge
Collections to the Transferor.
(d) For each Business Day (i) the funds on
deposit in the Collection Account in an amount not
to exceed, during the Revolving Period, the sum of
the Class B Floating Allocation Percentage and the
Class C Floating Allocation Percentage or, during
the Amortization Period, the sum of the Class B
Fixed/Floating Allocation Percentage and the Class
C Fixed/Floating Allocation Percentage of Net
Principal Collections with respect to such Business
Day shall be applied by the Servicer or by the
Trustee acting in accordance with the instructions
of the Servicer as Reallocated Principal
Collections to the extent necessary to pay first
the Class A Required Amount and then the Class B
Required Amount on such Business Day as described
in subsection 4.7(c) of the Agreement and (ii) the
remainder of the Net Principal Collections shall be
treated as VFC Principal Collections and applied as
provided in subsection 4.6(f) of the Agreement.
(e) For each Business Day on and after the
Amortization Period Commencement Date, the funds on
deposit in the Collection Account will be
distributed by the Trustee acting in accordance
with the instructions of the Servicer in the
following priority:
(i) an amount equal to the sum of (A)
Net Principal Collections for such Business Day
(minus the amount of Reallocated Principal
Collections with respect to such Business Day which
is required to fund a deficiency pursuant to
subsection 4.7(c) of the Agreement for such
Business Day, if any), (B) any amount on deposit in
the Excess Funding Account allocated to the
Investor Certificates on such Business Day, and (C)
the aggregate amounts, if any, allocated on such
Business Day pursuant to subsections 4.6(b)(v),
(vi), (vii) or (x) or 4.6(c)(v), (vi), (vii) or (x)
(such sum, the "Class A Daily Principal Amount"),
plus the amount of Shared Principal Collections
allocated to the Series 1999-1 Certificates in
accordance with Sections 4.3(e) and 4.6(f) of the
Agreement, will be deposited into the Principal
Account until the amount on deposit therein equals
the Class A Invested Amount;
(ii) on and after the Class B Principal
Payment Commencement Date, an amount equal to the
sum of (A) Net Principal Collections for such
Business Day (minus the amount of Reallocated
Principal Collections with respect to such Business
Day which is required to fund a deficiency with
respect to the Class B Certificates pursuant to
subsection 4.7(c) of the Agreement for such
Business Day), (B) any amount on deposit in the
Excess Funding Account allocated to the Investor
Certificates on such Business Day, and (C) the
amount, if any, allocated to pursuant to
subsections 4.6(b)(v), (vii) or (x) or 4.6(c)(v),
(vii) or (x) of the Agreement with respect to such
Business Day, minus, in the case of each of clauses
(A), (B) and (C) above, the amount thereof paid to
the Class A Certificateholders pursuant to
subsection 4.6(e)(i) of the Agreement (such sum,
after such reduction, the "Class B Daily Principal
Amount"), will be deposited into the Principal
Account until the amount on deposit therein equals
the Class B Invested Amount;
(iii) on and after the Class C Principal
Payment Commencement Date, an amount equal to (A)
Net Principal Collections for such Business Day,
(B) any amount on deposit in the Excess Funding
Account allocated to the Class C Certificates on
such Business Day, and (C) the amount, if any,
allocated to pursuant to subsections 4.6(b)(v) or
(x) or 4.6(c)(v) or (x) of the Agreement with
respect to such Business Day, minus, in the case of
each of clauses (A), (B) and (C) above, the amount
thereof paid to the Class A Certificateholders
pursuant to subsection 4.6(e)(i) of the Agreement
or to the Class B Certificateholders pursuant to
subsection 4.6(e)(ii) of the Agreement (such sum,
after such reduction, the "Class C Daily Principal
Amount") will be paid to the Holders of the Class C
Certificates; and
(iv) an amount equal to the balance of
any such remaining funds on deposit in the
Collection Account on such Business Day allocated
to the Series 1999-1 Certificates shall be treated
as Shared Principal Collections and applied as
provided in subsection 4.3(e) of the Agreement.
(f) VFC Principal Collections, to the extent
permitted by the Class A Certificate Purchase
Agreement and the Class B Certificate Purchase
Agreement, as applicable, shall be applied by the
Servicer or by the Trustee acting in accordance
with the instructions of the Servicer on each
Business Day with respect to the Revolving Period
first, at the option of the Transferor and in an
amount to be determined by the Transferor, to make
payments of principal to (i) the Class A
Certificateholders, (ii) if after giving effect to
such payment, both (A) no Series 1999-1 Pay Out
Event shall have occurred and be continuing and (B)
the Class B Invested Amount shall not be less than
the Required Class B Invested Amount, to the Class
A Certificateholders and the Class B
Certificateholders pro rata based on the Invested
Amount of each such Class on such Business Day, or
(iii) if after giving effect to such payment, both
(A) no Series 1999-1 Pay Out Event shall have
occurred and be continuing, (B) the Class B
Invested Amount shall not be less than the Required
Class B Invested Amount, and (C) the Class C
Invested Amount shall not be less than the Required
Class C Invested Amount, to the Class A
Certificateholders, the Class B Certificateholders
and the Class C Certificateholders pro rata based
on the Invested Amount of each such Class on such
Business Day and, then the remaining VFC Principal
Collections shall be treated as Shared Principal
Collections available to make payments with respect
to other Series pursuant to subsection 4.3(e) of
the Agreement. On any Business Day Shared
Principal Collections allocated to the Series 1999-
1 Certificates for such Business Day may be applied
by the Servicer or by the Trustee acting in
accordance with the instructions of the Servicer,
at the option of the Transferor and in an amount
(such amount to be deemed the "Principal Shortfall"
with respect to the Series 1999-1 Certificates) to
be determined by the Transferor, to make payments
of principal to (i) the Class A Certificateholders,
(ii) if after giving effect to such payment, both
(A) no Series 1999-1 Pay Out Event shall have
occurred and be continuing and (B) the Class B
Invested Amount shall not be less than the Required
Class B Invested Amount, to the Class A
Certificateholders and the Class B
Certificateholders pro rata based on the Invested
Amount of each such Class on such Business Day, or
(iii) if after giving effect to such payment, both
(A) no Series 1999-1 Pay Out Event shall have
occurred and be continuing, (B) the Class B
Invested Amount shall not be less than the Required
Class B Invested Amount, and (C) the Class C
Invested Amount shall not be less than the Required
Class C Invested Amount, to the Class A
Certificateholders, the Class B Certificateholders
and the Class C Certificateholders pro rata based
on the Invested Amount of each such Class on such
Business Day. Amounts of principal to be paid to
the Class A Certificateholders or the Class B
Certificateholders pursuant to this subsection
4.6(f) shall be deposited into the Principal
Account.
(g) At the option of the Transferor on any
Business Day, all or any portion of Principal
Collections otherwise to be paid to the Transferor
as Holder of the Exchangeable Transferor
Certificate pursuant to subsection 4.3(b) of the
Agreement on such Business Day or of Shared
Principal Collections otherwise to be paid to the
Transferor pursuant to subsection 4.3(e) of the
Agreement on such Business Day may be deposited
into the Reserve Account.
Section 4.7 Coverage of Required Amounts for the
Series 1999-1 Certificates. (a) To the extent that
any amounts are on deposit in the Excess Funding
Account on any Business Day, the Servicer shall
apply Finance Charge Collections that would
otherwise be allocable to the Transferor in an
amount equal to the excess of (x) the product of
(a) the Base Rate and (b) the product of (i) the
amount on deposit in the Excess Funding Account and
(ii) the number of days elapsed since the previous
Business Day divided by the actual number of days
in such year over (y) the aggregate amount of all
earnings since the previous Business Day available
from the Cash Equivalents in which funds on deposit
in the Excess Funding Account are invested, such
amount to be applied during the Revolving Period in
the manner specified in subsections 4.6(a)(i)
through (ix) and (xii) through (xv) of the
Agreement or during the Amortization Period in the
manner specified in subsections 4.6(b)(i) through
(ix) and (xi) of the Agreement or subsections
4.6(c)(i) through (ix) and (vii) through (xv), as
applicable, of the Agreement. After giving effect
to such application, on each Business Day, the
Servicer shall determine the Class A Required
Amount, the Class B Required Amount and the Series
1999-1 Shortfall, if any. In the event that the
Class A Required Amount, the Class B Required
Amount or the Series 1999-1 Shortfall for a
Business Day is greater than zero, the Servicer
shall reflect such positive amount on the Daily
Report for such Business Day.
(b) To the extent of any Series 1999-1
Shortfall, the Servicer shall apply any Excess
Finance Charge Collections allocable to the Series
1999-1 Certificates in an amount equal to such
Series 1999-1 Shortfall in the manner specified in
subsections 4.6(a)(i) through (xv) of the Agreement
during the Revolving Period or in the manner
specified in subsections 4.6(b)(i) through (xi) or
4.6(c)(i) through (xv) of the Agreement, as
applicable, during the Amortization Period. Excess
Finance Charge Collections allocated to the Series
1999-1 Certificates for any Business Day shall mean
an amount equal to the product of (x) Excess
Finance Charge Collections available from all other
Series in Group I for such Business Day and (y) a
fraction, the numerator of which is the Series 1999-
1 Shortfall for such Business Day and the
denominator of which is the aggregate amount of
shortfalls in required amounts or other amounts to
be paid from Finance Charge Collections for all
Series in Group I for such Business Day. If there
is any Class A Required Amount for a Business Day
after such application of Excess Finance Charge
Collections, the amount thereof, up to the
Available Reserve Amount, shall be withdrawn by the
Trustee acting in accordance with the instructions
of the Servicer on such Business Day from the
Reserve Account and shall be applied during the
Revolving Period in the manner specified in
subsections 4.6(a)(i), (v), (vi) or (viii) of the
Agreement, or during the Amortization Period in the
manner described in subsections 4.6(b)(i), (v),
(vi) or (viii) of the Agreement or subsections
4.6(c)(i), (v), (vi) or (viii) of the Agreement, as
applicable. If there is any Class B Required
Amount for a Business Day after such application of
Excess Finance Charge Collections, the amount
thereof, up to the Available Reserve Amount (after
giving effect to any withdrawals in respect of the
Class A Required Amount), shall be withdrawn by the
Trustee acting in accordance with the instructions
of the Servicer on such Business Day from the
Reserve Account and shall be applied during the
Revolving Period in the manner specified in
subsections 4.6(a)(ii), (v), (vii) or (ix) of the
Agreement, or during the Amortization Period in the
manner described in subsections 4.6(b)(ii), (v),
(vi) or (ix) or 4.6(c)(ii), (v), (vii) or (ix) of
the Agreement, as applicable.
(c) In the event that the sum of the Class A
Required Amount and the Class B Required Amount for
a Business Day exceeds the sum of the Available
Reserve Amount and the amount of the Excess Finance
Charge Collections allocated thereto on such
Business Day, a portion of the Net Principal
Collections allocable to the Class C Certificates
in an amount equal to the lesser of such excess and
product of (i) (x) during the Revolving Period, the
sum of the Class B Floating Allocation Percentage
and the Class C Floating Allocation Percentage or
(y) during the Amortization Period, the sum of the
Class B Fixed/Floating Allocation Percentage and
Class C Fixed/Floating Allocation Percentage and
(ii) the amount of Net Principal Collections in the
Collection Account with respect to such Business
Day shall be allocated by the Servicer first to the
Class A Certificates and then to the Class B
Certificates and applied (any such amount so
applied, "Reallocated Principal Collections") on
such Business Day in accordance with the provisions
during the Revolving Period of subsections
4.6(a)(i), (ii) or (iv) through (ix) of the
Agreement and during the Amortization Period, in
accordance with the provisions of subsections
4.6(b)(i), (ii) or (iv) through (ix) of the
Agreement or 4.6(c)(i), (ii) or (iv) through (ix)
of the Agreement, as applicable; provided, however,
that (A) with respect to amounts applied pursuant
to subsections 4.6(a)(iv), (b)(iv) and (c)(iv),
such amounts shall be applied only to the extent of
the sum of the Class A Floating Allocation
Percentage and the Class B Floating Allocation
Percentage of the shortfall arising pursuant to
such subsections and (y) the amount so applied with
respect to the Class B Required Amount on any
Business Day shall not exceed the applicable Class
C Floating Allocation Percentage or Class C
Fixed/Floating Allocation Percentage, as
applicable, of the Net Principal Collections in the
Collection Account with respect to such Business
Day, minus any Reallocated Principal Collections
applied to cover the Class A Required Amount on
that Business Day. In the event that the sum of
the Class A Required Amount and the Class B
Required Amount exceeds such Available Reserve
Amount and the amount of such Excess Finance Charge
Collections and of such Net Principal Collections
applied pursuant to this subsection 4.7(c), the
Class C Invested Amount shall be reduced but only
to the extent that the Class C Invested Amount
shall be reduced to zero by an amount not to exceed
the Series Default and Dilution Amount for that
Business Day; and then the Class B Invested Amount
and, if applicable, the Class A Invested Amount
shall be reduced as provided in subsections 4.8(b)
or 4.8(c) of the Agreement.
Section 4.8 Investor Charge-Offs. (a) If, on
any Determination Date with respect to a
Distribution Date on or prior to the Class C
Principal Payment Commencement Date, the Series
Default and Dilution Amount for the preceding
Monthly Period exceeded the aggregate amount of
Finance Charge Collections applied to the payment
thereof pursuant to subsection 4.6(a)(v) of the
Agreement during the Revolving Period or subsection
4.6(b)(v) or 4.6(c)(v) of the Agreement, as
applicable, during the Amortization Period and the
Available Reserve Amount and the amount of Excess
Finance Charge Collections and Reallocated
Principal Collections allocated thereto pursuant to
subsection 4.7(b) of the Agreement, the Class C
Invested Amount will be reduced (without
duplication of any reduction pursuant to the last
sentence of subsection 4.7(b)) by the amount by
which the Series Default and Dilution Amount for
the preceding monthly period exceeds the amount
applied with respect thereto during such preceding
Monthly Period (a "Class C Investor Charge-Off").
To the extent that on any subsequent Business Day
VFC Additional Amounts are purchased pursuant to
Section 6.15, the Holder of the Class C
Certificates shall first deposit into the Excess
Funding Account an amount equal to any Class C
Investor Charge-Offs on such Business Day and then
shall purchase any other Class C Invested Amount
pursuant to Section 6.15. To the extent that on
any subsequent Business Day there is a remaining
positive balance of Total Finance Charge
Collections on deposit in the Collection Account
after giving effect during the Revolving Period to
subsections 4.6(a)(i) through (ix) of the Agreement
or during the Amortization Period to subsections
4.6(b)(i) through (ix) or subsections 4.6(c)(i)
through (ix) of the Agreement, as applicable, the
Servicer will apply such excess Finance Charge
Collections as provided in subsection 4.6(a)(x) of
the Agreement during the Revolving Period or
subsection 4.6(b)(x) or 4.6(c)(x) of the Agreement,
as applicable, during the Amortization Period to
reimburse the aggregate amount of Class C Investor
Charge-Offs and other reductions to the Class C
Invested Amount pursuant to clause (d) of the
definition thereof not previously reimbursed, up to
the amount so available.
(b) In the event that any reduction of the
Class C Invested Amount pursuant to subsection
4.8(a) of the Agreement would cause the Class C
Invested Amount to be a negative number, the Class
C Invested Amount will be reduced to zero, and the
Class B Invested Amount will be reduced by the
lesser of (i) the amount by which the Class C
Invested Amount would have been reduced below zero
and (ii) the Class A/B Default and Dilution Amount
for the preceding Monthly Period (a "Class B
Investor Charge-Off"). To the extent that on any
subsequent Business Day there is a positive balance
of Total Finance Charge Collections on deposit in
the Collection Account after giving effect to
subsections 4.6(a)(i) through (vi) of the Agreement
during the Revolving Period or subsections
4.6(b)(i) through (vi) or 4.6(c)(i) through (vi) of
the Agreement, as applicable, during the
Amortization Period, the Servicer will apply such
excess Finance Charge Collections as provided in
subsection 4.6(a)(vii) of the Agreement during the
Revolving Period or subsection 4.6(b)(vii) or
4.6(c)(vii) of the Agreement, as applicable, during
the Amortization Period to reimburse the aggregate
amount of Class B Investor Charge-Offs and other
reductions to the Class B Invested Amount pursuant
to clause (d) of the definition thereof not
previously reimbursed, up to the amount so
available.
(c) In the event that any such reduction of the
Class B Invested Amount pursuant to subsection
4.8(b) of the Agreement would cause the Class B
Invested Amount to be a negative number, the Class
B Invested Amount will be reduced to zero, and the
Class A Invested Amount will be reduced by the
lesser of (i) the amount by which the Class B
Invested Amount would have been reduced below zero
and (ii) the Class A Default and Dilution Amount
for the preceding Monthly Period (a "Class A
Investor Charge-Off"). To the extent that on any
subsequent Business Day there is a positive balance
of Total Finance Charge Collections on deposit in
the Collection Account after giving effect to
subsections 4.6(a)(i) through (v) of the Agreement
during the Revolving Period or subsections
4.6(b)(i) through (v) or 4.6(c)(i) through (v) of
the Agreement, as applicable, during the
Amortization Period, the Servicer will apply such
excess Finance Charge Collections as provided in
subsection 4.6(a)(vi) of the Agreement during the
Revolving Period or subsection 4.6(b)(vi) or
4.6(c)(vi) of the Agreement, as applicable, during
the Amortization Period to reimburse the aggregate
amount of Class A Investor Charge-Offs not
previously reimbursed, up to the amount so
available.
Section 4.9 Reserve Account. (a) The Servicer
shall establish and maintain with an Eligible
Institution, which may be the Trustee, in the name
of the Trustee, on behalf of the Trust, a
segregated trust account (the "Reserve Account")
bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of
the Holders of Series 1999-1 Variable Funding
Certificates. The Trustee shall, on behalf of the
Holders of Series 1999-1 Variable Funding
Certificates, possess all right, title and interest
in all funds on deposit from time to time in the
Reserve Account and in all proceeds thereof. The
Reserve Account shall be under the sole dominion
and control of the Trustee for the benefit of the
Holders of Series 1999-1 Variable Funding
Certificates. If at any time an Eligible
Institution holding the Reserve Account ceases to
be an Eligible Institution, the Transferor shall
notify the Trustee, and the Trustee upon being
notified (or the Servicer on its behalf) shall
within 10 Business Days establish a new Reserve
Account meeting the conditions specified above, and
shall transfer any cash or any investments to such
new Reserve Account. The Trustee, at the direction
of the Servicer, shall make deposits to and
withdrawals from the Reserve Account in the amounts
and at the times set forth in Sections 4.6, 4.7 and
4.9 of the Agreement. All withdrawals from the
Reserve Account shall be made in the priority set
forth below.
(b) No deposit into the Reserve Account shall
be required on the Closing Date. Funds on deposit
in the Reserve Account from time to time shall be
invested and/or reinvested at the direction of the
Servicer by the Trustee in Cash Equivalents that
will mature so that such funds will be available
for withdrawal on the following Transfer Date. The
Trustee shall not be liable for any investment loss
or other charge resulting therefrom. No Cash
Equivalent shall be disposed of prior to its
maturity unless the Servicer so directs and either
(i) such disposal will not result in a loss of all
or part of the principal portion of such Cash
Equivalent or (ii) prior to the maturity of such
Cash Equivalent, a default occurs in the payment of
principal, interest or any other amount with
respect to such Cash Equivalent. The Trustee shall
maintain for the benefit of the Holders of Series
1999-1 Variable Funding Certificates possession of
the negotiable instruments or securities, if any,
evidencing such Cash Equivalents. All cash
interest and earnings (net of losses and investment
expenses) received on each Business Day on funds on
deposit in the Reserve Account shall be retained
therein to the extent that the Available Reserve
Amount is less than the Required Reserve Amount on
such Business Day, and such retained amounts shall
be considered to be available and on deposit in the
Reserve Account until withdrawn therefrom. All
cash interest and earnings (net of losses and
investment expenses) received on each Business Day
on funds on deposit in the Reserve Account in
excess of the amount, if any, required to be
retained in the Reserve Account on such Business
Day shall be treated as a component of Total
Finance Charge Collections and, for purposes of
determining the availability of funds or the
balances in the Reserve Account for any other
reason under this Variable Funding Supplement, all
such investment earnings on such funds shall be
deemed not to be available or on deposit in the
Reserve Account. If on any Business Day the amount
on deposit in the Reserve Account exceeds the
Required Reserve Amount, the amount of such excess
shall be treated as a component of Total Finance
Charge Collections.
Section 4.10 Excess Purchase Account. (a)
The Servicer shall establish and maintain with an
Eligible Institution, which may be the Trustee, in
the name of the Trustee, on behalf of the Trust, a
segregated trust account (the "Excess Purchase
Account") bearing a designation clearly indicating
that the funds deposited therein are held for the
benefit of the Holders of Series 1999-1 Variable
Funding Certificates. The Trustee, on behalf of
the Holders of the Series 1999-1 Variable Funding
Certificates, shall possess all right, title and
interest in all funds on deposit from time to time
in the Excess Purchase Account and in all proceeds
thereof. The Excess Purchase Account shall be under
the sole dominion and control of the Trustee for
the benefit of the Holders of Series 1999-1
Variable Funding Certificates. If at any time an
Eligible Institution holding the Excess Purchase
Account ceases to be an Eligible Institution, the
Transferor shall notify the Trustee, and the
Trustee upon being notified (or the Servicer on its
behalf) shall within 10 Business Days establish a
new Excess Purchase Account meeting the conditions
specified above, and shall transfer any cash or any
investments to such new Excess Purchase Account.
The Trustee, at the direction of the Servicer,
shall make deposits to the Excess Purchase Account
in the amounts and at the times set forth in
Section 6.15 of the Agreement.
(b) Funds on deposit in the Excess Purchase
Account from time to time shall be invested and/or
reinvested at the direction of the Servicer by the
Trustee in Cash Equivalents that will mature so
that such funds will be available for withdrawal
not later than the following Transfer Date. The
Trustee shall not be liable for any investment loss
or other charge resulting therefrom. No Cash
Equivalent shall be disposed of prior to its
maturity unless the Servicer so directs and either
(i) such disposal will not result in a loss of all
or part of the principal portion of such Cash
Equivalent or (ii) prior to the maturity of such
Cash Equivalent, a default occurs in the payment of
principal, interest or any other amount with
respect to such Cash Equivalent. The Trustee shall
maintain for the benefit of the Holders of Series
1999-1 Variable Funding Certificates possession of
the negotiable instruments or securities, if any,
evidencing such Cash Equivalents. All cash
interest and earnings (net of losses and investment
expenses) received on each Business Day on funds on
deposit in the Excess Purchase Account shall be
treated as a component of Total Finance Charge
Collections. For purposes of determining the
availability of funds or the balances in the Excess
Purchase Account for any other reason under this
Variable Funding Supplement, all investment
earnings on such funds shall be deemed not to be
available or on deposit.
(c) If on any Business Day prior to the
Amortization Period Commencement Date the greater
of (i) the sum of (A) the aggregate Invested Amount
of each Series then outstanding as of such day
including the Series 1999-1 Variable Funding
Certificates minus amounts on deposit in the
principal funding account for any Series and (B)
the Minimum Transferor Amount as of such day or
(ii) the Minimum Aggregate Principal Receivables
exceeds an amount equal to (a) the aggregate amount
of Principal Receivables and amounts on deposit in
the Excess Funding Account (other than investment
earnings thereon), plus (b) the amount on deposit
in the Excess Purchase Account, the amount of such
excess shall be withdrawn by the Trustee in
accordance with the instructions of the Servicer
from the Excess Purchase Account and paid to the
Transferor in respect of VFC Additional Invested
Amounts theretofore purchased hereunder. On the
Amortization Period Commencement Date, the amount
on deposit in the Excess Purchase Account or, if
less, the sum of the Class A Invested Amount and
the Class B Invested Amount shall be withdrawn by
the Trustee at the direction of the Servicer and
deposited into the Principal Account.
Section 4.11 Principal and Interest Funding
Accounts. (a) The Servicer shall establish and
maintain with an Eligible Institution approved by
the Class A Agent and the Class B Agent, which may
be the Trustee, in the name of the Trustee, on
behalf of the Trust, segregated trust accounts (the
"Principal Account" and the "Interest Funding
Account", respectively), each bearing a designation
clearly indicating that the funds deposited therein
are held for the benefit of the Holders of Series
1999-1 Variable Funding Certificates. The Trustee
shall, on behalf of the Holders of the Series 1999-
1 Variable Funding Certificates, possess all right,
title and interest in all funds on deposit from
time to time in the Principal Account and the
Interest Funding Account and in all proceeds
thereof. The Principal Account and the Interest
Funding Account shall each be under the sole
dominion and control of the Trustee for the benefit
of the Holders of Series 1999-1 Variable Funding
Certificates. If at any time an Eligible
Institution holding the Principal Account or the
Interest Funding Account ceases to be an Eligible
Institution, the Transferor shall notify the
Trustee and the Administrative Agent, and the
Trustee upon being notified (or the Servicer on its
behalf ) shall within ten Business Days establish a
new Principal Account or Interest Funding Account,
as the case may be, meeting the conditions
specified above, and shall transfer any cash or any
investments to such new Principal Account or
Interest Funding Account. The Trustee, at the
direction of the Servicer, shall make deposits to
the Principal Account in the amounts and at the
times set forth in Section 4.6 or 4.10 of the
Agreement and shall make deposits to the Interest
Funding Account in the amounts and at the times set
forth in Section 4.6 of the Agreement. Amounts
deposited into the Principal Account or Interest
Funding Account shall not reduce the Invested
Amount.
(b) Funds on deposit in the Principal Account
and the Interest Funding Account in respect of the
Class A Variable Funding Certificates from time to
time shall be invested and/or reinvested at the
direction of the Class A Agent by the Trustee in
Cash Equivalents that will mature so that such
funds will be available for withdrawal on the
Business Day preceding the respective dates on
which the related payments are required to be made
under the Class A Certificate Purchase Agreement.
The Trustee shall not be liable for any investment
loss or other charge resulting therefrom. No Cash
Equivalent shall be disposed of prior to its
maturity unless the Class A Agent so directs and
either (i) such disposal will not result in a loss
of all or part of the principal portion of such
Cash Equivalent or (ii) prior to the maturity of
such Cash Equivalent, a default occurs in the
payment of principal, interest or any other amount
with respect to such Cash Equivalent. The Trustee
shall maintain for the benefit of the Holders of
Class A Certificates possession of the negotiable
instruments or securities, if any, evidencing such
Cash Equivalents. Funds on deposit in the
Principal Account and the Interest Funding Account
in respect of the Class B Variable Funding
Certificates from time to time shall be invested
and/or reinvested at the direction of the Class B
Agent by the Trustee in Cash Equivalents that will
mature so that such funds will be available for
withdrawal on the Business Day preceding the
respective dates on which the related payments are
required to be made under the Class B Certificate
Purchase Agreement. No Cash Equivalent shall be
disposed of prior to its maturity unless the Class
B Agent so directs and either (i) such disposal
will not result in a loss of all or part of the
principal portion of such Cash Equivalent or (ii)
prior to the maturity of such Cash Equivalent, a
default occurs in the payment of principal,
interest or any other amount with respect to such
Cash Equivalent. The Trustee shall maintain for
the benefit of the Holders of Class B Certificates
possession of the negotiable instruments or
securities, if any, evidencing such Cash
Equivalents.
(c) All cash interest and earnings (net of
losses and investment expenses) received on each
Business Day on funds on deposit in the Principal
Account or the Interest Funding Account shall be
treated as a component of Total Finance Charge
Collections. For purposes of determining the
availability of funds or the balances in the
Principal Account or the Interest Funding Account
for any other reason under this Variable Funding
Supplement, all investment earnings on such funds
shall be deemed not to be available or on deposit.
(d) Amounts on deposit in the Principal
Account shall be withdrawn by the Trustee acting at
the direction of the Class A Agent on each
Distribution Date for any portion of the Class A
Investor Principal Balance or on any other date on
which a payment in respect of principal of the
Class A Certificates is due as contemplated by the
Class A Certificate Purchase Agreement, to pay to
Class A Certificateholders such portion of the
Class A Investor Principal Balance. Amounts on
deposit in the Interest Funding Account shall be
withdrawn by the Trustee acting at the direction of
the Class A Agent on each Distribution Date for any
portion of the Class A Investor Principal Balance
or on any other date on which a payment in respect
of fees or interest on the Class A Certificates is
due as contemplated by the Class A Certificate
Purchase Agreement, to pay to Class A
Certificateholders accrued and unpaid interest on
such portion of the Class A Investor Principal
Balance and to pay accrued and unpaid Class A
Program Fees. Amounts on deposit in the Principal
Account shall be withdrawn by the Trustee acting at
the direction of the Class B Agent on each
Distribution Date for any portion of the Class B
Investor Principal Balance or on any other date on
which a payment in respect of principal of the
Class B Certificates is due as contemplated by the
Class B Certificate Purchase Agreement, to pay to
Class B Certificateholders such portion of the
Class B Investor Principal Balance. Amounts on
deposit in the Interest Funding Account shall be
withdrawn by the Trustee acting at the direction of
the Class B Agent on each Distribution Date for any
portion of the Class B Investor Principal Balance
or on any other date on which a payment in respect
of fees or interest on the Class B Certificates is
due as contemplated by the Class B Certificate
Purchase Agreement, to pay to Class B
Certificateholders accrued and unpaid interest on
such portion of the Class B Investor Principal
Balance and to pay accrued and unpaid Class B
Program Fees.
(e) If (i) on any Business Day the amount on
deposit in the Interest Funding Account is less
than the amount of accrued interest owing on the
Class A Certificates and the Class B Certificates
on such Business Day, and (ii) any amount of Class
A Interest and/or Class B Interest owed as a result
of any adjustment described in the last sentence of
Class A Carrying Cost or Class B Carrying Costs has
not been deposited into the Interest Funding
Account on or prior to such Business Day, the
Transferor shall deposit into the Interest Funding
Account on such Business Day an amount equal to the
lesser of (a) the shortfall described in clause
(i) next above, and (ii) the amount of Excess
Finance Charge Collections distributed to the
Transferor pursuant to Sections 4.6(a)(xvi),
4.6(b)(xii) or 4.6(c)(xvi), as the case may be,
since the immediately preceding Business Day on
which an adjustment described in clause (ii) next
above occurred.
(f) If (i) on any Business Day the amount on
deposit in the Interest Funding Account is greater
than the amount of accrued interest owing on the
Class A Certificates and the Class B Certificates
on such Business Day, and (ii) such surplus
resulted from the Commercial Paper Rate used to
make daily allocations during the immediately
preceding Fixed Period, pursuant to the last
sentence of Class A Carrying Costs and Class B
Carrying Costs, as the case may be, being greater
than the actual Commercial Paper Rate applicable to
such Fixed Period, the Servicer will apply such
surplus (to the extent that such surplus has not
previously been applied pursuant to this Section
4.11(f)) to the amounts required to be deposited
into the Interest Funding Account on such Business
Day in respect of Class A Interest and Class B
Interest pursuant to Sections 4.6(a)(i) and
(a)(ii), 4.6(b)(i) and (b)(ii) or 4.6(c)(i) and
(ii), as applicable.
Section 4.12 Proceeds Account. The
Servicer shall establish and maintain with an
Eligible Institution, which may be the Trustee, in
the name of the Trustee, on behalf of the Trust, a
segregated trust account (the "Proceeds Account")
bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of
the Holders of Series 1999-1 Variable Funding
Certificates. The Trustee shall, on behalf of the
Holders of Series 1999-1 Variable Funding
Certificates, possess all right, title and interest
in all funds on deposit from time to time in the
Proceeds Account and in all proceeds thereof. The
Proceeds Account shall be under the sole dominion
and control of the Trustee for the benefit of the
Holders of Series 1999-1 Variable Funding
Certificates. If at any time an Eligible
Institution holding the Proceeds Account ceases to
be an Eligible Institution, the Transferor shall
notify the Trustee, and the Trustee upon being
notified (or the Servicer on its behalf) shall
within 10 Business Days establish a new Proceeds
Account meeting the conditions specified above, and
shall transfer any cash or any investments to such
new Proceeds Account. The Trustee, at the
direction of the Servicer, shall make deposits to
and withdrawals from the Proceeds Account in the
amounts and at the times set forth in Section 6.15
of the Agreement. Funds on deposit in the Proceeds
Account from time to time shall be held uninvested.
SECTION 8 Article V of the Agreement. Article V of
the Agreement shall read in its entirety as follows and shall be
applicable only to the Series 1999-1 Certificates:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
Section 5.1 Distributions. (a) On each
Business Day, the Paying Agent shall distribute to
the Class A Certificateholders the amount, if any,
specified in subsection 4.11(d) of the Agreement to
be paid to the Class A Certificateholders on such
Business Day; provided, however, that the final
payment in retirement of the Class A Certificates
will be made only upon presentation and surrender
of the Class A Certificates at the office or
offices specified in the notice of such final
distribution delivered by the Trustee pursuant to
Section 12.3 of the Agreement.
(b) On each Business Day, the Paying Agent
shall distribute to the Class B Certificateholders
the amount, if any, specified in subsection 4.11(d)
of the Agreement to be paid to the Class B
Certificateholders on such Business Day; provided,
however, that the final payment in retirement of
the Class B Certificate will be made only upon
presentation and surrender of the Class B
Certificates at the office or offices specified in
the notice of such final distribution delivered by
the Trustee pursuant to Section 12.3 of the
Agreement.
(c) On each Business Day, the Paying Agent
shall distribute (in accordance with the Daily
Report delivered by the Servicer to the Trustee
pursuant to subsection 3.4(b) of the Agreement) to
each Class C Certificateholder of record (other
than as provided in subsection 2.4(d) or in Section
12.3 of the Agreement respecting a final
distribution) such Certificateholder's pro rata
share (based on the aggregate Undivided Interests
represented by Class C Certificates held by such
Certificateholder) of such amounts on deposit in
the Collection Account as are payable to the Class
C Certificateholders pursuant to Section 4.6 of the
Agreement; provided, however, that the final
payment in retirement of the Class C Certificate
will be made only upon presentation and surrender
of the Class C Certificates at the office or
offices specified in the notice of such final
distribution delivered by the Trustee pursuant to
Section 12.3 of the Agreement.
Section 5.2 Monthly Certificateholders'
Statement. As soon as practicable, but no later
than each Determination Date following the end of
each Monthly Period with respect to items (i)
through (vii) below, and no later than 30 days
following the end of each Monthly Period with
respect to the remaining items listed below, the
Servicer shall forward to the Trustee, the
Administrative Agent and the Rating Agencies a
statement, substantially in the form of Exhibit E
to this Variable Funding Supplement, including the
following information:
(i) the amount of Net Principal
Collections received in the Collection Account
during the related Monthly Period and allocated in
respect of each Class of Series 1999-1
Certificates;
(ii) the amount of Total Finance Charge
Collections processed during the related Monthly
Period and allocated in respect of each Class of
Series 1999-1 Certificates;
(iii) the aggregate amount of Principal
Receivables, the Invested Amount, the Class A
Invested Amount, the Class B Invested Amount, the
Class C Invested Amount, the Transferor Amount,
the Floating Allocation Percentage and, during the
Amortization Period, the Fixed/Floating Allocation
Percentage with respect to the Principal
Receivables in the Trust as of the end of the day
on the last day of the Monthly Period preceding
such Distribution Date;
(iv) the aggregate outstanding balance
of Accounts which are 30, 60, 90, 120, 150 and 180
days or more delinquent as of the end of each
billing cycle during the preceding Monthly Period
for such account;
(v) the aggregate Investor Default
Amount for the related Monthly Period;
(vi) the aggregate Investor Uncovered
Dilution Amount for the related Monthly Period;
(vii) the aggregate amount of (A) Class
A Investor Charge-Offs, (B) Class B Investor
Charge-Offs and other reductions to the Class B
Invested Amount pursuant to clause (d) of the
definition thereof and (C) Class C Investor Charge-
Offs and other reductions to the Class C Invested
Amount pursuant to clause (d) of the definition
thereof for the related Monthly Period and
reimbursements thereof;
(viii) the aggregate amount of the
Monthly Servicing Fee for the related Monthly
Period;
(ix) the Excess Spread Percentage, the
Excess Spread Enhancement Cap Percentage, the
Payment Rate Percentage, the Payment Rate
Enhancement Cap Percentage and the Enhancement
Percentage for the related Monthly Period;
(x) the Available Reserve Account Amount
on the last day of Monthly Period immediately
preceding the related Monthly Period, the
aggregate deposits in the Reserve Account during
the related Monthly Period, the aggregate
disbursements from the Reserve Account during such
Monthly Period, and the Available Reserve Account
Amount and the Required Reserve Account Amount on
the last day of such Monthly Period; and
(xi) the Portfolio Yield and the average
of the daily Base Rates for the related Monthly
Period.
Section 5.3 Annual Certificateholders' Tax
Statement. On or before January 31 of each
calendar year, beginning with calendar year 1998,
the Trustee shall distribute to each Person who at
any time during the preceding calendar year was a
Series 1999-1 Certificateholder, a statement
prepared by the Servicer containing information
regarding the amounts distributed to such Person
and the principal and interest portion thereof,
aggregated for such calendar year or the applicable
portion thereof during which such Person was a
Series 1999-1 Certificateholder, together with such
other customary information (consistent with the
treatment of the Certificates as debt) as the
Servicer deems necessary or desirable to enable the
Series 1999-1 Certificateholders to prepare their
tax returns.
SECTION 9 Article VI of Agreement. The Opinion of
Counsel referred to in part (b) of the seventh sentence of Section
6.9 of the Agreement shall mean, with respect to the Series 1999-1
Certificates, an Opinion of Counsel to the effect that the Class A
Certificates and the Class B Certificates will not represent
interests in an association taxable as a corporation or a publicly
traded partnership for federal income tax purposes. Except as
provided in the preceding sentence, sections 6.1 through 6.14 of
the Agreement shall be read in their entirety as provided in the
Agreement. Article VI (except for Sections 6.1 through 6.14
thereof) shall read in its entirety as follows and shall be
applicable only to the Series 1999-1 Certificates:
Section 6.15 VFC Additional Invested
Amounts. (a) The Holders of the Class A
Certificates, the Holders of the Class B
Certificates and the Holders of the Class C
Certificates agree, by acceptance of the Class A
Certificates, the Class B Certificates or the Class
C Certificates, respectively, that the Transferor
may from time to time prior to the Amortization
Period Commencement Date for the Variable Funding
Certificates require that such Certificateholders
acquire as of any Business Day additional undivided
interests in the Trust in specified amounts (such
amounts, respectively, the "VFC Additional Class A
Invested Amount," the "VFC Additional Class B
Invested Amount," and the "VFC Additional Class C
Invested Amount" and, collectively, the "VFC
Additional Invested Amounts") not to exceed, after
giving effect thereto, an amount equal to (i) the
aggregate amount of Principal Receivables and
amounts on deposit in the Excess Funding Account
(other than investment earnings thereon), (ii) plus
the amount on deposit in the Excess Purchase
Account, minus (iii) the greater of (A) the sum of
(x) the aggregate Invested Amount of each Series
then outstanding as of such day including all
Variable Funding Certificates minus amounts on
deposit in the principal funding account for any
Series and (y) the Minimum Transferor Amount as of
such day or (B) the Minimum Aggregate Principal
Receivables.
(b) The obligation of any Holder of Class A
Certificates to acquire any VFC Additional Class A
Invested Amount shall be subject to the
satisfaction of any applicable conditions provided
in the Class A Certificate Purchase Agreement and
subject to the further conditions that, after
giving effect to such acquisition and to any
concurrent acquisitions of VFC Additional Invested
Amounts, (i) the Class B Invested Amount shall be
equal to or greater than the Required Class B
Invested Amount and the Class C Invested Amount
shall be equal to or greater than the Required
Class C Invested Amount and (ii) the sum of the
Available Reserve Amount plus the excess, if any,
of the Class C Invested Amount over 10% of the
Invested Amount shall be equal to or greater than
the Required Reserve Amount. The obligation of any
Holder of Class B Certificates to acquire any VFC
Additional Class B Invested Amount shall be subject
to the satisfaction of any applicable conditions
provided in the Class B Certificate Purchase
Agreement and subject to the further conditions
that, after giving effect to such acquisition and
to any concurrent acquisitions of VFC Additional
Invested Amounts, (i) the Class C Invested Amount
shall be equal to or greater than the Required
Class C Invested Amount and (ii) the sum of the
Available Reserve Amount plus the excess, if any,
of the Class C Invested Amount over 10% of the
Invested Amount shall be equal to or greater than
the Required Reserve Amount.
(c) If the Holders of the Class A Certificates
acquire such additional interest, then in
consideration of such Holder's payments of the VFC
Additional Class A Invested Amount, the Servicer
shall note such VFC Additional Class A Invested
Amount on the related Daily Report and direct the
Trustee in writing to pay to the Transferor such
VFC Additional Invested Amounts, and the Invested
Amount of the Class A Variable Funding Certificates
will be equal to the Invested Amount of the Class A
Certificates stated in such Daily Report. If the
Holders of the Class B Certificates acquire such
additional interest, then in consideration of such
Holder's payments of the VFC Additional Class B
Invested Amount, the Servicer shall note such VFC
Additional Class B Invested Amount on the related
Daily Report and direct the Trustee to pay to the
Transferor such VFC Additional Invested Amounts,
and the Invested Amount of the Class B Certificates
will be equal to the Invested Amount of the Class B
Certificates stated in such Daily Report. If the
Holders of the Class C Certificates acquire such
additional interest, then in consideration of such
Holder's payments of the VFC Additional Class C
Invested Amount, the Servicer shall appropriately
note such VFC Additional Class C Invested Amount on
the related Daily Report and direct the Trustee in
writing to pay to the Transferor such VFC
Additional Invested Amounts, and the Invested
Amount of the Class C Certificates will be equal to
the Invested Amount of the Class C Certificates
stated in such Daily Report.
(d) The proceeds of the purchase on any
Business Day of VFC Additional Invested Amounts
received by the Trustee shall be deposited upon
receipt into the Proceeds Account. To the extent
that on any purchase date and after giving effect
to the purchase of VFC Additional Invested Amounts
pursuant to this Section 6.15, (a) the greater of
(i) the sum of (A) the aggregate Invested Amount of
each Series then outstanding as of such day
including the Variable Funding Certificates minus
amounts on deposit in the principal funding account
for any Series and (B) the Minimum Transferor
Amount as of such day or (ii) the Minimum Aggregate
Principal Receivables exceeds (b) an amount equal
to the aggregate amount of Principal Receivables
and amounts on deposit in the Excess Funding
Account (other than investment earnings thereon),
the Servicer shall instruct the Trustee, and the
Trustee, upon such instruction from the Servicer,
shall withdraw a portion of the purchase price for
such VFC Additional Invested Amounts equal to such
excess from the Proceeds Account and deposit such
portion into the Excess Purchase Account. The
Trustee shall withdraw any remaining Proceeds of
such purchase price from the Proceeds Account and
transfer such amounts to the Transferor in
accordance with the instructions of the Servicer.
(e) In the event that the proceeds of a
purchase of any VFC Additional Class A Invested
Amounts required to be made on a Business Day
pursuant to the Class A Certificate Purchase
Agreement shall not have been received in the
Proceeds Account by 1:00 p.m., New York City time,
on such Business Day, the Servicer shall notify the
Class A Agent and the Transferor by not later than
1:30 p.m., New York City time, on such Business
Day. In the event that the proceeds of a purchase
of any VFC Additional Class B Invested Amounts
required to be made on a Business Day pursuant to
the Class B Certificate Purchase Agreement shall
not have been received in the Proceeds Account by
1:00 p.m., New York City time, on such Business
Day, the Servicer shall notify the Class B Agent
and the Transferor by not later than 1:30 p.m., New
York City time, on such Business Day.
Section 6.16 Extension. (a) If a Pay Out
Event has not occurred or has occurred but has been
remedied on or before the 30th Business Day
preceding the Extension Date, the Transferor, in
its sole discretion, may deliver to the Trustee on
or before such date a notice substantially in the
form of Exhibit B (the "Extension Notice") to this
Variable Funding Supplement. The Trustee shall
mail a copy of the Extension Notice and all
documents annexed thereto to the Investor
Certificateholders of record on the date of receipt
thereof. The Transferor shall state in the
Extension Notice that it intends to extend the
Revolving Period until the later Amortization
Period Commencement Date set forth in the Extension
Notice. The Extension Notice shall also set forth
the next Extension Date. The following documents
shall be annexed to the Extension Notice: (i) a
form of the Opinion of Counsel addressed to the
Transferor and the Trustee to the effect that
despite the Extension the Transferor will not be
treated as an association taxable as a corporation
(the "Extension Tax Opinion"); (ii) a form of the
Opinion of Counsel addressed to the Transferor and
the Trustee (the "Extension Opinion") to the effect
that (A) the Transferor has the corporate power and
authority to effect the Extension, (B) the
Extension has been duly authorized by the
Transferor, and (C) all conditions precedent to the
Extension required by this Section 6.16 have been
fulfilled; and (iii) a form of Investor
Certificateholder Election Notice substantially in
the form of Exhibit C (the "Election Notice") to
this Variable Funding Supplement. In addition, the
Extension Notice shall state that any Investor
Certificateholder electing to approve the Extension
must do so on or before the Election Date (as
defined below) by returning the annexed Election
Notice properly executed to the Trustee in the
manner described below. The Extension Notice shall
also state that an Investor Certificateholder may
withdraw any such election in whole or in part on
or before the Election Date, and the Transferor, in
its sole discretion, may, prior to the Election
Date, withdraw its election to extend the Revolving
Period. Any Holder that elects to approve an
Extension hereunder shall deliver a duly executed
Election Notice to the Trustee at the address
designated in the Extension Notice on or before
3:00 p.m., New York City time, on or before the
fifth Business Day preceding the Extension Date
(such Business Day constituting the "Election
Date").
(b) No Extension shall occur until prior
satisfaction of the following conditions at the
close of business on the Election Date: (i) no Pay
Out Event shall have occurred and be continuing,
(ii) there shall have been delivered to the Trustee
(A) the Extension Tax Opinion and the Extension
Opinion, each addressed to the Transferor and the
Trustee and (B) written confirmation from each
Rating Agency rating the Class A Certificates or
the Class B Certificates or providing informal
ratings on such Series 1999-1 Variable Funding
Certificates for the benefit of a Class A
Certificateholder or Class B Certificateholder that
the Extension will not cause such Rating Agency to
lower its then current rating or informal rating or
withdraw its ratings or informal ratings of such
Investor Certificates, (iii) each holder of Class A
Certificates and each holder of Class B
Certificates shall have elected to approve the
Extension by returning to the Trustee on or before
the Election Date the executed Election Notice
annexed to the Extension Notice delivered to such
Class A Certificateholders and Class B
Certificateholders pursuant to subsection 6.16(a)
of the Agreement, (iv) if provided for by the
Transferor, in its sole discretion, in the
Extension Notice, the holders of a specified
minimum amount of outstanding Class C Certificates
shall have elected to approve of the Extension by
returning to the Trustee on or before the Election
Date the executed form of Election Notice annexed
to the Extension Notice delivered to such Class C
Certificateholders pursuant to subsection 6.16(a)
of the Agreement and (v) the Transferor shall have
delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each to the effect that
all conditions precedent in this subparagraph (b)
have been satisfied. If, by the close of business
on the Election Date, all of the conditions stated
in this subsection 6.16(b) of the Agreement have
not been satisfied and all such documents delivered
to the Trustee pursuant to this subsection 6.16(b)
of the Agreement are not in form satisfactory to
it, or if the Transferor has notified the Trustee,
prior to the Election Date, that the Transferor has
exercised its right to withdraw its election of an
Extension, no Extension shall occur.
(c) The execution by the required number of
Investor Certificateholders of the applicable
Election Notice and return thereof to the Trustee
by the required date and time, the continued
election by the Transferor to extend the Revolving
Period at the Election Date, and the compliance
with all of the provisions of this Section 6.16,
shall evidence an extension or renewal of the
obligations represented by the Investor
Certificates delivered in exchange therefor, and
not a novation or extinguishment of such
obligations or a substitution with respect thereto.
(d) To the extent required by applicable laws
and regulations, as evidenced by an Opinion of
Counsel delivered by the Transferor to the Trustee,
the provisions of this Section 6.16 shall or may be
modified to comply with all applicable laws and
regulations in effect at the time of a prepared
Extension.
Section 6.17 Transfers of Class C
Certificates; Legends. (a) No Class C Certificate
or any interest therein may be sold (including in
the initial offering), conveyed, assigned,
hypothecated, pledged, participated or otherwise
transferred (each such act or event, a "Transfer"),
except in accordance with this Section 6.17. Any
Transfer of a Class C Certificate otherwise
permitted by this Section 6.17 will be permitted
only if it consists of a pro rata percentage
interest in all payments made with respect to such
Holder's beneficial interest in the Class C
Certificates. No Transfer of a Class C Certificate
or any interest therein to any Person (each, an
"Assignee") may occur, unless the Assignee shall
have executed and delivered to the Trustee an
investment letter substantially in the form of
Exhibit D hereto and the Transferor shall have
granted its prior written consent thereto. Such
consent shall not be granted if the Transferor
determines in its sole and absolute discretion that
such Transfer would create a risk that the Trust
would be classified for federal or any applicable
state tax purposes as an association or publicly
traded partnership taxable as a corporation;
provided, that any attempted Transfer that would
cause the number of Targeted Holders to exceed
ninety-nine shall be void; and provided, further,
that the number of Targeted Holders for the Trust
as a result of Transfers of Class C Certificates
shall not be more than ten or such other number as
may be consented to by the Transferor, which
consent may be withheld in its sole and absolute
discretion. The Transferor agrees to monitor the
number of Targeted Holders and to deny its consent
to any transfer of any interest in the Trust with
respect to which no opinion has been rendered that
such certificate (or other interest in the Trust)
will be treated as debt for federal income tax
purposes if such transfer could cause the number of
Targeted Holders to exceed ninety-nine.
(b) Each initial purchaser of a Class C
Certificate or any interest therein and any
Assignee thereof shall further certify to the
Transferor, the Servicer and the Trustee that it
has neither acquired nor will it sell, trade or
transfer any interest in a Class C Certificate or
cause an interest in a Class C Certificate to be
marketed on or through an "established securities
market" within the meaning of Section 7704(b)(1) of
the Code and any proposed, temporary or final
treasury regulation thereunder, including, without
limitation, an over-the-counter-market or an
interdealer quotation system that regularly
disseminates firm buy or sell quotations. In
addition, each initial purchaser of a Class C
Certificate or any interest therein and any
Assignee shall certify, prior to any delivery or
Transfer to it of a Class C Certificate, that it is
not and, for so long as it holds any interest in a
Class C Certificate, will not become a partnership,
Subchapter S corporation or grantor trust for U.S.
federal income tax purposes. If an initial
purchaser of an interest in a Class C Certificate
or an Assignee cannot make the certification
described in the preceding sentence, the Transferor
may, in its sole discretion, prohibit a Transfer to
such entity; provided, however, that if the
Transferor agrees to permit such a Transfer, the
Transferor or the Servicer may require additional
certifications in order to prevent the Trust from
being treated as a publicly traded partnership.
Each initial purchaser of an interest in a Class C
Certificate and each Assignee acknowledges that any
Opinion of Counsel furnished to the Transferor or
the Trustee to the effect that the Trust will not
be treated as a publicly traded partnership taxable
as a corporation will be dependent in part on the
accuracy of the certifications described in this
subsection 6.17(b).
(c) Subject to the provisions of subsections
6.17(a) and 6.17(b) above, the Transferor may at
any time, without the consent of the Investor
Certificateholders, (i) sell or transfer all or a
portion of the Class C Certificates and (ii) in
connection with any such sale or transfer, enter
into a supplemental agreement with the Trustee
pursuant to which the Transferor may amend the
Class C Certificate Rate, set forth the amount of
monthly interest due Class C Certificateholders
(the "Class C Interest"), provide for the payment
of additional amounts (the "Class C Additional
Interest") with respect to any shortfall (the
"Class C Interest Shortfall") in payments of such
Class C Interest and provide for such other
provisions with respect to the Class C Certificates
as may be specified in such supplemental agreement,
provided that in each such case (A) the Transferor
shall have given notice to the Trustee, the
Servicer, the Administrative Agent and the Rating
Agencies of such proposed sale or transfer of the
Class C Certificates and such supplemental
agreement at least five Business Days prior to the
consummation of such sale or transfer and the
execution of such proposed supplemental agreement;
(B) the Rating Agency Condition shall have been
satisfied; (C) no Trust Pay Out Event or Series
1999-1 Pay Out Event shall have occurred prior to
the consummation of such proposed sale or transfer
of Class C Certificates or the execution of such
supplemental agreement; (D) the Transferor shall
have delivered an Officer's Certificate, dated the
date of the consummation of such sale or transfer
and the effectiveness of such supplemental
agreement, to the effect that, in the reasonable
belief of the Transferor, such action will not,
based on the facts known to such officer at the
time of such certification, cause a Pay Out Event
to occur with respect to any Series, (E) the
Transferor will have delivered an Opinion of
Counsel, dated the date of such certificate with
respect to such action to the effect that such
action will not adversely affect the Federal or
Applicable Tax State income tax characterization of
any outstanding Series of Investor Certificates or
the taxability of the Trust under Federal or
Applicable Tax State income tax laws, and (F)
either (x) the Available Reserve Amount on the most
recent Determination Date (after giving effect to
all payments and allocations on such Determination
Date) shall have been equal to or greater than the
Required Reserve Amount on such Determination Date,
each recalculated on a pro forma basis as though
the Class C Certificates had borne interest at the
amended Class C Interest Rate throughout each of
the three Monthly Periods preceding such
Determination Date or (y) the Administrative Agent
shall have consented to such supplemental agreement
and the terms and conditions set forth therein;
provided, further, as a condition to the sale or
transfer of all or a portion of the Class C
Certificates the transferee shall be required to
agree not to institute against, or join any other
Person in instituting against, or join any other
Person instituting against, the Trust or the
Transferor any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state
bankruptcy or similar law, for one year and one day
after all Investor Certificates are paid in full.
(d) Transfers of Class C Certificates shall
also be subject to the provisions of subsection
3(c) of this Variable Funding Supplement.
Section 6.18 Transfers of Variable Funding
Certificates; Legends. (a) The provisions of this
Section 6.18 shall apply to the Class A
Certificates and the Class B Certificates unless,
with respect to such Class, the Transferor and the
Trustee shall have received an Opinion of Counsel
to the effect that such Class will be treated as
indebtedness for federal income tax purposes.
(b) Subject to subsection 6.18(a), no Transfer
of a Class A Certificate or Class B Certificate or
any interest therein (including in the initial
offering) may occur, except in accordance with this
Section 6.18. Any Transfer of a Class A
Certificate or Class B Certificate otherwise
permitted by this Section 6.18 will be permitted
only if it consists of a pro rata percentage
interest in all payments made with respect to such
Holder's beneficial interest in the Class A
Certificates or Class B Certificates, as the case
may be. No Transfer of a Class A Certificate or a
Class B Certificate or any interest therein to any
Assignee shall be permitted, unless such Assignee
shall have executed and delivered to the Trustee an
investment letter substantially in the form of
Exhibit A to the Class A Certificate Purchase
Agreement or to the Class B Certificate Purchase
Agreement, as applicable, and, except in the case
of a Transfer to a Support Bank (as defined in such
respective agreements), unless the Transferor shall
have granted its prior written consent thereto.
Such consent shall not be granted if the Transferor
reasonably determines that such Transfer would
create a risk that the Trust would be classified
for federal or any applicable state tax purposes as
an association or publicly traded partnership
taxable as a corporation; provided, that any
attempted Transfer that would cause the number of
Targeted Holders to exceed ninety-nine shall be
void; and provided, further, that the number of
Targeted Holders for the Trust as a result of
Transfers of Class A Certificates and Class B
Certificates shall not in the aggregate be more
than 20 or such other number as may be consented to
by the Transferor, which consent may be withheld in
its sole and absolute discretion. The Transferor
shall not withhold its consent to a Transfer unless
(i) the determination referred to in the preceding
sentence has been made with respect to such
Transfer, (ii) one of the two provisos to the
preceding sentence is applicable to such Transfer,
(iii) the Transferor has the right to withhold its
consent to such Transfer pursuant to the Class A
Certificate Purchase Agreement or the Class B
Certificate Purchase Agreement, as applicable, or
(iv) the Transferor has the right to prohibit such
Transfer pursuant to subsection 6.18(c).
(c) Each initial purchaser of a Class A
Certificate or a Class B Certificate, as
applicable, or any interest therein and any
Assignee thereof shall further certify to the
Transferor, the Servicer and the Trustee that it
has neither acquired nor will it sell, trade or
transfer any interest in a Class A Certificate or
Class B Certificate, as applicable, or cause an
interest in a Class A Certificate or Class B
Certificate, as applicable, to be marketed on or
through an "established securities market" within
the meaning of Section 7704(b)(1) of the Code and
any proposed, temporary or final treasury
regulation thereunder, including, without
limitation, an over-the-counter-market or an
interdealer quotation system that regularly
disseminates firm buy or sell quotations. In
addition, each initial purchaser of a Class A
Certificate or a Class B Certificate, as
applicable, or any interest therein and any
Assignee shall certify, prior to any delivery or
Transfer to it of a Class A Certificate or Class B
Certificate, as applicable, that it is not and, for
so long as it holds any interest in a Class A
Certificate or Class B Certificate, as applicable,
will not become a partnership, Subchapter S
corporation or grantor trust for U.S. federal
income tax purposes. If an initial purchaser of an
interest in a Class A Certificate or Class B
Certificate or an Assignee cannot make the
certification described in the preceding sentence,
the Transferor may, in its sole discretion, by
written notice to the Trustee permit a Transfer to
such entity; provided, however, that if the
Transferor agrees to permit such a Transfer, the
Transferor, the Servicer or the Trustee may require
additional certifications in order to prevent the
Trust from being treated as a publicly traded
partnership. Each initial purchaser of an interest
in a Class A Certificate or a Class B Certificate
and each Assignee acknowledges that the Opinion of
Counsel to the effect that the Trust will not be
treated as a publicly traded partnership taxable as
a corporation is dependent in part on the accuracy
of the certifications described in this subsection
6.18(c).
(d) Transfers of Class A Certificates or Class
B Certificates shall also be subject to the
provisions of subsection 3(c) of this Variable
Funding Supplement.
SECTION 10 Series 1999-1 Pay Out Events. The Pay
Out Events which can cause the commencement of the Amortization
Period with respect to the Series 1999-1 Variable Funding
Certificates include the Trust Pay Out Events described in Section
9.1 of the Agreement and the Series 1999-1 Pay Out Events
described in the following sentence. If any one of the following
events shall occur with respect to the Series 1999-1 Certificates:
(a) failure on the part of the Transferor (i) to make
any payment or deposit required by the terms of (A) the
Agreement or (B) this Variable Funding Supplement, on or
before the date occurring five days after the date such
payment or deposit is required to be made herein or (ii)
duly to observe or perform in any material respect any
covenants or agreements of the Transferor set forth in
the Agreement or this Variable Funding Supplement, which
failure has a material adverse effect on the Series 1999-
1 Variable Funding Certificateholders and which
continues unremedied for a period of 60 days after the
date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the
Transferor by the Trustee, or to the Transferor and the
Trustee by the Holders of Class A Certificates
evidencing Undivided Interests aggregating more than 50%
of the Class A Invested Amount or of Class B
Certificates evidencing Undivided Interests aggregating
more than 50% of the Class B Invested Amount, and
continues to affect materially and adversely the
interests of the Series 1999-1 Variable Funding
Certificateholders for such period;
(b) any representation or warranty made by the
Transferor in the Agreement or this Series 1999-1
Variable Funding Supplement, or any information
contained in a computer file or microfiche list required
to be delivered by the Transferor pursuant to Section
2.1 or 2.6 of the Agreement, (i) shall prove to have
been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any
material respect for a period of 60 days after the date
on which written notice of such failure, requiring the
same to be remedied, shall have been given to the
Transferor by the Trustee, or to the Transferor and the
Trustee by the Holders of Class A Certificates
evidencing Undivided Interests aggregating more than 50%
of the Class A Invested Amount or of Class B
Certificates evidencing Undivided Interests aggregating
more than 50% of the Class B Invested Amount, and (ii)
as a result of which the interests of the Series 1999-1
Variable Funding Certificateholders are materially and
adversely affected and continue to be materially and
adversely affected for such period; provided, however,
that a Series 1999-1 Pay Out Event pursuant to this
subsection 10(b) shall not be deemed to have occurred
hereunder if the Transferor has accepted reassignment of
the related Receivable, or all of such Receivables, if
applicable, during such period in accordance with the
provisions of the Agreement;
(c) the average Portfolio Yield for any three
consecutive Monthly Periods is reduced to a rate which
is less than the average of the daily Base Rates for
such period;
(d) (i) the Transferor Amount shall be less than the
Minimum Transferor Amount or (ii) the sum of the amount
of Principal Receivables in the Trust and the amount on
deposit in the Excess Funding Account shall be less than
the Minimum Aggregate Principal Receivables, in each
case for 15 consecutive days;
(e) any Servicer Default shall occur which would have
a material adverse effect on the Series 1999-1 Variable
Funding Certificateholders;
(f) failure on the part of the Servicer to deliver the
Daily Report or Settlement Statement to the Trustee
when due, which failure continues for a period of five
Business Days after the date on which written notice of
such failure, requiring the same to be remedied, shall
have been given by the Trustee to the Servicer;
(g) the Trustee shall have received notice from the
Administrative Agent that a Termination Event has
occurred under the Class A Certificate Purchase
Agreement or the Class B Certificate Purchase Agreement
and stating that such occurrence constitutes a Series
1999-1 Pay Out Event;
(h) failure on the part of the Servicer duly to observe
or perform in any respect any covenants or agreements of
the Servicer set forth in the Agreement (other than
those set forth in subsection 10.1(a) or 10.1(f)
thereof), which has a material adverse effect on the
Series 1999-1 Variable Funding Certificateholders and
which continues unremedied for a period of 30 days after
the date on which written notice of such failure,
requiring the same to be remedied, has been given to the
Servicer by the Trustee, or to the Servicer and the
Trustee by the Holders of Class A Certificates
evidencing Undivided Interests aggregating more than 50%
of the Class A Invested Amount or of Class B
Certificates evidencing Undivided Interests aggregating
more than 50% of the Class B Invested Amount, materially
adversely affected thereby and continues to materially
adversely affect such Series 1999-1 Variable Funding
Certificateholders for such period; or the Servicer
shall delegate its duties under the Agreement, except as
permitted by Section 8.7 thereof; or any representation,
warranty or certification made by the Servicer in the
Agreement or in any certificate delivered pursuant to
the Agreement shall prove to have been incorrect when
made, which has a material adverse effect on the Series
1999-1 Variable Funding Certificateholders and which
continues to be incorrect in any material respect for a
period of 45 days after the date on which written notice
of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee, or
to the Servicer and the Trustee by the Holders of Class
A Certificates evidencing Undivided Interests
aggregating more than 50% of the Class A Invested Amount
or of Class B Certificates evidencing Undivided
Interests aggregating more than 50% of the Class B
Invested Amount, materially adversely affected thereby
and continues to materially adversely affect such Series
1999-1 Variable Funding Certificateholders for such
period;
(i) failure on the part of the Originator (i) to make
any payment or deposit required by the terms of the
Receivables Purchase Agreement on or before the date
occurring five days after the date such payment or
deposit is required to be made therein or (ii) duly to
observe or perform in any material respect any covenants
or agreements of the Originator set forth in the
Receivables Purchase Agreement, which failure has a
material adverse effect on the Series 1999-1 Variable
Funding Certificateholders and which continues
unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same
to be remedied, shall have been given to the Originator
by the Trustee, or to the Originator and the Trustee by
the Holders of Class A Certificates evidencing Undivided
Interests aggregating more than 50% of the Class A
Invested Amount or of Class B Certificates evidencing
Undivided Interests aggregating more than 50% of the
Class B Invested Amount, and continues to affect
materially and adversely the interests of the Series
1999-1 Variable Funding Certificateholders for such
period;
(j) any representation or warranty made by the
Originator in the Receivables Purchase Agreement, or any
information contained in a transmittal list required to
be delivered by the Originator pursuant to Section 2.02
thereof, (i) shall prove to have been incorrect in any
material respect when made or when delivered, which
continues to be incorrect in any material respect for a
period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied,
shall have been given to the Originator by the Trustee,
or to the Originator and the Trustee by the Holders of
Class A Certificates evidencing Undivided Interests
aggregating more than 50% of the Class A Invested Amount
or of Class B Certificates evidencing Undivided
Interests aggregating more than 50% of the Class B
Invested Amount, and (ii) as a result of which the
interests of the Series 1999-1 Variable Funding
Certificateholders are materially and adversely affected
and continue to be materially and adversely affected for
such period; provided, however, that a Series 1999-1 Pay
Out Event pursuant to this subsection 10(k) shall not be
deemed to have occurred hereunder if the Originator has
accepted reassignment of the related Receivable, or all
of such Receivables, if applicable, during such period
in accordance with the provisions of the Receivables
Purchase Agreement;
(k) Federated shall cease to own directly or indirectly
100% of the issued and outstanding capital stock of each
of the Transferor and the Originator;
(l) the Originator shall not be in compliance with all
minimum ratios of total capital (and core capital) to
risk-weighted-assets required by the governmental
authorities regulating the Originator in accordance with
the implementation by such authorities of the Basle
Accord and such noncompliance shall have continued for a
period of 30 days; or
(m) the sum of (i) Transferor's tangible net worth
(determined in accordance with generally accepted
accounting principles) plus (ii) to the extent excluded
in determining such tangible net worth, the outstanding
principal amount of, and all accrued and unpaid interest
on, the subordinated promissory note from the Transferor
to FCHC referred to in subsection 2.5(l) of the
Agreement, at any time shall be less than $20,000,000,
and such condition shall continue for a period of 30
days;
then, in the case of any event described in subparagraph
(a), (b), (e), (f), (h), (i), (j), (k), (l) or (m) after
the applicable grace period, if any, set forth in such
subparagraphs, either the Trustee or the Holders of
Class A Certificates evidencing Undivided Interests
aggregating more than 50% of the Class A Invested Amount
or of Class B Certificates evidencing Undivided
Interests aggregating more than 50% of the Class B
Invested Amount, by notice then given in writing to the
Transferor and the Servicer (and to the Trustee if given
by the Certificateholders) may declare that a pay out
event (a "Series 1999-1 Pay Out Event") has occurred as
of the date of such notice, and in the case of any event
described in subparagraph (c), (d), (g) or (h), a
Series 1999-1 Pay Out Event shall occur without any
notice or other action on the part of the Trustee or the
Series 1999-1 Variable Funding Certificateholders
immediately upon the occurrence of such event. The
Servicer shall provide prompt written notice to the
Rating Agencies of the occurrence of any Pay Out Event
following the Servicer's obtaining actual knowledge of
such event.
SECTION 11 Successor Servicer and Delegation. (a)
Section 10.2 of the Agreement shall read in its entirety as
provided in the Agreement and, in addition, the following sentence
should be inserted in the fifteenth line of Section 10.2(a)
between the phrase "acceptable to the Trustee." and "If such
Successor Servicer is" and shall be applicable only with respect
to the Series 1999-1 Certificates: "Any Successor Servicer must
either (A) be approved by the Class A Agent and the Class B Agent,
which approvals shall not be unreasonably withheld, or (B) be a
Person which (i) has a net worth of at least $50,000,000, (ii) has
serviced at least $2,000,000,000 of credit or charge card
receivables at any one time outstanding during the previous 12
months and (iii) has a senior long-term debt rating, as determined
by at least one nationally recognized statistical rating
organization, of at least `BBB' or its equivalent, provided, that
if such Successor Servicer has no long term debt or such debt is
not rated by a nationally recognized statistical rating
organization, the long term debt rating of its parent must be at
least `BBB' or its equivalent."
(b) The Servicer shall not delegate any significant
duties as servicer under the Agreement pursuant to Section 8.7
thereof to any Person other than an Affiliate of FDSNB except in
accordance with such Section and with the prior consent of the
Administrative Agent acting at the direction of Holders of Class A
Certificates evidencing Undivided Interests aggregating more than
50% of the Class A Invested Amount or of Class B Certificates
evidencing Undivided Interests aggregating more than 50% of the
Class B Invested Amount, which direction shall not be unreasonably
withheld.
(c) The Trustee covenants and agrees that, so long as
any portion of the Class A Investor Principal Balance or the Class
B Investor Principal Balance shall remain outstanding or any
monetary obligation arising hereunder or under the Class A
Certificate Purchase Agreement or the Class B Certificate Purchase
Agreement to the Class A Agent, the Class B Agent or any purchaser
thereunder shall remain unpaid, unless Holders of Class A
Certificates evidencing Undivided Interests aggregating more than
50% of the Class A Invested Amount and of Class B Certificates
evidencing Undivided Interests aggregating more than 50% of the
Class B Invested Amount, shall otherwise consent in writing, it
shall, for the benefit of the Class A Certificateholders, the
Class A Agent, the Class B Certificateholders and the Class B
Agent, and so long as the Class B Certificate Purchase Agreement
or the Class B Certificate Purchase Agreement, as the case may be,
shall be in effect, use reasonable efforts to consult with the
Class A Agent and the Class B Agent prior to any appointment of
any Successor Servicer pursuant to Section 10.2 of the Agreement;
provided that the consent of the Class A Certificateholders or the
Class B Certificateholders to the appointment of a Successor
Servicer shall only be required if otherwise required under the
terms of the Agreement.
SECTION 12 Successor Trustee. Section 11.6 of the
Agreement shall read in its entirety as provided in the Agreement
and, in addition, the following sentence shall be added to the end
of subsection 11.6(c) of the Agreement and shall be applicable
only to the Series 1999-1 Certificates: "Any successor trustee
appointed pursuant to this Section 11.6 shall be subject to the
written consent of the Administrative Agent (which consent shall
not be unreasonably withheld)."
SECTION 13 Notices to Administrative Agent. A copy
of each notice, demand, direction, report, Officer's Certificate
or other certificate, election and opinion required to be sent or
delivered pursuant to Section or subsection 1.2(d), 2.3, 2.4(b),
2.4(d), 2.5(f), 2.6(d), 2.6(e), 2.7, 3.5, 3.6, 6.3(b), 6.9, 6.14,
7.2, 8.2, 8.7, 9.2, 10.1, 10.2, 10.3, 10.4, 11.6, 11.9, 11.15,
12.1, 12.2 or 13.2 of the Agreement shall also be sent or
delivered and, in the case of opinions, shall be addressed to the
Administrative Agent. The Trustee shall also promptly furnish to
the Administrative Agent a copy of any notice delivered to it by
any Holder of Investor Certificates (other than notices which
relate solely to a Series of Investor Certificates other than the
Series 1999-1 Certificates or in connection with transfers of
Certificates).
The Transferor shall give prompt notice to the Administrative
Agent (if not otherwise provided for in the Agreement or this
Variable Funding Supplement) of any deposit made pursuant to
subsection 2.4(c) or 3.8(a) of the Agreement, any change in Charge
Account Agreements or the Credit and Collection Policy pursuant to
subsection Section 2.5(c) of the Agreement or Section 14 of this
Variable Funding Supplement that constitutes a change to the
Charge Account Agreements, any transfer pursuant to subsection
2.5(f) of the Agreement and any circumstance contemplated by
subsection 3.1(c) of the Agreement. The Servicer shall give
prompt notice to the Administrative Agent of any change in the
depositary holding the Collection Account pursuant to subsection
4.2(a) of the Agreement, and the Trustee shall give prompt notice
to the Administrative Agent of the appointment or change of any
Paying Agent pursuant to Section 6.6 of the Agreement and any
merger, conversion or consolidation of the Trustee as contemplated
by Section 11.9 of the Agreement.
SECTION 14 Charge Account Agreements and Credit and
Collection Policies. Section 2.5(c) of the Agreement shall read in
its entirety as set forth below and as so amended and restated
shall be applicable only with respect to the Series 1999-1
Certificates: "The Transferor shall comply with and perform its
obligations and shall cause the Originator to comply with and
perform their obligations under the Charge Account Agreements
relating to the Accounts and the Credit and Collection Policy
except insofar as any failure to comply or perform would not
materially and adversely affect the rights of the Trust or the
Certificateholders hereunder or under the Certificates. The
Transferor may change the terms and provisions of the Charge
Account Agreements or the Credit and Collection Policy in any
respect (including, without limitation, the reduction of the
required minimum monthly payment, the calculation of the amount,
or the timing, of charge offs and the periodic finance charges and
other fees to be assessed thereon) only if such change (i) would
not, in the reasonable belief of the Transferor, cause,
immediately or with the passage of time, a Series 1999-1 Pay Out
Event to occur, (ii) (A) if it owns a comparable segment of charge
card accounts, such change is made applicable to the comparable
segment of the revolving credit card accounts owned by the
Transferor, if any, which have characteristics the same as, or
substantially similar to, the Accounts that are the subject of
such change and (B) if it does not own such a comparable segment,
it will not make any such change with the intent to materially
benefit the Transferor or the Originator over the Investor
Certificateholders, except as otherwise restricted by an
endorsement, sponsorship, or other agreement between the
Transferor and an unrelated third party or by the terms of the
Charge Account Agreements, and (iii) if the Servicer is servicing
charge card accounts owned by an unrelated third party, such
change would not result in the Servicer's applying a materially
higher standard of care to the servicing of such accounts than it
applies under this Agreement. Notwithstanding the Credit and
Collection Policy, in the event that (i) a Servicer Default shall
have occurred, or (ii) any event or circumstance described in
subsection 9.1(a) of the Agreement shall have occurred with
respect to Federated, the Servicer shall promptly take all steps
necessary to cause the availability of In-Store Payments to cease
and shall indemnify and hold the Trust harmless from any loss
resulting from any further In-Store Payments which for any reason
are not available for application as Collections as provided in
the Agreement."
SECTION 15 Minimum Denominations. The Series 1999-1
Certificates shall initially be issued in the principal amounts of
$124,800,000 Class A Variable Funding Certificates, $15,600,000
Class B Variable Funding Certificates and $15,600,000 Class C
Certificates. There shall be no minimum denomination for the
Series 1999-1 Certificates and the principal amount thereof shall
equal on any day the principal amount thereof reflected on the
then most recently issued Daily Report.
SECTION 16 Cash Equivalents. No investment of any
amounts on deposit in any account established pursuant to this
Series 1999-1 Variable Funding Supplement which is not otherwise a
Cash Equivalent (i) issued by an investment company described in
subclause (x) of clause (c) of the definition of Cash Equivalents
or (ii) described in clause (d) or (e) of the definition of Cash
Equivalent shall constitute a Cash Equivalent without the written
approval of the Administrative Agent.
SECTION 17 Automatic Additional Accounts. The
Transferor shall not elect to terminate or suspend the inclusion
of Automatic Additional Accounts without the prior written consent
of the Administrative Agent acting on behalf of the Holders of
Series 1999-1 Variable Funding Certificates as provided in Section
19 of this Variable Funding Supplement.
SECTION 18 Series 1999-1 Termination. The right of
the Series 1999-1 Certificateholders to receive payments from the
Trust will terminate on the first Business Day following the
Series 1999-1 Termination Date.
SECTION 19 Actions by Administrative Agent. The
Administrative Agent shall have no obligation hereunder to grant
any consent or approval, to give any direction or to take any
discretionary action unless and until it has been directed to do
so by the Class A Certificateholders as provided in the Class A
Certificate Purchase Agreement or by the Class B
Certificateholders as provided in the Class B Certificate Purchase
Agreement.
SECTION 20 Periodic Finance Charges and Other Fees.
The Transferor hereby agrees that, except as otherwise required by
any Requirement of Law, or as is deemed by the Transferor to be
necessary in order for the Transferor to maintain its credit card
business, based upon a good faith assessment by the Transferor, in
its sole discretion, of the nature of the competition in the
credit card business, it shall not at any time reduce the Periodic
Finance Charges assessed on any Receivable or other fees on any
Account if, as a result of such reduction, the Transferor's
reasonable expectation of the Portfolio Yield as of such date
would be less than the Base Rate.
SECTION 21 Rating Agency Condition. Any requirement
set forth in the Agreement that, with respect to any action or
series of related actions or proposed transaction or series or
related proposed transactions, each Rating Agency shall have
determined or notified the Trustee, the Transferor or the Servicer
that such action or series of related actions or proposed
transaction or series or related proposed transactions will not
result in a reduction or withdrawal of the rating of any Series of
Investor Certificates (or any similar requirement), shall mean
with respect to the Series 1999-1, that the Rating Agency
Condition has been satisfied with respect to such action or series
of related actions or proposed transaction or series or related
proposed transactions.
SECTION 22 Distribution Account. There shall be no
Distribution Account for Series 1999-1.
SECTION 23 Certificate Purchase Agreements. The
Trustee hereby acknowledges receipt of copies of the Class A
Certificate Purchase Agreement and the Class B Certificate
Purchase Agreement and agrees to be bound by the provisions of
subsection 9.12 (b) and Sections 9.14 and 9.15 of each such
agreement applicable to it. The Servicer hereby agrees to provide
the Trustee with a copy of any amendment or other modification to
either such agreement.
SECTION 24 Ratification of Agreement. As
supplemented by this Variable Funding Supplement, the Agreement is
in all respects ratified and confirmed and the Agreement as so
supplemented by this Variable Funding Supplement shall be read,
taken, and construed as one and the same instrument.
SECTION 25 Counterparts. This Variable Funding
Supplement may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all of
such counterparts shall together constitute but one and the same
instrument.
SECTION 26 GOVERNING LAW. THIS VARIABLE FUNDING
SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 27 The Trustee. The Trustee shall not be
responsible in any manner whatsoever for or in respect of (a) the
sufficiency of this Variable Funding Supplement or for or in
respect of the Preliminary Statement contained herein, all of
which recitals are made solely by the Transferor, or (b)
determining, calculating or verifying any of the amounts,
percentages, collections, distributions or other computations set
forth in this Variable Funding Supplement.
SECTION 28 Instructions in Writing. All
instructions given by the Servicer to the Trustee pursuant to this
Variable Funding Supplement shall be in writing, and may be
included in a Daily Report or Settlement Statement.
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee
have caused this Series 1999-1 Variable Funding Supplement to be
duly executed by their respective officers as of the day and year
first above written.
PRIME II RECEIVABLES CORPORATION
Transferor
By:/s/ Susan P. Storer
Name: Susan P. Storer
Title: President
FDS NATIONAL BANK
Servicer
By:/s/ Susan R. Robinson
Name: Susan R. Robinson
Title: Treasurer
THE CHASE MANHATTAN BANK
Trustee
By:/s/ Jennifer Cupo
Name: Jennifer Cupo
Title: Vice President
Exhibit A-1
[FORM OF CLASS A VARIABLE FUNDING CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), IN RELIANCE UPON
EXEMPTIONS PROVIDED BY THE SECURITIES ACT. NO RESALE OR OTHER
TRANSFER OF THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (B) IN
A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
NEITHER THE TRANSFEROR NOR THE TRUSTEE IS OBLIGATED TO REGISTER
THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES
OR "BLUE SKY" LAW.
EACH HOLDER OF THIS CERTIFICATE OR AN INTEREST THEREIN, BY
ACCEPTING AND HOLDING THIS CERTIFICATE, IS DEEMED TO HAVE
REPRESENTED AND WARRANTED THAT IT IS NOT (I) AN EMPLOYEE BENEFIT
PLAN AS DEFINED IN SECTION 3(3) OF ERISA) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(l) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
No. ___% Percentage Interest
PRIME CREDIT CARD MASTER TRUST II
CLASS A VARIABLE FUNDING CERTIFICATE,
SERIES 1999-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the
ordinary course of business from a portfolio of consumer revolving
credit card accounts generated or to be generated by FDS National
Bank ("FDSNB") and other assets and interests constituting the
Trust under the Pooling and Servicing Agreement described below.
(Not an interest in or a recourse obligation of Prime II
Receivables Corporation, FDSNB or any affiliate of either of
them.)
This certifies that ____________________________ (the
"Certificateholder") is the registered owner of a fractional
undivided interest in the Prime Credit Card Master Trust II (the
"Trust") issued pursuant to the Pooling and Servicing Agreement,
dated as of January 22, 1997 (the "Pooling and Servicing
Agreement," such term to include any amendment or Supplement
thereto) by and among Prime II Receivables Corporation, as
Transferor (the "Transferor"), FDSNB, as Servicer (the
"Servicer"), and The Chase Manhattan Bank, as Trustee (the
"Trustee"), and the Series 1999-1 Variable Funding Supplement,
dated as of July 6, 1999 (the "Supplement"), among the Transferor,
the Servicer and the Trustee. The corpus of the Trust consists of
all of the Transferor's right, title and interest in, to and under
the Trust Property. The Certificateholder is entitled to payments
from time to time as provided in the Pooling and Servicing
Agreement.
The holder of this Certificate on any Business Day is
entitled to payment in an amount equal to its pro rata share (as
provided in the Pooling and Servicing Agreement) of (a) the Class
A Initial Invested Amount plus (b) an amount equal to the
aggregate principal amount of any VFC Additional Class A Invested
Amount purchased by the Class A Certificateholders through the end
of the preceding Business Day pursuant to Section 6.15 of the
Pooling and Servicing Agreement minus (c) the aggregate amount of
principal payments made to the Class A Certificateholders prior to
such Business Day.
This Certificate does not purport to summarize the Pooling
and Servicing Agreement and reference is made to the Pooling and
Servicing Agreement for information with respect to the interests,
rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A
copy of the Pooling and Servicing Agreement may be requested from
the Trustee by writing to the Trustee at 450 West 33rd Street, New
York, New York 10001, Attention: Corporate Trustee Administration
Department. To the extent not defined herein, the capitalized
terms used herein have the meanings ascribed to them in the
Pooling and Servicing Agreement. This Certificate is one of a
series of Certificates entitled "Prime Credit Card Master Trust II
Class A Variable Funding Certificates, Series 1999-1" (the "Class
A Variable Funding Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued under
and is subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing
Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the
Certificateholder is bound.
The Series 1999-1 Certificates are issued in three classes,
the Class A Variable Funding Certificates (of which this
certificate is one), the Class B Variable Funding Certificates,
which are subordinated to the Class A Variable Funding
Certificates in certain rights of payment as described in the
Agreement and the Class C Certificates, which are subordinated to
the Class A Variable Funding Certificates and Class B Variable
Funding Certificates in certain rights of payment as described in
the Agreement.
A portion of the aggregate Receivables in the Trust as
determined pursuant to the Pooling and Servicing Agreement will be
treated as Finance Charge Receivables. Such amount may be
adjusted from time to time pursuant to the Supplement. The
remainder of such Receivables will be treated as Principal
Receivables.
Each holder of a Class A Variable Funding Certificate (a
"Class A Certificateholder") or any interest therein by acceptance
of its Certificate or any interest therein, agrees to treat the
Class A Variable Funding Certificates for purposes of federal,
state and local income or franchise taxes and any other tax
imposed on or measured by income, as indebtedness of the
Transferor to the extent permitted by law.
The Trust's assets are allocated in part to the holders of
the Investor Certificates (the "Investor Certificateholders") with
the remainder allocated to holders of other Series of Certificates
issued by the Trust, if any, and to the Transferor. In addition
to the Investor Certificates, an Exchangeable Transferor
Certificate will be issued pursuant to the Pooling and Servicing
Agreement and will represent the Transferor's Interest in the
Trust. The Exchangeable Transferor Certificate will represent the
interest in the Receivables not represented by the Investor
Certificates or any other Series of Certificates. The
Exchangeable Transferor Certificate may be exchanged by the
Transferor pursuant to the Pooling and Servicing Agreement for one
or more Series of Certificates and a reissued Exchangeable
Transferor Certificate upon the conditions set forth in the
Pooling and Servicing Agreement. In addition, to the extent
permitted for any Series of Certificates by the related
Supplement, the Certificateholders of such Series may tender their
Certificates and the Transferor may tender the Exchangeable
Transferor Certificate in exchange for one or more Series of
Certificates and a reissued Exchangeable Transferor Certificate.
The aggregate interest in the Trust represented by the
Investor Certificates at any time shall not exceed an amount equal
to the Invested Amount at such time. The Initial Invested Amount
is $_____________. The aggregate interest in the Trust
represented by the Class A Variable Funding Certificates at any
time shall not exceed an amount equal to the Class A Invested
Amount at such time. The Class A Initial Invested Amount is
$___________.
Interest will accrue on the unpaid principal amount of the
Class A Variable Funding Certificates at a per annum rate equal to
the Class A Certificate Rate and will be calculated on each
Business Day based on the product of the Class A Certificate Rate
and the outstanding principal balance of the Class A Variable
Funding Certificates on such Business Day.
If on any Determination Date the Series Default and Dilution
Amount for the preceding Monthly Period exceeded the aggregate
amount of Finance Charge Collections applied to the payment
thereof and the Available Reserve Amount, and the amount of Excess
Finance Charge Collections and Reallocated Principal Collections
allocated thereto, then a portion of the Class C Invested Amount
will be reduced by an amount equal to such deficiency (but not in
excess of the Series Default and Dilution Amount for such Monthly
Period) to avoid a charge-off with respect to the Class A Variable
Funding Certificates or Class B Variable Funding Certificates. If
the Class C Invested Amount is reduced to zero, then a portion of
the Class B Invested Amount will be reduced by an amount by which
the Class C Invested Amount would have been reduced below zero
(but not in excess of the Class A/B Default and Dilution Amount
for such Monthly Period). If the Class B Invested Amount is
reduced to zero, then a portion of the Class A Invested Amount
will be reduced by an amount by which the Class B Invested Amount
would have been reduced below zero (but not in excess of Class A
Default Amount for such Monthly Period).
The Servicer, is entitled to receive as servicing
compensation a servicing fee in an amount equal to, with respect
to each Series, the product of (i) a fraction, the numerator of
which is the actual number of days in the measuring period
specified in the applicable Series Supplement and the denominator
of which is the actual number of days in the year, (ii) the
applicable Series Servicing Fee Percentage and (iii) the Invested
Amount as of the end of the date of determination for such payment
as specified in the applicable Series Supplement. The share of
the Servicing Fee allocable to the Investor Certificates for any
Business Day is equal to the product of (i) a fraction, the
numerator of which is the actual number of days from and including
the preceding Business Day to but excluding such Business Day and
the denominator of which is the actual number of days in the year,
(ii) 2.0% per annum and (iii) the Adjusted Invested Amount as of
the end of the preceding Business Day (the "Servicing Fee"). The
Servicing Fee will be paid in the manner set forth in the Pooling
and Servicing Agreement. The remainder of the servicing
compensation will be allocable to the Transferor Amount and the
Certificateholders of all other Series, and the Trustee and the
Investor Certificateholders will not have any obligation to pay
such portion of the servicing compensation.
As described in the Pooling and Servicing Agreement,
Principal Collections with respect to any Business Day will be
allocated on the basis of the aggregate Investor Percentage of all
Series and the Transferor Percentage with respect to the Principal
Collections.
Subject to the Pooling and Servicing Agreement and the
Supplement, payments of principal are limited to the unpaid Class
A Invested Amount of the Class A Variable Funding Certificates,
which may be less than the unpaid balance of the Class A Variable
Funding Certificates pursuant to the terms of the Pooling and
Servicing Agreement and the Supplement. All principal of and
interest on the Class A Variable Funding Certificates is due and
payable no later than July 31, 2004, unless a different date shall
be set forth in an Extension Notice (the "Series Termination
Date"). After the Series Termination Date, neither the Trust nor
the Transferor will have any further obligation to distribute
principal or interest on the Class A Variable Funding
Certificates. In the event that the Class A Invested Amount is
greater than zero on the Series Termination Date, the Trustee will
sell or cause to be sold, to the extent necessary, an amount of
Principal Receivables and the related Finance Charge Receivables
(or, in some cases, interests therein) up to 110% of the Class A
Invested Amount, the Class B Invested Amount and the Class C
Invested Amount at the close of business on such date (but not
more than the total amount of Receivables allocable to the
Investor Certificates determined pursuant to the Pooling and
Servicing Agreement), and shall pay the proceeds to the Class A
Certificateholders pro rata in final payment of the Class A
Variable Funding Certificates, then to the Class B Variable
Funding Certificateholders pro rata in final payment of the Class
B Variable Funding Certificates and then to the Class C
Certificateholders pro rata in final payment of the Class C
Certificates.
The transfer of this Certificate shall be registered in the
Certificate Register upon surrender of this Certificate for
registration of transfer at any office or agency maintained by the
Transfer Agent and Registrar accompanied by a written instrument
of transfer in a form satisfactory to the Trustee and the Transfer
Agent and Registrar duly executed by the Certificateholder or such
Certificateholder's attorney-in-fact duly authorized in writing,
and thereupon one or more new Class A Variable Funding
Certificates of authorized denominations and for the same
aggregate fractional Undivided Interests will be issued to the
designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and
certain limitations therein and herein set forth, Class A Variable
Funding Certificates are exchangeable for new Class A Variable
Funding Certificates evidencing like aggregate fractional
undivided interests, as requested by the Class A Certificateholder
surrendering such Class A Variable Funding Certificates. No
service charge may be imposed for any such exchange but the
Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in connection therewith.
The Trustee, the Paying Agent and the Transfer Agent and
Registrar, and any agent of any of them, may treat the person in
whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Paying Agent and the
Transfer Agent and Registrar, nor any agent of any of them or of
any such agent shall be affected by notice to the contrary except
in certain circumstances described in the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement and the Supplement may be
amended from time to time by the Servicer, the Transferor and the
Trustee, without the consent of any of the Class A
Certificateholders, to cure any ambiguity, to revise any exhibits
or schedules (other than Schedule 1) of the Pooling and Servicing
Agreement, to correct or supplement any provisions therein which
may be inconsistent with any other provisions therein or to add
any other provisions with respect to matters or questions raised
under the Pooling and Servicing Agreement or the Supplement which
shall not be inconsistent with the provisions of the Pooling and
Servicing Agreement or the Supplement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any of
the Investor Certificateholders. Additionally, the Pooling and
Servicing Agreement and the Supplement may be amended from time to
time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class A Certificateholders, to add to or
change any of the provisions of the Pooling and Servicing
Agreement (i) to provide that Bearer Certificates may be
registrable as to principal, to change or eliminate any
restrictions on the payment of principal of (or premium, if any)
or any interest on Bearer Certificates to comply with the Bearer
Rules, to permit Bearer Certificates to be issued in exchange for
Registered Certificates (if then permitted by the Bearer Rules),
to permit Bearer Certificates to be issued in exchange for Bearer
Certificates of other authorized denominations or to permit the
issuance of Certificates in uncertificated form or (ii) to
restrict or eliminate in any way the Transferor's right to
designate Removed Accounts and to remove from the Trust all of the
Trust's right, title and interest in, to and under the Receivables
in such Removed Accounts pursuant to Section 2 of the Pooling and
Servicing Agreement. The Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Trustee's
rights, duties or immunities under the Pooling and Servicing
Agreement or otherwise.
The Pooling and Servicing Agreement (and any schedule or
exhibit thereto) and the Supplement (and any schedule or exhibit
thereto) may also be amended from time to time by the Servicer,
the Transferor and the Trustee, without the consent of any of the
Class A Certificateholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or the
Supplement, or of modifying in any manner the rights of the
Holders of the Class A Variable Funding Certificates; provided
that (i) the Servicer shall have provided an Officer's Certificate
to the Trustee to the effect that such amendment will not
materially and adversely affect the interests of the
Certificateholders, (ii) such amendment shall not, as evidenced by
an Opinion of Counsel, cause the Trust to be characterized for
U.S. federal income tax purposes as an association taxable as a
corporation or otherwise have any material adverse impact on the
U.S. federal income taxation of the Class A Variable Funding
Certificates or the Class A Certificateholders and (iii) the
Servicer shall have provided at least ten Business Days prior
written notice to each Rating Agency of such amendment and shall
have received written confirmation from each Rating Agency to the
effect that the then current rating of any Series or any Class of
any Series will not be reduced or withdrawn as a result of such
amendment; provided, further, that such amendment shall not reduce
in any manner the amount of, or delay the timing of, distributions
which are required to be made on any Class A Variable Funding
Certificate without the consent of the related Class A
Certificateholder, change the definition of or the manner of
calculating the interest of any Investor Certificateholder of such
Series without the consent of the related Investor
Certificateholder or reduce the percentage pursuant to the next
succeeding paragraph required to consent to any such amendment, in
each case without the consent of all such Class A
Certificateholders.
The Pooling and Servicing Agreement and the Supplement may
also be amended from time to time by the Servicer, the Transferor
and the Trustee with the consent of the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less
than 66-2/3% of the Invested Amount of each and every Series
adversely affected, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the
Pooling and Servicing Agreement or of modifying in any manner the
rights of the Investor Certificateholders of any Series then
issued and outstanding; provided, however, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing
of, distributions which are required to be made on any Investor
Certificate of any Series without the consent of the related
Investor Certificateholders; (ii) change the definition of or the
manner of calculating the interest of any Investor
Certificateholder of any Series without the consent of the related
Investor Certificateholder or (iii) reduce the aforesaid
percentage required to consent to any such amendment, in each case
without the consent of all such Investor Certificateholders;
provided, further, that for the purposes of the Officer's
Certificate referred to in clause (i) above, any action taken in
order to enable the Trust or a portion thereof to elect to qualify
as a FASIT (or comparable tax entity for the securitization of
financial assets) in accordance with the Internal Revenue Code of
1986, as amended, shall be deemed not to materially and adversely
affect the interest of the Certificateholders.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Pooling
and Servicing Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Certificate to be duly executed under its official seal.
PRIME II RECEIVABLES CORPORATION
By:_________________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Variable Funding Certificates
referred to in the within-mentioned Pooling and Servicing
Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________________
Authorized Signatory
Exhibit A-2
[FORM OF CLASS B VARIABLE FUNDING CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), IN RELIANCE UPON
EXEMPTIONS PROVIDED BY THE SECURITIES ACT. NO RESALE OR OTHER
TRANSFER OF THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (B) IN
A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
NEITHER THE TRANSFEROR NOR THE TRUSTEE IS OBLIGATED TO REGISTER
THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES
OR "BLUE SKY" LAW.
EACH HOLDER OF THIS CERTIFICATE OR AN INTEREST THEREIN, BY
ACCEPTING AND HOLDING THIS CERTIFICATE, IS DEEMED TO HAVE
REPRESENTED AND WARRANTED THAT IT IS NOT (I) AN EMPLOYEE BENEFIT
PLAN AS DEFINED IN SECTION 3(3) OF ERISA) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(l) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
No. ___% Percentage Interest
PRIME CREDIT CARD MASTER TRUST II
CLASS B VARIABLE FUNDING CERTIFICATE,
SERIES 1999-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the
ordinary course of business from a portfolio of consumer revolving
credit card accounts generated or to be generated by FDS National
Bank ("FDSNB") and other assets and interests constituting the
Trust under the Pooling and Servicing Agreement described below.
(Not an interest in or a recourse obligation of Prime II
Receivables Corporation, FDSNB or any affiliate of either of
them.)
This certifies that ____________________________ (the
"Certificateholder") is the registered owner of a fractional
undivided interest in the Prime Credit Card Master Trust II (the
"Trust") issued pursuant to the Pooling and Servicing Agreement,
dated as of January 22, 1997 (the "Pooling and Servicing
Agreement," such term to include any amendment or Supplement
thereto) by and among Prime II Receivables Corporation, as
Transferor (the "Transferor"), FDSNB, as Servicer (the
"Servicer"), and The Chase Manhattan Bank, as Trustee (the
"Trustee"), and the Series 1999-1 Variable Funding Supplement,
dated as of July 6, 1999 (the "Supplement"), among the Transferor,
the Servicer and the Trustee. The corpus of the Trust consists of
all of the Transferor's right, title and interest in, to and under
the Trust Property. The Certificateholder is entitled to payments
from time to time as provided in the Pooling and Servicing
Agreement.
The holder of this Certificate on any Business Day is
entitled to payment in an amount equal to its pro rata share (as
provided in the Pooling and Servicing Agreement) of (a) the Class
B Initial Invested Amount plus (b) an amount equal to the
aggregate principal amount of any VFC Additional Class B Invested
Amount purchased by the Class B Certificateholders through the end
of the preceding Business Day pursuant to Section 6.15 of the
Pooling and Servicing Agreement minus (c) the aggregate amount of
principal payments made to the Class B Certificateholders prior to
such Business Day.
This Certificate does not purport to summarize the Pooling
and Servicing Agreement and reference is made to the Pooling and
Servicing Agreement for information with respect to the interests,
rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A
copy of the Pooling and Servicing Agreement may be requested from
the Trustee by writing to the Trustee at 450 West 33rd Street, New
York, New York 10001, Attention: Corporate Trustee Administration
Department. To the extent not defined herein, the capitalized
terms used herein have the meanings ascribed to them in the
Pooling and Servicing Agreement. This Certificate is one of a
series of Certificates entitled "Prime Credit Card Master Trust II
Class B Variable Funding Certificates, Series 1999-1" (the "Class
B Variable Funding Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued under
and is subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing
Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the
Certificateholder is bound.
The Series 1999-1 Certificates are issued in three classes,
the Class A Variable Funding Certificates, the Class B Variable
Funding Certificates (of which this certificate is one), which are
subordinated to the Class A Variable Funding Certificates in
certain rights of payment as described in the Agreement and the
Class C Certificates, which are subordinated to the Class A
Variable Funding Certificates and Class B Variable Funding
Certificates in certain rights of payment as described in the
Agreement.
A portion of the aggregate Receivables in the Trust as
determined pursuant to the Pooling and Servicing Agreement will be
treated as Finance Charge Receivables. Such amount may be
adjusted from time to time pursuant to the Supplement. The
remainder of such Receivables will be treated as Principal
Receivables.
Each holder of a Class B Variable Funding Certificate (a
"Class B Certificateholder") or any interest therein by acceptance
of its Certificate or any interest therein, agrees to treat the
Class B Variable Funding Certificates for purposes of federal,
state and local income or franchise taxes and any other tax
imposed on or measured by income, as indebtedness of the
Transferor to the extent permitted by law.
The Trust's assets are allocated in part to the holders of
the Investor Certificates (the "Investor Certificateholders") with
the remainder allocated to holders of other Series of Certificates
issued by the Trust, if any, and to the Transferor. In addition
to the Investor Certificates, an Exchangeable Transferor
Certificate will be issued pursuant to the Pooling and Servicing
Agreement and will represent the Transferor's Interest in the
Trust. The Exchangeable Transferor Certificate will represent the
interest in the Receivables not represented by the Investor
Certificates or any other Series of Certificates. The
Exchangeable Transferor Certificate may be exchanged by the
Transferor pursuant to the Pooling and Servicing Agreement for one
or more Series of Certificates and a reissued Exchangeable
Transferor Certificate upon the conditions set forth in the
Pooling and Servicing Agreement. In addition, to the extent
permitted for any Series of Certificates by the related
Supplement, the Certificateholders of such Series may tender their
Certificates and the Transferor may tender the Exchangeable
Transferor Certificate in exchange for one or more Series of
Certificates and a reissued Exchangeable Transferor Certificate.
The aggregate interest in the Trust represented by the
Investor Certificates at any time shall not exceed an amount equal
to the Invested Amount at such time. The Initial Invested Amount
is $___________. The aggregate interest in the Trust represented
by the Class B Variable Funding Certificates at any time shall not
exceed an amount equal to the Class B Invested Amount at such
time. The Class B Initial Invested Amount is $___________.
Interest will accrue on the unpaid principal amount of the
Class B Variable Funding Certificates at a per annum rate equal to
the Class B Certificate Rate and will be calculated on each
Business Day based on the product of the Class B Certificate Rate
and the outstanding principal balance of the Class B Variable
Funding Certificates on such Business Day.
If on any Determination Date the Series Default and Dilution
Amount for the preceding Monthly Period exceeded the aggregate
amount of Finance Charge Collections applied to the payment
thereof and the Available Reserve Amount, and the amount of Excess
Finance Charge Collections and Reallocated Principal Collections
allocated thereto, then a portion of the Class C Invested Amount
will be reduced by an amount equal to such deficiency (but not in
excess of the Series Default and Dilution Amount for such Monthly
Period) to avoid a charge-off with respect to the Class A Variable
Funding Certificates or Class B Variable Funding Certificates. If
the Class C Invested Amount is reduced to zero, then a portion of
the Class B Invested Amount will be reduced by an amount by which
the Class C Invested Amount would have been reduced below zero
(but not in excess of the Class A/B Default and Dilution Amount
for such Monthly Period). If the Class B Invested Amount is
reduced to zero, then a portion of the Class A Invested Amount
will be reduced by an amount by which the Class B Invested Amount
would have been reduced below zero (but not in excess of the Class
A Default and Dilution Amount for such Monthly Period).
The Servicer, is entitled to receive as servicing
compensation a servicing fee in an amount equal to, with respect
to each Series, the product of (i) a fraction, the numerator of
which is the actual number of days in the measuring period
specified in the applicable Series Supplement and the denominator
of which is the actual number of days in the year, (ii) the
applicable Series Servicing Fee Percentage and (iii) the Invested
Amount as of the end of the date of determination for such payment
as specified in the applicable Series Supplement. The share of
the Servicing Fee allocable to the Investor Certificates for any
Business Day is equal to the product of (i) a fraction, the
numerator of which is the actual number of days from and including
the preceding Business Day to but excluding such Business Day and
the denominator of which is the actual number of days in a year,
(ii) 2.0% per annum and (iii) the Adjusted Invested Amount as of
the end of the preceding Business Day (the "Servicing Fee"). The
Servicing Fee will be paid in the manner set forth in the Pooling
and Servicing Agreement. The remainder of the servicing
compensation will be allocable to the Transferor Amount and the
Certificateholders of all other Series, and the Trustee and the
Investor Certificateholders will not have any obligation to pay
such portion of the servicing compensation.
As described in the Pooling and Servicing Agreement,
Principal Collections with respect to any Business Day will be
allocated on the basis of the aggregate Investor Percentage of all
Series and the Transferor Percentage with respect to the Principal
Collections.
Subject to the Pooling and Servicing Agreement and the
Supplement, payments of principal are limited to the unpaid Class
B Invested Amount of the Class B Variable Funding Certificates,
which may be less than the unpaid balance of the Class B Variable
Funding Certificates pursuant to the terms of the Pooling and
Servicing Agreement and the Supplement. All principal of and
interest on the Class B Variable Funding Certificates is due and
payable no later than July 31, 2004, unless a different date shall
be set forth in an Extension Notice (the "Series Termination
Date"). After the Series Termination Date, neither the Trust nor
the Transferor will have any further obligation to distribute
principal or interest on the Class B Variable Funding
Certificates. In the event that the Class B Invested Amount is
greater than zero on the Series Termination Date, the Trustee will
sell or cause to be sold, to the extent necessary, an amount of
Principal Receivables and the related Finance Charge Receivables
(or, in some cases, interests therein) up to 110% of the Class A
Invested Amount, the Class B Invested Amount and the Class C
Invested Amount at the close of business on such date (but not
more than the total amount of Receivables allocable to the
Investor Certificates determined pursuant to the Pooling and
Servicing Agreement), and shall pay the proceeds to the Class A
Certificateholders pro rata in final payment of the Class A
Variable Funding Certificates, then to the Class B Variable
Funding Certificateholders pro rata in final payment of the Class
B Variable Funding Certificates and then to the Class C
Certificateholders pro rata in final payment of the Class C
Certificates.
The transfer of this Certificate shall be registered in the
Certificate Register upon surrender of this Certificate for
registration of transfer at any office or agency maintained by the
Transfer Agent and Registrar accompanied by a written instrument
of transfer in a form satisfactory to the Trustee and the Transfer
Agent and Registrar duly executed by the Certificateholder or such
Certificateholder's attorney-in-fact duly authorized in writing,
and thereupon one or more new Class B Variable Funding
Certificates of authorized denominations and for the same
aggregate fractional Undivided Interests will be issued to the
designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and
certain limitations therein and herein set forth, Class B Variable
Funding Certificates are exchangeable for new Class B Variable
Funding Certificates evidencing like aggregate fractional
undivided interests, as requested by the Class B Certificateholder
surrendering such Class B Variable Funding Certificates. No
service charge may be imposed for any such exchange but the
Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in connection therewith.
The Trustee, the Paying Agent and the Transfer Agent and
Registrar, and any agent of any of them, may treat the person in
whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Paying Agent and the
Transfer Agent and Registrar, nor any agent of any of them or of
any such agent shall be affected by notice to the contrary except
in certain circumstances described in the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement and the Supplement may be
amended from time to time by the Servicer, the Transferor and the
Trustee, without the consent of any of the Class B
Certificateholders, to cure any ambiguity, to revise any exhibits
or schedules (other than Schedule 1) of the Pooling and Servicing
Agreement, to correct or supplement any provisions therein which
may be inconsistent with any other provisions therein or to add
any other provisions with respect to matters or questions raised
under the Pooling and Servicing Agreement or the Supplement which
shall not be inconsistent with the provisions of the Pooling and
Servicing Agreement or the Supplement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any of
the Investor Certificateholders. Additionally, the Pooling and
Servicing Agreement and the Supplement may be amended from time to
time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class B Certificateholders, to add to or
change any of the provisions of the Pooling and Servicing
Agreement (i) to provide that Bearer Certificates may be
registrable as to principal, to change or eliminate any
restrictions on the payment of principal of (or premium, if any)
or any interest on Bearer Certificates to comply with the Bearer
Rules, to permit Bearer Certificates to be issued in exchange for
Registered Certificates (if then permitted by the Bearer Rules),
to permit Bearer Certificates to be issued in exchange for Bearer
Certificates of other authorized denominations or to permit the
issuance of Certificates in uncertificated form or (ii) to
restrict or eliminate in any way the Transferor's right to
designate Removed Accounts and to remove from the Trust all of the
Trust's right, title and interest in, to and under the Receivables
in such Removed Accounts pursuant to Section 2 of the Pooling and
Servicing Agreement. The Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Trustee's
rights, duties or immunities under the Pooling and Servicing
Agreement or otherwise.
The Pooling and Servicing Agreement (and any schedule or
exhibit thereto) and the Supplement (and any schedule or exhibit
thereto) may also be amended from time to time by the Servicer,
the Transferor and the Trustee, without the consent of any of the
Class B Certificateholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or the
Supplement, or of modifying in any manner the rights of the
Holders of the Class B Variable Funding Certificates; provided
that (i) the Servicer shall have provided an Officer's Certificate
to the Trustee to the effect that such amendment will not
materially and adversely affect the interests of the
Certificateholders, (ii) such amendment shall not, as evidenced by
an Opinion of Counsel, cause the Trust to be characterized for
U.S. federal income tax purposes as an association taxable as a
corporation or otherwise have any material adverse impact on the
U.S. federal income taxation of the Class B Variable Funding
Certificates or the Class B Certificateholders and (iii) the
Servicer shall have provided at least ten Business Days prior
written notice to each Rating Agency of such amendment and shall
have received written confirmation from each Rating Agency to the
effect that the then current rating of any Series or any Class of
any Series will not be reduced or withdrawn as a result of such
amendment; provided, further, that such amendment shall not reduce
in any manner the amount of, or delay the timing of, distributions
which are required to be made on any Class B Variable Funding
Certificate without the consent of the related Class B
Certificateholder, change the definition of or the manner of
calculating the interest of any Investor Certificateholder of such
Series without the consent of the related Investor
Certificateholder or reduce the percentage pursuant to the next
succeeding paragraph required to consent to any such amendment, in
each case without the consent of all such Class B
Certificateholders.
The Pooling and Servicing Agreement and the Supplement may
also be amended from time to time by the Servicer, the Transferor
and the Trustee with the consent of the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less
than 66-2/3% of the Invested Amount of each and every Series
adversely affected, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the
Pooling and Servicing Agreement or of modifying in any manner the
rights of the Investor Certificateholders of any Series then
issued and outstanding; provided, however, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing
of, distributions which are required to be made on any Investor
Certificate of any Series without the consent of the related
Investor Certificateholders; (ii) change the definition of or the
manner of calculating the interest of any Investor
Certificateholder of any Series without the consent of the related
Investor Certificateholder or (iii) reduce the aforesaid
percentage required to consent to any such amendment, in each case
without the consent of all such Investor Certificateholders;
provided, further, that for the purposes of the Officer's
Certificate referred to in clause (i) above, any action taken in
order to enable the Trust or a portion thereof to elect to qualify
as a FASIT (or comparable tax entity for the securitization of
financial assets) in accordance with the Internal Revenue Code of
1986, as amended, shall be deemed not to materially and adversely
affect the interest of the Certificateholders.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Pooling
and Servicing Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Certificate to be duly executed under its official seal.
PRIME II RECEIVABLES CORPORATION
By:_________________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Variable Funding Certificates
referred to in the within-mentioned Pooling and Servicing
Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________________
Authorized Signatory
Exhibit A-3
[FORM OF CLASS C CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), IN RELIANCE UPON
EXEMPTIONS PROVIDED BY THE SECURITIES ACT. NO RESALE OR OTHER
TRANSFER OF THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (B) IN
A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
NEITHER THE TRANSFEROR NOR THE TRUSTEE IS OBLIGATED TO REGISTER
THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES
OR "BLUE SKY" LAW.
EACH HOLDER OF THIS CERTIFICATE OR AN INTEREST THEREIN, BY
ACCEPTING AND HOLDING THIS CERTIFICATE, IS DEEMED TO HAVE
REPRESENTED AND WARRANTED THAT IT IS NOT (I) AN EMPLOYEE BENEFIT
PLAN AS DEFINED IN SECTION 3(3) OF ERISA) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(l) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
No. ___% Percentage Interest
PRIME CREDIT CARD MASTER TRUST II
CLASS C CERTIFICATE,
SERIES 1999-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the
ordinary course of business from a portfolio of consumer revolving
credit card accounts generated or to be generated by FDS National
Bank ("FDSNB") and other assets and interests constituting the
Trust under the Pooling and Servicing Agreement described below.
(Not an interest in or a recourse obligation of Prime II
Receivables Corporation, FDSNB or any affiliate of either of
them.)
This certifies that ____________________________ (the
"Certificateholder") is the registered owner of a fractional
undivided interest in the Prime Credit Card Master Trust II (the
"Trust") issued pursuant to the Pooling and Servicing Agreement,
dated as of January 22, 1997 (the "Pooling and Servicing
Agreement," such term to include any amendment or Supplement
thereto) by and among Prime II Receivables Corporation, as
Transferor (the "Transferor"), FDSNB, as Servicer (the
"Servicer"), and The Chase Manhattan Bank, as Trustee (the
"Trustee"), and the Series 1999-1 Variable Funding Supplement,
dated as of July 6, 1999 (the "Supplement"), among the Transferor,
the Servicer and the Trustee. The corpus of the Trust consists of
all of the Transferor's right, title and interest in, to and under
the Trust Property. The Certificateholder is entitled to payments
from time to time as provided in the Pooling and Servicing
Agreement.
The holder of this Certificate on any Business Day is
entitled to payment in an amount equal to its pro rata share (as
provided in the Pooling and Servicing Agreement) of (a) the Class
C Initial Invested Amount plus (b) an amount equal to the
aggregate principal amount of any VFC Additional Class C Invested
Amount purchased by the Class C Certificateholders through the end
of the preceding Business Day pursuant to Section 6.15 of the
Pooling and Servicing Agreement minus (c) the aggregate amount of
principal payments to the Class C Certificateholders prior to such
Business Day.
This Certificate does not purport to summarize the Pooling
and Servicing Agreement and reference is made to the Pooling and
Servicing Agreement for information with respect to the interests,
rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A
copy of the Pooling and Servicing Agreement may be requested from
the Trustee by writing to the Trustee at 450 West 33rd Street, New
York, New York 10001, Attention: Corporate Trustee Administration
Department. To the extent not defined herein, the capitalized
terms used herein have the meanings ascribed to them in the
Pooling and Servicing Agreement. This Certificate is one of a
series of Certificates entitled "Prime Credit Card Master Trust II
Class C Certificates, Series 1999-1" (the "Class C Certificates"),
each of which represents a fractional undivided interest in the
Trust, and is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which
Pooling and Servicing Agreement, as amended from time to time, the
Certificateholder by virtue of the acceptance hereof assents and
by which the Certificateholder is bound.
The Series 1999-1 Certificates are issued in three classes,
the Class A Variable Funding Certificates, the Class B Variable
Funding Certificates, which are subordinated to the Class A
Variable Funding Certificates in certain rights of payment as
described in the Agreement and the Class C Certificates (of which
this certificate is one), which are subordinated to the Class A
Variable Funding Certificates and Class B Variable Funding
Certificates in certain rights of payment as described in the
Agreement.
A portion of the aggregate Receivables in the Trust as
determined pursuant to the Pooling and Servicing Agreement will be
treated as Finance Charge Receivables. Such amount may be
adjusted from time to time pursuant to the Supplement. The
remainder of such Receivables will be treated as Principal
Receivables.
Each holder of a Class C Certificate (a "Class C
Certificateholder") or any interest therein by acceptance of its
Certificate or any interest therein, agrees to treat the Class C
Certificates for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by
income, as indebtedness of the Transferor to the extent permitted
by law.
The Trust's assets are allocated in part to the holders of
the Investor Certificates (the "Investor Certificateholders") with
the remainder allocated to holders of other Series of Certificates
issued by the Trust, if any, and to the Transferor. In addition
to the Investor Certificates, an Exchangeable Transferor
Certificate will be issued pursuant to the Pooling and Servicing
Agreement and will represent the Transferor's Interest in the
Trust. The Exchangeable Transferor Certificate will represent the
interest in the Receivables not represented by the Investor
Certificates or any other Series of Certificates. The
Exchangeable Transferor Certificate may be exchanged by the
Transferor pursuant to the Pooling and Servicing Agreement for one
or more Series of Certificates and a reissued Exchangeable
Transferor Certificate upon the conditions set forth in the
Pooling and Servicing Agreement. In addition, to the extent
permitted for any Series of Certificates by the related
Supplement, the Certificateholders of such Series may tender their
Certificates and the Transferor may tender the Exchangeable
Transferor Certificate in exchange for one or more Series of
Certificates and a reissued Exchangeable Transferor Certificate.
The aggregate interest in the Trust represented by the
Investor Certificates at any time shall not exceed an amount equal
to the Invested Amount at such time. The Initial Invested Amount
is $___________. The aggregate interest in the Trust represented
by the Class C Certificates at any time shall not exceed an amount
equal to the Class C Invested Amount at such time. The Class C
Initial Invested Amount is $__________.
Interest will accrue on the unpaid principal amount of the
Class C Certificates at a per annum rate equal to the Class C
Certificate Rate and will be calculated on each Business Day based
on the product of the Class C Certificate Rate and the outstanding
principal balance of the Class C Certificates on such Business
Day.
If on any Determination Date the Series Default and Dilution
Amount for the preceding Monthly Period exceeded the aggregate
amount of Finance Charge Collections applied to the payment
thereof and the Available Reserve Amount, and the amount of Excess
Finance Charge Collections and Reallocated Principal Collections
allocated thereto, then a portion of the Class C Invested Amount
will be reduced by an amount equal to such deficiency (but not in
excess of the Series Default and Dilution Amount for such Monthly
Period) to avoid a charge-off with respect to the Class A Variable
Funding Certificates or Class B Variable Funding Certificates. If
the Class C Invested Amount is reduced to zero, then a portion of
the Class B Invested Amount will be reduced by an amount by which
the Class C Invested Amount would have been reduced below zero
(but not in excess of the Class A/B Default and Dilution Amount
for such Monthly Period). If the Class B Invested Amount is
reduced to zero, then a portion of the Class A Invested Amount
will be reduced by an amount by which the Class B Invested Amount
would have been reduced below zero (but not in excess of the Class
A Default and Dilution Amount for such Monthly Period).
The Servicer, is entitled to receive as servicing
compensation a servicing fee in an amount equal to, with respect
to each Series, the product of (i) a fraction, the numerator of
which is the actual number of days in the measuring period
specified in the applicable Series Supplement and the denominator
of which is the actual number of days in the year, (ii) the
applicable Series Servicing Fee Percentage and (iii) the Adjusted
Invested Amount as of the end of the date of determination for
such payment as specified in the applicable Series Supplement.
The share of the Servicing Fee allocable to the Investor
Certificates for any Business Day is equal to the product of (i) a
fraction, the numerator of which is the actual number of days from
and including the preceding Business Day to but excluding such
Business Day and the denominator of which is the actual number of
days in a year, (ii) 2.0% per annum and (iii) the Invested Amount
as of the end of the preceding Business Day (the "Servicing Fee").
The Servicing Fee will be paid in the manner set forth in the
Pooling and Servicing Agreement. The remainder of the servicing
compensation will be allocable to the Transferor Amount and the
Certificateholders of all other Series, and the Trustee and the
Investor Certificateholders will not have any obligation to pay
such portion of the servicing compensation.
As described in the Pooling and Servicing Agreement,
Principal Collections with respect to any Business Day will be
allocated on the basis of the aggregate Investor Percentage of all
Series and the Transferor Percentage with respect to the Principal
Collections.
Subject to the Pooling and Servicing Agreement and the
Supplement, payments of principal are limited to the unpaid Class
C Invested Amount of the Class C Certificates, which may be less
than the unpaid balance of the Class C Certificates pursuant to
the terms of the Pooling and Servicing Agreement and the
Supplement. All principal of and interest on the Class C
Certificates is due and payable no later than July 31, 2004,
unless a different date shall be set forth in an Extension Notice
(the "Series Termination Date"). After the Series Termination
Date, neither the Trust nor the Transferor will have any further
obligation to distribute principal or interest on the Class C
Certificates. In the event that the Class C Invested Amount is
greater than zero on the Series Termination Date, the Trustee will
sell or cause to be sold, to the extent necessary, an amount of
Principal Receivables and the related Finance Charge Receivables
(or, in some cases, interests therein) up to 110% of the Class A
Invested Amount, the Class B Invested Amount and the Class C
Invested Amount at the close of business on such date (but not
more than the total amount of Receivables allocable to the
Investor Certificates determined pursuant to the Pooling and
Servicing Agreement), and shall pay the proceeds to the Class A
Certificateholders pro rata in final payment of the Class A
Variable Funding Certificates, then to the Class B Variable
Funding Certificateholders pro rata in final payment of the Class
B Variable Funding Certificates and then to the Class C
Certificateholders pro rata in final payment of the Class C
Certificates.
The transfer of this Certificate shall be registered in the
Certificate Register upon surrender of this Certificate for
registration of transfer at any office or agency maintained by the
Transfer Agent and Registrar accompanied by a written instrument
of transfer in a form satisfactory to the Trustee and the Transfer
Agent and Registrar duly executed by the Certificateholder or such
Certificateholder's attorney-in-fact duly authorized in writing,
and thereupon one or more new Class C Certificates of authorized
denominations and for the same aggregate fractional Undivided
Interests will be issued to the designated transferee or
transferees.
As provided in the Pooling and Servicing Agreement and
certain limitations therein and herein set forth, Class C
Certificates are exchangeable for new Class C Certificates
evidencing like aggregate fractional undivided interests, as
requested by the Class C Certificateholder surrendering such Class
C Certificates. No service charge may be imposed for any such
exchange but the Transfer Agent and Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith.
The Trustee, the Paying Agent and the Transfer Agent and
Registrar, and any agent of any of them, may treat the person in
whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Paying Agent and the
Transfer Agent and Registrar, nor any agent of any of them or of
any such agent shall be affected by notice to the contrary except
in certain circumstances described in the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement and the Supplement may be
amended from time to time by the Servicer, the Transferor and the
Trustee, without the consent of any of the Class C
Certificateholders, to cure any ambiguity, to revise any exhibits
or schedules (other than Schedule 1) of the Pooling and Servicing
Agreement, to correct or supplement any provisions therein which
may be inconsistent with any other provisions therein or to add
any other provisions with respect to matters or questions raised
under the Pooling and Servicing Agreement or the Supplement which
shall not be inconsistent with the provisions of the Pooling and
Servicing Agreement or the Supplement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any of
the Investor Certificateholders. Additionally, the Pooling and
Servicing Agreement and the Supplement may be amended from time to
time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class C Certificateholders, to add to or
change any of the provisions of the Pooling and Servicing
Agreement (i) to provide that Bearer Certificates may be
registrable as to principal, to change or eliminate any
restrictions on the payment of principal of (or premium, if any)
or any interest on Bearer Certificates to comply with the Bearer
Rules, to permit Bearer Certificates to be issued in exchange for
Registered Certificates (if then permitted by the Bearer Rules),
to permit Bearer Certificates to be issued in exchange for Bearer
Certificates of other authorized denominations or to permit the
issuance of Certificates in uncertificated form or (ii) to
restrict or eliminate in any way the Transferor's right to
designate Removed Accounts and to remove from the Trust all of the
Trust's right, title and interest in, to and under the Receivables
in such Removed Accounts pursuant to Section 2 of the Pooling and
Servicing Agreement. The Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Trustee's
rights, duties or immunities under the Pooling and Servicing
Agreement or otherwise.
The Pooling and Servicing Agreement (and any schedule or
exhibit thereto) and the Supplement (and any schedule or exhibit
thereto) may also be amended from time to time by the Servicer,
the Transferor and the Trustee, without the consent of any of the
Class C Certificateholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or the
Supplement, or of modifying in any manner the rights of the
Holders of the Class C Certificates; provided that (i) the
Servicer shall have provided an Officer's Certificate to the
Trustee to the effect that such amendment will not materially and
adversely affect the interests of the Certificateholders, (ii)
such amendment shall not, as evidenced by an Opinion of Counsel,
cause the Trust to be characterized for U.S. federal income tax
purposes as an association taxable as a corporation or otherwise
have any material adverse impact on the U.S. federal income
taxation of the Class C Certificates or the Class C
Certificateholders and (iii) the Servicer shall have provided at
least ten Business Days prior written notice to each Rating Agency
of such amendment and shall have received written confirmation
from each Rating Agency to the effect that the then current rating
of any Series or any Class of any Series will not be reduced or
withdrawn as a result of such amendment; provided, further, that
such amendment shall not reduce in any manner the amount of, or
delay the timing of, distributions which are required to be made
on any Class C Certificate without the consent of the related
Class C Certificateholder, change the definition of or the manner
of calculating the interest of any Investor Certificateholder of
such Series without the consent of the related Investor
Certificateholder or reduce the percentage pursuant to the next
succeeding paragraph required to consent to any such amendment, in
each case without the consent of all such Class C
Certificateholders.
The Pooling and Servicing Agreement and the Supplement may
also be amended from time to time by the Servicer, the Transferor
and the Trustee with the consent of the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less
than 66-2/3% of the Invested Amount of each and every Series
adversely affected, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the
Pooling and Servicing Agreement or of modifying in any manner the
rights of the Investor Certificateholders of any Series then
issued and outstanding; provided, however, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing
of, distributions which are required to be made on any Investor
Certificate of any Series without the consent of the related
Investor Certificateholders; (ii) change the definition of or the
manner of calculating the interest of any Investor
Certificateholder of any Series without the consent of the related
Investor Certificateholder or (iii) reduce the aforesaid
percentage required to consent to any such amendment, in each case
without the consent of all such Investor Certificateholders;
provided, further, that for the purposes of the Officer's
Certificate referred to in clause (i) above, any action taken in
order to enable the Trust or a portion thereof to elect to qualify
as a FASIT (or comparable tax entity for the securitization of
financial assets) in accordance with the Internal Revenue Code of
1986, as amended, shall be deemed not to materially and adversely
affect the interest of the Certificateholders.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Pooling
and Servicing Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Certificate to be duly executed under its official seal.
PRIME II RECEIVABLES CORPORATION
By:_________________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________________
Authorized Signatory
EXHIBIT B
FORM OF EXTENSION NOTICE
PRIME CREDIT CARD MASTER TRUST II, SERIES 1999-1
The undersigned, a duly authorized representative of Prime II
Receivables Corporation, a Delaware corporation the "Transferor"),
as Transferor pursuant to the Pooling and Servicing Agreement
dated as of January 22, 1997 (the "Pooling and Servicing
Agreement"), by and between the Transferor, as transferor, FDS
National Bank, as Servicer (the "Servicer"), and The Chase
Manhattan Bank, as trustee (the "Trustee"), as supplemented by the
Series 1999-1 Supplement, dated July 6, 1999 (the "Series 1999-1
Supplement"), by and between the Transferor, the Servicer and the
Trustee, (the Pooling and Servicing Agreement, as supplemented by
the Series 1999-1 Supplement, or as the Pooling and Servicing
Agreement may from time to time be amended, supplemented, or
modified, the "Agreement"), does hereby notify the Trustee (or any
successor Trustee) and the Investor Certificateholders:
A. Capitalized terms used but not defined in this
Certificate shall have the respective meanings set forth in the
Agreement. References herein to certain sections and subsections
are references to the respective sections and subsections of the
Agreement.
B. The undersigned is a Treasurer, Vice President or more
senior officer of the Transferor who is duly authorized to execute
and deliver this Certificate on behalf of the Transferor.
C. This Certificate is being delivered pursuant to Section
6.16(a) of the Agreement.
D. The Transferor is the Transferor under the Agreement.
E. No Pay Out Event has occurred that has not been remedied
pursuant to the provisions of the Agreement.
F. The Certificate is being delivered to the Trustee on or
before the date specified in subsection 6.16(a) for such delivery.
G. NOTIFICATION OF EXTENSION.
Pursuant to subsection 6.16(a) and in respect of [ , ]
(the "Current Extension Date"), the Transferor hereby notifies the
Trustee and the Investor Certificateholders of the Transferor's
intention to extend the Revolving Period in respect of Series 1999-
1 on the Current Extension Date pursuant to the provisions of
Section 6.16, until the date set forth below (such extension, the
"Extension").
H. REQUIREMENTS TO COMPLETE EXTENSION
(1) Annexed hereto is an election notice (an "Election
Notice") to be returned by any Investor Certificateholder electing
to approve the Extension. No Extension shall occur unless
Investor Certificateholders holding at least the aggregate
principal amount of Class A Certificates and Class B Certificates
set forth below, respectively, shall return properly executed
Election Notices approving the Extension by the Election Date (as
defined below). Any Investor Certificateholder electing to
approve the Extension must deliver a properly executed Election
Notice at the office of the Trustee,
[address] on or before 3:00 p.m., [New York City] time, on [
, ] (the "Election Date"). Any Investor Certificateholder may
withdraw any Election Notice delivered by it to the Trustee by
notifying the Trustee in writing at the address set forth in the
previous sentence on or prior to the Election Date.
(2) The minimum principal amount of Class A Certificates
that must approve of the Extension before such Extension may occur
shall equal $ .
(3) The minimum principal amount of Class B Certificates
that must approve of the Extension before such Extension may occur
shall equal $ .
(4) THE EXTENSION SHALL NOT OCCUR UNTIL PRIOR SATISFACTION
OF CERTAIN CONDITIONS PRECEDENT BY THE CLOSE OF BUSINESS ON THE
ELECTION DATE, INCLUDING THE APPROVAL OF SUCH EXTENSION BY THE
INVESTOR CERTIFICATEHOLDERS HOLDING THE REQUIRED AGGREGATE
PRINCIPAL AMOUNT OF CLASS A AND CLASS B CERTIFICATES, THAT NO PAY
OUT EVENT SHALL HAVE OCCURRED AND BE CONTINUING, AND THAT CERTAIN
LEGAL OPINIONS AND RATING AGENCY CONFIRMATIONS SHALL HAVE BEEN
DELIVERED TO THE TRANSFEROR AND THE TRUSTEE PURSUANT TO SECTION
6.16(b). THE TRANSFEROR MAY IN ITS SOLE DISCRETION WITHDRAW THIS
EXTENSION NOTICE AT ANY TIME ON OR PRIOR TO THE ELECTION DATE BY
DELIVERING NOTICE OF SUCH WITHDRAWAL IN WRITING TO THE TRUSTEE.
IF ANY SUCH NOTICE OF WITHDRAWAL SHALL BE SO DELIVERED, NO
EXTENSION SHALL OCCUR.
I. NEW PROVISIONS TO BECOME EFFECTIVE ON THE EXTENSION
DATE.
(1) The new Amortization Period Commencement Date shall be
the earlier of (a) [ (b) the Pay Out Commencement Date.
(2) The new Extension Date shall be [ ,
].
[(3) The new Scheduled Series 1999-1 Termination Date shall
be [ , ].]
[(4) The following are additional provisions that will apply
to the Investor Certificates on and after the Extension Date:
INSERT PROVISIONS]
J. Annexed hereto are the following:
(1) the form of Extension Tax Opinion.
(2) the form of Extension Opinion.
(3) the Election Notice.
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this [ ] day of [ , ].
PRIME II RECEIVABLES CORPORATION
By:_______________________________
Name:
Title:
EXHIBIT C
FORM OF INVESTOR CERTIFICATEHOLDER ELECTION NOTICE
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trustee Administration Department
Re: Prime Credit Card Master Trust II:
Election Notice to Extend Series 1999-1
Ladies and Gentlemen:
The undersigned hereby elects to approve the extension of the
Revolving Period for Series 1999-1 until the Amortization Period
Commencement Date set forth in the Extension Notice dated [
, ] (the "Extension Notice") and delivered to the
undersigned pursuant Section 6.16(a) of the Pooling and Servicing
Agreement, dated as of January 22, 1997 including the Series 1999-
1 Supplement thereto, each by and among Prime II Receivables
Corporation, as transferor, FDS National Bank, as Servicer, and
The Chase Manhattan Bank, as trustee (the "Pooling and Servicing
Agreement"). The undersigned hereby acknowledges that commencing
on the Current Extension Date (as defined in the Extension
Notice), the terms and provisions of the Pooling and Servicing
Agreement shall be modified as set forth in the Extension Notice.
IN WITNESS WHEREOF, the undersigned registered owner(s) has [have]
executed this Election Notice as of the date set forth below.
Dated:
Name(s): _______________________
Address: _______________________
(Please Print)
Signature(s): _____________________
EXHIBIT D
FORM OF INVESTMENT LETTER
(Class C Certificates, Series 1999-1)
[Date]
Re: Prime Credit Card Master Trust II
Class C Certificates, Series 1999-1
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by the
undersigned (the "Purchaser") pursuant to Section 6.17 of the
Series 1999-1 Variable Funding Supplement, dated as of July 6,
1999 (the "Supplement"), among Prime II Receivables Corporation,
as Transferor (the "Transferor"), FDS National Bank, as Servicer
(the "Servicer"), and The Chase Manhattan Bank, as Trustee (the
"Trustee"), which supplements the Pooling and Servicing Agreement,
dated as of January 22, 1997, among the Transferor, the Servicer
and the Trustee, in connection with the Purchaser's acquisition of
Class C Certificates or an interest therein. Capitalized terms
used herein without definition shall have the meanings set forth
in the Supplement. The Purchaser represents to and agrees with
the Transferor and the Trustee as follows:
(a) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of its investment in the Series C Certificates
and is able to bear the economic risk of such investment. The
Purchaser has independently and based on such documents and
information as it has deemed appropriate, made is own appraisal of
and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Trust,
the Transferor and the Servicer and made its own decision to
purchase its interest in the Series C Certificates, and will,
independently and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
analysis, appraisals and decisions in taking or not taking action
under the Supplement, and to make such investigation as it deems
necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of
the Trust, the Transferor and the Servicer.
(b) The Purchaser is an "accredited investor", as defined in
Rule 501, promulgated by the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"), or is a sophisticated institutional
investor. The Purchaser understands that the offering and sale of
the Series C Certificates has not been and will not be registered
under the Securities Act and has not and will not be registered or
qualified under any applicable "Blue Sky" law, and that the
offering and sale of the Series C Certificates has not been
reviewed by, passed on or submitted to any federal or state agency
or commission, securities exchange or other regulatory body.
(c) The Purchaser is acquiring an interest in Series C
Certificates without a view to any distribution, resale or other
transfer thereof except, with respect to any Series C Certificates
or any interest or participation therein, as contemplated in the
following sentence. The Purchaser will not resell or otherwise
transfer any interest or participation in the Series C
Certificates, except in accordance with Section 6.17 of the
Supplement and (i) in a transaction exempt from the registration
requirements of the Securities Act of 1933, as amended, and
applicable state securities or "blue sky" laws; (ii) to the
Transferor or any affiliate of the Transferor; or (iii) to a
person who the Purchaser reasonably believes is a qualified
institutional buyer (within the meaning thereof in Rule 144A under
the Securities Act) that is aware that the resale or other
transfer is being made in reliance upon Rule 144A. In connection
therewith, the Purchaser hereby agrees that it will not resell or
otherwise transfer the Series C Certificates or any interest
therein unless the purchaser thereof provides to the addressee
hereof a letter substantially in the form hereof.
(d) The Purchaser hereby certifies to the Transferor, the
Servicer and the Trustee that it has neither acquired nor will it
sell, trade or transfer any interest in a Class C Certificate or
cause an interest in a Class C Certificate to be marketed on or
through an "established securities market" within the meaning of
Section 7704(b)(1) of the Code and any proposed, temporary or
final treasury regulation thereunder, including, without
limitation, an over-the-counter market or an interdealer quotation
system that regularly disseminates firm buy or sell quotations.
The Purchaser hereby further certifies that it is not and, for so
long as it holds any interest in a Class C Certificate, will not
become a partnership, Subchapter S corporation or grantor trust
for U.S. federal income tax purposes. The Purchaser acknowledges
that the Opinion of Counsel to the effect that the Trust will not
be treated as a publicly traded partnership taxable as a
corporation is dependent in part on the accuracy of the
certifications described in this paragraph.
(e) Pursuant to subsection 6.17(c) of the Supplement, the
Purchaser hereby agrees not to institute against, or join any
other Person in instituting against, or join any other Person in
instituting against, the Trust or the Transferor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state bankruptcy or
similar law, for one year and one day after all Investor
Certificates are paid in full.
(f) This Investment Letter has been duly executed and
delivered and constitutes the legal, valid and binding obligation
of the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles affecting the enforcement of creditors'
rights generally and general principles of equity.
EXECUTION COPY
CLASS A CERTIFICATE PURCHASE AGREEMENT
Dated as of July 6, 1999
among
PRIME II RECEIVABLES CORPORATION,
as Transferor,
FDS NATIONAL BANK,
as Servicer,
THE CLASS A PURCHASERS PARTIES HERETO,
and
PNC BANK, NATIONAL ASSOCIATION,
as Agent and Administrative Agent
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS 1
1.1 Definitions 1
SECTION 2.
AMOUNT AND TERMS OF COMMITMENTS 12
2.1 Purchases 12
2.2 Reductions and Increases of Commitments 15
2.3 Fees, Expenses, Payments, Etc 16
2.4 Requirements of Law 18
2.5 Taxes 20
2.6 Non-recourse 22
2.7 Indemnification 23
2.8 Termination Events 25
2.9 Certain Agreements of the Agent 26
SECTION 3.
CONDITIONS PRECEDENT 26
3.1 Condition to Initial Purchase 26
3.2 Condition to Additional Purchase 27
SECTION 4.
REPRESENTATIONS AND WARRANTIES 28
4.1 Representations and Warranties of the Transferor 28
4.2 Representations and Warranties of FDSNB 30
4.3 Representations and Warranties of the Agent
and the Class A Purchasers 32
SECTION 5.
COVENANTS 32
5.1 Covenants of the Transferor and FDSNB 32
SECTION 6.
MUTUAL COVENANTS REGARDING CONFIDENTIALITY 36
6.1 Covenants of Transferor, Etc. 36
6.2 Covenants of Class A Purchasers 36
SECTION 7.
THE AGENTS 37
7.1 Appointment 37
7.2 Delegation of Duties 37
7.3 Exculpatory Provisions 37
7.4 Reliance by Agent 38
7.5 Notices 38
7.6 Non-Reliance on Agent and Other Class A
Purchasers 39
7.7 Indemnification 39
7.8 Agents in Their Individual Capacities 39
7.9 Successor Agent 40
SECTION 8.
SECURITIES LAWS; TRANSFERS; TAX TREATMENT 41
8.1 Transfers of Class A Certificates 41
8.2 Tax Characterization of the Class A Certificates 45
SECTION 9.
MISCELLANEOUS 46
9.1 Amendments and Waivers 46
9.2 Notices 47
9.3 No Waiver; Cumulative Remedies 48
9.4 Successors and Assigns 48
9.5 Successors to Servicer 49
9.6 Counterparts 50
9.7 Severability 50
9.8 Integration 50
9.9 Governing Law 50
9.10 Termination 50
9.11 Action by Servicer 50
9.12 Limited Recourse; No Proceedings 51
9.13 Survival of Representations and Warranties 51
9.14 Submission to Jurisdiction; Waivers 51
9.15 WAIVERS OF JURY TRIAL 53
LIST OF EXHIBITS
EXHIBIT A Form of Investment Letter
EXHIBIT B Form of Joinder Supplement
EXHIBIT C Form of Transfer Supplement
EXHIBIT D Form of Notice of Financing
CLASS A CERTIFICATE PURCHASE AGREEMENT, dated as of
July 6, 1999, by and among PRIME II RECEIVABLES CORPORATION, a
Delaware corporation ("Prime II Receivables Corporation"), as
Transferor (the "Transferor"), FDS NATIONAL BANK, a national
banking association ("FDSNB"), as Servicer (the "Servicer"), the
CLASS A PURCHASERS from time to time parties hereto (the "Class A
Purchasers"), and PNC BANK, NATIONAL ASSOCIATION, as Agent for
the Class A Purchasers (in such capacity, the "Agent") and as
Administrative Agent for the Class A Purchasers and the Class B
Purchasers (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, Prime II Receivables Corporation, as
Transferor, FDSNB, as Servicer, and the Trustee are parties to a
certain Pooling and Servicing Agreement dated as of January 22,
1997 (as the same may from time to time be amended or otherwise
modified, the "Master Pooling and Servicing Agreement"), and a
Series 1999-1 Variable Funding Supplement thereto, dated as of
July 6, 1999 (as the same may from time to time be amended or
otherwise modified, the "Supplement" and, together with the
Master Pooling and Servicing Agreement, the "Pooling and
Servicing Agreement");
WHEREAS, the Trust proposes to issue its Class A
Variable Funding Certificates, Series 1999-1 (the "Class A
Certificates") and its Class B Variable Funding Certificates,
Series 1999-1 (the "Class B Certificates" and, together with the
Class A Certificates, the "Series 1999-1 Variable Funding
Certificates") pursuant to the Pooling and Servicing Agreement;
WHEREAS, the Trust also proposes to issue its Class C
Certificates, Series 1999-1 (the "Class C Certificates" and,
together with the Series 1999-1 Variable Funding Certificates,
the "Series 1999-1 Certificates") pursuant to the Pooling and
Servicing Agreement; and
WHEREAS, the Class A Purchasers are willing to purchase
the Class A Certificates on the Closing Date and from time to
time thereafter to purchase VFC Additional Class A Invested
Amounts thereunder on the terms and conditions provided for
herein;
NOW THEREFORE, in consideration of the mutual covenants
herein contained, and other good and valuable consideration, the
receipt and adequacy of which are hereby expressly acknowledged,
the parties hereto agree as follows:
SECTION 1. DEFINITIONS
. Definitions. All capitalized terms used herein as
defined terms and not de fined herein shall have the meanings
given to them in the Pooling and Servicing Agreement. Each
capitalized term defined herein shall relate only to the Series
1999-1 Certificates and to no other Series of Certificates issued
by the Trust.
"Act" has the meaning specified in subsection 2.7(a) of
this Agreement.
"Additional Interest Amount" has the meaning assigned
to such term in Section 2.3(g).
"Adjusted Eurodollar Rate" shall mean, for any Fixed
Period (or any shorter period of time agreed to by the Agent and
the Transferor), an interest rate per annum (rounded upward to
the nearest 1/16th of 1%) determined pursuant to the following
formula:
LIBOR
100% - Eurodollar Rate Reserve Percentage
where "Eurodollar Rate Reserve Percentage" means, for any Fixed
Period (or any shorter period of time agreed to by the Agent and
the Transferor), the reserve percentage (expressed as a decimal,
rounded upward to the nearest 1/100th of 1%) applicable during
such Fixed Period or such shorter period (or, if more than one
such percentage shall be so applicable, the daily average of such
percentages for those days in such Fixed Period or such shorter
period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve
requirement) with respect to "Eurocurrency" funding (currently
referred to as "Eurocurrency liabilities") having a term
comparable to such Fixed Period or such shorter period.
"Administrative Agent" has the meaning specified in the
preamble to this Agreement.
"Affected Party" shall mean, (i) the Agent, (ii) the
Administrative Agent, and (iii) with respect to any Structured
Purchaser, any Support Bank of such Structured Purchaser.
"Agent" shall mean PNC, in its capacity as Agent for
the Class A Purchasers, or any successor agent hereunder.
"Agent Base Rate" shall mean, for any day, a
fluctuating interest rate per annum as shall be in effect from
time to time, which rate shall be at all times equal to the
higher of:
(a) the rate of interest in effect for such day as
publicly announced from time to time by PNC in Pittsburgh,
Pennsylvania as its "prime rate." Such "prime rate" is set
by PNC based upon various factors, including PNC's costs and
desired return, general economic conditions and other
factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced
rate, and
(b) 0.50% per annum above the latest Federal Funds
Rate.
"Agreement" shall mean this Class A Certificate
Purchase Agreement, as amended, modified or otherwise
supplemented from time to time.
"Alternate Rate" shall mean, for any Fixed Period (or,
with respect to the Adjusted Eurodollar Rate, a shorter period
of time agreed to by the Agent and the Transferor) with respect
to the portion of the Class A Investor Principal Balance owed to
a Class A Purchaser, an interest rate per annum equal to, at the
Transferor's option: (a) the Applicable Margin, plus the Adjusted
Eurodollar Rate for such Fixed Period or such shorter period, or
(b) the Agent Base Rate for such Fixed Period; provided, however,
that in the case of:
(i) any Fixed Period (or, with respect to the Adjusted
Eurodollar Rate, any such shorter period) on or prior to the
date on which such Class A Purchaser shall have notified the
Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful,
or any central bank or other Governmental Authority asserts
that it is unlawful for such Class A Purchaser (or, in the
case of a Structured Purchaser, for any entity providing
funds to such Structured Purchaser at an interest rate
determined by reference to the Adjusted Eurodollar Rate or a
similar rate) to fund such portion of the Class A Investor
Principal Balance at the Alternate Rate described above (and
such Class A Purchaser shall not have subsequently notified
the Agent that such circumstances no longer exist),
(ii) any Fixed Period of less than 30 days; provided,
that the Agent and the Transferor may agree that the
Adjusted Eurodollar Rate may apply to a period of less than
30 days,
(iii) any Fixed Period as to which: (A) the Agent does
not receive notice before 4:00 p.m. (Pittsburgh,
Pennsylvania time) on: (1) the Business Day immediately
preceding the first day of such Fixed Period that the
Transferor desires the related portion of the Class A
Investor Principal Balance to be funded at the Commercial
Paper Rate, or (2) the third Business Day preceding the
first day of such Fixed Period, or the second Business Day
preceding the last day of any shorter period agreed to by
the Agent and the Transferor, in either case, that the
Transferor desires that the related portion of the Class A
Investor Principal Balance to be funded at the Alternate
Rate and based on the Adjusted Eurodollar Rate, or (B) the
Agent shall have notified the Transferor that funding the
related portion of the Class A Investor Principal Balance at
the Commercial Paper Rate for any period of time is (in the
Agent's sole discretion) economically inadvisable to the
related Class A Purchaser, the Agent or the Transferor, or
such Class A Purchaser is not permitted to issue commercial
paper notes for any period of time to fund the Class A
Investor Principal Balance hereunder, or
(iv) any Fixed Period relating to a Class A Investor
Principal Balance that is less than $5,000,000,
the "Alternate Rate" for each such Fixed Period shall be an
interest rate per annum equal to the Agent Base Rate in effect on
each day of such Fixed Period.
"Applicable Margin" means, with respect to any purchase
for which Yield is calculated based on the Adjusted Eurodollar
Rate and the applicable Class A Purchaser is (a) Market Street
Capital Corp., 0.0%, or (b) any other Class A Purchaser, 0.75%.
"Assignee" and "Assignment" have the respective
meanings specified in subsection 8.1(e) of this Agreement.
"Business Day" means any day on which (i) banks are not
authorized or required to close in New York City or Pittsburgh,
Pennsylvania, and (ii) if such term is used in connection with
the Adjusted Eurodollar Rate, dealings are carried out in the
London interbank market.
"Class A Certificates" has the meaning specified in the
recitals to this Agreement.
"Class A Fee Letter" shall mean that certain letter
agreement, designated therein as the Series 1999-1 Class A Fee
Letter and dated as of the date hereof, among the Agent, the
Transferor and the Servicer, as such letter agreement may be
amended or otherwise modified from time to time.
"Class A Investor Principal Balance" shall mean, when
used with respect to any Business Day, an aggregate amount equal
to (a) the Class A Initial Invested Amount, plus (b) the
aggregate VFC Additional Class A Invested Amounts purchased by
the Class A Certificateholders through the end of the preceding
Business Day pursuant to Section 6.15 of the Pooling and
Servicing Agreement, minus (c) the aggregate amount of principal
payments made to the Class A Certificateholders prior to such
Business Day.
"Class A Owners" shall mean, with respect to any Class
A Certificate held by the Agent hereunder for the benefit of
Class A Purchasers, the owners of the Class A Invested Amount
represented by such Class A Certificate as reflected on the books
of the Class A Agent in accordance with this Agreement.
"Class A Program Fee" shall mean the ongoing fees
payable to the Agent or the Class A Purchasers in the amounts and
on the dates set forth in the Class A Fee Letter.
"Class A Purchasers" has the meaning specified in the
preamble to this Agreement.
"Class A Repayment Amount" shall mean the sum of all
amounts payable with respect to the principal amount of the Class
A Certificates and interest on the Class A Certificates and all
other amounts (other than amounts payable pursuant to subsection
2.3(b) or (c), the last sentence of subsection 2.6(a) and Section
2.7 hereof unless such amounts are not paid by the Servicer
pursuant to this Agreement) owing to the Class A Purchasers
hereunder.
"Class B Certificates" has the meaning specified in the
recitals to this Agreement.
"Class C Certificates" has the meaning specified in the
recitals to this Agreement.
"Closing Date" shall mean July 6, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commercial Paper Rate" shall mean, for any Fixed
Period for any portion of the Class A Investor Principal Balance,
to the extent a Structured Purchaser funds such portion for such
Fixed Period by issuing commercial paper notes, a rate calculated
by the Agent equal to: (a) the rate (or if more than one rate,
the weighted average of the rates) at which commercial paper
notes of such Structured Purchaser on each day during such Fixed
Period have been outstanding such Structured Purchaser; provided,
that if such rate(s) is a discount rate(s), then the Commercial
Paper Rate shall be the rate (or if more than one rate, the
weighted average of the rates) resulting from converting such
discount rate(s) to an interest-bearing equivalent rate, plus (b)
the commissions and charges charged by such placement agent or
commercial paper dealer with respect to such commercial paper
notes, expressed as a percentage of the face amount of such
commercial paper notes and converted to an interest-bearing
equivalent rate per annum.
"Committed Class A Purchaser" shall mean any Class A
Purchaser which has a Commitment, as set forth in its respective
Joinder Supplement and any Assignee of such Class A Purchaser to
the extent of the portion of such Commitment assumed by such
Assignee pursuant to its respective Transfer Supplement.
"Commitment" shall mean, for any Committed Class A
Purchaser, the maximum amount of such Committed Class A
Purchaser's commitment to purchase a portion the Class A Invested
Amount, as set forth in the Joinder Supplement or the Transfer
Supplement by which such Committed Class A Purchaser became a
party to this Agreement or assumed the Commitment (or a portion
thereof) of another Committed Class A Purchaser, as such amount
may be adjusted from time to time pursuant to Transfer
Supplement(s) executed by such Committed Class A Purchaser and
its Assignee and delivered pursuant to Section 8.1 of this
Agreement or pursuant to Section 2.2 of this Agreement.
"Commitment Expiration Date" shall mean, for each
Committed Class A Purchaser, the earlier to occur of (i) the date
set forth in the Joinder Supplement or the Transfer Supplement by
which such Committed Class A Purchaser became a party to this
Agreement or assumed the Commitment (or a portion thereof) of
another Committed Class A Purchaser, as such date may be extended
from time to time by mutual agreement of all Class A Purchasers,
the Agent and the Transferor, and (ii) the date that the
commitment of any Support Bank to such Committed Class A
Purchaser terminates under any liquidity agreement or credit
agreement which relates to this Agreement.
"Commitment Percentage" shall mean, for a Committed
Class A Purchaser, such Class A Purchaser's Commitment as a
percentage of the aggregate Commitments of all Committed Class A
Purchasers.
"Defaulting Purchaser" has the meaning specified in
subsection 2.1(e) of this Agreement.
"Downgraded Purchaser" has the meaning specified in
subsection 8.1(k).
"Eligible Assignee" shall mean PNC and each other
Person listed in a letter from the Agent to the Transferor dated
the Closing Date, as such list may be augmented from time to time
with the consent of the Agent and the Transferor.
"Excluded Taxes" has the meaning specified in
subsection 2.5(a) of this Agreement.
"FDSNB" has the meaning specified in the preamble to
this Agreement.
"Federal Funds Rate" means, for any day, the per annum
rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, "H.15(519)") for
such day opposite the caption "Federal Funds (Effective)." If on
any relevant day such rate is not yet published in H.15(519), the
rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds
Effective Rate." If on any relevant day the appropriate rate is
not yet published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in
overnight Federal funds arranged before 9:00 a.m. (New York time)
on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System, or any entity succeeding to any of
its principal functions.
"Fixed Period" shall mean, with respect to a Class A
Purchaser and any portion of the Class A Investor Principal
Balance owed to such Class A Purchaser, a period from and
including a Distribution Date to, but excluding, the next
succeeding Distribution Date; provided that (i) the first Fixed
Period shall commence on the Closing Date and end on the first
Distribution Date, (ii) in the case of any Fixed Period for any
portion of the Class A Principal Balance which commences before
the Termination Date and would otherwise end on a date occurring
after the Termination Date, such Fixed Period shall end on the
Termination Date and the duration of each Fixed Period which
commences on or after the Termination Date shall be of such
duration as shall be selected by the Agent, and (iii) upon the
occurrence, and during the continuance, of an event described in
clause (iii)(B) of the definition of Alternate Rate, the Agent
may, upon notice to the Transferor, terminate any Fixed Period
then in effect if Yield for such Fixed Period is calculated on
the basis of the Commercial Paper Rate. Any portion of the Class
A Investor Principal Balance allocated to any such terminated
Fixed Period shall (i) initially be reallocated to a Fixed Period
beginning on such date of termination and ending on (but
excluding) the third Business Day immediately succeeding such
date of termination and the Yield during such Fixed Period shall
be calculated based on the Alternate Rate as set forth in the
definition thereof, and (ii) then be reallocated to a Fixed
Period beginning on such third Business Day and ending on (but
excluding) the immediately succeeding Distribution Date and the
Yield during such Fixed Period shall be calculated based on the
Alternate Rate as set forth in the definition thereof.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof and
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Indemnitee" has the meaning specified in subsection
2.7(a) of this Agreement.
"Indemnifying Party" has the meaning specified in
subsection 2.7(b) of this Agreement.
"Investing Office" shall mean, with respect to any
Affected Party, any office of such Affected Party which is a
beneficial holder of a portion of the Class A Certificates.
"Investment Letter" has the meaning specified in
subsection 8.1(a) of this Agreement.
"Joinder Supplement" has the meaning specified in
subsection 2.2(d) of this Agreement.
"LIBOR" shall mean, with respect to any Fixed Period
(or any shorter period agreed to by the Agent and the Transferor)
for any Class A Investor Amount to be funded at the Adjusted
Eurodollar Rate, the rate of interest per annum determined by the
Agent to be the arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum notified to the
Agent by the Reference Bank as the rate of interest at which
dollar deposits in the approximate amount of such Class A
Investor Principal Amount to be funded at the Adjusted Eurodollar
Rate during such Fixed Period or such shorter period would be
offered by major banks in the London interbank market to the
Reference Bank at its request at or about 11:00 a.m. (London
time) on the second Business Day before the commencement of such
Fixed Period or such shorter period.
"Liquidation Day" shall mean, for any Class A Purchaser
and any portion of the Class A Investor Principal Balance owed to
such Purchaser (a) any day other than a Distribution Date or a
Business Day on which a decrease in the Class A Investor
Principal occurs pursuant to, and in accordance with, Section
2.3(h), on which a reduction of such portion of the Class A
Investor Principal Balance occurs, (b) any Purchase Date on which
the conditions set forth in Sections 3.2 of the Agreement are not
satisfied, and (c) any day on which the Agent reallocates any
portion of the Class A Investor Principal Balance as the result
of the termination of a Fixed Period pursuant to clause (iii)(B)
of the definition thereof.
.
"Liquidation Fee" shall mean, for any Class A Purchaser
and for any Liquidation Day, the amount, if any, by which (i)
the additional Yield (calculated without taking into account any
Liquidation Fee) which would have accrued during the current
Fixed Period or, with respect to the Adjusted Eurodollar Rate,
any shorter period agreed to by the Agent and the Transferror
(without giving effect to any termination of such Fixed Period or
such shorter period) on the portion of the Class A Investor
Principal Balance owed to such Class A Purchaser, exceeds (ii)
the income, if any, received by such Class A Purchaser from
investing the proceeds of such reduction of the Class A Investor
Principal Balance.
"Master Pooling and Servicing Agreement" has the
meaning specified in the recitals to this Agreement.
"Moody's" shall mean Moody's Investors Service, Inc.
"Noncommitted Class A Purchaser" shall mean a Class A
Purchaser which is not a Committed Class A Purchaser.
"Noncommitted Purchaser Percentage" shall mean for each
Class A Purchaser which is not a Committed Class A Purchaser, the
percentage set forth in its Joinder Supplement or the Transfer
Supplement by which such Class A Purchaser became a party to this
Agreement, as such percentage may be adjusted from time to time
pursuant to Transfer Supplement(s) executed by such Class A
Purchaser and any Assignee and delivered pursuant to Section 8.1
of this Agreement.
"Nondefaulting Purchaser" has the meaning specified in
subsection 2.1(e) of this Agreement.
"Participant" has the meaning specified in subsection
8.1(d) of this Agreement.
"Participation" has the meaning specified in subsection
8.1(d) of the Agreement.
"Percentage Interest" shall mean, for a Class A
Purchaser, (a) the sum of (i) the portion of the Class A Initial
Invested Amount (if any) purchased by such Class A Purchaser,
plus (ii) the aggregate VFC Additional Class A Invested Amounts
(if any) purchased by such Class A Purchaser through the end of
the preceding Business Day pursuant to Section 6.15 of the
Pooling and Servicing Agreement, plus (iii) any portion of the
Class A Investor Principal Balance acquired by such Class A
Purchaser as an Assignee from another Class A Purchaser pursuant
to a Transfer Supplement executed and delivered pursuant to
Section 8.1 of this Agreement, minus (iv) the aggregate amount of
principal payments made to such Class A Purchaser prior to such
Business Day, minus (v) any portion of the Class A Investor
Principal Balance assigned by such Class A Purchaser to an
Assignee pursuant to a Transfer Supplement executed and delivered
pursuant to Section 8.1 of this Agreement, as a percentage of (b)
the aggregate Class A Investor Principal Balance.
"PNC" shall mean PNC Bank, National Association.
"Pooling and Servicing Agreement" has the meaning
specified in the recitals to this Agreement.
"Prime II Receivables Corporation" has the meaning
specified in the preamble to this Agreement.
"Purchase Date" shall mean the Closing Date and each
date on which a purchase of a VFC Additional Class A Invested
Amount is to occur in accordance with Section 6.15 of the Pooling
and Servicing Agreement and Section 2.1 hereof.
"Purchase Request" shall have the meaning assigned to
such term in Section 2.1(c).
"Rating Agency" shall mean each of Moody's and Standard
& Poor's.
"Reference Bank" means PNC.
"Reduction Amount" has the meaning specified in
subsection 2.6(a) of this Agreement.
"Regulatory Change" shall mean (i) as to each Class A
Purchaser, any change occurring after the date of the execution
and delivery of the Joinder Supplement or the Transfer Supplement
by which it became party to this Agreement, or, in the case of a
Participant, the date on which its Participation became
effective, or (ii) as to any Affected Party, the date it became
such an Affected Party, in any (or the adoption after such date
of any new):
(i) United States Federal or state law or foreign law
applicable to such Class A Purchaser, Affected Party or
Participant; or
(ii) regulation, interpretation, directive, guideline
or request (whether or not having the force of law)
applicable to such Class A Purchaser, Affected Party or
Participant of any court or other judicial authority or any
Governmental Authority charged with the interpretation or
administration of any law referred to in clause (i) or of
any fiscal, monetary or other authority or central bank
having jurisdiction over such Class A Purchaser, Affected
Party or Participant.
"Related Documents" shall mean, collectively, this
Agreement (including the Class A Fee Letter and all Joinder
Supplements and Transfer Supplements), the Master Pooling and
Servicing Agreement, the Supplement, the Series 1999-1
Certificates, and the Receivables Purchase Agreement.
"Replacement Purchaser" has the meaning specified in
subsection 2.4(c) of this Agreement.
"Required Class A Owners" shall mean, at any time,
Class A Purchasers having Percentage Interests aggregating at
least 50.1%.
"Required Class A Purchasers" shall mean, at any time,
Committed Class A Purchasers having Commitments aggregating at
least 50.1% of the aggregate Commitments of all Committed Class A
Purchasers.
"Requirement of Law" shall mean, as to any Person, any
law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to
or binding upon such Person or to which such Person is subject,
whether federal, state or local (including, without limitation,
usury laws, the Federal Truth in Lending Act and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve
System).
"Reserve Account Increase Notice" shall mean a notice
delivered by the Administrative Agent in accordance with Section
2.8 hereof.
"Series 1999-1 Certificates" has the meaning specified
in the recitals to this Agreement.
"Series 1999-1 Variable Funding Certificates" has the
meaning specified in the recitals to this Agreement.
"Servicer" has the meaning specified in the preamble to
this Agreement.
"Standard & Poor's" shall mean Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc.
"Structured Purchaser" shall mean (i) Market Street
Capital Corp., and (ii) any Class A Purchaser whose principal
business consists of issuing commercial paper, medium term notes
or other securities to fund its acquisition and maintenance of
receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets or interests therein and
which is required by any nationally recognized rating agency
which is rating such securities to obtain from its principal
debtors an agreement such as that set forth in subsection 9.12(b)
of this Agreement in order to maintain such rating.
"Supplement" has the meaning specified in the recitals
to this Agreement.
"Support Bank" shall mean any Person extending or
having a commitment to extend funds to or for the account of any
Structured Purchaser, including by agreement to (i) purchase an
assignment of, or participation in Class A Certificates under a
liquidity or credit support agreement which relates to this
Agreement, (ii) provide one or more letters of credit for the
account of such Structured Purchaser, and (iii) issue one or more
surety bonds under which such Structured Purchaser is obligated
to repay such Person for any drawings thereunder.
"Taxes" has the meaning specified in subsection 2.5(a)
of this Agreement.
"Termination Date" shall mean the Amortization Period
Commencement Date.
"Termination Event" has the meaning specified in
Section 2.8 hereof.
"Transfer" has the meaning specified in subsection
8.1(c) of this Agreement.
"Transfer Supplement" has the meaning specified in
subsection 8.1(e) of this Agreement.
"Transferor" has the meaning specified in the preamble
to this Agreement.
"Trust" shall mean the Prime Credit Card Master Trust
II.
"Trustee" shall mean The Chase Manhattan Bank, a
banking corporation organized and existing under the laws of the
State of New York, in its capacity as Trustee under the Pooling
and Servicing Agreement, together with its successors in such
capacity.
"written" or "in writing" (and other variations
thereof) shall mean any form of written communication or a
communication by means of telex, telecopier device, telegraph or
cable.
"Yield" shall mean, for any Business Day the aggregate
of the following amounts:
(i) for each portion of the Class A Investor
Principal Balance owed to a Structured Purchaser to the
extent that such Structured Purchaser has funded such
portion through the issuance of commercial paper notes on
the immediately preceding Business Day,
PB x CPR x ED + LF + AI
360
and
(ii) for each remaining portion of the Class A
Investor Principal Balance,
PB x AR x ED + LF + AI
TD
where:
PB = the relevant portion of the Class A
Investor Principal Balance
CPR = the Commercial Paper Rate then
applicable to the relevant portion of the Class A
Investor Principal Balance
AR = the Alternate Rate then applicable
to the relevant portion of the Class A Investor
Principal Balance
ED = the number of days elapsed since
the immediately preceding Business Day
TD = 360 if AR is the Adjusted
Eurodollar Rate, or 365 or 366, as applicable, if
AR is the Agent Base Rate
LF = the Liquidation Fee, if any, for
such Business Day
AI = the Additional Interest Amount, if
any, for such Business Day.
If during any Fixed Period any portion of the Class A
Invested Principal Balance is funded through the issuance of
commercial paper notes, the Servicer shall make daily allocations
of Class A Interest based on the Commercial Paper Rate applicable
to the immediately preceding Fixed Period (or, in the event that
no portion of the Class A Investor Principal Balance accrued
Yield at the Commercial Paper Rate during such immediately
preceding Fixed Period, the Agent will on the first day of the
related Fixed Period provide the Servicer an estimate of the
Commercial Paper Rate applicable to such portion of the Class A
Investor Principal Balance and such Fixed Period). It is
understood and agreed that (i) the Commercial Paper Rate
described in the immediately preceding sentence will be used
solely for purposes of making daily allocations of Class A
Interest under the Supplement, and (ii) any resulting differences
between such estimated daily allocations and the actual Yield for
such Fixed Period shall be reconciled as set forth in the
definitions of Class A Carrying Costs.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Purchases. (a) On and subject to the terms and
conditions of this Agreement, each Noncommitted Class A Purchaser
which is a party hereto on the Closing Date, severally, agrees to
acquire its Noncommitted Purchaser Percentage of the Class A
Certificates on the Closing Date for a purchase price equal to
its Noncommitted Purchaser Percentage of the Initial Class A
Invested Amount, which shall not be less than $500,000, and each
Committed Class A Purchaser which is a party hereto on the
Closing Date, severally, agrees to acquire its Commitment
Percentage of the Class A Certificates not so acquired by
Noncommitted Class A Purchasers on the Closing Date for a
purchase price equal to the portion of the Initial Class A
Invested Amount represented thereby on the Closing Date. Such
purchase price shall be made available to the Transferor on the
Closing Date, subject to the satisfaction of the conditions
specified in Section 3 hereof, by wire transfer at or prior to
2:00 p.m. Pittsburgh, Pennsylvania time on the Closing Date at an
account of the Transferor specified in writing by the Transferor
to the Agent in funds immediately available to the Transferor;
provided, that, in any event, the Agent shall notify the
Transferor at or prior to 1:00 p.m. Pittsburgh, Pennsylvania
time, if such wire transfer will not be initiated at or prior to
2:00 p.m. Pittsburgh, Pennsylvania time on the Closing Date. The
Class A Purchasers hereby direct that the Class A Certificates be
registered in the name of the Agent, on behalf of the Class A
Owners from time to time hereunder.
(b) On and subject to the terms and conditions of this
Agreement and prior to the Termination Date, (i) each
Noncommitted Class A Purchaser may purchase its Noncommitted
Purchaser Percentage of any VFC Additional Class A Invested
Amount offered for purchase by the Transferor pursuant to Section
6.15 of the Pooling and Servicing Agreement in an amount of not
less than $500,000, and (ii) each Committed Class A Purchaser,
severally, agrees to purchase a portion of such VFC Additional
Class A Invested Amount which is not purchased by Noncommitted
Class A Purchasers pursuant to clause (i) in an amount equal to
the lesser of (A) its Commitment Percentage thereof, or (B) the
excess of its Commitment over its Percentage Interest of the
Class A Investor Principal Balance (determined prior to giving
effect to such purchase), in either case for a purchase price
equal to the VFC Additional Class A Invested Amount so purchased.
Such purchase price shall be made available to the Trustee in
immediately available funds, by wire transfer at or prior to 2:00
p.m. Pittsburgh, Pennsylvania time on the applicable Purchase
Date for the account of the Transferor, subject to the
satisfaction of the conditions specified in Section 3 hereof, on
the applicable Purchase Date specified pursuant to subsection
2.1(c), for deposit in the Proceeds Account held by the Trustee
pursuant to the Supplement; provided, that, in any event, the
Agent shall notify the Transferor at or prior to 1:00 p.m.
Pittsburgh, Pennsylvania time, if such wire transfer will not be
initiated at or prior to 2:00 p.m. Pittsburgh, Pennsylvania time
on such Purchase Date. Each Noncommitted Class A Purchaser which
is a Structured Purchaser confirms by becoming a party to this
Agreement that, subject to the terms and conditions of this
Agreement, it currently intends to purchase its Noncommitted
Purchaser Percentage of any VFC Additional Class A Invested
Amount offered for purchase by the Transferor pursuant to Section
6.15 of the Pooling and Servicing Agreement to the extent that,
at the time of such purchase, it is permitted and able in the
ordinary course of its business to issue commercial paper which
is rated not lower than the respective ratings assigned by
Moody's and Standard & Poor's on the date on which such
Structured Purchaser became a Class A Purchaser (without
increasing or otherwise modifying any letter of credit or other
enhancement provided to such Structured Purchaser or any
liquidity support provided to such Structured Purchaser by
Affected Parties) in sufficient amounts fully to fund such
purchase.
(c) The purchase of the Initial Class A Invested
Amount and each purchase of any VFC Additional Class A Invested
Amount shall be made on prior written notice in the form of
Exhibit D (a "Purchase Request") from the Transferor to the Agent
received by the Agent not later than 4:00 p.m. Pittsburgh,
Pennsylvania time (i) in the case of a purchase to be funded at
the Alternate Rate based upon the Adjusted Eurodollar Rate, on
the third Business Day immediately preceding the applicable
Purchase Date (or, in the case of the initial purchase, the
Closing Date), (ii) in the case of a purchase to be funded at the
Commercial Paper Rate on the Business Day immediately preceding
the applicable Purchase Date (or, in the case of the initial
purchase, the Closing Date), or (iii) in the case of a purchase
to be funded at the Alternate Base Rate based upon the Agent Base
Rate, on the Business Day (or, in the event that Market Street
Capital Corporation is the applicable Class A Purchaser, the
second Business Day) immediately preceding the applicable
Purchase Date (or, in the case of the initial purchase, the
Closing Date). Each such Purchase Request shall be irrevocable
and shall specify (i) the aggregate Initial Class A Invested
Amount or VFC Additional Class A Invested Amount, as the case may
be, to be purchased and (ii) the applicable Purchase Date (which
shall be a Business Day). The Agent shall promptly forward a
copy of such Purchase Request to each Class A Purchaser. In the
case of the purchase of a VFC Additional Class A Invested Amount,
each Noncommitted Class A Purchaser shall notify the Agent by
10:45 a.m., Pittsburgh, Pennsylvania time, on the applicable
Purchase Date whether it has determined to make such purchase
and, if so, whether all of the terms specified by the Transferor
are acceptable to such Noncommitted Class A Purchaser. In the
event that a Noncommitted Class A Purchaser shall not have timely
provided such notice, it shall be deemed to have determined not
to make such purchase. The Agent shall notify the Transferor and
each Committed Class A Purchaser on or prior to 11:00 a.m.,
Pittsburgh, Pennsylvania time, on the applicable Purchase Date of
whether each Noncommitted Class A Purchaser has so determined to
purchase its share of such VFC Additional Class A Invested Amount
and, in the event that Noncommitted Class A Purchasers have not
determined to purchase the entire VFC Additional Class A Invested
Amount, the Agent shall specify in such notice (i) the portion of
the VFC Additional Class A Invested Amount to be purchased by
each Committed Class A Purchaser, (ii) the applicable Purchase
Date (which shall be a Business Day). Notwithstanding anything
else herein to the contrary, if the Transferor has requested that
the purchase be funded at the Commercial Paper Rate, the Agent
shall notify the Transferor no later than 12:00 (noon)
Pittsburgh, Pennsylvania time on the applicable Purchase Date,
whether the Agent has exercised its discretion not to fund such
purchase with the issuance of commercial paper notes as described
in clause (iii)(B) of the definition of Commercial Paper Rate, in
which case the Transferor shall be deemed to have requested that
the purchase be funded at the Alternate Base Rate and be based
upon the Agent Base Rate.
(d) In no event may the Transferor offer any VFC
Additional Class A Invested Amount for purchase hereunder or
under Section 6.15 of the Pooling and Servicing Agreement, nor
shall any Committed Class A Purchaser be obligated to purchase
any VFC Additional Class A Invested Amount, to the extent that
such VFC Additional Class A Invested Amount, when aggregated with
the Class A Investor Principal Balance determined prior to giving
effect to the issuance thereof, would exceed the aggregate
Commitments.
(e) In the event that one or more Committed Class A
Purchasers (the "Defaulting Purchasers") fails to fund its
Committed Percentage of any purchase of a VFC Additional Class A
Invested Amount by 1:00 p.m., Pittsburgh, Pennsylvania time, on
the applicable Purchase Date and the Servicer shall have notified
the Agent of such failure by not later than 1:30 p.m.,
Pittsburgh, Pennsylvania time, on such Purchase Date, the Agent
shall so notify each of the other Committed Class A Purchasers
(the "Nondefaulting Purchasers") not later than 2:30 p.m.,
Pittsburgh, Pennsylvania time, on such Purchase Date, and each
Nondefaulting Purchaser shall, subject to the satisfaction of the
conditions specified in Section 3 hereof, purchase a portion of
the aggregate VFC Additional Class A Invested Amount which was to
be purchased by the Defaulting Purchasers equal to the lesser of
(i) its Commitment Percentage thereof as a percentage of the
aggregate Commitment Percentages of all Nondefaulting Purchasers,
and (ii) the excess of its Commitment over its Percentage
Interest of the Class A Investor Principal Balance (determined
prior to giving effect to such purchase), in either case for a
purchase price equal to the VFC Additional Class A Invested
Amount so purchased, by making such purchase price available to
the Trustee for the account of the Transferor on such Purchase
Date for deposit in the Proceeds Account in immediately available
funds. No such purchase by Nondefaulting Purchasers shall
relieve any Defaulting Purchaser of its obligations to make
purchases hereunder, and each Defaulting Purchaser shall from and
after the applicable Purchase Date be obligated to purchase the
portion of any VFC Additional Class A Invested Amount which such
Defaulting Purchaser was required to purchase hereunder and which
was purchased by a Nondefaulting Purchaser from such
Nondefaulting Purchaser at a purchase price equal to (i) the
portion of the Class A Investor Principal Balance represented
thereby, plus (ii) accrued and unpaid interest thereon at the
applicable Class A Certificate Rate, plus (iii) an amount
calculated at the rate of 1.0% per annum from the applicable
Purchase Date for such VFC Additional Class A Invested Amount
through the date of such purchase by the Defaulting Purchaser.
The Transferor shall have the right to replace any Defaulting
Purchaser hereunder with a Replacement Purchaser, and the Agent,
acting at the request of the Required Class A Purchasers, shall
have the right to replace such Defaulting Purchaser with a
Replacement Purchaser which is an Eligible Assignee or is
otherwise reasonably acceptable to the Transferor; provided, that
(x) such replacement shall not affect the Defaulting Purchaser's
right to receive any amounts otherwise owed to it hereunder, when
and as the same would have been due and payable without regard to
such replacement (subject to the rights of the other parties
hereto with respect to such Defaulting Purchaser), and (y) such
Replacement Purchaser shall, concurrently with its becoming a
Committed Class A Purchaser hereunder, purchase the portion of
any VFC Additional Class A Invested Amount at the time required
to be purchased by the Defaulting Purchaser pursuant to the
preceding sentence for a purchase price equal to (i) the portion
of the Class A Investor Principal Balance represented thereby,
plus (ii) accrued and unpaid interest thereon at the applicable
Class A Certificate Rate; provided further, that upon any such
replacement and purchase by a Replacement Purchaser, any amounts
owing to Nondefaulting Purchasers by such Defaulting Purchaser
under clause (iii) of the preceding sentence shall remain an
obligation of such Defaulting Purchaser.
(f) The Class A Certificates shall be paid as provided
in the Pooling and Servicing Agreement. The Agent shall allocate
each payment in reduction of the Class A Investor Principal
Balance to the Class A Owners pro rata based on their respective
Percentage Interests, and shall allocate each payment of Class A
Interest for any Business Day to the Class A Owners pro rata
based on the Yield on such Class A Owner's portion of the Class A
Investor Principal Balance for such Business Day. Amounts so
allocated by the Agent shall be distributed by the Agent to the
respective Class A Owners when and as received by the Agent from
the Trust.
2.2 Reductions and Increases of Commitments. (a) At
any time the Transferor may, upon at least five Business Days'
prior written notice to the Agent, terminate in whole or reduce
in part the portion of the Commitments which exceed the then
outstanding Class A Investor Principal Balance (after adjustments
thereto occurring on the date of such termination or reduction).
Each such partial reduction shall be in an aggregate amount of
$10,000,000 or integral multiples thereof. On the Termination
Date, the aggregate Commitments shall automatically reduce to an
amount equal to the Class A Investor Principal Balance on such
day, and on each Business Day thereafter shall be further reduced
by an amount equal to the reduction in the Class A Investor
Principal Balance (if any) on such day. Reductions of the
aggregate Commitments pursuant to this subsection 2.2(a) shall be
allocated to the pro rata to the Commitments of each Committed
Class A Purchaser based on its respective Commitment Percentage.
(b) The Transferor may, upon at least two Business
Days' prior written notice to the Agent, terminate in whole or
reduce in part the Commitment of any Defaulting Purchaser or
Downgraded Purchaser to an amount not less than such Class A
Purchaser's Percentage Interest of the Class A Investor Principal
Balance. Each such partial reduction shall be in an aggregate
amount of 1,000,000 or integral multiples thereof. No such
termination of reduction shall relieve such Defaulting Purchaser
of its obligations to Nondefaulting Purchasers pursuant to
subsection 2.1(e) hereof.
(c) The aggregate Commitments of the Committed Class A
Purchasers may be increased from time to time through the
increase of the Commitment of one or more Committed Class A
Purchasers; provided, however, that no such increase shall have
become effective unless (i) the Agent and the Transferor shall
have given their written consent thereto, (ii) such increasing
Committed Class A Purchaser shall have entered into an
appropriate amendment or supplement to this Agreement reflecting
such increased Commitment and (iii) such conditions, if any, as
the Agent shall have required in connection with its consent
(including, without limitation, the delivery of legal opinions
with respect to such Committed Class A Purchaser, the agreement
of such Committed Class A Purchaser to become a Support Bank for
one or more Structured Purchasers having a support commitment
corresponding to its Commitment hereunder and approvals from the
Rating Agency) shall have been satisfied. The Transferor may
also increase the aggregate Commitments of the Committed Class A
Purchasers from time to time by adding additional Committed Class
A Purchasers in accordance with subsection 2.2(d).
(d) Subject to the provisions of subsections 8.1(a)
and 8.1(b) applicable to initial purchasers of Class A
Certificates, a Person having short-term credit ratings of not
lower than P-1 from Moody's and A-1 from Standard & Poor's may
from time to time with the consent of the Agent and the
Transferor become a party to this Agreement as an initial or an
additional Noncommitted Class A Purchaser or an initial or an
additional Committed Class A Purchaser by (i) delivering to the
Transferor an Investment Letter and (ii) entering into an
agreement substantially in the form attached hereto as Exhibit B
hereto (a "Joinder Supplement"), with the Agent and the
Transferor, acknowledged by the Servicer, which shall specify (A)
the name and address of such Person for purposes of Section 9.2
hereof, (B) whether such Person will be a Noncommitted Class A
Purchaser or Committed Class A Purchaser and, if such Person will
be a Committed Class A Purchaser, its Commitment, and (C) the
other information provided for in such form of Joinder
Supplement. Upon its receipt of a duly executed Joinder
Supplement, the Agent shall on the effective date determined
pursuant thereto give notice of such effectiveness to the
Transferor, the Servicer and the Trustee, and the Servicer will
provide notice thereof to each Rating Agency (if required). If,
at the time the effectiveness of the Joinder Supplement for an
additional Committed Class A Purchaser, the other Committed Class
A Purchasers are Class A Owners, it shall be a condition to such
effectiveness that such additional Committed Class A Purchaser
purchase from each other Class A Purchaser an interest in the
Class A Certificates in an amount equal to (i) such other Class A
Purchaser's Percentage Interest of the Class A Investor Principal
Balance, times (ii) a fraction, the numerator of which equals the
Commitment of such additional Class A Purchaser, and the
denominator of which equals the aggregate Commitments of the
Class A Purchasers (determined after giving effect to the
additional Commitment of the additional Class A Purchaser as set
forth in such Joinder Supplement), for a purchase price equal to
the portion of the Class A Investor Principal Balance purchased.
2.3 Fees, Expenses, Payments, Etc. (a) Subject to
the provisions of subsection 9.12(a) hereof, the Transferor
agrees to pay to the Agent for the account of the Class A
Purchasers the fees set forth in the Class A Fee Letter at the
times specified therein.
(b) Subject to the provisions of subsection 9.12(a)
hereof in the case of the Transferor, the Transferor and FDSNB,
jointly and severally, shall be obligated to pay on demand to (i)
the Agent and the initial Class A Purchasers all reasonable costs
and expenses in connection with the preparation, execution,
delivery and administration (including any requested amendments,
waivers or consents of any of the Related Documents) of this
Agreement, and the other documents to be delivered hereunder or
in connection herewith, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the
Agent and each of the initial Class A Purchasers with respect
thereto and (ii) the Agent and each Class A Purchaser, all
reasonable costs and expenses, if any, in connection with the
enforcement of any of the Related Documents, and the other
documents delivered thereunder or in connection therewith.
(c) Subject to the provisions of subsection 9.12(a)
hereof in the case of the Transferor, the Transferor and FDSNB,
jointly and severally, shall be obligated to pay on demand any
and all stamp and other taxes (other than Taxes covered by
Section 2.5) and fees payable in connection with the execution,
delivery, filing and recording of this Agreement, the Class A
Certificates, any of the other Related Documents or the other
documents and agreements to be delivered hereunder and
thereunder, and agree to save each Class A Purchaser and the
Agent harmless from and against any liabilities with respect to
or resulting from any delay by the Transferor or FDSNB in paying
or omission to pay such taxes and fees.
(d) Yield calculated by reference to the Adjusted
Eurodollar Rate shall be calculated on the basis of a 360-day
year for the actual days elapsed. Any Yield or interest accruing
at the Agent Base Rate shall be calculated on the basis of a 365-
or 366-day year, as applicable, for the actual days elapsed.
Fees or other periodic amounts payable hereunder shall be
calculated, unless otherwise specified in the Class A Fee Letter,
on the basis of a 360-day year and for the actual days elapsed.
(e) Each determination of Yield by the Agent pursuant
to any provision of this Agreement shall be conclusive and
binding on the Class A Purchasers, the Transferor, the Servicer
and the Trustee in the absence of manifest error.
(f) All payments to be made hereunder, whether on
account of principal, interest, fees or otherwise, shall be made
without setoff or counterclaim and shall be made prior to 2:30
p.m., Pittsburgh, Pennsylvania time, on the due date thereof to
the Agent's account specified in subsection 9.2(b) hereof, in
United States dollars and in immediately available funds.
Notwithstanding anything herein to the contrary, if any payment
due hereunder becomes due and payable on a day other than a
Business Day, the payment date thereof shall be extended to the
next succeeding Business Day and interest shall accrue thereon at
the applicable rate during such extension. To the extent that
(i) the Trustee, FDSNB, the Transferor or the Servicer makes a
payment to the Agent or a Class A Purchaser or (ii) the Agent or
a Class A Purchaser receives or is deemed to have received any
payment or proceeds for application to an obligation, which
payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other
party under any bankruptcy or insolvency law, state or Federal
law, common law, or for equitable cause, then, to the extent such
payment or proceeds are set aside, the obligation or part thereof
intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been
received or deemed received by the Agent or the Class A
Purchaser, as the case may be.
(g) If on any Distribution Date the amount on deposit
in the Interest Funding Account is less than the amount of Class
A Interest and Class B Interest payable with respect to the Class
A Certificates and Class B Certificates on such Distribution
Date, an additional amount equal to the product of (i) such
interest shortfall (or portion thereof which has not been paid to
the Class A Certificateholder), times (ii) (A) a fraction, the
numerator of which is the actual number of days in the period
from and including the preceding Distribution Date to but
excluding such Distribution Date and the denominator of which is
360, times (B) the applicable rate of interest on each day, shall
be payable as provided in the Supplement with respect to the
Class A Certificates, on each Distribution Date following such
Distribution Date to and including the Distribution Date on which
such interest shortfall is paid to the Class A Certificateholder
(any such amount being referred to herein as an "Additional
Interest Amount"). Notwithstanding anything to the contrary
herein, any Additional Interest Amount shall only be payable or
distributed to the Class A Certificateholder to the extent
permitted by applicable law.
(h) Subject to the terms and conditions of this
Agreement and the Supplement (including, without limitation,
Section 4.6(f) thereof), the Transferor may decrease the Class A
Investor Principal Balance in whole or in part on any Business
Day by giving the Class A Agent prior written notice of such
decrease no later than 4:00 p.m. (Pittsburgh, Pennsylvania time)
on (i) in the case of a decrease in the Class A Investor
Principal Balance of $10,000,000 or less, the Business Day
immediately preceding the Business Day on which such decrease
shall occur, (ii) in the case of a decrease in the Class A
Investor Principal Balance of more than $10,000,000 but less than
$30,000,000, the third Business Day immediately preceding the
Business Day on which such decrease shall occur, and (iii) in the
case of a decrease in the Class A Investor Principal Balance of
$30,000,000 or more, the fifth Business Day immediately preceding
the Business Day on which such decrease shall occur; provided,
however, that each such decrease in the Class A Investor
Principal Balance shall be in a minimum amount of $500,000 and
integral multiples of $100,000 in excess thereof.
2.4 Requirements of Law. (a) In the event that any
Affected Party shall have reasonably determined that any
Regulatory Change shall:
(i) subject such Affected Party to any tax of any
kind whatsoever with respect to this Agreement, its
Commitment or its beneficial interest in the Class A
Certificates, or change the basis of taxation of payments in
respect thereof (except for Taxes covered by Section 2.5 and
taxes included in the definition of Excluded Taxes in
subsection 2.5(a) and changes in the rate of tax on the
overall net income of such Affected Party);
(ii) impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or
for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, such
Affected Party; or
(iii) impose on such Affected Party any other
condition.
and the result of any of the foregoing is to increase the cost to
such Affected Party, by an amount which such Affected Party, in
its reasonable judgment, deems to be material, of maintaining its
Commitment or its beneficial interest in the Class A Certificates
or to reduce any amount receivable in respect thereof, then, in
any such case, after submission by such Affected Party to the
Agent of a written request therefor and the submission by the
Agent to the Transferor, the Trustee and the Servicer of such
written request therefor, (subject to subsection 9.12(a) hereof)
the Transferor shall pay to the Agent for the account of such
Affected Party any additional amounts necessary to compensate
such Affected Party for such increased cost or reduced amount
receivable, together with interest on each such amount from the
day which is ten Business Days after the date such request for
compensation under this subsection 2.4(a) is received by the
Transferor until payment in full thereof (after as well as before
judgment) at the Agent Base Rate in effect from time to time.
(b) In the event that any Affected Party shall have
reasonably determined that any Regulatory Change regarding
capital adequacy has the effect of reducing the rate of return on
such Affected Party's capital or on the capital of any
corporation controlling such Affected Party as a consequence of
its obligations hereunder or its maintenance of its Commitment or
its beneficial interest in the Class A Certificates to a level
below that which such Affected Party or such corporation could
have achieved but for such Regulatory Change (taking into
consideration such Affected Party's or such corporation's
policies with respect to capital adequacy) by an amount
reasonably deemed by such Affected Party to be material, then,
from time to time, after submission by such Affected Party to the
Agent of a written request therefor and submission by the Agent
to the Transferor and the Servicer of such written request
therefor, (subject to subsection 9.12(a) hereof) the Transferor
shall pay to the Agent for the account of such Affected Party
such additional amount or amounts as will compensate such
Affected Party for such reduction, together with interest on each
such amount from the day which is ten Business Days after the
date such request for compensation under this subsection 2.4(b)
is received by the Transferor until payment in full thereof
(after as well as before judgment) at the Agent Base Rate in
effect from time to time.
(c) Each Affected Party agrees that it shall use its
reasonable efforts to reduce or eliminate any claim for
compensation pursuant to subsections 2.4(a) and 2.4(b), including
but not limited to designating a different Investing Office for
its Class A Certificates (or any interest therein) if such
designation will avoid the need for, or reduce the amount of, any
increased amounts referred to in subsection 2.4(a) or 2.4(b) and
will not, in the reasonable opinion of such Affected Party, be
disadvantageous to such Affected Party or inconsistent with its
policies or result in an unreimbursed cost or expense to such
Affected Party or in an increase in the aggregate amount payable
under both subsections 2.4(a) and 2.4(b). If any increased
amounts referred to in subsection 2.4(a) or 2.4(b) shall not be
eliminated or reduced by the designation of a different Investing
Office and payment thereof hereunder shall not be waived by such
Affected Party, the Transferor shall have the right to replace
such Affected Party hereunder with a new purchaser reasonably
acceptable to the Agent ("Replacement Purchaser") that shall
succeed to the rights of such Affected Party under this Agreement
and such Affected Party shall assign its beneficial interest in
the Class A Certificates to such Replacement Purchaser in
accordance with the provisions of Section 8.1, provided, that (i)
such Affected Party shall not be replaced here under with a new
investor until such Affected Party has been paid in full its
Percentage Interest of the Class A Investor Principal Balance and
all accrued and unpaid Yield (including any Liquidation Fee
determined for the replacement date) thereon by such new investor
and all other amounts (including all amounts owing under this
Section 2.4) owed to it pursuant to this Agreement and (ii) if
the Affected Party to be replaced is the Agent, the
Administrative Agent or any Support Bank or, unless the Agent and
the Administrative Agent otherwise agree, a Structured Purchaser
sponsored or administered by the Administrative Agent or the
Agent (in its individual capacity), a replacement Agent or
Administrative Agent, as the case may be, shall have been
appointed in accordance with Section 7.9 and the Agent or
Administrative Agent, as the case may be, to be replaced shall
have been paid all amounts owing to it as Agent or Administrative
Agent, as the case may be, pursuant to this Agreement; provided,
further, that the Transferor shall pro vide such Affected Party
with an Officer's Certificate stating that such new investor is
not subject to, or has agreed not to seek, such increased amount.
(d) Each Affected Party claiming increased amounts
described in subsection 2.4(a) or 2.4(b) will furnish to the
Agent (together with its request for compensation) a certificate
setting forth any actions taken by such Affected Party to reduce
or eliminate such increased amounts pursuant to subsection 2.4(c)
and the basis and the calculation of the amount (in reasonable
detail) of each request by such Affected Party for any such
increased amounts referred to in subsection 2.4(a) or 2.4(b),
such certificate to be conclusive as to the factual information
set forth therein absent manifest error.
2.5 Taxes. (a) All payments made to the Class A
Purchasers or the Agent under this Agreement and the Pooling and
Servicing Agreement (including all amounts payable with respect
to the Class A Certificates) shall, to the extent allowed by law,
be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority (collectively,
"Taxes"), excluding (i) income taxes (including, without
limitation, branch profit taxes, minimum taxes and taxes computed
under alternative methods, at least one of which is based on or
measured by net income), franchise taxes (imposed in lieu of
income taxes), or any other taxes based on or measured by the net
income of the Class A Purchaser or the gross receipts or income
of the Class A Purchaser; (ii) any Taxes that would not have been
imposed but for the failure of such Class A Purchaser or the
Agent, as applicable, to provide and keep current (to the extent
legally able) any certification or other documentation required
to qualify for an exemption from, or reduced rate of, any such
Taxes or required by this Agreement to be furnished by such Class
A Purchaser or the Agent, as applicable; (iii) any Taxes imposed
as a result of a change by any Class A Purchaser of the Investing
Office (other than changes mandated by this Agreement, including
subsection 2.4(c) hereof, or required by law); and (iv) any Taxes
imposed as a result of the Transfer by any Class A Purchaser of
its interest hereunder other than in accordance with Section 8.1
(all such excluded taxes being hereinafter called "Excluded
Taxes"). If any Taxes, other than Excluded Taxes, are required
to be withheld from any amounts payable to a Class A Purchaser or
the Agent hereunder or under the Pooling and Servicing Agreement,
then after sub mission by any Class A Purchaser to the Agent (in
the case of an amount payable to a Class A Purchaser) and by the
Agent to the Transferor and the Servicer of a written request
therefor, the amounts so payable to such Class A Purchaser or the
Agent, as applicable, shall be increased and the Transferor shall
be liable to pay to the Agent for the account of such Class A
Purchaser or for its own account, as applicable, the amount of
such increase) to the extent necessary to yield to such Class A
Purchaser or the Agent, as applicable (after payment of all such
Taxes) interest or any such other amounts payable hereunder or
thereunder at the rates or in the amounts specified in this
Agreement and the Pooling and Servicing Agreement; provided,
however, that the amounts so payable to such Class A Purchaser or
the Agent shall not be increased pursuant to this subsection
2.5(a) if such requirement to withhold results from the failure
of such Person to comply with subsection 2.5(c) hereof. Whenever
any Taxes are payable on or with respect to amounts distributed
to a Class A Purchaser or the Agent, as promptly as possible
thereafter the Servicer shall send to the Agent, on behalf of
such Class A Purchaser (if applicable), a certified copy of an
original official receipt showing payment thereof. If the
Trustee, upon the direction of the Servicer, fails to pay any
Taxes when due to the appropriate taxing authority or fails to
remit to the Agent, on behalf of such Class A Purchaser (if
applicable), the required receipts or other required documentary
evidence, subject to subsection 9.12(a), the Transferor shall pay
to the Agent on behalf of such Class A Purchaser or for its own
account, as applicable, any incremental taxes, interest or
penalties that may become payable by such Class A Purchaser or
the Agent, as applicable, as a result of any such failure. If
any increased amounts payable under this subsection 2.5(a) shall
not be waived by the applicable Class A Purchaser, the Transferor
shall have the right to replace the Class A Purchaser hereunder
with a Replacement Purchaser that will succeed to the rights of
such Class A Purchaser under this Agreement; provided, that (i)
such Class A Purchaser shall not be replaced hereunder with a new
investor until such Class A Purchaser has been paid in full its
Percentage Interest of the Class A Investor Principal Balance and
all accrued and unpaid Yield (including any Liquidation Fee
determined for the replacement date) thereon and all other
amounts (including all amounts owing under this Section 2.5) owed
to it pursuant to this Agreement and (ii) if the Class A
Purchaser to be replaced is the Agent or Administrative Agent,
or, unless the Agent and the Administrative Agent otherwise
agree, a Structured Purchaser sponsored or administered by the
Administrative Agent or the Agent (in its individual capacity), a
replacement Agent or Administrative Agent, as the case may be,
shall have been appointed in accordance with Section 7.9 and the
Agent or Administrative Agent, as the case may be, to be replaced
shall have been paid all amounts owing to it as Agent or
Administrative Agent, as the case may be, pursuant to this
Agreement; provided, further, that the Transferor shall provide
such Class A Purchaser with an Officer's Certificate stating that
such new investor is not subject to such Taxes or that such new
investor is subject to a lesser amount of Taxes than the Class A
Purchaser.
(b) A Class A Purchaser claiming increased amounts
under subsection 2.5(a) for Taxes paid or payable by such Class A
Purchaser (or the Agent for its own account) will furnish to the
Agent who will furnish to the Transferor and the Servicer a
certificate, setting forth the basis and amount of each request
by such Class A Purchaser for such Taxes, such certificate to be
conclusive as to the factual information set forth therein absent
manifest error. All such amounts shall be due and payable to the
Agent on behalf of such Class A Purchaser or for its own account,
as the case may be, on the succeeding Distribution Date following
receipt by the Transferor of such certificate at least 10 days
prior to such Distribution Date, in each case if then incurred by
such Class A Purchaser and otherwise shall be due and payable on
the following Distribution Date (or, if earlier, on the Series
1999-1 Termination Date).
(c) Each Class A Purchaser and each Participant
holding an interest in Class A Certificates agrees that prior to
the date on which the first interest payment hereunder is due
thereto, it will deliver to the Servicer and the Trustee, if such
Class A Purchaser or Participant is not incorporated under the
laws of the United States or any State thereof (i) two duly
completed copies of the U.S. Internal Revenue Service Form 4224
or successor applicable forms required to evidence that the Class
A Purchaser's or Participant's income from this Agreement or the
Class A Certificates is "effectively connected" with the conduct
of a trade or business in the United States as the case may be
and (ii) a U.S. Internal Revenue Service Form W-8 or W-9 or
successor applicable or required forms. Each Class A Purchaser
or Participant holding an interest in Class A Certificates also
agrees to deliver to the Servicer and the Trustee two further
copies of said Form 4224 and Form W-8 or W-9, or such successor
applicable forms or other manner of certification, as the case
may be, on or before the date that any such form expires or
becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Servicer and the Trustee, and such extensions or renewals thereof
as may reasonably be requested by the Servicer, unless in any
such case, solely as a result of a change in treaty, law or
regulation occurring prior to the date on which any such delivery
would otherwise be required, and assuming that Section 1446 of
the Code does not apply, the Class A Purchaser is no longer
eligible to deliver the then-applicable form set forth above.
Each Class A Purchaser certifies, represents and warrants and
each Participant acquiring an interest in a Class A Certificate
or Class A Purchaser which is an Assignee shall certify,
represent and warrant as a condition of acquiring its
Participation or beneficial interest in the Class A Certificates
(x) that its income from this Agreement or the Class A
Certificates is effectively connected with a United States trade
or business and (y) that it is entitled to an exemption from
United States backup withholding tax. Further, each Class A
Purchaser covenants and each Participant acquiring an interest in
a Class A Certificate that for so long as it shall hold such
Participation or Class A Certificates it shall be held in such
manner that the income therefrom shall be effectively connected
with the conduct of a United States trade or business. The
Servicer and the Trustee shall be entitled to withhold or cause
such withholding, and additional amounts in respect of Taxes need
not be paid to a Class A Purchaser or Participant in the event of
a breach of the certifications, representations, warranties or
covenants set forth in this subsection 2.5(c) by such Class A
Purchaser or Participant.
(d) In the event that any Class A Purchaser or
Participant holding an interest in Class A Certificates shall
breach the certifications, representations, warranties or
covenants set forth in this Section 2.5, the Transferor shall
have the right to replace such Class A Purchaser or such
Participant's lead Class A Purchaser hereunder with a Replacement
Purchaser that shall succeed to the rights of such Class A
Purchaser under this Agreement and, subject to compliance with
the provisos to the last sentence of subsection 2.5(a), such
Class A Purchaser shall assign its interest in this Agent and any
Class A Certificates owned by it to such Replacement Purchaser in
accordance with the provisions of Section 8.1.
2.6 Non-recourse. (a) Except to the extent provided
in this Section 2.6, the obligation to repay the Class A
Repayment Amount shall be without recourse to the Transferor, the
Servicer (or any Person acting on behalf of any of them), the
Holder of the Exchangeable Transferor Certificate, the Trust
(except to the extent specifically provided for herein or in the
Pooling and Servicing Agreement), the Trustee, the
Certificateholders or any Affiliate of any of them, and shall be
limited solely to amounts payable to the Series 1999-1
Certificateholders under the Pooling and Servicing Agreement. To
the extent that such amounts are insufficient to pay the Class A
Repayment Amount, the obligation to pay the Class A Repayment
Amount shall not constitute a claim against the Transferor, the
Servicer (or any Person acting on behalf of any of them), the
Holder of the Exchangeable Transferor Certificate, the Trust
(except to the extent specifically provided for herein or in the
Pooling and Servicing Agreement), the Trustee, the
Certificateholders or any Affiliate of any of them.
Notwithstanding anything to the contrary contained herein, if the
Transferor or the Servicer shall fail to make any payment,
deposit or transfer relating to the Series 1999-1 Certificates
required to be made pursuant to the Pooling and Servicing
Agreement and, as a result of such failure, the amount available
to be applied to the Class A Certificates pursuant to the Pooling
and Servicing Agreement is reduced to an amount which is less
than the amount which otherwise would have been available had
such payment, deposit or transfer been made (the amount of any
such reduction hereinafter referred to as a "Re duction Amount"),
the Transferor or the Servicer, as the case may be, shall repay
the Class A Investor Principal Balance, together with interest
due thereon in accordance with the Pooling and Servicing
Agreement, to the extent of (i) such Reduction Amount and (ii)
interest on the portion of the Class A Investor Charge-Offs, if
any, which results from the existence of any Reduction Amount at
the Agent Base Rate plus 2.00% per annum.
(b) Subject to and without limiting the foregoing
provisions of this Section 2.6, the obligations of the Transferor
and the Servicer under this Agreement shall be absolute,
unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement, irrespective of any
of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement, the Pooling and Servicing Agreement, the Series
1999-1 Certificates or the Supplement;
(ii) any amendment to or waiver of, or consent to
or departure from, this Agreement, the Series 1999-1
Certificates, the Pooling and Servicing Agreement or the
Supplement, unless agreed to by the Required Class A Owners
and the Required Class A Purchasers or all the Class A
Owners and the Required Class A Purchasers if required
hereunder;
(iii) the existence of any claim, setoff, defense
or other right which the Transferor, the Servicer or the
Trustee may have at any time against each other, the Agent,
the Administrative Agent or any Class A Purchaser, as the
case may be, or any other Person, whether in connection with
this Agreement, the Class A Certificates, the Pooling and
Servicing Agreement or any unrelated transactions;
(iv) the bankruptcy or insolvency of the Trust or
with respect to any party jointly and severally liable with
another party hereto, of such other party; or
(v) any other circumstances or happening
whatsoever, whether or not similar to any of the foregoing;
provided, that, with respect to obligations owing to any
Class A Purchaser, the same shall not have constituted gross
negligence or willful misconduct of such Class A Purchaser.
2.7 Indemnification. (a) Subject to subsection
9.12(a) hereof in the case of the Transferor, the Transferor and
FDSNB, jointly and severally, agree to indemnify and hold
harmless the Agent, the Administrative Agent, each Support Bank
and each Class A Purchaser and any directors, officers,
employees, attorneys, auditors or accountants of such Agent, the
Administrative Agent, Support Bank or Class A Purchaser (each
such person being referred to as an "Indemnitee") from and
against any and all claims, damages, losses, liabilities, costs
or ex penses whatsoever which such Indemnitee may incur (or which
may be claimed against such Indemnitee) by reason of or in
connection with the execution and delivery of, or payment under,
this Agreement, the Pooling and Servicing Agreement, the Series
1999-1 Certificates, except (i) to the extent that any such
claim, damage, loss, liability, cost or expense shall be caused
by the willful misconduct or gross negligence of such Indemnitee,
(ii) to the extent that any such claim, damage, loss, liability,
cost or expense relates to any Excluded Taxes, (iii) to the
extent that any such claim, damage, loss, liability, cost or
expense relates to disclosure made by the Agent or a Class A
Purchaser in connection with an Assignment or Participation
pursuant to Section 8.1 of this Agreement which disclosure is not
based on information given to the Agent by or on behalf of the
Transferor, the Servicer or the Trustee or (iv) to the extent
that such claim, damage, loss, liability, cost or expense shall
be caused by a charge off of Receivables. The foregoing
indemnity shall include any claims, damages, losses, liabilities,
costs or expenses to which any such Indemnitee may become subject
under the Securities Act of 1933, as amended (the "Act"), the
Securities Exchange Act of 1934, as amended, the Investment
Company Act of 1940, as amended, or other federal or state law or
regulation arising out of or based upon any untrue statement or
alleged untrue statement of a material fact in any disclosure
document relating to the Class A Certificates or the Class B
Certificates, or any amendments thereof or supplements thereto or
arising out of, or based upon, the omission or the alleged
omission to state a material fact necessary to make the
statements therein or any amendment thereof or supplement
thereto, in light of the circumstances in which they were made,
not misleading.
(b) Promptly after the receipt by an Indemnitee of a
notice of the commencement of any action against an Indemnitee,
such Indemnitee will notify the Agent and the Agent will, if a
claim in respect thereof is to be made against the Transferor
pursuant to subsection 2.7(a) (the "Indemnifying Party"), notify
the Indemnifying Party in writing of the commencement there of;
but the omission so to notify such party will not relieve such
party from any liability which it may have to such Indemnitee
pursuant to subsection 2.7(a). Upon receipt of such notice, the
Indemnifying Party shall assume the defense of such action or
proceeding, including the employment of counsel satisfactory to
the Indemnitee in its reasonable judgment and the payment of all
related expenses. Each Indemnitee shall have the right to employ
separate counsel in any such action or proceeding and to
participate in (but not control) the defense thereof, but the
fees and expenses of such counsel shall be at its own expense
unless (a) the Indemnifying Party shall have failed to assume or
continue to defend such action or proceeding, (b) the named
parties to any such action or proceeding (including any impleaded
parties) include both such Indemnitee and either the Transferor
or another person or entity that may be entitled to
indemnification from the Transferor (by virtue of this Agreement
or otherwise) and such Indemnitee shall have been advised by
counsel that there may be one or more legal defenses available to
such Indemnitee which are different from or additional to those
available to the Transferor or such other party or shall
otherwise have reasonably determined that the co-representation
would present such counsel with a conflict of interest, or (c)
the Indemnifying Party and the Indemnitee shall have mutually
agreed to the retention of separate counsel. Anything contained
in this Agreement to the contrary notwithstanding, the
Indemnifying Party (i) shall not be entitled to assume the
defense of any part of a Third Party Claim that specifically
seeks an order, injunction or other equitable relief or relief
for other than money damages against the Indemnitee, and (ii)
shall not (and shall not permit any counsel employed pursuant to
this Section 2.7) to enter into any settlement, or agree to the
terms of any settlement, without the prior written consent of
each Indemnitee that would be affected thereby.
2.8 Termination Events. In the event that any one or
more of the following (each, a "Termination Event") shall have
occurred:
(a) the failure of the Transferor, the Servicer or
the Trustee to make a deposit, payment or withdrawal
required hereunder or under any Related Document (determined
without regard to the failure of the Servicer to deliver any
statement or certificate required hereunder or under the
Supplement in order for such deposit, payment or withdrawal
to be made) when and as required and such failure continues
for five Business Days; provided that the failure of the
Transferor to make additional payments pursuant to
subsection 2.4(a) or 2.4(b) or Section 2.5 hereof shall not
constitute a Termination Event unless such failure continues
after the last Business Day of the Monthly Period which
follows the Monthly Period in which the Transferor received
a request for such payment pursuant to such subsection;
(b) any representation or warranty made herein or
in connection with this Agreement by the Transferor, the
Servicer or the Trustee shall prove to have been incorrect
in any material respect when made, and continues to be
incorrect in any material respect for a period of sixty (60)
days after receipt of written notice thereof, requiring the
same to be remedied, by the Transferors and the Servicer
from the Agent and as a result the interests of the Class A
Purchasers or any other them are and continue to be
materially and adversely affected;
(c) the failure by the Transferor or the Servicer
or, if such failure is reasonably expected to have a
material adverse effect on the Class A Investors, by the
Trustee, to duly observe or perform any term or provision of
this Agreement (except as described in clause (a) above)
which is not cured within 60 days after written notice of
such failure is given to the defaulting party by the Agent;
(d) the occurrence (whether occurring before or
after the commencement of an Amortization Period) of a Trust
Pay Out Event, a Series 1999-1 Pay Out Event or a Servicer
Default, or the occurrence of an event or condition which
would be a Trust Pay Out Event, a Series 1999-1 Pay Out
Event or a Servicer Default but for a waiver of or failure
to declare or determine such event by the Certificateholders
or the Trustee;
(e) the Commitment Expiration Date; or
(f) Market Street Funding Corporation shall not
have become a Class A Purchaser hereunder by the ninetieth
calendar day after the Closing Date;
then, in the event of a Termination Event described in any of
clauses (a) through (d) above, in addition to any other rights or
remedies of the Class A Purchasers hereunder or under any Related
Documents, (A) the Administrative Agent, at the direction of the
Required Class A Owners and of the Required Class A Purchasers
(and without regard to whether a similar direction shall have
been given pursuant to the Class B Certificate Purchase
Agreement) in their discretion, shall deliver a Reserve Account
Increase Notice to the Servicer as contemplated by the
Supplement, and/or (B) the Administrative Agent, at the direction
of the Required Class A Owners and of the Required Class A
Purchasers (and without regard to whether a similar direction
shall have been given pursuant to the Class B Certificate
Purchase Agreement) in their discretion, shall deliver a notice
to the Trustee and the Servicer that such Termination Event has
occurred and directing that such Termination Event constitute a
Series 1999-1 Pay Out Event under subsection 10(g) of the
Supplement. In the event that a Termination Event described in
clause (e) above shall have occurred, the Agent shall give notice
thereof to the Administrative Agent, which shall, without further
direction, deliver prompt notice to the Trustee and the Servicer
that such Termination Event has occurred and directing that such
Termination Event constitute a Series 1999-1 Pay Out Event under
subsection 10(g) of the Supplement.
2.9 Certain Agreements of the Agent. If on the
thirtieth day after the Closing Date and/or the sixtieth day
after the Closing Date (or, in either case, if such day is not a
Business Day, the immediately succeeding Business Day) Market
Street Funding Corporation has failed to become a Class A
Purchaser hereunder, the Agent hereby agrees to notify the
Transferor on such thirtieth and/or sixtieth day of the basis for
such failure and any actions that are required to be taken by the
Transferor, Servicer or any of their affiliates or agents in
order for Market Street Funding Corporation to become a Class A
Purchaser hereunder.
SECTION 3. CONDITIONS PRECEDENT
3.1 Condition to Initial Purchase. As a condition
precedent to the initial purchase by any Class A Purchasers of
the Class A Certificates, (i) the Agent on behalf of the Class A
Purchasers shall have received on the Closing Date the following
items, each of which shall be in form and substance satisfactory
to the Agent:
(a) the favorable written opinion of counsel for
each of Prime II Receivables Corporation and FDSNB addressed to
the Agent and the Class A Purchasers and dated the Closing Date,
covering general corporate matters and the due execution and
delivery of, and the enforceability of, each of the Related
Documents to which it is party and such other matters as the
Agent may request;
(b) a copy of (i) the corporate charter and by-laws
of, and an incumbency certificate with respect to its officers
executing any of the Related Documents on the Closing Date on
behalf of, each of Prime II Receivables Corporation and FDSNB,
certified by an authorized officer of each such entity, (ii) good
standing certificates from the appropriate Governmental Authority
as of a recent date with respect to each of Prime II Receivables
Corporation and FDSNB and (iii) resolutions of the Board of
Director (or an authorized committee thereof) of each of Prime II
Receivables Corporation and FDSNB with respect to the Related
Documents to which it is party, certified by an authorized
officer of each such entity;
(c) the representations and warranties of the
Transferor set forth or referred to in Section 4.1 hereof and the
representations and warranties of FDSNB set forth or referred to
in Section 4.2 hereof shall be true and correct in all material
respects on Closing Date as though made on and as of the Closing
Date, and the Agent shall have received an Officer's Certificate
of the Transferor and of FDSNB, respectively, confirming the
satisfaction of the condition set forth in this clause (c);
(d) customary sale/security interest, tax,
bankruptcy and non-consolidation opinions, addressed to the Agent
and the Class A Purchasers;
(e) an agreed procedures letter from the
independent certified public accountants of FDSNB and a
certificate of an authorized officer of FDSNB with respect to the
accuracy of data previously furnished to the Agent with respect
to the Receivables in the Trust, in each case in form and scope
satisfactory to the Agent;
(f) an executed copy of the Master Pooling and
Servicing Agreement, the Receivables Purchase Agreement and the
Supplement;
(g) evidence satisfactory to the Agent that the
Class B Certificates having a Class B Initial Invested Amount at
least equal to the Required Class B Invested Amount and the Class
C Certificates having a Class C Initial Invested Amount at least
equal to the Required Class C Invested Amount shall have been
duly issued;
(h) evidence satisfactory to the Agent that the
initial deposit (if any) in the Reserve Account required by
Section 4.9(a) of the Pooling and Servicing Agreement shall have
been made;
(i) evidence satisfactory to the Agent of the due
execution and delivery of the Related Documents to which it is
party by the Trustee; and
(j) all up front fees and expenses agreed and
specified in the Class A Fee Letter shall have been paid by the
Transferor on the Closing Date; and
(ii) all representations and warranties of the Transferor and
the Servicer contained herein shall be true and correct in all
material respects on the Closing Date (and after giving effect to
the transactions contemplated hereby) and no event which of
itself or with the giving of notice or lapse of time, or both,
would permit the furnishing of a Reserve Account Increase Notice
has occurred and is continuing and the Agent shall have received
an Officer's Certificate of each of the Transferor and the
Servicer to such effect.
3.2 Condition to Additional Purchases. The following
shall be conditions precedent to each purchase by any Class A
Purchasers of VFC Additional Class A Invested Amounts hereunder:
(a) the Transferor shall have timely delivered a
Purchase Request pursuant to subsection 2.1(c) of this
Agreement;
(b) no Termination Event shall have occurred;
(c) after giving effect to such purchase of VFC
Additional Class A Invested Amount, the aggregate Class A
Investor Principal Balance shall not exceed the aggregate
Commitments of the Committed Class A Purchasers minus the
aggregate Commitments of all Defaulting Purchasers;
(d) the conditions set forth in Section 6.15 of the
Pooling and Servicing Agreement to the issuance of such VFC
Additional Class A Invested Amount shall have been
satisfied; and
(e) the representations and warranties of the
Transferor contained in Section 4.1 and of FDSNB contained
in Section 4.2 shall be true and correct in all material
respects on and as of the applicable Purchase Date, as
though made on and as of such date, other than the
representations and warranties of FDSNB contained in the
last sentence of subsection 4.2(f) or in subsection 4.2(h),
which shall have been true and correct in all material
respects when made and as of the Closing Date, and other
than the representations and warranties of the Transferor
and of FDSNB set forth in subsection 4.1(l) and subsection
4.2(g), respectively, which shall have been true and correct
on all material respects on or as of the respective dates
specified therein.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Transferor.
The Transferor repeats and reaffirms to the Class A Purchasers
and the Agent the representations and warranties of the
Transferor set forth in Sections 2.3 and 2.4 of the Pooling and
Servicing Agreement and represents and warrants that such
representations and warranties are true and correct as of the
date hereof. The Transferor further represents and warrants to,
and agrees with, the Agent and each Class A Purchaser that, as of
the date hereof:
(a) The Transferor has been duly organized and is
validly existing and in good standing as a corporation under the
laws of the State of Delaware, with corporate power and authority
to own its properties and to transact the business in which it is
now engaged, and the Transferor is duly qualified to do business
and is in good standing in each State of the United States where
the nature of its business requires it to be so qualified.
(b) The Transferor has the full corporate power,
authority and legal right to make, execute, deliver and perform
the Related Documents to which it is party and all of the
transactions contemplated thereby and to issue the Series 1999-1
Certificates from the Trust and has taken all necessary corporate
action to authorize the execution, delivery and performance of
the Related Documents to which it is party and such issuance.
Each of the Related Documents to which it is party constitutes
the legal, valid and binding agreement of the Transferor
enforceable in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of the rights of creditors
generally and except as such enforceability may be limited by
general principles of equity, whether considered in a proceeding
at law or in equity).
(c) The Transferor is not required to obtain the
consent of any other party or any consent, license, approval or
authorization of, or registration with, any Governmental
Authority in connection with the execution, delivery or
performance of each of the Related Documents to which it is party
that has not been duly obtained and which is not and will not be
in full force and effect on the Closing Date.
(d) The execution, delivery and performance of the
Related Documents to which it is party by the Transferor do not
violate or conflict with any provision of any existing law or
regulation applicable to the Transferor or any order or decree of
any court to which the Transferor is subject or the Certificate
of Incorporation or Bylaws of the Transferor, or any mortgage,
security agreement, indenture, contract or other agreement to
which the Transferor is a party or by which the Transferor or any
significant portion of its properties is bound.
(e) There is no litigation, investigation or
administrative proceeding before any court, tribunal, regulatory
body or governmental body presently pending, or, to the knowledge
of the Transferor, threatened, with respect to any of the Related
Documents, the transactions contemplated thereby, or the issuance
of the Series 1999-1 Certificates and there is no such litigation
or proceeding against the Transferor or any significant portion
of its properties which would, individually or in the aggregate,
have a material adverse effect on the transactions contemplated
by any of the Related Documents or the ability of the Transferor
to perform its obligations thereunder.
(f) The Transferor is not insolvent or the subject
of any voluntary or involuntary bankruptcy proceedings.
(g) No Pay Out Event, Servicer Default, Termination
Event or event permitting the furnishing of a Reserve Account
Increase Notice has occurred and is continuing, and no event, act
or omission has occurred and is continuing which, with the lapse
of time, the giving of notice, or both, would constitute such an
event or default.
(h) The Pooling and Servicing Agreement is not
required to be qualified under the Trust Indenture Act of 1939,
as amended, and neither the Trust nor the Transferor is required
to be registered under the Investment Company Act of 1940, as
amended.
(i) The Receivables conveyed by the Transferor to
the Trust under the Pooling and Servicing Agreement are in an
aggregate amount, determined as of July 6, 1999, of
$456,983,326.18. The Receivables Purchase Agreement is in full
force and effect on the date hereof and no material default by
any party exists thereunder.
(j) The Trust is duly created and existing under
the laws of the State of New York. Simultaneous with the closing
hereunder, all conditions to the issuance and sale of the Series
1999-1 Certificates set forth in the Pooling and Servicing
Agreement have been satisfied and the Series 1999-1 Certificates
have been duly issued by the Trust.
(k) Neither the Transferor nor any of its
Affiliates has directly, or through any agent, (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in
respect of, any "security" (as defined in the Act) that is or
will be integrated with the sale of the any Series 1999-1
Certificates in a manner that would require the registration
under the Act of the offering of the Series 1999-1 Certificates
or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Series 1999-1
Certificates (as those terms are used in Regulation D under the
Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Act. Assuming the accuracy of the
representations and warranties of each Class A Purchaser in its
Investment Letter and of each purchaser of Class B Certificates
and Class C Certificate in their respective investment letters,
the offer and sale of the Series 1999-1 Certificates are
transactions which are exempt from the registration requirements
of the Act.
(l) All written factual information heretofore
furnished by the Transferor to, or for delivery to, the Agent for
purposes of or in connection with this Agreement, including,
without limitation, information relating to the Accounts and
Receivables and the Transferor's and FDSNB's credit card
businesses, was true and correct in all material respects on the
date as of which such information was stated or certified and
remains true and correct in all material respects (unless such
information specifically relates to an earlier date in which case
such information shall have been true and correct in all material
respects on such earlier date).
(m) The Transferor has reviewed the areas within its
business and operations which would reasonably be expected to be
materially adversely affected by, and have developed or are
developing a program to address on a timely basis, the internal
"Year 2000 Problem" (that is, the risk that computer applications
used by the Transferor may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior
to and any date on or after December 31, 1999), and has made
related appropriate inquiry of material suppliers and vendors.
The "Year 2000 Problem" will not have a material adverse effect
on the interests of the Class A Purchasers or the Agent hereunder
or under the Pooling and Servicing Agreement.
4.2 Representations and Warranties of FDSNB. FDSNB
repeats and reaffirms to the Class A Purchasers and the Agent the
representations and warranties of the Servicer set forth in
Section 3.3 of the Pooling and Servicing Agreement and represents
and warrants that such representations and warranties are true
and correct as of the date hereof. FDSNB further represents and
warrants to, and agrees with, the Agent and each Class A
Purchaser that, as of the date hereof:
(a) FDSNB has been duly organized and is validly
existing and in good standing as a national banking association
under the laws of the United States of America, with corporate
power and authority to own its properties and to transact the
business in which it is now engaged, and FDSNB is duly qualified
to do business (or is exempt from such qualification) and is in
good standing in each State of the United States where the nature
of its business requires it to be so qualified. FDSNB is an
insured depository institution under Section 4(a) of the Federal
Deposit Insurance Act.
(b) FDSNB has the full corporate power, authority
and legal right to make, execute, deliver and perform the Related
Documents to which it is party and all the transactions
contemplated thereby and has taken all necessary corporate action
to authorize the execution, delivery and performance of the
Related Documents to which it is party. Each of the Related
Documents to which it is party constitutes the legal, valid and
binding agreement of FDSNB enforceable in accordance with its
terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of the rights of creditors generally and the rights
of creditors of national banking associations and except as such
enforceability may be limited by general principles of equity,
whether considered in a proceeding at law or in equity).
(c) FDSNB is not required to obtain the consent of
any other party or any consent, license, approval or
authorization of, or registration with, any Governmental
Authority in connection with the execution, delivery or
performance of each of the Related Documents to which it is party
that has not been duly obtained and which is not and will not be
in full force and effect on the Closing Date.
(d) The execution, delivery and performance of each
of the Related Documents to which it is party by FDSNB do not
violate or conflict with any provision of any existing law or
regulation applicable to FDSNB or any order or decree of any
court to which FDSNB is subject or the Articles of Association or
Bylaws of FDSNB, or any mortgage, security agreement, indenture,
contract or other agreement to which FDSNB is a party or by which
FDSNB or any significant portion of FDSNB's properties is bound.
(e) There is no litigation, investigation or
administrative proceeding before any court, tribunal, regulatory
body or governmental body presently pending, or, to the knowledge
of FDSNB, threatened, with respect to the Related Documents, the
transactions contemplated thereby, or the issuance of the Series
1999-1 Certificates, and there is no such litigation or
proceeding against FDSNB or any significant portion of its
properties which would, individually or in the aggregate, have a
material adverse effect on the transactions contemplated by any
of the Related Documents or the ability of FDSNB, in its capacity
as Servicer or otherwise, to perform its obligations thereunder.
(f) FDSNB is not insolvent or the subject of any
insolvency or liquidation proceeding. The financial statements
of FDSNB delivered to the Agent are complete and correct in all
material respects and fairly present the financial condition of
FDSNB as of date of such statements and the results of operations
of FDSNB for the period then ended, all in accordance with
regulatory accounting principles consistently applied. Since the
date of the most recent audited financial statements of FDSNB
delivered to the Agent, there has not been any material adverse
change in the condition (financial or otherwise) of FDSNB.
(g) All written factual information heretofore
furnished by FDSNB to, or for delivery to, the Agent for purposes
of or in connection with this Agreement, including, without
limitation, information relating to the Accounts and Receivables
and the Transferor's and FDSNB's VISAr credit card businesses,
was true and correct in all material respects on the date as of
which such information was stated or certified and remains true
and correct in all material respects (unless such information
specifically relates to an earlier date in which case such
information shall have been true and correct in all material
respects on such earlier date).
(h) There are no outstanding comments from the most
recent report prepared by FDSNB's (in its capacity as Servicer)
independent public accountants in connection with its VISAr
credit card receivables.
(i) No Pay Out Event, Servicer Default, Termination
Event or event permitting the furnishing of a Reserve Account
Increase Notice has occurred and is continuing, and no event, act
or omission has occurred and is continuing which, with the lapse
of time, the giving of notice, or both, would constitute such an
event or default.
(j) FDSNB has reviewed the areas within its
business and operations which would reasonably be expected to be
materially adversely affected by, and have developed or are
developing a program to address on a timely basis, the internal
"Year 2000 Problem" (that is, the risk that computer applications
used by the FDSNB may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any
date on or after December 31, 1999), and has made related
appropriate inquiry of material suppliers and vendors. The "Year
2000 Problem" will not have a material adverse effect on the
interests of the Class A Purchasers or the Agent hereunder or
under the Pooling and Servicing Agreement.
4.3 Representations and Warranties of the Agent and
the Class A Purchasers. Each of the Agent and the Class A
Purchasers represents and warrants to, and agrees with, the
Transferor and the Servicer, that:
(a) It is duly authorized to enter into and perform
this Agreement and to purchase its Commitment Percentage (if any)
of the Class A Certificates, and has duly executed and delivered
this Agreement; and the person signing this Agreement on behalf
of such Class A Purchaser has been duly authorized by such Class
A Purchaser to do so.
(b) This Agreement constitutes the legal, valid and
binding obligation of such Class A Purchaser, enforceable in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, conservatorship or other similar laws now or
hereafter in effect affecting the enforcement of creditors'
rights in general, and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(c) No registration with or consent or approval of
or other action by any state or local governmental authority or
regulatory body having jurisdiction over such Class A Purchaser
is required in connection with the execution, delivery or
performance by such Class A Purchaser of this Agreement other
than as may be required under the blue sky laws of any state.
SECTION 5. COVENANTS
5.1 Covenants of the Transferor and FDSNB. Each of
the Transferor and FDSNB (individually or, as set forth below, as
the Servicer) covenants and agrees, so long as any amount of the
Class A Investor Principal Balance shall remain outstanding or
any monetary obli gation arising hereunder shall remain unpaid,
unless the Required Class A Owners and the Required Class A
Purchasers shall otherwise consent in writing, that:
(a) each of the Transferor and the Servicer shall
perform in all material respects each of the respective
agreements, warranties and indemnities applicable to it and
comply in all material respects with each of the respective terms
and provisions applicable to it hereunder and under the other
Related Documents to which it is party, which agreements are
hereby incorporated by reference into this Agreement as if set
forth herein in full; and each of the Transferor and the Servicer
shall take all reasonable action to enforce the obligations of
each of the other parties to such Related Documents which are
contained therein;
(b) the Transferor and the Servicer shall furnish
to the Agent () a copy of each opinion, certificate, report,
statement, notice or other communication (other than investment
instructions) relating to the Series 1999-1 Certificates which is
furnished by or on behalf of either of them to
Certificateholders, to any Rating Agency or to the Trustee and
furnish to the Agent after receipt thereof, a copy of each
notice, demand or other communication relating to the Series 1999-
1 Certificates, this Agreement or the Pooling and Servicing
Agreement received by the Transferor or the Servicer from the
Trustee, any Rating Agency or 15% or more of the Series 1999-1
Certificateholders (to the extent such notice, demand or
communication relates to the Accounts, the Receivables, any
Servicer Default or any Pay Out Event); and (ii) such other
information, documents records or reports respecting the Trust,
the Receivables, the Transferor, FDSNB or the Servicer as the
Agent may from time to time reasonably request without
unreasonable expense to the Transferor or the Servicer;
(c) the Servicer shall furnish to the Agent on or
before the date such reports are due under the Pooling and
Servicing Agreement copies of each of the reports and
certificates required by subsection 3.4(b) and Sections 3.5 and
3.6 of the Pooling and Servicing Agreement;
(d) the Servicer shall promptly furnish to the
Agent a copy, addressed to the Agent, of each opinion of counsel
delivered to the Trustee pursuant to Section 13.2(d) of the
Pooling and Servicing Agreement;
(e) FDSNB shall furnish to the Agent (i) a copy of
its annual Call Report promptly after it becomes available, (ii)
an annual certificate dated within 90 days after the end each of
its fiscal years stating its compliance (or failure to comply)
with each minimum ratio of total capital and core capital to risk-
weighted assets required by Governmental Authorities in
accordance with the implementation of the Basle Accord;
(f) the Servicer shall furnish to the Agent a
certificate concurrently with its delivery of its annual
certificate pursuant to Section 3.5 of the Pooling and Servicing
Agreement stating that no Termination Event (other than a
Termination Event described in clause (e) of subsection 2.8) or
event or condition which with the passage of time or the giving
of notice, or both, would constitute such a Termination Event or,
if such Termination Event, event or condition has occurred,
identifying the same in reasonable detail;
(g) the Transferor shall not exercise its right to
accept optional reassignment of the Receivables or repurchase the
Series 1999-1 Certificates pursuant to Sections 10.2 or 12.2 of
the Pooling and Servicing Agreement or Section 3 of the
Supplement, unless the Class A Purchasers have been paid, or will
be paid upon such repurchase or in connection with such optional
reassignment, the Class A Investor Principal Balance, all
interest thereon and all other amounts owing hereunder in full;
(h) the Transferor and the Servicer shall at any
time from time to time during regular business hours, on
reasonable notice to the Transferor or the Servicer, as the case
may be, permit the Agent, or its agents or representatives to:
(i) examine all books, records and documents
(including computer tapes and disks) in its possession or
under its control relating to the Receivables, and
(ii) visit its offices and property for the
purpose of examining such materials described in clause (i)
above.
The information obtained by the Agent or any Class A Purchaser
pursuant to this subsection shall be held in confidence in
accordance with Section 6.2 hereof;
(i) the Servicer shall furnish to the Agent,
promptly after the occurrence of any Servicer Default,
Termination Event, Pay Out Event or any event which would permit
the furnishing of a Reserve Account Increase Notice, a
certificate of an appropriate officer of the Servicer setting
forth the circumstances of such Servicer Default, Pay Out Event,
Termination Event or event and any action taken or proposed to be
taken by the Servicer or the Transferor with respect thereto;
(j) the Transferor and the Servicer shall timely
make all payments, deposits or transfers and give all
instructions to transfer required by this Agreement and the
Pooling and Servicing Agreement;
(k) the Transferor shall not terminate (except in
accordance with the terms thereof), amend, waive or otherwise
modify the Pooling and Servicing Agreement or the Supplement
unless (i) such amendment, waiver or modification shall not, as
evidenced by an Officer's Certificate of the Transferor delivered
to the Agent, adversely affect in any material respect the
interests of the Agent or the Class A Purchasers under this
Agreement or the Pooling and Servicing Agreement, and will not
result in a reduction or withdrawal of the then current rating by
any Rating Agency of any commercial paper notes issued by any
Structured Purchaser; (ii) all of the provisions of Section 13.1
of the Pooling and Servicing Agreement have been complied with
and (iii) in the case of any amendment of the Supplement, any
amendment to be effected pursuant to subsection 13.1(b) of the
Pooling and Servicing Agreement or any amendment to the interest
rate to be borne by the Class B Certificates or the Class C
Certificates, the prior written consent thereto shall have been
provided by the Required Class A Owners and the Required Class A
Purchasers;
(l) the Transferor and the Servicer shall execute
and deliver to the Agent all such documents and instruments and
do all such other acts and things as may be necessary or
reasonably required by the Agent or the Trustee to enable the
Trustee or the Agent to exercise and enforce their respective
rights under this Agreement and the Pooling and Servicing
Agreement and to realize thereon, and record and file and
rerecord and refile all such documents and instruments, at such
time or times, in such manner and at such place or places, all as
may be necessary or required by the Trustee or the Agent to
validate, preserve, perfect and protect the position of the
Trustee under the Pooling and Servicing Agreement;
(m) without the prior written consent of the
Required Class A Owners and the Required Class A Purchasers, the
Transferor will not appoint (or cause to be appointed) a
successor Trustee;
(n) neither the Transferor nor the Servicer will
consolidate with or merge into any other Person or convey or
transfer its properties and assets substantially as an entirety
to any Person, except (i) in accordance with Section 7.2 or 8.2
of the Pooling and Servicing Agreement, with respect to the
Transferor or the Servicer, respectively, and (ii) so long as (A)
the obligations of the Transferor or the Servicer, as the case
may be, under this Agreement and any other document executed and
delivered in connection herewith shall be expressly assumed in
writing by the transferee, purchaser or successor corporation,
(B) the Transferor or the Servicer, as the case may be, has
delivered to the Agent an Officer's Certificate of the Transferor
or the Servicer and an Opinion of Counsel addressed to the Agent
and each Class A Purchaser meeting the requirements of subsection
7.2(a)(ii) or 8.2(ii) of the Pooling and Servicing Agreement, as
appropriate, as provided in such agreement, (C) the Transferor or
the Servicer, as the case may be, has delivered to the Agent a
copy of the notice to the Rating Agencies delivered pursuant to
subsection 7.2(a)(iii) or 8.2(iii) of the Pooling and Servicing
Agreement, and (D) such consolidation, merger or transfer, in the
reasonable judgment of the Transferor and the Servicer, will not
have a material adverse effect on the interests of the Class A
Purchasers hereunder or under the Pooling and Servicing
Agreement;
(o) the Transferor shall not reduce or withdraw any
Discount Percentage then in effect unless such reduction or
withdrawal (i) would not in the reasonable belief of the
Transferor cause a Pay Out Event with respect to the Series 1999-
1 Certificates or an event which, with notice or lapse of time or
both, would constitute such a Pay Out Event to occur or (ii) is
consented to by the Required Class A Owners and the Required
Class A Purchasers;
(p) the Transferor and FDSNB will not make any
material amendment, modification or change to, or provide any
waiver under, the Receivables Purchase Agreement without the
prior written consent of the Required Class A Owners and the
Required Class A Purchasers;
(q) the Transferor will not incur, permit or suffer
to exist any lien, charge or other adverse claim on the Minimum
Transferor Amount in the Trust;
(r) the Transferor will not engage in any business
other than the transactions contemplated by this Agreement and
the Related Documents;
(s) the Transferor will not (i) incur any
liabilities or indebtedness, other than pursuant to this
Agreement and the Related Documents or reasonably related
thereto, (ii) incur or permit or suffer to exist any lien, charge
or encumbrance on any of its properties or assets, other than as
provided for in the Pooling and Servicing Agreement, (iii) make
any investments other than in Cash Equivalents or (iv) make any
capital expenditures other than those reasonably required for its
performance of its obligations hereunder and under the Related
Documents;
(t) the Transferor will not amend, modify or
otherwise make any change to its Certificate of Incorporation if
such amendment, modification or other change would have a
material adverse effect on the interests of the Class A
Purchasers, would affect any provisions thereof relating to the
commencement of a voluntary bankruptcy proceeding or which is
inconsistent with the assumptions set forth in the legal opinion
of Jones, Day, Reavis & Pogue, counsel to FDSNB and the
Transferor, issued in connection with this Agreement and the
transactions contemplated hereby and relating to the issues of
substantive consolidation; and
(u) Each of the Transferor and FDSNB will (i)
review the areas within its business and operations which would
reasonably be expected to be materially adversely affected by,
and will develop and implement a program to address on a timely
basis, the internal "Year 2000 Problem", and will make related
appropriate inquiry of material suppliers and vendors and (ii)
notify the Agent promptly if any auditor, regulator, or third
party consultant issues a management letter or other
communication regarding the Year 2000 exposure, program or
progress of the Transferor or FDSNB.
SECTION 6. MUTUAL COVENANTS REGARDING CONFIDENTIALITY
6.1 Covenants of Transferor, Etc. The Transferor and
the Servicer shall hold in confidence, and not disclose to any
Person, the terms of any fees payable in connection with this
Agreement except they may disclose such information (i) to their
officers, directors, employees, agents, counsel, accountants,
auditors, advisors or representatives, (ii) with the consent of
the Required Class A Purchasers and Agent, or (iii) to the extent
the Transferor or the Servicer or any Affiliate of either of them
should be required by any law or regulation applicable to it or
requested by any Governmental Authority to disclose such
information; provided, that, in the case of clause (iii), the
Transferor or the Servicer, as the case may be, will use all
reasonable efforts to maintain confidentiality and will (unless
otherwise prohibited by law) notify the Agent of its intention to
make any such disclosure prior to making such disclosure.
6.2 Covenants of Class A Purchasers. The Agent and
each Class A Purchaser covenants and agrees that any information
obtained by the Agent or such Class A Purchaser pursuant to this
Agreement shall be held in confidence (it being understood that
documents provided to the Agent hereunder may in all cases be
distributed by the Agent to the Class A Purchasers) except that
the Agent or such Class A Purchaser may disclose such information
(i) to its officers, directors, employees, agents, counsel,
accountants, auditors, advisors or representatives, (ii) to the
extent such information has become available to the public other
than as a result of a disclosure by or through the Agent or such
Class A Purchaser, (iii) to the extent such information was
available to the Agent or such Class A Purchaser on a
nonconfidential basis prior to its disclosure to the Agent or
such Class A Purchaser hereunder, (iv) with the consent of the
Transferor, (v) to the extent permitted by Section 8.1, (vi) to
the extent the Agent or such Class A Purchaser should be (A)
required in connection with any legal or regulatory proceeding or
(B) requested by any Governmental Authority to disclose such
information or (vii) in the case of any Class A Purchaser that is
a Structured Lender, to rating agencies, placement agents and
providers of liquidity and credit support who agree to hold such
information in confidence; provided, that, in the case of clause
(vi) above, the Agent or such Class A Purchaser, as applicable,
will use all reasonable efforts to maintain confidentiality and,
in the case of clause (vi)(A) above, will (unless otherwise
prohibited by law) notify the Transferor of its intention to make
any such disclosure prior to making any such disclosure.
SECTION 7. THE AGENTS
7.1 Appointment. (a) Each Class A Purchaser hereby
irrevocably designates and appoints the Agent as the agent of
such Class A Purchaser under this Agreement, and each such Class
A Purchaser irrevocably authorizes the Agent, as the agent for
such Class A Purchaser, to take such action on its behalf under
the provisions of the Related Documents and to exercise such
powers and perform such duties thereunder as are expressly
delegated to the Agent by the terms of this Agreement, together
with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Class A Purchaser, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist
against the Agent.
(b) Each Class A Purchaser hereby irrevocably
designates and appoints the Administrative Agent as the agent of
such Class A Purchaser under the Pooling and Servicing Agreement,
and each such Class A Purchaser irrevocably authorizes the
Administrative Agent, as the agent for such Class A Purchaser, to
take such action on its behalf under the provisions of the
Pooling and Servicing Agreement and to exercise such powers
thereunder as are expressly granted to the Administrative Agent
by the terms of the Pooling and Servicing Agreement, subject to
the terms and conditions of this Agreement, together with such
other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in
the Pooling and Servicing Agreement, or any fiduciary
relationship with any Class A Purchaser, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist
against the Administrative Agent.
7.2 Delegation of Duties. The Agent and the
Administrative Agent may execute any of its duties under this
Agreement or any of the other Related Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.
Neither the Agent nor the Administrative Agent shall be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
7.3 Exculpatory Provisions. Neither the Agent nor the
Administrative Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates
shall be (a) liable to any of the Class A Purchasers for any
action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any of the other
Related Documents (except for its or such Person's own gross
negligence or willful misconduct) or (b) responsible in any
manner to any of the Class A Purchasers for any recitals,
statements, representations or warranties made by the Transferor,
the Servicer or the Trustee or any officer thereof contained in
this Agreement or any of the other Related Documents or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Agent or the Administrative
Agent under or in connection with, this Agreement or any of the
other Related Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any of the other Related Documents or for any
failure of the Transferor, the Servicer or the Trustee to perform
its obligations hereunder or thereunder. Neither the Agent nor
the Administrative Agent shall be under any obligation to any
Class A Purchaser to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the other Related
Documents, or to inspect the properties, books or records of the
Transferor, the Servicer, the Trustee or the Trust.
7.4 Reliance by Agent. The Agent and the
Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, written statement, order or
other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Agent or the
Administrative Agent), independent accountants and other experts
selected by the Agent or the Administrative Agent. The Agent and
the Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any of the
other Related Documents unless it shall first receive such advice
or concurrence of the Required Class A Purchasers as it deems
appropriate or it shall first be indemnified to its satisfaction
by the Class A Purchasers or of the Committed Class A Purchasers
against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
The Agent and the Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under
this Agreement or any of the other Related Documents in
accordance with a request of the Required Class A Owners and the
Required Class A Purchasers and such request and any action taken
or failure to act pursuant thereto shall be binding upon all
present and future Class A Purchasers.
7.5 Notices. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any breach of this
Agreement or the occurrence of any Pay Out Event or any
Termination Event unless the Agent has received notice from the
Transferor, the Servicer, the Trustee or any Class A Purchaser
referring to this Agreement, describing such event. In the event
that the Agent receives such a notice, the Agent promptly shall
give notice thereof to the Class A Owners and the Required Class
A Purchasers. The Agent shall take such action with respect to
such event as shall be reasonably directed by the Required Class
A Owners and the Required Class A Purchasers; provided that
unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such event as
it shall deem advisable in the best interests of the Class A
Purchasers.
7.6 Non-Reliance on Agent and Other Class A
Purchasers. Each Class A Purchaser expressly acknowledges that
neither the Agent nor the Administrative Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-
fact or Affiliates has made any representations or warranties to
it and that no act by the Agent or the Administrative Agent
hereafter taken, including any review of the affairs of the
Transferor, the Servicer, the Trustee or the Trust shall be
deemed to constitute any representation or warranty by the Agent
or the Administrative Agent to any Class A Purchaser. Each Class
A Purchaser represents to the Agent and the Administrative Agent
that it has, independently and without reliance upon the Agent or
any other Class A Purchaser, and based on such documents and
information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Trust,
the Trustee, the Transferor and the Servicer and made its own
decision to purchase its Class A Certificate hereunder and enter
into this Agreement. Each Class A Purchaser also represents that
it will, independently and without reliance upon the Agent or the
Administrative Agent or any other Class A Purchaser, and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own analysis, appraisals and
decisions in taking or not taking action under this Agreement or
any of the other Related Documents, and to make such
investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Trust, the Trustee, the Transferor and
the Servicer. Except for notices, reports and other documents
received by the Agent under Section 5 hereof, the Agent shall not
have any duty or responsibility to provide any Class A Purchaser
with any credit or other information concerning the business,
operations, property, condition (financial or otherwise),
prospects or creditworthiness of the Trust, the Trustee, the
Transferor or the Servicer which may come into the possession of
the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
7.7 Indemnification. The Committed Class A Purchasers
agree to indemnify the Agent and the Administrative Agent in its
capacity as such (without limiting the obligation of the
Transferor, the Trust or the Servicer to reimburse the Agent or
the Administrative Agent for any such amounts), ratably according
to their respective Commitment Percentages, from and against any
and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the obligations
under this Agreement, including the Class A Invested Amount) be
imposed on, incurred by or asserted against the Agent or the
Administrative Agent in any way relating to or arising out of
this Agreement, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action
taken or omitted by the Agent or the Administrative Agent under
or in connection with any of the foregoing; provided that no
Class A Purchaser shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
the Agent or the Administrative Agent resulting from its own
gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the obligations under
this Agreement, including the Class A Invested Amount.
7.8 Agents in Their Individual Capacities. The Agent,
the Administrative Agent and their Affiliates may make loans to,
accept deposits from and generally engage in any kind of business
with the Trust, the Trustee, the Servicer and the Transferor as
though the Agent and the Administrative Agent were not the agents
hereunder. Each Class A Purchaser acknowledges that PNC may act
(i) as administrator and agent for one or more Structured
Purchasers and in such capacity acts and may continue to act on
behalf of each such Structured Purchaser in connection with its
business and (ii) as the agent for certain financial institutions
under the liquidity and credit enhancement agreements relating to
this Agreement to which any such Structured Purchaser is party
and in various other capacities relating to the business of any
such Structured Purchaser under various agreements. PNC in its
capacity as the Agent shall not, by virtue of its acting in any
such other capacities, be deemed to have duties or
responsibilities hereunder or be held to a standard of care in
connection with the performance of its duties as the Agent or the
Administrative Agent other than as expressly provided in this
Agreement. PNC may act as the Agent and the Administrative Agent
without regard to and without additional duties or liabilities
arising from its role as such administrator or agent or arising
from its acting in any such other capacity.
7.9 Successor Agent. (a) The Agent may resign as
Agent upon ten days' notice to the Class A Purchasers, the
Trustee, the Transferor and the Servicer with such resignation
becoming effective upon a successor agent succeeding to the
rights, powers and duties of the Agent pursuant to this
subsection 7.9(a). If the Agent shall resign as Agent under this
Agreement, then the Required Class A Purchasers and the Required
Class A Owners shall appoint from among the Committed Class A
Purchasers a successor agent for the Class A Purchasers. The
successor agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor agent
effective upon its appointment, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other
or further act or deed on the part of such former Agent or any of
the parties to this Agreement. After the retiring Agent's
resignation as Agent, the provisions of this Section 7 shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
(b) The Administrative Agent may resign as
Administrative Agent upon ten days' notice to the Class A
Purchasers, the Class B Purchasers (as defined in the Class B
Certificate Purchase Agreement), the Trustee, the Transferor and
the Servicer with such resignation becoming effective upon a
successor agent succeeding to the rights, powers and duties of
the Administrative Agent pursuant to this subsection 7.9(b). If
the Administrative Agent shall resign as Administrative Agent
under this Agreement, then the Required Class A Purchasers and
the Required Class A Owners shall appoint from among the
Committed Class A Purchasers hereunder or under the Class B
Certificate Purchase Agreement a successor Administrative Agent
of the Class A Certificateholders and Class B Certificateholders
as provided in the Supplement; provided that no such appointment
shall be effective unless such successor is also appointed as
successor Administrative Agent under the Class B Certificate
Purchase Agreement. The successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the
term "Administrative Agent" shall mean such successor agent
effective upon its appointment, and the former Administrative
Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the
part of such former Administrative Agent or any of the parties to
this Agreement. After the retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this
Section 7 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under
this Agreement.
SECTION 8. SECURITIES LAWS; TRANSFERS; TAX TREATMENT
8.1 Transfers of Class A Certificates. (a) Each
Class A Owner agrees that the beneficial interest in the Class A
Certificates purchased by it will be acquired for investment only
and not with a view to any public distribution thereof, and that
such Class A Owner will not offer to sell or otherwise dispose of
any Class A Certificate acquired by it (or any interest therein)
in violation of any of the registration requirements of the Act
or any applicable state or other securities laws. Each Class A
Owner acknowledges that it has no right to require the Transferor
to register, under the Act or any other securities law, the Class
A Certificates (or the beneficial interest therein) acquired by
it pursuant to this Agreement or any Transfer Supplement. Each
Class A Owner hereby confirms and agrees that in connection with
any transfer or syndication by it of an interest in the Class A
Certificates, such Class A Owner has not engaged and will not
engage in a general solicitation or general advertising including
advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting
whose attendees have been invited by any general solicitation or
general advertising. Each initial Class A Owner agrees with the
Transferor that it will execute and deliver to the Transferor,
the Servicer and the Trustee on or before the Closing Date a
letter in the form attached hereto as Exhibit A (an "Investment
Letter") with respect to the purchase by such Class A Owner of a
beneficial interest in the Class A Certificates.
(b) Each initial purchaser of a Class A Certificate
or any interest therein and any Assignee thereof or Participant
therein shall certify to the Transferor, the Servicer and the
Trustee that it is either (A)(i) a citizen or resident of the
United States, (ii) a corporation or other entity organized in or
under the laws of the United States or any political subdivision
thereof which, if such entity is a tax-exempt entity, recognizes
that payments with respect to the Class A Certificates may
constitute unrelated business taxable income or (iii) a person
not described in (i) or (ii) whose income from the Class A
Certificates is and will be effectively connected with the
conduct of a trade or business within the United States (within
the meaning of the Code) and whose ownership of any interest in a
Class A Certificate will not result in any withholding obligation
with respect to any payments with respect to the Class A
Certificates by any Person (other than withholding, if any, under
Section 1446 of the Code) and who will furnish to the Servicer
and the Trustee, and to the Class A Owner making the Transfer a
properly executed U.S. Internal Revenue Service Form 4224 (and to
agree (to the extent legally able) to provide a new Form 4224
upon the expiration or obsolescence of any previously delivered
form and comparable statements in accordance with applicable
United States laws) or (B) an estate or trust the income of which
is includible in gross income for United States federal income
tax purposes.
(c) Any sale, transfer, assignment, participation,
pledge, hypothecation or other disposition (a "Transfer") of a
Class A Certificate or any interest therein may be made only in
accordance with this Section 8.1 and in accordance with and
subject to the applicable limitations set forth in Section 6.18
of the Pooling and Servicing Agreement. Any Transfer of an
interest in a Class A Certificate, a Commitment or any
Noncommitted Purchaser Percentage, when combined with any
substantially concurrent Transfers hereunder between the same
parties and any substantially concurrent Transfer of an interest
in a Class B Certificate or a Commitment or Noncommitted
Purchaser Percentage (as such terms are defined for purposes of
the Class B Certificate Purchase Agreement) between the same
parties, shall be in respect of (i) in the case of a Committed
Class A Purchaser, at least $5,000,000 in the aggregate, which
may be composed of any one or more of (A) Class A Invested
Amount, (B) to the extent in excess of the Class A Invested
Amount subject to such Transfer, Commitment hereunder, (C) Class
B Invested Amount, and (D) to the extent in excess of the Class B
Invested Amount subject to such concurrent Transfer, Commitment
under the Class B Certificate Purchase Agreement, or (ii) in the
case of a Noncommitted Class A Purchaser, at least $5,000,000 in
the aggregate, which may be composed of any one or more of (A)
Class A Invested Amount, (B) to the extent in excess of the Class
A Invested Amount subject to such Transfer, the product of the
Noncommitted Purchaser Percentage subject to such Transfer times
the aggregate Commitments hereunder, (C) Class B Invested Amount
and (D) to the extent in excess of the Class B Invested Amount
subject to such concurrent Transfer, the product of the
Noncommitted Purchaser Percentage under the Class B Certificate
Purchase Agreement subject to such Transfer times the aggregate
Commitments under the Class B Certificate Purchase Agreement.
Any Transfer of an interest in a Class A Certificate otherwise
permitted by this Section 8.1 will be permitted only if it
consists of a pro rata percentage interest in all payments made
with respect to the Class A Purchaser's beneficial interest in
such Class A Certificate. No Class A Certificate or any interest
therein may be Transferred by assignment or Participation to any
Person (each, a "Transferee") unless prior to the transfer the
Transferee shall have executed and delivered to the Agent and the
Transferor an Investment Letter and, except for any Transfer to
an Eligible Transferee, each of the Transferor and the Servicer
shall have granted its prior consent thereto; provided that in
the event of a Transfer from a Class A Purchaser to one of its
Affiliates or to a Person which, prior to such Transfer, is a
Class A Purchaser of all of its interest in the Class A
Certificates the transferring Class A Purchaser shall provide the
Transferor and the Servicer with five (5) Business Days prior
written notice thereof and the prior consent of the Transferor
and the Servicer shall not be required for such Transfer.
Each of the Transferor and the Servicer authorizes
each Class A Purchaser to disclose to any Transferee and Support
Bank and any prospective Transferee or Support Bank any and all
financial information in the Class A Purchaser's possession
concerning the Trust, the Transferor or the Servicer which has
been delivered to the Agent or such Class A Purchaser by or on
behalf of the Trust or the Transferor or the Servicer pursuant to
this Agreement (including information obtained pursuant to rights
of inspection granted hereunder) or the other Related Documents
or which has been delivered to such Class A Purchaser by or on
behalf of the Trust, the Transferor or the Servicer in connection
with such Class A Purchaser's credit evaluation of the Trust, the
Transferor or the Servicer prior to becoming a party to, or
purchasing an interest in this Agreement or the Class A
Certificates; provided that prior to any such disclosure, such
Transferee or Support Bank or prospective Transferee or Support
Bank shall have executed an agreement agreeing to be bound by the
provisions of Section 6.2 hereof.
(d) Each Class A Purchaser may, in accordance with
applicable law, at any time grant participations in all or part
of its interest in its Commitment or in the Class A Certificates
including the payments due to it under this Agreement and the
Pooling and Servicing Agreement (each, a "Participation") to any
Person (each, a "Participant"); provided, however, that no
Participation shall be granted to any Person unless and until the
Agent shall have consented thereto and the conditions to Transfer
specified in this Agreement and the Pooling and Servicing
Agreement, including in subsection 8.1(c) hereof and Section 6.18
of the Pooling and Servicing Agreement, shall have been satisfied
and that such Participation consists of a pro rata percentage
interest in all payments made with respect to such Class A
Purchaser's beneficial interest (if any) in the Class A
Certificates. In connection with any such Participation, the
Agent shall maintain a register of each Participant and the
amount of each Participation. Each Class A Purchaser hereby
acknowledges and agrees that (A) any such Participation will not
alter or affect such Class A Purchaser's direct obligations
hereunder, and (B) neither the Trustee, the Transferor nor the
Servicer shall have any obligation to have any communication or
relationship with any Participant. Each Class A Purchaser and
each Participant shall comply with the provisions of subsection
2.5(c). No Participant shall be entitled to Transfer all or any
portion of its Participation, without the prior written consent
of the Agent. The Transferor shall be obligated to indemnify a
Participant for all amounts owing to it under Sections 2.4, 2.5
and 2.7 as if such Participant were a Class A Purchaser
hereunder, but, in the case of Sections 2.4 and 2.5, only in an
amount not in excess of the amounts which would have been owing
thereunder had such Participation not been granted and, in the
case of Section 2.5, provided that such Participant has complied
with the provisions of subsection 2.5(c) as if it were a Class A
Purchaser. Each Class A Purchaser shall give the Agent notice of
the consummation of any sale by it of a Participation and the
Agent (upon receipt of notice from the related Class A Purchaser)
shall promptly notify the Transferor, the Servicer and the
Trustee.
(e) Each Class A Purchaser may, with the consent of
the Agent and in accordance with applicable law, sell or assign
(each, an "Assignment"), to any Person (each, an "Assignee")
which is an Eligible Assignee (or is otherwise consented to in
writing by the Transferor and the Servicer) all or any part of
its interest in its Commitment or in the Class A Certificates and
its rights and obligations under this Agreement and the Pooling
and Servicing Agreement pursuant to an agreement substantially in
the form attached hereto as Exhibit C hereto (a "Transfer
Supplement"), executed by such Assignee and the Class A Purchaser
and delivered to the Agent for its acceptance and consent;
provided, however, that no such assignment or sale shall be
effective unless and until the conditions to Transfer specified
in this Agreement and the Pooling and Servicing Agreement,
including in subsection 8.1(c) hereof and Section 6.18 of the
Pooling and Servicing Agreement, shall have been satisfied; and
provided further, however, that no such assignment or sale to an
Assignee which would become a Committed Class A Purchaser shall
be effective unless either (i) the commercial paper notes or the
short-term obligations of such Assignee are rated at least A-1 by
Standard & Poor's and P-1 by Moody's or (ii) such assignment or
sale shall have been consented to by all Class A Purchasers. From
and after the effective date determined pursuant to such Transfer
Supplement, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Transfer Supplement, have the
rights and obligations of a Class A Purchaser hereunder as set
forth therein and (y) the transferor Class A Purchaser shall, to
the extent provided in such Transfer Supplement, be released from
its Commitment and other obligations under this Agreement;
provided, however, that after giving effect to each such
Assignment, the obligations released by any such Class A
Purchaser shall not exceed the obligations assumed by an Assignee
or Assignees. Such Transfer Supplement shall be deemed to amend
this Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Assignee and the resulting
adjustment of Percentage Interests, Noncommitted Purchaser
Percentages or Commitment Percentages arising from the
Assignment. Upon its receipt of a duly executed Transfer
Supplement, the Agent shall on the effective date determined
pursuant thereto give notice of such acceptance to the
Transferor, the Servicer and the Trustee and the Servicer will
provide notice thereof to each Rating Agency (if required).
Upon surrender for registration of transfer of a
Class A Purchaser's beneficial interest in the Class A
Certificates (or portion thereof) and delivery to the Transferor
and the Trustee of an Investment Letter, executed by the
registered owner (and the beneficial owner if it is a Person
other than the registered owner), and receipt by the Trustee of a
copy of the duly executed related Transfer Supplement and such
other documents as may be required under this Agreement, such
beneficial interest in the Class A Certificates (or portion
thereof) shall be transferred in the records of the Trustee and
the Agent and, if requested by the Assignee, new Class A
Certificates shall be issued to the Assignee and, if applicable,
the transferor Class A Purchaser in amounts reflecting such
Transfer as provided in the Pooling and Servicing Agreement.
Such Transfers of Class A Certificates (and interests therein)
shall be subject to this Section 8.1 in lieu of any regulations
which may be prescribed under Section 6.3 of the Pooling and
Servicing Agreement. Successive registrations of Transfers as
aforesaid may be made from time to time as desired, and each such
registration of a transfer to a new registered owner shall be
noted on the Certificate Register.
(f) Each Class A Purchaser may pledge its interest
in the Class A Certificates to any Federal Reserve Bank as
collateral in accordance with applicable law.
(g) Any Class A Purchaser shall have the option to
change its Investing Office, provided that such Class A Purchaser
shall have prior to such change in office complied with the
provisions of subsection 2.5(c) and provided further that such
Class A Purchaser shall not be entitled to any amounts otherwise
payable under Section 2.4 or 2.5 resulting solely from such
change in office unless such change in office was mandated by
applicable law or by such Class A Purchaser's compliance with the
provisions of this Agreement.
(h) Each Affected Party which, on the date it
became an Affected Party, was an Eligible Assignee or was
consented to by the Transferor and the Servicer shall be entitled
to receive additional payments pursuant to Sections 2.4, 2.5 and
2.7 hereof as though it were a Class A Purchaser and such Section
applied to its interest in or commitment to acquire an interest
in the Class A Certificates; provided that such Affected Party
shall not be entitled to additional payments pursuant to (i)
Section 2.4 by reason of Regulatory Changes which occurred prior
to the date it became an Affected Party or (ii) Section 2.5
attributable to its failure to satisfy the requirements of
subsection 2.5(c) as if it were a Class A Purchaser.
(i) If any increased amounts referred to in Sections
2.4 or 2.5 owing to any Affected Party are not eliminated or
reduced by the designation of a different Investing Office or
other actions taken pursuant to subsection 2.4(c) and payment
thereof hereunder is not waived by such Affected Party within 45
days after the Transferor or the Servicer shall have given notice
to such Affected Party, its related Class A Purchaser and the
Agent of the intent of the Transferor to exercise its rights
under this sentence, the Transferor shall have the right to
replace such related Class A Purchaser hereunder with a
Replacement Purchaser; provided, that (x) such related Class A
Purchaser shall not be replaced hereunder until such related
Class A Purchaser has been paid in full all amounts owed to it
hereunder and with respect to its interest in the Class A
Certificates and (y) if the related Class A Purchaser is the
Agent or the Administrative Agent or, unless otherwise agreed by
the Agent and the Administrative Agent, a Structured Purchaser
sponsored or administered by the Administrative Agent or the
Agent (in its individual capacity), a replacement Agent and
Administrative Agent shall have been appointed in accordance with
Section 7.9 and the Agent and the Administrative Agent to be
replaced shall have been paid in full all amounts owed to it
hereunder.
(j) Each Affected Party claiming increased amounts
described in Sections 2.4 or 2.5 shall furnish, through its
related Structured Purchaser, to the Trustee, the Agent, the
Servicer and the Transferor a certificate setting forth any
action taken by such Affected Party to reduce or eliminate such
increased amounts pursuant to subsection 2.4(c) and the basis and
amount of each request by such Affected Party for any such
amounts referred to in Sections 2.4 or 2.5, such certificate to
be conclusive with respect to the factual information set forth
therein absent manifest error.
(k) In the event that a Committed Class A Purchaser
was at any time a Defaulting Purchaser or is a Downgraded
Purchaser, the Transferor shall have the right and to replace
such Class A Purchaser hereunder with a Replacement Purchaser,
and the Agent, acting at the request of the Required Class A
Purchasers or the Required Class A Owners, shall have the right
to replace such Committed Class A Purchaser with a Replacement
Purchaser which is an Eligible Assignee or is otherwise
reasonably acceptable to the Transferor, which Replacement
Purchaser shall succeed to the rights of such Committed Class A
Purchaser under this Agreement, and such Committed Class A
Purchaser shall assign its beneficial interest in the Class A
Certificates to such Replacement Purchaser in accordance with the
provisions of this Section 8.1; pro vided, that (A) such
Committed Class A Purchaser shall not be replaced hereunder with
a new investor until such Committed Class A Purchaser has been
paid in full its Percentage Interest of the Class A Investor
Principal Balance and all accrued and unpaid Yield (including any
Liquidation Fee determined for the replacement date) thereon by
such new investor and all other amounts (including all amounts
owing under Sections 2.4 and 2.5) owed to it and to all
Participants and Affected Parties with respect to such Class A
Purchaser pursuant to this Agreement and (ii) if the Class A
Purchaser to be replaced is the Agent or the Administrative Agent
or, unless the Agent and the Administrative Agent otherwise
agree, a Structured Purchaser sponsored or administered by the
Administrative Agent or the Agent (in its individual capacity), a
replacement Agent or Administrative Agent, as the case may be,
shall have been appointed in accordance with Section 7.9 and the
Agent or Administrative Agent, as the case may be, to be replaced
shall have been paid all amounts owing to it as Agent or
Administrative Agent, as the case may be, pursuant to this
Agreement. For purposes of this subsection, a Committed Class A
Purchaser shall be a "Downgraded Purchaser" if and so long as the
credit rating assigned to its short-term obligations by Moody's
or Standard & Poor's on the date on which it became a party to
this Agreement shall have been reduced or withdrawn.
8.2 Tax Characterization of the Class A Certificates.
It is the intention of the parties hereto that the Class A
Certificates be treated for tax purposes as indebtedness. In the
event that the Class A Certificates are not so treated, it is the
intention of the parties that such Class A Certificates be
treated as an interest in a partnership that owns the
Receivables. In the event that the Class A Certificates are
treated as an interest in a partnership, it is the intention of
the parties that interest payable on such Class A Certificates be
treated as guaranteed payment and, if for any reason it is not so
treated, that the holders of such Class A Certificates be
specially allocated gross interest income equal to the interest
accrued during each applicable accrual period on such Class A
Certificates.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. This Agreement may not be
amended, supplemented or modified nor may any provision hereof be
waived except in accordance with the provisions of this Section
9.1. With the written consent of the Required Class A Owners and
the Required Class A Purchasers, the Agent, the Transferor and
the Servicer may, from time to time, enter into written
amendments, supplements, waivers or modifications hereto for the
purpose of adding any provisions to this Agreement or changing in
any manner the rights of any party hereto or waiving, on such
terms and conditions as may be specified in such instrument, any
of the requirements of this Agreement; provided, however, that no
such amendment, supplement, waiver or modification shall (i)
reduce the amount of or extend the maturity of any Class A
Certificate or reduce the rate or extend the time of payment of
interest thereon, or reduce or alter the timing of any other
amount payable to any Class A Purchaser hereunder or under the
Supplement, in each case without the consent of the Class A
Purchaser affected thereby, (ii) amend, modify or waive any
provision of this Section 9.1, or, if such amendment would have a
material adverse effect on the Class A Purchasers, the definition
of "Class A Invested Amount", or reduce the percentage specified
in the definition of Required Class A Owners or Required Class A
Purchasers, in each case without the written consent of all Class
A Purchasers or (iii) amend, modify or waive any provision of
Section 7 of this Agreement without the written consent of the
Agent, the Administrative Agent, the Required Class A Owners and
Required Class A Purchasers. Any waiver of any provision of this
Agreement shall be limited to the provisions specifically set
forth therein for the period of time set forth therein and shall
not be construed to be a waiver of any other provision of this
Agreement.
Each party hereto agrees, at the request of the Agent
from time to time to enter into or to consent to, as applicable,
any amendments or other modifications to this Agreement or the
Related Documents, other than those requiring the consent of all
Class A Purchasers as provided above in this subsection, and the
Transferor agrees to cause its Certificate of Incorporation and
Bylaws to be amended or otherwise modified, as shall reasonably
be determined by the Agent to be required for any initial Class A
Purchaser which is a Structured Purchaser to obtain or maintain
an informal rating of the Class A Certificates which will permit
such Structured Purchaser's commercial paper notes to maintain at
least the rating from Standard & Poor's and Moody's as in effect
immediately prior to such Structured Purchaser's becoming a Class
A Purchaser after giving effect to its initial purchase of the
Class A Certificates and to purchases from time to time by such
Structured Purchaser of VFC Additional Class A Invested Amounts
as contemplated by this Agreement, without giving effect to any
increase in any letter of credit or other enhancement provided to
such Structured Purchaser (other than liquidity support provided
to such Structured Purchaser by Affected Parties).
The Administrative Agent may cast any vote or give any
direction under the Pooling and Servicing Agreement on behalf of
the Class A Certificateholders if it has been directed to do so
by (i) the Required Class A Owners, (ii) the Required Class A
Purchasers, and (iii) by the Class B Purchasers (as defined in
the Class B Certificate Purchase Agreement) required under the
terms of Section 9.1 of the Class B Certificate Purchase
Agreement.
9.2 Notices. (a) All notices, requests and demands
to or upon the respective parties hereto to be effective shall be
in writing (including by telecopy, telegraph or telex), and,
unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the
case of mail or telecopy notice, when received, or, in the case
of telegraphic notice, when delivered to the telegraph company,
or, in the case of telex notice, when sent, answer back received,
addressed as follows or, with respect to a Class A Purchaser, as
set forth in its respective Joinder Supplement or Transfer
Supplement, or to such other address as may be hereafter notified
by the respective parties hereto:
The Transferor: Prime II Receivables Corporation
9111 Duke Boulevard
Mason, Ohio 45040
Attention: President
Telephone: (513) 573-2048
Telefax: (513) 573-2039
The Servicer: FDS National Bank
9111 Duke Boulevard
Mason, Ohio 45040
Attention: Chief Financial Officer
Telephone: (513) 573-2265
Telefax: (513) 573-2720
With a copy to:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, Ohio 45202
Attention: General Counsel
Telephone: (513) 579-7000
Telefax: (513) 579-7462
The Trustee: The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Capital Markets Fiduciary Services
Telephone: (212) 946-8608
Telefax: (212) 946-3240
The Agent PNC Bank, National Association
or the One PNC Plaza
Administrative 249 Fifth Avenue
Agent: Pittsburgh, Pennsylvania 15220-2707
Attention: John Smathers
Telephone: (412) 762-6440
Telefax: (412) 762-9814
Moody's: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department, 4th Floor
Telephone: (212) 553-3607
Telefax: (212) 553-4773
Standard Standard & Poor's Ratings Services
& Poor's: 26 Broadway, 15th Floor
New York, New York 10004
Attention: Asset-Backed Surveillance Department
Telephone: (212) 208-1892
Telefax: (212) 412-0323
(b) All payments to be made to the Agent or any Class
A Purchaser hereunder shall be made in United States dollars and
in immediately available funds not later than 2:30 p.m.
Pittsburgh, Pennsylvania time on the date payment is due, and,
unless otherwise specifically provided herein, shall be made to
the Agent, for the account of one or more of the Class A
Purchasers or for its own account, as the case may be. Unless
otherwise directed by the Agent, all payments to it shall be made
by federal wire (ABA #043-000-096) and telegraph name: PNC Bank,
National Association and (a) in the case of payments to Market
Street Capital Corp., to DDA #1002420425, or (b) in the case of
payments to Market Street Funding Corporation, to DDA
#1002422076, and, in either case, including the federal wire
number, to Asset-Backed Securities Group, Attn: John Smathers of
PNC (412-762-6440).
9.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Class A Purchaser, any right, remedy, power or privilege
hereunder or under any of the other Related Documents shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder or
under any of the other Related Documents preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges provided herein and in the other Related Documents are
cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
9.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Transferor, the
Servicer, the Agent, the Administrative Agent, the Class A
Purchasers, any Assignee and their respective successors and
assigns, except that the Transferor and the Servicer may not
assign or transfer any of their respective rights or obligations
under this Agreement except as provided herein and in the Pooling
and Servicing Agreement, without the prior written consent of the
Required Class A Owners and the Required Class A Purchasers.
9.5 Successors to Servicer. (a) In the event that a
transfer of servicing occurs under Article VIII or Article X of
the Pooling and Servicing Agreement, (i) from and after the
effective date of such transfer, the Successor Servicer shall be
the successor in all respects to the Servicer and shall be
responsible for the performance of all functions to be performed
by the Servicer from and after such date, except as provided in
the Pooling and Servicing Agreement, and shall be subject to all
the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof, and
all references in this Agreement to the Servicer shall be deemed
to refer to the Successor Servicer, and (ii) as of the date of
such transfer, the Successor Servicer shall be deemed to have
made with respect to itself the representations and warranties
made by the Servicer in Section 4.2 (in the case of subsection
4.2(a) with appropriate factual changes); provided, however, that
the references to the Servicer contained in Section 5.1 of this
Agreement shall be deemed to refer to the Servicer with respect
to responsibilities, duties and liabilities arising out of an act
or acts, or omission, or an event or events giving rise to such
responsibilities, duties and liabilities and occurring during
such time that the Servicer was Servicer under this Agreement and
shall be deemed to refer to the Successor Servicer with respect
to responsibilities, duties and liabilities arising out of an act
or acts, or omission, or an event or events giving rise to such
responsibilities, duties and liabilities and occurring during
such time that the Successor Servicer acts as Servicer under this
Agreement; provided, however, to the extent that an obligation to
indemnify the Class A Purchasers under Section 2.7 arises as a
result of any act or failure to act of any Successor Servicer in
the performance of servicing obligations under the Pooling and
Servicing Agreement or the Supplement, such indemnification
obligation shall be of the Successor Servicer and not FDSNB.
Upon the transfer of servicing to a Successor Servicer, such
Successor Servicer shall furnish to the Agent copies of its
audited annual financial statements for each of the three
preceding fiscal years or if the Trustee or any other banking
institution becomes the Successor Servicer, such Successor
Servicer shall provide, in lieu of the audited financial
statements required in the immediately preceding clause, complete
and correct copies of the publicly available portions of its
Consolidated Reports of Condition and Income as submitted to the
Federal Deposit Insurance Corporation for the two most recent
year end periods.
(b) In the event that any Person becomes the
successor to the Transferor pursuant to Article VII of the
Pooling and Servicing Agreement, from and after the effective
date of such transfer, such successor to the Transferor shall be
the successor in all respects to the Transferor and shall be
responsible for the performance of all functions to be performed
by the Transferor from and after such date, except as provided in
the Pooling and Servicing Agreement, and shall be subject to all
the responsibilities, duties and liabilities relating thereto
placed on the Transferor by the terms and provisions hereof, and
all references in this Agreement to the Transferor shall be
deemed to refer to the successor to the Transferor; provided,
however, that the references to the Transferor contained in
Sections 2.5, 2.7 and 5.1 of this Agreement shall be deemed to
refer to Prime II Receivables Corporation with respect to
responsibilities, duties and liabilities arising out of an act or
acts, or omission, or an event or events giving rise to such
responsibilities, duties and liabilities and occurring during
such time that Prime II Receivables Corporation was Transferor
under this Agreement and shall be deemed to refer to the
successor to Prime II Receivables Corporation as Transferor with
respect to responsibilities, duties and liabilities arising out
of an act or acts, or omission, or an event or events giving rise
to such responsibilities, duties and liabilities and occurring
during such time that the successor to Prime II Receivables
Corporation acts as Transferor under this Agreement.
9.6 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument.
9.7 Severability. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provisions in any other jurisdiction.
9.8 Integration. This Agreement and the Class A Fee
Letter represent the agree ment of the Agent, the Administrative
Agent, the Transferor, the Servicer and the Class A Purchasers
with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the
Class A Purchasers, the Agent or the Administrative Agent
relative to subject matter hereof not expressly set forth or
referred to herein or therein. FDSNB shall retain a copy of each
of the above-referenced agreements as part of its official
records.
9.9 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
9.10 Termination. This Agreement shall remain in full
force and effect until the earlier to occur of (a) payment in
full of the Class A Repayment Amount and all other amounts
payable to the Class A Purchasers, the Agent and the
Administrative Agent hereunder and the termination of all
Commitments and (b) the Series 1999-1 Termination Date; provided,
however, that if the Class A Repayment Amount and all other
amounts payable to the Class A Purchasers hereunder are paid in
full and all Commitments have terminated prior to the Series 1999-
1 Termination Date, the Agent shall notify the Trustee that
thereafter all amounts otherwise payable to the Class A
Purchasers hereunder shall be payable to the Transferor or any
Person designated thereby; and provided, further, that the
provisions of Sections 2.4, 2.5, 2.6, 2.7 and 7.7 and subsections
9.12(a) and 9.12(b) shall survive termination of this Agreement
and amounts payable to the Class A Purchasers thereunder shall
remain payable to the Class A Purchasers.
9.11 Action by Servicer. Wherever the Trustee or the
Trust is authorized or required to take an action or give a
notice pursuant to this Agreement and if the Trustee fails timely
to take such action or give such notice pursuant to this
Agreement after being requested to do so by the Servicer, the
Servicer shall take such action or give such notice on behalf of
the Trustee or the Trust.
9.12 Limited Recourse; No Proceedings. (a) The
obligations of the Transferor and the Servicer under this
Agreement are several (except as specifically provided herein)
and are solely the corporate obligations of the Transferor and
the Servicer. No recourse shall be had for the payment of any
fee or other obligation or claim arising out of or relating to
this Agreement or any other agreement, instrument, document or
certificate executed and delivered or issued by the Transferor
and the Servicer or any officer of any of them in connection
therewith, against any stockholder, employee, officer, director
or incorporator of the Transferor or the Servicer, and neither
the Agent nor any Class A Purchaser shall look to any property or
assets of the Transferor, other than to (a) amounts payable to
the Transferor under the Receivables Purchase Agreement, any
Supplement or the Pooling and Servicing Agreement and (b) any
other assets of the Transferor not pledged to third parties or
otherwise encumbered in any manner permitted by the Transferor's
Certificate of Incorporation. Each Class A Purchaser and the
Agent hereby agrees that to the extent such funds are
insufficient or unavailable to pay any amounts owing to it by the
Transferor pursuant to this Agreement, prior to the earlier of
the Trust Termination Date or the commencement of a bankruptcy or
insolvency proceeding by or against the Transferor, it shall not
constitute a claim against the Transferor. Nothing in this
paragraph shall limit or otherwise affect the liability of the
Servicer with respect to any amounts owing by it hereunder or the
right of the Agent or any Class A Purchaser to enforce such
liability against the Servicer or any of its assets.
(b) Each of the Transferor, the Servicer and the
Trustee hereby agrees that it shall not institute or join against
any Structured Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law,
for one year and a day after the latest maturing commercial paper
note, medium term note or other debt security issued by such
Structured Lender is paid. The foregoing shall not limit the
Transferor's, the Servicer's or the Trustee's right to file any
claim in or otherwise take any action with respect to any such
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding that was instituted by any Person other
than the Transferor, the Servicer or the Trustee.
9.13 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or
in connection herewith shall survive the execution and delivery
of this Agreement, the purchase of the Class A Certificates
hereunder and the termination of this Agreement.
9.14 Submission to Jurisdiction; Waivers. EACH OF THE
TRANSFEROR, THE ADMINISTRATIVE AGENT, THE SERVICER, THE TRUST,
THE TRUSTEE, THE AGENT AND EACH CLASS A PURCHASER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT TO WHICH IT IS A PARTY, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR
PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT
AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A
COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN
SECTION 9.2 OR AT SUCH OTHER ADDRESS OF WHICH THE
AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT
THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO SUE IN ANY OTHER JURISDICTION.
9.15 WAIVERS OF JURY TRIAL. THE TRANSFEROR, THE
SERVICER, THE TRUST, THE TRUSTEE, THE AGENT AND THE CLASS A
PURCHASERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER DOCUMENT OR INSTRUMENT RELATED HERETO AND FOR ANY
COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Certificate Purchase Agreement to be duly executed by their
respective officers as of the day and year first above written.
PRIME II RECEIVABLES CORPORATION,
as Transferor
By: /s/ Susan P. Storer
Name: Susan P. Storer
Title: President
FDS NATIONAL BANK
By: /s/ Susan R. Robinson
Name: Susan R. Robinson
Title: Treasurer
PNC BANK, NATIONAL ASSOCIATION,
as Agent and as Administrative Agent
By: /s/ John T. Smathers
Name: John T. Smathers
Title: Vice President
EXHIBIT A
FORM OF INVESTMENT LETTER
[Date]
Prime II Receivables Corporation
9111 Duke Boulevard
Mason, Ohio 45040
Attention: President
Re Prime Credit Card Master Trust II Class A
Variable Funding Certificates, Series 1999-1
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by
the undersigned (the "Purchaser") pursuant to subsection 8.1(a)
of the Class A Certificate Purchase Agreement dated as of July 6,
1999 (as in effect, the "Certificate Purchase Agreement"), among
the Transferor, FDS National Bank, as Servicer, the Class A
Purchasers parties thereto and PNC Bank, National Association, as
Agent and Administrative Agent. Capitalized terms used herein
without definition shall have the meanings set forth in the
Certificate Purchase Agreement. The Purchaser represents to and
agrees with the Transferor as follows:
(a) The Purchaser is authorized [to enter into the
Certificate Purchase Agreement and to perform its
obligations thereunder and to consummate the transactions
contemplated thereby] [to purchase a participation in
obligations under the Certificate Purchase Agreement].
(b) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of
evaluating the merits and risks of its investment in the
Class A Certificates and is able to bear the economic risk
of such investment. The Purchaser has been afforded the
opportunity to ask such questions as it deems necessary to
make an investment decision, and has received all
information it has requested in connection with making such
investment decision. The Purchaser has, independently and
without reliance upon the Agent, the Administrative Agent or
any other Class A Purchaser, and based on such documents and
information as it has deemed appropriate, made its own
appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Trust, the Transferor and the
Servicer and made its own decision to purchase its interest
in the Class A Certificates, and will, independently and
without reliance upon the Agent, the Administrative Agent or
any other Class A Purchaser, and based on such documents and
information as it shall deem appropriate at the time,
continue to make its own analysis, appraisals and decisions
in taking or not taking action under the Certificate
Purchase Agreement, and to make such investigation as it
deems necessary to inform itself as to the business,
operations, property, financial and other condition and
creditworthiness of the Trust, the Transferor and the
Servicer.
(c) The Purchaser is an "accredited investor", as
defined in Rule 501, promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), or is a
qualified institutional buyer (within the meaning thereof in
Rule 144A under the Securities Act). The Purchaser
understands that the offering and sale of the Class A
Certificates has not been and will not be registered under
the Securities Act and has not and will not be registered or
qualified under any applicable "Blue Sky" law, and that the
offering and sale of the Class A Certificate has not been
reviewed by, passed on or submitted to any federal or state
agency or commission, securities exchange or other
regulatory body.
(d) The Purchaser is acquiring an interest in Class A
Certificates without a view to any distribution, resale or
other transfer thereof except as contemplated in the
following sentence. The Purchaser will not resell or
otherwise transfer any interest or participation in the
Class A Certificates, except in accordance with Sections 8.1
of the Certificate Purchase Agreement and (i) in a
transaction exempt from the registration requirements of the
Securities Act of 1933, as amended, and applicable state
securities or "blue sky" laws; (ii) to the Transferor or any
affiliate of the Transferor; or (iii) to a person who the
Purchaser reasonably believes is a qualified institutional
buyer (within the meaning thereof in Rule 144A under the
Securities Act) that is aware that the resale or other
transfer is being made in reliance upon Rule 144A. In
connection therewith, the Purchaser hereby agrees that it
will not resell or otherwise transfer the Class A
Certificates or any interest therein unless the purchaser
thereof provides to the addressee hereof a letter
substantially in the form hereof.
[(e) The Purchaser hereby certifies to the Transferor,
the Servicer and the Trustee that it has neither acquired
nor will it sell, trade or transfer any interest in a Class
A Certificate or cause an interest in a Class A Certificate
to be marketed on or through an "established securities
market" within the meaning of Section 7704(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") and
any proposed, temporary or final treasury regulation
thereunder, including, without limitation, an over-the-
counter-market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations. In
addition, the Purchaser hereby certifies that it is not and,
for so long as it holds any interest in a Class A
Certificate will not become a partnership, Subchapter S
corporation or grantor trust for U.S. federal income tax
purposes. The Purchaser acknowledges that the opinion of
counsel to the effect that the Trust will not be treated as
a publicly traded partnership taxable as a corporation is
dependent in part on the accuracy of the certifications
described in this paragraph.][To be included only if
required by Section 6.18 of the Pooling and Servicing
Agreement.]
[(e)][(f)] This Investment Letter has been duly
executed and delivered and constitutes the legal, valid and
binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable
principles affecting the enforcement of creditors' rights
generally and general principles of equity.
[(f)][(g)] The Purchaser understands that the Class
A Certificates will bear a legend to substantially the
following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE
SECURITIES ACT. NO RESALE OR OTHER TRANSFER OF THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, (B) IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS. NEITHER THE TRANSFEROR
NOR THE TRUSTEE IS OBLIGATED TO REGISTER THE
CERTIFICATES UNDER THE SECURITIES ACT OR ANY OTHER
SECURITIES OR "BLUE SKY" LAW.
EACH HOLDER OF THIS CERTIFICATE OR AN INTEREST
THEREIN, BY ACCEPTING AND HOLDING THIS CERTIFICATE, IS
DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT
(I) AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3)
OF ERISA) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I
OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(l)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
Very truly yours,
[NAME OF PURCHASER]
By:___________________________
Name:
Title:
EXHIBIT B
FORM OF JOINDER SUPPLEMENT
THIS JOINDER SUPPLEMENT ("Supplement"), dated as of the
date set forth in Item 1 of Schedule I hereto, among Prime II
Receivables Corporation (the "Transferor"), the Class A Purchaser
set forth in Item 2 of Schedule I hereto (the "Additional Class A
Purchaser"), and PNC Bank, National Association, as Agent for the
Class A Purchasers under, and as defined in, the Certificate
Purchase Agreement described below (in such capacity, the
"Agent").
W I T N E S S E T H:
WHEREAS, this Supplement is being executed and
delivered in accordance with subsection 2.2(d) of the Class A
Certificate Purchase Agreement, dated as of July 6, 1999, among
the Transferor, FDS National Bank, as Servicer, the Class A
Purchasers parties thereto, the Agent and PNC Bank, National
Association, as Administrative Agent (as from time to time
amended, supplemented or otherwise modified in accordance with
the terms thereof, the "Certificate Purchase Agreement"; unless
otherwise defined herein, terms defined in the Certificate
Purchase Agreement are used herein as therein defined); and
WHEREAS, the Additional Class A Purchaser (if it is not
already a Class A Purchaser party to the Certificate Purchase
Agreement) wishes to become a Class A Purchaser party to the
Certificate Purchase Agreement;
NOW, THEREFORE, the parties hereto hereby agree as
follows:
(a) Upon receipt by the Agent of five counterparts of
this Supplement, to each of which is attached a fully completed
Schedule I and Schedule II, each of which has been executed by
the Additional Class A Purchaser, the Transferor and the Agent,
the Agent will transmit to the Servicer, the Transferor, the
Trustee, the Administrative Agent and the Additional Class A
Purchaser a Joinder Effective Notice, substantially in the form
of Schedule III to this Supplement (a "Joinder Effective
Notice"). Such Joinder Effective Notice shall be executed by the
Agent and shall set forth, inter alia, the date on which the
transfer effected by this Supplement shall become effective (the
"Joinder Effective Date"). From and after the Joinder Effective
Date, the Additional Class A Purchaser shall be a Class A
Purchaser party to the Certificate Purchase Agreement for all
purposes thereof and shall be a Noncommitted Class A Purchaser
or Committed Class A Purchaser, as the case may be, as set forth
in Schedule II hereto, having an initial Noncommitted Purchaser
Percentage or Commited Purchaser Percentage, as applicable, and a
Commitment, if applicable, as set forth in such Schedule II.
(b) Concurrently with the execution and delivery
hereof, the Additional Class A Purchaser will deliver to the
Transferor and the Trustee an executed Investment Letter in the
form of Exhibit A to the Certificate Purchase Agreement.
(c) Each of the parties to this Supplement agrees and
acknowledges that at any time and from time to time upon the
written request of any other party, it will execute and deliver
such further documents and do such further acts and things as
such other party may reasonably request in order to effect the
purposes of this Supplement.
(d) By executing and delivering this Supplement, the
Additional Class A Purchaser confirms to and agrees with the
Agent, the Administrative Agent and the Class A Purchasers as
follows: (i) neither the Agent, the Administrative Agent nor any
other Class A Purchaser makes any representation or warranty or
assumes any responsibility with respect to any statements,
warranties or representations made in or in connection with the
Certificate Purchase Agreement (other then representations or
warranties made by such respective parties) or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Certificate Purchase Agreement or any other
instrument or document furnished pursuant thereto, or with
respect to the Trust, the financial condition of the Servicer,
the Transferor or the Trustee, or the performance or observance
by the Servicer, the Transferor or the Trustee of any of their
respective obligations under the Certificate Purchase Agreement
or the Pooling and Servicing Agreement or any other instrument or
document furnished pursuant hereto; (ii) the Additional Class A
Purchaser confirms that it has received a copy of such documents
and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Supplement; (iii)
the Additional Class A Purchaser will, independently and without
reliance upon the Agent, the Administrative Agent or any other
Class A Purchaser and based on such documents and information as
it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the
Certificate Purchase Agreement; (iv) each Purchasing Class A
Purchaser appoints and authorizes the Agent and the
Administrative Agent to take such action as agent on its behalf
and to exercise such powers under the Certificate Purchase
Agreement and the Supplement as are delegated to the Agent or the
Administrative Agent, as applicable, by the terms thereof,
together with such powers as are reasonably incidental thereto,
all in accordance with Section 7 of the Certificate Purchase
Agreement; and (vi) the Additional Class A Purchaser agrees (for
the benefit of the Agent, the Administrative Agent, the other
Class A Purchasers, the Trustee, the Servicer and the Transferor)
that it will perform in accordance with their terms all of the
obligations which by the terms of the Certificate Purchase
Agreement are required to be performed by it as a Class A
Purchaser which is a Noncommitted Class A Purchaser or Committed
Class A Purchaser, as the case may be, as specified in Schedule
II hereto.
(e) Schedule II hereto sets forth the Commitment and
the Commitment Expiration Date, if applicable, and the initial
Investing Office of the Additional Class A Purchaser, as well as
administrative information with respect to the Additional Class A
Purchaser.
(f) This Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be executed by their respective duly authorized
officers on Schedule I hereto as of the date set forth in Item 1
of Schedule I hereto.
SCHEDULE I TO
JOINDER SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR JOINDER SUPPLEMENT
Re: Class A Certificate Purchase Agreement, dated as
of July 6, 1999, among Prime II Receivables
Corporation, as Transferor, FDS National Bank, as
Servicer, the Class A Purchasers party thereto and PNC
Bank, National Association, as Agent and as
Administrative Agent.
Item 1: Date of Joinder Supplement:
Item 2: Additional Class A Purchaser:
Item 3: Signatures of Parties to Agreement:
as Additional Class A Purchaser
By:
Name:
Title:
[By:
Name:
Title:]
PRIME II RECEIVABLES CORPORATION,
as Transferor
By:
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as Agent
By:
Name:
Title:
By:
Name:
Title:
ACCEPTED BY:
PNC BANK, NATIONAL ASSOCIATION, as
Administrative Agent
By:
Name:
Title:
By:
Name:
Title:
FDS NATIONAL BANK, as Servicer
By:
Name:
Title:
SCHEDULE II TO
JOINDER SUPPLEMENT
LIST OF INVESTING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT
[Additional Class A Purchaser]
Noncommitted Class A Purchaser: Yes/No
Initial Noncommitted Purchaser Percentage: _______%
(if applicable)
Committed Class A Purchaser: Yes/No
Initial Committed Purchaser Percentage: _______%
(if applicable)
Commitment: $____________
Commitment Expiration Date: _____________
Address for Notices:
Investing Office:
SCHEDULE III TO
JOINDER SUPPLEMENT
FORM OF
JOINDER EFFECTIVE NOTICE
To: [Name and address of
Transferor, Servicer, Trustee, Administrative
Agent and Additional Class A Purchaser]
The undersigned, as Agent under the Class A Certificate
Purchase Agreement, dated as of July 6, 1999, among Prime II
Receivables Corporation, as Transferor, FDS National Bank, as
Servicer, the Class A Purchasers parties thereto and PNC Bank,
National Association, as Agent for the Class A Purchasers and as
Administrative Agent thereunder, acknowledges receipt of five
executed counterparts of a completed Joinder Supplement. [Note:
attach copies of Schedules I and II from such Agreement.] Terms
defined in such Supplement are used herein as therein defined.
Pursuant to such Supplement, you are advised that the
Joinder Effective Date will be _____________, 199_.
Very truly yours,
PNC BANK, NATIONAL
ASSOCIATION,
as Agent
By:_______________________
Name:
Title:
By:_______________________
Name:
Title:
EXHIBIT C
FORM OF TRANSFER SUPPLEMENT
THIS TRANSFER SUPPLEMENT ("Supplement"), dated as of
the date set forth in Item 1 of Schedule I hereto, among the
Transferor Class A Purchaser set forth in Item 2 of Schedule I
hereto (the "Transferor Class A Purchaser"), the Purchasing Class
A Purchaser set forth in Item 3 of Schedule I hereto (the
"Purchasing Class A Purchaser"), and PNC Bank, National
Association, as Agent for the Class A Purchasers under, and as
defined in, the Certificate Purchase Agreement described below
(in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, this Supplement is being executed and
delivered in accordance with subsection 8.1(e) of the Class A
Certificate Purchase Agreement, dated as of July 6, 1999, among
Prime II Receivables Corporation, as Transferor, FDS National
Bank, as Servicer, the Class A Purchasers parties thereto, the
Agent and PNC Bank, National Association, as Administrative Agent
(as from time to time amended, supplemented or otherwise modified
in accordance with the terms thereof, the "Certificate Purchase
Agreement"; unless otherwise defined herein, terms defined in the
Certificate Purchase Agreement are used herein as therein
defined);
WHEREAS, the Purchasing Class A Purchaser (if it is not
already a Class A Purchaser party to the Certificate Purchase
Agreement) wishes to become a Class A Purchaser party to the
Certificate Purchase Agreement and the Purchasing Class A
Purchaser wishes to acquire and assume from the Transferor Class
A Purchaser, certain of the rights, obligations and commitments
under the Certificate Purchase Agreement; and
WHEREAS, the Transferor Class A Purchaser wishes to
sell and assign to the Purchasing Class A Purchaser, certain of
its rights, obligations and commitments under the Certificate
Purchase Agreement.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
(a) Upon receipt by the Agent of five counterparts of
this Supplement, to each of which is attached a fully completed
Schedule I and Schedule II, each of which has been executed by
the Transferor Class A Purchaser, the Purchasing Class A
Purchaser and the Agent, the Agent will transmit to the Servicer,
the Transferor, the Trustee, the Transferor Class A Purchaser and
the Purchasing Class A Purchaser a Transfer Effective Notice,
substantially in the form of Schedule III to this Supplement (a
"Transfer Effective Notice"). Such Transfer Effective Notice
shall be executed by the Agent and shall set forth, inter alia,
the date on which the transfer effected by this Supplement shall
become effective (the "Transfer Effective Date"). Subject to the
prior written consent, if applicable, of the Transferor and the
Servicer to such transfer in the form of Schedule IV to this
Supplement, from and after the Transfer Effective Date the
Purchasing Class A Purchaser shall be a Class A Purchaser party
to the Certificate Purchase Agreement for all purposes thereof as
a Noncommitted Class A Purchaser or Committed Class A Purchaser,
as specified on Schedule II to this Supplement.
(b) At or before 12:00 Noon, local time of the
Transferor Class A Purchaser, on the Transfer Effective Date, the
Purchasing Class A Purchaser shall pay to the Transferor Class A
Purchaser, in immediately available funds, an amount equal to the
purchase price, as agreed between the Transferor Class A
Purchaser and such Purchasing Class A Purchaser (the "Purchase
Price"), of the portion set forth on Schedule II hereto being
purchased by such Purchasing Class A Purchaser of the outstanding
Class A Invested Amount under the Class A Variable Funding
Certificate owned by the Transferor Class A Purchaser (such
Purchasing Class A Purchaser's "Purchase Percentage") and other
amounts owing to the Transferor Class A Purchaser under the
Certificate Purchase Agreement or otherwise in respect of the
Class A Variable Funding Certificates. Effective upon receipt by
the Transferor Class A Purchaser of the Purchase Price from the
Purchasing Class A Purchaser, the Transferor Class A Purchaser
hereby irrevocably sells, assigns and transfers to the Purchasing
Class A Purchaser, without recourse, representation or warranty,
and the Purchasing Class A Purchaser hereby irrevocably
purchases, takes and assumes from the Transferor Class A
Purchaser, the Purchasing Class A Purchaser's Purchase Percentage
of (i) the presently outstanding Class A Invested Amount under
the Class A Variable Funding Certificates owned by the Transferor
Class A Purchaser and other amounts owing to the Transferor Class
A Purchaser in respect of the Class A Variable Funding
Certificates, together with all instruments, documents and
collateral security pertaining thereto, and (ii) the Purchasing
Purchaser's Purchase Percentage of (A) if the Transferor Class A
Purchaser is a Noncommitted Class A Purchaser, the Noncommitted
Purchaser Percentage of the Transferor Class A Purchaser and the
other rights and duties of the Transferor Class A Purchaser under
the Certificate Purchase Agreement, or (B) if the Transferor
Class A Purchaser is a Committed Class A Purchaser, the Committed
Purchaser Percentage and the Commitment of the Transferor Class A
Purchaser and other rights, duties and obligations of the
Transferor Class A Purchaser under the Certificate Purchase
Agreement. This Supplement is intended by the parties hereto to
effect a purchase by the Purchasing Class A Purchaser and sale by
the Transferor Class A Purchaser of interests in the Class A
Variable Funding Certificates, and it is not to be construed as a
loan or a commitment to make a loan by the Purchasing Class A
Purchaser to the Transferor Class A Purchaser. The Transferor
Class A Purchaser hereby confirms that the amount of the Class A
Invested Amount is $ and its Percentage
Interest thereof is ___%, which equals $
as of , 199_. Upon and after the Transfer Effective
Date (until further modified in accordance with the Certificate
Purchase Agreement), the Noncommitted Purchaser Percentage or
Commited Purchaser Percentage, as applicable of the Transferor
Class A Purchaser and the Purchasing Class A Purchaser and the
Commitment, if any, of the Transferor Class A Purchaser and the
Purchasing Class A Purchaser shall be as set forth in Schedule II
to this Supplement.
(c) The Transferor Class A Purchaser has made
arrangements with the Purchasing Class A Purchaser with respect
to (i) the portion, if any, to be paid, and the date or dates for
payment, by the Transferor Class A Purchaser to the Purchasing
Class A Purchaser of any fees heretofore received by the
Transferor Class A Purchaser pursuant to the Certificate Purchase
Agreement prior to the Transfer Effective Date and (ii) the
portion, if any, to be paid, and the date or dates for payment,
by the Purchasing Class A Purchaser to the Transferor Class A
Purchaser of fees or interest received by the Purchasing Class A
Purchaser pursuant to the Certificate Purchase Agreement or
otherwise in respect of the Class A Variable Funding Certificates
from and after the Transfer Effective Date.
(d) (i) All principal payments that would otherwise be
payable from and after the Transfer Effective Date to or for the
account of the Transferor Class A Purchaser in respect of the
Class A Variable Funding Certificates shall, instead, be payable
to or for the account of the Transferor Class A Purchaser and the
Purchasing Class A Purchaser, as the case may be, in accordance
with their respective interests as reflected in this Supplement.
(ii) All interest, fees and other amounts that
would otherwise accrue for the account of the Transferor Class A
Purchaser from and after the Transfer Effective Date pursuant to
the Certificate Purchase Agreement or in respect of the Class A
Variable Funding Certificates shall, instead, accrue for the
account of, and be payable to or for the account of, the
Transferor Class A Purchaser and the Purchasing Class A
Purchaser, as the case may be, in accordance with their
respective interests as reflected in this Supplement. In the
event that any amount of interest, fees or other amounts accruing
prior to the Transfer Effective Date was included in the Purchase
Price paid by the Purchasing Class A Purchaser, the Transferor
Class A Purchaser and the Purchasing Class A Purchaser will make
appropriate arrangements for payment by the Transferor Class A
Purchaser to the Purchasing Class A Purchaser of such amount upon
receipt thereof from the Agent.
(e) Concurrently with the execution and delivery
hereof, the Purchasing Class A Purchaser will deliver to the
Transferor and the Trustee an executed Investment Letter in the
form of Exhibit A to the Certificate Purchase Agreement.
(f) Each of the parties to this Supplement agrees and
acknowledges that (i) at any time and from time to time upon the
written request of any other party, it will execute and deliver
such further documents and do such further acts and things as
such other party may reasonably request in order to effect the
purposes of this Supplement, and (ii) the Agent shall apply each
payment made to it under the Certificate Purchase Agreement,
whether in its individual capacity or as Agent, in accordance
with the provisions of the Certificate Purchase Agreement, as
appropriate.
(g) By executing and delivering this Supplement, the
Transferor Class A Purchaser and the Purchasing Class A Purchaser
confirm to and agree with each other, the Administrative Agent
and the Agent and the Class A Purchasers as follows: (i) other
than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned hereby free and
clear of any adverse claim, the Transferor Class A Purchaser
makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations
made in or in connection with the Certificate Purchase Agreement
or the Pooling and Servicing Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Certificate Purchase Agreement or any other
instrument or document furnished pursuant thereto; (ii) the
Transferor Class A Purchaser makes no representation or warranty
and assumes no responsibility with respect to the Trust, the
financial condition of the Servicer, the Transferor or the
Trustee, or the performance or observance by the Servicer, the
Transferor or the Trustee of any of their respective obligations
under the Certificate Purchase Agreement, the Pooling and
Servicing Agreement or any other instrument or document furnished
pursuant hereto; (iii) each Purchasing Class A Purchaser confirms
that it has received a copy of such documents and information as
it has deemed appropriate to make its own credit analysis and
decision to enter into this Supplement; (iv) each Purchasing
Class A Purchaser will, independently and without reliance upon
the Agent, the Transferor Class A Purchaser or any other Class A
Purchaser and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Certificate
Purchase Agreement or the Pooling and Servicing Agreement; (v)
each Purchasing Class A Purchaser appoints and authorizes the
Agent and the Administrative Agent to take such action as agent
on its behalf and to exercise such powers under the Certificate
Purchase Agreement and the Pooling and Servicing Agreement as are
delegated to the Agent or the Administrative Agent, as the case
may be, by the terms thereof, together with such powers as are
reasonably incidental thereto, all in accordance with Section 7
of the Certificate Purchase Agreement; and (vi) each Purchasing
Class A Purchaser agrees (for the benefit of the Transferor Class
A Purchaser, the Agent, the Administrative Agent, the Class A
Purchasers, the Trustee, the Servicer and the Transferor) that it
will perform in accordance with their terms all of the
obligations which by the terms of the Certificate Purchase
Agreement are required to be performed by it as a Class A
Purchaser.
(h) Schedule II hereto sets forth the revised
Noncommitted Purchaser Percentage or the revised Committed
Purchaser Percentage and Commitment of the Transferor Class A
Purchaser, as applicable, the Noncommitted Purchaser Percentage
or the Committed Purchaser Percentage, Commitment and Commitment
Expiration Date of the Purchasing Class A Purchaser, as
applicable, and the initial Investing Office of the Purchasing
Class A Purchaser, as well as administrative information with
respect to the Purchasing Class A Purchaser.
(i) This Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be executed by their respective duly authorized
officers on Schedule I hereto as of the date set forth in Item 1
of Schedule I hereto.
SCHEDULE I TO
TRANSFER SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR TRANSFER SUPPLEMENT
Re: Class A Certificate Purchase Agreement, dated as
of July 6, 1999, among Prime II Receivables
Corporation, as Transferor, FDS National Bank, as
Servicer, the Class A Purchasers party thereto and PNC
Bank, National Association, as Agent and as
Administrative Agent.
Item 1: Date of Transfer Supplement:
Item 2: Transferor Class A Purchaser:
Item 3: Purchasing Class A Purchaser:
Item 4: Signatures of Parties to Agreement:
as Transferor Class A Purchaser
By:
Name:
Title:
By:
Name:
Title:
as Purchasing Class A Purchaser
By:
Name:
Title:
By:
Name:
Title:
ACCEPTED BY:
PNC BANK, NATIONAL ASSOCIATION, as Agent
By:
Name:
Title:
By:
Name:
Title:
SCHEDULE II TO
TRANSFER SUPPLEMENT
LIST OF INVESTING OFFICES, ADDRESSES
FOR NOTICES, ASSIGNED INTEREST,
PURCHASE PERCENTAGE AND PURCHASE PRICE
[Transferor Class A Purchaser]
A. Noncommitted Class A Purchaser: Yes/No
If applicable:
Noncommitted Purchaser Percentage:
Transferor Class A Purchaser
Noncommitted Purchaser Percentage
Prior to Sale: _____%
Noncommitted Purchaser Percentage Sold: _____%
Noncommitted Purchaser Percentage Retained: _____%
B. Committed Class A Purchaser: Yes/No
If applicable:
Committed Purchaser Percentage:
Transferor Class A Purchaser
Committed Purchaser Percentage
Prior to Sale: _____%
Committed Purchaser Percentage Sold: _____%
Committed Purchaser Percentage Retained: _____%
Commitment:
Transferor Class A Purchaser Commitment
Prior to Sale: $________
Commitment Sold: $________
Commitment Retained: $________
C. Class A Invested Amount:
Transferor Class A Purchaser
Class A Invested Amount Prior to Sale: $________
Class A Invested Amount Sold: $________
Class A Invested Amount Retained: $________
D. Purchase Percentage: _____%
[Purchasing Class A Purchaser]
A. Noncommitted Class A Purchaser: Yes/No
If applicable:
Initial Noncommitted Purchaser Percentage: _____%
B. Committed Class A Purchaser: Yes/No
If applicable:
Committed Purchaser Percentage: _____%
Commitment: $________
Commitment Expiration Date: ____________
C. Class A Invested Amount Owned Immediately
After Sale: $________
Address for Notices:
Investing Office:
SCHEDULE III TO
TRANSFER SUPPLEMENT
Form of
Transfer Effective Notice
To: [Name and address of
Transferor, Servicer, Trustee, the Transferor Class A
Purchaser and the Purchasing Class A Purchaser]
The undersigned, as Agent under the Class A Certificate
Purchase Agreement, dated as of July 6, 1999, among Prime II
Receivables Corporation, as Transferor, FDS National Bank, as
Servicer, the Class A Purchasers parties thereto and PNC Bank,
National Association, as Agent for the Class A Purchasers and as
Administrative Agent thereunder, acknowledges receipt of five
executed counterparts of a completed Transfer Supplement. [Note:
attach copies of Schedules I and II from such Agreement.] Terms
defined in such Supplement are used herein as therein defined.
Pursuant to such Supplement, you are advised that the
Transfer Effective Date will be _____________, 199_.
Very truly yours,
PNC BANK, NATIONAL
ASSOCIATION,
as Agent
By:_______________________
Name:
Title:
By:_______________________
Name:
Title:
SCHEDULE IV TO
TRANSFER SUPPLEMENT
Form of
Consent of Transferor
To: The Chase Manhattan Bank, as Trustee
PNC Bank, National Association, as Agent
The undersigned hereby consents to the transfer, as of the
Transfer Effective Date, of a [Noncommitted Purchaser
Percentage/Committed Purchaser Percentage] equal to ____%
[representing a Commitment in the amount of $__________] and a
Class A Invested Amount under the Prime Credit Card Master Trust
II Class A Variable Funding Certificates, Series 1999-1, in the
amount of $_________, by _______________ to _______________,
pursuant to the Class A Certificate Purchase Agreement, dated as
of July 6, 1999, among Prime II Receivables Corporation, FDS
National Bank, as Servicer, the Class A Purchasers parties
thereto and PNC Bank, National Association, as Agent and as
Administrative Agent.
Very truly yours,
PRIME II RECEIVABLES CORPORATION
By:_______________________
Name:
Title:
FDS NATIONAL BANK,
as Servicer
By:_______________________
Name:
Title:
Dated: _________________
cc: Purchasing Class A Purchaser
EXHIBIT D
PRIME II RECEIVABLES CORPORATION
FORM OF NOTICE OF FINANCING
PNC XXXXXXX
Via Facsimile: XXXXXX
Attn: XXXXXX XXXXXXXXX
To be executed on: 02-Jul-99
Increase/
(Decrease)
Next Business Day 1999-1A 0.00
1999-1B 0.00
_______________________
Ph: (513) 573-2047
Fx: (513) 573-2039
FIRST AMENDMENT TO CLASS A CERTIFICATE PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO CLASS A CERTIFICATE PURCHASE
AGREEMENT (this "Amendment"), dated as of August 3, 1999, is
entered into among by and among PRIME II RECEIVABLES CORPORATION
(the "Transferor"), FDS NATIONAL BANK (the "Servicer"), MARKET
STREET FUNDING CORPORATION (the "Class A Purchasers"), and PNC
BANK, NATIONAL ASSOCIATION (the "Agent").
RECITALS
WHEREAS, the Transferor, the Servicer, the Class A Purchaser
and the Agent are parties to that certain Class A Certificate
Purchase Agreement, dated as of July 6, 1999 (as amended,
supplemented or otherwise modified from time to time, the
"Agreement"); and
WHEREAS, The parties hereto desire to amend the Agreement as
hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
. Certain Defined Terms. Capitalized terms that are
used herein without definition and that are defined in the
Agreement shall have the same meanings herein as therein defined.
. Amendments to Agreement. (a) Clause (a) of the
definition of "Commercial Paper Rate" that appears in Section 1.1
of the Agreement is hereby amended by inserting, after the word
"outstanding" and before the words "such Structured Purchaser,"
the words "on behalf of."
(b) The last sentence of Section 2.1(b) of the Agreement is
hereby amended and restated in its entirety to read as follows:
"It is understood and agreed that (i) except as provided in
the last sentence of Section 2.1(c), each Class A Purchaser
which is a Structured Purchaser, subject to the terms and
conditions of this Agreement, intends to fund its Noncommitted
Purchaser Percentage or Commitment Percentage, as the case may
be, of any and all Class A Investor Principal Balance offered
by the Transferor pursuant to Section 6.15 of the Pooling and
Servicing Agreement through the issuance of commercial paper,
to the extent that it is permitted and able in the ordinary
course of its business to issue commercial paper which is
rated not lower than the respective ratings assigned by
Moody's and Standard & Poor's on the date on which such
Structured Purchaser became a Class A Purchaser (without
increasing or otherwise modifying any letter of credit or
other enhancement provided to such Structured Purchaser or any
liquidity support provided to such Structured Purchaser by
Affected Parties), and (ii) notwithstanding anything else
herein to the contrary, under no circumstances shall the
Transferor or the Servicer be entitled to request such
Structured Purchaser to fund all or any portion of its Class A
Investor Principal Balance in any manner other than through
the issuance of commercial paper."
(c) Section 9.1 of the Agreement is hereby amended by
inserting after the last sentence in the first paragraph of
Section 9.1 the following sentence:
"The Agent shall promptly notify each Rating Agency of any
material amendment, modification, waiver and/or supplement to
this Agreement pursuant to this Section 9.1".
(d) Sections 6.2 and 9.12(b) of the Agreement are hereby
amended by replacing the words "Structured Lender" in each place
they appear in such Sections with the words "Structured
Purchaser."
. Representations and Warranties. Each of the parties
hereto hereby represents and warrants as follows:
(a) Representations and Warranties. The representations and
warranties contained in Section 4 of the Agreement are true
and correct as of the date hereof.
(b) No Default. Both before and immediately after giving
effect to this Amendment and the transactions contemplated
hereby no Termination Event, Series 1999-1 Pay Out Event,
Servicer Default or Trust Payout Event exists or shall exist.
. Effect of Amendment. All provisions of the Agreement, as
expressly amended and modified by this Amendment, shall remain in
full force and effect. After this Amendment becomes effective,
all references in the Agreement (or in any other Related
Document) to "this Agreement", "hereof", "herein" or words of
similar effect referring to the Agreement shall be deemed to be
references to the Agreement as amended by this Amendment. This
Amendment shall not be deemed, either expressly or impliedly, to
waive, amend or supplement any provision of the Agreement other
than as set forth herein.
. Effectiveness. This Amendment shall become effective as
of the date hereof upon receipt by the Agent of counterparts of
this Amendment (whether by facsimile or otherwise) executed by
each of the other parties hereto, in form and substance
satisfactory to the Agent in its sole discretion.
. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties on separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall
constitute but one and the same instrument.
. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of
New York (without regard to any otherwise applicable principles
of conflicts of law).
. Section Headings. The various headings of this Amendment
are included for convenience only and shall not affect the
meaning or interpretation of this Amendment, the Agreement or any
provision hereof or thereof.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first written above.
PRIME II RECEIVABLES CORPORATION,
as Transferor
By: /s/ Susan S. Storer
Name: Susan S. Storer
Title: President
FDS NATIONAL BANK,
as Servicer
By: /s/ Susan R. Robinson
Name: Susan R. Robinson
Title: Treasurer
MARKET STREET FUNDING CORPORATION,
as Class A Purchaser
By: /s/ Douglas K. Johnson
Name: Douglas K. Johnson
Title: President
PNC BANK, NATIONAL ASSOCIATION,
as Agent
By: /s/ John T. Smathers
Name: John T. Smathers
Title: Vice President
EXECUTION COPY
CLASS B CERTIFICATE PURCHASE AGREEMENT
Dated as of July 6, 1999
among
PRIME II RECEIVABLES CORPORATION,
as Transferor,
FDS NATIONAL BANK,
as Servicer,
THE CLASS B PURCHASERS PARTIES HERETO,
and
PNC BANK, NATIONAL ASSOCIATION,
as Agent and Administrative Agent
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
1.1 Definitions 1
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 12
2.1 Purchases 12
2.2 Reductions and Increases of Commitments 15
2.3 Fees, Expenses, Payments, Etc 16
2.4 Requirements of Law 18
2.5 Taxes 20
2.6 Non-recourse 22
2.7 Indemnification 23
2.8 Termination Events 25
2.9 Certain Agreements of the Agent 26
SECTION 3. CONDITIONS PRECEDENT 26
3.1 Condition to Initial Purchase 26
3.2 Condition to Additional Purchase 27
SECTION 4. REPRESENTATIONS AND WARRANTIES 28
4.1 Representations and Warranties of the Transferor 28
4.2 Representations and Warranties of FDSNB 30
4.3 Representations and Warranties of the Agent
and the Class B Purchasers 32
SECTION 5. COVENANTS 32
5.1 Covenants of the Transferor and FDSNB 32
SECTION 6. MUTUAL COVENANTS REGARDING CONFIDENTIALITY 36
6.1 Covenants of Transferor, Etc. 36
6.2 Covenants of Class B Purchasers 36
SECTION 7. THE AGENTS 37
7.1 Appointment 37
7.2 Delegation of Duties 37
7.3 Exculpatory Provisions 37
7.4 Reliance by Agent 38
7.5 Notices 38
7.6 Non-Reliance on Agent and Other Class B
Purchasers 38
7.7 Indemnification 39
7.8 Agents in Their Individual Capacities 39
7.9 Successor Agent 40
SECTION 8. SECURITIES LAWS; TRANSFERS; TAX TREATMENT 41
8.1 Transfers of Class B Certificates 41
8.2 Tax Characterization of the Class B Certificates 45
SECTION 9. MISCELLANEOUS 46
9.1 Amendments and Waivers 46
9.2 Notices 47
9.3 No Waiver; Cumulative Remedies 48
9.4 Successors and Assigns 48
9.5 Successors to Servicer 49
9.6 Counterparts 50
9.7 Severability 50
9.8 Integration 50
9.9 Governing Law 50
9.10 Termination 50
9.11 Action by Servicer 50
9.12 Limited Recourse; No Proceedings 51
9.13 Survival of Representations and Warranties 51
9.14 Submission to Jurisdiction; Waivers 51
9.15 WAIVERS OF JURY TRIAL 52
LIST OF EXHIBITS
EXHIBIT A Form of Investment Letter
EXHIBIT B Form of Joinder Supplement
EXHIBIT C Form of Transfer Supplement
EXHIBIT D Form of Notice of Financing
CLASS B CERTIFICATE PURCHASE AGREEMENT, dated as of
July 6, 1999, by and among PRIME II RECEIVABLES CORPORATION, a
Delaware corporation ("Prime II Receivables Corporation"), as
Transferor (the "Transferor"), FDS NATIONAL BANK, a national
banking association ("FDSNB"), as Servicer (the "Servicer"), the
CLASS B PURCHASERS from time to time parties hereto (the "Class B
Purchasers"), and PNC BANK, NATIONAL ASSOCIATION, as Agent for
the Class B Purchasers (in such capacity, the "Agent") and as
Administrative Agent for the Class B Purchasers and the Class A
Purchasers (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, Prime II Receivables Corporation, as
Transferor, FDSNB, as Servicer, and the Trustee are parties to a
certain Pooling and Servicing Agreement dated as of January 22,
1997 (as the same may from time to time be amended or otherwise
modified, the "Master Pooling and Servicing Agreement"), and a
Series 1999-1 Variable Funding Supplement thereto, dated as of
July 6, 1999 (as the same may from time to time be amended or
otherwise modified, the "Supplement" and, together with the
Master Pooling and Servicing Agreement, the "Pooling and
Servicing Agreement");
WHEREAS, the Trust proposes to issue its Class B
Variable Funding Certificates, Series 1999-1 (the "Class B
Certificates") and its Class A Variable Funding Certificates,
Series 1999-1 (the "Class A Certificates" and, together with the
Class B Certificates, the "Series 1999-1 Variable Funding
Certificates") pursuant to the Pooling and Servicing Agreement;
WHEREAS, the Trust also proposes to issue its Class C
Certificates, Series 1999-1 (the "Class C Certificates" and,
together with the Series 1999-1 Variable Funding Certificates,
the "Series 1999-1 Certificates") pursuant to the Pooling and
Servicing Agreement; and
WHEREAS, the Class B Purchasers are willing to purchase
the Class B Certificates on the Closing Date and from time to
time thereafter to purchase VFC Additional Class B Invested
Amounts thereunder on the terms and conditions provided for
herein;
NOW THEREFORE, in consideration of the mutual covenants
herein contained, and other good and valuable consideration, the
receipt and adequacy of which are hereby expressly acknowledged,
the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Definitions. All capitalized terms used herein as
defined terms and not de fined herein shall have the meanings
given to them in the Pooling and Servicing Agreement. Each
capitalized term defined herein shall relate only to the Series
1999-1 Certificates and to no other Series of Certificates issued
by the Trust.
"Act" has the meaning specified in subsection 2.7(a) of
this Agreement.
"Additional Interest Amount" has the meaning assigned
to such term in Section 2.3(g).
"Adjusted Eurodollar Rate" shall mean, for any Fixed
Period (or any shorter period of time agreed to by the Agent and
the Transferor), an interest rate per annum (rounded upward to
the nearest 1/16th of 1%) determined pursuant to the following
formula:
LIBOR
100% - Eurodollar Rate Reserve Percentage
where "Eurodollar Rate Reserve Percentage" means, for any Fixed
Period (or any shorter period of time agreed to by the Agent and
the Transferor), the reserve percentage (expressed as a decimal,
rounded upward to the nearest 1/100th of 1%) applicable during
such Fixed Period or such shorter period (or, if more than one
such percentage shall be so applicable, the daily average of such
percentages for those days in such Fixed Period or such shorter
period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve
requirement) with respect to "Eurocurrency" funding (currently
referred to as "Eurocurrency liabilities") having a term
comparable to such Fixed Period or such shorter period.
"Administrative Agent" has the meaning specified in the
preamble to this Agreement.
"Affected Party" shall mean, (i) the Agent, (ii) the
Administrative Agent, and (iii) with respect to any Structured
Purchaser, any Support Bank of such Structured Purchaser.
"Agent" shall mean PNC, in its capacity as Agent for
the Class B Purchasers, or any successor agent hereunder.
"Agent Base Rate" shall mean, for any day, a
fluctuating interest rate per annum as shall be in effect from
time to time, which rate shall be at all times equal to the
higher of:
(a) the rate of interest in effect for such day as
publicly announced from time to time by PNC in Pittsburgh,
Pennsylvania as its "prime rate." Such "prime rate" is set
by PNC based upon various factors, including PNC's costs and
desired return, general economic conditions and other
factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced
rate, and
(b) 0.50% per annum above the latest Federal Funds
Rate.
"Agreement" shall mean this Class B Certificate
Purchase Agreement, as amended, modified or otherwise
supplemented from time to time.
"Alternate Rate" shall mean, for any Fixed Period (or,
with respect to the Adjusted Eurodollar Rate, a shorter period of
time agreed to by the Agent and the Transferor) with respect to
the portion of the Class B Investor Principal Balance owed to a
Class B Purchaser, an interest rate per annum equal to, at the
Transferor's option: (a) the Applicable Margin, plus the Adjusted
Eurodollar Rate for such Fixed Period or such shorter period, or
(b) the Agent Base Rate for such Fixed Period; provided, however,
that in the case of:
(i) any Fixed Period (or, with respect to the Adjusted
Eurodollar Rate, any such shorter period) on or prior to the
date on which such Class A Purchaser shall have notified the
Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful,
or any central bank or other Governmental Authority asserts
that it is unlawful for such Class B Purchaser (or, in the
case of a Structured Purchaser, for any entity providing
funds to such Structured Purchaser at an interest rate
determined by reference to the Adjusted Eurodollar Rate or a
similar rate) to fund such portion of the Class B Investor
Principal Balance at the Alternate Rate described above (and
such Class A Purchaser shall not have subsequently notified
the Agent that such circumstances no longer exist),
(ii) any Fixed Period of less than 30 days; provided,
that the Agent and the Transferor may agree that the
Adjusted Eurodollar Rate may apply to a period of less than
30 days,
(iii) any Fixed Period as to which: (A) the Agent does
not receive notice before 4:00 p.m. (Pittsburgh,
Pennsylvania time) on: (1) the Business Day immediately
preceding the first day of such Fixed Period that the
Transferor desires the related portion of the Class B
Investor Principal Balance to be funded at the Commercial
Paper Rate, or (2) the third Business Day preceding the
first day of such Fixed Period, or the second Business Day
preceding the last day of any shorter period agreed to by
the Agent and the Transferor, in either case, that the
Transferor desires that the related portion of the Class B
Investor Principal Balance to be funded at the Alternate
Rate and based on the Adjusted Eurodollar Rate, or (B) the
Agent shall have notified the Transferor that funding the
related portion of the Class B Investor Principal Balance at
the Commercial Paper Rate for any period of time is (in the
Agent's sole discretion) economically inadvisable to the
related Class B Purchaser, the Agent or the Transferor, or
such Class B Purchaser is not permitted to issue commercial
paper notes for any period of time to fund the Class B
Investor Principal Balance hereunder, or
(iv) any Fixed Period relating to a Class B Investor
Principal Balance that is less than $5,000,000,
the "Alternate Rate" for each such Fixed Period shall be an
interest rate per annum equal to the Agent Base Rate in effect on
each day of such Fixed Period.
"Applicable Margin" means, with respect to any purchase
for which Yield is calculated based on the Adjusted Eurodollar
Rate and the applicable Class B Purchaser is (a) Market Street
Capital Corp., 0.0%, or (b) any other Class B Purchaser, 0.75%.
"Assignee" and "Assignment" have the respective
meanings specified in subsection 8.1(e) of this Agreement.
"Business Day" means any day on which (i) banks are not
authorized or required to close in New York City or Pittsburgh,
Pennsylvania, and (ii) if such term is used in connection with
the Adjusted Eurodollar Rate, dealings are carried out in the
London interbank market.
"Class A Certificates" has the meaning specified in the
recitals to this Agreement.
"Class B Certificates" has the meaning specified in the
recitals to this Agreement.
"Class B Fee Letter" shall mean that certain letter
agreement, designated therein as the Series 1999-1 Class B Fee
Letter and dated as of the date hereof, among the Agent, the
Transferor and the Servicer, as such letter agreement may be
amended or otherwise modified from time to time.
"Class B Investor Principal Balance" shall mean, when
used with respect to any Business Day, an aggregate amount equal
to (a) the Class B Initial Invested Amount, plus (b) the
aggregate VFC Additional Class B Invested Amounts purchased by
the Class A Certificateholders through the end of the preceding
Business Day pursuant to Section 6.15 of the Pooling and
Servicing Agreement, minus (c) the aggregate amount of principal
payments made to the Class A Certificateholders prior to such
Business Day.
"Class B Owners" shall mean, with respect to any Class
B Certificate held by the Agent hereunder for the benefit of
Class B Purchasers, the owners of the Class B Invested Amount
represented by such Class B Certificate as reflected on the books
of the Class A Agent in accordance with this Agreement.
"Class B Program Fee" shall mean the ongoing fees
payable to the Agent or the Class B Purchasers in the amounts and
on the dates set forth in the Class B Fee Letter.
"Class B Purchasers" has the meaning specified in the
preamble to this Agreement.
"Class B Repayment Amount" shall mean the sum of all
amounts payable with respect to the principal amount of the Class
B Certificates and interest on the Class B Certificates and all
other amounts (other than amounts payable pursuant to subsection
2.3(b) or (c), the last sentence of subsection 2.6(a) and Section
2.7 hereof unless such amounts are not paid by the Servicer
pursuant to this Agreement) owing to the Class B Purchasers
hereunder.
"Class C Certificates" has the meaning specified in the
recitals to this Agreement.
"Closing Date" shall mean July 6, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commercial Paper Rate" shall mean, for any Fixed
Period for any portion of the Class B Investor Principal Balance,
to the extent a Structured Purchaser funds such portion for such
Fixed Period by issuing commercial paper notes, a rate calculated
by the Agent equal to: (a) the rate (or if more than one rate,
the weighted average of the rates) at which commercial paper
notes of such Structured Purchaser on each day during such Fixed
Period have been outstanding such Structured Purchaser; provided,
that if such rate(s) is a discount rate(s), then the Commercial
Paper Rate shall be the rate (or if more than one rate, the
weighted average of the rates) resulting from converting such
discount rate(s) to an interest-bearing equivalent rate, plus (b)
the commissions and charges charged by such placement agent or
commercial paper dealer with respect to such commercial paper
notes, expressed as a percentage of the face amount of such
commercial paper notes and converted to an interest-bearing
equivalent rate per annum.
"Committed Class B Purchaser" shall mean any Class B
Purchaser which has a Commitment, as set forth in its respective
Joinder Supplement and any Assignee of such Class B Purchaser to
the extent of the portion of such Commitment assumed by such
Assignee pursuant to its respective Transfer Supplement.
"Commitment" shall mean, for any Committed Class B
Purchaser, the maximum amount of such Committed Class B
Purchaser's commitment to purchase a portion the Class B Invested
Amount, as set forth in the Joinder Supplement or the Transfer
Supplement by which such Committed Class B Purchaser became a
party to this Agreement or assumed the Commitment (or a portion
thereof) of another Committed Class B Purchaser, as such amount
may be adjusted from time to time pursuant to Transfer
Supplement(s) executed by such Committed Class B Purchaser and
its Assignee and delivered pursuant to Section 8.1 of this
Agreement or pursuant to Section 2.2 of this Agreement.
"Commitment Expiration Date" shall mean, for each
Committed Class B Purchaser, the earlier to occur of (i) the date
set forth in the Joinder Supplement or the Transfer Supplement by
which such Committed Class B Purchaser became a party to this
Agreement or assumed the Commitment (or a portion thereof) of
another Committed Class B Purchaser, as such date may be extended
from time to time by mutual agreement of all Class B Purchasers,
the Agent and the Transferor, and (ii) the date that the
commitment of any Support Bank to such Committed Class B
Purchaser terminates under any liquidity agreement or credit
agreement which relates to this Agreement.
"Commitment Percentage" shall mean, for a Committed
Class B Purchaser, such Class B Purchaser's Commitment as a
percentage of the aggregate Commitments of all Committed Class B
Purchasers.
"Defaulting Purchaser" has the meaning specified in
subsection 2.1(e) of this Agreement.
"Downgraded Purchaser" has the meaning specified in
subsection 8.1(k).
"Eligible Assignee" shall mean PNC and each other
Person listed in a letter from the Agent to the Transferor dated
the Closing Date, as such list may be augmented from time to time
with the consent of the Agent and the Transferor.
"Excluded Taxes" has the meaning specified in
subsection 2.5(a) of this Agreement.
"FDSNB" has the meaning specified in the preamble to
this Agreement.
"Federal Funds Rate" means, for any day, the per annum
rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, "H.15(519)") for
such day opposite the caption "Federal Funds (Effective)." If on
any relevant day such rate is not yet published in H.15(519), the
rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds
Effective Rate." If on any relevant day the appropriate rate is
not yet published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in
overnight Federal funds arranged before 9:00 a.m. (New York time)
on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System, or any entity succeeding to any of
its principal functions.
"Fixed Period" shall mean, with respect to a Class B
Purchaser and any portion of the Class B Investor Principal
Balance owed to such Class B Purchaser, a period from and
including a Distribution Date to, but excluding, the next
succeeding Distribution Date; provided that (i) the first Fixed
Period shall commence on the Closing Date and end on the first
Distribution Date, (ii) in the case of any Fixed Period for any
portion of the Class B Principal Balance which commences before
the Termination Date and would otherwise end on a date occurring
after the Termination Date, such Fixed Period shall end on the
Termination Date and the duration of each Fixed Period which
commences on or after the Termination Date shall be of such
duration as shall be selected by the Agent, and (iii) upon the
occurrence, and during the continuance, of an event described in
clause (iii)(B) of the definition of Alternate Rate, the Agent
may, upon notice to the Transferor, terminate any Fixed Period
then in effect if Yield for such Fixed Period is calculated on
the basis of the Commercial Paper Rate. Any portion of the Class
B Investor Principal Balance allocated to any such terminated
Fixed Period shall (i) initially be reallocated to a Fixed Period
beginning on such date of termination and ending on (but
excluding) the third Business Day immediately succeeding such
date of termination and the Yield during such Fixed Period shall
be calculated based on the Alternate Rate as set forth in the
definition thereof, and (ii) then be reallocated to a Fixed
Period beginning on such third Business Day and ending on (but
excluding) the immediately succeeding Distribution Date and the
Yield during such Fixed Period shall be calculated based on the
Alternate Rate as set forth in the definition thereof.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof and
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Indemnitee" has the meaning specified in subsection
2.7(a) of this Agreement.
"Indemnifying Party" has the meaning specified in
subsection 2.7(b) of this Agreement.
"Investing Office" shall mean, with respect to any
Affected Party, any office of such Affected Party which is a
beneficial holder of a portion of the Class B Certificates.
"Investment Letter" has the meaning specified in
subsection 8.1(a) of this Agreement.
"Joinder Supplement" has the meaning specified in
subsection 2.2(d) of this Agreement.
"LIBOR" shall mean, with respect to any Fixed Period
(or any shorter period agreed to by the Agent and the Transferor)
for any Class B Investor Amount to be funded at the Adjusted
Eurodollar Rate, the rate of interest per annum determined by the
Agent to be the arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum notified to the
Agent by the Reference Bank as the rate of interest at which
dollar deposits in the approximate amount of such Class B
Investor Principal Amount to be funded at the Adjusted Eurodollar
Rate during such Fixed Period or such shorter period would be
offered by major banks in the London interbank market to the
Reference Bank at its request at or about 11:00 a.m. (London
time) on the second Business Day before the commencement of such
Fixed Period or such shorter period.
"Liquidation Day" shall mean, for any Class B Purchaser
and any portion of the Class B Investor Principal Balance owed to
such Purchaser (a) any day other than a Distribution Date or a
Business Day on which a decrease in the Class B Investor
Principal occurs pursuant to, and in accordance with, Section
2.3(h), on which a reduction of such portion of the Class B
Investor Principal Balance occurs, (b) any Purchase Date on which
the conditions set forth in Sections 3.2 of the Agreement are not
satisfied, and (c) any day on which the Agent reallocates any
portion of the Class B Investor Principal Balance as the result
of the termination of a Fixed Period pursuant to clause (iii)(B)
of the definition thereof.
.
"Liquidation Fee" shall mean, for any Class B Purchaser
and for any Liquidation Day, the amount, if any, by which (i)
the additional Yield (calculated without taking into account any
Liquidation Fee) which would have accrued during the current
Fixed Period or, with respect to the Adjusted Eurodollar Rate,
any shorter period agreed to by the Agent and the Transferor
(without giving effect to any termination of such Fixed Period or
such shorter period) on the portion of the Class B Investor
Principal Balance owed to such Class B Purchaser, exceeds (ii)
the income, if any, received by such Class B Purchaser from
investing the proceeds of such reduction of the Class B Investor
Principal Balance.
"Master Pooling and Servicing Agreement" has the
meaning specified in the recitals to this Agreement.
"Moody's" shall mean Moody's Investors Service, Inc.
"Noncommitted Class B Purchaser" shall mean a Class B
Purchaser which is not a Committed Class B Purchaser.
"Noncommitted Purchaser Percentage" shall mean for each
Class B Purchaser which is not a Committed Class B Purchaser, the
percentage set forth in its Joinder Supplement or the Transfer
Supplement by which such Class B Purchaser became a party to this
Agreement, as such percentage may be adjusted from time to time
pursuant to Transfer Supplement(s) executed by such Class B
Purchaser and any Assignee and delivered pursuant to Section 8.1
of this Agreement.
"Nondefaulting Purchaser" has the meaning specified in
subsection 2.1(e) of this Agreement.
"Participant" has the meaning specified in subsection
8.1(d) of this Agreement.
"Participation" has the meaning specified in subsection
8.1(d) of the Agreement.
"Percentage Interest" shall mean, for a Class B
Purchaser, (a) the sum of (i) the portion of the Class B Initial
Invested Amount (if any) purchased by such Class B Purchaser,
plus (ii) the aggregate VFC Additional Class B Invested Amounts
(if any) purchased by such Class A Purchaser through the end of
the preceding Business Day pursuant to Section 6.15 of the
Pooling and Servicing Agreement, plus (iii) any portion of the
Class B Investor Principal Balance acquired by such Class B
Purchaser as an Assignee from another Class B Purchaser pursuant
to a Transfer Supplement executed and delivered pursuant to
Section 8.1 of this Agreement, minus (iv) the aggregate amount of
principal payments made to such Class A Purchaser prior to such
Business Day, minus (v) any portion of the Class B Investor
Principal Balance assigned by such Class B Purchaser to an
Assignee pursuant to a Transfer Supplement executed and delivered
pursuant to Section 8.1 of this Agreement, as a percentage of (b)
the aggregate Class B Investor Principal Balance.
"PNC" shall mean PNC Bank, National Association.
"Pooling and Servicing Agreement" has the meaning
specified in the recitals to this Agreement.
"Prime II Receivables Corporation" has the meaning
specified in the preamble to this Agreement.
"Purchase Date" shall mean the Closing Date and each
date on which a purchase of a VFC Additional Class B Invested
Amount is to occur in accordance with Section 6.15 of the Pooling
and Servicing Agreement and Section 2.1 hereof.
"Purchase Request" shall have the meaning assigned to
such term in Section 2.1(c).
"Rating Agency" shall mean each of Moody's and Standard
& Poor's.
"Reference Bank" means PNC.
"Reduction Amount" has the meaning specified in
subsection 2.6(a) of this Agreement.
"Regulatory Change" shall mean (i) as to each Class B
Purchaser, any change occurring after the date of the execution
and delivery of the Joinder Supplement or the Transfer Supplement
by which it became party to this Agreement, or, in the case of a
Participant, the date on which its Participation became
effective, or (ii) as to any Affected Party, the date it became
such an Affected Party, in any (or the adoption after such date
of any new):
(i) United States Federal or state law or foreign law
applicable to such Class B Purchaser, Affected Party or
Participant; or
(ii) regulation, interpretation, directive, guideline
or request (whether or not having the force of law)
applicable to such Class B Purchaser, Affected Party or
Participant of any court or other judicial authority or any
Governmental Authority charged with the interpretation or
administration of any law referred to in clause (i) or of
any fiscal, monetary or other authority or central bank
having jurisdiction over such Class B Purchaser, Affected
Party or Participant.
"Related Documents" shall mean, collectively, this
Agreement (including the Class B Fee Letter and all Joinder
Supplements and Transfer Supplements), the Master Pooling and
Servicing Agreement, the Supplement, the Series 1999-1
Certificates, and the Receivables Purchase Agreement.
"Replacement Purchaser" has the meaning specified in
subsection 2.4(c) of this Agreement.
"Required Class B Owners" shall mean, at any time,
Class B Purchasers having Percentage Interests aggregating at
least 50.1%.
"Required Class B Purchasers" shall mean, at any time,
Committed Class B Purchasers having Commitments aggregating at
least 50.1% of the aggregate Commitments of all Committed Class B
Purchasers.
"Requirement of Law" shall mean, as to any Person, any
law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to
or binding upon such Person or to which such Person is subject,
whether federal, state or local (including, without limitation,
usury laws, the Federal Truth in Lending Act and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve
System).
"Reserve Account Increase Notice" shall mean a notice
delivered by the Administrative Agent in accordance with Section
2.8 hereof.
"Series 1999-1 Certificates" has the meaning specified
in the recitals to this Agreement.
"Series 1999-1 Variable Funding Certificates" has the
meaning specified in the recitals to this Agreement.
"Servicer" has the meaning specified in the preamble to
this Agreement.
"Standard & Poor's" shall mean Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc.
"Structured Purchaser" shall mean (i) Market Street
Capital Corp., and (ii) any Class B Purchaser whose principal
business consists of issuing commercial paper, medium term notes
or other securities to fund its acquisition and maintenance of
receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets or interests therein and
which is required by any nationally recognized rating agency
which is rating such securities to obtain from its principal
debtors an agreement such as that set forth in subsection 9.12(b)
of this Agreement in order to maintain such rating.
"Supplement" has the meaning specified in the recitals
to this Agreement.
"Support Bank" shall mean any Person extending or
having a commitment to extend funds to or for the account of any
Structured Purchaser, including by agreement to (i) purchase an
assignment of, or participation in Class B Certificates under a
liquidity or credit support agreement which relates to this
Agreement, (ii) provide one or more letters of credit for the
account of such Structured Purchaser, and (iii) issue one or more
surety bonds under which such Structured Purchaser is obligated
to repay such Person for any drawings thereunder.
"Taxes" has the meaning specified in subsection 2.5(a)
of this Agreement.
"Termination Date" shall mean the Amortization Period
Commencement Date.
"Termination Event" has the meaning specified in
Section 2.8 hereof.
"Transfer" has the meaning specified in subsection
8.1(c) of this Agreement.
"Transfer Supplement" has the meaning specified in
subsection 8.1(e) of this Agreement.
"Transferor" has the meaning specified in the preamble
to this Agreement.
"Trust" shall mean the Prime Credit Card Master Trust
II.
"Trustee" shall mean The Chase Manhattan Bank, a
banking corporation organized and existing under the laws of the
State of New York, in its capacity as Trustee under the Pooling
and Servicing Agreement, together with its successors in such
capacity.
"written" or "in writing" (and other variations
thereof) shall mean any form of written communication or a
communication by means of telex, telecopier device, telegraph or
cable.
"Yield" shall mean, for any Business Day the aggregate
of the following amounts:
(i) for each portion of the Class B Investor
Principal Balance owed to a Structured Purchaser to the
extent that such Structured Purchaser has funded such
portion through the issuance of commercial paper notes on
the immediately preceding Business Day,
PB x CPR x ED + LF + AI
360
and
(ii) for each remaining portion of the Class B
Investor Principal Balance,
PB x AR x ED + LF + AI
TD
where:
PB = the relevant portion of the Class B
Investor Principal Balance
CPR = the Commercial Paper Rate then
applicable to the relevant portion of the Class B
Investor Principal Balance
AR = the Alternate Rate then applicable
to the relevant portion of the Class B Investor
Principal Balance
ED = the number of days elapsed since
the immediately preceding Business Day
TD = 360 if AR is the Adjusted
Eurodollar Rate, or 365 or 366, as applicable, if
AR is the Agent Base Rate
LF = the Liquidation Fee, if any, for
such Business Day
AI = the Additional Interest Amount, if
any, for such Business Day.
If during any Fixed Period any portion of the Class B
Invested Principal Balance is funded through the issuance of
commercial paper notes, the Servicer shall make daily allocations
of Class B Interest based on the Commercial Paper Rate applicable
to the immediately preceding Fixed Period (or, in the event that
no portion of the Class B Investor Principal Balance accrued
Yield at the Commercial Paper Rate during such immediately
preceding Fixed Period, the Agent will on the first day of the
related Fixed Period provide the Servicer an estimate of the
Commercial Paper Rate applicable to such portion of the Class B
Investor Principal Balance and such Fixed Period). It is
understood and agreed that (i) the Commercial Paper Rate
described in the immediately preceding sentence will be used
solely for purposes of making daily allocations of Class B
Interest under the Supplement, and (ii) any resulting differences
between such estimated daily allocations and the actual Yield for
such Fixed Period shall be reconciled as set forth in the
definitions of Class B Carrying Costs.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Purchases. (a) On and subject to the terms and
conditions of this Agreement, each Noncommitted Class B Purchaser
which is a party hereto on the Closing Date, severally, agrees to
acquire its Noncommitted Purchaser Percentage of the Class B
Certificates on the Closing Date for a purchase price equal to
its Noncommitted Purchaser Percentage of the Initial Class B
Invested Amount, which shall not be less than $500,000, and each
Committed Class B Purchaser which is a party hereto on the
Closing Date, severally, agrees to acquire its Commitment
Percentage of the Class B Certificates not so acquired by
Noncommitted Class B Purchasers on the Closing Date for a
purchase price equal to the portion of the Initial Class B
Invested Amount represented thereby on the Closing Date. Such
purchase price shall be made available to the Transferor on the
Closing Date, subject to the satisfaction of the conditions
specified in Section 3 hereof, by wire transfer at or prior to
2:00 p.m. Pittsburgh, Pennsylvania time on the Closing Date at an
account of the Transferor specified in writing by the Transferor
to the Agent in funds immediately available to the Transferor;
provided, that, in any event, the Agent shall notify the
Transferor at or prior to 1:00 p.m. Pittsburgh, Pennsylvania
time, if such wire transfer will not be initiated at or prior to
2:00 p.m. Pittsburgh, Pennsylvania time on the Closing Date. The
Class B Purchasers hereby direct that the Class B Certificates be
registered in the name of the Agent, on behalf of the Class B
Owners from time to time hereunder.
(b) On and subject to the terms and conditions of this
Agreement and prior to the Termination Date, (i) each
Noncommitted Class B Purchaser may purchase its Noncommitted
Purchaser Percentage of any VFC Additional Class B Invested
Amount offered for purchase by the Transferor pursuant to Section
6.15 of the Pooling and Servicing Agreement in an amount of not
less than $500,000, and (ii) each Committed Class B Purchaser,
severally, agrees to purchase a portion of such VFC Additional
Class B Invested Amount which is not purchased by Noncommitted
Class B Purchasers pursuant to clause (i) in an amount equal to
the lesser of (A) its Commitment Percentage thereof, or (B) the
excess of its Commitment over its Percentage Interest of the
Class B Investor Principal Balance (determined prior to giving
effect to such purchase), in either case for a purchase price
equal to the VFC Additional Class B Invested Amount so purchased.
Such purchase price shall be made available to the Trustee in
immediately available funds, by wire transfer at or prior to 2:00
p.m. Pittsburgh, Pennsylvania time on the applicable Purchase
Date for the account of the Transferor, subject to the
satisfaction of the conditions specified in Section 3 hereof, on
the applicable Purchase Date specified pursuant to subsection
2.1(c), for deposit in the Proceeds Account held by the Trustee
pursuant to the Supplement; provided, that, in any event, the
Agent shall notify the Transferor at or prior to 1:00 p.m.
Pittsburgh, Pennsylvania time, if such wire transfer will not be
initiated at or prior to 2:00 p.m. Pittsburgh, Pennsylvania time
on such Purchase Date. Each Noncommitted Class B Purchaser which
is a Structured Purchaser confirms by becoming a party to this
Agreement that, subject to the terms and conditions of this
Agreement, it currently intends to purchase its Noncommitted
Purchaser Percentage of any VFC Additional Class B Invested
Amount offered for purchase by the Transferor pursuant to Section
6.15 of the Pooling and Servicing Agreement to the extent that,
at the time of such purchase, it is permitted and able in the
ordinary course of its business to issue commercial paper which
is rated not lower than the respective ratings assigned by
Moody's and Standard & Poor's on the date on which such
Structured Purchaser became a Class B Purchaser (without
increasing or otherwise modifying any letter of credit or other
enhancement provided to such Structured Purchaser or any
liquidity support provided to such Structured Purchaser by
Affected Parties) in sufficient amounts fully to fund such
purchase.
(c) The purchase of the Initial Class B Invested
Amount and each purchase of any VFC Additional Class B Invested
Amount shall be made on prior written notice in the form of
Exhibit D (a "Purchase Request") from the Transferor to the Agent
received by the Agent not later than 4:00 p.m. Pittsburgh,
Pennsylvania time (i) in the case of a purchase to be funded at
the Alternate Rate based upon the Adjusted Eurodollar Rate, on
the third Business Day immediately preceding the applicable
Purchase Date (or, in the case of the initial purchase, the
Closing Date), (ii) in the case of a purchase to be funded at the
Commercial Paper Rate on the Business Day immediately preceding
the applicable Purchase Date (or, in the case of the initial
purchase, the Closing Date), or (iii) in the case of a purchase
to be funded at the Alternate Base Rate based upon the Agent Base
Rate, on the Business Day (or, in the event that Market Street
Capital Corporation is the applicable Class B Purchaser, the
second Business Day) immediately preceding the applicable
Purchase Date (or, in the case of the initial purchase, the
Closing Date). Each such Purchase Request shall be irrevocable
and shall specify (i) the aggregate Initial Class B Invested
Amount or VFC Additional Class B Invested Amount, as the case may
be, to be purchased and (ii) the applicable Purchase Date (which
shall be a Business Day). The Agent shall promptly forward a
copy of such Purchase Request to each Class B Purchaser. In the
case of the purchase of a VFC Additional Class B Invested Amount,
each Noncommitted Class B Purchaser shall notify the Agent by
10:45 a.m., Pittsburgh, Pennsylvania time, on the applicable
Purchase Date whether it has determined to make such purchase
and, if so, whether all of the terms specified by the Transferor
are acceptable to such Noncommitted Class B Purchaser. In the
event that a Noncommitted Class B Purchaser shall not have timely
provided such notice, it shall be deemed to have determined not
to make such purchase. The Agent shall notify the Transferor and
each Committed Class B Purchaser on or prior to 11:00 a.m.,
Pittsburgh, Pennsylvania time, on the applicable Purchase Date of
whether each Noncommitted Class B Purchaser has so determined to
purchase its share of such VFC Additional Class B Invested Amount
and, in the event that Noncommitted Class B Purchasers have not
determined to purchase the entire VFC Additional Class B Invested
Amount, the Agent shall specify in such notice (i) the portion of
the VFC Additional Class B Invested Amount to be purchased by
each Committed Class B Purchaser, (ii) the applicable Purchase
Date (which shall be a Business Day). Notwithstanding anything
else herein to the contrary, if the Transferor has requested that
the purchase be funded at the Commercial Paper Rate, the Agent
shall notify the Transferor no later than 12:00 (noon)
Pittsburgh, Pennsylvania time on the applicable Purchase Date,
whether the Agent has exercised its discretion not to fund such
purchase with the issuance of commercial paper notes as described
in clause (iii)(B) of the definition of Commercial Paper Rate, in
which case the Transferor shall be deemed to have requested that
the purchase be funded at the Alternate Base Rate and be based
upon the Agent Base Rate.
(d) In no event may the Transferor offer any VFC
Additional Class B Invested Amount for purchase hereunder or
under Section 6.15 of the Pooling and Servicing Agreement, nor
shall any Committed Class B Purchaser be obligated to purchase
any VFC Additional Class B Invested Amount, to the extent that
such VFC Additional Class B Invested Amount, when aggregated with
the Class B Investor Principal Balance determined prior to giving
effect to the issuance thereof, would exceed the aggregate
Commitments.
(e) In the event that one or more Committed Class B
Purchasers (the "Defaulting Purchasers") fails to fund its
Committed Percentage of any purchase of a VFC Additional Class B
Invested Amount by 1:00 p.m., Pittsburgh, Pennsylvania time, on
the applicable Purchase Date and the Servicer shall have notified
the Agent of such failure by not later than 1:30 p.m.,
Pittsburgh, Pennsylvania time, on such Purchase Date, the Agent
shall so notify each of the other Committed Class B Purchasers
(the "Nondefaulting Purchasers") not later than 2:30 p.m.,
Pittsburgh, Pennsylvania time, on such Purchase Date, and each
Nondefaulting Purchaser shall, subject to the satisfaction of the
conditions specified in Section 3 hereof, purchase a portion of
the aggregate VFC Additional Class B Invested Amount which was to
be purchased by the Defaulting Purchasers equal to the lesser of
(i) its Commitment Percentage thereof as a percentage of the
aggregate Commitment Percentages of all Nondefaulting Purchasers,
and (ii) the excess of its Commitment over its Percentage
Interest of the Class B Investor Principal Balance (determined
prior to giving effect to such purchase), in either case for a
purchase price equal to the VFC Additional Class B Invested
Amount so purchased, by making such purchase price available to
the Trustee for the account of the Transferor on such Purchase
Date for deposit in the Proceeds Account in immediately available
funds. No such purchase by Nondefaulting Purchasers shall
relieve any Defaulting Purchaser of its obligations to make
purchases hereunder, and each Defaulting Purchaser shall from and
after the applicable Purchase Date be obligated to purchase the
portion of any VFC Additional Class B Invested Amount which such
Defaulting Purchaser was required to purchase hereunder and which
was purchased by a Nondefaulting Purchaser from such
Nondefaulting Purchaser at a purchase price equal to (i) the
portion of the Class B Investor Principal Balance represented
thereby, plus (ii) accrued and unpaid interest thereon at the
applicable Class B Certificate Rate, plus (iii) an amount
calculated at the rate of 1.0% per annum from the applicable
Purchase Date for such VFC Additional Class B Invested Amount
through the date of such purchase by the Defaulting Purchaser.
The Transferor shall have the right to replace any Defaulting
Purchaser hereunder with a Replacement Purchaser, and the Agent,
acting at the request of the Required Class B Purchasers, shall
have the right to replace such Defaulting Purchaser with a
Replacement Purchaser which is an Eligible Assignee or is
otherwise reasonably acceptable to the Transferor; provided, that
(x) such replacement shall not affect the Defaulting Purchaser's
right to receive any amounts otherwise owed to it hereunder, when
and as the same would have been due and payable without regard to
such replacement (subject to the rights of the other parties
hereto with respect to such Defaulting Purchaser), and (y) such
Replacement Purchaser shall, concurrently with its becoming a
Committed Class B Purchaser hereunder, purchase the portion of
any VFC Additional Class B Invested Amount at the time required
to be purchased by the Defaulting Purchaser pursuant to the
preceding sentence for a purchase price equal to (i) the portion
of the Class B Investor Principal Balance represented thereby,
plus (ii) accrued and unpaid interest thereon at the applicable
Class B Certificate Rate; provided further, that upon any such
replacement and purchase by a Replacement Purchaser, any amounts
owing to Nondefaulting Purchasers by such Defaulting Purchaser
under clause (iii) of the preceding sentence shall remain an
obligation of such Defaulting Purchaser.
(f) The Class B Certificates shall be paid as provided
in the Pooling and Servicing Agreement. The Agent shall allocate
each payment in reduction of the Class B Investor Principal
Balance to the Class B Owners pro rata based on their respective
Percentage Interests, and shall allocate each payment of Class B
Interest for any Business Day to the Class B Owners pro rata
based on the Yield on such Class B Owner's portion of the Class B
Investor Principal Balance for such Business Day. Amounts so
allocated by the Agent shall be distributed by the Agent to the
respective Class B Owners when and as received by the Agent from
the Trust.
2.2 Reductions and Increases of Commitments. (a) At
any time the Transferor may, upon at least five Business Days'
prior written notice to the Agent, terminate in whole or reduce
in part the portion of the Commitments which exceed the then
outstanding Class B Investor Principal Balance (after adjustments
thereto occurring on the date of such termination or reduction).
Each such partial reduction shall be in an aggregate amount of
$10,000,000 or integral multiples thereof. On the Termination
Date, the aggregate Commitments shall automatically reduce to an
amount equal to the Class B Investor Principal Balance on such
day, and on each Business Day thereafter shall be further reduced
by an amount equal to the reduction in the Class B Investor
Principal Balance (if any) on such day. Reductions of the
aggregate Commitments pursuant to this subsection 2.2(a) shall be
allocated to the pro rata to the Commitments of each Committed
Class A Purchaser based on its respective Commitment Percentage.
(b) The Transferor may, upon at least two Business
Days' prior written notice to the Agent, terminate in whole or
reduce in part the Commitment of any Defaulting Purchaser or
Downgraded Purchaser to an amount not less than such Class B
Purchaser's Percentage Interest of the Class B Investor Principal
Balance. Each such partial reduction shall be in an aggregate
amount of 1,000,000 or integral multiples thereof. No such
termination of reduction shall relieve such Defaulting Purchaser
of its obligations to Nondefaulting Purchasers pursuant to
subsection 2.1(e) hereof.
(c) The aggregate Commitments of the Committed Class B
Purchasers may be increased from time to time through the
increase of the Commitment of one or more Committed Class B
Purchasers; provided, however, that no such increase shall have
become effective unless (i) the Agent and the Transferor shall
have given their written consent thereto, (ii) such increasing
Committed Class B Purchaser shall have entered into an
appropriate amendment or supplement to this Agreement reflecting
such increased Commitment and (iii) such conditions, if any, as
the Agent shall have required in connection with its consent
(including, without limitation, the delivery of legal opinions
with respect to such Committed Class B Purchaser, the agreement
of such Committed Class B Purchaser to become a Support Bank for
one or more Structured Purchasers having a support commitment
corresponding to its Commitment hereunder and approvals from the
Rating Agency) shall have been satisfied. The Transferor may
also increase the aggregate Commitments of the Committed Class B
Purchasers from time to time by adding additional Committed Class
B Purchasers in accordance with subsection 2.2(d).
(d) Subject to the provisions of subsections 8.1(a)
and 8.1(b) applicable to initial purchasers of Class B
Certificates, a Person having short-term credit ratings of not
lower than P-1 from Moody's and A-1 from Standard & Poor's may
from time to time with the consent of the Agent and the
Transferor become a party to this Agreement as an initial or an
additional Noncommitted Class B Purchaser or an initial or an
additional Committed Class B Purchaser by (i) delivering to the
Transferor an Investment Letter and (ii) entering into an
agreement substantially in the form attached hereto as Exhibit B
hereto (a "Joinder Supplement"), with the Agent and the
Transferor, acknowledged by the Servicer, which shall specify (A)
the name and address of such Person for purposes of Section 9.2
hereof, (B) whether such Person will be a Noncommitted Class B
Purchaser or Committed Class B Purchaser and, if such Person will
be a Committed Class B Purchaser, its Commitment, and (C) the
other information provided for in such form of Joinder
Supplement. Upon its receipt of a duly executed Joinder
Supplement, the Agent shall on the effective date determined
pursuant thereto give notice of such effectiveness to the
Transferor, the Servicer and the Trustee, and the Servicer will
provide notice thereof to each Rating Agency (if required). If,
at the time the effectiveness of the Joinder Supplement for an
additional Committed Class B Purchaser, the other Committed Class
B Purchasers are Class B Owners, it shall be a condition to such
effectiveness that such additional Committed Class B Purchaser
purchase from each other Class B Purchaser an interest in the
Class B Certificates in an amount equal to (i) such other Class B
Purchaser's Percentage Interest of the Class B Investor Principal
Balance, times (ii) a fraction, the numerator of which equals the
Commitment of such additional Class B Purchaser, and the
denominator of which equals the aggregate Commitments of the
Class B Purchasers (determined after giving effect to the
additional Commitment of the additional Class B Purchaser as set
forth in such Joinder Supplement), for a purchase price equal to
the portion of the Class B Investor Principal Balance purchased.
2.3 Fees, Expenses, Payments, Etc. (a) Subject to
the provisions of subsection 9.12(a) hereof, the Transferor
agrees to pay to the Agent for the account of the Class B
Purchasers the fees set forth in the Class B Fee Letter at the
times specified therein.
(b) Subject to the provisions of subsection 9.12(a)
hereof in the case of the Transferor, the Transferor and FDSNB,
jointly and severally, shall be obligated to pay on demand to (i)
the Agent and the initial Class B Purchasers all reasonable costs
and expenses in connection with the preparation, execution,
delivery and administration (including any requested amendments,
waivers or consents of any of the Related Documents) of this
Agreement, and the other documents to be delivered hereunder or
in connection herewith, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the
Agent and each of the initial Class B Purchasers with respect
thereto and (ii) the Agent and each Class B Purchaser, all
reasonable costs and expenses, if any, in connection with the
enforcement of any of the Related Documents, and the other
documents delivered thereunder or in connection therewith.
(c) Subject to the provisions of subsection 9.12(a)
hereof in the case of the Transferor, the Transferor and FDSNB,
jointly and severally, shall be obligated to pay on demand any
and all stamp and other taxes (other than Taxes covered by
Section 2.5) and fees payable in connection with the execution,
delivery, filing and recording of this Agreement, the Class B
Certificates, any of the other Related Documents or the other
documents and agreements to be delivered hereunder and
thereunder, and agree to save each Class B Purchaser and the
Agent harmless from and against any liabilities with respect to
or resulting from any delay by the Transferor or FDSNB in paying
or omission to pay such taxes and fees.
(d) Yield calculated by reference to the Adjusted
Eurodollar Rate shall be calculated on the basis of a 360-day
year for the actual days elapsed. Any Yield or interest accruing
at the Agent Base Rate shall be calculated on the basis of a 365-
or 366-day year, as applicable, for the actual days elapsed.
Fees or other periodic amounts payable hereunder shall be
calculated, unless otherwise specified in the Class B Fee Letter,
on the basis of a 360-day year and for the actual days elapsed.
(e) Each determination of Yield by the Agent pursuant
to any provision of this Agreement shall be conclusive and
binding on the Class B Purchasers, the Transferor, the Servicer
and the Trustee in the absence of manifest error.
(f) All payments to be made hereunder, whether on
account of principal, interest, fees or otherwise, shall be made
without setoff or counterclaim and shall be made prior to 2:30
p.m., Pittsburgh, Pennsylvania time, on the due date thereof to
the Agent's account specified in subsection 9.2(b) hereof, in
United States dollars and in immediately available funds.
Notwithstanding anything herein to the contrary, if any payment
due hereunder becomes due and payable on a day other than a
Business Day, the payment date thereof shall be extended to the
next succeeding Business Day and interest shall accrue thereon at
the applicable rate during such extension. To the extent that
(i) the Trustee, FDSNB, the Transferor or the Servicer makes a
payment to the Agent or a Class B Purchaser or (ii) the Agent or
a Class B Purchaser receives or is deemed to have received any
payment or proceeds for application to an obligation, which
payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other
party under any bankruptcy or insolvency law, state or Federal
law, common law, or for equitable cause, then, to the extent such
payment or proceeds are set aside, the obligation or part thereof
intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been
received or deemed received by the Agent or the Class B
Purchaser, as the case may be.
(g) If on any Distribution Date the amount on deposit
in the Interest Funding Account is less than the amount of Class
B Interest and Class A Interest payable with respect to the Class
B Certificates and Class A Certificates on such Distribution
Date, an additional amount equal to the product of (i) such
interest shortfall (or portion thereof which has not been paid to
the Class B Certificateholder), times (ii) (A) a fraction, the
numerator of which is the actual number of days in the period
from and including the preceding Distribution Date to but
excluding such Distribution Date and the denominator of which is
360, times (B) the applicable rate of interest on each day, shall
be payable as provided in the Supplement with respect to the
Class B Certificates, on each Distribution Date following such
Distribution Date to and including the Distribution Date on which
such interest shortfall is paid to the Class B Certificateholder
(any such amount being referred to herein as an "Additional
Interest Amount"). Notwithstanding anything to the contrary
herein, any Additional Interest Amount shall only be payable or
distributed to the Class B Certificateholder to the extent
permitted by applicable law.
(h) Subject to the terms and conditions of this
Agreement and the Supplement (including, without limitation,
Section 4.6(f) thereof), the Transferor may decrease the Class B
Investor Principal Balance in whole or in part on any Business
Day by giving the Class B Agent prior written notice of such
decrease no later than 4:00 p.m. (Pittsburgh, Pennsylvania time)
on (i) in the case of a decrease in the Class B Investor
Principal Balance of $10,000,000 or less, the Business Day
immediately preceding the Business Day on which such decrease
shall occur, (ii) in the case of a decrease in the Class B
Investor Principal Balance of more than $10,000,000 but less than
$30,000,000, the third Business Day immediately preceding the
Business Day on which such decrease shall occur, and (iii) in the
case of a decrease in the Class B Investor Principal Balance of
$30,000,000 or more, the fifth Business Day immediately preceding
the Business Day on which such decrease shall occur; provided,
however, that each such decrease in the Class B Investor
Principal Balance shall be in a minimum amount of $500,000 and
integral multiples of $100,000 in excess thereof.
2.4 Requirements of Law. (a) In the event that any
Affected Party shall have reasonably determined that any
Regulatory Change shall:
(i) subject such Affected Party to any tax of any
kind whatsoever with respect to this Agreement, its
Commitment or its beneficial interest in the Class B
Certificates, or change the basis of taxation of payments in
respect thereof (except for Taxes covered by Section 2.5 and
taxes included in the definition of Excluded Taxes in
subsection 2.5(a) and changes in the rate of tax on the
overall net income of such Affected Party);
(ii) impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or
for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, such
Affected Party; or
(iii) impose on such Affected Party any other
condition.
and the result of any of the foregoing is to increase the cost to
such Affected Party, by an amount which such Affected Party, in
its reasonable judgment, deems to be material, of maintaining its
Commitment or its beneficial interest in the Class B Certificates
or to reduce any amount receivable in respect thereof, then, in
any such case, after submission by such Affected Party to the
Agent of a written request therefor and the submission by the
Agent to the Transferor, the Trustee and the Servicer of such
written request therefor, (subject to subsection 9.12(a) hereof)
the Transferor shall pay to the Agent for the account of such
Affected Party any additional amounts necessary to compensate
such Affected Party for such increased cost or reduced amount
receivable, together with interest on each such amount from the
day which is ten Business Days after the date such request for
compensation under this subsection 2.4(a) is received by the
Transferor until payment in full thereof (after as well as before
judgment) at the Agent Base Rate in effect from time to time.
(b) In the event that any Affected Party shall have
reasonably determined that any Regulatory Change regarding
capital adequacy has the effect of reducing the rate of return on
such Affected Party's capital or on the capital of any
corporation controlling such Affected Party as a consequence of
its obligations hereunder or its maintenance of its Commitment or
its beneficial interest in the Class B Certificates to a level
below that which such Affected Party or such corporation could
have achieved but for such Regulatory Change (taking into
consideration such Affected Party's or such corporation's
policies with respect to capital adequacy) by an amount
reasonably deemed by such Affected Party to be material, then,
from time to time, after submission by such Affected Party to the
Agent of a written request therefor and submission by the Agent
to the Transferor and the Servicer of such written request
therefor, (subject to subsection 9.12(a) hereof) the Transferor
shall pay to the Agent for the account of such Affected Party
such additional amount or amounts as will compensate such
Affected Party for such reduction, together with interest on each
such amount from the day which is ten Business Days after the
date such request for compensation under this subsection 2.4(b)
is received by the Transferor until payment in full thereof
(after as well as before judgment) at the Agent Base Rate in
effect from time to time.
(c) Each Affected Party agrees that it shall use its
reasonable efforts to reduce or eliminate any claim for
compensation pursuant to subsections 2.4(a) and 2.4(b), including
but not limited to designating a different Investing Office for
its Class B Certificates (or any interest therein) if such
designation will avoid the need for, or reduce the amount of, any
increased amounts referred to in subsection 2.4(a) or 2.4(b) and
will not, in the reasonable opinion of such Affected Party, be
disadvantageous to such Affected Party or inconsistent with its
policies or result in an unreimbursed cost or expense to such
Affected Party or in an increase in the aggregate amount payable
under both subsections 2.4(a) and 2.4(b). If any increased
amounts referred to in subsection 2.4(a) or 2.4(b) shall not be
eliminated or reduced by the designation of a different Investing
Office and payment thereof hereunder shall not be waived by such
Affected Party, the Transferor shall have the right to replace
such Affected Party hereunder with a new purchaser reasonably
acceptable to the Agent ("Replacement Purchaser") that shall
succeed to the rights of such Affected Party under this Agreement
and such Affected Party shall assign its beneficial interest in
the Class B Certificates to such Replacement Purchaser in
accordance with the provisions of Section 8.1, provided, that (i)
such Affected Party shall not be replaced here under with a new
investor until such Affected Party has been paid in full its
Percentage Interest of the Class B Investor Principal Balance and
all accrued and unpaid Yield (including any Liquidation Fee
determined for the replacement date) thereon by such new investor
and all other amounts (including all amounts owing under this
Section 2.4) owed to it pursuant to this Agreement and (ii) if
the Affected Party to be replaced is the Agent, the
Administrative Agent or any Support Bank or, unless the Agent and
the Administrative Agent otherwise agree, a Structured Purchaser
sponsored or administered by the Administrative Agent or the
Agent (in its individual capacity), a replacement Agent or
Administrative Agent, as the case may be, shall have been
appointed in accordance with Section 7.9 and the Agent or
Administrative Agent, as the case may be, to be replaced shall
have been paid all amounts owing to it as Agent or Administrative
Agent, as the case may be, pursuant to this Agreement; provided,
further, that the Transferor shall pro vide such Affected Party
with an Officer's Certificate stating that such new investor is
not subject to, or has agreed not to seek, such increased amount.
(d) Each Affected Party claiming increased amounts
described in subsection 2.4(a) or 2.4(b) will furnish to the
Agent (together with its request for compensation) a certificate
setting forth any actions taken by such Affected Party to reduce
or eliminate such increased amounts pursuant to subsection 2.4(c)
and the basis and the calculation of the amount (in reasonable
detail) of each request by such Affected Party for any such
increased amounts referred to in subsection 2.4(a) or 2.4(b),
such certificate to be conclusive as to the factual information
set forth therein absent manifest error.
2.5 Taxes. (a) All payments made to the Class B
Purchasers or the Agent under this Agreement and the Pooling and
Servicing Agreement (including all amounts payable with respect
to the Class B Certificates) shall, to the extent allowed by law,
be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority (collectively,
"Taxes"), excluding (i) income taxes (including, without
limitation, branch profit taxes, minimum taxes and taxes computed
under alternative methods, at least one of which is based on or
measured by net income), franchise taxes (imposed in lieu of
income taxes), or any other taxes based on or measured by the net
income of the Class B Purchaser or the gross receipts or income
of the Class B Purchaser; (ii) any Taxes that would not have been
imposed but for the failure of such Class B Purchaser or the
Agent, as applicable, to provide and keep current (to the extent
legally able) any certification or other documentation required
to qualify for an exemption from, or reduced rate of, any such
Taxes or required by this Agreement to be furnished by such Class
B Purchaser or the Agent, as applicable; (iii) any Taxes imposed
as a result of a change by any Class B Purchaser of the Investing
Office (other than changes mandated by this Agreement, including
subsection 2.4(c) hereof, or required by law); and (iv) any Taxes
imposed as a result of the Transfer by any Class B Purchaser of
its interest hereunder other than in accordance with Section 8.1
(all such excluded taxes being hereinafter called "Excluded
Taxes"). If any Taxes, other than Excluded Taxes, are required
to be withheld from any amounts payable to a Class B Purchaser or
the Agent hereunder or under the Pooling and Servicing Agreement,
then after sub mission by any Class B Purchaser to the Agent (in
the case of an amount payable to a Class B Purchaser) and by the
Agent to the Transferor and the Servicer of a written request
therefor, the amounts so payable to such Class B Purchaser or the
Agent, as applicable, shall be increased and the Transferor shall
be liable to pay to the Agent for the account of such Class B
Purchaser or for its own account, as applicable, the amount of
such increase) to the extent necessary to yield to such Class B
Purchaser or the Agent, as applicable (after payment of all such
Taxes) interest or any such other amounts payable hereunder or
thereunder at the rates or in the amounts specified in this
Agreement and the Pooling and Servicing Agreement; provided,
however, that the amounts so payable to such Class B Purchaser or
the Agent shall not be increased pursuant to this subsection
2.5(a) if such requirement to withhold results from the failure
of such Person to comply with subsection 2.5(c) hereof. Whenever
any Taxes are payable on or with respect to amounts distributed
to a Class B Purchaser or the Agent, as promptly as possible
thereafter the Servicer shall send to the Agent, on behalf of
such Class B Purchaser (if applicable), a certified copy of an
original official receipt showing payment thereof. If the
Trustee, upon the direction of the Servicer, fails to pay any
Taxes when due to the appropriate taxing authority or fails to
remit to the Agent, on behalf of such Class B Purchaser (if
applicable), the required receipts or other required documentary
evidence, subject to subsection 9.12(a), the Transferor shall pay
to the Agent on behalf of such Class B Purchaser or for its own
account, as applicable, any incremental taxes, interest or
penalties that may become payable by such Class B Purchaser or
the Agent, as applicable, as a result of any such failure. If
any increased amounts payable under this subsection 2.5(a) shall
not be waived by the applicable Class B Purchaser, the Transferor
shall have the right to replace the Class B Purchaser hereunder
with a Replacement Purchaser that will succeed to the rights of
such Class B Purchaser under this Agreement; provided, that (i)
such Class B Purchaser shall not be replaced hereunder with a new
investor until such Class B Purchaser has been paid in full its
Percentage Interest of the Class B Investor Principal Balance and
all accrued and unpaid Yield (including any Liquidation Fee
determined for the replacement date) thereon and all other
amounts (including all amounts owing under this Section 2.5) owed
to it pursuant to this Agreement and (ii) if the Class B
Purchaser to be replaced is the Agent or Administrative Agent,
or, unless the Agent and the Administrative Agent otherwise
agree, a Structured Purchaser sponsored or administered by the
Administrative Agent or the Agent (in its individual capacity), a
replacement Agent or Administrative Agent, as the case may be,
shall have been appointed in accordance with Section 7.9 and the
Agent or Administrative Agent, as the case may be, to be replaced
shall have been paid all amounts owing to it as Agent or
Administrative Agent, as the case may be, pursuant to this
Agreement; provided, further, that the Transferor shall provide
such Class B Purchaser with an Officer's Certificate stating that
such new investor is not subject to such Taxes or that such new
investor is subject to a lesser amount of Taxes than the Class B
Purchaser.
(b) A Class B Purchaser claiming increased amounts
under subsection 2.5(a) for Taxes paid or payable by such Class B
Purchaser (or the Agent for its own account) will furnish to the
Agent who will furnish to the Transferor and the Servicer a
certificate, setting forth the basis and amount of each request
by such Class B Purchaser for such Taxes, such certificate to be
conclusive as to the factual information set forth therein absent
manifest error. All such amounts shall be due and payable to the
Agent on behalf of such Class B Purchaser or for its own account,
as the case may be, on the succeeding Distribution Date following
receipt by the Transferor of such certificate at least 10 days
prior to such Distribution Date, in each case if then incurred by
such Class B Purchaser and otherwise shall be due and payable on
the following Distribution Date (or, if earlier, on the Series
1999-1 Termination Date).
(c) Each Class B Purchaser and each Participant
holding an interest in Class B Certificates agrees that prior to
the date on which the first interest payment hereunder is due
thereto, it will deliver to the Servicer and the Trustee, if such
Class B Purchaser or Participant is not incorporated under the
laws of the United States or any State thereof (i) two duly
completed copies of the U.S. Internal Revenue Service Form 4224
or successor applicable forms required to evidence that the Class
B Purchaser's or Participant's income from this Agreement or the
Class B Certificates is "effectively connected" with the conduct
of a trade or business in the United States as the case may be
and (ii) a U.S. Internal Revenue Service Form W-8 or W-9 or
successor applicable or required forms. Each Class B Purchaser
or Participant holding an interest in Class B Certificates also
agrees to deliver to the Servicer and the Trustee two further
copies of said Form 4224 and Form W-8 or W-9, or such successor
applicable forms or other manner of certification, as the case
may be, on or before the date that any such form expires or
becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Servicer and the Trustee, and such extensions or renewals thereof
as may reasonably be requested by the Servicer, unless in any
such case, solely as a result of a change in treaty, law or
regulation occurring prior to the date on which any such delivery
would otherwise be required, and assuming that Section 1446 of
the Code does not apply, the Class B Purchaser is no longer
eligible to deliver the then-applicable form set forth above.
Each Class B Purchaser certifies, represents and warrants and
each Participant acquiring an interest in a Class B Certificate
or Class B Purchaser which is an Assignee shall certify,
represent and warrant as a condition of acquiring its
Participation or beneficial interest in the Class B Certificates
(x) that its income from this Agreement or the Class B
Certificates is effectively connected with a United States trade
or business and (y) that it is entitled to an exemption from
United States backup withholding tax. Further, each Class B
Purchaser covenants and each Participant acquiring an interest in
a Class B Certificate that for so long as it shall hold such
Participation or Class B Certificates it shall be held in such
manner that the income therefrom shall be effectively connected
with the conduct of a United States trade or business. The
Servicer and the Trustee shall be entitled to withhold or cause
such withholding, and additional amounts in respect of Taxes need
not be paid to a Class B Purchaser or Participant in the event of
a breach of the certifications, representations, warranties or
covenants set forth in this subsection 2.5(c) by such Class B
Purchaser or Participant.
(d) In the event that any Class B Purchaser or
Participant holding an interest in Class B Certificates shall
breach the certifications, representations, warranties or
covenants set forth in this Section 2.5, the Transferor shall
have the right to replace such Class B Purchaser or such
Participant's lead Class B Purchaser hereunder with a Replacement
Purchaser that shall succeed to the rights of such Class B
Purchaser under this Agreement and, subject to compliance with
the provisos to the last sentence of subsection 2.5(a), such
Class B Purchaser shall assign its interest in this Agent and any
Class B Certificates owned by it to such Replacement Purchaser in
accordance with the provisions of Section 8.1.
2.6 Non-recourse. (a) Except to the extent provided
in this Section 2.6, the obligation to repay the Class B
Repayment Amount shall be without recourse to the Transferor, the
Servicer (or any Person acting on behalf of any of them), the
Holder of the Exchangeable Transferor Certificate, the Trust
(except to the extent specifically provided for herein or in the
Pooling and Servicing Agreement), the Trustee, the
Certificateholders or any Affiliate of any of them, and shall be
limited solely to amounts payable to the Series 1999-1
Certificateholders under the Pooling and Servicing Agreement. To
the extent that such amounts are insufficient to pay the Class B
Repayment Amount, the obligation to pay the Class B Repayment
Amount shall not constitute a claim against the Transferor, the
Servicer (or any Person acting on behalf of any of them), the
Holder of the Exchangeable Transferor Certificate, the Trust
(except to the extent specifically provided for herein or in the
Pooling and Servicing Agreement), the Trustee, the
Certificateholders or any Affiliate of any of them.
Notwithstanding anything to the contrary contained herein, if the
Transferor or the Servicer shall fail to make any payment,
deposit or transfer relating to the Series 1999-1 Certificates
required to be made pursuant to the Pooling and Servicing
Agreement and, as a result of such failure, the amount available
to be applied to the Class B Certificates pursuant to the Pooling
and Servicing Agreement is reduced to an amount which is less
than the amount which otherwise would have been available had
such payment, deposit or transfer been made (the amount of any
such reduction hereinafter referred to as a "Re duction Amount"),
the Transferor or the Servicer, as the case may be, shall repay
the Class B Investor Principal Balance, together with interest
due thereon in accordance with the Pooling and Servicing
Agreement, to the extent of (i) such Reduction Amount and (ii)
interest on the portion of the Class B Investor Charge-Offs, if
any, which results from the existence of any Reduction Amount at
the Agent Base Rate plus 2.00% per annum.
(b) Subject to and without limiting the foregoing
provisions of this Section 2.6, the obligations of the Transferor
and the Servicer under this Agreement shall be absolute,
unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement, irrespective of any
of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement, the Pooling and Servicing Agreement, the Series
1999-1 Certificates or the Supplement;
(ii) any amendment to or waiver of, or consent to
or departure from, this Agreement, the Series 1999-1
Certificates, the Pooling and Servicing Agreement or the
Supplement, unless agreed to by the Required Class B Owners
and the Required Class B Purchasers or all the Class B
Owners and the Required Class B Purchasers if required
hereunder;
(iii) the existence of any claim, setoff, defense
or other right which the Transferor, the Servicer or the
Trustee may have at any time against each other, the Agent,
the Administrative Agent or any Class B Purchaser, as the
case may be, or any other Person, whether in connection with
this Agreement, the Class B Certificates, the Pooling and
Servicing Agreement or any unrelated transactions;
(iv) the bankruptcy or insolvency of the Trust or
with respect to any party jointly and severally liable with
another party hereto, of such other party; or
(v) any other circumstances or happening
whatsoever, whether or not similar to any of the foregoing;
provided, that, with respect to obligations owing to any
Class B Purchaser, the same shall not have constituted gross
negligence or willful misconduct of such Class B Purchaser.
2.7 Indemnification. () Subject to subsection
9.12(a) hereof in the case of the Transferor, the Transferor and
FDSNB, jointly and severally, agree to indemnify and hold
harmless the Agent, the Administrative Agent, each Support Bank
and each Class B Purchaser and any directors, officers,
employees, attorneys, auditors or accountants of such Agent, the
Administrative Agent, Support Bank or Class B Purchaser (each
such person being referred to as an "Indemnitee") from and
against any and all claims, damages, losses, liabilities, costs
or ex penses whatsoever which such Indemnitee may incur (or which
may be claimed against such Indemnitee) by reason of or in
connection with the execution and delivery of, or payment under,
this Agreement, the Pooling and Servicing Agreement, the Series
1999-1 Certificates, except (i) to the extent that any such
claim, damage, loss, liability, cost or expense shall be caused
by the willful misconduct or gross negligence of such Indemnitee,
(ii) to the extent that any such claim, damage, loss, liability,
cost or expense relates to any Excluded Taxes, (iii) to the
extent that any such claim, damage, loss, liability, cost or
expense relates to disclosure made by the Agent or a Class B
Purchaser in connection with an Assignment or Participation
pursuant to Section 8.1 of this Agreement which disclosure is not
based on information given to the Agent by or on behalf of the
Transferor, the Servicer or the Trustee or (iv) to the extent
that such claim, damage, loss, liability, cost or expense shall
be caused by a charge off of Receivables. The foregoing
indemnity shall include any claims, damages, losses, liabilities,
costs or expenses to which any such Indemnitee may become subject
under the Securities Act of 1933, as amended (the "Act"), the
Securities Exchange Act of 1934, as amended, the Investment
Company Act of 1940, as amended, or other federal or state law or
regulation arising out of or based upon any untrue statement or
alleged untrue statement of a material fact in any disclosure
document relating to the Class B Certificates or the Class A
Certificates, or any amendments thereof or supplements thereto or
arising out of, or based upon, the omission or the alleged
omission to state a material fact necessary to make the
statements therein or any amendment thereof or supplement
thereto, in light of the circumstances in which they were made,
not misleading.
(b) Promptly after the receipt by an Indemnitee of a
notice of the commencement of any action against an Indemnitee,
such Indemnitee will notify the Agent and the Agent will, if a
claim in respect thereof is to be made against the Transferor
pursuant to subsection 2.7(a) (the "Indemnifying Party"), notify
the Indemnifying Party in writing of the commencement there of;
but the omission so to notify such party will not relieve such
party from any liability which it may have to such Indemnitee
pursuant to subsection 2.7(a). Upon receipt of such notice, the
Indemnifying Party shall assume the defense of such action or
proceeding, including the employment of counsel satisfactory to
the Indemnitee in its reasonable judgment and the payment of all
related expenses. Each Indemnitee shall have the right to employ
separate counsel in any such action or proceeding and to
participate in (but not control) the defense thereof, but the
fees and expenses of such counsel shall be at its own expense
unless (a) the Indemnifying Party shall have failed to assume or
continue to defend such action or proceeding, (b) the named
parties to any such action or proceeding (including any impleaded
parties) include both such Indemnitee and either the Transferor
or another person or entity that may be entitled to
indemnification from the Transferor (by virtue of this Agreement
or otherwise) and such Indemnitee shall have been advised by
counsel that there may be one or more legal defenses available to
such Indemnitee which are different from or additional to those
available to the Transferor or such other party or shall
otherwise have reasonably determined that the co-representation
would present such counsel with a conflict of interest, or (c)
the Indemnifying Party and the Indemnitee shall have mutually
agreed to the retention of separate counsel. Anything contained
in this Agreement to the contrary notwithstanding, the
Indemnifying Party (i) shall not be entitled to assume the
defense of any part of a Third Party Claim that specifically
seeks an order, injunction or other equitable relief or relief
for other than money damages against the Indemnitee, and (ii)
shall not (and shall not permit any counsel employed pursuant to
this Section 2.7) to enter into any settlement, or agree to the
terms of any settlement, without the prior written consent of
each Indemnitee that would be affected thereby.
2.8 Termination Events. In the event that any one or
more of the following (each, a "Termination Event") shall have
occurred:
(a) the failure of the Transferor, the Servicer or
the Trustee to make a deposit, payment or withdrawal
required hereunder or under any Related Document (determined
without regard to the failure of the Servicer to deliver any
statement or certificate required hereunder or under the
Supplement in order for such deposit, payment or withdrawal
to be made) when and as required and such failure continues
for five Business Days; provided that the failure of the
Transferor to make additional payments pursuant to
subsection 2.4(a) or 2.4(b) or Section 2.5 hereof shall not
constitute a Termination Event unless such failure continues
after the last Business Day of the Monthly Period which
follows the Monthly Period in which the Transferor received
a request for such payment pursuant to such subsection;
(b) any representation or warranty made herein or
in connection with this Agreement by the Transferor, the
Servicer or the Trustee shall prove to have been incorrect
in any material respect when made, and continues to be
incorrect in any material respect for a period of sixty (60)
days after receipt of written notice thereof, requiring the
same to be remedied, by the Transferors and the Servicer
from the Agent and as a result the interests of the Class B
Purchasers or any other them are and continue to be
materially and adversely affected;
(c) the failure by the Transferor or the Servicer
or, if such failure is reasonably expected to have a
material adverse effect on the Class B Investors, by the
Trustee, to duly observe or perform any term or provision of
this Agreement (except as described in clause (a) above)
which is not cured within 60 days after written notice of
such failure is given to the defaulting party by the Agent;
(d) the occurrence (whether occurring before or
after the commencement of an Amortization Period) of a Trust
Pay Out Event, a Series 1999-1 Pay Out Event or a Servicer
Default, or the occurrence of an event or condition which
would be a Trust Pay Out Event, a Series 1999-1 Pay Out
Event or a Servicer Default but for a waiver of or failure
to declare or determine such event by the Certificateholders
or the Trustee;
(e) the Commitment Expiration Date; or
(f) Market Street Funding Corporation shall not
have become a Class B Purchaser hereunder by the ninetieth
calendar day after the Closing Date;
then, in the event of a Termination Event described in any of
clauses (a) through (d) above, in addition to any other rights or
remedies of the Class B Purchasers hereunder or under any Related
Documents, (A) the Administrative Agent, at the direction of the
Required Class B Owners and of the Required Class B Purchasers
(and without regard to whether a similar direction shall have
been given pursuant to the Class A Certificate Purchase
Agreement) in their discretion, shall deliver a Reserve Account
Increase Notice to the Servicer as contemplated by the
Supplement, and/or (B) the Administrative Agent, at the direction
of the Required Class B Owners and of the Required Class B
Purchasers (and without regard to whether a similar direction
shall have been given pursuant to the Class A Certificate
Purchase Agreement) in their discretion, shall deliver a notice
to the Trustee and the Servicer that such Termination Event has
occurred and directing that such Termination Event constitute a
Series 1999-1 Pay Out Event under subsection 10(g) of the
Supplement. In the event that a Termination Event described in
clause (e) above shall have occurred, the Agent shall give notice
thereof to the Administrative Agent, which shall, without further
direction, deliver prompt notice to the Trustee and the Servicer
that such Termination Event has occurred and directing that such
Termination Event constitute a Series 1999-1 Pay Out Event under
subsection 10(g) of the Supplement.
2.9 Certain Agreements of the Agent. If on the
thirtieth day after the Closing Date and/or the sixtieth day
after the Closing Date (or, in either case, if such day is not a
Business Day, the immediately succeeding Business Day) Market
Street Funding Corporation has failed to become a Class B
Purchaser hereunder, the Agent hereby agrees to notify the
Transferor on such thirtieth and/or sixtieth day of the basis for
such failure and any actions that are required to be taken by the
Transferor, Servicer or any of their affiliates or agents in
order for Market Street Funding Corporation to become a Class B
Purchaser hereunder.
SECTION 3. CONDITIONS PRECEDENT
3.1 Condition to Initial Purchase. As a condition
precedent to the initial purchase by any Class B Purchasers of
the Class B Certificates, (i) the Agent on behalf of the Class B
Purchasers shall have received on the Closing Date the following
items, each of which shall be in form and substance satisfactory
to the Agent:
(a) the favorable written opinion of counsel for
each of Prime II Receivables Corporation and FDSNB addressed to
the Agent and the Class B Purchasers and dated the Closing Date,
covering general corporate matters and the due execution and
delivery of, and the enforceability of, each of the Related
Documents to which it is party and such other matters as the
Agent may request;
(b) a copy of (i) the corporate charter and by-laws
of, and an incumbency certificate with respect to its officers
executing any of the Related Documents on the Closing Date on
behalf of, each of Prime II Receivables Corporation and FDSNB,
certified by an authorized officer of each such entity, (ii) good
standing certificates from the appropriate Governmental Authority
as of a recent date with respect to each of Prime II Receivables
Corporation and FDSNB and (iii) resolutions of the Board of
Director (or an authorized committee thereof) of each of Prime II
Receivables Corporation and FDSNB with respect to the Related
Documents to which it is party, certified by an authorized
officer of each such entity;
(c) the representations and warranties of the
Transferor set forth or referred to in Section 4.1 hereof and the
representations and warranties of FDSNB set forth or referred to
in Section 4.2 hereof shall be true and correct in all material
respects on Closing Date as though made on and as of the Closing
Date, and the Agent shall have received an Officer's Certificate
of the Transferor and of FDSNB, respectively, confirming the
satisfaction of the condition set forth in this clause (c);
(d) customary sale/security interest, tax,
bankruptcy and non-consolidation opinions, addressed to the Agent
and the Class B Purchasers;
(e) an agreed procedures letter from the
independent certified public accountants of FDSNB and a
certificate of an authorized officer of FDSNB with respect to the
accuracy of data previously furnished to the Agent with respect
to the Receivables in the Trust, in each case in form and scope
satisfactory to the Agent;
(f) an executed copy of the Master Pooling and
Servicing Agreement, the Receivables Purchase Agreement and the
Supplement;
(g) evidence satisfactory to the Agent that the
Class C Certificates having a Class C Initial Invested Amount at
least equal to the Required Class C Invested Amount;
(h) evidence satisfactory to the Agent that the
initial deposit (if any) in the Reserve Account required by
Section 4.9(a) of the Pooling and Servicing Agreement shall have
been made;
(i) evidence satisfactory to the Agent of the due
execution and delivery of the Related Documents to which it is
party by the Trustee; and
(j) all up front fees and expenses agreed and
specified in the Class B Fee Letter shall have been paid by the
Transferor on the Closing Date; and
(ii) all representations and warranties of the Transferor and
the Servicer contained herein shall be true and correct in all
material respects on the Closing Date (and after giving effect to
the transactions contemplated hereby) and no event which of
itself or with the giving of notice or lapse of time, or both,
would permit the furnishing of a Reserve Account Increase Notice
has occurred and is continuing and the Agent shall have received
an Officer's Certificate of each of the Transferor and the
Servicer to such effect.
3.2 Condition to Additional Purchases. The following
shall be conditions precedent to each purchase by any Class B
Purchasers of VFC Additional Class B Invested Amounts hereunder:
(a) the Transferor shall have timely delivered a
Purchase Request pursuant to subsection 2.1(c) of this
Agreement;
(b) no Termination Event shall have occurred;
(c) after giving effect to such purchase of VFC
Additional Class B Invested Amount, the aggregate Class B
Investor Principal Balance shall not exceed the aggregate
Commitments of the Committed Class B Purchasers minus the
aggregate Commitments of all Defaulting Purchasers;
(d) the conditions set forth in Section 6.15 of the
Pooling and Servicing Agreement to the issuance of such VFC
Additional Class B Invested Amount shall have been
satisfied; and
(e) the representations and warranties of the
Transferor contained in Section 4.1 and of FDSNB contained
in Section 4.2 shall be true and correct in all material
respects on and as of the applicable Purchase Date, as
though made on and as of such date, other than the
representations and warranties of FDSNB contained in the
last sentence of subsection 4.2(f) or in subsection 4.2(h),
which shall have been true and correct in all material
respects when made and as of the Closing Date, and other
than the representations and warranties of the Transferor
and of FDSNB set forth in subsection 4.1(l) and subsection
4.2(g), respectively, which shall have been true and correct
on all material respects on or as of the respective dates
specified therein.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Transferor.
The Transferor repeats and reaffirms to the Class B Purchasers
and the Agent the representations and warranties of the
Transferor set forth in Sections 2.3 and 2.4 of the Pooling and
Servicing Agreement and represents and warrants that such
representations and warranties are true and correct as of the
date hereof. The Transferor further represents and warrants to,
and agrees with, the Agent and each Class B Purchaser that, as of
the date hereof:
(a) The Transferor has been duly organized and is
validly existing and in good standing as a corporation under the
laws of the State of Delaware, with corporate power and authority
to own its properties and to transact the business in which it is
now engaged, and the Transferor is duly qualified to do business
and is in good standing in each State of the United States where
the nature of its business requires it to be so qualified.
(b) The Transferor has the full corporate power,
authority and legal right to make, execute, deliver and perform
the Related Documents to which it is party and all of the
transactions contemplated thereby and to issue the Series 1999-1
Certificates from the Trust and has taken all necessary corporate
action to authorize the execution, delivery and performance of
the Related Documents to which it is party and such issuance.
Each of the Related Documents to which it is party constitutes
the legal, valid and binding agreement of the Transferor
enforceable in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of the rights of creditors
generally and except as such enforceability may be limited by
general principles of equity, whether considered in a proceeding
at law or in equity).
(c) The Transferor is not required to obtain the
consent of any other party or any consent, license, approval or
authorization of, or registration with, any Governmental
Authority in connection with the execution, delivery or
performance of each of the Related Documents to which it is party
that has not been duly obtained and which is not and will not be
in full force and effect on the Closing Date.
(d) The execution, delivery and performance of the
Related Documents to which it is party by the Transferor do not
violate or conflict with any provision of any existing law or
regulation applicable to the Transferor or any order or decree of
any court to which the Transferor is subject or the Certificate
of Incorporation or Bylaws of the Transferor, or any mortgage,
security agreement, indenture, contract or other agreement to
which the Transferor is a party or by which the Transferor or any
significant portion of its properties is bound.
(e) There is no litigation, investigation or
administrative proceeding before any court, tribunal, regulatory
body or governmental body presently pending, or, to the knowledge
of the Transferor, threatened, with respect to any of the Related
Documents, the transactions contemplated thereby, or the issuance
of the Series 1999-1 Certificates and there is no such litigation
or proceeding against the Transferor or any significant portion
of its properties which would, individually or in the aggregate,
have a material adverse effect on the transactions contemplated
by any of the Related Documents or the ability of the Transferor
to perform its obligations thereunder.
(f) The Transferor is not insolvent or the subject
of any voluntary or involuntary bankruptcy proceedings.
(g) No Pay Out Event, Servicer Default, Termination
Event or event permitting the furnishing of a Reserve Account
Increase Notice has occurred and is continuing, and no event, act
or omission has occurred and is continuing which, with the lapse
of time, the giving of notice, or both, would constitute such an
event or default.
(h) The Pooling and Servicing Agreement is not
required to be qualified under the Trust Indenture Act of 1939,
as amended, and neither the Trust nor the Transferor is required
to be registered under the Investment Company Act of 1940, as
amended.
(i) The Receivables conveyed by the Transferor to
the Trust under the Pooling and Servicing Agreement are in an
aggregate amount, determined as of July 6, 1999, of
$456,983,326.18. The Receivables Purchase Agreement is in full
force and effect on the date hereof and no material default by
any party exists thereunder.
(j) The Trust is duly created and existing under
the laws of the State of New York. Simultaneous with the closing
hereunder, all conditions to the issuance and sale of the Series
1999-1 Certificates set forth in the Pooling and Servicing
Agreement have been satisfied and the Series 1999-1 Certificates
have been duly issued by the Trust.
(k) Neither the Transferor nor any of its
Affiliates has directly, or through any agent, (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in
respect of, any "security" (as defined in the Act) that is or
will be integrated with the sale of the any Series 1999-1
Certificates in a manner that would require the registration
under the Act of the offering of the Series 1999-1 Certificates
or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Series 1999-1
Certificates (as those terms are used in Regulation D under the
Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Act. Assuming the accuracy of the
representations and warranties of each Class B Purchaser in its
Investment Letter and of each purchaser of Class A Certificates
and Class C Certificate in their respective investment letters,
the offer and sale of the Series 1999-1 Certificates are
transactions which are exempt from the registration requirements
of the Act.
(l) All written factual information heretofore
furnished by the Transferor to, or for delivery to, the Agent for
purposes of or in connection with this Agreement, including,
without limitation, information relating to the Accounts and
Receivables and the Transferor's and FDSNB's credit card
businesses, was true and correct in all material respects on the
date as of which such information was stated or certified and
remains true and correct in all material respects (unless such
information specifically relates to an earlier date in which case
such information shall have been true and correct in all material
respects on such earlier date).
(m) The Transferor has reviewed the areas within its
business and operations which would reasonably be expected to be
materially adversely affected by, and have developed or are
developing a program to address on a timely basis, the Internal
"Year 2000 Problem" (that is, the risk that computer applications
used by the Transferor may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior
to and any date on or after December 31, 1999), and has made
related appropriate inquiry of material suppliers and vendors.
The "Year 2000 Problem" will not have a material adverse effect
on the interests of the Class B Purchasers or the Agent hereunder
or under the Pooling and Servicing Agreement.
4.2 Representations and Warranties of FDSNB. FDSNB
repeats and reaffirms to the Class B Purchasers and the Agent the
representations and warranties of the Servicer set forth in
Section 3.3 of the Pooling and Servicing Agreement and represents
and warrants that such representations and warranties are true
and correct as of the date hereof. FDSNB further represents and
warrants to, and agrees with, the Agent and each Class B
Purchaser that, as of the date hereof:
(a) FDSNB has been duly organized and is validly
existing and in good standing as a national banking association
under the laws of the United States of America, with corporate
power and authority to own its properties and to transact the
business in which it is now engaged, and FDSNB is duly qualified
to do business (or is exempt from such qualification) and is in
good standing in each State of the United States where the nature
of its business requires it to be so qualified. FDSNB is an
insured depository institution under Section 4(a) of the Federal
Deposit Insurance Act.
(b) FDSNB has the full corporate power, authority
and legal right to make, execute, deliver and perform the Related
Documents to which it is party and all the transactions
contemplated thereby and has taken all necessary corporate action
to authorize the execution, delivery and performance of the
Related Documents to which it is party. Each of the Related
Documents to which it is party constitutes the legal, valid and
binding agreement of FDSNB enforceable in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganiza
tion, moratorium or other similar laws affecting the enforcement
of the rights of creditors generally and the rights of creditors
of national banking associations and except as such
enforceability may be limited by general principles of equity,
whether considered in a proceeding at law or in equity).
(c) FDSNB is not required to obtain the consent of
any other party or any consent, license, approval or
authorization of, or registration with, any Governmental
Authority in connection with the execution, delivery or
performance of each of the Related Documents to which it is party
that has not been duly obtained and which is not and will not be
in full force and effect on the Closing Date.
(d) The execution, delivery and performance of each
of the Related Documents to which it is party by FDSNB do not
violate or conflict with any provision of any existing law or
regulation applicable to FDSNB or any order or decree of any
court to which FDSNB is subject or the Articles of Association or
Bylaws of FDSNB, or any mortgage, security agreement, indenture,
contract or other agreement to which FDSNB is a party or by which
FDSNB or any significant portion of FDSNB's properties is bound.
(e) There is no litigation, investigation or
administrative proceeding before any court, tribunal, regulatory
body or governmental body presently pending, or, to the knowledge
of FDSNB, threatened, with respect to the Related Documents, the
transactions contemplated thereby, or the issuance of the Series
1999-1 Certificates, and there is no such litigation or
proceeding against FDSNB or any significant portion of its
properties which would, individually or in the aggregate, have a
material adverse effect on the transactions contemplated by any
of the Related Documents or the ability of FDSNB, in its capacity
as Servicer or otherwise, to perform its obligations thereunder.
(f) FDSNB is not insolvent or the subject of any
insolvency or liquidation proceeding. The financial statements
of FDSNB delivered to the Agent are complete and correct in all
material respects and fairly present the financial condition of
FDSNB as of date of such statements and the results of operations
of FDSNB for the period then ended, all in accordance with
regulatory accounting principles consistently applied. Since the
date of the most recent audited financial statements of FDSNB
delivered to the Agent, there has not been any material adverse
change in the condition (financial or otherwise) of FDSNB.
(g) All written factual information heretofore
furnished by FDSNB to, or for delivery to, the Agent for purposes
of or in connection with this Agreement, including, without
limitation, information relating to the Accounts and Receivables
and the Transferor's and FDSNB's VISAr credit card businesses,
was true and correct in all material respects on the date as of
which such information was stated or certified and remains true
and correct in all material respects (unless such information
specifically relates to an earlier date in which case such
information shall have been true and correct in all material
respects on such earlier date).
(h) There are no outstanding comments from the most
recent report prepared by FDSNB's (in its capacity as Servicer)
independent public accountants in connection with its VISAr
credit card receivables.
(i) No Pay Out Event, Servicer Default, Termination
Event or event permitting the furnishing of a Reserve Account
Increase Notice has occurred and is continuing, and no event, act
or omission has occurred and is continuing which, with the lapse
of time, the giving of notice, or both, would constitute such an
event or default.
(j) FDSNB has reviewed the areas within its
business and operations which would reasonably be expected to be
materially adversely affected by, and have developed or are
developing a program to address on a timely basis, the internal
"Year 2000 Problem" (that is, the risk that computer applications
used by the FDSNB may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any
date on or after December 31, 1999), and has made related
appropriate inquiry of material suppliers and vendors. The "Year
2000 Problem" will not have a material adverse effect on the
interests of the Class B Purchasers or the Agent hereunder or
under the Pooling and Servicing Agreement.
4.3 Representations and Warranties of the Agent and
the Class B Purchasers. Each of the Agent and the Class B
Purchasers represents and warrants to, and agrees with, the
Transferor and the Servicer, that:
(a) It is duly authorized to enter into and perform
this Agreement and to purchase its Commitment Percentage (if any)
of the Class B Certificates, and has duly executed and delivered
this Agreement; and the person signing this Agreement on behalf
of such Class B Purchaser has been duly authorized by such Class
B Purchaser to do so.
(b) This Agreement constitutes the legal, valid and
binding obligation of such Class B Purchaser, enforceable in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, conservatorship or other similar laws now or
hereafter in effect affecting the enforcement of creditors'
rights in general, and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(c) No registration with or consent or approval of
or other action by any state or local governmental authority or
regulatory body having jurisdiction over such Class B Purchaser
is required in connection with the execution, delivery or
performance by such Class B Purchaser of this Agreement other
than as may be required under the blue sky laws of any state.
SECTION 5. COVENANTS
5.1 Covenants of the Transferor and FDSNB. Each of
the Transferor and FDSNB (individually or, as set forth below, as
the Servicer) covenants and agrees, so long as any amount of the
Class B Investor Principal Balance shall remain outstanding or
any monetary obligation arising hereunder shall remain unpaid,
unless the Required Class B Owners and the Required Class B
Purchasers shall otherwise consent in writing, that:
(a) each of the Transferor and the Servicer shall
perform in all material respects each of the respective
agreements, warranties and indemnities applicable to it and
comply in all material respects with each of the respective terms
and provisions applicable to it hereunder and under the other
Related Documents to which it is party, which agreements are
hereby incorporated by reference into this Agreement as if set
forth herein in full; and each of the Transferor and the Servicer
shall take all reasonable action to enforce the obligations of
each of the other parties to such Related Documents which are
contained therein;
(b) the Transferor and the Servicer shall furnish
to the Agent () a copy of each opinion, certificate, report,
statement, notice or other communication (other than investment
instructions) relating to the Series 1999-1 Certificates which is
furnished by or on behalf of either of them to
Certificateholders, to any Rating Agency or to the Trustee and
furnish to the Agent after receipt thereof, a copy of each
notice, demand or other communication relating to the Series 1999-
1 Certificates, this Agreement or the Pooling and Servicing
Agreement received by the Transferor or the Servicer from the
Trustee, any Rating Agency or 15% or more of the Series 1999-1
Certificateholders (to the extent such notice, demand or
communication relates to the Accounts, the Receivables, any
Servicer Default or any Pay Out Event); and (ii) such other
information, documents records or reports respecting the Trust,
the Receivables, the Transferor, FDSNB or the Servicer as the
Agent may from time to time reasonably request without
unreasonable expense to the Transferor or the Servicer;
(c) the Servicer shall furnish to the Agent on or
before the date such reports are due under the Pooling and
Servicing Agreement copies of each of the reports and
certificates required by subsection 3.4(b) and Sections 3.5 and
3.6 of the Pooling and Servicing Agreement;
(d) the Servicer shall promptly furnish to the
Agent a copy, addressed to the Agent, of each opinion of counsel
delivered to the Trustee pursuant to Section 13.2(d) of the
Pooling and Servicing Agreement;
(e) FDSNB shall furnish to the Agent (i) a copy of
its annual Call Report promptly after it becomes available, (ii)
an annual certificate dated within 90 days after the end each of
its fiscal years stating its compliance (or failure to comply)
with each minimum ratio of total capital and core capital to risk-
weighted assets required by Governmental Authorities in
accordance with the implementation of the Basle Accord;
(f) the Servicer shall furnish to the Agent a
certificate concurrently with its delivery of its annual
certificate pursuant to Section 3.5 of the Pooling and Servicing
Agreement stating that no Termination Event (other than a
Termination Event described in clause (e) of subsection 2.8) or
event or condition which with the passage of time or the giving
of notice, or both, would constitute such a Termination Event or,
if such Termination Event, event or condition has occurred,
identifying the same in reasonable detail;
(g) the Transferor shall not exercise its right to
accept optional reassignment of the Receivables or repurchase the
Series 1999-1 Certificates pursuant to Sections 10.2 or 12.2 of
the Pooling and Servicing Agreement or Section 3 of the
Supplement, unless the Class B Purchasers have been paid, or will
be paid upon such repurchase or in connection with such op tional
reassignment, the Class B Investor Principal Balance, all
interest thereon and all other amounts owing hereunder in full;
(h) the Transferor and the Servicer shall at any
time from time to time during regular business hours, on
reasonable notice to the Transferor or the Servicer, as the case
may be, permit the Agent, or its agents or representatives to:
(i) examine all books, records and documents
(including computer tapes and disks) in its possession or
under its control relating to the Receivables, and
(ii) visit its offices and property for the
purpose of examining such materials described in clause (i)
above.
The information obtained by the Agent or any Class B Purchaser
pursuant to this subsection shall be held in confidence in
accordance with Section 6.2 hereof;
(i) the Servicer shall furnish to the Agent,
promptly after the occurrence of any Servicer Default,
Termination Event, Pay Out Event or any event which would permit
the furnishing of a Reserve Account Increase Notice, a
certificate of an appropriate officer of the Servicer setting
forth the circumstances of such Servicer Default, Pay Out Event,
Termination Event or event and any action taken or proposed to be
taken by the Servicer or the Transferor with respect thereto;
(j) the Transferor and the Servicer shall timely
make all payments, deposits or transfers and give all
instructions to transfer required by this Agreement and the
Pooling and Servicing Agreement;
(k) the Transferor shall not terminate (except in
accordance with the terms thereof), amend, waive or otherwise
modify the Pooling and Servicing Agreement or the Supplement
unless (i) such amendment, waiver or modification shall not, as
evidenced by an Officer's Certificate of the Transferor delivered
to the Agent, adversely affect in any material respect the
interests of the Agent or the Class B Purchasers under this
Agreement or the Pooling and Servicing Agreement, and will not
result in a reduction or withdrawal of the then current rating by
any Rating Agency of any commercial paper notes issued by any
Structured Purchaser; (ii) all of the provisions of Section 13.1
of the Pooling and Servicing Agreement have been complied with
and (iii) in the case of any amendment of the Supplement, any
amendment to be effected pursuant to subsection 13.1(b) of the
Pooling and Servicing Agreement or any amendment to the interest
rate to be borne by the Class A Certificates or the Class C
Certificates, the prior written consent thereto shall have been
provided by the Required Class B Owners and the Required Class B
Purchasers;
(l) the Transferor and the Servicer shall execute
and deliver to the Agent all such documents and instruments and
do all such other acts and things as may be necessary or
reasonably required by the Agent or the Trustee to enable the
Trustee or the Agent to exercise and enforce their respective
rights under this Agreement and the Pooling and Servicing
Agreement and to realize thereon, and record and file and
rerecord and refile all such documents and instruments, at such
time or times, in such manner and at such place or places, all as
may be necessary or required by the Trustee or the Agent to
validate, preserve, perfect and protect the position of the
Trustee under the Pooling and Servicing Agreement;
(m) without the prior written consent of the
Required Class B Owners and the Required Class B Purchasers, the
Transferor will not appoint (or cause to be appointed) a
successor Trustee;
(n) neither the Transferor nor the Servicer will
consolidate with or merge into any other Person or convey or
transfer its properties and assets substantially as an entirety
to any Person, except (i) in accordance with Section 7.2 or 8.2
of the Pooling and Servicing Agreement, with respect to the
Transferor or the Servicer, respectively, and (ii) so long as (A)
the obligations of the Transferor or the Servicer, as the case
may be, under this Agreement and any other document executed and
delivered in connection herewith shall be expressly assumed in
writing by the transferee, purchaser or successor corporation,
(B) the Transferor or the Servicer, as the case may be, has
delivered to the Agent an Officer's Certificate of the Transferor
or the Servicer and an Opinion of Counsel addressed to the Agent
and each Class B Purchaser meeting the requirements of subsection
7.2(a)(ii) or 8.2(ii) of the Pooling and Servicing Agreement, as
appropriate, as provided in such agreement, (C) the Transferor or
the Servicer, as the case may be, has delivered to the Agent a
copy of the notice to the Rating Agencies delivered pursuant to
subsection 7.2(a)(iii) or 8.2(iii) of the Pooling and Servicing
Agreement, and (D) such consolidation, merger or transfer, in the
reasonable judgment of the Transferor and the Servicer, will not
have a material adverse effect on the interests of the Class B
Purchasers hereunder or under the Pooling and Servicing
Agreement;
(o) the Transferor shall not reduce or withdraw any
Discount Percentage then in effect unless such reduction or
withdrawal (i) would not in the reasonable belief of the
Transferor cause a Pay Out Event with respect to the Series 1999-
1 Certificates or an event which, with notice or lapse of time or
both, would constitute such a Pay Out Event to occur or (ii) is
consented to by the Required Class B Owners and the Required
Class B Purchasers;
(p) the Transferor and FDSNB will not make any
material amendment, modification or change to, or provide any
waiver under, the Receivables Purchase Agreement without the
prior written consent of the Required Class B Owners and the
Required Class B Purchasers;
(q) the Transferor will not incur, permit or suffer
to exist any lien, charge or other adverse claim on the Minimum
Transferor Amount in the Trust;
(r) the Transferor will not engage in any business
other than the transactions contemplated by this Agreement and
the Related Documents;
(s) the Transferor will not (i) incur any
liabilities or indebtedness, other than pursuant to this
Agreement and the Related Documents or reasonably related
thereto, (ii) incur or permit or suffer to exist any lien, charge
or encumbrance on any of its properties or assets, other than as
provided for in the Pooling and Servicing Agreement, (iii) make
any investments other than in Cash Equivalents or (iv) make any
capital expenditures other than those reasonably required for its
performance of its obligations hereunder and under the Related
Documents;
(t) the Transferor will not amend, modify or
otherwise make any change to its Certificate of Incorporation if
such amendment, modification or other change would have a
material adverse effect on the interests of the Class B
Purchasers, would affect any provisions thereof relating to the
commencement of a voluntary bankruptcy proceeding or which is
inconsistent with the assumptions set forth in the legal opinion
of Jones, Day, Reavis & Pogue, counsel to FDSNB and the
Transferor, issued in connection with this Agreement and the
transactions contemplated hereby and relating to the issues of
substantive consolidation; and
(u) Each of the Transferor and FDSNB will (i)
review the areas within its business and operations which would
reasonably be expected to be materially adversely affected by,
and will develop and implement a program to address on a timely
basis, the internal "Year 2000 Problem", and will make related
appropriate inquiry of material suppliers and vendors and (ii)
notify the Agent promptly if any auditor, regulator, or third
party consultant issues a management letter or other
communication regarding the Year 2000 exposure, program or
progress of the Transferor or FDSNB.
SECTION 6. MUTUAL COVENANTS REGARDING CONFIDENTIALITY
6.1 Covenants of Transferor, Etc. The Transferor and
the Servicer shall hold in confidence, and not disclose to any
Person, the terms of any fees payable in connection with this
Agreement except they may disclose such information (i) to their
officers, directors, employees, agents, counsel, accountants,
auditors, advisors or representatives, (ii) with the consent of
the Required Class B Purchasers and Agent, or (iii) to the extent
the Transferor or the Servicer or any Affiliate of either of them
should be required by any law or regulation applicable to it or
requested by any Governmental Authority to disclose such
information; provided, that, in the case of clause (iii), the
Transferor or the Servicer, as the case may be, will use all
reasonable efforts to maintain confidentiality and will (unless
otherwise prohibited by law) notify the Agent of its intention to
make any such disclosure prior to making such disclosure.
6.2 Covenants of Class B Purchasers. The Agent and
each Class B Purchaser covenants and agrees that any information
obtained by the Agent or such Class B Purchaser pursuant to this
Agreement shall be held in confidence (it being understood that
documents provided to the Agent hereunder may in all cases be
distributed by the Agent to the Class B Purchasers) except that
the Agent or such Class B Purchaser may disclose such information
(i) to its officers, directors, employees, agents, counsel,
accountants, auditors, advisors or representatives, (ii) to the
extent such information has become available to the public other
than as a result of a disclosure by or through the Agent or such
Class B Purchaser, (iii) to the extent such information was
available to the Agent or such Class B Purchaser on a
nonconfidential basis prior to its disclosure to the Agent or
such Class B Purchaser hereunder, (iv) with the consent of the
Transferor, (v) to the extent permitted by Section 8.1, (vi) to
the extent the Agent or such Class B Purchaser should be (A)
required in connection with any legal or regulatory proceeding or
(B) requested by any Governmental Authority to disclose such
information or (vii) in the case of any Class B Purchaser that is
a Structured Lender, to rating agencies, placement agents and
providers of liquidity and credit support who agree to hold such
information in confidence; provided, that, in the case of clause
(vi) above, the Agent or such Class B Purchaser, as applicable,
will use all reasonable efforts to maintain confidentiality and,
in the case of clause (vi)(A) above, will (unless otherwise
prohibited by law) notify the Transferor of its intention to make
any such disclosure prior to making any such disclosure.
SECTION 7. THE AGENTS
7.1 Appointment. (a) Each Class B Purchaser hereby
irrevocably designates and appoints the Agent as the agent of
such Class B Purchaser under this Agreement, and each such Class
B Purchaser irrevocably authorizes the Agent, as the agent for
such Class B Purchaser, to take such action on its behalf under
the provisions of the Related Documents and to exercise such
powers and perform such duties thereunder as are expressly
delegated to the Agent by the terms of this Agreement, together
with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Class B Purchaser, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist
against the Agent.
(b) Each Class B Purchaser hereby irrevocably
designates and appoints the Administrative Agent as the agent of
such Class B Purchaser under the Pooling and Servicing Agreement,
and each such Class B Purchaser irrevocably authorizes the
Administrative Agent, as the agent for such Class B Purchaser, to
take such action on its behalf under the provisions of the
Pooling and Servicing Agreement and to exercise such powers
thereunder as are expressly granted to the Administrative Agent
by the terms of the Pooling and Servicing Agreement, subject to
the terms and conditions of this Agreement, together with such
other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in
the Pooling and Servicing Agreement, or any fiduciary
relationship with any Class B Purchaser, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist
against the Administrative Agent.
7.2 Delegation of Duties. The Agent and the
Administrative Agent may execute any of its duties under this
Agreement or any of the other Related Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.
Neither the Agent nor the Administrative Agent shall be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
7.3 Exculpatory Provisions. Neither the Agent nor the
Administrative Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates
shall be (a) liable to any of the Class B Purchasers for any
action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any of the other
Related Documents (except for its or such Person's own gross
negligence or willful misconduct) or (b) responsible in any
manner to any of the Class B Purchasers for any recitals,
statements, represen tations or warranties made by the
Transferor, the Servicer or the Trustee or any officer thereof
contained in this Agreement or any of the other Related Documents
or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent or the
Administrative Agent under or in connection with, this Agreement
or any of the other Related Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any of the other Related Documents or for any
failure of the Transferor, the Servicer or the Trustee to perform
its obligations hereunder or thereunder. Neither the Agent nor
the Administrative Agent shall be under any obligation to any
Class B Purchaser to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the other Related
Documents, or to inspect the properties, books or records of the
Transferor, the Servicer, the Trustee or the Trust.
7.4 Reliance by Agent. The Agent and the
Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, written statement, order or
other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Agent or the
Administrative Agent), independent accountants and other experts
selected by the Agent or the Administrative Agent. The Agent and
the Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any of the
other Related Documents unless it shall first receive such advice
or concurrence of the Required Class B Purchasers as it deems
appropriate or it shall first be indemnified to its satisfaction
by the Class B Purchasers or of the Committed Class B Purchasers
against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
The Agent and the Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under
this Agreement or any of the other Related Documents in
accordance with a request of the Required Class B Owners and the
Required Class B Purchasers and such request and any action taken
or failure to act pursuant thereto shall be binding upon all
present and future Class B Purchasers.
7.5 Notices. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any breach of this
Agreement or the occurrence of any Pay Out Event or any
Termination Event unless the Agent has received notice from the
Transferor, the Servicer, the Trustee or any Class B Purchaser
referring to this Agreement, describing such event. In the event
that the Agent receives such a notice, the Agent promptly shall
give notice thereof to the Class B Owners and the Required Class
B Purchasers. The Agent shall take such action with respect to
such event as shall be reasonably directed by the Required Class
B Owners and the Required Class B Purchasers; provided that
unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such event as
it shall deem advisable in the best interests of the Class B
Purchasers.
7.6 Non-Reliance on Agent and Other Class B
Purchasers. Each Class B Purchaser expressly acknowledges that
neither the Agent nor the Administrative Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-
fact or Affiliates has made any representations or warranties to
it and that no act by the Agent or the Administrative Agent
hereafter taken, including any review of the affairs of the
Transferor, the Servicer, the Trustee or the Trust shall be
deemed to constitute any representation or warranty by the Agent
or the Administrative Agent to any Class B Purchaser. Each Class
B Purchaser represents to the Agent and the Administrative Agent
that it has, independently and without reliance upon the Agent or
any other Class B Purchaser, and based on such documents and
information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Trust,
the Trustee, the Transferor and the Servicer and made its own
decision to purchase its Class B Certificate hereunder and enter
into this Agreement. Each Class B Purchaser also represents that
it will, independently and without reliance upon the Agent or the
Administrative Agent or any other Class B Purchaser, and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own analysis, appraisals and
decisions in taking or not taking action under this Agreement or
any of the other Related Documents, and to make such
investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Trust, the Trustee, the Transferor and
the Servicer. Except for notices, reports and other documents
received by the Agent under Section 5 hereof, the Agent shall not
have any duty or responsibility to provide any Class B Purchaser
with any credit or other information concerning the business,
operations, property, condition (financial or otherwise),
prospects or creditworthiness of the Trust, the Trustee, the
Transferor or the Servicer which may come into the possession of
the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
7.7 Indemnification. The Committed Class B Purchasers
agree to indemnify the Agent and the Administrative Agent in its
capacity as such (without limiting the obligation of the
Transferor, the Trust or the Servicer to reimburse the Agent or
the Administrative Agent for any such amounts), ratably according
to their respective Commitment Percentages, from and against any
and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the obligations
under this Agreement, including the Class B Invested Amount) be
imposed on, incurred by or asserted against the Agent or the
Administrative Agent in any way relating to or arising out of
this Agreement, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action
taken or omitted by the Agent or the Administrative Agent under
or in connection with any of the foregoing; provided that no
Class B Purchaser shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
the Agent or the Administrative Agent resulting from its own
gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the obligations under
this Agreement, including the Class B Invested Amount.
7.8 Agents in Their Individual Capacities. The Agent,
the Administrative Agent and their Affiliates may make loans to,
accept deposits from and generally engage in any kind of business
with the Trust, the Trustee, the Servicer and the Transferor as
though the Agent and the Administrative Agent were not the agents
hereunder. Each Class B Purchaser acknowledges that PNC may act
(i) as administrator and agent for one or more Structured
Purchasers and in such capacity acts and may continue to act on
behalf of each such Structured Purchaser in connection with its
business and (ii) as the agent for certain financial institutions
under the liquidity and credit enhancement agreements relating to
this Agreement to which any such Structured Purchaser is party
and in various other capacities relating to the business of any
such Structured Purchaser under various agreements. PNC in its
capacity as the Agent shall not, by virtue of its acting in any
such other capacities, be deemed to have duties or
responsibilities hereunder or be held to a standard of care in
connection with the performance of its duties as the Agent or the
Administrative Agent other than as expressly provided in this
Agreement. PNC may act as the Agent and the Administrative Agent
without regard to and without additional duties or liabilities
arising from its role as such administrator or agent or arising
from its acting in any such other capacity.
7.9 Successor Agent. (a) The Agent may resign as
Agent upon ten days' notice to the Class B Purchasers, the
Trustee, the Transferor and the Servicer with such resignation
becoming effective upon a successor agent succeeding to the
rights, powers and duties of the Agent pursuant to this
subsection 7.9(a). If the Agent shall resign as Agent under this
Agreement, then the Required Class B Purchasers and the Required
Class B Owners shall appoint from among the Committed Class B
Purchasers a successor agent for the Class B Purchasers. The
successor agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor agent
effective upon its appointment, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other
or further act or deed on the part of such former Agent or any of
the parties to this Agreement. After the retiring Agent's
resignation as Agent, the provisions of this Section 7 shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
(b) The Administrative Agent may resign as
Administrative Agent upon ten days' notice to the Class B
Purchasers, the Class A Purchasers (as defined in the Class A
Certificate Purchase Agreement), the Trustee, the Transferor and
the Servicer with such resignation becoming effective upon a
successor agent succeeding to the rights, powers and duties of
the Administrative Agent pursuant to this subsection 7.9(b). If
the Administrative Agent shall resign as Administrative Agent
under this Agreement, then the Required Class B Purchasers and
the Required Class B Owners shall appoint from among the
Committed Class B Purchasers hereunder or under the Class B
Certificate Purchase Agreement a successor Administrative Agent
of the Class B Certificateholders and Class A Certificateholders
as provided in the Supplement; provided that no such appointment
shall be effective unless such successor is also appointed as
successor Administrative Agent under the Class A Certificate
Purchase Agreement. The successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the
term "Administrative Agent" shall mean such successor agent
effective upon its appointment, and the former Administrative
Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the
part of such former Administrative Agent or any of the parties to
this Agreement. After the retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this
Section 7 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under
this Agreement.
SECTION 8. SECURITIES LAWS; TRANSFERS; TAX TREATMENT
8.1 Transfers of Class B Certificates. (a) Each
Class B Owner agrees that the beneficial interest in the Class B
Certificates purchased by it will be acquired for investment only
and not with a view to any public distribution thereof, and that
such Class B Owner will not offer to sell or otherwise dispose of
any Class B Certificate acquired by it (or any interest therein)
in violation of any of the registration requirements of the Act
or any applicable state or other securities laws. Each Class B
Owner acknowledges that it has no right to require the Transferor
to register, under the Act or any other securities law, the Class
B Certificates (or the beneficial interest therein) acquired by
it pursuant to this Agreement or any Transfer Supplement. Each
Class B Owner hereby confirms and agrees that in connection with
any transfer or syndication by it of an interest in the Class B
Certificates, such Class B Owner has not engaged and will not
engage in a general solicitation or general advertising including
advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting
whose attendees have been invited by any general solicitation or
general advertising. Each initial Class B Owner agrees with the
Transferor that it will execute and deliver to the Transferor,
the Servicer and the Trustee on or before the Closing Date a
letter in the form attached hereto as Exhibit A (an "Investment
Letter") with respect to the purchase by such Class B Owner of a
beneficial interest in the Class B Certificates.
(b) Each initial purchaser of a Class B Certificate
or any interest therein and any Assignee thereof or Participant
therein shall certify to the Transferor, the Servicer and the
Trustee that it is either (A)(i) a citizen or resident of the
United States, (ii) a corporation or other entity organized in or
under the laws of the United States or any political subdivision
thereof which, if such entity is a tax-exempt entity, recognizes
that payments with respect to the Class B Certificates may
constitute unrelated business taxable income or (iii) a person
not described in (i) or (ii) whose income from the Class B
Certificates is and will be effectively connected with the
conduct of a trade or business within the United States (within
the meaning of the Code) and whose ownership of any interest in a
Class B Certificate will not result in any withholding obligation
with respect to any payments with respect to the Class B
Certificates by any Person (other than withholding, if any, under
Section 1446 of the Code) and who will furnish to the Servicer
and the Trustee, and to the Class B Owner making the Transfer a
properly executed U.S. Internal Revenue Service Form 4224 (and to
agree (to the extent legally able) to provide a new Form 4224
upon the expiration or obsolescence of any previously delivered
form and comparable statements in accordance with applicable
United States laws) or (B) an estate or trust the income of which
is includible in gross income for United States federal income
tax purposes.
(c) Any sale, transfer, assignment, participation,
pledge, hypothecation or other disposition (a "Transfer") of a
Class B Certificate or any interest therein may be made only in
accordance with this Section 8.1 and in accordance with and
subject to the applicable limitations set forth in Section 6.18
of the Pooling and Servicing Agreement. Any Transfer of an
interest in a Class B Certificate, a Commitment or any
Noncommitted Purchaser Percentage, when combined with any
substantially concurrent Transfers hereunder between the same
parties and any substantially concurrent Transfer of an interest
in a Class A Certificate or a Commitment or Noncommitted
Purchaser Percentage (as such terms are defined for purposes of
the Class A Certificate Purchase Agreement) between the same
parties, shall be in respect of (i) in the case of a Committed
Class B Purchaser, at least $5,000,000 in the aggregate, which
may be composed of any one or more of (A) Class B Invested
Amount, (B) to the extent in excess of the Class B Invested
Amount subject to such Transfer, Commitment hereunder, (C) Class
A Invested Amount, and (D) to the extent in excess of the Class A
Invested Amount subject to such concurrent Transfer, Commitment
under the Class A Certificate Purchase Agreement, or (ii) in the
case of a Noncommitted Class B Purchaser, at least $5,000,000 in
the aggregate, which may be composed of any one or more of (A)
Class B Invested Amount, (B) to the extent in excess of the Class
B Invested Amount subject to such Transfer, the product of the
Noncommitted Purchaser Percentage subject to such Transfer times
the aggregate Commitments hereunder, (C) Class A Invested Amount
and (D) to the extent in excess of the Class A Invested Amount
subject to such concurrent Transfer, the product of the
Noncommitted Purchaser Percentage under the Class A Certificate
Purchase Agreement subject to such Transfer times the aggregate
Commitments under the Class A Certificate Purchase Agreement.
Any Transfer of an interest in a Class B Certificate otherwise
permitted by this Section 8.1 will be permitted only if it
consists of a pro rata percentage interest in all payments made
with respect to the Class B Purchaser's beneficial interest in
such Class B Certificate. No Class B Certificate or any interest
therein may be Transferred by assignment or Participation to any
Person (each, a "Transferee") unless prior to the transfer the
Transferee shall have executed and delivered to the Agent and the
Transferor an Investment Letter and, except for any Transfer to
an Eligible Transferee, each of the Transferor and the Servicer
shall have granted its prior consent thereto; provided that in
the event of a Transfer from a Class B Purchaser to one of its
Affiliates or to a Person which, prior to such Transfer, is a
Class B Purchaser of all of its interest in the Class B
Certificates the transferring Class B Purchaser shall provide the
Transferor and the Servicer with five (5) Business Days prior
written notice thereof and the prior consent of the Transferor
and the Servicer shall not be required for such Transfer.
Each of the Transferor and the Servicer authorizes
each Class B Purchaser to disclose to any Transferee and Support
Bank and any prospective Transferee or Support Bank any and all
financial information in the Class B Purchaser's possession
concerning the Trust, the Transferor or the Servicer which has
been delivered to the Agent or such Class B Purchaser by or on
behalf of the Trust or the Transferor or the Servicer pursuant to
this Agreement (including information obtained pursuant to rights
of inspection granted hereunder) or the other Related Documents
or which has been delivered to such Class B Purchaser by or on
behalf of the Trust, the Transferor or the Servicer in connection
with such Class B Purchaser's credit evaluation of the Trust, the
Transferor or the Servicer prior to becoming a party to, or
purchasing an interest in this Agreement or the Class B
Certificates; provided that prior to any such disclosure, such
Transferee or Support Bank or prospective Transferee or Support
Bank shall have executed an agreement agreeing to be bound by the
provisions of Section 6.2 hereof.
(d) Each Class B Purchaser may, in accordance with
applicable law, at any time grant participations in all or part
of its interest in its Commitment or in the Class B Certificates
including the payments due to it under this Agreement and the
Pooling and Servicing Agreement (each, a "Participation") to any
Person (each, a "Participant"); provided, however, that no
Participation shall be granted to any Person unless and until the
Agent shall have consented thereto and the conditions to Transfer
specified in this Agreement and the Pooling and Servicing
Agreement, including in subsection 8.1(c) hereof and Section 6.18
of the Pooling and Servicing Agreement, shall have been satisfied
and that such Participation consists of a pro rata percentage
interest in all payments made with respect to such Class B
Purchaser's beneficial interest (if any) in the Class B
Certificates. In connection with any such Participation, the
Agent shall maintain a register of each Participant and the
amount of each Participation. Each Class B Purchaser hereby
acknowledges and agrees that (A) any such Participation will not
alter or affect such Class B Purchaser's direct obligations
hereunder, and (B) neither the Trustee, the Transferor nor the
Servicer shall have any obligation to have any communication or
relationship with any Participant. Each Class B Purchaser and
each Participant shall comply with the provisions of subsection
2.5(c). No Participant shall be entitled to Transfer all or any
portion of its Participation, without the prior written consent
of the Agent. The Transferor shall be obligated to indemnify a
Participant for all amounts owing to it under Sections 2.4, 2.5
and 2.7 as if such Participant were a Class B Purchaser
hereunder, but, in the case of Sections 2.4 and 2.5, only in an
amount not in excess of the amounts which would have been owing
thereunder had such Participation not been granted and, in the
case of Section 2.5, provided that such Participant has complied
with the provisions of subsection 2.5(c) as if it were a Class B
Purchaser. Each Class B Purchaser shall give the Agent notice of
the consummation of any sale by it of a Participation and the
Agent (upon receipt of notice from the related Class B Purchaser)
shall promptly notify the Transferor, the Servicer and the
Trustee.
(e) Each Class B Purchaser may, with the consent of
the Agent and in accordance with applicable law, sell or assign
(each, an "Assignment"), to any Person (each, an "Assignee")
which is an Eligible Assignee (or is otherwise consented to in
writing by the Transferor and the Servicer) all or any part of
its interest in its Commitment or in the Class B Certificates and
its rights and obligations under this Agreement and the Pooling
and Servicing Agreement pursuant to an agreement substantially in
the form attached hereto as Exhibit C hereto (a "Transfer
Supplement"), executed by such Assignee and the Class B Purchaser
and delivered to the Agent for its acceptance and consent;
provided, however, that no such assignment or sale shall be
effective unless and until the conditions to Transfer specified
in this Agreement and the Pooling and Servicing Agreement,
including in subsection 8.1(c) hereof and Section 6.18 of the
Pooling and Servicing Agreement, shall have been satisfied; and
provided further, however, that no such assignment or sale to an
Assignee which would become a Committed Class B Purchaser shall
be effective unless either (i) the commercial paper notes or the
short-term obligations of such Assignee are rated at least A-1 by
Standard & Poor's and P-1 by Moody's or (ii) such assignment or
sale shall have been consented to by all Class B Purchasers. From
and after the effective date determined pursuant to such Transfer
Supplement, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Transfer Supplement, have the
rights and obligations of a Class B Purchaser hereunder as set
forth therein and (y) the transferor Class B Purchaser shall, to
the extent provided in such Transfer Supplement, be released from
its Commitment and other obligations under this Agreement;
provided, however, that after giving effect to each such
Assignment, the obligations released by any such Class B
Purchaser shall not exceed the obligations assumed by an Assignee
or Assignees. Such Transfer Supplement shall be deemed to amend
this Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Assignee and the resulting
adjustment of Percentage Interests, Noncommitted Purchaser
Percentages or Commitment Percentages arising from the
Assignment. Upon its receipt of a duly executed Transfer
Supplement, the Agent shall on the effective date determined
pursuant thereto give notice of such acceptance to the
Transferor, the Servicer and the Trustee and the Servicer will
provide notice thereof to each Rating Agency (if required).
Upon surrender for registration of transfer of a
Class B Purchaser's beneficial interest in the Class B
Certificates (or portion thereof) and delivery to the Transferor
and the Trustee of an Investment Letter, executed by the
registered owner (and the beneficial owner if it is a Person
other than the registered owner), and receipt by the Trustee of a
copy of the duly executed related Transfer Supplement and such
other documents as may be required under this Agreement, such
beneficial interest in the Class B Certificates (or portion
thereof) shall be transferred in the records of the Trustee and
the Agent and, if requested by the Assignee, new Class B
Certificates shall be issued to the Assignee and, if applicable,
the transferor Class B Purchaser in amounts reflecting such
Transfer as provided in the Pooling and Servicing Agreement.
Such Transfers of Class B Certificates (and interests therein)
shall be subject to this Section 8.1 in lieu of any regulations
which may be prescribed under Section 6.3 of the Pooling and
Servicing Agreement. Successive registrations of Transfers as
aforesaid may be made from time to time as desired, and each such
registration of a transfer to a new registered owner shall be
noted on the Certificate Register.
(f) Each Class B Purchaser may pledge its interest
in the Class B Certificates to any Federal Reserve Bank as
collateral in accordance with applicable law.
(g) Any Class B Purchaser shall have the option to
change its Investing Office, provided that such Class B Purchaser
shall have prior to such change in office complied with the
provisions of subsection 2.5(c) and provided further that such
Class B Purchaser shall not be entitled to any amounts otherwise
payable under Section 2.4 or 2.5 resulting solely from such
change in office unless such change in office was mandated by
applicable law or by such Class B Purchaser's compliance with the
provisions of this Agreement.
(h) Each Affected Party which, on the date it
became an Affected Party, was an Eligible Assignee or was
consented to by the Transferor and the Servicer shall be entitled
to receive additional payments pursuant to Sections 2.4, 2.5 and
2.7 hereof as though it were a Class B Purchaser and such Section
applied to its interest in or commitment to acquire an interest
in the Class B Certificates; provided that such Affected Party
shall not be entitled to additional payments pursuant to (i)
Section 2.4 by reason of Regulatory Changes which occurred prior
to the date it became an Affected Party or (ii) Section 2.5
attributable to its failure to satisfy the requirements of
subsection 2.5(c) as if it were a Class B Purchaser.
(i) If any increased amounts referred to in Sections
2.4 or 2.5 owing to any Affected Party are not eliminated or
reduced by the designation of a different Investing Office or
other actions taken pursuant to subsection 2.4(c) and payment
thereof hereunder is not waived by such Affected Party within 45
days after the Transferor or the Servicer shall have given notice
to such Affected Party, its related Class B Purchaser and the
Agent of the intent of the Transferor to exercise its rights
under this sentence, the Transferor shall have the right to
replace such related Class B Purchaser hereunder with a
Replacement Purchaser; provided, that (x) such related Class B
Purchaser shall not be replaced hereunder until such related
Class B Purchaser has been paid in full all amounts owed to it
hereunder and with respect to its interest in the Class B
Certificates and (y) if the related Class B Purchaser is the
Agent or the Administrative Agent or, unless otherwise agreed by
the Agent and the Administrative Agent, a Structured Purchaser
sponsored or administered by the Administrative Agent or the
Agent (in its individual capacity), a replacement Agent and
Administrative Agent shall have been appointed in accordance with
Section 7.9 and the Agent and the Administrative Agent to be
replaced shall have been paid in full all amounts owed to it
hereunder.
(j) Each Affected Party claiming increased amounts
described in Sections 2.4 or 2.5 shall furnish, through its
related Structured Purchaser, to the Trustee, the Agent, the
Servicer and the Transferor a certificate setting forth any
action taken by such Affected Party to reduce or eliminate such
increased amounts pursuant to subsection 2.4(c) and the basis and
amount of each request by such Affected Party for any such
amounts referred to in Sections 2.4 or 2.5, such certificate to
be conclusive with respect to the factual information set forth
therein absent manifest error.
(k) In the event that a Committed Class B Purchaser
was at any time a Defaulting Purchaser or is a Downgraded
Purchaser, the Transferor shall have the right and to replace
such Class B Purchaser hereunder with a Replacement Purchaser,
and the Agent, acting at the request of the Required Class B
Purchasers or the Required Class B Owners, shall have the right
to replace such Committed Class B Purchaser with a Replacement
Purchaser which is an Eligible Assignee or is otherwise
reasonably acceptable to the Transferor, which Replacement
Purchaser shall succeed to the rights of such Committed Class A
Purchaser under this Agreement, and such Committed Class B
Purchaser shall assign its beneficial interest in the Class B
Certificates to such Replacement Purchaser in accordance with the
provisions of this Section 8.1; provided, that (A) such Committed
Class B Purchaser shall not be replaced hereunder with a new
investor until such Committed Class B Purchaser has been paid in
full its Percentage Interest of the Class B Investor Principal
Balance and all accrued and unpaid Yield (including any
Liquidation Fee determined for the replacement date) thereon by
such new investor and all other amounts (including all amounts
owing under Sections 2.4 and 2.5) owed to it and to all
Participants and Affected Parties with respect to such Class B
Purchaser pursuant to this Agreement and (ii) if the Class B
Purchaser to be replaced is the Agent or the Administrative Agent
or, unless the Agent and the Administrative Agent otherwise
agree, a Structured Purchaser sponsored or administered by the
Administrative Agent or the Agent (in its individual capacity), a
replacement Agent or Administrative Agent, as the case may be,
shall have been appointed in accordance with Section 7.9 and the
Agent or Administrative Agent, as the case may be, to be replaced
shall have been paid all amounts owing to it as Agent or
Administrative Agent, as the case may be, pursuant to this
Agreement. For purposes of this subsection, a Committed Class B
Purchaser shall be a "Downgraded Purchaser" if and so long as the
credit rating assigned to its short-term obligations by Moody's
or Standard & Poor's on the date on which it became a party to
this Agreement shall have been reduced or withdrawn.
8.2 Tax Characterization of the Class B Certificates.
It is the intention of the parties hereto that the Class B
Certificates be treated for tax purposes as indebtedness. In the
event that the Class B Certificates are not so treated, it is the
intention of the parties that such Class B Certificates be
treated as an interest in a partnership that owns the
Receivables. In the event that the Class B Certificates are
treated as an interest in a partnership, it is the intention of
the parties that interest payable on such Class B Certificates be
treated as guaranteed payment and, if for any reason it is not so
treated, that the holders of such Class B Certificates be
specially allocated gross interest income equal to the interest
accrued during each applicable accrual period on such Class B
Certificates.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. This Agreement may not be
amended, supplemented or modified nor may any provision hereof be
waived except in accordance with the provisions of this Section
9.1. With the written consent of the Required Class B Owners and
the Required Class B Purchasers, the Agent, the Transferor and
the Servicer may, from time to time, enter into written
amendments, supplements, waivers or modifications hereto for the
purpose of adding any provisions to this Agreement or changing in
any manner the rights of any party hereto or waiving, on such
terms and conditions as may be specified in such instrument, any
of the requirements of this Agreement; provided, however, that no
such amendment, supplement, waiver or modification shall (i)
reduce the amount of or extend the maturity of any Class B
Certificate or reduce the rate or extend the time of payment of
interest thereon, or reduce or alter the timing of any other
amount payable to any Class B Purchaser hereunder or under the
Supplement, in each case without the consent of the Class B
Purchaser affected thereby, (ii) amend, modify or waive any
provision of this Section 9.1, or, if such amendment would have a
material adverse effect on the Class B Purchasers, the definition
of "Class B Invested Amount", or reduce the percentage specified
in the definition of Required Class B Owners or Required Class B
Purchasers, in each case without the written consent of all Class
B Purchasers or (iii) amend, modify or waive any provision of
Section 7 of this Agreement without the written consent of the
Agent, the Administrative Agent, the Required Class B Owners and
Required Class B Purchasers. Any waiver of any provision of this
Agreement shall be limited to the provisions specifically set
forth therein for the period of time set forth therein and shall
not be construed to be a waiver of any other provision of this
Agreement.
Each party hereto agrees, at the request of the Agent
from time to time to enter into or to consent to, as applicable,
any amendments or other modifications to this Agreement or the
Related Documents, other than those requiring the consent of all
Class B Purchasers as provided above in this subsection, and the
Transferor agrees to cause its Certificate of Incorporation and
Bylaws to be amended or otherwise modified, as shall reasonably
be determined by the Agent to be required for any initial Class B
Purchaser which is a Structured Purchaser to obtain or maintain
an informal rating of the Class B Certificates which will permit
such Structured Purchaser's commercial paper notes to maintain at
least the rating from Standard & Poor's and Moody's as in effect
immediately prior to such Structured Purchaser's becoming a Class
B Purchaser after giving effect to its initial purchase of the
Class B Certificates and to purchases from time to time by such
Structured Purchaser of VFC Additional Class B Invested Amounts
as contemplated by this Agreement, without giving effect to any
increase in any letter of credit or other enhancement provided to
such Structured Purchaser (other than liquidity support provided
to such Structured Purchaser by Affected Parties).
The Administrative Agent may cast any vote or give any
direction under the Pooling and Servicing Agreement on behalf of
the Class B Certificateholders if it has been directed to do so
by (i) the Required Class B Owners, (ii) the Required Class B
Purchasers, and (iii) by the Class A Purchasers (as defined in
the Class A Certificate Purchase Agreement) required under the
terms of Section 9.1 of the Class A Certificate Purchase
Agreement.
9.2 Notices. (a) All notices, requests and demands
to or upon the respective parties hereto to be effective shall be
in writing (including by telecopy, telegraph or telex), and,
unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the
case of mail or telecopy notice, when received, or, in the case
of telegraphic notice, when delivered to the telegraph company,
or, in the case of telex notice, when sent, answer back received,
addressed as follows or, with respect to a Class B Purchaser, as
set forth in its respective Joinder Supplement or Transfer
Supplement, or to such other address as may be hereafter notified
by the respective parties hereto:
The Transferor: Prime II Receivables Corporation
9111 Duke Boulevard
Mason, Ohio 45040
Attention: President
Telephone: (513) 573-2048
Telefax: (513) 573-2039
The Servicer: FDS National Bank
9111 Duke Boulevard
Mason, Ohio 45040
Attention: Chief Financial Officer
Telephone: (513) 573-2265
Telefax: (513) 573-2720
With a copy to:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, Ohio 45202
Attention: General Counsel
Telephone: (513) 579-7000
Telefax: (513) 579-7462
The Trustee: The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Capital Markets Fiduciary Services
Telephone: (212) 946-8608
Telefax: (212) 946-3240
The Agent PNC Bank, National Association
or the One PNC Plaza
Administrative 249 Fifth Avenue
Agent: Pittsburgh, Pennsylvania 15220-2707
Attention: John Smathers
Telephone: (412) 762-6440
Telefax: (412) 762-9814
Moody's: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department, 4th Floor
Telephone: (212) 553-3607
Telefax: (212) 553-4773
Standard Standard & Poor's Ratings Services
& Poor's: 26 Broadway, 15th Floor
New York, New York 10004
Attention: Asset-Backed Surveillance Department
Telephone: (212) 208-1892
Telefax: (212) 412-0323
(b) All payments to be made to the Agent or any Class
B Purchaser hereunder shall be made in United States dollars and
in immediately available funds not later than 2:30 p.m.
Pittsburgh, Pennsylvania time on the date payment is due, and,
unless otherwise specifically provided herein, shall be made to
the Agent, for the account of one or more of the Class B
Purchasers or for its own account, as the case may be. Unless
otherwise directed by the Agent, all payments to it shall be made
by federal wire (ABA #043-000-096) and telegraph name: PNC Bank,
National Association and (a) in the case of payments to Market
Street Capital Corp., to DDA #1002420425, or (b) in the case of
payments to Market Street Funding Corporation, to DDA
#1002422076, and, in either case, including the federal wire
number, to Asset-Backed Securities Group, Attn: John Smathers of
PNC (412-762-6440).
9.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Class B Purchaser, any right, remedy, power or privilege
hereunder or under any of the other Related Documents shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder or
under any of the other Related Documents preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges provided herein and in the other Related Documents are
cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
9.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Transferor, the
Servicer, the Agent, the Administrative Agent, the Class B
Purchasers, any Assignee and their respective successors and
assigns, except that the Transferor and the Servicer may not
assign or transfer any of their respective rights or obligations
under this Agreement except as provided herein and in the Pooling
and Servicing Agreement, without the prior written consent of the
Required Class B Owners and the Required Class B Purchasers.
9.5 Successors to Servicer. (a) In the event that a
transfer of servicing occurs under Article VIII or Article X of
the Pooling and Servicing Agreement, (i) from and after the
effective date of such transfer, the Successor Servicer shall be
the successor in all respects to the Servicer and shall be
responsible for the performance of all functions to be performed
by the Servicer from and after such date, except as provided in
the Pooling and Servicing Agreement, and shall be subject to all
the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof, and
all references in this Agreement to the Servicer shall be deemed
to refer to the Successor Servicer, and (ii) as of the date of
such transfer, the Successor Servicer shall be deemed to have
made with respect to itself the representations and warranties
made by the Servicer in Section 4.2 (in the case of subsection
4.2(a) with appropriate factual changes); provided, however, that
the references to the Servicer contained in Section 5.1 of this
Agreement shall be deemed to refer to the Servicer with respect
to responsibilities, duties and liabilities arising out of an act
or acts, or omission, or an event or events giving rise to such
responsibilities, duties and liabilities and occurring during
such time that the Servicer was Servicer under this Agreement and
shall be deemed to refer to the Successor Servicer with respect
to responsibilities, duties and liabilities arising out of an act
or acts, or omission, or an event or events giving rise to such
responsibilities, duties and liabilities and occurring during
such time that the Successor Servicer acts as Servicer under this
Agreement; provided, however, to the extent that an obligation to
indemnify the Class B Purchasers under Section 2.7 arises as a
result of any act or failure to act of any Successor Servicer in
the performance of servicing obligations under the Pooling and
Servicing Agreement or the Supplement, such indemnification
obligation shall be of the Successor Servicer and not FDSNB.
Upon the transfer of servicing to a Successor Servicer, such
Successor Servicer shall furnish to the Agent copies of its
audited annual financial statements for each of the three
preceding fiscal years or if the Trustee or any other banking
institution becomes the Successor Servicer, such Successor
Servicer shall provide, in lieu of the audited financial
statements required in the immediately preceding clause, complete
and correct copies of the publicly available portions of its
Consolidated Reports of Condition and Income as submitted to the
Federal Deposit Insurance Corporation for the two most recent
year end periods.
(b) In the event that any Person becomes the
successor to the Transferor pursuant to Article VII of the
Pooling and Servicing Agreement, from and after the effective
date of such transfer, such successor to the Transferor shall be
the successor in all respects to the Transferor and shall be
responsible for the performance of all functions to be performed
by the Transferor from and after such date, except as provided in
the Pooling and Servicing Agreement, and shall be subject to all
the responsibilities, duties and liabilities relating thereto
placed on the Transferor by the terms and provisions hereof, and
all references in this Agreement to the Transferor shall be
deemed to refer to the successor to the Transferor; provided,
however, that the references to the Transferor contained in
Sections 2.5, 2.7 and 5.1 of this Agreement shall be deemed to
refer to Prime II Receivables Corporation with respect to
responsibilities, duties and liabilities arising out of an act or
acts, or omission, or an event or events giving rise to such
responsibilities, duties and liabilities and occurring during
such time that Prime II Receivables Corporation was Transferor
under this Agreement and shall be deemed to refer to the
successor to Prime II Receivables Corporation as Transferor with
respect to responsibilities, duties and liabilities arising out
of an act or acts, or omission, or an event or events giving rise
to such responsibilities, duties and liabilities and occurring
during such time that the successor to Prime II Receivables
Corporation acts as Transferor under this Agreement.
9.6 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument.
9.7 Severability. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provisions in any other jurisdiction.
9.8 Integration. This Agreement and the Class B Fee
Letter represent the agree ment of the Agent, the Administrative
Agent, the Transferor, the Servicer and the Class B Purchasers
with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the
Class B Purchasers, the Agent or the Administrative Agent
relative to subject matter hereof not expressly set forth or
referred to herein or therein. FDSNB shall retain a copy of each
of the above-referenced agreements as part of its official
records.
9.9 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
9.10 Termination. This Agreement shall remain in full
force and effect until the earlier to occur of (a) payment in
full of the Class B Repayment Amount and all other amounts
payable to the Class B Purchasers, the Agent and the
Administrative Agent hereunder and the termination of all
Commitments and (b) the Series 1999-1 Termination Date; provided,
however, that if the Class B Repayment Amount and all other
amounts payable to the Class B Purchasers hereunder are paid in
full and all Commitments have terminated prior to the Series 1999-
1 Termination Date, the Agent shall notify the Trustee that
thereafter all amounts otherwise payable to the Class B
Purchasers hereunder shall be payable to the Transferor or any
Person designated thereby; and provided, further, that the
provisions of Sections 2.4, 2.5, 2.6, 2.7 and 7.7 and subsections
9.12(a) and 9.12(b) shall survive termination of this Agreement
and amounts payable to the Class B Purchasers thereunder shall
remain payable to the Class B Purchasers.
9.11 Action by Servicer. Wherever the Trustee or the
Trust is authorized or required to take an action or give a
notice pursuant to this Agreement and if the Trustee fails timely
to take such action or give such notice pursuant to this
Agreement after being requested to do so by the Servicer, the
Servicer shall take such action or give such notice on behalf of
the Trustee or the Trust.
9.12 Limited Recourse; No Proceedings. (a) The
obligations of the Transferor and the Servicer under this
Agreement are several (except as specifically provided herein)
and are solely the corporate obligations of the Transferor and
the Servicer. No recourse shall be had for the payment of any
fee or other obligation or claim arising out of or relating to
this Agreement or any other agreement, instrument, document or
certificate executed and delivered or issued by the Transferor
and the Servicer or any officer of any of them in connection
therewith, against any stockholder, employee, officer, director
or incorporator of the Transferor or the Servicer, and neither
the Agent nor any Class B Purchaser shall look to any property or
assets of the Transferor, other than to (a) amounts payable to
the Transferor under the Receivables Purchase Agreement, any
Supplement or the Pooling and Servicing Agreement and (b) any
other assets of the Transferor not pledged to third parties or
otherwise encumbered in any manner permitted by the Transferor's
Certificate of Incorporation. Each Class B Purchaser and the
Agent hereby agrees that to the extent such funds are
insufficient or unavailable to pay any amounts owing to it by the
Transferor pursuant to this Agreement, prior to the earlier of
the Trust Termination Date or the commencement of a bankruptcy or
insolvency proceeding by or against the Transferor, it shall not
constitute a claim against the Transferor. Nothing in this
paragraph shall limit or otherwise affect the liability of the
Servicer with respect to any amounts owing by it hereunder or the
right of the Agent or any Class B Purchaser to enforce such
liability against the Servicer or any of its assets.
(b) Each of the Transferor, the Servicer and the
Trustee hereby agrees that it shall not institute or join against
any Structured Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law,
for one year and a day after the latest maturing commercial paper
note, medium term note or other debt security issued by such
Structured Lender is paid. The foregoing shall not limit the
Transferor's, the Servicer's or the Trustee's right to file any
claim in or otherwise take any action with respect to any such
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding that was instituted by any Person other
than the Transferor, the Servicer or the Trustee.
9.13 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or
in connection herewith shall survive the execution and delivery
of this Agreement, the purchase of the Class B Certificates
hereunder and the termination of this Agreement.
9.14 Submission to Jurisdiction; Waivers. EACH OF THE
TRANSFEROR, THE ADMINISTRATIVE AGENT, THE SERVICER, THE TRUST,
THE TRUSTEE, THE AGENT AND EACH CLASS B PURCHASER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT TO WHICH IT IS A PARTY, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR
PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT
AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A
COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN
SECTION 9.2 OR AT SUCH OTHER ADDRESS OF WHICH THE
AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT
THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO SUE IN ANY OTHER JURISDICTION.
9.15 WAIVERS OF JURY TRIAL. THE TRANSFEROR, THE
SERVICER, THE TRUST, THE TRUSTEE, THE AGENT AND THE CLASS B
PURCHASERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER DOCUMENT OR INSTRUMENT RELATED HERETO AND FOR ANY
COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Certificate Purchase Agreement to be duly executed by their
respective officers as of the day and year first above written.
PRIME II RECEIVABLES CORPORATION,
as Transferor
By: /s/ Susan P. Storer
Name: Susan P. Storer
Title: President
FDS NATIONAL BANK
By: /s/ Susan R. Robinson
Name: Susan R. Robinson
Title: Treasurer
PNC BANK, NATIONAL ASSOCIATION,
as Agent and as Administrative Agent
By: /s/ John T. Smathers
Name: John T. Smathers
Title: Vice President
EXHIBIT A
FORM OF INVESTMENT LETTER
[Date]
Prime II Receivables Corporation
9111 Duke Boulevard
Mason, Ohio 45040
Attention: President
Re Prime Credit Card Master Trust II Class B
Variable Funding Certificates, Series 1999-1
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by
the undersigned (the "Purchaser") pursuant to subsection 8.1(a)
of the Class B Certificate Purchase Agreement dated as of July 6,
1999 (as in effect, the "Certificate Purchase Agreement"), among
the Transferor, FDS National Bank, as Servicer, the Class B
Purchasers parties thereto and PNC Bank, National Association, as
Agent and Administrative Agent. Capitalized terms used herein
without definition shall have the meanings set forth in the
Certificate Purchase Agreement. The Purchaser represents to and
agrees with the Transferor as follows:
(a) The Purchaser is authorized [to enter into the
Certificate Purchase Agreement and to perform its
obligations thereunder and to consummate the transactions
contemplated thereby] [to purchase a participation in
obligations under the Certificate Purchase Agreement].
(b) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of
evaluating the merits and risks of its investment in the
Class B Certificates and is able to bear the economic risk
of such investment. The Purchaser has been afforded the
opportunity to ask such questions as it deems necessary to
make an investment decision, and has received all
information it has requested in connection with making such
investment decision. The Purchaser has, independently and
without reliance upon the Agent, the Administrative Agent or
any other Class B Purchaser, and based on such documents and
information as it has deemed appropriate, made its own
appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Trust, the Transferor and the
Servicer and made its own decision to purchase its interest
in the Class B Certificates, and will, independently and
without reliance upon the Agent, the Administrative Agent or
any other Class B Purchaser, and based on such documents and
information as it shall deem appropriate at the time,
continue to make its own analysis, appraisals and decisions
in taking or not taking action under the Certificate
Purchase Agreement, and to make such investigation as it
deems necessary to inform itself as to the business,
operations, property, financial and other condition and
creditworthiness of the Trust, the Transferor and the
Servicer.
(c) The Purchaser is an "accredited investor", as
defined in Rule 501, promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), or is a
qualified institutional buyer (within the meaning thereof in
Rule 144A under the Securities Act). The Purchaser
understands that the offering and sale of the Class B
Certificates has not been and will not be registered under
the Securities Act and has not and will not be registered or
qualified under any applicable "Blue Sky" law, and that the
offering and sale of the Class B Certificate has not been
reviewed by, passed on or submitted to any federal or state
agency or commission, securities exchange or other
regulatory body.
(d) The Purchaser is acquiring an interest in Class B
Certificates without a view to any distribution, resale or
other transfer thereof except as contemplated in the
following sentence. The Purchaser will not resell or
otherwise transfer any interest or participation in the
Class B Certificates, except in accordance with Sections 8.1
of the Certificate Purchase Agreement and (i) in a
transaction exempt from the registration requirements of the
Securities Act of 1933, as amended, and applicable state
securities or "blue sky" laws; (ii) to the Transferor or any
affiliate of the Transferor; or (iii) to a person who the
Purchaser reasonably believes is a qualified institutional
buyer (within the meaning thereof in Rule 144A under the
Securities Act) that is aware that the resale or other
transfer is being made in reliance upon Rule 144A. In
connection therewith, the Purchaser hereby agrees that it
will not resell or otherwise transfer the Class B
Certificates or any interest therein unless the purchaser
thereof provides to the addressee hereof a letter
substantially in the form hereof.
[(e) The Purchaser hereby certifies to the Transferor,
the Servicer and the Trustee that it has neither acquired
nor will it sell, trade or transfer any interest in a Class
B Certificate or cause an interest in a Class B Certificate
to be marketed on or through an "established securities
market" within the meaning of Section 7704(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") and
any proposed, temporary or final treasury regulation
thereunder, including, without limitation, an over-the-
counter-market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations. In
addition, the Purchaser hereby certifies that it is not and,
for so long as it holds any interest in a Class B
Certificate will not become a partnership, Subchapter S
corporation or grantor trust for U.S. federal income tax
purposes. The Purchaser acknowledges that the opinion of
counsel to the effect that the Trust will not be treated as
a publicly traded partnership taxable as a corporation is
dependent in part on the accuracy of the certifications
described in this paragraph.][To be included only if
required by Section 6.18 of the Pooling and Servicing
Agreement.]
[(e)][(f)] This Investment Letter has been duly
executed and delivered and constitutes the legal, valid and
binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable
principles affecting the enforcement of creditors' rights
generally and general principles of equity.
[(f)][(g)] The Purchaser understands that the Class
B Certificates will bear a legend to substantially the
following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE
SECURITIES ACT. NO RESALE OR OTHER TRANSFER OF THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, (B) IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS. NEITHER THE TRANSFEROR
NOR THE TRUSTEE IS OBLIGATED TO REGISTER THE
CERTIFICATES UNDER THE SECURITIES ACT OR ANY OTHER
SECURITIES OR "BLUE SKY" LAW.
EACH HOLDER OF THIS CERTIFICATE OR AN INTEREST
THEREIN, BY ACCEPTING AND HOLDING THIS CERTIFICATE, IS
DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT
(I) AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3)
OF ERISA) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I
OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(l)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
Very truly yours,
[NAME OF PURCHASER]
By:___________________________
Name:
Title:
EXHIBIT B
FORM OF JOINDER SUPPLEMENT
THIS JOINDER SUPPLEMENT ("Supplement"), dated as of the
date set forth in Item 1 of Schedule I hereto, among Prime II
Receivables Corporation (the "Transferor"), the Class B Purchaser
set forth in Item 2 of Schedule I hereto (the "Additional Class B
Purchaser"), and PNC Bank, National Association, as Agent for the
Class B Purchasers under, and as defined in, the Certificate
Purchase Agreement described below (in such capacity, the
"Agent").
W I T N E S S E T H:
WHEREAS, this Supplement is being executed and
delivered in accordance with subsection 2.2(d) of the Class B
Certificate Purchase Agreement, dated as of July 6, 1999, among
the Transferor, FDS National Bank, as Servicer, the Class B
Purchasers parties thereto, the Agent and PNC Bank, National
Association, as Administrative Agent (as from time to time
amended, supplemented or otherwise modified in accordance with
the terms thereof, the "Certificate Purchase Agreement"; unless
otherwise defined herein, terms defined in the Certificate
Purchase Agreement are used herein as therein defined); and
WHEREAS, the Additional Class B Purchaser (if it is not
already a Class B Purchaser party to the Certificate Purchase
Agreement) wishes to become a Class B Purchaser party to the
Certificate Purchase Agreement;
NOW, THEREFORE, the parties hereto hereby agree as
follows:
(a) Upon receipt by the Agent of five counterparts of
this Supplement, to each of which is attached a fully completed
Schedule I and Schedule II, each of which has been executed by
the Additional Class B Purchaser, the Transferor and the Agent,
the Agent will transmit to the Servicer, the Transferor, the
Trustee, the Administrative Agent and the Additional Class B
Purchaser a Joinder Effective Notice, substantially in the form
of Schedule III to this Supplement (a "Joinder Effective
Notice"). Such Joinder Effective Notice shall be executed by the
Agent and shall set forth, inter alia, the date on which the
transfer effected by this Supplement shall become effective (the
"Joinder Effective Date"). From and after the Joinder Effective
Date, the Additional Class B Purchaser shall be a Class B
Purchaser party to the Certificate Purchase Agreement for all
purposes thereof and shall be a Noncommitted Class B Purchaser
or Committed Class B Purchaser, as the case may be, as set forth
in Schedule II hereto, having an initial Noncommitted Purchaser
Percentage or Commited Purchaser Percentage, as applicable, and a
Commitment, if applicable, as set forth in such Schedule II.
(b) Concurrently with the execution and delivery
hereof, the Additional Class B Purchaser will deliver to the
Transferor and the Trustee an executed Investment Letter in the
form of Exhibit A to the Certificate Purchase Agreement.
(c) Each of the parties to this Supplement agrees and
acknowledges that at any time and from time to time upon the
written request of any other party, it will execute and deliver
such further documents and do such further acts and things as
such other party may reasonably request in order to effect the
purposes of this Supplement.
(d) By executing and delivering this Supplement, the
Additional Class B Purchaser confirms to and agrees with the
Agent, the Administrative Agent and the Class B Purchasers as
follows: (i) neither the Agent, the Administrative Agent nor any
other Class B Purchaser makes any representation or warranty or
assumes any responsibility with respect to any statements,
warranties or representations made in or in connection with the
Certificate Purchase Agreement (other then representations or
warranties made by such respective parties) or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Certificate Purchase Agreement or any other
instrument or document furnished pursuant thereto, or with
respect to the Trust, the financial condition of the Servicer,
the Transferor or the Trustee, or the performance or observance
by the Servicer, the Transferor or the Trustee of any of their
respective obligations under the Certificate Purchase Agreement
or the Pooling and Servicing Agreement or any other instrument or
document furnished pursuant hereto; (ii) the Additional Class B
Purchaser confirms that it has received a copy of such documents
and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Supplement; (iii)
the Additional Class B Purchaser will, independently and without
reliance upon the Agent, the Administrative Agent or any other
Class B Purchaser and based on such documents and information as
it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the
Certificate Purchase Agreement; (iv) each Purchasing Class B
Purchaser appoints and authorizes the Agent and the
Administrative Agent to take such action as agent on its behalf
and to exercise such powers under the Certificate Purchase
Agreement and the Supplement as are delegated to the Agent or the
Administrative Agent, as applicable, by the terms thereof,
together with such powers as are reasonably incidental thereto,
all in accordance with Section 7 of the Certificate Purchase
Agreement; and (vi) the Additional Class B Purchaser agrees (for
the benefit of the Agent, the Administrative Agent, the other
Class B Purchasers, the Trustee, the Servicer and the Transferor)
that it will perform in accordance with their terms all of the
obligations which by the terms of the Certificate Purchase
Agreement are required to be performed by it as a Class B
Purchaser which is a Noncommitted Class B Purchaser or Committed
Class B Purchaser, as the case may be, as specified in Schedule
II hereto.
(e) Schedule II hereto sets forth the Commitment and
the Commitment Expiration Date, if applicable, and the initial
Investing Office of the Additional Class B Purchaser, as well as
administrative information with respect to the Additional Class B
Purchaser.
(f) This Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be executed by their respective duly authorized
officers on Schedule I hereto as of the date set forth in Item 1
of Schedule I hereto.
SCHEDULE I TO
JOINDER SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR JOINDER SUPPLEMENT
Re: Class B Certificate Purchase Agreement, dated as
of July 6, 1999, among Prime II Receivables
Corporation, as Transferor, FDS National Bank, as
Servicer, the Class B Purchasers party thereto and PNC
Bank, National Association, as Agent and as
Administrative Agent.
Item 1: Date of Joinder Supplement:
Item 2: Additional Class B Purchaser:
Item 3: Signatures of Parties to Agreement:
as Additional Class B Purchaser
By:
Name:
Title:
[By:
Name:
Title:]
PRIME II RECEIVABLES CORPORATION,
as Transferor
By:
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as Agent
By:
Name:
Title:
By:
Name:
Title:
ACCEPTED BY:
PNC BANK, NATIONAL ASSOCIATION, as
Administrative Agent
By:
Name:
Title:
By:
Name:
Title:
FDS NATIONAL BANK, as Servicer
By:
Name:
Title:
SCHEDULE II TO
JOINDER SUPPLEMENT
LIST OF INVESTING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT
[Additional Class B Purchaser]
Noncommitted Class B Purchaser: Yes/No
Initial Noncommitted Purchaser Percentage: _______%
(if applicable)
Committed Class B Purchaser: Yes/No
Initial Committed Purchaser Percentage: _______%
(if applicable)
Commitment: $____________
Commitment Expiration Date: _____________
Address for Notices:
Investing Office:
SCHEDULE III TO
JOINDER SUPPLEMENT
FORM OF
JOINDER EFFECTIVE NOTICE
To: [Name and address of
Transferor, Servicer, Trustee, Administrative
Agent and Additional Class B Purchaser]
The undersigned, as Agent under the Class B Certificate
Purchase Agreement, dated as of July 6, 1999, among Prime II
Receivables Corporation, as Transferor, FDS National Bank, as
Servicer, the Class B Purchasers parties thereto and PNC Bank,
National Association, as Agent for the Class B Purchasers and as
Administrative Agent thereunder, acknowledges receipt of five
executed counterparts of a completed Joinder Supplement. [Note:
attach copies of Schedules I and II from such Agreement.] Terms
defined in such Supplement are used herein as therein defined.
Pursuant to such Supplement, you are advised that the
Joinder Effective Date will be _____________, 199_.
Very truly yours,
PNC BANK, NATIONAL
ASSOCIATION,
as Agent
By:_______________________
Name:
Title:
By:_______________________
Name:
Title:
EXHIBIT C
FORM OF TRANSFER SUPPLEMENT
THIS TRANSFER SUPPLEMENT ("Supplement"), dated as of
the date set forth in Item 1 of Schedule I hereto, among the
Transferor Class B Purchaser set forth in Item 2 of Schedule I
hereto (the "Transferor Class B Purchaser"), the Purchasing Class
B Purchaser set forth in Item 3 of Schedule I hereto (the
"Purchasing Class B Purchaser"), and PNC Bank, National
Association, as Agent for the Class B Purchasers under, and as
defined in, the Certificate Purchase Agreement described below
(in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, this Supplement is being executed and
delivered in accordance with subsection 8.1(e) of the Class B
Certificate Purchase Agreement, dated as of July 6, 1999, among
Prime II Receivables Corporation, as Transferor, FDS National
Bank, as Servicer, the Class B Purchasers parties thereto, the
Agent and PNC Bank, National Association, as Administrative Agent
(as from time to time amended, supplemented or otherwise modified
in accordance with the terms thereof, the "Certificate Purchase
Agreement"; unless otherwise defined herein, terms defined in the
Certificate Purchase Agreement are used herein as therein
defined);
WHEREAS, the Purchasing Class B Purchaser (if it is not
already a Class B Purchaser party to the Certificate Purchase
Agreement) wishes to become a Class B Purchaser party to the
Certificate Purchase Agreement and the Purchasing Class B
Purchaser wishes to acquire and assume from the Transferor Class
B Purchaser, certain of the rights, obligations and commitments
under the Certificate Purchase Agreement; and
WHEREAS, the Transferor Class B Purchaser wishes to
sell and assign to the Purchasing Class B Purchaser, certain of
its rights, obligations and commitments under the Certificate
Purchase Agreement.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
(a) Upon receipt by the Agent of five counterparts of
this Supplement, to each of which is attached a fully completed
Schedule I and Schedule II, each of which has been executed by
the Transferor Class B Purchaser, the Purchasing Class B
Purchaser and the Agent, the Agent will transmit to the Servicer,
the Transferor, the Trustee, the Transferor Class B Purchaser and
the Purchasing Class B Purchaser a Transfer Effective Notice,
substantially in the form of Schedule III to this Supplement (a
"Transfer Effective Notice"). Such Transfer Effective Notice
shall be executed by the Agent and shall set forth, inter alia,
the date on which the transfer effected by this Supplement shall
become effective (the "Transfer Effective Date"). Subject to the
prior written consent, if applicable, of the Transferor and the
Servicer to such transfer in the form of Schedule IV to this
Supplement, from and after the Transfer Effective Date the
Purchasing Class B Purchaser shall be a Class B Purchaser party
to the Certificate Purchase Agreement for all purposes thereof as
a Noncommitted Class B Purchaser or Committed Class B Purchaser,
as specified on Schedule II to this Supplement.
(b) At or before 12:00 Noon, local time of the
Transferor Class B Purchaser, on the Transfer Effective Date, the
Purchasing Class B Purchaser shall pay to the Transferor Class B
Purchaser, in immediately available funds, an amount equal to the
purchase price, as agreed between the Transferor Class B
Purchaser and such Purchasing Class B Purchaser (the "Purchase
Price"), of the portion set forth on Schedule II hereto being
purchased by such Purchasing Class B Purchaser of the outstanding
Class B Invested Amount under the Class B Variable Funding
Certificate owned by the Transferor Class B Purchaser (such
Purchasing Class B Purchaser's "Purchase Percentage") and other
amounts owing to the Transferor Class B Purchaser under the
Certificate Purchase Agreement or otherwise in respect of the
Class B Variable Funding Certificates. Effective upon receipt by
the Transferor Class B Purchaser of the Purchase Price from the
Purchasing Class B Purchaser, the Transferor Class B Purchaser
hereby irrevocably sells, assigns and transfers to the Purchasing
Class B Purchaser, without recourse, representation or warranty,
and the Purchasing Class B Purchaser hereby irrevocably
purchases, takes and assumes from the Transferor Class B
Purchaser, the Purchasing Class B Purchaser's Purchase Percentage
of (i) the presently outstanding Class B Invested Amount under
the Class B Variable Funding Certificates owned by the Transferor
Class B Purchaser and other amounts owing to the Transferor Class
B Purchaser in respect of the Class B Variable Funding
Certificates, together with all instruments, documents and
collateral security pertaining thereto, and (ii) the Purchasing
Purchaser's Purchase Percentage of (A) if the Transferor Class B
Purchaser is a Noncommitted Class B Purchaser, the Noncommitted
Purchaser Percentage of the Transferor Class B Purchaser and the
other rights and duties of the Transferor Class B Purchaser under
the Certificate Purchase Agreement, or (B) if the Transferor
Class B Purchaser is a Committed Class B Purchaser, the Committed
Purchaser Percentage and the Commitment of the Transferor Class B
Purchaser and other rights, duties and obligations of the
Transferor Class B Purchaser under the Certificate Purchase
Agreement. This Supplement is intended by the parties hereto to
effect a purchase by the Purchasing Class B Purchaser and sale by
the Transferor Class B Purchaser of interests in the Class B
Variable Funding Certificates, and it is not to be construed as a
loan or a commitment to make a loan by the Purchasing Class B
Purchaser to the Transferor Class B Purchaser. The Transferor
Class B Purchaser hereby confirms that the amount of the Class B
Invested Amount is $ and its Percentage
Interest thereof is ___%, which equals $
as of , 199_. Upon and after the Transfer Effective
Date (until further modified in accordance with the Certificate
Purchase Agreement), the Noncommitted Purchaser Percentage or
Commited Purchaser Percentage, as applicable of the Transferor
Class B Purchaser and the Purchasing Class B Purchaser and the
Commitment, if any, of the Transferor Class B Purchaser and the
Purchasing Class B Purchaser shall be as set forth in Schedule II
to this Supplement.
(c) The Transferor Class B Purchaser has made
arrangements with the Purchasing Class B Purchaser with respect
to (i) the portion, if any, to be paid, and the date or dates for
payment, by the Transferor Class B Purchaser to the Purchasing
Class B Purchaser of any fees heretofore received by the
Transferor Class B Purchaser pursuant to the Certificate Purchase
Agreement prior to the Transfer Effective Date and (ii) the
portion, if any, to be paid, and the date or dates for payment,
by the Purchasing Class B Purchaser to the Transferor Class B
Purchaser of fees or interest received by the Purchasing Class B
Purchaser pursuant to the Certificate Purchase Agreement or
otherwise in respect of the Class B Variable Funding Certificates
from and after the Transfer Effective Date.
(d) (i) All principal payments that would otherwise be
payable from and after the Transfer Effective Date to or for the
account of the Transferor Class B Purchaser in respect of the
Class B Variable Funding Certificates shall, instead, be payable
to or for the account of the Transferor Class B Purchaser and the
Purchasing Class B Purchaser, as the case may be, in accordance
with their respective interests as reflected in this Supplement.
(ii) All interest, fees and other amounts that
would otherwise accrue for the account of the Transferor Class B
Purchaser from and after the Transfer Effective Date pursuant to
the Certificate Purchase Agreement or in respect of the Class B
Variable Funding Certificates shall, instead, accrue for the
account of, and be payable to or for the account of, the
Transferor Class B Purchaser and the Purchasing Class B
Purchaser, as the case may be, in accordance with their
respective interests as reflected in this Supplement. In the
event that any amount of interest, fees or other amounts accruing
prior to the Transfer Effective Date was included in the Purchase
Price paid by the Purchasing Class B Purchaser, the Transferor
Class B Purchaser and the Purchasing Class B Purchaser will make
appropriate arrangements for payment by the Transferor Class B
Purchaser to the Purchasing Class B Purchaser of such amount upon
receipt thereof from the Agent.
(e) Concurrently with the execution and delivery
hereof, the Purchasing Class B Purchaser will deliver to the
Transferor and the Trustee an executed Investment Letter in the
form of Exhibit A to the Certificate Purchase Agreement.
(f) Each of the parties to this Supplement agrees and
acknowledges that (i) at any time and from time to time upon the
written request of any other party, it will execute and deliver
such further documents and do such further acts and things as
such other party may reasonably request in order to effect the
purposes of this Supplement, and (ii) the Agent shall apply each
payment made to it under the Certificate Purchase Agreement,
whether in its individual capacity or as Agent, in accordance
with the provisions of the Certificate Purchase Agreement, as
appropriate.
(g) By executing and delivering this Supplement, the
Transferor Class B Purchaser and the Purchasing Class B Purchaser
confirm to and agree with each other, the Administrative Agent
and the Agent and the Class B Purchasers as follows: (i) other
than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned hereby free and
clear of any adverse claim, the Transferor Class B Purchaser
makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations
made in or in connection with the Certificate Purchase Agreement
or the Pooling and Servicing Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Certificate Purchase Agreement or any other
instrument or document furnished pursuant thereto; (ii) the
Transferor Class B Purchaser makes no representation or warranty
and assumes no responsibility with respect to the Trust, the
financial condition of the Servicer, the Transferor or the
Trustee, or the performance or observance by the Servicer, the
Transferor or the Trustee of any of their respective obligations
under the Certificate Purchase Agreement, the Pooling and
Servicing Agreement or any other instrument or document furnished
pursuant hereto; (iii) each Purchasing Class B Purchaser confirms
that it has received a copy of such documents and information as
it has deemed appropriate to make its own credit analysis and
decision to enter into this Supplement; (iv) each Purchasing
Class B Purchaser will, independently and without reliance upon
the Agent, the Transferor Class B Purchaser or any other Class B
Purchaser and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Certificate
Purchase Agreement or the Pooling and Servicing Agreement; (v)
each Purchasing Class B Purchaser appoints and authorizes the
Agent and the Administrative Agent to take such action as agent
on its behalf and to exercise such powers under the Certificate
Purchase Agreement and the Pooling and Servicing Agreement as are
delegated to the Agent or the Administrative Agent, as the case
may be, by the terms thereof, together with such powers as are
reasonably incidental thereto, all in accordance with Section 7
of the Certificate Purchase Agreement; and (vi) each Purchasing
Class B Purchaser agrees (for the benefit of the Transferor Class
B Purchaser, the Agent, the Administrative Agent, the Class B
Purchasers, the Trustee, the Servicer and the Transferor) that it
will perform in accordance with their terms all of the
obligations which by the terms of the Certificate Purchase
Agreement are required to be performed by it as a Class B
Purchaser.
(h) Schedule II hereto sets forth the revised
Noncommitted Purchaser Percentage or the revised Committed
Purchaser Percentage and Commitment of the Transferor Class B
Purchaser, as applicable, the Noncommitted Purchaser Percentage
or the Committed Purchaser Percentage, Commitment and Commitment
Expiration Date of the Purchasing Class B Purchaser, as
applicable, and the initial Investing Office of the Purchasing
Class B Purchaser, as well as administrative information with
respect to the Purchasing Class B Purchaser.
(i) This Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be executed by their respective duly authorized
officers on Schedule I hereto as of the date set forth in Item 1
of Schedule I hereto.
SCHEDULE I TO
TRANSFER SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR TRANSFER SUPPLEMENT
Re: Class B Certificate Purchase Agreement, dated as
of July 6, 1999, among Prime II Receivables
Corporation, as Transferor, FDS National Bank, as
Servicer, the Class B Purchasers party thereto and PNC
Bank, National Association, as Agent and as
Administrative Agent.
Item 1: Date of Transfer Supplement:
Item 2: Transferor Class B Purchaser:
Item 3: Purchasing Class B Purchaser:
Item 4: Signatures of Parties to Agreement:
as Transferor Class B Purchaser
By:
Name:
Title:
By:
Name:
Title:
as Purchasing Class B Purchaser
By:
Name:
Title:
By:
Name:
Title:
ACCEPTED BY:
PNC BANK, NATIONAL ASSOCIATION, as Agent
By:
Name:
Title:
By:
Name:
Title:
SCHEDULE II TO
TRANSFER SUPPLEMENT
LIST OF INVESTING OFFICES, ADDRESSES
FOR NOTICES, ASSIGNED INTEREST,
PURCHASE PERCENTAGE AND PURCHASE PRICE
[Transferor Class B Purchaser]
A. Noncommitted Class B Purchaser: Yes/No
If applicable:
Noncommitted Purchaser Percentage:
Transferor Class B Purchaser
Noncommitted Purchaser Percentage
Prior to Sale: _____%
Noncommitted Purchaser Percentage Sold: _____%
Noncommitted Purchaser Percentage Retained: _____%
B. Committed Class B Purchaser: Yes/No
If applicable:
Committed Purchaser Percentage:
Transferor Class B Purchaser
Committed Purchaser Percentage
Prior to Sale: _____%
Committed Purchaser Percentage Sold: _____%
Committed Purchaser Percentage Retained: _____%
Commitment:
Transferor Class B Purchaser Commitment
Prior to Sale: $________
Commitment Sold: $________
Commitment Retained: $________
C. Class B Invested Amount:
Transferor Class B Purchaser
Class B Invested Amount Prior to Sale: $________
Class B Invested Amount Sold: $________
Class B Invested Amount Retained: $________
D. Purchase Percentage: _____%
[Purchasing Class B Purchaser]
A. Noncommitted Class B Purchaser: Yes/No
If applicable:
Initial Noncommitted Purchaser Percentage: _____%
B. Committed Class B Purchaser: Yes/No
If applicable:
Committed Purchaser Percentage: _____%
Commitment: $________
Commitment Expiration Date: ____________
C. Class B Invested Amount Owned Immediately
After Sale: $________
Address for Notices:
Investing Office:
SCHEDULE III TO
TRANSFER SUPPLEMENT
Form of
Transfer Effective Notice
To: [Name and address of
Transferor, Servicer, Trustee, the Transferor Class B
Purchaser and the Purchasing Class B Purchaser]
The undersigned, as Agent under the Class B Certificate
Purchase Agreement, dated as of July 6, 1999, among Prime II
Receivables Corporation, as Transferor, FDS National Bank, as
Servicer, the Class B Purchasers parties thereto and PNC Bank,
National Association, as Agent for the Class B Purchasers and as
Administrative Agent thereunder, acknowledges receipt of five
executed counterparts of a completed Transfer Supplement. [Note:
attach copies of Schedules I and II from such Agreement.] Terms
defined in such Supplement are used herein as therein defined.
Pursuant to such Supplement, you are advised that the
Transfer Effective Date will be _____________, 199_.
Very truly yours,
PNC BANK, NATIONAL
ASSOCIATION,
as Agent
By:_______________________
Name:
Title:
By:_______________________
Name:
Title:
SCHEDULE IV TO
TRANSFER SUPPLEMENT
Form of
Consent of Transferor
To: The Chase Manhattan Bank, as Trustee
PNC Bank, National Association, as Agent
The undersigned hereby consents to the transfer, as of the
Transfer Effective Date, of a [Noncommitted Purchaser
Percentage/Committed Purchaser Percentage] equal to ____%
[representing a Commitment in the amount of $__________] and a
Class B Invested Amount under the Prime Credit Card Master Trust
II Class B Variable Funding Certificates, Series 1999-1, in the
amount of $_________, by _______________ to _______________,
pursuant to the Class B Certificate Purchase Agreement, dated as
of July 6, 1999, among Prime II Receivables Corporation, FDS
National Bank, as Servicer, the Class B Purchasers parties
thereto and PNC Bank, National Association, as Agent and as
Administrative Agent.
Very truly yours,
PRIME II RECEIVABLES
CORPORATION
By:_______________________
Name:
Title:
FDS NATIONAL BANK,
as Servicer
By:_______________________
Name:
Title:
Dated: _________________
cc: Purchasing Class B Purchaser
EXHIBIT D
PRIME II RECEIVABLES CORPORATION
FORM OF NOTICE OF FINANCING
PNC XXXXXXX
Via Facsimile: XXXXXX
Attn: XXXXXX XXXXXXXXX
To be executed on: 02-Jul-99
Increase/
(Decrease)
Next Business Day 1999-1A 0.00
1999-1B 0.00
_______________________
Ph: (513) 573-2047
Fx: (513) 573-2039
FIRST AMENDMENT TO CLASS B CERTIFICATE PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO CLASS B CERTIFICATE PURCHASE
AGREEMENT (this "Amendment"), dated as of August 3, 1999, is
entered into among by and among PRIME II RECEIVABLES CORPORATION
(the "Transferor"), FDS NATIONAL BANK (the "Servicer"), MARKET
STREET FUNDING CORPORATION (the "Class B Purchasers"), and PNC
BANK, NATIONAL ASSOCIATION (the "Agent").
RECITALS
WHEREAS, the Transferor, the Servicer, the Class B Purchaser
and the Agent are parties to that certain Class B Certificate
Purchase Agreement, dated as of July 6, 1999 (as amended,
supplemented or otherwise modified from time to time, the
"Agreement"); and
WHEREAS, The parties hereto desire to amend the Agreement as
hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
. Certain Defined Terms. Capitalized terms that are
used herein without definition and that are defined in the
Agreement shall have the same meanings herein as therein defined.
. Amendments to Agreement. (a) Clause (a) of the
definition of "Commercial Paper Rate" that appears in Section 1.1
of the Agreement is hereby amended by inserting, after the word
"outstanding" and before the words "such Structured Purchaser,"
the words "on behalf of."
(b) The last sentence of Section 2.1(b) of the Agreement is
hereby amended and restated in its entirety to read as follows:
"It is understood and agreed that (i) except as provided in
the last sentence of Section 2.1(c), each Class B Purchaser
which is a Structured Purchaser, subject to the terms and
conditions of this Agreement, intends to fund its Noncommitted
Purchaser Percentage or Commitment Percentage, as the case may
be, of any and all Class B Investor Principal Balance offered
by the Transferor pursuant to Section 6.15 of the Pooling and
Servicing Agreement through the issuance of commercial paper,
to the extent that it is permitted and able in the ordinary
course of its business to issue commercial paper which is
rated not lower than the respective ratings assigned by
Moody's and Standard & Poor's on the date on which such
Structured Purchaser became a Class B Purchaser (without
increasing or otherwise modifying any letter of credit or
other enhancement provided to such Structured Purchaser or any
liquidity support provided to such Structured Purchaser by
Affected Parties), and (ii) notwithstanding anything else
herein to the contrary, under no circumstances shall the
Transferor or the Servicer be entitled to request such
Structured Purchaser to fund all or any portion of its Class B
Investor Principal Balance in any manner other than through
the issuance of commercial paper."
(c) Section 9.1 of the Agreement is hereby amended by
inserting after the last sentence in the first paragraph of
Section 9.1 the following sentence:
"The Agent shall promptly notify each Rating Agency of any
material amendment, modification, waiver and/or supplement to
this Agreement pursuant to this Section 9.1".
(d) Sections 6.2 and 9.12(b) of the Agreement are hereby
amended by replacing the words "Structured Lender" in each place
they appear in such Sections with the words "Structured
Purchaser."
. Representations and Warranties. Each of the parties
hereto hereby represents and warrants as follows:
(a) Representations and Warranties. The representations and
warranties contained in Section 4 of the Agreement are true
and correct as of the date hereof.
(b) No Default. Both before and immediately after giving
effect to this Amendment and the transactions contemplated
hereby no Termination Event, Series 1999-1 Pay Out Event,
Servicer Default or Trust Payout Event exists or shall exist.
. Effect of Amendment. All provisions of the Agreement, as
expressly amended and modified by this Amendment, shall remain in
full force and effect. After this Amendment becomes effective,
all references in the Agreement (or in any other Related
Document) to "this Agreement", "hereof", "herein" or words of
similar effect referring to the Agreement shall be deemed to be
references to the Agreement as amended by this Amendment. This
Amendment shall not be deemed, either expressly or impliedly, to
waive, amend or supplement any provision of the Agreement other
than as set forth herein.
. Effectiveness. This Amendment shall become effective as
of the date hereof upon receipt by the Agent of counterparts of
this Amendment (whether by facsimile or otherwise) executed by
each of the other parties hereto, in form and substance
satisfactory to the Agent in its sole discretion.
. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties on separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall
constitute but one and the same instrument.
. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of
New York (without regard to any otherwise applicable principles
of conflicts of law).
. Section Headings. The various headings of this Amendment
are included for convenience only and shall not affect the
meaning or interpretation of this Amendment, the Agreement or any
provision hereof or thereof.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first written above.
PRIME II RECEIVABLES CORPORATION,
as Transferor
By: /s/ Susan S. Storer
Name: Susan S. Storer
Title: President
FDS NATIONAL BANK,
as Servicer
By: /s/ Susan R. Robinson
Name: Susan R. Robinson
Title: Treasurer
MARKET STREET FUNDING CORPORATION,
as Class A Purchaser
By: /s/ Douglas K. Johnson
Name: Douglas K. Johnson
Title: President
PNC BANK, NATIONAL ASSOCIATION,
as Agent
By: /s/ John T. Smathers
Name: John T. Smathers
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-END> JUL-31-1999
<CASH> 357
<SECURITIES> 0
<RECEIVABLES> 3,512
<ALLOWANCES> 0
<INVENTORY> 3,635
<CURRENT-ASSETS> 7,867<F1>
<PP&E> 6,689
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,879<F2>
<CURRENT-LIABILITIES> 4,353
<BONDS> 4,704
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,879<F3>
<SALES> 4,111
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 2,409
<OTHER-EXPENSES> 1,384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87
<INCOME-PRETAX> 233<F4>
<INCOME-TAX> 96
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 137
<EPS-BASIC> 0.65
<EPS-DILUTED> 0.61
<FN>
<F1>Includes the following:
Supplies and prepaid expenses 221
Deferred income tax assets 142
<F2>Includes the following:
Intangible assets - net 1,807
Other assets 516
<F3>Includes the following:
Deferred income taxes 1,240
Other liabilities 586
Shareholders' Equity 5,996
<F4>Includes the following:
Interest Income 2
</FN>
</TABLE>
