<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 9, 1996
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
FCC NATIONAL BANK
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME AS SPECIFIED IN REGISTRANT'S CHARTER)
FIRST CHICAGO MASTER TRUST II
(ISSUER OF THE CERTIFICATES)
UNITED STATES 6021 51-0269396
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
ONE GATEWAY CENTER
300 KING STREET
WILMINGTON, DELAWARE 19801
(302) 594-8606
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT A. ROSHOLT
EXECUTIVE VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER
FIRST CHICAGO NBD CORPORATION
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60670
(312) 732-3209
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
LAURENCE GOLDMAN, ESQ. RICHARD F. KADLICK, ESQ.
FIRST CHICAGO NBD CORPORATION SKADDEN, ARPS, SLATE,
ONE FIRST NATIONAL PLAZA MEAGHER & FLOM
CHICAGO, ILLINOIS 60670 919 THIRD AVENUE
(312) 732-3565 NEW YORK, NEW YORK 10022
(212) 735-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective as determined by
market conditions.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
BE REGISTERED* REGISTERED CERTIFICATE** PRICE** REGISTRATION FEE
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<S> <C> <C> <C> <C>
Asset Backed Securities. $1,000,000 100% $1,000,000 $345
</TABLE>
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* The securities are also being registered for the purpose of market-making.
** Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 9, 1996
PROSPECTUS
FIRST CHICAGO MASTER TRUST II
ASSET BACKED CERTIFICATES
FCC NATIONAL BANK, SELLER AND SERVICER
The Asset Backed Certificates (collectively, the "Certificates") described
herein may be sold from time to time in one or more series (each, a "Series"),
in amounts, at prices and on terms to be determined at the time of sale and
which are set forth in a supplement to this Prospectus (a "Prospectus
Supplement"). Each of the Certificates will evidence an undivided interest in
the First Chicago Master Trust II (the "Trust") created pursuant to a Pooling
and Servicing Agreement between FCC National Bank, as seller and servicer (the
"Bank"), and Norwest Bank Minnesota, National Association, as trustee. The
Trust assets include receivables (the "Receivables") generated from time to
time in the ordinary course of business in a portfolio of consumer revolving
credit card accounts and any Enhancements, as more fully described herein and,
with respect to any Series offered hereby, in the related Prospectus
Supplement. The Bank owns the remaining interest in the Trust not represented
by any Series. Certain capitalized terms used herein are defined elsewhere in
this Prospectus. A listing of the pages on which such terms are defined is
found in the "Index of Terms for Prospectus" beginning on page 63.
Each Series will consist of one or more classes of Certificates (each, a
"Class"), as specified in the related Prospectus Supplement. The interest of
the Certificateholders of each Class or Series will include the right to
receive a varying percentage of collections with respect to the Receivables at
the times, in the manner and to the extent described herein and, with respect
to any Series offered hereby, in the related Prospectus Supplement. Interest
and principal payments with respect to each Series offered hereby will be made
as specified in the related Prospectus Supplement. One or more Classes of a
Series offered hereby may be entitled to the benefits of a form of Enhancement
as specified in the related Prospectus Supplement. In addition, any Series
offered hereby may include one or more Classes which are subordinated in right
and priority to payment of principal of, and/or interest on, one or more other
Classes of such Series or another Series, in each case to the extent described
in the related Prospectus Supplement. Each Series of Certificates or Class
thereof offered hereby will be rated in one of the four highest rating
categories by at least one nationally recognized rating organization.
While the specific terms of any Series in respect of which this Prospectus is
being delivered are described in the related Prospectus Supplement, the terms
of such Series are not subject to prior review by, or consent of, the
Certificateholders of any previously issued Series.
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" BEGINNING ON PAGE 15 HEREIN.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF THE BANK OR ANY AFFILIATE THEREOF EXCEPT TO THE
LIMITED EXTENT DESCRIBED HEREIN. NEITHER THE CERTIFICATES, THE UNDERLYING
ACCOUNTS, THE RECEIVABLES NOR ANY COLLECTIONS THEREON ARE INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Certificates may be sold by the Bank directly to purchasers, through agents
designated from time to time, through underwriting syndicates led by one or
more managing underwriters or through one or more underwriters acting alone. If
underwriters or agents are involved in the offering of the Certificates of any
Series offered hereby, the name of the managing underwriter or underwriters or
agents is set forth in the related Prospectus Supplement. If an underwriter,
agent or dealer is involved in the offering of the Certificates of any Series
offered hereby, the underwriter's discount, agent's commission or dealer's
purchase price is set forth in, or may be calculated from, the related
Prospectus Supplement, and the net proceeds to the Bank from such offering will
be the public offering price of such Certificates less such discount in the
case of an underwriter, the purchase price of such Certificates less such
commission in the case of an agent or the purchase price of such Certificates
in the case of a dealer, and less, in each case, the other expenses of the Bank
associated with the issuance and distribution of such Certificates. An
affiliate of the Bank may, from time to time, act as agent or underwriter in
connection with the sale of Certificates. See "Plan of Distribution."
This Prospectus and applicable Prospectus Supplement may be used by First
Chicago Capital Markets, Inc. ("FCCM"), an affiliate of the Bank, in connection
with offers and sales related to secondary market transactions in the
Certificates. FCCM may act as principal or agent in such transactions. Such
sales will be made at prices related to the prevailing market prices at the
time of sale.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF ANY SERIES OF
CERTIFICATES UNLESS ACCOMPANIED BY THE RELATED PROSPECTUS SUPPLEMENT.
The date of this Prospectus is , 1996.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series to be offered thereby and
hereby, among other things, sets forth with respect to such Series: (a) the
initial aggregate principal amount of each Class of such Series; (b) the
certificate interest rate (or method for determining it) of each Class of such
Series; (c) certain information concerning the Receivables; (d) the expected
date or dates on which the principal amount of the Certificates will be paid
to holders of each Class of Certificates (the "Certificateholders"); (e) the
extent to which any Class within a Series is subordinated to any other Class
of such Series or any other Series; (f) the identity of each Class of floating
rate Certificates and fixed rate Certificates included in such Series, if any,
or such other type of Class of Certificates; (g) the Distribution Dates for
the respective Classes; (h) relevant financial information with respect to the
Receivables; (i) additional information with respect to an Enhancement
relating to such Series; and (j) the plan of distribution of such Series.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly unaudited
reports, containing information concerning the Trust and prepared by the
Servicer, will be sent on behalf of the Trust to Cede & Co. ("Cede"), as
registered holder of the Certificates, pursuant to the Pooling and Servicing
Agreement (the "Agreement"). See "Description of the Certificates and the
Agreement--Book-Entry Registration," "--Reports to Certificateholders" and "--
Evidence as to Compliance." Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting
principles. The Bank does not intend to send any of its financial reports to
Certificateholders or to owners of beneficial interests in the Certificates
("Certificate Owners"). The Servicer will file with the Securities and
Exchange Commission (the "Commission") such reports with respect to the Trust
as are required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder.
AVAILABLE INFORMATION
FCC National Bank, as originator of the Trust, has filed a Registration
Statement under the Securities Act of 1933, as amended (the "Act"), with the
Commission on behalf of the Trust with respect to the Certificates offered
pursuant to this Prospectus. For further information, reference is made to the
Registration Statement and amendments thereof and exhibits thereto, which are
available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549; 7 World Trade Center, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of the Registration
Statement and amendments thereof and exhibits thereto may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Servicer, on behalf
of the Trust, are incorporated in this Prospectus by reference: the Trust's
Annual Report on Form 10-K for the year ended December 31, 1995, and the
Trust's Current Reports on Form 8-K dated January 12, 1996, February 9, 1996
and March 12, 1996.
All reports and other documents filed by the Servicer, on behalf of the
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Certificates shall be deemed to be incorporated by reference
into this Prospectus and to be part hereof. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Servicer will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to First Chicago NBD Corporation, One First National
Plaza, Chicago, Illinois 60670, Attention: Investor Relations (312) 732-4812.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain
capitalized terms which are used herein are defined elsewhere in this
Prospectus and in the accompanying Prospectus Supplement. Unless the context
otherwise requires, certain capitalized terms, when used herein and in the
accompanying Prospectus Supplement, relate only to the particular Series being
offered by such Prospectus Supplement. Other Series issued pursuant to other
similar prospectuses or disclosure documents may also use such capitalized
terms in such prospectuses or documents. However, in such cases, reference to
such terms, unless the context otherwise requires, is made only in the context
of the issuance of such other Series.
TYPE OF SECURITY...... Asset Backed Certificates (the "Certificates") to
be issued from time to time in one or more series
(each, a "Series") which will consist of one or
more classes (each, a "Class"). The accompanying
Prospectus Supplement identifies all previously
issued Series of the Trust that remain outstanding
(as well as any Series proposed to be issued by
the Trust) and certain principle terms and other
relevant characteristics thereof.
ISSUER................ The Certificates represent undivided interests in
First Chicago Master Trust II (the "Trust"). The
Trust's fiscal year ends December 31.
SELLER................ FCC National Bank (the "Bank"), a national bank and
a wholly-owned subsidiary of First Chicago NBD
Corporation ("First Chicago NBD"), is the
transferor of ownership interests in certain
receivables and the originator of the Trust. The
Bank is referred to herein as the "Seller."
TRUSTEE............... Norwest Bank Minnesota, National Association (the
"Trustee").
TRUST ASSETS.......... The Trust assets include all receivables existing
from time to time (the "Receivables") in certain
consumer revolving credit card accounts owned by
the Bank (the "Accounts"), any Receivables in
Additional Accounts added to the Trust from time
to time, funds collected or to be collected from
cardholders in respect of the Receivables (other
than recoveries on charged-off Receivables, unless
such recoveries are made available to one or more
Series as specified in the related Prospectus
Supplement, and insurance proceeds), moneys on
deposit in certain accounts of the Trust, the
right to receive certain Interchange fees
attributable to the Accounts (which right may not
be afforded to a particular Series) and any
Enhancement issued with respect to a particular
Series (the drawing on or payment of such
Enhancement not being available to the
Certificateholders of any other Series). The Trust
will not include the Receivables from any Removed
Accounts which are removed from the Trust from
time to time. The term "Enhancement" shall mean,
with respect to any Series, any letter of credit,
guaranteed rate agreement, maturity guaranty
facility, tax protection agreement, interest rate
swap, cash collateral account, collateral interest
or other contract, agreement or arrangement for
the benefit of Certificateholders of such Series
or any Class thereof. See "Enhancement."
3
<PAGE>
THE ACCOUNTS AND THE
RECEIVABLES..........
The Accounts currently consist of substantially all
of the VISA(R) and MasterCard(R)* consumer
revolving credit card accounts existing in all of
the Seller's ten billing cycles, excluding certain
affinity accounts and certain accounts not
originated by either the Seller or its affiliate,
The First National Bank of Chicago ("FNBC").
The Seller has previously transferred its interests
in all of the Receivables outstanding in the Ac-
counts to the Trust, so that the Trust holds all
such Receivables. Additional accounts added to
each of the billing cycles referred to above (ex-
cluding certain affinity accounts) in the normal
operation of the Seller's credit card business and
satisfying the criteria provided in the Agreement
also are being added and currently are expected to
continue to be added on a daily basis to the Ac-
counts as a category of Additional Accounts (the
"Automatic Additional Accounts"). All new Receiv-
ables arising in such Automatic Additional Ac-
counts have been and will continue to be automati-
cally transferred to the Trust. The Seller, at its
option, may terminate or suspend the inclusion of
Automatic Additional Accounts at any time.
The Receivables consist of amounts charged by card-
holders for goods and services and amounts ad-
vanced to cardholders as cash advances (the "Prin-
cipal Receivables") and all related monthly peri-
odic charges, annual fees, late charges, over-
limit fees and all other fees billed to card-
holders on the Accounts for a Due Period (the "Fi-
nance Charge Receivables") and unpaid Finance
Charge Receivables for prior Due Periods. In addi-
tion, certain Interchange attributable to card-
holder charges for merchandise and services in the
Accounts may be treated as Finance Charge Receiv-
ables for purposes of a particular Series. See
"The Bank's Credit Card Business--Interchange."
All new Receivables arising in the Accounts (in-
cluding in Additional Accounts) have been and will
continue to be automatically transferred to the
Trust. Accordingly, the amount of Re- ceivables
fluctuates from day to day as new Receivables are
generated and as existing Receivables are collect-
ed, written off as uncollectible or otherwise ad-
justed. The term "Aggregate Principal Receivables"
means, for any Due Period, the aggregate amount of
Principal Receivables at the end of the prior Due
Period.
A monthly periodic charge is currently assessed,
when applicable, on all Principal Receivables. The
monthly periodic charge may be a fixed rate or a
variable rate. See "The Accounts--Billing and
Payments."
Pursuant to the Agreement, the Seller has the right
(subject to certain limitations and conditions),
and in some circumstances, such as the maintenance
of the First Chicago Interest at a specified mini-
mum level, is obligated, to designate additional
eligible consumer revolving credit card accounts
to be included as Accounts (the "Additional Ac-
counts") and to convey to the Trust all of the Re-
ceivables in the Additional Accounts, whether such
Receivables are then existing or thereafter creat-
ed.
- --------
* VISA(R) and MasterCard(R) are registered trademarks of VISA USA, Inc. and
MasterCard International, Inc., respectively.
4
<PAGE>
Further, pursuant to the Agreement, the Seller has
the right (subject to certain limitations and con-
ditions) to accept removal of certain Accounts
designated by the Seller from the Trust (the "Re-
moved Accounts") and accept the conveyance of all
of the Receivables in the Removed Accounts,
whether such Receivables are then existing or
thereafter created.
The Certificates represent undivided interests in
the Trust only and do not represent interests in
or obligations of the Seller or any affiliate
thereof except to the limited extent described
herein. Neither the Certificates, the Accounts,
the Receivables nor any collections thereon are
insured or guaranteed by the Federal Deposit In-
surance Corporation (the "FDIC") or any other gov-
ernmental agency.
EXCHANGES............. The Agreement authorizes the Trustee to issue two
types of certificates: (i) one or more Series of
Certificates which will be transferable and have
the characteristics described below, and (ii) a
certificate which evidences the principal amount
of the Seller interest in the Trust (the "First
Chicago Interest"), which initially is held by the
Seller and which generally is not transferable
(the "Exchangeable Seller's Certificate"). The
Agreement also provides that, pursuant to any one
or more supplements to the Agreement (each, a
"Supplement"), the Seller may tender the Exchange-
able Seller's Certificate or, if permitted by the
applicable Supplement, certificates representing
any Series of Certificates and the Exchangeable
Seller's Certificate, to the Trustee in exchange
for one or more new Series and a reissued Ex-
changeable Seller's Certificate (any such tender,
an "Exchange"). Under the Agreement, the Seller
may define, with respect to any Series, the Prin-
cipal Terms of the Series. See "Description of the
Certificates and the Agreement--Exchanges." Any
Exchange involving only the tender of the Ex-
changeable Seller's Certificate to the Trustee
will have the effect of decreasing the First Chi-
cago Interest. The Seller may offer any Series to
the public or other investors under a prospectus
or other disclosure document (a "Disclosure Docu-
ment") in transactions either registered under the
Act or exempt from registration thereunder, di-
rectly or through one or more underwriters or
placement agents, in fixed-price offerings or in
negotiated transactions or otherwise. The Seller
intends to continue to offer, from time to time,
additional Series issued by the Trust. Set forth
in the Prospectus Supplement is a chart which pro-
vides the Principal Terms and other relevant char-
acteristics of the other outstanding Series which
have been issued or are proposed to be issued by
the Trust.
Under the Agreement and pursuant to a Supplement,
an Exchange may occur only upon delivery to the
Trustee of the following: (i) a Supplement speci-
fying the Principal Terms of such Series, (ii) an
opinion of counsel to the effect that, unless oth-
erwise specified in the related Supplement, the
certificates of such Series under existing law
will be characterized as debt for Federal income
tax purposes and that the issuance of such Series
will not adversely affect the Federal income tax
characterization of any outstanding Series,
(iii) if required by the related Supplement, an
Enhancement, (iv) if an Enhancement is required by
the Supplement, any Enhancement agreement with re-
spect thereto, (v) written confirmation from each
Rating Agency that the
5
<PAGE>
Exchange will not result in the Rating Agency re-
ducing or withdrawing its rating on any then out-
standing Series rated by it, and (vi) the existing
Exchangeable Seller's Certificate and, if applica-
ble, the Certificates representing the Series to
be exchanged.
GENERAL TERMS OF THE
CERTIFICATES.........
Each Series of Certificates will represent an undi-
vided interest in the Trust. Each Certificate of a
Series will represent the right to receive pay-
ments of (i) interest at the specified rate or
rates per annum (each, a "Certificate Rate"),
which may be fixed, floating or other type of
variable rate and (ii) payments of principal dur-
ing the Controlled Amortization Period, the Prin-
cipal Amortization Period, or, under certain lim-
ited circumstances, the Rapid Amortization Period
(each, an "Amortization Period"), or on a Sched-
uled Payment Date, in which case such Series will
have a Controlled Accumulation Period and, under
certain limited circumstances if so specified in
the related Prospectus Supplement, a Rapid Accumu-
lation Period (each, an "Accumulation Period"), as
well as, under certain limited circumstances, a
Rapid Amortization Period, all as specified in the
related Prospectus Supplement.
Each Series of Certificates will consist of one or more
Classes, one or more of which may be senior to other
Classes of Certificates (such senior classes, "Senior
Certificates") and one or more of which may be subor-
dinated to other Classes of Certificates (such subor-
dinated classes, "Subordinated Certificates").
The assets of the Trust will be allocated among the
Certificateholders of each Series and the holder of
the Exchangeable Seller's Certificate (and, in certain
circumstances, the Enhancement Provider with respect
to a Series). The aggregate amount of the interest of
the Certificateholders of a Series in the Principal
Receivables of the Trust is referred to herein as the
"Invested Amount." If specified in any Prospectus Sup-
plement, the term "Invested Amount" with respect to
the related Series includes the Collateral Interest
with respect to such Series. The aggregate amount of
the interest represented by the Exchangeable Seller's
Certificate in the Principal Receivables of the Trust
is referred to herein as the "First Chicago Amount,"
and is based on the aggregate amount of Principal Re-
ceivables in the Trust not allocated to the
Certificateholders or any Enhancement Provider. See
"Description of the Certificates and Agreement--Gener-
al." As new Receivables are added to the Trust and as
payments are made on the First Chicago Interest, the
First Chicago Amount will fluctuate over time.
The Certificateholders of each Series will have the
right to receive (but only to the extent needed to
make required payments under the Agreement and subject
to any reallocation of such amounts if the related
Supplement so provides) varying percentages of the
collections of Finance Charge Receivables and Princi-
pal Receivables for each Due Period and will be allo-
cated a varying percentage of the amount of Defaulted
Receivables for such Due Period (each such percentage,
an "Invested Percentage"). The related Prospectus Sup-
plement specifies the Invested Percentages applicable
to a Se-
6
<PAGE>
ries with respect to the allocation of collections of
Principal Receivables, Finance Charge Receivables and
Defaulted Receivables during the Revolving Period, any
Amortization Period and any Accumulation Period, as
applicable, for such Series. If the Certificates of a
Series offered hereby include more than one Class of
Certificates, the assets of the Trust allocable to the
Certificates of such Series may be further allocated
among each Class in such Series as described in the
related Prospectus Supplement. See "Description of
Certificates and the Agreement--Allocation Percent-
ages."
REGISTRATION OF Unless otherwise specified in the related Prospec-
CERTIFICATES......... tus Supplements the Certificates of each Series
offered hereby will initially be represented by
one or more certificates registered in the name of
Cede, as the nominee of The Depository Trust Com-
pany ("DTC"), and no person acquiring an interest
in the Certificates will be entitled to receive a
definitive certificate representing such person's
interest, except in the event that Definitive Cer-
tificates are issued under the limited circum-
stances described herein. Unless otherwise speci-
fied in the related Prospectus Supplement, Certif-
icate Owners may elect to hold their interests in
the Certificates through DTC in the United States
or, in Europe, through Cedel, societe anonyme
("Cedel") or the Euroclear System ("Euroclear").
Transfers will be made in accordance with the
rules and operating procedures described herein.
See "Description of the Certificates and the
Agreement--Definitive Certificates."
INTEREST PAYMENTS..... Interest on each Series of Certificates or Class
thereof for each accrual period (each, an "Inter-
est Period") specified in the related Prospectus
Supplement will be distributed in the amounts and
on the dates (which may be monthly, quarterly,
semiannually or otherwise as specified in the re-
lated Prospectus Supplement) (each, a "Distribu-
tion Date") specified in the related Prospectus
Supplement. Interest payments on each Distribution
Date will be funded from collections of Finance
Charge Receivables allocated to the applicable Se-
ries during the preceding Due Period (or applica-
ble Due Periods), as described in the related Pro-
spectus Supplement, and may be funded from certain
investment earnings on funds in certain accounts
of the Trust and from any applicable Enhancement,
if necessary, or certain other amounts as speci-
fied in the related Prospectus Supplement. If the
Distribution Dates for payment of interest for a
Series or Class occur less frequently than month-
ly, such collections or other amounts allocable to
such Series or Class will be deposited in one or
more trust accounts or held by the Servicer pend-
ing distribution to the Certificateholders of such
Series or Class, all as described in the related
Prospectus Supplement.
REVOLVING PERIOD...... Unless otherwise specified in the related Prospec-
tus Supplement, with respect to each Series and
any Class thereof, no principal will be payable to
Certificateholders until the Principal Commence-
ment Date or the Scheduled Payment Date with re-
spect to such Series or Class, as described below.
For the period beginning on the date of issuance
of a Series (the "Series Closing Date") and ending
with the commencement of an Amortization Period or
an Accumulation Period (the "Revolving Period")
with respect to such Series, collections of Prin-
cipal Receivables otherwise allo-
7
<PAGE>
cable to such Series will, subject to certain lim-
itations, be paid to the holder of the Ex-
changeable Seller's Certificate or, under certain
circumstances and if so specified in the related
Prospectus Supplement, paid to the holders of
other Series of Certificates, as described herein
and in the related Prospectus Supplement. See "De-
scription of the Certificates and the Agreement--
Liquidation Events" for a discussion of the events
which might lead to early termination of the Re-
volving Period.
PRINCIPAL PAYMENTS.... The principal of the Certificates of each Series
offered hereby will be scheduled to be paid either
in installments commencing on a date specified in
the related Prospectus Supplement (the "Principal
Commencement Date"), in which case such Series
will have either a Controlled Amortization Period
or a Principal Amortization Period, as described
below, or on an expected date specified in, or de-
termined in the manner specified in, the related
Prospectus Supplement (the "Scheduled Payment
Date"), in which case such Series will have a Con-
trolled Accumulation Period, as described below.
If a Series has more than one Class of Certifi-
cates, a different method of paying principal,
Principal Commencement Date or Scheduled Payment
Date may be assigned to each Class. The payment of
principal with respect to the Certificates of a
Series or Class may commence earlier than the ap-
plicable Principal Commencement Date or Scheduled
Payment Date, and the final principal payment with
respect to the Certificates of a Series or Class
may be made later than the applicable expected
payment date or Scheduled Payment Date, if a Liq-
uidation Event occurs and the Rapid Amortization
Period commences with respect to such Series or
Class or under certain other circumstances de-
scribed herein or in the related Prospectus Sup-
plement.
CONTROLLED
AMORTIZATION PERIOD..
If the Prospectus Supplement relating to a Series
so specifies, unless a Rapid Amortization Period
with respect to such Series commences, the Certif-
icates of such Series or any Class thereof will
have an amortization period (the "Controlled Amor-
tization Period") during which collections of
Principal Receivables allocable to such Series
(and certain other amounts if so specified in the
related Prospectus Supplement) will be used on
each Distribution Date to make principal distribu-
tions in scheduled amounts to the
Certificateholders of such Series or any Class of
such Series then scheduled to receive such distri-
butions. The amount to be distributed on any Dis-
tribution Date during the Controlled Amortization
Period will be limited to an amount (the "Con-
trolled Distribution Amount") equal to an amount
specified in the related Prospectus Supplement
(the "Controlled Amortization Amount") plus any
existing deficit controlled amortization amount
arising from prior Distribution Dates. If a Series
has more than one Class of Certificates, each
Class may have a separate Controlled Amortization
Amount. In addition, the related Prospectus Sup-
plement may describe certain priorities among such
Classes with respect to such distributions. The
Controlled Amortization Period will commence at
the close of business on a date specified in the
related Prospectus Supplement and continue until
the earliest of (a) the commencement of the Rapid
Amortization Period, (b) payment in full of the
Certificates of such Series or Class and (c) the
date by which the final
8
<PAGE>
distribution of principal and interest on the Cer-
tificates of such Series must be made (the "Series
Termination Date").
PRINCIPAL
AMORTIZATION PERIOD..
If the Prospectus Supplement relating to a Series
so specifies, unless a Rapid Amortization Period
with respect to such Series commences, the
Certificates of such Series or any Class thereof
will have an amortization period (the "Principal
Amortization Period") during which collections of
Principal Receivables allocable to such Series
(and certain other amounts if so specified in the
related Prospectus Supplement) will be used on
each Distribution Date to make principal distribu-
tions to the Certificateholders of such Series or
any Class of such Series then scheduled to receive
such distributions. If a Series has more than one
Class of Certificates, the related Prospectus Sup-
plement may describe certain priorities among such
Classes with respect to such distributions. The
Principal Amortization Period will commence at the
close of business on a date specified in the re-
lated Prospectus Supplement and continue until the
earlier of (a) the commencement of the Rapid Amor-
tization Period, (b) payment in full of the Cer-
tificates of such Series or Class and (c) the Se-
ries Termination Date with respect to such Series.
CONTROLLED
ACCUMULATION PERIOD..
If the Prospectus Supplement relating to a Series
so specifies, unless a Rapid Amortization Period
or, if so specified in the related Prospectus Sup-
plement, a Rapid Accumulation Period with respect
to such Series commences, the Certificates of such
Series or any Class thereof will have an accumula-
tion period (the "Controlled Accumulation Period")
during which collections of Principal Receivables
allocable to such Series (and certain other
amounts if so specified in the related Prospectus
Supplement) will be deposited on the business day
immediately prior to each Distribution Date (each,
a "Transfer Date") (or such other day specified in
the related Prospectus Supplement) in a trust ac-
count held in the name of the Trustee for the ben-
efit of the Certificateholders of such Series or
Class (a "Principal Funding Account") and used to
make distributions of principal to the
Certificateholders of such Series or Class on the
Scheduled Payment Date. The amount to be deposited
in the Principal Funding Account with respect to
any Distribution Date will be limited to an amount
(the "Controlled Deposit Amount") equal to an
amount specified in the related Prospectus Supple-
ment (the "Controlled Accumulation Amount") plus
any deficit Controlled Accumulation Amount arising
from prior Distribution Dates. If a Series has
more than one Class of Certificates, each Class
may have a separate Principal Funding Account and
Controlled Accumulation Amount. In addition, the
related Prospectus Supplement may describe certain
priorities among such Classes with respect to de-
posits of principal into such Principal Funding
Accounts. The Controlled Accumulation Period will
commence at the close of business on a date speci-
fied in or determined in the manner specified in
the related Prospectus Supplement (which may per-
mit the postponement of such commencement) and
continue until the earliest of (a) the commence-
ment of the Rapid Amortization Period or, if so
specified in the related Prospectus Supplement,
the Rapid Accumulation
9
<PAGE>
Period, (b) payment in full of the Certificates of
such Series or Class and (c) the Series Termina-
tion Date with respect to such Series.
Funds on deposit in any Principal Funding Account
may be invested in Eligible Investments or subject
to a guaranteed rate or investment contract or
other arrangement intended to assure a minimum re-
turn on the investment of such funds. Investment
earnings on such funds may be applied to pay in-
terest on the related Series of Certificates or
any Class thereof or make other payments as speci-
fied in the related Prospectus Supplement. In or-
der to enhance the likelihood of payment in full
of principal at the end of a Controlled Accumula-
tion Period with respect to a Series of Certifi-
cates, such Series or any Class thereof may be
subject to a principal payment guaranty or other
similar arrangement.
RAPID ACCUMULATION If so specified and under the conditions set forth
PERIOD............... in the Prospectus Supplement relating to a Series
having a Controlled Accumulation Period, during
the period from the day on which a Liquidation
Event has occurred until the earliest of (a) the
commencement of the Rapid Amortization Period, (b)
payment in full of the Certificates of such Series
and (c) the Series Termination Date with respect
to such Series (the "Rapid Accumulation Period"),
collections of Principal Receivables allocable to
such Series (and certain other amounts if so spec-
ified in the related Prospectus Supplement) will
be deposited in the Principal Funding Account on
each Transfer Date (or such other day specified in
the related Prospectus Supplement) and used to
make distributions of principal to the
Certificateholders of such Series or Class on the
Scheduled Payment Date. The amount to be deposited
in the Principal Funding Account during the Rapid
Accumulation Period will not be limited to any
Controlled Deposit Amount. The Rapid Accumulation
Period is intended to result in the fastest possi-
ble accumulation of funds available to make prin-
cipal distributions to Certificateholders of a Se-
ries following a Liquidation Event with respect to
such Series in order to better assure the repay-
ment of principal to such Certificateholders. See
"Description of the Certificates and the Agree-
ment--Liquidation Events" for a discussion of the
events that might lead to the commencement of a
Rapid Accumulation Period.
During the Rapid Accumulation Period, funds on de-
posit in any Principal Funding Account may be in-
vested in Eligible Investments or subject to a
guaranteed rate or investment contract or other
arrangement intended to assure a minimum return on
the investment of such funds. Investment earnings
on such funds may be applied to pay interest on
the related Series of Certificates or any Class
thereof or make other payments as specified in the
related Prospectus Supplement. In order to enhance
the likelihood of payment in full of principal at
the end of a Rapid Accumulation Period with re-
spect to a Series of Certificates, such Series or
any Class thereof may be subject to a principal
payment guaranty or other similar arrangement.
RAPID AMORTIZATION During the period from the day on which a Liquida-
PERIOD............... tion Event has occurred with respect to a Series
or, if so specified in the Prospectus Supplement
relating to a Series with a Controlled Accumula-
tion Period, from such time specified in the re-
lated Prospectus Supplement after a Liquidation
Event
10
<PAGE>
has occurred and the Rapid Accumulation Period has
commenced, to the earlier of (a) payment in full
of the Certificates of such Series and (b) the Se-
ries Termination Date with respect to such Series
(the "Rapid Amortization Period"), collections of
Principal Receivables allocable to such Series
(and certain other amounts if so specified in the
related Prospectus Supplement) will be distributed
as principal payments to the Certificateholders of
such Series, monthly on each Distribution Date
with respect to such Series in the manner and or-
der of priority set forth in the related Prospec-
tus Supplement. During the Rapid Amortization Pe-
riod with respect to a Series, distributions of
principal will not be limited by any Controlled
Deposit Amount or Controlled Distribution Amount.
In addition, upon the commencement of the Rapid
Amortization Period with respect to a Series, any
funds on deposit in a Principal Funding Account
with respect to such Series or any Class thereof
will be paid to the Certificateholders of such Se-
ries or Class on the first Distribution Date with
respect to the Rapid Amortization Period. The
Rapid Amortization Period is intended to result in
the fastest possible distribution of principal to
Certificateholders of a Series following a Liqui-
dation Event with respect to such Series in order
to better assure the repayment of principal to
such Certificateholders. See "Description of the
Certificates and the Agreement--Liquidation
Events" for a discussion of the events which might
lead to the commencement of a Rapid Amortization
Period.
EXCESS FINANCE CHARGE
COLLECTIONS..........
To the extent that collections of Finance Charge
Receivables allocated to the Certificates of a Se-
ries are not needed to make payments to
Certificateholders of such Series or other pay-
ments required in respect of such Series, such
collections may be applied to cover shortfalls in
amounts payable from collections of Finance Charge
Receivables allocable to one or more other Series
to the extent specified in the Prospectus Supple-
ment relating to such other Series.
SHARED COLLECTIONS OF
PRINCIPAL
RECEIVABLES.......... To the extent that collections of Principal Receiv-
ables allocated to the Certificates of a Series
are not needed to make payments to
Certificateholders of such Series or other pay-
ments required in respect of such Series, such
collections may be applied to cover principal pay-
ments due to or for the benefit of one or more
other Series to the extent specified in the Pro-
spectus Supplement relating to such other Series.
Any such application of collections will not re-
sult in a reduction of the Invested Amount of the
Certificates originally allocated such collections
of Principal Receivables.
FUNDING PERIOD........ The Prospectus Supplement relating to a Series of
Certificates may specify that for a period begin-
ning on the Series Closing Date of such Series and
ending on a specified date before the commencement
of an Amortization Period or Accumulation Period
with respect to such Series (the "Funding Peri-
od"), which period is expected to be less than a
year, the aggregate amount of Principal Receiv-
ables in the Trust allocable to such Series may be
less than the aggregate principal amount of the
Certificates of such
11
<PAGE>
Series. The amount of such deficiency (the "Pre-
Funding Amount") may be placed in a trust account
held in the name of the Trustee for the benefit of
Certificateholders of such Series (the "Pre-Fund-
ing Account") pending the transfer of additional
Principal Receivables to the Trust or pending the
reduction of the Invested Amounts of other Series
issued by the Trust if so specified in the Pro-
spectus Supplement. The Pre-Funding Amount of a
Series may be up to 100% of the principal amount
of the Certificates of such Series. The related
Prospectus Supplement will specify the initial In-
vested Amount on the Series Closing Date with re-
spect to such a Series, the aggregate principal
amount of the Certificates of such Series (the
"Full Invested Amount") and the date by which the
Invested Amount is expected to equal the Full In-
vested Amount. The Invested Amount will increase
as Principal Receivables are added to the Trust or
as the Invested Amounts of other Series of the
Trust are reduced.
During the Funding Period, funds, if any, on de-
posit in the Pre-Funding Account for a Series of
Certificates will be withdrawn and paid to the
holder of the Exchangeable Seller's Certificate to
the extent of any increases in the Invested Amount
of such Series. In the event that the Invested
Amount of such Series does not for any reason
equal the Full Invested Amount by the end of the
Funding Period, any amount remaining in the Pre-
Funding Account will be payable to the
Certificateholders of such Series in a manner and
at such time as set forth in the related Prospec-
tus Supplement. Such payment will reduce the ag-
gregate principal amount of such Certificates. In
addition, a prepayment premium or penalty or simi-
lar amount may be payable to Certificateholders of
such Series if specified in the related Prospectus
Supplement.
If so specified in the related Prospectus Supple-
ment, funds on deposit in the Pre-Funding Account
may be invested in Eligible Investments or subject
to a guaranteed rate or investment agreement or
other similar arrangement, and investment earnings
and any applicable payment under any such invest-
ment arrangement will be applied to pay interest
on the Certificates of such Series.
OPTIONAL REPURCHASE... Each Series of Certificates will be subject to op-
tional repurchase by the Seller on any Distribu-
tion Date after the Invested Amount of such Series
is reduced to an amount less than or equal to 5%
of the initial Invested Amount of such Series or
such other amount specified in the related Pro-
spectus Supplement, if certain conditions set
forth in the Agreement are met. Unless otherwise
specified in the related Prospectus Supplement,
the repurchase price will be equal to the Invested
Amount of such Series, plus accrued and unpaid in-
terest on the Certificates of such Series and any
other amounts payable as described in the Prospec-
tus Supplement, through the day preceding the Dis-
tribution Date on which the repurchase occurs. See
"Description of the Certificates and the Agree-
ment--Final Payment of Principal; Termination of
Trust."
SERVICING............. Under the Agreement, the Servicer (initially, the
Bank) is responsible for servicing, managing and
making collections on all Receivables in the
12
<PAGE>
Trust. Subject to certain conditions, the Servicer
may use for its own benefit and not segregate col-
lections of Receivables received in each Due Pe-
riod until the Transfer Date. On or about the 8th
day preceding each Distribution Date (each, a "De-
termination Date"), the Servicer will allocate as
described herein and in the accompanying Prospec-
tus Supplement all collections of Receivables re-
ceived with respect to the related Due Period to
each Series and the Seller and on the Transfer
Date preceding such Distribution Date will deposit
the portion allocable to the Certificateholders of
any Series into a segregated trust account held in
the name of the Trustee for the benefit of
Certificateholders (the "Collection Account"). See
"Description of the Certificates and the Agree-
ment--Application of Collections." In certain lim-
ited circumstances, the Bank may resign or be re-
moved as Servicer, in which event either the
Trustee or a third party servicer may be appointed
as successor Servicer (the Bank or any such suc-
cessor Servicer is referred to herein as the
"Servicer"). As servicing compensation from the
Trust, the Servicer receives a Servicing Fee pay-
able from Interchange, from allocations of Finance
Charge Receivables based upon the Invested
Amounts, from time to time, of Series issued by
the Trust, and from certain other amounts, as de-
scribed herein or in the accompanying Prospectus
Supplement.
TAX STATUS............ Except to the extent otherwise specified in the re-
lated Prospectus Supplement, it is anticipated
that Tax Counsel will render an opinion that the
Certificates offered hereby (the "Offered Certifi-
cates") will be characterized as indebtedness for
Federal income tax purposes. Except to the extent
otherwise specified in the related Prospectus Sup-
plement, the Certificate Owners will agree to
treat the Offered Certificates as debt for Feder-
al, state and local income tax purposes. See "Tax
Matters" for additional information concerning the
application of Federal income tax laws.
ERISA Under regulations issued by the Department of La-
CONSIDERATIONS........ bor, the Trust's assets would not be deemed "plan
assets" of any employee benefit plan holding in-
terests in the Certificates of a Series if certain
conditions are met. If the Trust's assets were
deemed to be "plan assets" of an employee benefit
plan, there is uncertainty as to whether existing
exemptions from the "prohibited transaction" rules
of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), would apply to all
transactions involving the Trust's assets. No as-
surance can be made with respect to any offering
of the Certificates of any Series that the condi-
tions which would allow the Trust's assets not to
be deemed "plan assets" will be met, although the
intention of the underwriters (but not their as-
surance) as to whether the Certificates of a par-
ticular Series offered hereby will be "publicly-
offered securities," and therefore eligible for an
ERISA exemption, is set forth in the related Pro-
spectus Supplement. Accordingly, employee benefit
plans contemplating purchasing interests in Cer-
tificates should consult their counsel before mak-
ing a purchase. See "ERISA Considerations."
CERTIFICATE RATING.... It will be a condition to the issuance of the Cer-
tificates of each Series or Class thereof offered
pursuant to this Prospectus and the accompanying
Prospectus Supplement that they be rated in one of
the four highest rating catego-
13
<PAGE>
ries by at least one nationally recognized rating
organization (each such rating organization se-
lected by the Seller to rate any Series, a "Rating
Agency"). The rating or ratings applicable to the
Certificates of each Series or Class thereof of-
fered hereby is set forth in the related Prospec-
tus Supplement.
A rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or
withdrawal at any time by the assigning Rating
Agency. Each rating should be evaluated indepen-
dently of any other rating. See "Risk Factors--
Certificate Rating."
LISTING............... If so specified in the Prospectus Supplement relat-
ing to a Series, application will be made to list
the Certificates of such Series, or all or a por-
tion of any Class thereof, on the Luxembourg Stock
Exchange or any other specified exchange.
14
<PAGE>
RISK FACTORS
Limited Liquidity. Certain financial institutions currently make a market in
types of asset-backed certificates similar to the Certificates. It is expected
that the underwriters of any Series of Certificates offered hereby will make a
market in such Certificates, but no such underwriter will be obligated to make
a market in such Certificates. There is no assurance that any such market will
develop or, if a market does develop, that it will provide Certificateholders
with liquidity of investment or that it will continue for the life of such
Certificates.
Certain Legal Aspects. While the Seller has transferred or will transfer
interests in the Receivables to the Trust, a court could treat such
transaction as an assignment of collateral as security for the benefit of the
Certificateholders. The Seller warrants in the Agreement that the transfer of
the Receivables to the Trust is either a valid transfer and assignment of the
Receivables to the Trust or the grant to the Trust of a security interest in
the Receivables. The Seller has taken or will take all actions as are required
under New York, Illinois and Delaware law to perfect the Trust's interest in
the Receivables and the Seller warrants that if the transfer by the Seller to
the Trust granted the Trust a security interest in the Receivables, the Trust
will at all times have a first priority perfected security interest therein
and, with certain exceptions, and for certain limited periods of time, in
proceeds thereof. Nevertheless, if the transfer of the Receivables to the
Trust is deemed to create a security interest therein under the New York,
Illinois or Delaware Uniform Commercial Code (collectively, the "UCC"), a tax
or government lien on property of the Seller arising before any Receivable
comes into existence may have priority over the Trust's interest in such
Receivable and in the event of an insolvency of the Seller, the receiver's
administrative expenses may also have priority over the Trust's interest in
the Receivables. In addition, while the Seller is the Servicer, cash
collections held by the Seller may, subject to certain conditions, be
commingled and used for the Seller's own benefit prior to each Distribution
Date and, in the event of the insolvency or receivership of the Seller or, in
certain circumstances, the lapse of certain time periods, the Trust may not
have a perfected interest in such collections. If the short term deposit
rating of the Seller is reduced below A-1 or P-1 by the applicable Rating
Agency, the Seller will, within five business days, commence the deposit of
collections directly into the Collection Account within one business day after
the date of processing, and the Collection Account will be moved to an
Eligible Institution other than the Seller, which Eligible Institution may be
an affiliate of the Seller. If a receiver or conservator were appointed for
the Seller, causing a Liquidation Event with respect to all Series then
outstanding, pursuant to the Agreement (x) with respect to outstanding Series
issued prior to April 19, 1995 (each, a "Preexisting Series"), unless holders
of more than 50% of the Invested Amount of any such Series instruct otherwise
or unless otherwise required by the FDIC as receiver or conservator for the
Seller, the Trustee would sell the Receivables of all Series, and (y) with
respect to Series issued on or after April 19, 1995 (except as otherwise may
be specified in the Supplement relating thereto), unless holders of more than
50% of the Invested Amount of each Class of each such Series (including a
majority in interest in each Collateral Interest), each holder of an interest
in the First Chicago Interest, the holders of more than 50% of the Invested
Amount of each Preexisting Series and any other person specified in any
Supplement instruct otherwise or unless otherwise required by the FDIC as
receiver or conservator for the Seller, the Trustee would sell the portion of
the Receivables allocable to all Series other than the Preexisting Series,
thereby causing a loss to Certificateholders of such Series if the net
proceeds allocable to such Series from such sale, if any, and the amount
available under any applicable Enhancement, if any, were insufficient to pay
Certificateholders of such Series in full. To the extent the Seller grants a
security interest in the Receivables to the Trust, and that interest is
validly perfected before the Seller's insolvency and was not taken in
contemplation of insolvency or with the intent to hinder, delay or defraud the
Seller or its creditors, that security interest should not be subject to
avoidance, and payments to the Trust with respect to the Receivables should
not be subject to recovery by a receiver or conservator of the Seller. If,
however, the FDIC were to assert a contrary position, certain provisions of
Federal law which, at the request of the FDIC, have been applied in recent
lawsuits to avoid security interests in collateral granted by depository
institutions, would permit the FDIC to avoid such security interest, thereby
resulting in possible delays and reductions in payments to the
Certificateholders of all outstanding Series. In addition, Federal law
governing receiverships of Federally-insured depository institutions could be
interpreted to require compliance with certain claims procedures if a receiver
were appointed for the Seller before the Trustee could collect, sell, dispose
of or otherwise liquidate the Receivables, which could delay or possibly
reduce
15
<PAGE>
payments on the Certificates. If the only Liquidation Event to occur is either
the insolvency of the Seller or the appointment of a receiver or conservator
for the Seller, the receiver or conservator for the Seller may have the power
to continue to require the Seller to transfer new Principal Receivables to the
Trust and to prevent the early sale, liquidation or disposition of the
Receivables and the commencement of a Rapid Amortization Period (or a Rapid
Accumulation Period, if applicable). See "Certain Legal Aspects of the
Receivables--Transfer of Receivables" and "--Certain Matters Relating to
Receivership."
The Accounts and Receivables are subject to numerous Federal and state
consumer protection laws which impose requirements on the making and
enforcement of consumer loans. Such laws, as well as any new laws or rulings
which may be adopted, may adversely affect the Servicer's ability to collect
on the Receivables or maintain the level of monthly periodic charges or fees,
and failure by the Servicer to comply with such requirements could adversely
affect the Servicer's ability to enforce the Receivables.
Members of Congress in the past have proposed legislation, which has not
been enacted into law, to limit the maximum annual percentage rate that may be
assessed on credit card accounts. The Seller cannot predict if Congress will
take any such action in the future. If Federal legislation were enacted which
contained an interest rate limit substantially lower than the annual
percentage rates currently assessed on the Accounts, it is possible that the
Portfolio Yield could be reduced to a rate less than the Base Rate. The terms
"Portfolio Yield" and "Base Rate" for each Series (or Class thereof) have the
meanings set forth in the Prospectus Supplement relating to such Series. If
the Portfolio Yield for a period specified in the applicable Prospectus
Supplement is less than the Base Rate for the related period specified in the
Prospectus Supplement, a Rapid Amortization Period or Rapid Accumulation
Period with respect to the applicable Series will commence. In addition, there
has been increased consumer awareness with respect to the level of finance
charges and fees and other practices of credit card issuers. As a result of
these developments and other factors, there can be no assurance as to whether
any Federal or state legislation will be promulgated which would impose
additional limitations on the monthly periodic finance charges or fees
relating to the Accounts.
Since October 1991, a number of lawsuits and administrative actions have
been filed in several states against out-of-state banks (both Federally-
insured state-chartered banks and Federally-insured national banks) which
issue credit cards. These actions challenge various fees and charges (such as
late fees, over-limit fees, returned check charges and annual membership fees)
assessed against residents of the states in which such suits were filed, based
on restrictions or prohibitions under such states' laws alleged to be
applicable to the out-of-state credit card issuers. Two state supreme courts
(California and Colorado) and a Federal appeals court have affirmed dismissal
of these cases on the ground that individual state prohibitions on assessing
these fees or charges are preempted by Federal laws. In November 1995, the New
Jersey Supreme Court ruled that state prohibitions on late fees are not
preempted. The issue is now before the United States Supreme Court, which has
agreed to review the California late fee case to resolve the conflict. At
present, one similar suit is pending against an affiliate of the Seller in the
State of California challenging the late fee which the Seller assesses its
customers who reside in such state. At this stage, the case is stayed pending
decision by the United States Supreme Court on this issue. There can be no
assurance that the Seller will not be named as a defendant in future lawsuits
or administrative actions challenging the fees and charges which it assesses
residents of various states. If such cases were resolved adversely to the
Seller, they could have the effect of limiting certain fees and charges that
could be assessed on credit card accounts and could require the Seller and
other credit card issuing banks to pay refunds and civil penalties; any such
payment could have an adverse impact on the Seller's business.
The California Supreme Court in March 1992 refused to review a lower court's
determination that the practice by Wells Fargo Bank of charging its
cardholders over-limit and late payment fees violated California laws that
require banks to limit such charges to their costs. In July 1993, a California
trial court held in a class action against First Interstate Bank that First
Interstate Bank's credit card late payment and over-the-limit fees exceeded
the amount allowed under a California statute on liquidated damages and
awarded damages of approximately $14 million to the plaintiff class. First
Interstate Bank appealed the decision, and the California Court of Appeals
upheld the determination that First Interstate Bank's fees were excessive, but
reduced the judgment to approximately $5 million. Such action and similar
actions which may be brought in other states as a result of such action, if
resolved adversely to bank credit card issuers, could have the effect of
limiting the
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compensation the Seller receives from certain fees and charges, other than
periodic finance charges, that could be assessed on credit card accounts of
residents of such states and could require credit card issuers such as the
Seller to pay refunds and civil penalties with respect to charges previously
imposed on cardholders in such states. Consequently, such actions could have
an adverse impact on the Seller's credit card operations. One potential effect
of any such litigation involving the Seller, if successful, would be to reduce
the amount of Finance Charge Receivables. If such a reduction occurs, a
Liquidation Event may occur with respect to one or more Series and a Rapid
Amortization Period or Rapid Accumulation Period may commence with respect to
such affected Series.
Pursuant to the Agreement, the Seller or, in some circumstances, the
Servicer, covenants to accept the transfer of each Receivable that does not
comply with all applicable requirements of law the failure to comply with
which would have a material adverse effect on Certificateholders if such
Receivable is written off as uncollectible or if the proceeds of such
Receivable are not available to the Trust. Additionally, under certain
conditions, the Seller covenants in the Agreement to accept the transfer of
each Receivable which is subject to certain specified liens immediately upon
the discovery of such liens. In the Agreement, the Seller makes certain other
covenants and warranties relating to the validity and enforceability of the
Accounts and the Receivables. The sole remedy, if any such covenant or
warranty is not complied with and such noncompliance continues beyond the
applicable cure period and such Receivables are written off as uncollectible
or the proceeds of such Receivables are not available to the Trust (or, in the
case of Receivables subject to certain types of liens, immediately upon the
discovery of such lien), is that (x) if such covenant or warranty was a Seller
covenant or warranty, the principal balance of such Receivables will be
deducted from the aggregate amount of Principal Receivables used to calculate
the First Chicago Interest, or (y) if such covenant or warranty was a Servicer
covenant or warranty or if such deduction would reduce the First Chicago
Interest below zero or would otherwise not be permitted by law, the Servicer
or the Seller, as appropriate, will be obligated to make a deposit in the
Collection Account equal to the principal amount of such Receivable (plus
monthly periodic charges through the end of the related Due Period to the
extent not included in the amount of the Receivable) (the "Transfer Deposit
Amount"). In addition, in the event of the breach of certain representations
and warranties, the Seller may be obligated to purchase all issued and
outstanding Series. See "Description of the Certificates and the Agreement--
Covenants, Representations and Warranties" and "--Servicer Covenants" and
"Certain Legal Aspects of the Receivables--Consumer Protection Laws."
Payments and Maturity. The Receivables may be paid at any time and there is
no assurance that there will be additional Receivables created in the Accounts
or that any particular pattern of cardholder repayments will occur. A
significant decline in the amount of Receivables generated in the Accounts
could result in commencement of a Rapid Amortization Period or Rapid
Accumulation Period. The Agreement provides that the Seller is required to
designate Additional Accounts the Receivables of which will be added to the
Trust in the event that the amount of Aggregate Principal Receivables is not
maintained at a certain minimum amount. Such minimum amount may be increased
by Supplements pursuant to which additional Series are issued. There can be no
assurance that the Seller will have Eligible Additional Accounts to so
designate. If Additional Accounts are not designated by the Seller when
required, a Liquidation Event may occur with respect to one or more Series and
a Rapid Amortization Period or Rapid Accumulation Period for such Series would
commence. In addition, increased convenience use (where cardholders pay their
Receivables early and thus avoid all finance charges on purchases, fees and
finance charges) would decrease the effective yield on Receivables and could
also cause a Rapid Amortization Period or Rapid Accumulation Period for one or
more Series as well as decreased protection to Certificateholders against
defaults with respect to the Accounts. Conversely, only a minimum monthly
payment is required with respect to the Accounts and a significant decrease in
the rate of repayment by cardholders of the outstanding balances or an
increase in defaults or delinquencies of such Accounts could delay the return
of principal during an Amortization Period or following an Accumulation Period
and could, if the applicable Enhancement is exhausted, cause a loss of
principal to Certificateholders. See "The Bank's Credit Card Business" and
"Maturity and Principal Payment Considerations."
Pre-Funding Account. With respect to any Series having a Pre-Funding
Account, in the event that there is an insufficient amount of Principal
Receivables in the Trust at the end of the applicable Funding Period, the
Certificateholders of such Series will be repaid principal from amounts on
deposit in the Pre-Funding Account
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(to the extent of such insufficiency) following the end of such Funding
Period, as described more fully in the Prospectus Supplement relating to such
Series. As a result of such repayment, Certificateholders would receive a
principal payment significantly earlier than they expected. In addition,
Certificateholders would not receive the benefit of the applicable Certificate
Rate for the period of time originally expected on the amount of such early
repayment. There can be no assurance that a Certificateholder would be able to
reinvest such early repayment amount at a similar rate of return.
If so provided in the related Prospectus Supplement, a prepayment premium or
penalty may be payable to the Certificateholders of such Series upon such
early repayment. Any such premium or penalty payment would be an obligation of
the Seller only; no assets of the Trust would be available for such payment.
In the event of the insolvency or receivership of the Seller, such a premium
or penalty payment may be subject to avoidance or recovery by the FDIC as
receiver or conservator of the Seller.
Effect of Subordination. With respect to Certificates of a Series having a
Class or Classes of Subordinated Certificates, except in the circumstances
specified in the related Prospectus Supplement, payments of principal in
respect of the Subordinated Certificates of a Series will not commence until
after the final principal payment with respect to the Senior Certificates of
such Series. In addition, if so specified in the related Prospectus
Supplement, if collections of Finance Charge Receivables allocable to the
Certificates of a Series are insufficient to cover required amounts due with
respect to the Senior Certificates of such Series, the Invested Amount with
respect to the Subordinated Certificates will be reduced, resulting in a
reduction of the portion of collections of Finance Charge Receivables
allocable to the Subordinated Certificates in future periods and a possible
delay or reduction in principal and interest payments on the Subordinated
Certificates. Moreover, if so specified in the related Prospectus Supplement,
in the event of a sale of Receivables in the Trust, including as a result of
certain events of insolvency of the Seller or the appointment of a conservator
or receiver for the Seller, the portion of the net proceeds of such sale
allocable to pay principal to the Certificates of a Series will be used first
to pay amounts due on the Senior Certificates and any remainder will then be
used to pay amounts due on the Subordinated Certificates.
Social, Legal, Economic and Other Factors. Changes in card use and payment
patterns by cardholders may result from a variety of social, legal and
economic factors. The credit card industry is highly competitive and operates
in a legal and regulatory environment increasingly focused on the cost of
services charged for credit cards. New credit card issuers have been entering
the market while other issuers have been seeking to expand market share
through increased advertising, target marketing and pricing competition.
Additionally, the use of incentive or affinity programs (e.g., gift awards for
card usage) may affect card usage patterns. Moreover, certain credit card
issuers assess monthly periodic charges at rates significantly lower than the
rate currently being assessed on a significant number of the Accounts. In
addition, the Bank offers to its cardholders, and may from time to time in the
future offer to its cardholders, revolving credit card accounts which provide
certain benefits not currently available under the Accounts. Conversely,
benefits provided under certain Accounts, including benefits under cardholder
affinity programs, could be modified or terminated in the future by the Bank
(or in the case of benefits available under affinity programs, the other
parties to such programs) which could make the Bank's credit card product less
attractive to cardholders. If cardholders choose to use competing sources of
credit or alternative accounts of the Bank, the rate at which new Receivables
are generated in the Accounts may be reduced and payment patterns with respect
to Receivables may be affected.
In 1992, a jury in Federal court in Utah held that the VISA association
violated antitrust laws when it denied membership in VISA to a subsidiary of
Dean Witter, Discover & Co., on the basis that another such subsidiary is the
issuer of the Discover Card, a competitor of the VISA credit card. In
September 1994, the United States Court of Appeals reversed the trial court's
decision upholding the verdict, and held VISA's conduct did not violate the
antitrust laws. The United States Court of Appeals denied Dean Witter,
Discover & Co.'s motion for a rehearing en banc, and in June 1995, the United
States Supreme Court refused to review the decision of the Court of Appeals.
While the United States Supreme Court refused to review the Court of Appeals
decision with regard to Dean Witter, Discover & Co.'s antitrust claims, the
case is continuing on Dean Witter, Discover & Co.'s state law claims and
VISA's counterclaims.
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Also, there are proposed in the Congress and certain state legislatures from
time to time new laws and amendments to existing laws to regulate further the
credit card industry or reduce finance charges applicable to credit card
accounts. In addition, as noted above, lawsuits have been filed in certain
jurisdictions challenging the ability of national banks to charge fees in
excess of state law limits. However, the Seller is unable to determine and has
no basis on which to predict whether or to what extent legal, economic or
social factors will affect card use, repayment patterns or revenues. In order,
in part, to avoid the occurrence of a Rapid Amortization Period or Rapid
Accumulation Period due to changes in card use and payment patterns, the
Seller has agreed to add Additional Accounts, if they are available, to be
included in the Accounts if Aggregate Principal Receivables in the Trust falls
below certain levels.
Economic factors including the rate of inflation, unemployment and relative
interest rates may also be reflected in changes of card use and payment
patterns, including increased risks of defaults by cardholders. Since the
largest number of the cardholders (based on billing addresses) whose Accounts
historically have been included in the Trust are in California, New York,
Illinois and Florida, adverse changes in economic conditions in these areas
could have a direct impact on the timing and amount of payments on the
Certificates. In addition, the Receivables include delinquent and reaged
Receivables and in all likelihood include obligations of cardholders who are
or are about to become bankrupt or insolvent. If there are not sufficient
funds from the allocable portions of collections of Finance Charge Receivables
as described herein or from the other sources of payment described in the
related Prospectus Supplement, interest paid to Certificateholders of the
affected Series on future Distribution Dates and the aggregate amount of
principal returned to such Certificateholders will be reduced.
The Ability of the Seller to Change Terms of the Accounts. The Seller has
the right to determine the monthly periodic charges and other fees which will
be applicable from time to time to the Accounts, to alter the minimum monthly
payment required under the Accounts and to change various other terms with
respect to the Accounts. A decrease in monthly periodic charges would decrease
the effective yield on the Accounts and could result in the occurrence of a
Liquidation Event and the commencement of a Rapid Amortization Period or a
Rapid Accumulation Period with respect to one or more Series. In servicing the
Accounts, the Servicer is required to exercise the same care and apply the
same policies that it exercises in servicing comparable accounts which it owns
or services. Under the Agreement, the Seller has agreed that, unless required
by law or unless, in its good faith judgment, necessary to maintain on a
competitive basis its credit card business, it will not reduce the annual
percentage rate of the monthly periodic charge assessed on the Receivables or
other fees on the Accounts if, as a result of such reduction, its reasonable
expectation of the Portfolio Yield is a rate less than the Base Rate of any
Series. The Servicer also has covenanted that it will change other terms
relating to the Accounts only if, in the reasonable judgment of the Servicer,
(x) if the Seller owns a comparable segment of consumer revolving credit card
accounts, such change is made applicable to any such comparable segment owned
by the Seller which has characteristics the same or substantially similar to
the Accounts, or (y) if the Seller does not own such a comparable segment,
such change is not made with the intent to benefit materially the Seller over
Certificateholders. Except as specified above, there are no restrictions on
the Servicer's ability to change the terms of the Accounts. The Servicer has
instituted programs to waive annual fees on certain accounts, has allowed
cardholders to elect a variable rate option (which, under certain
circumstances, could allow for a lower monthly periodic charge than the fixed
rate monthly periodic charge assessed by the Seller) and has lowered the
spread applicable to certain variable rate Accounts. There can be no
assurances that changes in applicable law, changes in the marketplace or
prudent business practice might not result in a determination by the Servicer
to take other actions which would otherwise change Account terms.
The Seller introduced a variable rate card in 1987 and has offered
cardholders the option of utilizing either a fixed or variable rate monthly
periodic charge. From 1989 through 1994, the Seller emphasized the origination
of variable rate accounts and substantially all new accounts originated during
that time were variable rate accounts. The Seller also offered all cardholders
with fixed rate accounts the opportunity to switch to a variable rate option.
The total yield on such variable rate Accounts is affected by fluctuations in
the prime rate, and decreases in the prime rate will diminish the yield on
such Accounts. Depending on fluctuations in interest rates,
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the variable rate monthly periodic charge may change from month to month and
could be less than the fixed charge applicable to most standard fixed rate
Accounts. Commencing in 1994, the Seller has offered most new accounts a fixed
rate monthly periodic charge on purchases for an initial period which, after
such period, converts into a variable rate monthly periodic charge. The
initial fixed rates on these new accounts is substantially lower than that
which the Seller generally assesses on its standard fixed rate Accounts and is
also generally lower than the variable monthly periodic charge assessed on
most variable rate Accounts. The Seller cannot predict how fluctuations in the
prime rate and/or the continued use of the initial fixed/variable rate pricing
for certain new Accounts may affect the future revenue experience of the
Accounts.
Master Trust Considerations. The Trust, as a master trust, has previously
issued a number of Series of Certificates, and is expected to issue other
additional Series from time to time in the future. The Prospectus Supplement
identifies all previously issued Series which remain outstanding. While the
Principal Terms of any Series will be specified in a Supplement, the
provisions of a Supplement and, therefore, the terms of any additional Series,
will not be subject to the prior review or consent of Certificateholders of
any previously issued Series. Such Principal Terms may include methods for
determining applicable Invested Percentages and allocating collections,
provisions creating different or additional security or other Enhancement,
provisions subordinating such Series to another Series or other Series (if the
Supplement relating to such Series so permits) to such Series, and any other
amendment or supplement to the Agreement which is made applicable only to such
Series. It is a condition precedent to the issuance of any additional Series
that either (x) each Rating Agency which has rated any outstanding Series
deliver written confirmation to the Trustee that the Exchange will not result
in such Rating Agency reducing or withdrawing its rating on any outstanding
Series or (y) if at the time of the Exchange there is no outstanding Series
which is currently rated by a Rating Agency, a nationally recognized
investment banking firm or commercial bank deliver a certificate to the
Trustee to the effect that the Exchange will not have an adverse effect on the
timing or distribution of payments to such other Series. There can be no
assurance, however, that the Principal Terms of any other Series, including
any Series issued from time to time hereafter, might not have an impact on the
timing and amount of payments received by a Certificateholder. See
"Description of the Certificates and the Agreement--Exchanges."
Addition of Accounts. The Seller may, and in some cases will be obligated
to, designate Additional Accounts, the Receivables in which will be conveyed
to the Trust. There can be no assurance that the Seller will have Eligible
Additional Accounts to so designate. Since substantially all of the
receivables in the accounts in the Bank's Portfolio have already been
transferred to the Trust, any new accounts which may be designated by the
Seller as Additional Accounts may have different terms and provisions than the
Accounts. Further, the Additional Accounts which the Seller may designate may
be subject to different eligibility criteria than the Accounts. Such
Additional Accounts may include accounts originated using criteria different
from those which were applied to the Accounts because such accounts were
originated at a later date or were part of a special portfolio of credit card
accounts originated by the Seller or an affiliate of the Seller or were
acquired from another credit card issuer. The Seller is required to give prior
written notice of any such addition to the Rating Agency, and, prior to the
date of such addition, the Seller must not have received notice from any
Rating Agency of its intention to reduce or withdraw the rating of any Series
of Certificates due to such addition. See "Description of the Certificates and
the Agreement--Addition of Accounts."
Control. Subject to certain exceptions, the Certificateholders of each
Series (and, if so provided in the related Supplement, the Enhancement
Provider with respect to such Series) may take certain actions, or direct
certain actions to be taken, under the Agreement or the related Supplement.
However, under certain circumstances, the consent or approval of a specified
percentage of the aggregate Invested Amount of all Series will be required to
direct certain actions, including requiring the appointment of a successor
Servicer following a Servicer Default, amending the Agreement and directing a
repurchase of all outstanding Series upon the breach of certain
representations and warranties by the Seller. In addition, if a receiver or
conservator were appointed for the Seller causing a Liquidation Event with
respect to all Series then outstanding, the Trustee would sell the portion of
the Receivables allocable to Certificates offered hereby as set forth in the
Agreement unless (i) holders of more than 50% of the Invested Amount of each
Preexisting Series, (ii) unless otherwise specified in the
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Supplement relating thereto, a majority in Invested Amount of each Class of
each Series issued after the Preexisting Series (including a majority in
interest in each Collateral Interest), (iii) each holder of an interest in the
First Chicago Interest and (iv) any other person specified in any Supplement,
instruct otherwise or unless otherwise required by the FDIC. Therefore, even
if a majority in Invested Amount of each Class of each Series being offered
pursuant to the accompanying Prospectus Supplement were to instruct the
Trustee not to sell the Receivables upon the occurrence of the aforementioned
Liquidation Event, such instruction would not be effective unless agreed to by
(i) a majority in Invested Amount of each Preexisting Series, (ii) unless
otherwise specified in the Supplement relating thereto, a majority in Invested
Amount of each Class of each Series issued after the Preexisting Series
(including a majority in interest in each Collateral Interest), (iv) each
holder of an interest in the First Chicago Interest and (v) any other person
specified in a Supplement.
Rating of the Certificates. It is a condition to the issuance of the
Certificates that they be rated in one of the four highest rating categories
by at least one Rating Agency. Any rating assigned to the Certificates of a
Series or a Class by a Rating Agency will reflect such Rating Agency's
assessment of the likelihood that Certificateholders of such Series or Class
will receive the payments of interest and principal required to be made under
the Agreement (including amounts payable from any Pre-Funding Account) and
will be based primarily on the value of the Receivables in the Trust and the
availability of any Enhancement with respect to such Series or Class. However,
any such rating will not, unless specified in the related Prospectus
Supplement with respect to any Class or Series offered hereby, address the
likelihood that the principal of, or interest on, any Certificates of such
Class or Series will be paid on a scheduled date. In addition, any such rating
will not address the possibility of the occurrence of a Liquidation Event with
respect to such Class or Series or the possibility of the imposition of United
States withholding tax with respect to non-U.S. Certificateholders. The rating
will not be a recommendation to purchase, hold or sell Certificates of such
Series or Class, and such rating will not comment as to the marketability of
such Certificates, any market price or suitability for a particular investor.
There is no assurance that any rating will remain for any given period of time
or that any rating will not be lowered or withdrawn entirely by a Rating
Agency if in such Rating Agency's judgment circumstances so warrant.
The Seller will request a rating of each Class of Certificates offered
hereby by at least one Rating Agency. There can be no assurance as to whether
any rating agency not requested to rate any Class of Certificates will
nonetheless issue a rating with respect to any such Class of Certificates,
and, if so, what such rating would be. A rating assigned to any Series of
Certificates or Class thereof by a rating agency that has not been requested
by the Seller to do so may be lower than the rating assigned by a Rating
Agency pursuant to the Seller's request.
Limited Credit Enhancement. Although Enhancement may be provided with
respect to a Series of Certificates or any Class thereof, the amount available
will be limited and will be subject to certain reductions. If the amount
available under any Enhancement is reduced to zero, or Enhancement is
otherwise not available to cover a loss, Certificateholders of the Series or
Class thereof covered by such Enhancement will bear directly the credit and
other risks associated with their undivided interest in the Trust and will be
more likely to suffer a loss. See "Enhancement."
Book-Entry Registration. Unless otherwise specified in the related
Prospectus Supplement, the Certificates of each Series initially will be
represented by certificates registered in the name of Cede and will not be
registered in the names of the Certificate Owners or their nominees. Because
of this, unless and until Definitive Certificates are issued, Certificate
Owners of such Series will not be recognized by the Trustee as
Certificateholders, as that term is used in the Agreement. Hence, until such
time, Certificate Owners will only be able to exercise the rights of
Certificateholders indirectly through DTC, Cedel or Euroclear and their
participating organizations, and will receive reports and other information
provided for under the Agreement only if, when and to the extent provided to
Certificate Owners by DTC, Cedel or Euroclear and their participating
organizations. See "Description of the Certificates and the Agreement--Book-
Entry Registration" and "--Definitive Certificates."
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THE BANK'S CREDIT CARD BUSINESS
GENERAL
The interests in Receivables which the Seller has conveyed or will convey to
the Trust pursuant to the Agreement are generated from transactions made by
holders of certain Classic VISA and VISA Gold credit card accounts and certain
Standard MasterCard and Gold MasterCard credit card accounts. These accounts
were generated under the VISA USA, Incorporated ("VISA") or MasterCard
International Incorporated ("MasterCard International") programs and were
either originated by the Bank or FNBC, or purchased by the Bank or FNBC from
other credit card issuers. Effective as of July 1, 1987, FNBC transferred its
credit card operation and all its credit card accounts to the Bank, although
FNBC retained ownership of all receivables comprising the existing balances in
such accounts. Subsequently, such receivables also were transferred to the
Bank. The Bank is a member of MasterCard International, and First Chicago NBD
and the Bank are members of VISA. The Bank currently offers other VISA and
MasterCard credit card accounts with various program features, charges and
rate structures. The Bank services these accounts at its headquarters located
in Wilmington, Delaware and its operations center located in Elgin, Illinois
and retains an affiliated credit card servicing company, First Card Services,
Inc. ("FCSI"), located in Uniondale, New York, to perform collection and
customer service activities. Commencing in June 1996, the Bank also
anticipates using an additional affiliated credit card servicing company, NBD
Service Corp., located in Indianapolis, Indiana, to perform collection and
customer service activities.
The VISA and MasterCard credit cards are issued as part of the worldwide
VISA and MasterCard International systems and transactions creating the
receivables through the use of the credit cards are processed through the VISA
and MasterCard International systems. Should either system materially curtail
its activities, or should the Bank cease to be a member of MasterCard
International or First Chicago NBD and the Bank cease to be members of VISA,
for any reason, a Liquidation Event could occur, and delays in payments on the
Receivables and possible reductions in the amounts thereof could also occur.
The VISA and MasterCard credit cards of the type pursuant to which the
Accounts were established may be used for two types of transactions: purchases
and cash advances (including balance transfers). Cardholders make purchases
when using a credit card to buy goods or services. A cash advance is made when
a credit card is used to obtain cash from a financial institution, from an
automated teller machine or by writing a check on an account; a balance
transfer occurs when a cardholder transfers a credit card balance with another
credit card issuer to an account with the Seller. Amounts due with respect to
each type of transaction will be included in the Receivables.
The VISA and MasterCard credit card accounts owned by the Bank were
principally generated through: (i) direct mail solicitations for accounts on a
preapproved credit basis; (ii) applications made available to prospective
cardholders at FNBC, the Bank and their affiliates, at retail outlets, at
other financial institutions with which arrangements have been made, on
college campuses and in magazines; (iii) affinity marketing; and (iv)
purchases of accounts from other credit card issuers.
If an account is opened in response to a direct mail preapproved
solicitation, the prospective cardholder's name has previously been screened
through a credit bureau to ensure that the person meets certain standards of
creditworthiness and fiscal responsibility. In the case of preapproved
solicitations, the credit limit is based upon the prospective cardholder's
creditworthiness as measured by the Seller's risk evaluation process, length
and depth of credit experience and usage of credit. In the case of pre-
approved solicitations where an offer is made for a credit card with a credit
line "up to" a predetermined amount, credit line assignment is based on
similar criteria at the time of the response.
Before an account is opened in response to an application, the prospective
cardholder's application is reviewed for completeness and creditworthiness. A
credit report issued by an independent credit reporting agency is generally
obtained and information on such report regarding the applicant may be
verified. The ability of the applicant to repay credit card balances is
generally evaluated by applying a credit score card, which is intended to
provide a general indication, based on the information available, of the
applicant's willingness and ability to repay his obligations. If an
application is approved, an initial credit limit is established for the
account based on the applicant's credit score.
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Affinity marketing involves the solicitation of prospective cardholders from
identifiable groups with a common interest and/or common cause. Affinity
marketing is conducted through two approaches: the first relies on the
solicitation of organized membership groups with the written endorsement of
the group's leadership and the second utilizes solicitation of prospective
cardholders through the use of purchased lists. Solicitation activities used
in connection with affinity marketing also include: solicitation in
appropriate magazines, telemarketing and applications made available to
prospective cardholders in appropriate locations. In certain cases,
preapproved solicitations will be used in the same manner as described in the
preceding paragraph.
Credit card accounts that have been purchased by FNBC and the Bank were
originally opened using criteria established by the institution from which the
accounts were purchased or by the institution from which the selling
institution originally purchased the accounts. Purchased accounts are screened
against criteria which are set at the time of acquisition to determine whether
any of the purchased accounts should be closed immediately. Any accounts
failing the criteria are closed. All other such accounts remain open. The
credit limits on such accounts are based initially on the limits established
or maintained by the selling institution.
Each cardholder is subject to an agreement governing the terms and
conditions of the accounts. Pursuant to such cardholder agreement, the Bank
reserves the right to change or terminate any terms, conditions, services or
features of the accounts (including increasing or decreasing monthly periodic
charges, other charges or minimum payments). Credit limits may be adjusted
periodically based upon the Bank's continuing evaluation of the cardholder's
payment behavior.
COLLECTION EFFORTS
Efforts to collect delinquent credit card receivables are made by the Bank
and FCSI personnel and collection agencies and attorneys retained by the Bank.
Under current practice, the Bank includes a request for payment of overdue
amounts on all billing statements subsequent to a delinquency. Collection
personnel generally initiate telephone contact with cardholders whose credit
card accounts have become 30 days or more delinquent. Certain cardholders whom
the Bank considers higher risk may be contacted when their accounts first
become delinquent. In the event that initial telephone contact fails to
resolve the delinquency, the Bank continues to contact the cardholder by
telephone and by mail. The Bank may also enter into arrangements with
cardholders to extend or otherwise change payment schedules. The current
policy of the Bank is to recognize losses no later than the 180th day of
delinquency (i.e., 210 days after the date of the billing statement), although
charge-offs may be made earlier in some circumstances. The credit evaluation,
servicing and charge-off policies and collection practices of the Bank may
change over time in accordance with the Bank's business judgment and
applicable law. Under the terms of the Agreement, any recoveries (including
insurance proceeds) received on charged-off Accounts are retained by the Bank
and are not included in the assets of the Trust.
LOSS AND DELINQUENCY EXPERIENCE
The Prospectus Supplement relating to each Series sets forth the loss and
delinquency experience with respect to payments by cardholders for
substantially all VISA and MasterCard consumer revolving credit card accounts
owned by the Bank (excluding certain affinity accounts and certain accounts
not originated by the Bank or FNBC) (the "Bank's Portfolio") during the
periods shown in the Prospectus Supplement. There can be no assurance,
however, that the loss and delinquency experience for the Receivables in the
future will be similar to the historical experience set forth in the
Prospectus Supplement for the Bank's Portfolio.
The Bank has policies to allow delinquent accounts whose cardholders are
making good faith efforts to repay overdue amounts to be deemed current
("reaged") provided certain conditions are satisfied. If an account is 90 days
delinquent or greater, it qualifies for reaging treatment if the sum of the
payments received during the preceding five months (or in certain
circumstances the lesser of (a) five months or (b) the number of months since
the account was last current) is at least equal to the sum of the three oldest
minimum payments. The reaging process permits only one reaging of an account
from 90 days delinquent or greater categories in a 12-month period. With
respect to accounts that are 30 to 90 days delinquent, reaging treatment
occurs pursuant to a process
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which uses criteria that are more liberal than the criteria described above.
An account 30 to 90 days delinquent can be reaged so long as these criteria
are met. The entire process is system controlled. In addition to automatic
reaging, account closure and usage restrictions are system controlled. When an
account is 30 days delinquent, charge privileges are suspended. Account
closure occurs automatically when an account is 60 days delinquent.
Reinstatement of closed accounts requires a full credit review; only a minimal
number of closed accounts qualify for reinstatement. The Bank may terminate,
alter or modify its reaging process at any time. Currently, the Bank is
evaluating various collection strategies which, if implemented, would alter
the reaging process for certain accounts. The delinquency information set
forth in the Prospectus Supplement reflects the application of the Bank's
current reaging process.
REVENUE EXPERIENCE
The gross revenues from monthly periodic charges and fees billed to
cardholders on the Bank's Portfolio are set forth in the Prospectus Supplement
for the periods indicated in the Prospectus Supplement.
The revenues for the Bank's Portfolio shown in the Prospectus Supplement are
related to monthly periodic charges and other fees billed to cardholders but
do not include revenue attributable to Interchange. The revenues related to
monthly periodic charges and fees depend in part upon the collective
preference of cardholders to use their credit cards as revolving debt
instruments for purchases and cash advances and paying off account balances
over several months as opposed to convenience use, where the cardholders
prefer instead to pay off their entire balance each month, thereby avoiding
monthly periodic charges on purchases, fees and finance charges. Revenues
related to monthly periodic charges and fees also depend on the types of
charges and fees assessed by the Bank on the accounts. The Bank introduced a
variable rate card in 1987 and has offered cardholders the option of utilizing
either a fixed or variable rate monthly periodic charge. From 1989 through
1994, the Bank emphasized the origination of variable rate accounts and
substantially all new accounts originated during that time were variable rate
accounts. Depending upon fluctuations in interest rates, the variable rate
monthly periodic charge (which is based on the prime rate) assessed on
variable rate accounts may change from month to month and could be less than
the fixed charge applicable to most standard fixed rate accounts. Commencing
in 1994, the Bank began offering most new accounts, for purchase transactions,
a fixed rate monthly periodic charge for an initial period which then converts
into a variable rate. The initial fixed rate offered on such accounts is
substantially lower than that currently assessed on the variable rate accounts
or the standard fixed rate accounts. The total yield on such accounts during
the initial fixed rate period is therefore lower than that of a variable rate
account or standard fixed rate account. Fluctuations in the prime interest
rate, and/or the continued use of the initial fixed/variable rate pricing for
certain new accounts, may affect future revenue experience.
INTERCHANGE
Members participating in the VISA and MasterCard International associations
receive certain fees ("Interchange") as partial compensation for taking credit
risk, absorbing fraud losses, funding full payer receivables and servicing
cardholders for a limited period prior to initial billing. Under the VISA and
MasterCard International systems, a portion of this Interchange in connection
with cardholder charges for merchandise and services is passed from banks
which clear the transactions for merchants to credit card-issuing banks.
Interchange ranges from approximately 1% to 2% of the transaction amount,
although VISA and MasterCard International may from time to time change the
amount of Interchange reimbursed to banks issuing their credit cards.
Interchange will be allocated to the Trust on the basis of the percentage
equivalent of the ratio which the amount of cardholder sales charges in the
Accounts bears to the total amount of cardholder sales charges for all
accounts in the Seller's entire portfolio. This percentage is an estimate of
the actual Interchange and may be greater or less than the actual amount of
the Interchange relating to the Accounts from time to time. Unless otherwise
specified in the related Prospectus Supplement, Interchange will be included
in Finance Charge Receivables for purposes of calculating the Portfolio Yield
for a Series.
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THE ACCOUNTS
GENERAL
The Accounts currently consist of substantially all of the VISA(R) and
MasterCard(R) consumer revolving credit card accounts existing in all of the
Seller's ten billing cycles (billing cycles 0, 1, 2, 3, 4, 5, 6, 7, 8 and 9),
excluding certain affinity accounts and certain accounts not originated by
either the Seller or FNBC. Additional accounts added to each of the foregoing
billing cycles (excluding certain affinity accounts) in the normal operation
of the Seller's credit card business will generally be added on a daily basis
as a category of Additional Accounts. See "Description of the Certificates and
the Agreement--Addition of Accounts."
The Seller's VISA and MasterCard accounts are grouped into billing cycles
for the purpose of administrative convenience. Each billing cycle has a
separate monthly billing date at which time the activity in the related
accounts during the month ending on such billing date are processed and billed
to cardholders. The Accounts include VISA and MasterCard accounts in billing
cycles ending at the close of business on ten separate days in each month. The
Seller transferred to the Trust all Receivables existing in the Accounts on
the billing date for such Account in either May 1990, September 1990, May
1991, July 1991 or May 1992 (each, a "Cut Off Date") and all Receivables
generated in each such Account after the applicable Cut Off Date. All monthly
calculations with respect to each Account are computed based on the activity
during the applicable billing cycle for that Account (the monthly billing
cycle periods for the Accounts ending in the same month during the term of the
Trust being collectively referred to herein as a "Due Period"). Thus, in the
case of the August 1996 Distribution Date, for example, monthly collections
would be based on the July 1996 Due Period and would reflect collection
activity for billing cycles commencing at the opening of business on the 2nd,
4th, 7th, 10th, 13th, 16th, 19th, 22nd, 25th and 28th days of June 1996, and
ending at the close of business of the 1st, 3rd, 6th, 9th, 12th, 15th, 18th,
21st, 24th and 27th days of July 1996, respectively, with respect to the
Accounts in each of such billing cycles.
Accounts were previously assigned to billing cycles based on the month in
which they were opened. More recently, new accounts have been assigned to
billing cycles in a manner which is intended, for purposes of administrative
convenience, to equalize the number of accounts in the billing cycles. Because
the Accounts include substantially all the accounts existing in the Seller's
ten billing cycles (except for certain affinity accounts and accounts not
originated by either the Seller or FNBC), and because the Receivables include
all amounts payable by cardholders under the Accounts, the Receivables of some
of the Accounts include delinquent or reaged Receivables and may include
obligations of cardholders who are or are about to become bankrupt or
insolvent.
Pursuant to the Agreement, the Seller has the right (subject to certain
limitations and conditions described below) to designate from time to time
additional qualifying VISA and MasterCard consumer revolving credit card
accounts of the Bank to be included as Accounts and to convey to the Trust all
Receivables in such Additional Accounts, whether such Receivables are then
existing or thereafter created. The Seller currently adds all new accounts
opened in the ordinary course of business in the ten billing cycles (excluding
certain affinity accounts) as Automatic Additional Accounts on a daily basis
and currently intends to continue the addition of such new accounts. In
addition, the Seller is required to designate Additional Accounts (x) to
maintain the First Chicago Amount equal to Aggregate Principal Receivables
minus the sum of the Invested Amounts for all Series, so that the First
Chicago Amount for the related Due Period equals or exceeds 7% of the
Aggregate Principal Receivables for the same Due Period, or such lower
percentage as is acceptable to the Rating Agencies, subject to certain
conditions (the "Minimum First Chicago Interest Percentage") and (y) to
maintain, for so long as the Certificates remain outstanding, Aggregate
Principal Receivables in an amount equal to or greater than the sum of the
initial Invested Amounts (or other amounts, if applicable) of all outstanding
Series and (the "Minimum Aggregate Principal Receivables"). The Seller will
convey the Receivables then existing or thereafter created under any such
Additional Accounts to the Trust. Further, pursuant to the Agreement, the
Seller has the right (subject to certain limitations and conditions discussed
herein) to accept the removal of certain Accounts
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designated by the Seller from the Trust and to require the Trustee to convey
all Receivables in such Removed Accounts to the Seller, whether such
Receivables are then existing or thereafter created. Throughout the term of
the Trust, the Accounts from which the Receivables arise will be the same
Accounts designated by the Seller on the applicable Cut Off Dates plus any
Additional Accounts and minus any Removed Accounts. See "Description of the
Certificates and the Agreement--Conveyance of Receivables."
The Prospectus Supplement includes tables summarizing the Accounts by
various criteria as well as certain other information relating to the
Accounts, including information supplementing the foregoing description of the
Accounts. Such information includes the amount of Principal Receivables and
Finance Charge Receivables in the Accounts, the average Receivables balance of
the Accounts, the average credit limit of the Accounts and the aggregate total
Receivables balance as a percentage of the aggregate total credit limit of the
Accounts.
BILLING AND PAYMENTS
The credit card accounts owned by the Bank include accounts originated or
purchased by the Bank or FNBC. These accounts have various billing and payment
structures, including varying annual fees and monthly periodic charges. The
Prospectus Supplement contains information on the current billing and payment
characteristics of the Accounts.
The Bank has the right to determine the monthly periodic charges applicable
to the Accounts, including the right to alter or defer minimum monthly
payments required under the Accounts or to change various other terms with
respect to the Accounts, subject to certain limitations contained in the
Agreement. See "Description of the Certificates and the Agreement--Collection
and Other Servicing Procedures."
Payments by cardholders to the Bank on the Accounts are processed and
applied first to any fees billed to the Accounts, next to billed and unpaid
monthly periodic charges and then to billed and unpaid transactions in the
order determined by the Bank. Any excess is applied to unbilled monthly
periodic charges. There can be no assurance that monthly periodic rates, fees
and other charges will remain at current levels in the future. See
"Description of the Certificates and the Agreement--Collection and Other
Servicing Procedures."
THE SELLER
The primary business of the Seller, a wholly-owned subsidiary of First
Chicago NBD, is the processing and issuance of VISA and MasterCard credit
cards. The Seller, which was acquired by First Chicago NBD as of July 1, 1987,
from Beneficial Corporation, was named Beneficial National Bank USA prior to
its acquisition by First Chicago NBD. The Prospectus Supplement contains
additional information relating to the Seller.
The principal executive offices of the Seller are located at One Gateway
Center, 300 King Street, Wilmington, Delaware 19801 (telephone 302-594-8606).
The principal executive offices of First Chicago NBD are located at One First
National Plaza, Chicago, Illinois 60670 (telephone 312-732-4000).
THE TRUST
The Trust was formed for this and like transactions pursuant to the
Agreement and prior to formation had no assets or obligations. Since its
formation, the Trust has not engaged in any business activity but rather
acquires and holds Receivables and the other assets of the Trust and proceeds
therefrom, issues additional Series and makes payments on the Certificates and
related activities. As a consequence, the Trust is not expected to have any
need for, or source of, capital resources other than the assets of the Trust.
The Trust has issued and outstanding the Series identified in the Prospectus
Supplement.
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USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the
Seller. The Seller intends to use such proceeds for general corporate
purposes.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
For each Series, following its Revolving Period, collections of Principal
Receivables are expected to be distributed to the Certificateholders of such
Series or any specified Class thereof on each specified Distribution Date
during the Controlled Amortization Period or the Principal Amortization
Period, or are expected to be accumulated for payment to Certificateholders of
such Series or any specified Class thereof during a Controlled Accumulation
Period and distributed on a Scheduled Payment Date; provided, however, that,
if a Rapid Amortization Period or a Rapid Accumulation Period commences,
collections of Principal Receivables will be paid to Certificateholders or
accumulated in the manner described herein and in the related Prospectus
Supplement. The related Prospectus Supplement specifies when the Controlled
Amortization Period, the Principal Amortization Period or Controlled
Accumulation Period, as applicable, will commence, the principal payments
expected or available to be received or accumulated during such Controlled
Amortization Period, Principal Amortization Period or Controlled Accumulation
Period, or a Rapid Accumulation Period, as applicable, the manner and priority
of principal payments and accumulations among the Classes of a Series of
Certificates, the payment rate assumptions on which such expected principal
accumulations and payments are based and the Liquidation Events which, if any
were to occur, would lead to the commencement of a Rapid Amortization Period
or, if so specified in the related Prospectus Supplement, a Rapid Accumulation
Period.
The Prospectus Supplement includes a table setting forth the highest and
lowest cardholder monthly payment rates for the Bank's Portfolio during any
month in each period shown in such table and the average cardholder monthly
payment rates for all months during such periods shown, in each case
calculated as a percentage of total opening monthly account balances during
the periods shown.
The amount of collections on Receivables may vary from month to month due to
seasonal variations, general economic conditions and payment habits of
individual cardholders. There can be no assurance that collections of
Principal Receivables with respect to the Accounts will be similar to the
historical experience set forth in the Prospectus Supplement. Further, if a
Liquidation Event occurs with respect to a Series, the average life and
maturity of the Certificates of such Series could be significantly reduced.
Likewise, the sharing of collections of Principal Receivables allocated to
other Series with a Series during a Rapid Amortization Period or Rapid
Accumulation Period with respect to that Series could significantly reduce the
duration of such a period.
The amount of outstanding Receivables and the rates of payments,
delinquencies, charge-offs and new borrowings on the Accounts depend upon a
variety of factors, including seasonal variations, the availability of other
sources of credit, general economic conditions and consumer spending and
borrowing patterns. Accordingly, there can be no assurance that future
cardholder monthly payment rate experience will be similar to historical
experience.
DESCRIPTION OF THE CERTIFICATES AND THE AGREEMENT
The Certificates of each Series will be issued pursuant to the Agreement and
a Supplement entered into between the Bank, as transferor of interests in the
Receivables and as Servicer of the Accounts and the Receivables, and Norwest
Bank Minnesota, National Association, as Trustee for the Certificateholders.
Pursuant to the Agreement, the Seller may execute further Supplements thereto
between the Seller and the Trustee in order to issue additional Series. See
"--Exchanges." The Trustee will provide a copy of the Agreement (without
exhibits or schedules), including any Supplements, to Certificateholders
without charge upon written request. The following summary describes certain
terms of the Agreement common to each Series of Certificates and is qualified
in its entirety by reference to the Agreement and the related Supplement.
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GENERAL
The Certificates will represent an undivided interest in the Trust,
including the right to receive, in the aggregate, the applicable Invested
Percentage of all collections received with respect to the Receivables in the
Trust. The property of the Trust consists of the Receivables generated under
the Accounts and under any Additional Accounts hereinafter added to the Trust,
all funds to be collected from cardholders in respect of Receivables (other
than recoveries with respect to previously charged-off Receivables, unless
such recoveries are made available to one or more Series as specified in the
related Prospectus Supplement, and insurance proceeds), all moneys on deposit
in the Collection Account and any other account established for the benefit of
any Series (which account may not be for the benefit of any other Series), the
right to receive certain Interchange fees attributable to the Accounts (which
right may not be afforded to a Series) and any Enhancement issued with respect
to any particular Series (the drawing on or payment of which may not be
available to the Certificateholders of any other Series). The Trust will not
include the Receivables from any Removed Accounts which may be removed from
the Trust from time to time pursuant to the terms of the Agreement.
Each Series of Certificates may consist of one or more Classes, one or more
of which may be Senior Certificates and one or more of which may be
Subordinated Certificates. Each Class of a Series will evidence the right to
receive a specified portion of each distribution of principal or interest or
both. The Invested Amount with respect to a Series with more than one Class
will be allocated among the Classes as described in the related Prospectus
Supplement. The Certificates of a Class may differ from Certificates of other
Classes of the same Series in, among other things, the amounts allocated to
principal payments, maturity date, Certificate Rate and the availability of
Enhancement.
For each Series of Certificates, payments of interest and principal will be
made on Distribution Dates specified in the related Prospectus Supplement to
Certificateholders in whose names the Certificates of such Series were
registered on the record dates (each, a "Record Date") specified in the
related Prospectus Supplement. Interest will be distributed to
Certificateholders in the amounts, for the periods and on the dates specified
in the related Prospectus Supplement.
For each Series of Certificates, the Seller initially will own the
Exchangeable Seller's Certificate. The Exchangeable Seller's Certificate
represents the undivided interest in the Trust not represented by the
Certificates or the rights, if any, of any Enhancement Providers to receive
payments from the Trust. The holder of the Exchangeable Seller's Certificate
will have the right to a percentage (the "First Chicago Percentage") of all
cardholder payments from the Receivables in the Trust.
Unless otherwise specified in the related Prospectus Supplement, during the
Revolving Period for a Series, the Invested Amount of such Series will remain
constant except under certain limited circumstances. The amount of Principal
Receivables in the Trust, however, will vary each day as new Principal
Receivables are created and others are paid. The amount of the First Chicago
Amount will fluctuate each day, to reflect the changes in the amount of the
Principal Receivables in the Trust. When a Series is amortizing, or when
principal with respect thereto is accumulating in the Principal Funding
Account for such Series, the Invested Amount of such Series will decline as
customer payments of Principal Receivables are collected and distributed to or
accumulated for distribution to the Certificateholders. As a result, the First
Chicago Amount will generally increase to reflect reductions in the Invested
Amount for such Series and will also change to reflect the variations in the
amount of Principal Receivables in the Trust. The First Chicago Amount may
also be reduced as the result of an Exchange.
Unless otherwise specified in the related Prospectus Supplement,
Certificates of each Series initially will be represented by certificates
registered in the name of the nominee of DTC (together with any successor
depository selected by the Seller, the "Depository"), except as set forth
below. Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, beneficial interests in the
Certificates will be available for purchase in minimum denominations of $1,000
and integral multiples thereof in book-entry form only. The Seller has been
informed by DTC that DTC's nominee will be Cede. Accordingly, Cede is expected
to be the holder of record of each Series of Certificates offered hereby. No
Certificate Owner acquiring an interest in the Certificates will be entitled
to receive a certificate representing such person's interest in the
Certificates.
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Unless and until Definitive Certificates are issued for any Series under the
limited circumstances described herein, all references herein to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
its participating organizations ("Participants"), and all references herein to
distributions, notices, reports and statements to Certificateholders shall
refer to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Certificates, as the case may be, for distribution to
Certificate Owners in accordance with DTC procedures. See "--Book-Entry
Registration" and "--Definitive Certificates."
If so specified in the Prospectus Supplement relating to a Series,
application will be made to list the Certificates of such Series, or all or a
portion of any Class thereof, on the Luxembourg Stock Exchange or any other
specified exchange.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, Certificate Owners may hold their
interests in the Certificates offered hereby through DTC (in the United
States) or Cedel or Euroclear (in Europe) if they are participants of such
systems, or indirectly through organizations which are participants in such
systems.
Cede, as nominee for DTC, will be the registered holder of the global
Certificates. Cedel and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective Depositaries which in turn
will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC. Citibank, N.A. ("Citibank"), will act
as depositary for Cedel and Morgan Guaranty Trust Company of New York
("Morgan") will act as depositary for Euroclear (in such capacities, the
"Depositaries").
Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules. Transfers between Cedel Participants and Euroclear
Participants will occur in the ordinary way in accordance with their
applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel or
Euroclear Participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing
system by its Depositary; however, such cross-market transactions will require
delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures
for same-day funds settlement applicable to DTC. Cedel Participants and
Euroclear Participants may not deliver instructions directly to the
Depositaries.
Because of time zone differences, credits of securities received in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participant on such business day. Cash received in Cedel or
Euroclear as a result of sales of securities by or through a Cedel Participant
or a Euroclear Participant to a DTC Participant will be received with value on
the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in
DTC. For additional information regarding clearance and settlement procedures
for the Certificates, see Annex I hereto and for information with respect to
tax documentation procedures relating to the Certificates, see Annex I hereto
and "Tax Matters--Foreign Investors".
DTC is a limited-purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York UCC, and a
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"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its Participants and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly (the "Indirect Participants").
Certificate Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interest
in, Certificates may do so only through Participants and Indirect
Participants. In addition, Certificate Owners will receive all distributions
of principal of and interest on the Certificates from FNBC, as paying agent,
or its successor in such capacity (the "Paying Agent"), through the
Participants who in turn will receive them from DTC. Under a book-entry
format, Certificate Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the Paying Agent to Cede,
as nominee for DTC. DTC will forward such payments to its Participants which
thereafter will forward them to Indirect Participants or Certificate Owners.
Certificate Owners will not be recognized by the Trustee as
Certificateholders, as such term is used in the Agreement or any Supplement,
and Certificate Owners will only be permitted to exercise the rights of
Certificateholders indirectly through the Participants who in turn will
exercise the rights of Certificateholders through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Certificates and is
required to receive and transmit distributions of principal of and interest on
the Certificates. Participants and Indirect Participants with which
Certificate Owners have accounts with respect to the Certificates similarly
are required to make book-entry transfers and receive and transmit such
payments on behalf of their respective Certificate Owners. Accordingly,
although Certificate Owners will not possess Certificates, Certificate Owners
will receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Certificate Owner to pledge Certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Certificates, may be limited due to the lack of a physical certificate for
such Certificates.
DTC has advised the Seller that it will take any action permitted to be
taken by a Certificateholder under the Agreement or any Supplement only at the
direction of one or more Participants to whose account with DTC the
Certificates are credited. Additionally, DTC has advised the Seller that it
will take such actions with respect to specified percentages of the Invested
Amount of a Series only at the direction of and on behalf of Participants
whose holdings include undivided interests that satisfy such specified
percentages. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of Participants
whose holdings include such undivided interests.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants,
thereby eliminating the need for physical movement of certificates.
Transactions may be settled in Cedel in any of 32 currencies, including United
States dollars. Cedel provides to its Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
interfaces with domestic markets in several countries. As a professional
depository, Cedel is subject to regulation by the Luxembourg Monetary
Institute. Cedel Participants are recognized financial institutions around the
world including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations and may
include the Underwriters. Indirect access to Cedel is also available to
others, such as banks, brokers, dealers
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and trust companies that clear through or maintain a custodial relationship
with a Cedel Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for participants
of the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 27 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing, and interfaces with
domestic markets in several countries generally similar to the arrangements
for cross-market transfers with DTC described above. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium
office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The Cooperative
establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
Law (collectively, the "Terms and Conditions"). The Terms and Conditions
govern transfers of securities and cash within the Euroclear System,
withdrawals of securities and cash from the Euroclear System, and receipts of
payments with respect to securities in the Euroclear System. All securities in
the Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants, and has no record of or relationship with persons holding
through Euroclear Participants.
Distributions with respect to Certificates held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to
tax reporting in accordance with relevant United States tax laws and
regulations. See "Tax Matters." Cedel or the Euroclear Operator, as the case
may be, will take any other action permitted to be taken by a
Certificateholder under the Agreement or any Supplement on behalf of a Cedel
Participant or Euroclear Participant only in accordance with its relevant
rules and procedures and subject to its Depositary's ability to effect such
actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Certificates among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
Unless otherwise specified in the related Prospectus Supplement, the
Certificates of each Series will be issued in fully registered, certificated
form to Certificate Owners or their nominees (the "Definitive Certificates"),
rather than to DTC or its nominee, only if (i) the Seller advises the Trustee
in writing that DTC is no longer willing or able to discharge properly its
responsibilities as Depository with respect to the Certificates of such
Series, and the Trustee or the Seller is unable to locate a qualified
successor, (ii) the Seller, at its option,
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elects to terminate the book-entry system through DTC, or (iii) after the
occurrence of a Servicer Default, Certificate Owners representing in the
aggregate not less than 50% of the aggregate Invested Amount of all Series
then issued and outstanding advise DTC through Participants in writing that
the continuation of a book-entry system through any Depository is no longer in
the best interest of the Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the affected Certificates and
instructions for re-registration, the Trustee will issue the affected
Certificates as Definitive Certificates, and thereafter the Trustee will
recognize the holders of such Definitive Certificates as holders under the
Agreement (the "Holders").
Distribution of principal and interest on the Certificates will be made by
the Paying Agent directly to Holders of Definitive Certificates in accordance
with the procedures set forth herein, in the related Prospectus Supplement and
in the Agreement. Interest and principal payments on a Distribution Date will
be made to Holders in whose names the Definitive Certificates were registered
at the close of business on the related Record Date. Distributions will be
made by check mailed to the address of such Holder as it appears on the
certificate register. The final payment on any Certificate (whether a
Definitive Certificates or a certificate registered in the name of Cede
representing the Certificates of a Series), however, will be made only upon
presentation and surrender of such certificate at the office or agency
specified in the notice of final distribution to Certificateholders of such
Series. The Trustee will provide such notice to registered Certificateholders
not later than the fifth day of the month of such final distribution.
Unless otherwise specified in the related Prospectus Supplement, Definitive
Certificates will be transferable and exchangeable at the offices of the
Transfer Agent and Registrar, which shall initially be FNBC. No service charge
will be imposed for any registration of transfer or exchange, but the Transfer
Agent and Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge imposed in connection therewith. The Transfer
Agent and Registrar, as the case may be, shall not be required to register the
transfer or exchange of Definitive Certificates for a period of 15 days
preceding the due date for any payment with respect to such Definitive
Certificates.
INTEREST PAYMENTS
For each Series of Certificates and Class thereof, interest will accrue from
the relevant Series Closing Date on the applicable Invested Amount at the
applicable Certificate Rate, which may be a fixed, floating or other type of
rate as specified in the related Prospectus Supplement. Interest will be
distributed to Certificateholders on the Distribution Dates specified in the
related Prospectus Supplement. Interest payments on any Distribution Date will
be funded from collections of Finance Charge Receivables allocated to the
Invested Amount during the preceding Due Period or Due Periods and may be
funded from certain investment earnings on funds held in accounts of the Trust
and from any applicable Enhancement, if necessary, or certain other amounts as
specified in the related Prospectus Supplement. If the Distribution Dates for
payment of interest for a Series or Class occur less frequently than monthly,
such collections or other amounts (or the portion thereof allocable to such
Class) may be deposited in one or more trust accounts (each, an "Interest
Funding Account") pending distribution to the Certificateholders of such
Series or Class, as described in the related Prospectus Supplement. If a
Series has more than one Class of Certificates, each such Class may have a
separate Interest Funding Account. The Prospectus Supplement relating to each
Series of Certificates and each Class thereof will describe the amounts and
sources of interest payments to be made, the Certificate Rate, and, for a
Series or Class thereof bearing interest at a floating Certificate Rate, the
dates and the manner for determining Certificate Rates, and the formula, index
or other method by which such Certificate Rates are determined.
PRINCIPAL PAYMENTS
Unless otherwise specified in the related Prospectus Supplement, during the
Revolving Period for each Series of Certificates (which begins on the related
Series Closing Date and ends on the day before an
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Amortization Period or Accumulation Period begins), no principal payments will
be made to the Certificateholders of such Series. During the Controlled
Amortization Period, Principal Amortization Period or Accumulation Period, as
applicable, which will be scheduled to begin on the date specified in, or
determined in the manner specified in, the related Prospectus Supplement, and
during the Rapid Amortization Period, which will begin upon the occurrence of
a Liquidation Event, principal will be paid to the Certificateholders in the
amounts and on Distribution Dates specified in the related Prospectus
Supplement or will be accumulated in a Principal Funding Account for later
distribution to Certificateholders on the Scheduled Payment Date in the
amounts specified in the related Prospectus Supplement. Principal payments for
any Series or Class thereof will be funded from collections of Principal
Receivables received during the related Due Period or Due Periods as specified
in the related Prospectus Supplement and allocated to such Series or Class and
from certain other sources specified in the related Prospectus Supplement. In
the case of a Series with more than one Class of Certificates, the
Certificateholders of one or more Classes may receive payments of principal at
different times. The related Prospectus Supplement will describe the manner,
timing and priority of payments of principal to Certificateholders of each
Class.
Funds on deposit in any Principal Funding Account applicable to a Series may
be subject to a guaranteed rate agreement or guaranteed investment contract or
other arrangement specified in the related Prospectus Supplement intended to
assure a minimum rate of return on the investment of such funds. In order to
enhance the likelihood of the payment in full of the principal amount of a
Series of Certificates or Class thereof at the end of an Accumulation Period,
such Series of Certificates or Class thereof may be subject to a principal
guaranty or other similar arrangement specified in the related Prospectus
Supplement.
CONVEYANCE OF RECEIVABLES
As of each of June 28, 1990, October 25, 1990, June 12, 1991, August 1, 1991
and June 1, 1992, the Seller transferred and assigned to the Trust the
Receivables in the applicable portion of the Accounts outstanding as of the
relevant Cut Off Date, all of the Receivables thereafter created under the
Accounts and the proceeds of all of the foregoing (other than recoveries with
respect to previously charged-off Receivables and insurance proceeds).
In connection with the transfer of the Receivables to the Trust, and the
sale of the previously issued Series of Certificates and the Certificates
offered hereby, the Seller has reflected and will reflect the transfer of a
portion of the Receivables in an amount equal to the sum of the initial
Invested Amounts of the previously issued Series of Certificates and the
initial Invested Amount of the Series of Certificates offered hereby to the
Trust on its books and records. In addition, the Seller has provided or will
provide to the Trustee a computer file or a microfiche list containing a true
and complete list showing for each Account, as of the applicable Cut Off Date,
(i) its account number and billing cycle, (ii) its collection status, (iii)
the aggregate amount outstanding in such Account and (iv) the aggregate amount
of Principal Receivables in such Account. The Bank, as initial Servicer, is
retaining and is not delivering to the Trustee any other records or agreements
relating to the Accounts or the Receivables. The records and agreements
relating to the Accounts and the Receivables are not segregated from those
relating to other credit card accounts and receivables and neither the
computer files nor the physical documentation relating to the Accounts or
Receivables are stamped or marked to reflect the transfer of Receivables to
the Trust. The Seller has filed or will file UCC financing statements with
respect to the Receivables meeting the requirements of New York, Illinois and
Delaware state law. See "Risk Factors" and "Certain Legal Aspects of the
Receivables."
EXCHANGES
The Agreement provides for the Trustee to issue two types of certificates:
(i) one or more Series of Certificates which are transferable and have the
characteristics described below and (ii) the Exchangeable Seller's
Certificate, a certificate which evidences the First Chicago Interest,
presently is held by the Seller and generally
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is not transferable. The Agreement also provides that, pursuant to any one or
more Supplements, the Seller may tender the Exchangeable Seller's Certificate,
or the Exchangeable Seller's Certificate and the certificates evidencing any
Series of Certificates, to the Trustee in exchange for one or more new Series
and a reissued Exchangeable Seller's Certificate. Under the Agreement, the
Seller may define, with respect to any newly issued Series: (i) its name or
designation; (ii) its initial principal amount (or method for calculating such
amount); (iii) its coupon rate (or formula for the determination thereof);
(iv) the interest payment date or dates and the date or dates from which
interest shall accrue; (v) the method for allocating to Certificateholders of
such Series collections; (vi) the names of any accounts to be used by such
Series and the terms governing the operation of any such accounts; (vii) the
percentage used to calculate monthly servicing fees; (viii) the Minimum First
Chicago Interest Percentage; (ix) the minimum amount of Aggregate Principal
Receivables required to be maintained through the designation by the Seller of
Additional Accounts; (x) the issuer and terms of a letter of credit or other
form of Enhancement with respect thereto; (xi) the Base Rate applicable to
such Series; (xii) the terms on which the Certificates of such Series may be
repurchased by the Seller or remarketed to other investors; (xiii) the Series
Termination Date; (xiv) any deposit into any account maintained for the
benefit of Certificateholders of such Series; (xv) the number of Classes of
such Series, and if more than one Class, the rights and priorities of each
such Class; (xvi) the extent to which the Certificates of such Series will be
issuable in temporary or permanent global form (and, in such case, the
Depositary for such global certificate or certificates, the terms and
conditions, if any, upon which such global certificate may be exchanged, in
whole or in part, for definitive certificates, and the manner in which any
interest payable on a temporary or global certificate will be paid);
(xvii) whether the Certificates of such Series may be issued in bearer form
and any limitations imposed thereon; (xviii) whether Interchange will be
included in funds available to Certificateholders of such Series; (xix) the
priority of any Series with respect to any other Series; (xx) the rights of
the holders of the Exchangeable Seller's Certificate that have been
transferred to the holders of such Series; and (xxi) any other relevant terms
(all such terms, the "Principal Terms" of such Series). None of the Seller,
the Servicer, the Trustee or the Trust is required or intends to obtain the
consent of any Certificateholder to issue any additional Series. However, as a
condition of an Exchange, the Seller will deliver to the Trustee written
confirmation that the Exchange will not result in the applicable Rating Agency
reducing or withdrawing its rating of any outstanding Series. The Seller may
offer any Series to the public under a Disclosure Document in transactions
either registered under the Act or exempt from registration thereunder
directly, through one or more underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or otherwise. Any such Series may be
issued in fully registered or book-entry form in minimum denominations
determined by the Seller. A chart set forth in the Prospectus Supplement
provides the Principal Terms and other relevant characteristics of the other
outstanding Series which have been issued or are proposed to be issued by the
Trust. The Seller intends to offer, from time to time, additional Series.
The Agreement provides that the Seller may perform Exchanges and define
Principal Terms such that each Series has a period during which amortization
or accumulation of the principal amount thereof is intended to occur which may
have a different length and begin on a different date than such period for any
other Series. Further, one or more Series may be in their Amortization Periods
or Accumulation Periods while other Series are not. Thus, certain Series may
not be amortizing, or accumulating principal for ultimate payment to
Certificateholders, while other Series are in such Amortization Period or
Accumulation Period. Moreover, each Series may have the benefits of a letter
of credit, Cash Collateral Account, Collateral Interest, interest rate swap or
other form of Enhancement provided by entities different from those providing
the letters of credit, Cash Collateral Accounts, Collateral Interests,
interest rate swaps or other form of Enhancement with respect to any other
Series. Under the Agreement, any such letter of credit, Cash Collateral
Account, Collateral Interests, interest rate swap or other form of Enhancement
shall only be available for the Series to which it relates. Likewise, with
respect to each such letter of credit, Cash Collateral Account, Collateral
Interest, interest rate swap or other form of Enhancement, the Seller may
deliver a different letter of credit, loan, collateral, swap or other form of
Enhancement agreement. The Agreement also provides that the Seller may specify
different coupon rates and monthly servicing fees with respect to each Series.
Collections allocated to Finance Charge Receivables not used to pay interest
on the Certificates, the Monthly Servicing Fee, the Investor Default Amount,
Investor Charge-Offs or other amounts payable with respect to any Series will
be allocated as provided in such letter of
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credit, loan, collateral, swap or other form of Enhancement agreement, if
applicable. The Seller also has the option under the Agreement to vary between
Series the terms upon which a Series may be repurchased by the Seller or
remarketed to other investors. Additionally, certain Series may be
subordinated to other Series, or Classes within a Series may have different
priorities. There is no limit to the number of Exchanges that the Seller may
perform under the Agreement. The Trust will terminate only as provided in the
Agreement.
Under the Agreement and pursuant to a Supplement, an Exchange may only occur
upon the satisfaction of certain conditions provided in the Agreement. Under
the Agreement, the Seller may perform an Exchange by notifying the Trustee at
least three days in advance of the date upon which the Exchange is to occur.
Under the Agreement, the notice will state the designation of any Series to be
issued on the date of the Exchange and, with respect to each such Series: (i)
its initial principal amount (or method for calculating such amount), (ii) its
Certificate Rate and (iii) the provider of a letter of credit, Cash Collateral
Account, Collateral Interest, interest rate swap or other form of Enhancement,
if any, with respect to such Series. On the date of the Exchange, the
Agreement provides that the Trustee will issue any such Series only upon
delivery to it of the following: (i) a Supplement in form satisfactory to the
Trustee signed by the Seller and specifying the Principal Terms of such
Series, (ii) an opinion of counsel to the effect that, unless otherwise
specified in the related Supplement, the Certificates of such Series will be
characterized as debt under existing law for Federal income tax purposes and
that the issuance of such Series will not materially adversely impact the
Federal income tax characterization of any outstanding Series, (iii) the
letter of credit, Cash Collateral Account, funds for the purchase of the
Collateral Interest, interest rate swap or other form of Enhancement, if any,
and a letter of credit, loan, collateral, swap or other form of Enhancement
agreement with respect thereto executed by the Seller and the provider of the
letter of credit, Cash Collateral Account, Collateral Interest, interest rate
swap or other form of Enhancement, (iv) written confirmation from the
applicable Rating Agency that the Exchange will not result in such Rating
Agency reducing or withdrawing its rating on any outstanding Series and (v)
the existing Exchangeable Seller's Certificate and the applicable Certificates
of the Series to be exchanged, if applicable. Upon satisfaction of such
conditions, the Trustee will cancel the existing Exchangeable Seller's
Certificate and the Certificates of the exchanged Series, if applicable, and
issue the new Series and a new Exchangeable Seller's Certificate.
COVENANTS, REPRESENTATIONS AND WARRANTIES
The Seller has covenanted to the Trustee for the benefit of all
Certificateholders of all Series which from time to time may have an interest
in the Trust that, as to the Receivables and the Accounts, unless cured within
60 days from receipt of notice from the Trustee, the Seller will accept the
transfer of any Receivable which is written off as uncollectible or any
Receivable the proceeds of which are unavailable to the Trust, if (i) such
Receivable is not an Eligible Receivable or (ii) the Agreement does not
constitute either (a) a valid transfer and assignment to the Trust of all
right, title and interest of the Seller in and to such Receivable, whether
then existing or thereafter created, and of all proceeds thereof (including
amounts in the Collection Account) or (b) a grant of a first priority
perfected security interest in such Receivable and, with certain exceptions
and for certain limited periods of time, the proceeds thereof (including
amounts in the Collection Account), which security interest is effective as to
each Receivable upon the creation thereof. Additionally, under certain
conditions, the Seller covenants in the Agreement to accept the transfer of
each Receivable which is subject to certain specified liens immediately upon
the discovery of such liens.
The Seller shall accept the transfer of any Receivable, as described above,
by deducting the principal balance of such Receivable from the aggregate
amount of Principal Receivables used to calculate the First Chicago Interest;
provided, however, that if such deduction would reduce the First Chicago
Interest below zero or would otherwise not be permitted by law, the Seller
will be obligated to make a deposit in the Collection Account in immediately
available funds equal to the Transfer Deposit Amount. Such deposit shall be
considered a payment in full of the ineligible Receivable. Any amounts so paid
by the Seller shall be allocated in respect of Finance Charge Receivables and
Principal Receivables as provided in the Agreement.
The Seller represented and warranted as of the issuance dates for all
previous Series, and will represent and warrant as of the issuance date of the
Certificates offered hereby, to the Trustee for the benefit of all
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Certificateholders of all Series which from time to time may have an interest
in the Trust, that (i) the Agreement constitutes a legal, valid, binding and
enforceable obligation of the Seller, (ii) all material information with
respect to the Accounts and the Receivables in the list provided to the
Trustee was true and correct in all material respects as of the applicable Cut
Off Dates and (iii) any Additional Accounts conformed as of the applicable
date to the computer file or list of Additional Accounts provided by the
Seller to the Trustee on or prior to the date the Receivables in such
Additional Accounts were added to the Trust (or in the case of Automatic
Additional Accounts, to the computer file or list of Additional Accounts
provided by the Seller to the Trustee on the applicable Determination Date as
described in "--Addition of Accounts" below). In the event that (x) any of the
representations and warranties described in clause (i), (ii) or (iii) above
are not true and correct or (y) a material amount of Receivables are not
Eligible Receivables, and such event has a material adverse effect on the
interests of holders of the Certificates, then either the Trustee or the
holders of Certificates evidencing undivided interests in the Trust
aggregating more than 50% of the aggregate Invested Amount of all Series, by
written notice to the Seller (and to the Trustee and the Servicer, if given by
the Certificateholders), may direct the Seller to purchase all Series
outstanding within 60 days of such notice. The Seller is obligated to purchase
all Series on a Distribution Date occurring within such applicable period,
unless the representations and warranties shall then be true and correct in
all material respects or there shall no longer be a material amount of
Receivables which are not Eligible Receivables, as the case may be. The
purchase price is equal to the aggregate Invested Amount of all Series on the
Record Date related to the applicable payment date on which the purchase is
scheduled to be made plus an amount equal to all interest accrued but unpaid
on all Series at the applicable Certificate Rates through the end of the
Interest Periods of such Series. The payment of such purchase price into the
Collection Account in immediately available funds will be considered a
prepayment in full of all Receivables and will be paid in full to the
Certificateholders upon presentation and surrender of their Certificates. The
obligations described above shall be the sole remedies respecting the
foregoing representations, warranties and events available to the Trustee or
the Certificateholders.
An "Eligible Receivable" is defined to mean each Receivable (i) which has
arisen under an Eligible Account or an Eligible Additional Account, (ii) which
was created in compliance with all requirements of law and pursuant to a
credit card agreement which complies with all requirements of law in either
case the failure to comply with which would have a material adverse effect
upon certificateholders, (iii) with respect to which all consents or
authorizations of, or registrations with, any governmental authority required
to be obtained or given by the Seller in connection with the creation of such
Receivable or the execution, delivery and performance by the Seller of the
related credit card agreement have been duly obtained or given and are in full
force and effect as of such date of creation, (iv) as to which the Trust will
at all times have good and marketable title, free and clear of all liens,
encumbrances, charges and security interests (except those permitted by the
Agreement), (v) which will at all times be the legal, valid and binding
payment obligation of the cardholder thereof enforceable against such
cardholder in accordance with its terms, subject to certain bankruptcy and
equity related exceptions, (vi) which constitutes either an "account" or a
"general intangible" under and as defined in Article 9 of the UCC as then in
effect in the States of Delaware, Illinois and New York, (vii) which, at the
time of its transfer to the Trust, has not been waived or modified except as
permitted by the Agreement, (viii) which is not subject to any right of
rescission, setoff, counterclaim or other defense (including the defense of
usury), other than certain bankruptcy and equity related defenses and
adjustments permitted by the Agreement to be made by the Servicer, (ix) as to
which the Seller has satisfied all obligations to be fulfilled at the time it
is transferred to the Trust and (x) as to which the Seller has done nothing,
at the time of its transfer to the Trust, to impair the rights of the Trust or
certificateholders therein. An "Eligible Account" is defined to mean an
account (i) which is a VISA or MasterCard consumer revolving credit card
account and was in existence and owned by the Bank at the close of business on
its Cut Off Date, (ii) which is payable in United States dollars, (iii) the
credit card or cards for which accounts have not been reported lost or stolen,
(iv) the receivables in which have not been written off, (v) which was not
originated or originally purchased by Beneficial National Bank USA, (vi) which
is not part of certain affinity programs and (vii) which was not originated by
The Society for Savings, Hartford, Connecticut.
It is not required or anticipated that the Trustee will make any initial or
periodic general examination of the Receivables or any records relating to the
Receivables for the purpose of establishing the presence or absence of
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defects, compliance with the Seller's representations and warranties or for
any other purpose. The Servicer, however, is required to deliver to the
Trustee on or before March 31 of each year an opinion of counsel with respect
to the validity of the security interest of the Trust in and to the
Receivables.
ADDITION OF ACCOUNTS
As described above under "The Accounts," the Seller has the right and, in
some circumstances is obligated, to designate from time to time Additional
Accounts to be included as Accounts and to convey to the Trust all Receivables
in such Additional Accounts, whether such Receivables are then existing or
thereafter created. The Seller is required to add Additional Accounts if, on a
Determination Date, the First Chicago Amount for the related Due Period is
less than the Minimum First Chicago Interest Percentage of the Aggregate
Principal Receivables for the same Due Period or if, on any Determination
Date, Aggregate Principal Receivables are less than the Minimum Aggregate
Principal Receivables (or such higher amount established pursuant to a
Supplement). Each such Additional Account must be an "Eligible Additional
Account." An "Eligible Additional Account" is either: (i) an account (a) which
is a VISA or MasterCard consumer revolving credit card account which was in
existence and owned by the Bank on the date on which such account is to be
added to the Trust, (b) which is payable in United States dollars, (c) the
credit card or cards for which have not been reported lost or stolen and (d)
the receivables in which have not been charged off; (ii) any Automatic
Additional Account; or (iii) any other consumer revolving credit card account
which the applicable Rating Agency permits to be added to the Trust. The
Seller is required to give prior written notice of such additions to the
Rating Agency and prior to the date of such addition shall not have received
notice from any Rating Agency of its intention to reduce or withdraw the
rating of any Series of Certificates.
Accounts (excluding those in certain affinity programs) opened during the
normal operation of the Seller's credit card business in the billing cycles
the Receivables of which are included in the Trust (or any other billing cycle
of the Seller of which a substantial portion of the Receivables have been
transferred to the Trust in the future) may also be added to the Trust
automatically on a daily basis ("Automatic Additional Accounts"). Automatic
Additional Accounts will not include those accounts purchased by the Seller
from another credit card issuer or accounts included in any affinity program
or other special program, the accounts of which are not then currently
included in the Trust. The Seller, at its option, may terminate or suspend the
inclusion of Automatic Additional Accounts at any time. The Seller will
provide to the Trustee on each Determination Date a computer file or a
microfiche list containing a true and complete list showing each Automatic
Additional Account included during the Due Period relating to such
Determination Date and indicating for each such Automatic Additional Account
as of its first billing date (i) its account number and billing cycle, (ii)
its collection status, (iii) the aggregate amount outstanding in such
Automatic Additional Account and (iv) the aggregate amount of Principal
Receivables in such Automatic Additional Account.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in the next succeeding sentence, on each
Determination Date on which the First Chicago Amount exceeds 15% of Aggregate
Principal Receivables with respect to such Determination Date, the Seller may,
but shall not be obligated to, accept all Receivables and proceeds thereof
from certain Accounts offered to it by the Trustee, without notice to the
Certificateholders. The Seller may, at its sole discretion, accept such offer
in an aggregate amount equal to an amount not greater than the excess of the
First Chicago Amount over the amount of Aggregate Principal Receivables
required to be maintained pursuant to the Agreement and any Supplement for
deletion and removal from the Trust. The Seller is permitted to designate and
require reassignment to it of the Receivables from Removed Accounts only upon
satisfaction of the following conditions: (i) the Seller shall have delivered
to the Trustee for execution a written reassignment and a computer file or
microfiche list containing a true and complete list of all Accounts in the
Trust after such removal, the Accounts to be identified by, among other
things, account number and their aggregate amount of Principal Receivables;
(ii) the Seller shall represent and warrant that no selection procedure used
by the Seller which is adverse to the interests of the Certificateholders was
utilized in selecting the Removed Accounts; (iii) the removal of any
Receivables of any Removed Accounts shall not, in the reasonable belief of the
Seller,
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cause a Liquidation Event to occur; (iv) the Seller shall have delivered prior
written notice of the removal to each Rating Agency which has rated any
outstanding Series and prior to the date on which such Receivables are to be
removed shall not have received notice from any Rating Agency of its intention
to reduce or withdraw the rating of any Series of Certificates; and (v) the
Seller shall have delivered to the Trustee an officer's certificate confirming
the items set forth in clauses (i) through (iv) above.
COLLECTION ACCOUNT
The Trustee has established and maintains in the name of the Trustee, on
behalf of the Trust, a segregated trust account for the benefit of the
Certificateholders. The Collection Account has been established and is
maintained with the trust department of The First National Bank of Chicago, an
Eligible Institution. An "Eligible Institution" is defined as a depository
institution organized under the laws of the United States or any one of the
States thereof, which is a member of the FDIC and which has a short-term
unsecured debt rating of at least A-1 and P-1 by the applicable Rating Agency;
provided, however, that no such rating shall be required of an institution
which maintains the Collection Account as a fully segregated trust account
with the trust department of such institution. The Trustee, the Seller or the
Servicer, or any affiliate of either of them, may qualify as an Eligible
Institution. Funds in the Collection Account may be invested, at the direction
of the Servicer, in: (i) obligations fully guaranteed by the United States of
America; (ii) demand deposits, time deposits, certificates of deposit or
bankers' acceptances of certain depository institutions or trust companies
having the highest rating from the applicable Rating Agency; (iii) commercial
paper having, at the time of the Trust's investment, a rating in the highest
rating category from the applicable Rating Agency; (iv) money market funds
which have the highest rating from the applicable Rating Agency; or (v) any
other investment if the applicable Rating Agency confirms in writing that such
investment will not adversely affect its rating on any Series (collectively,
the "Eligible Investments"). Any earnings (net of losses and investment
expenses) on funds in the Collection Account are paid monthly to the Seller.
The Servicer has the revocable power to withdraw funds from the Collection
Account and to instruct the Trustee to make withdrawals and payments from the
Collection Account for the purpose of carrying out the Servicer's or the
Trustee's duties under the Agreement.
OTHER TRUST ACCOUNTS
If so specified in the Prospectus Supplement relating to a Series, the
Trustee shall have the power to establish one or more accounts for such
Series, including an Interest Funding Account, a Principal Funding Account, a
Pre-Funding Account or such other account specified in the related Prospectus
Supplement, each of which series accounts shall be held for the benefit of
Certificateholders of the related Series and for the purposes set forth in the
related Prospectus Supplement. Such series account will be established at an
Eligible Institution (which may be the Trustee or an affiliate of the Seller,
Servicer or Trustee) unless otherwise specified in the related Prospectus
Supplement. Funds in any series account established by a Series Supplement may
be invested in Eligible Investments or otherwise as provided in the related
Prospectus Supplement. Any earnings (net of losses and investment expenses) on
funds in such series accounts will be paid to, or for the account of, the
Seller or as otherwise specified in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, the Servicer will
have revocable power to withdraw funds from the series accounts for the
purpose of carrying out the Servicer's duties under the Agreement and related
Supplement.
FUNDING PERIOD
For any Series of Certificates, the related Prospectus Supplement may
specify that during a Funding Period, all or a portion of the principal amount
of such Series (the "Pre-Funding Amount") will be held in a Pre-Funding
Account pending the transfer of additional Receivables to the Trust or pending
the reduction of the Invested Amounts of one or more other Series issued by
the Trust. The related Prospectus Supplement will specify the initial Invested
Amount with respect to such Series, the Full Invested Amount and the date by
which the Invested Amount is expected to equal the Full Invested Amount. The
Invested Amount will increase as Receivables are added to the Trust or as the
Invested Amounts of the other Series of the Trust are reduced. If the Invested
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Amount does not equal the Full Invested Amount by the end of the Funding
Period, Certificateholders of the affected Series will receive principal
repayments prior the expected date of receipt. See "Risk Factors--Pre-Funding
Account."
During the Funding Period, funds on deposit in the Pre-Funding Account for a
Series of Certificates will be withdrawn and paid to the holder of the
Exchangeable Seller's Certificate to the extent of any increases in the
Invested Amount of such Series. In the event that the Invested Amount does not
for any reason equal the Full Invested Amount by the end of the Funding
Period, any amount remaining in the Pre-Funding Account will be payable to the
Certificateholders of such Series in the manner and at such time as set forth
in the related Prospectus Supplement. Such payment will reduce the aggregate
principal amount of such Certificates. In addition, if so specified in the
related Prospectus Supplement, a prepayment premium or penalty or similar
amount may be payable to the Certificateholders of such Series.
Monies in the Pre-Funding Account will be invested by the Trustee in
Eligible Investments and, if so specified in the related Prospectus
Supplement, will be subject to a guaranteed rate or investment agreement or
other similar arrangement, and, in connection with each Distribution Date
during the Funding Period, investment earnings on funds in the Pre-Funding
Account will be withdrawn from the Pre-Funding Account and deposited, together
with any applicable payment under a guaranteed rate or investment agreement or
other similar arrangement, into the Collection Account for distribution in
respect of interest on the Certificates of the related Series in the manner
specified in the related Prospectus Supplement.
PAIRED SERIES
If specified in the Prospectus Supplement relating to a Series, such Series
may be paired with another Series (each, a "Paired Series"), such that a
reduction in the Invested Amount of one such Series generally results in an
increase in the Invested Amount of the other such Series. The effects of this
feature will be described in the related Prospectus Supplements of the Paired
Series.
ALLOCATION PERCENTAGES
Pursuant to the Agreement, during each Due Period the Servicer will allocate
between the Series issued by the Trust and the First Chicago Interest all
amounts collected on Finance Charge Receivables and all amounts collected on
Principal Receivables and the amount of all Defaulted Receivables. Collections
of Finance Charge Receivables (including the applicable portion of
Interchange) and Defaulted Receivables will be allocated at all times to a
Series, and collections of Principal Receivables will be allocated during the
Revolving Period with respect to a Series and generally paid to the Seller or,
in certain circumstances, to the Enhancement Provider or to other Series,
based on the percentage equivalent of a fraction, the numerator of which is
the Invested Amount for such Distribution Date, and the denominator of which
is Aggregate Principal Receivables for the related Due Period (the "Floating
Allocation Percentage"). During an Amortization Period or Accumulation Period
with respect to a Series (or Class thereof), collections of Principal
Receivables will be allocated thereto based on the percentage equivalent of a
fraction, the numerator of which is the Invested Amount as of the end of the
day on the last Distribution Date relating to the Revolving Period (or such
other amount determined in the manner specified in the related Prospectus
Supplement) and the denominator of which is the greater of (a) Aggregate
Principal Receivables for the Due Period related to the current Distribution
Date and (b) the sum of the numerators used to calculate the Invested
Percentages with respect to Principal Receivables for all Series outstanding
for the current Distribution Date (the "Fixed Allocation Percentage").
"Invested Percentage" means, on any date of determination with respect to
any Distribution Date: (a) when used with respect to Principal Receivables
during an Amortization Period or Accumulation Period with respect to a Series
(or Class thereof), the Fixed Allocation Percentage; and (b) when used with
respect to Principal Receivables during the Revolving Period with respect to a
Series (or Class thereof) and Finance Charge Receivables and Defaulted
Receivables at any time, the Floating Allocation Percentage.
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"First Chicago Percentage" means when used with respect to allocations of
collections of Finance Charge Receivables and Principal Receivables and the
amount of Defaulted Receivables, 100% minus the sum of the applicable Invested
Percentages with respect to all Series then issued and outstanding.
APPLICATION OF COLLECTIONS
The Bank, as Servicer, uses for its own benefit all collections received
with respect to the Receivables in each Due Period until the related Transfer
Date at which time such collections are applied as described below. Under the
Agreement, collections on the Receivables for any Due Period are allocated
such that all collections up to the amount of Finance Charge Receivables
billed at the beginning of such Due Period are deemed collections of Finance
Charge Receivables and the remaining amount of such collections are deemed
collections of Principal Receivables. If the short-term deposit ratings of the
Seller are reduced below A-1 or P-1 by the applicable Rating Agency, then the
Seller will, within five business days, commence the deposit of collections
directly into the Collection Account within one business day of the date of
processing and will move the Collection Account, if then held by the Seller,
to an Eligible Institution other than the Seller, which Eligible Institution
may be an affiliate of the Seller. In addition, if at any time the Seller is
not the Servicer, the Servicer will, within five business days, commence the
deposit of all collections received with respect to the Receivables in each
Due Period into the Collection Account within one business day of the date of
processing, and, in such event, the Collection Account, if then held by the
Seller, will be moved to an Eligible Institution other than the Seller. Should
the Seller be required to make daily deposits into the Collection Account as
described above, the Seller, upon the approval of each Rating Agency, may make
an estimated allocation of collections between Finance Charge Receivables and
Principal Receivables.
Throughout the existence of the Trust, the Servicer allocates to the Seller,
as holder of the Exchangeable Seller's Certificate, an amount equal to the
First Chicago Percentage of the aggregate amount of collections allocable to
Principal Receivables and Finance Charge Receivables in respect of such Due
Period. On each Determination Date with respect to the Revolving Period for a
Series, the Servicer will allocate to the Seller or, in certain circumstances,
to the Enhancement Provider for such Series or to other Series, from
collections, an amount equal to the Floating Allocation Percentage of the
aggregate amount of collections in respect of Principal Receivables for the
related Distribution Date, except that the amount of such allocation with
respect to Principal Receivables shall not exceed the amount of the First
Chicago Interest in Principal Receivables (after giving effect to any new
Receivables transferred to the Trust for the Due Period relating to such
Determination Date).
On each Determination Date with respect to a Controlled Amortization Period
or a Controlled Accumulation Period for a Series, the Servicer will allocate
to the Seller or, in certain circumstances, to the Enhancement Provider for
such Series or to other Series, from collections, an amount equal to the
excess of the Fixed Allocation Percentage for the related Distribution Date of
the aggregate amount of collections in respect of Principal Receivables over
the amount required to be distributed or accumulated as principal with respect
to such Series, except that the amount of such allocation with respect to
Principal Receivables shall not exceed the amount of the First Chicago
Interest in Principal Receivables (after giving effect to any new Receivables
transferred to the Trust for the Due Period relating to such Determination
Date).
On each Distribution Date with respect to a Principal Amortization Period, a
Rapid Amortization Period or a Rapid Accumulation Period for a Series, the
Servicer will distribute, or accumulate, collections of Principal Receivables
allocable to the Certificateholders of such Series in payment of principal, or
as accumulation of principal, on the Certificates of such Series.
The Servicer need not deposit amounts allocable to the Seller as holder of
the Exchangeable Seller's Certificate into the Collection Account and instead
may pay, or be deemed to pay, to the Seller such amounts as collected.
Any amounts in respect of Principal Receivables not distributed to the
Seller because such Principal Receivables would exceed the First Chicago
Interest in Principal Receivables (after giving effect to any new
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Receivables transferred to the Trust for the Due Period relating to such
Determination Date) ("Unallocated Principal Collections") will be held in the
Collection Account until distributable to the Seller or to one or more Series.
Any Transfer Deposit Amounts, any Adjustment Payments, any proceeds from any
repurchase of the Certificates occurring in connection with a Service Transfer
and the proceeds of any sale, disposition or liquidation of Receivables
following the occurrence of a Liquidation Event caused by the appointment of a
receiver or conservator for the Seller or in connection with a Series
Termination Date will also be deposited into the Collection Account
immediately upon receipt and will be allocated as collections of Principal
Receivables or Finance Charge Receivables, as applicable.
Payments to Certificateholders will be made from the Collection Account. In
addition to the amounts deposited in the Collection Account, as described
above, from payments on the Receivables, amounts required for any optional
repurchase or other purchase of the Certificates by the Seller or the proceeds
of any sale of the Receivables will be deposited in the Collection Account.
In the case of a Series of Certificates having more than one Class, the
amounts in the Collection Account will be allocated and applied to each Class
in the manner and order of priority described in the related Prospectus
Supplement.
The Paying Agent will initially be FNBC. The Paying Agent shall have the
revocable power to withdraw funds from the Collection Account for the purposes
of making distributions to the Certificateholders.
DISCOUNT OPTION
If so specified in the Prospectus Supplement for a Series, the Seller may at
any time designate a specified fixed or variable percentage as specified in
such Prospectus Supplement (the "Discount Percentage") of the amount of
Receivables arising in the Accounts on and after the date such option is
exercised that otherwise would have been treated as Principal Receivables to
be treated as Finance Charge Receivables. Such designation may be applicable
to one or more Series. Such designation will become effective upon
satisfaction of the requirements set forth in the Agreement, including written
confirmation by each Rating Agency in writing of its then current rating on
each outstanding Series affected thereby. On the date of processing of any
collections, the product of the Discount Percentage and collections of
Receivables that arise in the Accounts on such day on or after the date such
option is exercised that otherwise would be Principal Receivables will be
deemed collections of Finance Charge Receivables and will be applied
accordingly, unless otherwise provided in the related Prospectus Supplement.
SHARED COLLECTIONS OF FINANCE CHARGE RECEIVABLES
To the extent that collections of Finance Charge Receivables allocated to a
Series are not needed to make payments to Certificateholders of such Series or
other payments required in respect of such Series, such collections ("Excess
Finance Charge Collections") may be applied to cover shortfalls in amounts
payable from collections of Finance Charge Receivables allocable to one or
more other Series. There can be no assurance, however, that such Excess
Finance Charge Collections will be available to cover such shortfalls.
SHARED COLLECTIONS OF PRINCIPAL RECEIVABLES
To the extent that collections of Principal Receivables allocated to a
Series are not needed to make payments to or for the benefit of the
Certificateholders of such Series, such collections ("Excess Principal
Collections") may be applied to cover principal payments due to or for the
benefit of one or more other Series. Any such application of collections will
not result in a reduction of the Invested Amount of the Series to which such
collections were initially allocated. There can be no assurance, however, that
such Excess Principal Collections will be available to cover any shortfall of
principal due on any Distribution Date for any Series.
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DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
The term "Investor Default Amount" means, with respect to any Series and for
any Due Period, the product of the Floating Allocation Percentage for such
Distribution Date times the amount of Defaulted Receivables; the term
"Defaulted Receivables" means, for any Due Period, Receivables which in such
Due Period were written off as uncollectible in accordance with the Servicer's
policies and procedures for servicing credit card receivables comparable to
the Receivables. Under existing policies of the Servicer, Receivables which
are unpaid will be written off by the last day of the Due Period in which they
become 180 days delinquent (210 days after the date of the billing statement)
unless the cardholder cures such default by making a partial payment which
qualifies under the standards customarily applied by the Servicer.
In the case of a Series of Certificates having more than one Class, the
Investor Default Amount will be allocated among the Classes in the manner
described in the related Prospectus Supplement. If so provided in the related
Prospectus Supplement, an amount equal to the Investor Default Amount for any
Due Period may be paid from other amounts, including from collections of
Finance Charge Receivables available therefor or from Enhancement, and applied
to pay principal to Certificateholders or the holder of the Exchangeable
Seller's Certificates, as appropriate. In the case of a Series of Certificates
having one or more Classes of Subordinated Certificates, the related
Prospectus Supplement may provide that all or a portion of amounts otherwise
allocable to such Subordinated Certificates may be paid to the Senior
Certificates to make up any Investor Default Amount allocable to such Senior
Certificates. Any portion of the Investor Default Amount allocable to a Class
of Certificates and not covered by collections of Finance Charge Receivables,
Enhancement or subordination (or any other source specified in the related
Prospectus Supplement) will result in a reduction in the Invested Amount of
such Class (such reduction, an "Investor Charge-Off"). An Investor Charge-Off
for a Class of Certificates will slow down or reduce the return of principal
to the Certificateholders of the affected Class. Investor Charge-Offs will be
reimbursed on any Distribution Date to the extent Finance Charge Receivables,
Enhancement, subordination (or any other source specified in the related
Prospectus Supplement) is allocable to such affected Class in excess of other
required payments to be made to or in respect of such affected Class on such
Distribution Date. Any such reimbursement will result in an increase in the
Invested Amount with respect to such Class. In the case of a Series of
Certificates having more than one Class, the related Prospectus Supplement
will describe the manner and priority of allocating Investor Charge-Offs and
reimbursements thereof among the Classes of such Series.
If the Servicer adjusts the amount of any Receivable because of a rebate,
refund or billing error to a cardholder, or because such Receivable was
created in respect of merchandise which was refused or returned by a
cardholder, the amount of the First Chicago Interest for any Due Period will
be reduced by the amount of the adjustment. In addition, the amount of the
First Chicago Interest in the Trust will be reduced by the principal amount of
any Receivable which was discovered as having been created through a
fraudulent or counterfeit charge. After the Due Period in which any such
reduction in the amount of the First Chicago Interest occurred, the principal
amount of such Receivable described above will not be included in the
calculation of any Invested Percentage. Furthermore, to the extent that the
reduction in the First Chicago Interest in Principal Receivables would reduce
such interest below zero, the Seller will deposit an offsetting amount of cash
into the Collection Account (an "Adjustment Payment") on the related
Distribution Date for such Due Period.
DEFEASANCE
If so specified in the Prospectus Supplement relating to a Series, the
Seller may terminate its substantive obligations in respect of such Series by
depositing with the Trustee, from amounts representing, or acquired with,
collections of Receivables, money or certain Eligible Investments as described
in the related Prospectus Supplement sufficient to make all remaining
scheduled interest and principal payments on such Series, on the dates
scheduled for such payments, and to pay all amounts owing to any Enhancement
Provider with respect to such Series, if such action would not result in a
Liquidation Event for any Series. Prior to its first exercise of its right to
substitute money or Eligible Investments for Receivables, the Seller will
deliver to the Trustee (i) an opinion of counsel to the effect that such
deposit and termination of obligations will not result in the Trust being
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required to register as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and (ii) an opinion of counsel to
the effect that, unless otherwise specified in the related Supplement, the
defeasance will not materially adversely impact the Federal income tax
characterization of the Series or any other outstanding Series.
FINAL PAYMENT OF PRINCIPAL; TERMINATION OF TRUST
The Certificates of each Series will be subject to optional repurchase by
the Seller on any Distribution Date on or after which the Invested Amount of
such Series is reduced to an amount less than or equal to 5% of the initial
Invested Amount thereof (or such other amount specified in the related
Prospectus Supplement), unless certain events of bankruptcy, insolvency or
receivership have occurred with respect to the Seller. The repurchase price of
the Certificates of a Series will be equal to the Invested Amount plus accrued
and unpaid interest on the Certificates through, and including, the day
preceding the Distribution Date with respect to which the repurchase occurs
(or such other amount specified in the related Prospectus Supplement). In any
event, the last payment of principal and interest on the Certificates of a
Series will be due and payable no later than the Series Termination Date for
such Series. In the event that the Invested Amount of a Series is greater than
zero on the applicable Series Termination Date, the Trustee will sell or cause
to be sold interests in the Receivables or certain Receivables, as specified
in the Agreement and the related Supplement, in an amount up to 110% of the
Invested Amount of such Series at the close of business on such date (but not
more than the total amount of Receivables allocable to such Series). The net
proceeds of such sale and any collections on the Receivables will be paid to
the Certificateholders of such Series in the priority specified in the related
Prospectus Supplement on the Series Termination Date as final payment of the
Certificates of such Series.
Unless the Seller instructs the Trustee otherwise, the Trust will only
terminate on the earlier of: (a) the day following the day on which funds
shall have been deposited in the Collection Account sufficient to pay in full
the aggregate Invested Amounts of all Series outstanding plus accrued interest
thereon at the applicable Certificate Rates through the applicable Interest
Period or (b) June 1, 2100. Upon the termination of the Trust and the
surrender of the Exchangeable Seller's Certificate, the Trustee shall convey
to the Seller all right, title and interest of the Trust in and to the
Receivables and other funds of the Trust (other than funds on deposit in the
Collection Account).
LIQUIDATION EVENTS
Unless otherwise specified in the related Prospectus Supplement, the
Revolving Period for a Series will continue through the date specified in the
related Prospectus Supplement, unless a Liquidation Event with respect to such
Series occurs. A Rapid Amortization Period or Rapid Accumulation Period will
commence at the beginning of the Due Period during which a Liquidation Event
occurs or is deemed to occur. A "Liquidation Event" occurs with respect to all
Series issued by the Trust upon the occurrence of any of the following events:
(i) certain events of insolvency, conservatorship or receivership
relating to the Seller; or
(ii) the Trust becomes an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In the case of any event described in clause (i) or (ii), a Liquidation
Event with respect to all Series will be deemed to have occurred without any
notice or other action on the part of the Trustee or the Certificateholders
immediately upon the occurrence of such event. In addition, a Liquidation
Event may occur with respect to any Series upon the occurrence of any other
event specified in the related Prospectus Supplement. If a Liquidation Event
occurs and the FDIC is appointed as the receiver for the Bank and no
Liquidation Event other than such receivership or insolvency exists, the FDIC
may have the power to prevent commencement of a Rapid Amortization Period or a
Rapid Accumulation Period.
In addition to the consequences of a Liquidation Event discussed above, if
pursuant to certain provisions of Federal law, the Seller voluntarily goes
into liquidation or the FDIC or any other person is appointed a receiver
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or conservator of the Seller, on the day of such appointment the Seller will
immediately cease to transfer Principal Receivables to the Trust and promptly
give notice to the Trustee of such appointment. Within 15 days, the Trustee
will publish a notice of the liquidation or the appointment stating that the
Trustee intends to sell, dispose of or otherwise liquidate the Receivables in
a commercially reasonable manner and to the best of its ability. Unless
otherwise instructed within a specified period by certificateholders
representing undivided interests aggregating more than 50% of the Invested
Amount of any Preexisting Series, the Trustee will sell, dispose of or
otherwise liquidate the Receivables of all Series in a commercially reasonable
manner and on commercially reasonable terms. Furthermore, even if the
Receivables are not sold pursuant to the preceding sentence, with respect to
Series issued on or after April 19, 1995 (except as otherwise may be specified
in the related Supplement), unless otherwise instructed within a specified
period by holders representing undivided interests aggregating more than 50%
of the Invested Amount of each Class of each such Series (including a majority
in interest in each Collateral Interest), each holder of an interest in the
First Chicago Interest, the holders of more than 50% of the Invested Amount of
each Preexisting Series and any other person specified in any Supplement, the
Trustee will sell, dispose of or otherwise liquidate the portion of the
Receivables allocable to all Series other than the Preexisting Series in a
commercially reasonable manner and on commercially reasonable terms in
accordance with the Agreement. The proceeds from the sale, disposition or
liquidation of the Receivables will be treated as collections on the
Receivables and such proceeds will be distributed to the applicable
Certificateholders. See "Certain Legal Aspects of the Receivables--Certain
Matters Relating to Receivership" for a discussion of how Federal legislation
may affect the Trustee's ability to liquidate the Receivables.
INDEMNIFICATION
The Agreement provides that the Servicer will indemnify the Trust, for the
benefit of Certificateholders and the Trustee, from and against any loss,
liability, expense, damage or injury suffered or sustained arising out of the
activities of the Trust or the Trustee pursuant to the Agreement, including
those arising from acts or omissions of the Servicer; provided, however, that
the Servicer will not indemnify (i) the Trust or the Certificateholders for
any liabilities, costs and expenses with respect to Federal, state or local
income or franchise taxes required to be paid by the Trust or the
Certificateholders or (ii) the Trust, the Certificateholders or the Trustee
for liabilities imposed by reason of any wrongful actions taken by or
omissions of the Trustee.
Under the Agreement, the Seller will indemnify an injured party for the
entire amount of any losses, claims, damages or liabilities (other than those
incurred by a Certificateholder in the capacity of an investor in the
Certificates) arising out of or based on the Agreement as though the Agreement
created a partnership under the Uniform Partnership Act. The Seller will also
indemnify each Certificateholder for any such losses, claims, damages or
liabilities except to the extent that they arise from any action by such
Certificateholder. In the event of a Service Transfer, the successor Servicer
will indemnify the Seller for any losses, claims, damages and liabilities of
the Seller as described in this paragraph arising from the actions or
omissions of such successor Servicer.
The Agreement provides that none of the Seller, the Servicer or any of their
directors, officers, employees or agents will be under any other liability to
the Trustee, the Certificateholders or any other person for any action taken,
or for refraining from taking any action, in good faith pursuant to the
Agreement. However, none of the Seller, the Servicer or any of their
directors, officers, employees or agents will be protected against any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence of any such person in the performance of their
duties or by reason of reckless disregard of their obligations and duties
thereunder.
In addition, the Agreement provides that the Servicer is not under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its servicing responsibilities under the Agreement. The Servicer
may, in its sole discretion, undertake any such legal action which it may deem
necessary or desirable for the benefit of Certificateholders with respect to
the Agreement and the rights and duties of the parties thereto and the
interest of the Certificateholders thereunder.
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COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Agreement, the Servicer is responsible for servicing,
collecting, enforcing and administering the Receivables in accordance with the
policies and procedures for servicing credit card receivables and exercising a
degree of skill and care consistent with those of a reasonable and prudent
servicer of credit card receivables, but in any event at least comparable with
the policies and procedures and the degree of skill and care applied or
exercised with respect to its own credit card receivables. The Servicer is
required to maintain fidelity bond coverage insuring against losses through
wrongdoing of its officers and employees who are involved in the servicing of
credit card receivables covering such actions and in such amounts as the
Servicer believes to be reasonable from time to time.
In the Agreement, the Servicer covenants that, except as otherwise required
by any requirement of law or as is deemed by the Servicer to be necessary in
order for the Servicer to maintain its credit card business on a competitive
basis based on a good faith assessment by the Servicer of the nature of the
competition in the credit card business, it will not reduce the annual
percentage rate of the monthly periodic charge assessed on the Receivables or
other fees on the Accounts, if as a result of such reduction, its reasonable
expectation of the Portfolio Yield is a rate less than the Base Rate for any
Series. The Servicer also covenants that it may change the terms relating to
the Accounts, only if in the reasonable judgment of the Servicer, if the
Seller owns a comparable segment of accounts, such change is made applicable
to any comparable segment of consumer revolving credit card accounts owned by
the Seller which have characteristics the same as or substantially similar to
the Accounts and if the Seller does not own such a comparable segment, such
change is not made with the intent to benefit materially the Seller over the
Certificateholders.
Servicing activities performed by the Servicer include collecting and
recording payments, communicating with cardholders, investigating payment
delinquencies, evaluations in relation to increasing credit limits and issuing
credit cards, providing billing and tax records to cardholders and maintaining
internal records with respect to each Account. Managerial and custodial
services performed by the Servicer on behalf of the Trust include providing
assistance in any inspections of the documents and records relating to the
Accounts and Receivables by the Trustee pursuant to the Agreement, maintaining
the agreements, documents and files relating to the Accounts and Receivables
as custodian for the Trust and providing related data processing and reporting
services for Certificateholders and on behalf of the Trustee.
SERVICER COVENANTS
In the Agreement, the Servicer covenants to the Certificateholders and the
Trustee as to each Receivable and related Account that: (i) it will duly
fulfill all obligations on its part to be fulfilled under or in connection
with the Receivable or Account, and will maintain in effect all qualifications
required in order to service the Receivable or Account and will comply with
all requirements of law in connection with servicing the Receivables and the
Accounts the failure to comply with which would have a material adverse effect
on Certificateholders; (ii) it will not permit any rescission or cancellation
of the Receivable, except as ordered by a court of competent jurisdiction; and
(iii) it will do nothing to impair the rights of the Certificateholders in the
Receivables and will not reschedule, revise or defer payments due on the
Receivables, except that, in the case of clauses (ii) and (iii) above, the
Servicer may make customer service, curing and delinquency adjustments in the
ordinary course of business in accordance with prudent servicing practices.
Under the terms of the Agreement, the Servicer is obligated to accept the
transfer of any Receivable if it discovers, or receives written notice from
the Trustee, that (i) any covenant of the Servicer set forth above has not
been complied with or (ii) the Servicer has not complied in all material
respects with all requirements of law applicable to the Receivables or
Accounts, and in either case such noncompliance has not been cured within 60
days thereafter and the Receivable has been written off as uncollectible or
the proceeds of the Receivables are not available to the Trust. Such transfer
will be effected by the Servicer depositing the Transfer Deposit Amount of
such Receivable in the Collection Account. This transfer obligation
constitutes the sole remedy available to the Certificateholders, if such
covenant or warranty of the Servicer is not satisfied. The Trust's interest in
any such repurchased Receivable shall be automatically assigned to the
Servicer.
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SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses is a monthly servicing fee (the "Servicing Fee") in an
amount, on any Distribution Date, equal to the sum of, with respect to all
Series, 1/12 of the product of (a) the applicable servicing fee percentages
with respect to each Series and (b) the sum of an allocable portion of the
amount of the First Chicago Interest and the aggregate Invested Amount of all
Series with respect to the related Due Period. The Servicing Fee will be
allocated among the First Chicago Interest and Certificateholders of all
Series. The portion of the Servicing Fee allocable to the Certificateholders
of a Series on each Distribution Date (the "Monthly Servicing Fee") generally
will be equal to 1/12 of the product of (a) the applicable servicing fee
percentage with respect to such Series and (b) the Invested Amount of such
Series with respect to the related Due Period. All or a portion of the Monthly
Servicing Fee for a Series will be paid from collections of Finance Charge
Receivables allocable or otherwise available to such Series. A portion of the
Monthly Servicing Fee for a Series may be payable from Interchange allocable
to such Series. Amounts available from Enhancement or other sources specified
in the related Prospectus Supplement may also be available to pay the Monthly
Servicing Fee for a Series. The remaining portion of the Servicing Fee will be
allocable to the First Chicago Interest. The Monthly Servicing Fee for each
Series will be paid from the Collection Account on each Distribution Date.
The Servicer pays from its servicing compensation certain expenses incurred
in connection with servicing the Accounts and the Receivables including,
without limitation, expenses related to enforcement of the Receivables,
payment of fees and disbursements of the Trustee and independent accountants
and all other fees and expenses which are not expressly stated in the
Agreement to be payable by the Trust or the Certificateholders other than
Federal, state and local income and franchise taxes, if any, of the Trust.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Agreement, except upon determination that such duties are no longer
permissible under applicable law. No such resignation will become effective
until the Trustee or a successor to the Servicer has assumed the Servicer's
responsibilities and obligations under the Agreement.
Any person into which, in accordance with the Agreement, the Seller or the
Servicer may be merged or consolidated or any person resulting from any merger
or consolidation to which the Seller or the Servicer is a party, or any person
succeeding to the business of the Seller or the Servicer, will be the
successor to the Seller or the Servicer, as the case may be, under the
Agreement.
SERVICER DEFAULT
In the event of any Servicer Default, either the Trustee or
Certificateholders evidencing undivided interests aggregating more than 50% of
the aggregate Invested Amount of all Series, by written notice to the Servicer
(and to the Trustee, if given by the Certificateholders), may terminate all of
the rights and obligations of the Servicer, in its capacity as servicer under
the Agreement, to all of the Receivables held by the Trust with respect to all
Series, and the proceeds thereof, and appoint a new Servicer (a "Service
Transfer"), subject to the right of Enhancement Providers, if applicable, to
approve such new Servicer. The rights and interests of the Seller under the
Agreement in the First Chicago Interest will not be affected by any Service
Transfer. The Trustee shall as promptly as possible appoint a successor
Servicer and if no successor Servicer has been appointed by the Trustee and
has accepted such appointment by the time the Servicer ceases to act as
Servicer, all authority, power and obligations of the Servicer under the
Agreement will pass to, and be vested in, the Trustee. Prior to any Service
Transfer, the Trustee will seek to obtain bids from potential Servicers
meeting certain eligibility requirements set forth in the Agreement to serve
as a successor Servicer for servicing compensation not in excess of the
Servicing Fee. If the Trustee is unable to obtain any bids from eligible
Servicers and the Servicer delivers an officer's certificate to the effect
that it cannot in good faith cure the Servicer Default which gave rise to a
Service Transfer, then the Trustee will offer the Servicer the right to accept
the transfer of all of the Receivables. The deposit
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amount for such a transfer for each Series shall be equal to the greater of
(i) the principal amount of such Series, plus accrued interest thereon, at the
applicable Certificate Rate, through the end of the applicable Interest Period
for such Series and (ii) the average bid price quoted by at least two
recognized securities dealers for similar securities rated in the highest
rating category by each Rating Agency and having a remaining maturity
approximately equal to the remaining maturity of the Certificates of such
Series. However, if the FDIC is appointed as the receiver or conservator for
the Servicer, and no Servicer Default other than such receivership,
conservatorship or insolvency exists, the FDIC may have the power to prevent
either the Trustee or the majority of the Certificateholders from effecting a
Service Transfer.
A "Servicer Default" refers to any of the following events:
(i) failure by the Servicer or, for so long as the Seller is the
Servicer, the Seller to make any payment, transfer or deposit, or to give
instructions to the Trustee, or to give notice to the Trustee to make such
payment, transfer or deposit, or to give notice of any required withdrawal,
drawing or payment required to be made under any form of Enhancement, on
the date the Servicer or the Seller, as the case may be, is required to do
so under the Agreement or any Supplement (or within a five-day grace
period);
(ii) failure on the part of the Servicer or, for so long as the Seller is
the Servicer, the Seller duly to observe or perform any other covenants or
agreements of the Servicer or the Seller in the Agreement or any Supplement
which has a material adverse effect on the Certificateholders, which
continues unremedied for a period of 60 days after written notice, or the
Servicer assigns its duties under the Agreement, except as specifically
permitted thereunder;
(iii) any representation, warranty or certification made by the Servicer
in the Agreement or any Supplement or in any certificate delivered pursuant
to the Agreement or any Supplement proves to have been incorrect when made,
which has a material adverse effect on the rights of the
Certificateholders, and which material adverse effect continues for the
Certificateholders for a period of 60 days after written notice; or
(iv) the occurrence of certain events of bankruptcy, insolvency,
receivership or conservatorship of the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred
to under clause (i) above for a period of 10 business days or referred to
under clause (ii) or (iii) for a period of 60 business days shall not
constitute a Servicer Default, if such delay or failure could not be prevented
by the exercise of reasonable diligence by the Servicer and such delay or
failure was caused by an act of God or other similar occurrence. Upon the
occurrence of any such event, the Servicer shall not be relieved from using
its best efforts to perform its obligations in a timely manner in accordance
with the terms of the Agreement or any Supplement and the Servicer shall
provide the Trustee, the Enhancement Providers, if any, applicable to any
Series, the Seller and the Certificateholders prompt notice of such failure or
delay by the Servicer, together with a description of its efforts to so
perform its obligations. The Servicer will immediately notify the Trustee in
writing of any Servicer Default.
REPORTS TO CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, for each
Series, on each Distribution Date, there will be forwarded to each
Certificateholder of record a statement (the "Monthly Servicer Report")
prepared by the Servicer setting forth: (i) the total amount distributed with
respect to the Certificates of such Series; (ii) the amount of the
distribution on such Distribution Date allocable to principal; (iii) the
amount of such distribution allocable to interest; (iv) the amount of
collections processed during the preceding Due Period and allocated in respect
of the Certificates of such Series; (v) the Invested Amount of such Series and
the Invested Percentages with respect to such Series; (vi) the aggregate
outstanding balance of Accounts which are 30 days or more delinquent as of the
close of business at the end of the preceding Due Period; (vii) the Investor
Default Amount for such Distribution Date; (viii) the amount of Investor
Charge-Offs for such Distribution Date and the amount of reimbursements of
such Investor Charge-Offs; (ix) the amount of the Monthly Servicing Fee for
such
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Distribution Date; (x) the amount available under any Enhancement at the close
of business on such Distribution Date; (xi) the amount, if any, by which the
principal balance of the Certificates of such Series exceeds the Invested
Amount of such Series as of the end of the day on the Record Date; and (xii)
the "pool factor" as of the end of the related Record Date (consisting of an
eight-digit decimal expressing the ratio of the Invested Amount to the initial
Invested Amount). In the case of a Series having more than one Class, the
Monthly Servicer Report will provide information as to each Class of
Certificates.
On or before January 31 of each calendar year, there will be furnished to
each person who at any time during the preceding calendar year was a
Certificateholder of record (or, if so provided in applicable Treasury
regulations, made available to Certificate Owners) a statement prepared by the
Servicer containing the information required to be provided by an issuer of
indebtedness under the Code for such calendar year or the applicable portion
thereof during which such person was a Certificateholder, together with such
other customary information as the Servicer deems necessary or desirable to
enable the Certificateholders to prepare their tax returns. See "Tax Matters."
EVIDENCE AS TO COMPLIANCE
The Agreement provides that on or before March 31 of each calendar year, the
Servicer will cause a firm of independent public accountants to furnish a
report to the effect that such firm has applied certain agreed-upon procedures
to certain documents and records relating to the servicing of the Receivables
and that, based upon such agreed-upon procedures, no matters came to their
attention that caused them to believe that such servicing was not conducted in
compliance with certain applicable terms and conditions set forth in the
Agreement except for such exceptions or errors as such firm shall believe to
be immaterial and such other exceptions as shall be set forth in such
statement. In addition, on or before March 31 of each calendar year, such
accountants will compare the mathematical calculations of the amounts
contained in the Monthly Servicer Reports and other certificates delivered
during such year with the computer reports of the Servicer and statements of
any agents engaged by the Servicer to perform servicing activities which were
the source of such amounts and deliver a certificate to the Trustee confirming
that such amounts are in agreement except for such exceptions as they believe
to be immaterial and such other exceptions which shall be set forth in such
report.
The Agreement provides for delivery to the Trustee on or before March 31 of
each calendar year of a statement signed by an officer of the Servicer to the
effect that the Servicer has, or has caused to be, fully performed its
obligations in all material respects under the Agreement throughout the
preceding year or, if there has been a default in the performance of any such
obligation, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by a request in writing delivered to the Trustee.
CONVEYANCE OF ACCOUNTS
Subject to the conditions set forth in the succeeding sentence, the Seller
may transfer or otherwise convey its interest in Accounts, including the
Receivables in such Accounts (subject to the interest of the Trustee), in
whole or in part, and, in conjunction with such transfer will execute (and the
Trustee will authenticate and deliver to the transferee) a certificate
substantially in the form of the Exchangeable Seller's Certificate which
represents the transferred interest in such Accounts. The Seller will be
permitted to convey Accounts only upon satisfaction of the following
conditions: (i) the acquiring person will (a) be organized and existing under
the laws of the United States of America or any state or the District of
Columbia, and be a bank or other entity that is not subject to the Bankruptcy
Code of 1978, and (b) expressly assume by an agreement supplemental to the
Agreement the performance of the Seller's obligations with respect to such
Accounts; (ii) the Seller will deliver to the Trustee and, as required, any
Enhancement Provider of a Series, opinions of counsel (a) stating that all
conditions precedent to the conveyance have been complied with and (b) to the
effect that the conveyance will not adversely affect the treatment of the
Certificates as debt for Federal and applicable state income tax purposes or
materially adversely
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impact the Federal income tax consequences that affect any Certificateholder;
(iii) the Seller will obtain from each Rating Agency a letter confirming that
the rating of the Certificates, after such conveyance, will not be lowered or
withdrawn; and (iv) the Seller will obtain the consent to the conveyance, as
required, of any Enhancement Provider of a Series and of more than 51% of the
principal amount of Certificateholders of each Series.
AMENDMENTS
The Agreement and any Supplement may be amended by the Seller, the Servicer
and the Trustee, without Certificateholder consent, to cure any ambiguity, to
correct or supplement any provision therein which may be inconsistent with any
other provision therein and to add any other provisions with respect to
matters or questions arising under the Agreement or any Supplement which are
not inconsistent with the provisions of the Agreement or any Supplement. In
addition, the Agreement and any Supplement may be amended from time to time by
the Seller, the Servicer and the Trustee, without Certificateholder consent,
to add to or change any of the provisions of the Agreement to provide that
bearer certificates issued with respect to any Series may be registrable as to
principal, to change or eliminate any restrictions on the payment of principal
of or any interest on such bearer certificates, to permit such bearer
certificates to be issued in exchange for registered certificates or bearer
certificates of other authorized denominations or to permit the issuance of
uncertificated certificates. Moreover, any Supplement and any amendments
regarding the addition or removal of Receivables from the Trust will not be
considered amendments requiring Certificateholder consent under the provisions
of the Agreement or any Supplement.
The Agreement and any Supplement may be amended by the Seller, the Servicer
and the Trustee with the consent of the holders of Certificates evidencing
undivided interests aggregating not less than 66 2/3% of the Invested Amount
of all Series adversely affected for the purpose of adding any provisions to,
changing in any manner or eliminating any of the provisions of the Agreement
or any Supplement or of modifying in any manner the rights of
Certificateholders of any Series then issued and outstanding. No such
amendment, however, may (i) reduce in any manner the amount of, or delay the
timing of, distributions required to be made on such Series, (ii) change the
definition or the manner of calculating the interest of any Certificateholder
of such Series, or (iii) reduce the aforesaid percentage of undivided
interests the holders of which are required to consent to any such amendment,
in each case without the consent of all Certificateholders of all Series
adversely affected. Promptly following the execution of any amendment to the
Agreement or any Supplement, the Trustee will furnish written notice of the
substance of such amendment to each Certificateholder of all Series (or with
respect to an amendment of a Supplement, to the applicable Series).
LIST OF CERTIFICATEHOLDERS
Upon written request of three or more Certificateholders of record of a
Series or any Certificateholder or group of Certificateholders of record
representing undivided interests in the Trust aggregating not less than 5% of
the Invested Amount of a Series, the Trustee will afford such
Certificateholders access during business hours to the current list of
Certificateholders of the Trust for purposes of communicating with other
certificateholders with respect to their rights under the Agreement.
The Agreement generally does not provide for any annual or other meetings of
Certificateholders.
THE TRUSTEE
Norwest Bank Minnesota, National Association, is Trustee under the
Agreement. The Seller, the Servicer and their respective affiliates may from
time to time enter into normal banking and trustee relationships with the
Trustee and its affiliates. The Trustee, the Seller, the Servicer and any of
their respective affiliates may hold Certificates in their own names; however,
any Certificates so held shall not be entitled to participate in any decisions
made or instructions given to the Trustee by the Certificateholders as a
group. The Trustee's address is Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479, Attention: Corporate Trust Department.
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For purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee will have the power to appoint a co-trustee or
separate trustees of all or any part of the Trust. In the event of such
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Trustee will be conferred or imposed upon and exercised or performed
by the Trustee and such separate trustee or co-trustee jointly, or, in any
jurisdiction in which the Trustee will be incompetent or unqualified to
perform certain acts, singly upon such separate trustee or co-trustee who
shall exercise and perform such rights, powers, duties and obligations solely
at the direction of the Trustee.
The Trustee may resign at any time, in which event the Seller will be
obligated to appoint a successor Trustee. The Trustee has agreed that it will
not resign, however, without written confirmation from each Rating Agency that
such resignation will not result in the Rating Agency reducing or withdrawing
its rating on any then outstanding Series rated by it. The Servicer may also
remove the Trustee, if the Trustee ceases to be eligible to continue as such
under the Agreement or if the Trustee becomes insolvent. In such
circumstances, the Servicer will be obligated to appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee does not become effective until acceptance of the appointment by the
successor Trustee.
ENHANCEMENT
GENERAL
For any Series, Enhancement may be provided with respect to one or more
Classes thereof. If so specified in the related Prospectus Supplement, any
form of Enhancement may be structured so as to be drawn upon by more than one
Class to the extent described therein.
Unless otherwise specified in the related Prospectus Supplement for a
Series, the Enhancement will not provide protection against all risks of loss
and will not guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur which exceed the amount
covered by the Enhancement or which are not covered by the Enhancement,
Certificateholders will bear their allocable share of deficiencies.
If Enhancement is provided with respect to a Series, the related Prospectus
Supplement will include a description of (a) the amount payable under such
Enhancement, (b) any conditions to payment thereunder not otherwise described
herein, (c) the conditions (if any) under which the amount payable under such
Enhancement may be reduced and under which such Enhancement may be terminated
or replaced and (d) any material provision of any agreement relating to such
Enhancement. Additionally, the related Prospectus Supplement may set forth
certain information with respect to any provider of Enhancement (an
"Enhancement Provider"), including (i) brief description of its principal
business activities, (ii) its principal place of business, place of
incorporation and the jurisdiction under which it is chartered or licensed to
do business, (iii) if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its business and (iv) its
total assets, and its stockholders' or policy holders' surplus, if applicable,
and other appropriate financial information as of the date specified in the
Prospectus Supplement. The Enhancement Provider may have an interest in
certain cash flows in respect of the Receivables to the extent described in
such Prospectus Supplement.
SUBORDINATION
If so specified in the related Prospectus Supplement, one or more Classes of
any Series will be subordinated as described in the related Prospectus
Supplement to the extent necessary to fund payments with respect to the Senior
Certificates. The rights of the holders of any Subordinated Certificates to
receive distributions of principal and/or interest on any Distribution Date
for such Series will be subordinate in right and priority to the rights of the
holders of Senior Certificates, but only to the extent set forth in the
related Prospectus Supplement. If so specified in the related Prospectus
Supplement, subordination may apply only in the event of certain types of
losses not covered by another Enhancement. The related Prospectus Supplement
will also set forth any applicable information concerning the amount of
subordination of a Class or Classes of Subordinated Certificates in a
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Series, the circumstances in which such subordination will be applicable, the
manner, if any, in which the amount of subordination will decrease over time,
and the conditions under which amounts available from payments that would
otherwise be made to holders of such Subordinated Certificates will be
distributed to holders of Senior Certificates. If collections of Receivables
otherwise distributable to holders of Subordinated Certificates of a Series
will be used as support for a Class of another Series, the related Prospectus
Supplement will specify the manner and conditions for applying such a cross-
support feature.
CASH COLLATERAL GUARANTY OR ACCOUNT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided by a guaranty (the "Cash
Collateral Guaranty") secured by the deposit of cash or certain permitted
investments in an account (the "Cash Collateral Account") reserved for the
beneficiaries of the Cash Collateral Guaranty or by a Cash Collateral Account
alone. The amount available pursuant to the Cash Collateral Guaranty or the
Cash Collateral Account will be the lesser of amounts on deposit in the Cash
Collateral Account and an amount specified in the related Prospectus
Supplement. The related Prospectus Supplement will set forth the circumstances
under which payments are made to beneficiaries of the Cash Collateral Guaranty
from the Cash Collateral Account or from the Cash Collateral Account directly.
COLLATERAL INTEREST
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided initially by an undivided
interest in the Trust (the "Collateral Interest") in an amount initially equal
to a percentage of the Certificates of such Series as specified in the
Prospectus Supplement. Such Series may also have the benefit of a Cash
Collateral Guaranty or Cash Collateral Account with an initial amount on
deposit therein, if any, as specified in the Prospectus Supplement which may
be increased (i) to the extent the Seller elects, subject to certain
conditions specified in the related Prospectus Supplement, to apply
collections of Principal Receivables allocable to the Collateral Interest to
decrease the Collateral Interest, (ii) to the extent collections of Principal
Receivables allocable to the Collateral Interest are required to be deposited
into the Cash Collateral Account as specified in the related Prospectus
Supplement and (iii) to the extent excess collections of Finance Charge
Receivables are required to be deposited into the Cash Collateral Account as
specified in the related Prospectus Supplement. The total amount of the
Enhancement available pursuant to the Collateral Interest and, if applicable,
the Cash Collateral Guaranty or Cash Collateral Account, will be the lesser of
the sum of the Collateral Interest and the amount on deposit in the Cash
Collateral Account and an amount specified in the related Prospectus
Supplement. The related Prospectus Supplement will set forth the circumstances
under which payments which otherwise would be made to holders of the
Collateral Interest will be distributed to the holders of Certificates offered
thereby and, if applicable, the circumstances under which payment will be made
under the Cash Collateral Guaranty or under the Cash Collateral Account.
LETTER OF CREDIT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided by one or more letters of
credit. A letter of credit may provide limited protection against certain
losses in addition to, or in lieu of, other Enhancement. The issuer of the
letter of credit will be obligated to honor demands with respect to such
letter of credit, to the extent of the amount available thereunder, to provide
funds under the circumstances and subject to such conditions as are specified
in the related Prospectus Supplement.
The maximum liability of the issuer of the letter of credit under such
letter of credit will generally be an amount equal to a percentage specified
in the related Prospectus Supplement of the initial Invested Amount of a
Series or a Class of such Series. The maximum amount available at any time to
be paid under a letter of credit will be determined in the manner specified
therein and in the related Prospectus Supplement.
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SURETY BOND OR INSURANCE POLICY
If so specified in the related Prospectus Supplement, insurance with respect
to a Series or one or more Classes thereof will be provided by one or more
insurance companies. Such insurance will guarantee, with respect to one or
more Classes of the related Series, distributions of interest or principal in
the manner and amount specified in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, a surety bond will be
purchased for the benefit of the holders of any Series or Class of such Series
to assure distributions of interest or principal with respect to such Series
or Class of Certificates in the manner and amount specified in the related
Prospectus Supplement.
INTEREST RATE SWAP
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided by an interest rate swap or
other similar hedging arrangement. Such interest rate swap or other
arrangement will provide for the swapping of certain payments on the
Receivables for payments from the provider of the interest rate swap or other
arrangement in the manner and amounts specified in the related Prospectus
Supplement.
SPREAD ACCOUNT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided by the periodic deposit of
certain available excess cash flow from the Trust assets into an account (the
"Spread Account") intended to assist with subsequent distribution of interest
and principal on the Certificates of such Class or Series in the manner
specified in the related Prospectus Supplement.
RESERVE ACCOUNT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof or any Enhancement related thereto will be
provided by the establishment of a reserve account (the "Reserve Account").
The Reserve Account may be funded, to the extent provided in the related
Prospectus Supplement, by an initial cash deposit, the retention of certain
periodic distributions of principal or interest or both otherwise payable to
one or more Classes of Certificates, including the Subordinated Certificates,
or the provision of a letter of credit, guarantee, insurance policy or other
form of credit support or any combination thereof. The Reserve Account will be
established to assist with the subsequent distribution of principal or
interest on the Certificates of such Series or Class thereof or such other
amount owing on any Enhancement thereto in the manner provided in the related
Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The Seller has transferred interests in the Receivables to the Trust. The
Seller covenants and warrants that such transfer constitutes either a valid
transfer and assignment to the Trust of all right, title and interest of the
Seller in and to the Receivables, except for the interest of the Seller as
holder of the Exchangeable Seller's Certificate, or a grant of a security
interest to the Trust in and to the Receivables. The Seller also covenants and
warrants to the Trust in the Agreement that, in the event the transfer of
Receivables by the Seller to the Trust is deemed to create a security interest
under the UCC and assuming that the Seller is not at the time of such transfer
the subject of any insolvency proceedings, there exists a valid, subsisting
and enforceable first priority perfected security interest in favor of the
Trust in the Receivables contained in the Accounts in existence since the time
of the addition of such Receivables to the Trust and a valid, subsisting and
enforceable first priority perfected security interest in favor of the Trust
in the Receivables created thereafter on and after their creation and, with
certain exceptions, and for certain limited time periods, the proceeds
thereof. For a discussion of the Trust's
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rights arising from these covenants and warranties not being satisfied, see
"Description of the Certificates and the Agreement--Covenants, Representations
and Warranties."
The Seller has represented that the Receivables are either "accounts" or
"general intangibles" for purposes of the UCC. Both the sale of accounts and
the transfer of accounts as security for an obligation are treated under the
UCC as creating a security interest therein and are subject to its provisions,
and the filing of an appropriate financing statement is required to perfect
the interest of the Trust in the Receivables. If a transfer of general
intangibles is deemed to create a security interest, the UCC applies and
filing an appropriate financing statement is also required in order to perfect
the Trust's security interest in the Receivables. A financing statement
covering the Receivables has been filed under the UCC to protect the Trust in
case the transfer by the Seller is deemed subject to the UCC as either a sale
of accounts or a transfer of accounts or general intangibles as security for
an obligation. If a transfer of general intangibles is deemed not to create a
security interest, the filing of a financing statement is not required to
protect the Trust's interest from third parties.
There are certain limited circumstances under the UCC in which prior or
subsequent transferees of Receivables coming into existence after the
applicable Cut Off Date could have an interest in such Receivables with
priority over the Trust's interest. A tax or other government lien on property
of the Seller arising prior to the time a Receivable comes into existence may
also have priority over the interest of the Trust in such Receivables.
Furthermore, if the FDIC were appointed as receiver of the Seller, the
receiver's administrative expenses may also have priority over the interest of
the Trust in such Receivables. Under the Agreement, however, the Seller has
warranted that it has transferred or will transfer the Receivables to the
Trust free and clear of the lien of any third party except for certain
permitted tax liens. In addition, the Seller covenants that it will not sell,
pledge, assign, transfer or grant any lien on any Receivable (or any interest
therein) other than to the Trust.
CERTAIN MATTERS RELATING TO RECEIVERSHIP
The Federal Deposit Insurance Act ("FDIA"), as amended by the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), which
became effective August 9, 1989, sets forth certain powers that the FDIC could
exercise if it were appointed as receiver or conservator of the Seller.
Subject to clarification by FDIC regulations or interpretations, it would
appear from the positions taken by the FDIC before the passage of FIRREA that
the FDIC in its capacity as receiver or conservator for the Seller would not
interfere with the timely transfer to the Trust of payments collected on the
Receivables or interfere with the timely liquidation of Receivables as
described below. To the extent that the Seller has granted a security interest
in the Receivables to the Trust, and that interest is validly perfected before
the Seller's insolvency and is not taken in contemplation of insolvency or
with the intent to hinder, delay or defraud the Seller or its creditors, that
security interest should not be subject to avoidance, and payments to the
Trust with respect to the Receivables should not be subject to recovery by a
receiver or conservator of the Seller. If, however, a receiver were to assert
a contrary position, or were to require the Trustee to establish its right to
those payments by submitting to and completing the administrative claims
procedure under the FDIA, as amended by FIRREA, delays in payments on the
Certificates and possible reductions in the amount of those payments could
occur.
The Agreement provides that, upon the appointment of a receiver or
conservator for the Seller, the Seller will promptly give notice thereof to
the Trustee, and a Liquidation Event with respect to all Series will occur.
Under the Agreement, (x) with respect to any Preexisting Series, unless
otherwise instructed within a specified period by the holders of Certificates
representing undivided interests aggregating more than 50% of the Invested
Amount of any Preexisting Series or unless otherwise required by the FDIC as
receiver or conservator for the Seller, the Trustee will proceed to sell,
dispose of or otherwise liquidate the Receivables of all Series and (y) with
respect to Series issued on or after April 19, 1995 (except as otherwise may
be specified in the related Supplement), unless otherwise instructed within a
specified period of time by the holders of undivided interests aggregating
more than 50% of the Invested Amount of each Class of each such Series
(including a majority in interest in each Collateral Interest), each holder of
an interest in the First Chicago Interest, holders of more than
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50% of the Invested Amount of each Preexisting Series and any other person
specified in any Supplement, the Trustee will proceed to sell, dispose of or
otherwise liquidate the portion of the Receivables allocable to all Series
other than the Preexisting Series. Such sales, dispositions or other
liquidations will be conducted in a commercially reasonable manner and on
commercially reasonable terms in accordance with the Agreement. The proceeds
from the sale of the Receivables would then be treated by the Trustee as
collections on the Receivables. If the only Liquidation Event to occur is
either the insolvency of the Seller or the appointment of a conservator or
receiver for the Seller, the receiver or conservator for the Seller may have
the power to continue to require the Seller to transfer new Principal
Receivables to the Trust and to prevent the early sale, liquidation or
disposition of the Receivables and the early commencement of a Rapid
Amortization Period or a Rapid Accumulation Period. See "Description of the
Certificates and the Agreement--Liquidation Events."
CONSUMER PROTECTION LAWS
The relationship between the cardholder and credit card issuer is
extensively regulated by Federal and state consumer protection statutes. With
respect to credit cards issued by the Seller the most significant Federal laws
include the Federal Truth-In-Lending and Equal Credit Opportunity Acts. These
statutes impose disclosure requirements before and when an Account is opened
and at the end of monthly billing cycles, and, in addition, limit cardholder
liability for unauthorized use, prohibit certain discriminatory practices in
extending credit, may impose certain limitations on the type of account-
related charges that may be issued and regulate collection practices. In
addition, cardholders are entitled under these laws to have payments and
credits applied to the credit card account promptly and to require billing
errors to be resolved promptly. The Trust may be liable for certain violations
of consumer protection laws that apply to the Receivables, either as assignee
from the Seller with respect to obligations arising before transfer of the
Receivables to the Trust or as the party directly responsible for obligations
arising after the transfer. In addition, a cardholder may be entitled to
assert such violations by way of set off against the obligation to pay the
amount of Receivables owing. The Seller has agreed to accept the transfer of
all Receivables that have been written off and that were not created in
compliance in all material respects with the requirements of such laws. The
Servicer has also agreed in the Agreement to indemnify the Trust, among other
things, for any liability arising from such violations. For a discussion of
the Trust's rights if the Receivables were not created in compliance in all
material respects with applicable laws, see "Description of the Certificates
and the Agreement--Covenants, Representations and Warranties."
The Soldiers' and Sailors' Civil Relief Act of 1940 allows individuals on
active duty in the military to cap the interest rate on debts incurred before
the call to active duty to 6% per annum. In addition, subject to judicial
discretion, any action or court proceeding in which an individual in military
service is involved may be stayed if the individual's rights would be
prejudiced by denial of such stay.
Application of Federal and state bankruptcy and debtor relief laws would
affect the interests of the Certificateholders, if such laws result in any
Receivables being written off as uncollectible when there are not funds
available pursuant to any applicable Enhancement. See "Description of the
Certificates and the Agreement--Defaulted Receivables; Rebates and Fraudulent
Charges."
TAX MATTERS
GENERAL
The following discussion, summarizing certain anticipated Federal income tax
aspects of the purchase, ownership and disposition of the Certificates of a
Series, is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), proposed, temporary and final Treasury regulations
thereunder, and published rulings and court decisions in effect as of the date
hereof, all of which are subject to change, possibly retroactively. This
discussion does not address every aspect of the Federal income tax laws that
may be relevant to Certificate Owners of a Series in light of their personal
investment circumstances or to certain types of Certificate Owners of a Series
subject to special treatment under the Federal income tax laws (for example,
banks
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and life insurance companies). Accordingly investors should consult their own
tax advisors regarding Federal, state, local, foreign and any other tax
consequences to them of any investment in the Certificates of a Series.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH
REGARD TO THE FEDERAL TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, OR
DISPOSITION OF INTERESTS IN CERTIFICATES, AS WELL AS THE TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, FOREIGN COUNTRY OR OTHER TAXING
JURISDICTION.
CHARACTERIZATION OF THE CERTIFICATES AS INDEBTEDNESS
Unless otherwise specified in the related Prospectus Supplement, Skadden,
Arps, Slate, Meagher & Flom, special tax counsel to the Bank ("Tax Counsel"),
will, upon issuance of a Series of Certificates, advise the Bank, based on the
assumptions and qualifications set forth in its opinion, that the Certificates
of such Series offered pursuant to a Prospectus Supplement (the "Offered
Certificates") will be treated as indebtedness for Federal income tax
purposes. However, opinions of counsel are not binding on the Internal Revenue
Service (the "IRS") and there can be no assurance that the IRS could not
successfully challenge this conclusion.
The Seller expresses in the Agreement its intent that for Federal, state and
local income or franchise tax purposes, the Offered Certificates of each
Series will be indebtedness secured by the Receivables. The Seller agrees and
each Certificateholder and Certificate Owner, by acquiring an interest in an
Offered Certificate, agrees or will be deemed to agree to treat the Offered
Certificates of such Series as indebtedness for Federal, state and local
income or franchise tax purposes. However, because different criteria are used
to determine the non-tax accounting characterization of the transactions
contemplated by the Agreement, the Seller expects to treat such transaction,
for regulatory and financial accounting purposes, as a sale of an ownership
interest in the Receivables and not as a debt obligation.
In general, whether for Federal income tax purposes a transaction
constitutes a sale of property or a loan, the repayment of which is secured by
the property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction rather than its form or the manner in
which it is labeled. While the IRS and the courts have set forth several
factors to be taken into account in determining whether the substance of a
transaction is a sale of property or a secured indebtedness for Federal income
tax purposes, the primary factor in making this determination is whether the
transferee has assumed the risk of loss or other economic burdens relating to
the property and has obtained the benefits of ownership thereof. Unless
otherwise set forth in a Prospectus Supplement, it is expected that, as set
forth in its opinion, Tax Counsel will analyze and rely on several factors in
reaching its opinion that the weight of the benefits and burdens of ownership
of the Receivables has not been transferred to the Certificate Owners.
In some instances, courts have held that a taxpayer is bound by a particular
form it has chosen for a transaction, even if the substance of the transaction
does not accord with its form. Unless otherwise specified in a Prospectus
Supplement, it is expected that Tax Counsel will advise that the rationale of
those cases will not apply to the transaction evidenced by a Series of
Certificates, because the form of the transaction, as reflected in the
operative provisions of the documents, either is not inconsistent with the
characterization of the Offered Certificates of such Series as debt for
Federal income tax purposes or otherwise makes the rationale of those cases
inapplicable to this situation.
TAXATION OF INTEREST INCOME OF CERTIFICATEHOLDERS
As set forth above, it is expected that, unless otherwise specified in a
Prospectus Supplement, Tax Counsel will advise the Bank that the Offered
Certificates will constitute indebtedness for Federal income tax purposes, and
accordingly, interest thereon will be includible in income by Certificate
Owners as ordinary income when received (in the case of a cash basis taxpayer)
or accrued (in the case of an accrual basis taxpayer) in accordance with their
respective methods of tax accounting. Interest received on the Offered
Certificates may also constitute "investment income" for purposes of certain
limitations of the Code concerning the deductibility of investment interest
expense.
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While it is not anticipated that the Offered Certificates will be issued at
a greater than de minimis discount, under Treasury regulations (the
"Regulations") the Offered Certificates may nevertheless be deemed to have
been issued with original issue discount ("OID"). This could be the case, for
example, if interest payments for a Series are not deemed to be payments of
"qualified stated interest" because (i) Certificate Owners of a Series do not
have default remedies ordinarily available to holders of debt instruments and
(ii) the penalties imposed on the Bank or the Trust as a result of any failure
to make interest payments are not viewed by the IRS as being substantial
enough to be respected for this purpose. Under a technical reading of Revenue
Ruling 95-70, which was issued on October 5, 1995, in which the IRS held that
interest was not "qualified stated interest" despite the charging of a penalty
rate, it is likely that interest payments for a Series or Class would not be
deemed to constitute "qualified stated interest." The debt instruments which
were the subject of Revenue Ruling 95-70 may be distinguished from the Offered
Certificates, however, because the issuer of those debt instruments had the
discretion to defer interest payments. As a result, the Seller intends to take
the position that interest payments constitute payments of "qualified stated
interest" with respect to Offered Certificates of a Series or Class that are
not issued at a price that is less than a de minimis discount from their
stated principal amount. If, however, interest payments for a Series were not
classified as "qualified stated interest," all of the taxable income to be
recognized with respect to the Offered Certificates would be includible in
income as OID but would not be includible again when the interest is actually
received.
If the Offered Certificates are in fact issued at a greater than de minimis
discount or are treated as having been issued with OID under the Regulations,
the following rules will apply. The excess of the "stated redemption price at
maturity" of an Offered Certificate over the original issue price (in this
case, the initial offering price at which a substantial amount of the Offered
Certificates are sold to the public) will constitute OID. A Certificate Owner
must include OID in income as interest over the term of the Offered
Certificate under a constant yield method. In general, OID must be included in
income in advance of the receipt of cash representing that income. In the case
of a debt instrument as to which the repayment of principal may be accelerated
as a result of the prepayment of other obligations securing the debt
instrument (a "Prepayable Instrument"), the periodic accrual of OID is
determined by taking into account both the prepayment assumptions used in
pricing the debt instrument and the prepayment experience. If this provision
applies to a Class of Certificates (which is not clear), the amount of OID
which will accrue in any given "accrual period" may either increase or
decrease depending upon the actual prepayment rate. Accordingly, each
Certificate Owner should consult its own tax advisor regarding the impact to
it of the OID rules if the Offered Certificates are issued with OID. Under the
Regulations, a holder of a Certificate issued with de minimis OID must include
such OID in income proportionately as principal payments are made on a Class
of Certificates.
A holder who purchases an Offered Certificate at a discount from its
adjusted issue price may be subject to the "market discount" rules of the
Code. These rules provide, in part, for the treatment of gain attributable to
accrued market discount as ordinary income upon the receipt of partial
principal payments or on the sale or other disposition of the Offered
Certificate, and for the deferral of interest deductions with respect to debt
incurred to acquire or carry the market discount Offered Certificate.
A subsequent holder who purchases an Offered Certificate at a premium may
elect to amortize and deduct this premium over the remaining term of the
Offered Certificate in accordance with rules set forth in Section 171 of the
Code.
SALE OF A CERTIFICATE
In general, a Certificate Owner will recognize gain or loss upon the sale,
exchange, redemption or other taxable disposition of an Offered Certificate
measured by the difference between (i) the amount of cash and the fair market
value of any property received (other than amounts attributable to, and
taxable as, accrued interest) and (ii) the Certificate Owner's tax basis in
the Offered Certificate (as increased by any OID or market discount previously
included in income by the holder and decreased by any deductions previously
allowed for amortizable bond premium and by any payments reflecting principal
or OID received with respect to such Certificate).
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Subject to the market discount rules discussed above and to the one-year
holding requirement for long-term capital gain treatment, any such gain or
loss generally will be long-term capital gain, provided that the Offered
Certificate was held as a capital asset; provided, however, that if the rules
applicable to Prepayable Instruments apply, any OID not previously accrued
will be treated as ordinary income. The maximum ordinary income rate for
individuals, estates and trusts exceeds the maximum long-term capital gains
rate for such taxpayers. In addition, capital losses generally may be used
only to offset capital gains.
TAX CHARACTERIZATION OF THE TRUST
The Agreement permits the issuance of Classes of Certificates that are
treated for Federal income tax purposes either as indebtedness or as an
interest in a partnership. Accordingly, the Trust could be characterized
either as (i) a security device to hold Receivables securing the repayment of
the Certificates of all Series or (ii) a partnership in which the Seller and
certain classes of Certificateholders are partners, and which has issued debt
represented by other Classes of Certificates (including, unless otherwise
specified in a Supplement, the Offered Certificates).
The opinion of Tax Counsel with respect to Offered Certificates will not be
binding on the courts or the IRS. It is possible that the IRS could assert
that, for purposes of the Code, the transaction contemplated by this
Prospectus and a related Prospectus Supplement constitutes a sale of the
Receivables (or an interest therein) to the Certificate Owners of one or more
Series or Classes and that the proper classification of the legal relationship
between the Bank and some or all of the Certificate Owners or
Certificateholders of one or more Series resulting from the transaction is
that of a partnership (including a publicly traded partnership), a publicly
traded partnership taxable as a corporation, or an association taxable as a
corporation. The Seller currently does not intend to comply with the Federal
income tax reporting requirements that would apply if any Classes of
Certificates were treated as interests in a partnership or corporation (unless
an interest in the Trust is issued or sold that is intended to be classified
as an interest in a partnership).
If the Trust were treated in whole or in part as a partnership in which some
or all Certificate Owners were partners, that partnership could be classified
as a publicly traded partnership taxable as a corporation. A partnership will
be classified as a publicly traded partnership taxable as a corporation if
equity interests therein are traded on an "established securities market," or
are "readily tradeable" on a "secondary market" or its "substantial
equivalent" unless certain exceptions apply. One such exception would apply if
the Trust is not engaged in a "financial business" and 90% or more of its
income consists of interest and certain other types of passive income. Because
Treasury regulations do not clarify the meaning of a "financial business" for
this purpose, it is unclear whether this exception applies. The Seller has
taken and intends to take measures designed to enable the Trust to be eligible
for such exceptions; however, there can be no assurance that the Trust could
not become a publicly traded partnership, because certain of the actions
necessary to comply with such exceptions are not fully within the control of
the Seller. Furthermore, certain Series issued prior to May 2, 1995 may not be
able to be conformed to the measures taken by the Seller with respect to
Series issued on or after that date.
If a transaction were treated as creating a partnership between the Seller
and the Certificate Owners or Certificateholders of one or more Series, the
partnership itself would not be subject to Federal income tax (unless it were
to be characterized as a publicly traded partnership taxable as a
corporation); rather, the partners of such partnership, including the
Certificate Owners or Certificateholders of such Series, would be taxed
individually on their respective distributive shares of the partnership's
income, gain, loss, deductions and credits. The amount and timing of items of
income and deductions of a Certificate Owner could differ if the Offered
Certificates were held to constitute partnership interests, rather than
indebtedness. Moreover, unless the partnership were treated as engaged in a
trade or business, an individual's share of expenses of the partnership would
be miscellaneous itemized deductions that, in the aggregate, are allowed as
deductions only to the extent they exceed two percent of the individual's
adjusted gross income, and would be subject to reduction under Section 68 of
the Code if the individual's adjusted gross income exceeded certain limits. As
a result, the individual might be taxed on a greater
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amount of income than the stated rate on the Offered Certificates. Finally,
assuming the partnership is a "publicly traded partnership" (as defined in
Section 469(k)(2) of the Code), even if it qualifies for exemption from
taxation as a corporation, all or a portion of any taxable income allocated to
a Certificate Owner that is a pension, profit-sharing or employee benefit plan
or other tax-exempt entity (including an individual retirement account) may,
under certain circumstances, constitute "unrelated business taxable income"
which generally would be taxable to the holder under the Code. Partnership
characterization also may have adverse state and local income or franchise tax
consequences for a Certificate Owner. From time to time, legislation has been
introduced in Congress that would affect the treatment of any "large
partnership," defined as any partnership in which there are at least 100
partners in a taxable year. Under such legislative proposals, among other
things, the availability of certain deductions to partners may be limited, and
certain computations (such as those relating to the level of allowable
miscellaneous itemized deductions and the netting of capital gains and losses)
would be made at the partnership rather than the partner level. No prediction
can be made regarding whether any such legislation will be enacted or, if so,
what its ultimate effective date will be.
If it were determined that a transaction created an entity classified as an
association or as a publicly traded partnership taxable as a corporation, the
Trust would be subject to Federal income tax at corporate income tax rates on
the income it derives from the Receivables, which would reduce the amounts
available for distribution to the Certificate Owners, possibly including
Certificate Owners of a Class that is treated as indebtedness. Such
classification may also have adverse state and local tax consequences that
would reduce amounts available for distribution to Certificate Owners. Cash
distributions to the Certificate Owners (except any Class not recharacterized
as an equity interest in an association) generally would be treated as
dividends for tax purposes to the extent of such deemed corporation's earnings
and profits.
PROPOSED LEGISLATION
Legislation is currently being considered by the U.S. Congress which would
create a new type of entity for Federal income tax purposes, the "financial
asset securitization investment trust" (a "FASIT"). Such legislation, if
enacted, would enable trusts such as the Trust to be treated by statute as a
pass-through entity not subject to entity-level tax and to issue securities
that would be treated by statute as debt for Federal income tax purposes. It
is unclear whether such legislation will be enacted, to what extent its
provisions will be modified prior to enactment, and whether its provisions, as
enacted, would enable a FASIT election to be made for all or a portion of the
Trust or the securities issued thereby. To the extent otherwise permitted by
the terms thereof, the Agreement may be amended in accordance with the
provisions thereof to provide that the Seller may cause a FASIT election to be
made for all or a portion of the Trust if the Seller delivers to the Trustee
an opinion of counsel to the effect that, for Federal income tax purposes, (i)
such issuance will not adversely affect the tax characterization as debt of
Certificates of any outstanding Series or Class that were characterized as
debt at the time of their issuance, (ii) following such issuance the Trust
will not be deemed to be an association (or publicly traded partnership)
taxable as a corporation and (iii) such issuance will not cause or constitute
an event in which gain or loss would be recognized by any Certificateholder or
the Trust.
FOREIGN INVESTORS
As set forth above, it is expected that Tax Counsel will render an opinion,
upon issuance, that the Offered Certificates will be treated as debt for U.S.
Federal income tax purposes. The following information describes the U.S.
Federal income tax treatment of investors that are not U.S. persons ("Foreign
Investors") if the Offered Certificates are treated as debt. The term "Foreign
Investor" means any person other than (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) an
estate or trust the income of which is includible in gross income for U.S.
Federal income tax purposes, regardless of its source.
Interest, including OID, paid to a Foreign Investor will be subject to U.S.
withholding taxes at a rate of 30% unless (x) the income is "effectively
connected" with the conduct by such Foreign Investor of a trade or business in
the United States or (y) the Foreign Investor and each securities clearing
organization, bank, or other
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financial institution that holds the Offered Certificates on behalf of the
customer in the ordinary course of its trade or business, in the chain between
the Certificate Owner and the U.S. person otherwise required to withhold the
U.S. tax, complies with applicable identification requirements and, in
addition (i) the non-U.S. Certificate Owner does not actually or
constructively own 10 percent or more of the total combined voting power of
all classes of stock of the Seller entitled to vote (or of a profits or
capital interest of a trust characterized as a partnership), (ii) the non-U.S.
Certificate Owner is not a controlled foreign corporation that is related to
the Seller (or a trust treated as a partnership) through stock ownership,
(iii) the non-U.S. Certificate Owner is not a bank receiving interest
described in Code Section 881(c)(3)(A), (iv) such interest is not contingent
interest described in Code Section 871(h)(4), and (v) the non-U.S. Certificate
Owner does not bear certain relationships to any holder of the Exchangeable
Seller's Certificate other than the Seller or any holder of the Certificates
of any Series not properly characterized as debt. Applicable identification
requirements generally will be satisfied if there is delivered to a securities
clearing organization (i) IRS Form W-8 signed under penalties of perjury by
the Certificate Owner, stating that the Certificate Owner is not a U.S. person
and providing such Certificate Owner's name and address, (ii) IRS Form 1001,
signed by the Certificate Owner or such Certificate Owner's agent, claiming
exemption from withholding under an applicable tax treaty, or (iii) IRS Form
4224 signed by the Certificate Owner or such owner's agent, claiming exemption
from withholding of tax on income effectively connected with the conduct of a
trade or business in the United States; provided that in any such case (x) the
applicable form is delivered pursuant to applicable procedures and is properly
transmitted to the United States entity otherwise required to withhold tax and
(y) none of the entities receiving the form has actual knowledge that the
Certificate Owner is a U.S. person.
A Certificate Owner that is a nonresident alien or foreign corporation will
not be subject to U.S. Federal income tax on gain realized upon the sale,
exchange, or redemption of an Offered Certificate, provided that (i) such gain
is not effectively connected with the conduct of a trade or business in the
United States, (ii) in the case of a Certificate Owner that is an individual,
such Certificate Owner is not present in the United States for 183 days or
more during the taxable year in which such sale, exchange, or redemption
occurs, and (ii) in the case of gain representing accrued interest, the
conditions described in the immediately preceding paragraph are satisfied.
If the interests of the Certificate Owners of a Series were reclassified as
interests in a partnership (not taxable as a corporation), such
recharacterization could cause a Foreign Investor to be treated as engaged in
a trade or business in the United States. In such event the Certificate Owner
of such Series would be required to file a Federal income tax return and, in
general, would be subject to Federal income tax, including branch profits tax
in the case of a Certificate Owner that is a corporation, on its net income
from the partnership. Further, the partnership would be required, on a
quarterly basis, to pay withholding tax equal to the sum, for each foreign
partner, of such foreign partner's distributive share of "effectively
connected" income of the partnership multiplied by the highest rate of tax
applicable to that foreign partner. The tax withheld from each foreign partner
would be credited against such foreign partner's U.S. Federal income tax
liability.
If the Trust were taxable as a corporation, distributions to foreign
persons, to the extent treated as dividends, would generally be subject to
withholding at the rate of 30%, unless such rate were reduced by an applicable
tax treaty.
STATE AND LOCAL TAXATION
As a consequence of the issuance of a Collateral Interest or other interests
that could be issued by the Trust in the future, it is possible, as noted
above, that the Trust could be viewed as a partnership. If the arrangement
were treated as creating a partnership for Illinois state tax purposes, the
Trust could be subject to the Illinois personal property replacement tax with
respect to the portion of the Trust's taxable income, if any, apportioned to
Illinois. The imposition of any such tax on the Trust could reduce the amount
available for distribution to the Certificate Owners.
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Except as described above, the discussion herein does not address the tax
treatment of the Trust, the Certificates or the Certificate Owners under any
state, local or foreign tax laws. Prospective investors are urged to consult
their own tax advisers regarding the state and local tax treatment of the
Trust, and the tax consequences relating to the purchase, ownership and
disposition of the Certificates under any applicable state, local or foreign
tax law.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan from engaging in certain transactions
involving "plan assets" with persons that are "parties in interest" under
ERISA or "disqualified persons" under the Code with respect to the plan. ERISA
also imposes certain duties on persons who are fiduciaries of plans subject to
ERISA and prohibits certain transactions between a plan and parties in
interest with respect to such plans ("Prohibited Transactions"). Under ERISA,
any person who exercises any authority or control respecting the management or
disposition of the assets of a plan is considered to be a fiduciary of such
plan (subject to certain exceptions not here relevant). A violation of these
"Prohibited Transaction" rules may generate excise tax and other liabilities
under ERISA and the Code for such persons.
Benefit Plan fiduciaries must also determine whether the acquisition and
holding of the Certificates and the operations of the Trust would result in
direct or indirect Prohibited Transactions. The operations of the Trust
could result in Prohibited Transactions if Benefit Plans that purchase
Certificates are deemed to own an interest in the underlying assets of the
Trust. There may also be an improper delegation of the responsibility to
manage Benefit Plan assets if Benefit Plans that purchase Certificates are
deemed to own an interest in the underlying assets of the Trust.
Pursuant to a final regulation (the "Final Regulation") issued by the
Department of Labor ("DOL") concerning the definition of what constitutes the
"plan assets" of an employee benefit plan subject to ERISA or the Code, or an
individual retirement account ("IRA") (collectively referred to as "Benefit
Plans"), the assets and properties of certain entities in which a Benefit Plan
makes an equity investment could be deemed to be assets of the Benefit Plan in
certain circumstances. Accordingly, if Benefit Plans purchase Certificates,
the Trust could be deemed to hold plan assets unless one of the exceptions
under the Final Regulation is applicable to the Trust.
The Final Regulation only applies to the purchase by a Benefit Plan of an
"equity interest" in an entity. Assuming that interests in Certificates are
equity interests, the Final Regulation contains an exception that provides
that if a Benefit Plan acquires a "publicly-offered security," the issuer of
the security is not deemed to hold plan assets. A publicly-offered security is
a security that is (i) freely transferable, (ii) part of a class of securities
that is owned by 100 or more investors independent of the issuer and of one
another and (iii) either is (A) part of a class of securities registered under
section 12(b) or 12(g) of the Exchange Act or (B) sold to the plan as part of
an offering of securities to the public pursuant to an effective registration
statement under the Act and the class of securities of which such security is
a part is registered under the Exchange Act within 120 days (or such later
time as may be allowed by the Commission) after the end of the fiscal year of
the issuer during which the offering of such securities to the public
occurred. There are no restrictions imposed on the transfer of the
Certificates; and the Bank intends to cause the registration requirements to
be satisfied. Based on information provided by the Underwriters, the Bank will
notify the Trustee as to whether or not the Certificates of a Class will be
held by at least 100 separately named persons at the conclusion of the
offering. The Bank will not, however, determine whether the 100-investor
requirement of the exception for the publicly offered securities is satisfied
as to any Class of Certificates. For purposes of the publicly-offered security
exception, each Series or Class may be deemed to constitute a separate class
of securities. Accordingly, interests in the Certificates of a Class may not
be regarded as within the publicly-offered security exception unless interests
in the Certificates of such Class satisfy the requirements for such exception
independently of any other Series or Class. In addition, the Final Regulation
provides that if at all times more than 75% of the value of all classes of
equity interests are
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held by investors other than benefit plan investors (which is defined as
including plans subject to ERISA, government plans and IRA's), the investing
plan's assets will not include any of the underlying assets of the Trust.
Unless otherwise specified in the related Prospectus Supplement, it is
anticipated that interests in the Certificates will meet the criteria of
publicly-offered securities as set forth above: the underwriters of a Series
expect (although no assurances can be given) that interests in each Class of
Certificates offered hereby will be held by at least 100 independent investors
at the conclusion of the offering thereof; there are no restrictions imposed
on the transfer of interests in the Certificates; and interests in the
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Act and then will be timely registered under
the Exchange Act.
If interests in the Class A Certificates fail to meet the criteria of
publicly-offered securities and the Trust's assets are deemed to include
assets of Benefit Plans that are Certificateholders, transactions involving
the Trust and "parties in interest" or "disqualified persons" with respect to
such plans might be prohibited under Section 406 of ERISA and Section 4975 of
the Code unless an exemption is applicable. Thus, for example, if a
participant in any Benefit Plan is a cardholder of one of the Accounts, under
DOL interpretations the purchase of interests in Certificates by such plan
could constitute a prohibited transaction. In addition, the Seller or any
underwriter of a Series may be considered to be a party in interest,
disqualified person or fiduciary with respect to an investing Benefit Plan.
Accordingly, an investment by a Benefit Plan in Certificates may be a
prohibited transaction under ERISA and the Code unless such investment is
subject to a statutory or administrative exemption. There are four class
exemptions issued by the DOL that could apply in such event: DOL Prohibited
Transaction Exemption 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers), 91-38 (Class
Exemption for Certain Transactions Involving Bank Collective Investment
Funds), 90-1 (Class Exemption for Certain Transactions Involving Insurance
Company Pooled Separate Accounts) and 95-60 (Class Exemption for Certain
Transactions Involving Insurance Company General Accounts). There is no
assurance that these exemptions, even if all of the conditions specified
therein are satisfied, will apply to all transactions involving the Trust's
assets.
In light of the foregoing, fiduciaries of a Benefit Plan considering the
purchase of interests in Certificates should consult their own counsel as to
whether the assets of the Trust which are represented by such interests would
be considered plan assets, and whether, under the general fiduciary standards
of investment prudence and diversification, an investment in Certificates is
appropriate for the Benefit Plan taking into account the overall investment
policy of the Benefit Plan and the composition of the Benefit Plan's
investment portfolio. In addition, fiduciaries should consider the
consequences that would apply if the Trust's assets were considered plan
assets, the applicability of exemptive relief from the Prohibited Transaction
rules, and, whether all conditions for such exemptive relief would be
satisfied.
In particular, insurance companies considering the purchase of Certificates
of any Series should consult their own benefits or other appropriate counsel
with respect to the United States Supreme Court's decision in John Hancock
Mutual Life Insurance Co. v. Harris Trust & Savings Bank, 114 S. Ct. 517
(1993) ("John Hancock") and the applicability of DOL Prohibited Transaction
Exemption 95-60 ("PTE 95-60"). In John Hancock, the Supreme Court held that
assets held in an insurance company's general account may be deemed to be
"plan assets" under certain circumstances; however, PTE 95-60 may exempt some
or all of the transactions that could occur as the result of the acquisition
and holding of the Certificates of a Series by an insurance company general
account from the penalties normally associated with prohibited transactions.
Accordingly, investors should analyze whether John Hancock and PTE 95-60 or
any other exemption may have an impact with respect to their purchase of the
Certificates of any Series.
PLAN OF DISTRIBUTION
The Seller may sell Certificates (i) through underwriters or dealers; (ii)
directly to one or more purchasers; or (iii) through agents. The related
Prospectus Supplement in respect of a Series offered hereby sets forth the
61
<PAGE>
terms of the offering of such Certificates, including the name or names of any
underwriters, the purchase price of such Certificates and the proceeds to the
Seller from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial offering price and any discounts or
concessions allowed or reallowed or paid to dealers. Only underwriters so
named in such Prospectus Supplement shall be deemed to be underwriters in
connection with the Certificates offered thereby.
Subject to the terms and conditions set forth in an underwriting agreement
(an "Underwriting Agreement") to be entered into with respect to each Series
of Certificates, the Seller will agree to sell to each of the underwriters
named therein and in the related Prospectus Supplement, and each of such
underwriters will severally agree to purchase from the Seller, the principal
amount of Certificates set forth therein and in the related Prospectus
Supplement (subject to proportional adjustment on the terms and conditions set
forth in the related Underwriting Agreement in the event of an increase or
decrease in the aggregate amount of Certificates offered hereby and by the
related Prospectus Supplement).
In each Underwriting Agreement, the several underwriters will agree, subject
to the terms and conditions set forth therein, to purchase all the
Certificates offered hereby and by the related Prospectus Supplement if any of
such Certificates are purchased. In the event of a default by any underwriter,
each Underwriting Agreement will provide that, in certain circumstances,
purchase commitments of the nondefaulting underwriters may be increased or the
Underwriting Agreement may be terminated.
Each Underwriting Agreement will provide that the Seller will indemnify the
related underwriters against certain liabilities, including liabilities under
applicable securities laws, or contribute to payments the several underwriters
may be required to make in respect thereof.
The place and time of delivery for any Series of Certificates in respect of
which this Prospectus is delivered are set forth in the accompanying
Prospectus Supplement.
First Chicago Capital Markets, Inc. ("FCCM"), an affiliate of the Seller,
may from time to time act as agent or underwriter in connection with the sale
of Certificates to the extent permitted by applicable law. Any obligations of
FCCM are the sole obligations of FCCM and do not create any obligations on the
part of any affiliate of FCCM.
This Prospectus and related Prospectus Supplements may be used by FCCM in
connection with offers and sales related to secondary market transactions in
the Certificates. FCCM, to the extent permitted by law, may act as principal
or agent in such transactions. Such sales will be made at prices related to
prevailing market prices at the time of sale.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Bank by Sherman I. Goldberg, Esq., Executive Vice President, General
Counsel and Secretary of First Chicago NBD, and by Skadden, Arps, Slate,
Meagher & Flom, New York, New York, Tax Counsel, and for the Underwriters by
Skadden, Arps, Slate, Meagher & Flom, New York, New York.
62
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INDEX OF TERMS FOR PROSPECTUS
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Accounts................................................................. 3
Accumulation Period...................................................... 6
Act...................................................................... 2
Additional Accounts...................................................... 4
Adjustment Payment....................................................... 42
Aggregate Principal Receivables.......................................... 4
Agreement................................................................ 2
Amortization Period...................................................... 6
Automatic Additional Accounts............................................ 4, 37
Bank..................................................................... 1, 3
Bank's Portfolio......................................................... 23
Base Rate................................................................ 16
Benefit Plans............................................................ 60
Cash Collateral Account.................................................. 51
Cash Collateral Guaranty................................................. 51
Cede..................................................................... 2
Cedel.................................................................... 7, 30
Cedel Participants....................................................... 30
Certificate Owners....................................................... 2
Certificate Rate......................................................... 6
Certificateholders....................................................... 2
Certificates............................................................. 1, 3
Citibank................................................................. 29
Class.................................................................... 1, 3
Code..................................................................... 54
Collateral Interest...................................................... 51
Collection Account....................................................... 13
Commission............................................................... 2
Controlled Accumulation Amount........................................... 9
Controlled Accumulation Period........................................... 9
Controlled Amortization Amount........................................... 8
Controlled Amortization Period........................................... 8
Controlled Deposit Amount................................................ 9
Controlled Distribution Amount........................................... 8
Cooperative.............................................................. 31
Cut Off Date............................................................. 25
Defaulted Receivables.................................................... 42
Definitive Certificates.................................................. 31
Depositaries............................................................. 29
Depository............................................................... 28
Determination Date....................................................... 13
Disclosure Document...................................................... 5
Discount Percentage...................................................... 41
Distribution Date........................................................ 7
DOL...................................................................... 60
DTC...................................................................... 7
Due Period............................................................... 25
Eligible Account......................................................... 36
Eligible Additional Account.............................................. 37
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Eligible Institution.................................................... 38
Eligible Investments.................................................... 38
Eligible Receivable..................................................... 36
Enhancement............................................................. 3
Enhancement Provider.................................................... 50
ERISA................................................................... 13
Euroclear............................................................... 7, 31
Euroclear Operator...................................................... 31
Euroclear Participants.................................................. 31
Excess Finance Charge Collections....................................... 41
Excess Principal Collections............................................ 41
Exchange................................................................ 5
Exchange Act............................................................ 2
Exchangeable Seller's Certificate....................................... 5
FASIT................................................................... 58
FCSI.................................................................... 22
FCCM.................................................................... 1, 62
FDIA.................................................................... 53
FDIC.................................................................... 5
Final Regulation........................................................ 60
Finance Charge Receivables.............................................. 4
FIRREA.................................................................. 53
First Chicago NBD....................................................... 3
First Chicago Amount.................................................... 6
First Chicago Interest.................................................. 5
First Chicago Percentage................................................ 28, 40
Fixed Allocation Percentage............................................. 39
Floating Allocation Percentage.......................................... 39
FNBC.................................................................... 4
Foreign Investors....................................................... 58
Full Invested Amount.................................................... 12
Funding Period.......................................................... 11
Holders................................................................. 32
Indirect Participants................................................... 30
Interchange............................................................. 24
Interest Funding Account................................................ 32
Interest Period......................................................... 7
Invested Amount......................................................... 6
Invested Percentage..................................................... 6, 39
Investor Charge-Off..................................................... 42
Investor Default Amount................................................. 42
IRA..................................................................... 60
IRS..................................................................... 55
John Hancock............................................................ 61
Liquidation Event....................................................... 43
MasterCard International................................................ 22
Minimum Aggregate Principal Receivables................................. 25
Minimum First Chicago Interest Percentage............................... 25
Monthly Servicer Report................................................. 47
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Monthly Servicing Fee.................................................... 46
Morgan................................................................... 29
Offered Certificates..................................................... 13, 55
OID...................................................................... 56
Paired Series............................................................ 39
Participants............................................................. 29
Paying Agent............................................................. 30
Portfolio Yield.......................................................... 16
Preexisting Series....................................................... 15
Pre-Funding Account...................................................... 12
Pre-Funding Amount....................................................... 12, 38
Prepayable Instrument.................................................... 56
Principal Amortization Period............................................ 9
Principal Commencement Date.............................................. 8
Principal Funding Account................................................ 9
Principal Receivables.................................................... 4
Principal Terms.......................................................... 34
Prohibited Transactions.................................................. 60
Prospectus Supplement.................................................... 1
PTE 95-60................................................................ 61
Rapid Accumulation Period................................................ 10
Rapid Amortization Period................................................ 11
Rating Agency............................................................ 14
Receivables.............................................................. 1, 3
Record Date.............................................................. 28
Regulations.............................................................. 56
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Removed Accounts........................................................... 5
Reserve Account............................................................ 52
Revolving Period........................................................... 7
Scheduled Payment Date..................................................... 8
Seller..................................................................... 3
Senior Certificates........................................................ 6
Series..................................................................... 1, 3
Series Closing Date........................................................ 7
Series Termination Date.................................................... 9
Servicer................................................................... 13
Servicer Default........................................................... 47
Service Transfer........................................................... 46
Servicing Fee.............................................................. 46
Spread Account............................................................. 52
Subordinated Certificates.................................................. 6
Supplement................................................................. 5
Tax Counsel................................................................ 55
Terms and Conditions....................................................... 31
Transfer Date.............................................................. 9
Transfer Deposit Amount.................................................... 17
Trust...................................................................... 1, 3
Trustee.................................................................... 3
UCC........................................................................ 15
Unallocated Principal Collections.......................................... 41
Underwriting Agreement..................................................... 62
VISA....................................................................... 22
</TABLE>
64
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Certificates
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold such Global Securities through any of DTC,
Cedel or Euroclear. The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with
conventional eurobond practice.
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
participants holding Global Securities will be effected on a delivery-against-
payment basis through Citibank and Morgan as the respective depositaries of
Cedel and Euroclear and as participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S. withholding
taxes, provided that such holders meet certain requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or
their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
depositaries, Citibank and Morgan, which in turn will hold such positions in
accounts as participants of DTC.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to conventional asset-backed securities.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
participants will be settled using the procedures applicable to conventional
asset-backed securities.
A-1
<PAGE>
TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Participants and/or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
TRADING BETWEEN DTC SELLER AND CEDEL OR EUROCLEAR PURCHASER. When Global
Securities are to be transferred from the account of a DTC participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a participant at least one
business day prior to settlement. Cedel or Euroclear will instruct Citibank or
Morgan, respectively, as the case may be, to receive the Global Securities
against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding
the settlement date. Payment will then be made by Citibank or Morgan to the
DTC participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear Participant's
account. The Global Securities credit will appear the next day (European time)
and the cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debit
will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they
would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, participants can elect not to preposition funds and allow that credit
line to be drawn upon to finance settlement. Under this procedure, Cedel
Participants or Euroclear Participants purchasing Global Securities would
incur overdraft charges for one day, assuming they cleared the overdraft when
the Global Securities were credited to their accounts. However, interest on
the Global Securities would accrue from the value date. Therefore, in many
cases the investment income on the Global Securities earned during that one-
day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each participant's particular
cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Global Securities
to Citibank or Morgan for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently than a trade between two DTC participants.
TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time
zone differences in their favor, Cedel and Euroclear Participants may employ
their customary procedures for transactions in which Global Securities are to
be transferred by the respective clearing system, through Citibank or Morgan,
to a DTC participant. The seller will send instructions to Cedel or Euroclear
through a participant at least one business day prior to settlement. In these
cases, Cedel or Euroclear will instruct Citibank or Morgan, as appropriate, to
deliver the Global Securities to the DTC participant's account against
payment. Payment will include interest accrued on the Global Securities from
and including the last coupon payment date to and excluding the settlement
date. The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and receipt of the
cash proceeds in the Cedel or Euroclear Participant's account would be back-
valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Cedel or Euroclear Participant have a line
of credit with its respective clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the back-
valuation will extinguish any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the Cedel or Euroclear
Participant's account would instead be valued as of the actual settlement
date.
A-2
<PAGE>
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(1) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(2) borrowing the Global Securities in the U.S. from a DTC participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(3) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A holder of Global Securities holding securities through Cedel or Euroclear
(or through DTC if the holder has an address outside the U.S.) will be subject
to the 30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. persons,
unless such holder takes one of the following steps to obtain an exemption or
reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Non-U.S. persons that are
beneficial owners can obtain a complete exemption from the withholding tax by
filing a signed Form W-8 (Certificate of Foreign Status).
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. persons that are beneficial owners residing in a country
that has a tax treaty with the United States can obtain an exemption or
reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless
the filer alternatively files Form W-8. Form 1001 may be filed by the
beneficial owner or his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Request for Taxpayer
Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Global Securities holder,
or in the case of a Form 1001 or a Form 4224 filer, his agent, files by
submitting the appropriate form to the person through whom he holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
This summary does not deal with all aspects of foreign income tax
withholding that may be relevant to foreign holders of these Global
Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of these Global
Securities.
A-3
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder
other than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee....................................................... $345
Printing and Engraving................................................. *
Trustee's Fees......................................................... *
Legal Fees and Expenses................................................ *
Blue Sky Fees and Expenses............................................. *
Accountants' Fees and Expenses......................................... *
Rating Agency Fees..................................................... *
Miscellaneous Fees..................................................... *
----
Total................................................................ $ *
====
</TABLE>
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* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Ninth of the Articles of Association of FCC National Bank (the
"Registrant") provides for indemnification of the directors, officers and
employees of the Registrant, or persons serving at the request of the
Registrant as a director, officer, employee or agent of another corporation or
other business entity, to the full extent permitted by the General Corporation
Law of Delaware, as such laws exist or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Registrant to provide broader indemnification rights than said law permitted
by the Registrant prior to such amendment). This indemnification applies to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative.
Notwithstanding the foregoing, the Registrant may indemnify any of the
foregoing persons to the fullest extent permitted under the statutes
applicable to national banking associations and the rules, regulations and
interpretations promulgated thereunder by the primary regulator of national
banking associations in each case now or hereafter in effect.
Indemnification may include all expenses (including attorney's fees,
judgments, fines, penalties and amounts paid in settlement) actually and
reasonably incurred by such indemnified person. However, the Registrant is not
authorized to indemnify against expenses, penalties, or other payments
incurred in an administrative proceeding or action instituted by a bank
regulatory agency which proceeding or action results in a final order against
such person assessing civil money penalties or requiring payments to the
Registrant. The Registrant is authorized to advance expenses upon receipt of
an undertaking by or on behalf of such director, officer or employee to repay
the same if it shall ultimately be determined that he is not entitled to be
indemnified.
The rights of indemnification and advancement of expenses provided by the
Articles of Association of the Registrant are not exclusive of any other
rights to which a person seeking indemnification or advancement of expenses
may be entitled under any statute, by-law, agreement, vote of stockholders or
disinterested directors or otherwise. The Registrant also insures its officers
and directors.
Section 145 of the General Corporation Law of Delaware contains detailed
provisions on indemnification of directors and officers against expenses,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred in connection with litigation.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
<TABLE>
<C> <S>
1.1 --Underwriting Agreement.(1)
4.1 --Pooling and Servicing Agreement between FCC National Bank and the
Trustee, including certain exhibits thereto.(1)
4.2 --Supplement to Pooling and Servicing Agreement relating to the Series
1990-A Certificates between FCC National Bank and the Trustee.(1)
4.3 --Supplement to Pooling and Servicing Agreement relating to the Series
1990-B Certificates between FCC National Bank and the Trustee.(2)
4.4 --Supplement to Pooling and Servicing Agreement relating to the Series
1990-C Certificates between FCC National Bank and the Trustee.(3)
4.5 --Supplement to Pooling and Servicing Agreement relating to the Series
1991-D Certificates between FCC National Bank and the Trustee.(4)
4.6 --Supplement to Pooling and Servicing Agreement relating to the Series
1992-E Certificates between FCC National Bank and the Trustee.(5)
4.7 --Supplement to Pooling and Servicing Agreement relating to the Series
1993-F Certificates between FCC National Bank and the Trustee.(6)
4.8 --Supplement to Pooling and Servicing Agreement relating to the Series
1993-G Certificates between FCC National Bank and the Trustee.(6)
4.9 --Supplement to Pooling and Servicing Agreement relating to the Series
1993-H Certificates between FCC National Bank and the Trustee.(7)
4.10 --Supplement to Pooling and Servicing Agreement relating to the Series
1994-I Certificates between FCC National Bank and the Trustee.(8)
4.11 --Supplement to Pooling and Servicing Agreement relating to the Series
1994-J Certificates between FCC National Bank and the Trustee.(8)
4.12 --Supplement to Pooling and Servicing Agreement relating to the Series
1994-K Certificates between FCC National Bank and the Trustee.(9)
4.13 --Supplement to Pooling and Servicing Agreement relating to the Series
1995-L Certificates between FCC National Bank and the Trustee.(9)
4.14 --Supplement to Pooling and Servicing Agreement relating to the Series
1995-M Certificates between FCC National Bank and the Trustee.(10)
4.15 --Supplement to Pooling and Servicing Agreement relating to the Series
1995-N Certificates between FCC National Bank and the Trustee.(10)
4.16 --Supplement to Pooling and Servicing Agreement relating to the Series
1995-O Certificates between FCC National Bank and the Trustee.(11)
4.17 --Supplement to Pooling and Servicing Agreement relating to the Series
1995-P Certificates between FCC National Bank and the Trustee.(11)
4.18 --Amendments to Pooling and Servicing Agreement and Series Supplements
between FCC National Bank and the Trustee.(12)
4.19 --1995 Amendment to Pooling and Servicing Agreement between FCC National
Bank and Trustee.(13)
4.20 --Form of Series Supplement.
4.21 --Form of Prospectus Supplement.
5.1 --Form of opinion of counsel of FCC National Bank.
8.1 --Opinion of special tax counsel to FCC National Bank.*
23.1 --Consent of counsel of FCC National Bank is included in opinion filed
as Exhibit 5.1.
23.2 --Consent of special tax counsel to FCC National Bank is included in
opinion filed as Exhibit 8.1.
24.1 --Power of Attorney.
</TABLE>
- --------
(1) Incorporated herein by reference to Registration Statement No. 33-35084
of FCC National Bank.
(2) Incorporated herein by reference to Registration Statement No. 33-36078
of FCC National Bank.
II-2
<PAGE>
(3) Incorporated herein by reference to Registration Statement No. 33-37021
of FCC National Bank.
(4) Incorporated herein by reference to Registration Statement No. 33-40126
of FCC National Bank.
(5) Incorporated herein by reference to Registration Statement No. 33-40135
of FCC National Bank.
(6) Incorporated herein by reference to Registration Statement No. 33-61950
of FCC National Bank.
(7) Incorporated herein by reference to Registration Statement No. 33-67056
of FCC National Bank.
(8) Incorporated herein by reference to Registration Statement No. 33-78032
of FCC National Bank.
(9) Incorporated herein by reference to Registration Statement No. 33-82466
of FCC National Bank.
(10) Incorporated herein by reference to Registration Statement No. 33-84880
of FCC National Bank.
(11) Incorporated herein by reference to Registration Statement No. 33-92358
of FCC National Bank.
(12) Incorporated herein by reference to the Current Report on Form 8-K dated
June 18, 1992 of FCC National Bank.
(13) Incorporated herein by reference to the Current Report on Form 8-K dated
May 5, 1995 of FCC National Bank.
* To be filed by amendment.
(b) Financial Statements
All financial statements, schedules and historical financial information
have been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement; (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (iii) to include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that (a)(i) and (a)(ii) will not
apply if the information required to be included in a post-effective
amendment thereby is contained in periodic reports filed pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(e) To provide to the underwriters at the closing specified in the
underwriting agreements certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.
II-3
<PAGE>
(f) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(g) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(i) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.
(h) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO, STATE OF ILLINOIS, ON APRIL 9, 1996.
FCC National Bank,
as originator of the Trust and
registrant
/s/ Sharon A. Renchof
By: _________________________________
SHARON A. RENCHOF ATTORNEY-IN-FACT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON APRIL 9, 1996 BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED.
SIGNATURE TITLE
/s/ Frederick M. Adams, Jr. Director
- -------------------------------------
(FREDERICK M. ADAMS, JR.)
/s/ S. Faye Dadzie Director
- -------------------------------------
(S. FAYE DADZIE)
/s/ Joseph M. Dudzinsky Director
- -------------------------------------
(JOSEPH M. DUDZINSKY)
Director
- -------------------------------------
(RICHARD P. ECKMAN)
/s/ William J. Garner Director
- -------------------------------------
(WILLIAM J. GARNER)
/s/ Michael J. Majchrzak Director
- -------------------------------------
(MICHAEL J. MAJCHRZAK)
/s/ Scott P. Marks, Jr. Director and
- ------------------------------------- Principal Executive
(SCOTT P. MARKS, JR.) Officer
II-5
<PAGE>
SIGNATURE TITLE
/s/ Anthony K. Metta Director
- -------------------------------------
(ANTHONY K. METTA)
/s/ Ralph R. Mueller Director
- -------------------------------------
(RALPH R. MUELLER)
/s/ Peter J. Nowak, Jr. Director, Principal
- ------------------------------------- Financial Officer
(PETER J. NOWAK, JR.) and Principal
Accounting Officer
/s/ Jeremiah P. Shea Director
- -------------------------------------
(JEREMIAH P. SHEA)
- --------
* The undersigned, by signing his name hereto, does hereby sign this
Registration Statement on behalf of each of the above-indicated officers and
directors of the registrant pursuant to the power of attorney signed by such
officers and directors.
/s/ Sharon A. Renchof
By: _________________________________
SHARON A. RENCHOF ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBITS INDEX
<TABLE>
<CAPTION>
SEQUENTIAL PAGE
EXHIBIT NO. DESCRIPTION OF EXHIBIT NUMBER
----------- ---------------------- ---------------
<C> <S> <C>
1.1 --Underwriting Agreement.(1)
4.1 --Pooling and Servicing Agreement between FCC
National Bank and the Trustee, including
certain exhibits thereto.(1)
4.2 --Supplement to Pooling and Servicing Agreement
relating to the Series 1990-A Certificates
between FCC National Bank and the Trustee.(1)
4.3 --Supplement to Pooling and Servicing Agreement
relating to the Series 1990-B Certificates
between FCC National Bank and the Trustee.(2)
4.4 --Supplement to Pooling and Servicing Agreement
relating to the Series 1990-C Certificates
between FCC National Bank and the Trustee.(3)
4.5 --Supplement to Pooling and Servicing Agreement
relating to the Series 1991-D Certificates
between FCC National Bank and the Trustee.(4)
4.6 --Supplement to Pooling and Servicing Agreement
relating to the Series 1992-E Certificates
between FCC National Bank and the Trustee.(5)
4.7 --Supplement to Pooling and Servicing Agreement
relating to the Series 1993-F Certificates
between FCC National Bank and the Trustee.(6)
4.8 --Supplement to Pooling and Servicing Agreement
relating to the Series 1993-G Certificates
between FCC National Bank and the Trustee.(6)
4.9 --Supplement to Pooling and Servicing Agreement
relating to the Series 1993-H Certificates
between FCC National Bank and the Trustee.(7)
4.10 --Supplement to Pooling and Servicing Agreement
relating to the Series 1994-I Certificates
between FCC National Bank and the Trustee.(8)
4.11 --Supplement to Pooling and Servicing Agreement
relating to the Series 1994-J Certificates
between FCC National Bank and the Trustee.(8)
4.12 --Supplement to Pooling and Servicing Agreement
relating to the Series 1994-K Certificates
between FCC National Bank and the Trustee.(9)
4.13 --Supplement to Pooling and Servicing Agreement
relating to the Series 1995-L Certificates
between FCC National Bank and the Trustee.(9)
4.14 --Supplement to Pooling and Servicing Agreement
relating to the Series 1995-M Certificates
between FCC National Bank and the Trustee.(10)
4.15 --Supplement to Pooling and Servicing Agreement
relating to the Series 1995-N Certificates
between FCC National Bank and the Trustee.(10)
4.16 --Supplement to Pooling and Servicing Agreement
relating to the Series 1995-O Certificates
between FCC National Bank and the Trustee.(11)
4.17 --Supplement to Pooling and Servicing Agreement
relating to the Series 1995-P Certificates
between FCC National Bank and the Trustee.(11)
4.18 --Amendments to Pooling and Servicing Agreement
and Series Supplements between FCC National
Bank and the Trustee.(12)
4.19 --1995 Amendment to Pooling and Servicing
Agreement between FCC National Bank and
Trustee.(13)
4.20 --Form of Series Supplement.
4.21 --Form of Prospectus Supplement.
5.1 --Form of opinion of counsel of FCC National
Bank.
8.1 --Opinion of special tax counsel to FCC National
Bank.*
23.1 --Consent of counsel of FCC National Bank is
included in opinion filed as Exhibit 5.1.
23.2 --Consent of special tax counsel to FCC National
Bank is included in opinion filed as Exhibit
8.1.
24.1 --Power of Attorney.
</TABLE>
- --------
(1) Incorporated herein by reference to Registration Statement No. 33-35084 of
FCC National Bank.
(2) Incorporated herein by reference to Registration Statement No. 33-36078 of
FCC National Bank.
<PAGE>
(3) Incorporated herein by reference to Registration Statement No. 33-37021 of
FCC National Bank.
(4) Incorporated herein by reference to Registration Statement No. 33-40126 of
FCC National Bank.
(5) Incorporated herein by reference to Registration Statement No. 33-40135 of
FCC National Bank.
(6) Incorporated herein by reference to Registration Statement No. 33-61950 of
FCC National Bank.
(7) Incorporated herein by reference to Registration Statement No. 33-67056 of
FCC National Bank.
(8) Incorporated herein by reference to Registration Statement No. 33-78032 of
FCC National Bank.
(9) Incorporated herein by reference to Registration Statement No. 33-82466 of
FCC National Bank.
(10) Incorporated herein by reference to Registration Statement No. 33-84880 of
FCC National Bank.
(11) Incorporated herein by reference to Registration Statement No. 33-92358 of
FCC National Bank.
(12) Incorporated herein by reference to the Current Report on Form 8-K dated
June 18, 1992 of FCC National Bank.
(13) Incorporated herein by reference to the Current Report on Form 8-K dated
May 5, 1995 of FCC National Bank.
* To be filed by amendment.
<PAGE>
EXHIBIT 4.20
FCC NATIONAL BANK,
Seller and Servicer
and
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
Trustee
on behalf of the Certificateholders
SERIES 1996- SUPPLEMENT
Dated as of _____ __, 1996
to
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1990
$___________
FIRST CHICAGO MASTER TRUST II
SERIES 1996-
<PAGE>
SERIES 1996- SUPPLEMENT dated as of _____ __, 1996 (this "Series
Supplement") between FCC NATIONAL BANK, a national bank, as Seller and Servicer,
and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a banking association
organized and existing under the laws of the United States of America (together
with its successors in trust thereunder as provided in the Agreement referred to
below, the "Trustee"), as trustee under the Pooling and Servicing Agreement
dated as of June 1, 1990 (as amended and supplemented, the "Agreement").
PRELIMINARY STATEMENT
Section 6.09 of the Agreement provides, among other things, that the
Seller 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 Seller for execution and redelivery to the Trustee for
authentication one or more Series of Certificates. The Seller has tendered the
Exchange Notice required by subsection 6.09(b) of the Agreement and hereby
enters into this Series Supplement with the Trustee as required by subsection
6.09(c) of the Agreement to provide for the issuance of the Investor
Certificates of Series 1996-_ (the "Series 1996-_ Certificates"). In the event
that any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the Agreement, the terms
and provisions of this Series Supplement shall govern.
All capitalized terms not otherwise defined herein are defined in the
Agreement. All Article, Section or subsection references herein shall mean
Article, Section or subsections of the Agreement, except as otherwise provided
herein. Unless otherwise stated herein, as the context otherwise requires or if
such term is otherwise defined in the Agreement, each capitalized term used or
defined herein shall relate only to the Series 1996-_ Certificates and no other
Series of investor certificates issued by the Trust.
SECTION 1. Designation. The Series 1996-_ Certificates shall be
-----------
issued in two classes to be designated generally as the Floating Rate Asset
Backed Certificates Series 1996-_ (to be defined herein as the Class A
Certificates) and the Collateral Interest Series 1996-_ (to be defined herein as
the Collateral Interest). Each
<PAGE>
of the Class A Certificates and the Collateral Interest shall constitute a Class
of Investor Certificates; provided, however, that the Collateral Interest shall
-------- -------
be issued in uncertificated form and the provisions of Article VI and Article
XII of the Agreement relating to the registration, authentication, delivery,
presentation, cancellation and surrender of Registered Certificates shall not be
applicable thereto. In addition, solely for purposes of subsection 9.02(a) of
the Agreement, holders of interests in the Cash Collateral Account (other than
the Seller) shall be deemed to be a Class of Investor Certificates.
SECTION 2. Definitions. The following words and phrases shall have
-----------
the following meaning with respect to the Series 1996-_ Certificates and the
definitions of such terms are applicable to the singular as well as the plural
form of such terms and to the masculine as well as the feminine and neuter
genders of such terms:
"Adjusted Available Cash Collateral Amount" shall mean, with respect
-----------------------------------------
to any Distribution Date, the Available Cash Collateral Amount for such
Distribution Date after giving effect to all withdrawals therefrom for such
Distribution Date pursuant to Section 4.06 of the Agreement.
"Amortization Period" shall mean, with respect to the Series 1996-_
-------------------
Certificates, and provided that a Rapid Amortization Period shall not have
commenced, a period commencing on the Controlled Amortization Date, and
continuing to the earlier of (x) but not including, the first day of the Due
Period in which a Liquidation Event is deemed to have occurred, (y) and
including, the date on which the Invested Amount is paid in full, or (z) the
Series Termination Date.
"Available Funds" shall have the meaning specified in Section 4.06 of
---------------
the Agreement.
"Available Cash Collateral Amount" shall mean, with respect to any
--------------------------------
Distribution Date, the amount on deposit in the Cash Collateral Account after
giving effect to all deposits therein and withdrawals therefrom with respect to
the immediately preceding Distribution Date, but before giving effect to any
deposits therein or withdrawals therefrom with respect to the related
Distribution Date.
3
<PAGE>
"Available Enhancement Amount" shall mean, with respect to any
----------------------------
Distribution Date, the sum of (a) the Collateral Invested Amount on the related
Determination Date and (b) the Available Cash Collateral Amount.
"Base Rate" shall mean, with respect to any Interest Period, the
---------
annualized percentage equivalent of a fraction, the numerator of which is the
sum of (i) the Class A Monthly Interest, (ii) the Collateral Monthly Interest
and (iii) one-twelfth of the product of ____% and the Invested Amount for such
Interest Period, and the denominator of which is the Invested Amount for such
Interest Period.
"Cash Collateral Account" shall have the meaning specified in Section
-----------------------
4.11 of the Agreement.
"Cash Collateral Account Surplus" shall mean, upon the occurrence of a
-------------------------------
Conversion Deposit and after the reduction of the Collateral Invested Amount to
zero, the excess of the amount on deposit in the Cash Collateral Account over
the Required Cash Collateral Account.
"Class A Additional Interest" shall have the meaning specified in
---------------------------
Section 4.04 of the Agreement.
"Class A Available Funds" shall mean, with respect to any Due Period,
-----------------------
an amount equal to the Class A Floating Percentage of the Floating Allocation
Percentage of Collections of Finance Charge Receivables (including any amounts
that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement).
"Class A Available Principal Collections" shall mean, with respect to
---------------------------------------
any Distribution Date, the sum of (a) the Class A Principal Percentage of the
Invested Percentage of Collections of Principal Receivables, (b) the amount, if
any, of Unallocated Principal Collections on deposit in the Collection Account
allocated to the Series 1996-_ Certificates pursuant to subsection 4.01(f) of
the Agreement, (c) Excess Principal Collections allocated to the Series 1996-_
Certificates pursuant to subsection 4.05(c) of the Agreement and (d) any other
amounts which are to be treated as Class A Available Principal Collections in
accordance with the provisions hereof (including, but not limited to, amounts
allocable pursuant to subsections 4.07(a)(iii), 4.07(d)(ii), 4.07(f)(ii),
4.07(g) and 4.09(b)).
4
<PAGE>
"Class A Certificate" shall mean any one of the Certificates executed
-------------------
by the Seller and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A hereto.
---------
"Class A Certificate Rate" shall mean for the period from the Closing
------------------------
Date through, and including ____ __, 1996, ______% per annum, and for each
Interest Period thereafter, a per annum rate of ____% in excess of LIBOR
determined on the related LIBOR Determination Date, calculated on the basis of
actual days elapsed and a 360-day year.
"Class A Certificateholder" shall mean the Holder of record of a Class
-------------------------
A Certificate.
"Class A Covered Amount" shall have the meaning specified in
----------------------
subsection 4.06(a) of the Agreement.
"Class A Expected Final Distribution Date" shall mean the ________
----------------------------------------
____ Distribution Date.
"Class A Floating Percentage" shall mean, with respect to any
---------------------------
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Class A Invested
Amount for such Distribution Date and the denominator of which is the Invested
Amount for such Distribution Date.
"Class A Initial Invested Amount" shall mean $___________.
-------------------------------
"Class A Interest Shortfall Amount" shall have the meaning specified
---------------------------------
in Section 4.04 of the Agreement.
"Class A Invested Amount" shall mean, on any date of determination, an
-----------------------
amount equal to (a) the Class A Initial Invested Amount, minus (b) the aggregate
-----
amount of principal payments made to the Class A Certificateholders prior to
such date, minus (c) the excess, if any, of the aggregate amount of Class A
-----
Investor Charge-Offs for all prior Distribution Dates over the aggregate amount
of Class A Investor Charge-Offs reimbursed pursuant to Section 4.09 of the
Agreement prior to such date.
"Class A Investor Charge-Offs" shall have the meaning specified in
----------------------------
Section 4.08 of the Agreement.
5
<PAGE>
"Class A Investor Default Amount" shall mean, with respect to each
-------------------------------
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for such Distribution Date and (ii) the Class A Floating Percentage for
such Distribution Date.
"Class A Monthly Interest" shall have the meaning specified in Section
------------------------
4.04 of the Agreement.
"Class A Monthly Principal" shall have the meaning specified in
-------------------------
Section 4.05 of the Agreement.
"Class A Principal Percentage" shall mean, with respect to any
----------------------------
Distribution Date (i) relating to the Revolving Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Class A Invested Amount for such Distribution Date,
and the denominator of which is the Invested Amount for such Distribution Date
and (ii) relating to the Amortization Period or the Rapid Amortization Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class A Invested Amount as of the end of
the day on the last Distribution Date relating to the Revolving Period, and the
denominator of which is the Invested Amount as of such day.
"Class A Required Amount" shall have the meaning specified in Section
-----------------------
4.06 of the Agreement.
"Closing Date" shall mean ____ __, 1996.
------------
"Collateral Additional Interest" shall have the meaning specified in
------------------------------
Section 4.04 of the Agreement.
"Collateral Available Funds" shall mean, with respect to any Due
--------------------------
Period, an amount equal to the Collateral Floating Percentage of the Floating
Allocation Percentage of Collections of Finance Charge Receivables (including
any amounts that are to be treated as Collections of Finance Charge Receivables
in accordance with the Agreement).
"Collateral Default Amount" shall mean, with respect to each
-------------------------
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for such Distribution Date and (ii) the Collateral Floating Percentage
for such Distribution Date.
6
<PAGE>
"Collateral Floating Percentage" shall mean, with respect to any
------------------------------
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Invested
Amount for such Distribution Date, and the denominator of which is the Invested
Amount for such Distribution Date.
"Collateral Initial Invested Amount" shall mean $__________.
----------------------------------
"Collateral Invested Amount" shall mean, for any date of
--------------------------
determination, an amount equal to (a) the Collateral Initial Invested Amount,
minus (b) an amount equal to the amount by which the Collateral Invested Amount
- -----
has been reduced on all prior Distribution Dates pursuant to Section 4.08 of the
Agreement, minus (c) the aggregate amount of Collateral Monthly Principal
-----
applied in accordance with the Loan Agreement pursuant to Section 4.07 of the
Agreement or deposited into the Cash Collateral Account pursuant to subsection
4.11(e) of the Agreement prior to such date; provided, however, that the
-------- -------
Collateral Invested Amount may not be reduced below zero.
"Collateral Interest" shall mean a fractional undivided interest in
-------------------
the Trust which shall consist of the right to receive, to the extent necessary
to make the required payments to the Loan Interest Holder under this Supplement,
the portion of Collections allocable thereto under the Agreement and funds on
deposit in the Collection Account allocable thereto pursuant to the Agreement.
"Collateral Interest Holder" shall mean the entity so designated in
--------------------------
the Loan Agreement.
"Collateral Interest Shortfall Amount" shall have the meaning
------------------------------------
specified in Section 4.04 of the Agreement.
"Collateral Monthly Interest" shall have the meaning specified in
---------------------------
Section 4.04 of the Agreement.
"Collateral Monthly Principal" shall have the meaning specified in
----------------------------
Section 4.05 of the Agreement.
7
<PAGE>
"Collateral Principal Collections" shall mean, with respect to any Due
--------------------------------
Period, the Collateral Principal Percentage of the Invested Percentage of
Collections of Principal Receivables plus any other amounts which are to be
----
treated as Collateral Principal Collections in accordance with the provisions
hereof minus the amount of Reallocated Principal Collections with respect to
-----
such Due Period.
"Collateral Principal Percentage" shall mean, with respect to any
-------------------------------
Distribution Date (i) relating to the Revolving Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Collateral Invested Amount for such Distribution Date,
and the denominator of which is the Invested Amount for such Distribution Date
and (ii) relating to the Amortization Period or the Rapid Amortization Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Collateral Invested Amount as of the end
of the day on the last Distribution Date relating to the Revolving Period.
"Collateral Rate" shall mean the rate designated as such in the Loan
---------------
Agreement.
"Controlled Amortization Amount" shall mean one-twelfth of the Class A
------------------------------
Initial Invested Amount.
"Controlled Amortization Date" shall mean the first day of the
----------------------------
________ ____ Due Period.
"Controlled Amount" shall mean, with respect to any Distribution Date
-----------------
relating to the Amortization Period, an amount equal to the sum of the
Controlled Amortization Amount and any existing Deficit Controlled Amortization
Amount.
"Conversion Deposit" shall have the meaning specified in subsection
------------------
4.11(e) of the Agreement.
"Conversion Event" shall mean any event that the Seller, in its sole
----------------
discretion, shall determine makes it advisable that the Collateral Invested
Amount no longer be Enhancement.
"Deficit Controlled Amortization Amount" shall mean, on the first
--------------------------------------
Distribution Date with respect to the Amortization Period, the excess, if any,
of the Con-
8
<PAGE>
trolled Amortization Amount over the amount distributed from the Collection
Account as Class A Monthly Principal for such Distribution Date and, on each
subsequent Distribution Date with respect to the Amortization Period, the
excess, if any, of the Controlled Amount over the Class A Monthly Principal
distributed from the Collection Account to the Class A Certificateholders on
such Distribution Date.
"Eligible Institution" shall have the meaning specified in Section
--------------------
1.01 of the Agreement, except that the reference therein to "First Chicago"
shall instead be to "the Servicer."
"Enhancement" shall mean the Cash Collateral Account and the
-----------
Collateral Invested Amount.
"Enhancement Provider" shall mean the Collateral Interest Holder.
--------------------
"Enhancement Surplus" shall mean, with respect to any Distribution
-------------------
Date, the amount by which the Collateral Invested Amount may be reduced on such
Distribution Date so that the sum of (i) the Adjusted Available Cash Collateral
Amount (after giving effect to any deposits pursuant to subsection 4.09(f) for
such Distribution Date), (ii) the Collateral Invested Amount (after giving
effect to any reductions thereof on such Distribution Date pursuant to Section
4.08 of the Agreement) as reduced by such Enhancement Surplus and (iii) the
Optional Deposit for such Distribution Date, if any, equals the Required
Enhancement Amount (computed as if the Collateral Invested Amount was reduced by
such Enhancement Surplus and subject to the proviso contained in the definition
of Required Enhancement Amount).
Algebraically, if the Required Enhancement Amount for the Distribution
Date is computed pursuant to clause (i) of the definition thereof, the
Enhancement Surplus shall be represented as:
.___ (AIA + (CIA-X)) = ACCA + (CIA-X)
where,
X = the Enhancement Surplus;
AIA = the Class A Invested Amount at the end of such Distribution Date;
9
<PAGE>
ACCA = the Adjusted Available Cash Collateral Amount (after giving
effect to any deposit pursuant to subsection 4.09(f) or Optional
Deposit on such Distribution Date); and
CIA = the Collateral Invested Amount on such Distribution Date (after
giving effect to any reductions thereof pursuant to Section
4.08).
Algebraically, if the Required Enhancement Amount for the Distribution
Date is computed pursuant to clause (ii) of the definition thereof, the
Enhancement Surplus shall be represented as:
$_________ + 2($_________ - ACCA) = ACCA + (CIA-X)
where,
X = the Enhancement Surplus;
ACCA = the Adjusted Available Cash Collateral Amount (after giving
effect to any deposit pursuant to Section 4.09(f) or Optional
Deposit on such Distribution Date); and
CIA = the Collateral Invested Amount on such Distribution Date (after
giving effect to any reductions thereof pursuant to Section
4.08).
"Excess Finance Charge Collections" shall have the meaning specified
---------------------------------
in subsection 4.04(c) of the Agreement.
"Excess Principal Collections" shall have the meaning specified in
----------------------------
subsection 4.05(c) of the Agreement.
"Excess Spread" shall mean, with respect to any Distribution Date, the
-------------
sum of the amounts, if any, specified in subsections 4.07(a)(iv) and 4.07(b).
"Fixed Allocation Percentage" shall mean, with respect to any
---------------------------
Distribution Date relating to the Amortization Period or any Rapid Amortization
Period, the percentage equivalent of a fraction, the numerator of which is the
Invested Amount as of the end of the day on the last Distribution Date relating
to the Revolving Period and the denominator of which is the greater of (a)
10
<PAGE>
Aggregate Principal Receivables for the Due Period related to the current
Distribution Date and (b) the sum of the numerators used to calculate the
Invested Percentages with respect to Principal Receivables for all Series of
investor certificates outstanding for the current Distribution Date.
"Floating Allocation Percentage" shall mean, with respect to any
------------------------------
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Invested Amount for such Distribution Date, and the denominator of
which is Aggregate Principal Receivables for the Due Period related to such
Distribution Date.
"Initial Invested Amount" shall mean the sum of the Class A Initial
-----------------------
Invested Amount and the Collateral Initial Invested Amount.
"Interchange" shall mean the interchange fees payable to the Seller,
-----------
in its capacity as credit card issuer, through VISA USA, Inc. and MasterCard
International Incorporated in connection with cardholder charges for goods and
services.
"Interchange Amount" shall mean, for any Distribution Date, the amount
------------------
of Interchange paid or payable to the Seller with respect to the second calendar
month preceding the month in which the Distribution Date occurs multiplied by a
fraction the numerator of which is the aggregate amount of cardholder sales
charges for goods and services in the Accounts with respect to the second
preceding Due Period and the denominator of which is the aggregate amount of
cardholder charges for goods and services in all the "MasterCard" and "VISA"
consumer revolving credit card accounts of the Seller with respect to such
second preceding Due Period.
"Interchange Monthly Servicing Fee" shall have the meaning specified
---------------------------------
in subsection 4.12(b) of the Agreement.
"Interest Period" shall mean, with respect to any Distribution Date,
---------------
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.
11
<PAGE>
"Invested Amount" shall mean, with respect to any date of
---------------
determination, an amount equal to the sum of (a) the Class A Invested Amount and
(b) the Collateral Invested Amount.
"Invested Percentage" shall mean, on any date of determination with
-------------------
respect to any Distribution Date: (a) when used with respect to Principal
Receivables during the Amortization Period or a Rapid Amortization Period, the
Fixed Allocation Percentage; and (b) when used with respect to Principal
Receivables during the Revolving Period and Finance Charge Receivables and
Defaulted Receivables at any time, the Floating Allocation Percentage.
"Investor Default Amount" shall mean, with respect to each
-----------------------
Distribution Date, an amount equal to the product of the Defaulted Amount for
such Distribution Date and the Invested Percentage applicable for such
Distribution Date.
"LIBOR" shall mean, for any Interest Period other than the initial
-----
Interest Period from the Closing Date through, but excluding, ____ __, 1996, the
London interbank offered rate for one-month deposits of Dollars determined by
the Servicer for each Interest Period in accordance with the provisions of
Section 4.13 of the Agreement.
"LIBOR Determination Date" shall mean ____ __, 1996 for the period
------------------------
from ____ __, 1996 through, and including, ______ __, 1996, and the second
London Business Day prior to the commencement of each subsequent Interest
Period.
"Loan Agreement" shall mean the Loan Agreement among the Seller, the
--------------
Servicer, the Trustee and the Collateral Interest Holder, dated the date hereof,
as amended, supplemented or otherwise modified from time to time in accordance
with its terms.
"London Business Day" shall mean any Business Day other than a
-------------------
Business Day on which banking institutions in London, England dealing in
deposits in United States Dollars are authorized or obligated by law or
executive order to be closed.
12
<PAGE>
"Optional Deposit" shall have the meaning specified in subsection
----------------
4.11(d) of the Agreement.
"Payment Date" shall mean any Distribution Date, commencing ______ __,
------------
1996, and the Termination Payment Date.
"Principal Shortfall" shall have the meaning specified in Section 4.03
-------------------
of the Agreement.
"Rapid Amortization Period" shall mean, with respect to the Series
-------------------------
1996-_ Certificates, a period beginning on the first day of the Due Period in
which a Liquidation Event is deemed to occur and continuing to and including the
earlier of (a) the date on which the Invested Amount is paid in full or (b) the
Series Termination Date.
"Rating Agency" shall mean, with respect to Series 1996-_, the rating
-------------
agency or agencies rating any Class of the Series 1996-_ Certificates at the
request of the Seller, including Moody's, Standard & Poor's and Fitch Investors
Service, Inc.
"Reallocated Principal Collections" shall mean, with respect to any
---------------------------------
Due Period, the Collateral Principal Percentage of the Invested Percentage of
Collections of Principal Receivables but only to the extent that such
Collections of Principal Receivables are actually distributed pursuant to
subsection 4.10(a) of the Agreement.
"Record Date" shall mean, with respect to any Distribution Date, the
-----------
last day of the calendar month immediately preceding such Distribution Date.
"Reference Banks" shall mean four major banks in the London interbank
---------------
market selected by the Servicer and identified in an Officer's Certificate
delivered to the Trustee on the Closing Date or in any subsequent Officer's
Certificate delivered no later than one Business Day prior to the then current
LIBOR Determination Date.
"Required Cash Collateral Amount" shall mean, with respect to any
-------------------------------
Distribution Date, the Required Enhancement Amount minus the Collateral Invested
-----
Amount after giving effect to all reductions of the Collateral Invested Amount
with respect to such Distribution Date pursuant to Section 4.08 and any
reductions of the Col-
13
<PAGE>
lateral Invested Amount with respect to such Distribution Date pursuant to
Section 4.07 other than as a result of any Enhancement Surplus due to any
Optional Deposit.
"Required Enhancement Amount" shall mean, with respect to any
---------------------------
Distribution Date, the greater of (i) the product of (a) the Invested Amount as
of such Distribution Date after taking into account all distributions and
reductions to be made on such Distribution Date, and (b) ____% and (ii) the sum
of (A) $_________ and (B) the product of (I) two and (II) the excess, if any, of
$_________ over the Adjusted Available Cash Collateral Amount; provided,
--------
however, that (i) if there are any withdrawals from the Cash Collateral Account
- -------
pursuant to Section 4.06 of the Agreement or any reductions in the Collateral
Invested Amount pursuant to clause (b) of the definition of such amount, or a
Liquidation Event occurs with respect to the Series 1996-_ Certificates, then
the Required Enhancement Amount for any Distribution Date shall equal the
Required Enhancement Amount on the Distribution Date immediately preceding such,
withdrawal reduction or Liquidation Event, (ii) in no event shall the Required
Enhancement Amount exceed the Class A Invested Amount on any such Distribution
Date, and (iii) the Required Enhancement Amount may be reduced without the
consent of the Class A Certificateholders or the Collateral Interest Holder, if
the Seller shall have received written notice from each Rating Agency (with a
copy delivered to the Trustee) that such reduction will not result in the
reduction or withdrawal of the then current rating of any Class of Series
1996-_ Certificates rated by such Rating Agency and the Seller shall have
delivered to the Trustee an Officer's Certificate to the effect that, based on
the facts known to such officer at such time, in the reasonable belief of the
Seller, such reduction will not cause a Liquidation Event or an event that,
after the giving of notice or the lapse of time, would constitute a Liquidation
Event, to occur with respect to the Series 1996-_ Certificates.
"Revolving Period" shall mean, with respect to the Series 1996-_
----------------
Certificates, the period from and including the Closing Date up to and including
the day prior to the day on which the Amortization Period or, if earlier, a
Rapid Amortization Period commences.
"Series D Certificates" or "Series 1991-D" shall mean the 8.40% Credit
--------------------- -------------
Card Certificates Series 1991-D.
14
<PAGE>
"Series E Certificates" or "Series 1992-E" shall mean the 6.25% Asset
--------------------- -------------
Backed Certificates Series 1992-E.
"Series I Certificates" or "Series 1994-I" shall mean the Floating
--------------------- -------------
Rate Asset Backed Certificates Series 1994-I.
"Series J Certificates" or "Series 1994-J" shall mean the Floating
--------------------- -------------
Rate Asset Backed Certificates Series 1994-J.
"Series K Certificates" or "Series 1994-K" shall mean the Floating
--------------------- -------------
Rate Credit Card Certificates Series 1994-K.
"Series L Certificates" or "Series 1994-L" shall mean the 7.15% Credit
--------------------- -------------
Card Certificates Series 1994-L.
"Series M Certificates" or "Series 1995-M" shall mean the Floating
--------------------- -------------
Rate Credit Card Certificates Series 1995-M.
"Series N Certificates" or "Series 1995-N" shall mean the Floating
--------------------- -------------
Rate Credit Card Certificates Series 1995-N.
"Series O Certificates" or "Series 1995-0" shall mean the Floating
--------------------- -------------
Rate Credit Card Certificates Series 1995-0.
"Series P Certificates" or "Series 1995-P" shall mean the Floating
--------------------- -------------
Rate Credit Card Certificates Series 1995-P.
"Series 1996-_ Certificateholder" shall mean the Holder of record of a
-------------------------------
Class A Certificate or the Collateral Interest Holder.
"Series 1996-_ Certificateholders' Interest" shall have the meaning
------------------------------------------
specified in Section 4.02 of the Agreement.
"Series Termination Date" shall mean the ________ ____ Distribution
-----------------------
Date.
"Servicing Fee Percentage" shall mean ____% per annum.
------------------------
15
<PAGE>
"Shortfall Amount" shall have the meaning specified in Section 4.04 of
----------------
the Agreement.
"Telerate Page 3750" shall mean the display page currently so
------------------
designated on the Dow Jones Telerate Service (or such other page as may replace
such page on such service for the purpose of displaying comparable rates or
prices).
"Termination Payment Date" shall mean the earlier of (a) the
------------------------
Distribution Date on which final payment has been made on the Series 1996-_
Certificates and (b) the Series Termination Date.
"Withdrawal Amount" shall mean, with respect to the Class A
-----------------
Certificates, and with respect to any Distribution Date, the lesser of (a) the
Class A Required Amount calculated for such Distribution Date and (b) the
Available Cash Collateral Amount calculated for such Distribution Date.
SECTION 3. Minimum First Chicago Interest Percentage and Minimum
-----------------------------------------------------
Aggregate Principal Receivables. The Minimum First Chicago Interest Percentage
- -------------------------------
applicable to the Series 1996-_ Certificates shall be 7% (unless (a) the Rating
Agencies confirm in writing that a lower percentage will not cause a reduction
or withdrawal of the then rating of any Class of Series 1996-_ Certificates and
(b) the Seller receives an Opinion of Counsel that such reduction will not
adversely affect the Federal income tax characterization of the Series 1996-_
Certificates or any other outstanding investor certificates, or be treated as an
exchange within the meaning of Section 1001 of the Code). The Minimum Aggregate
Principal Receivables shall be the sum of (i) the Initial Invested Amount and
(ii) the initial invested amounts of all other Series then outstanding or, if
any Series calculates the invested percentage with respect to Principal
Receivables by means of a numerator based other than on the initial invested
amount of such Series, then at least equal to the sum of the initial invested
amount of each Series then outstanding which calculates such invested percentage
on the basis of initial invested amount plus, for each other Series then
outstanding, the then current numerator used to calculate the invested
percentage with respect to Principal Receivables for such Series.
SECTION 4. Reassignment and Transfer Terms. The Series 1996-_
-------------------------------
Certificates may be reassigned and
16
<PAGE>
transferred to the Seller on any Distribution Date in the Amortization Period or
the Rapid Amortization Period on or after the Invested Amount is reduced to an
amount less than or equal to 5% of the Initial Invested Amount in accordance
with the terms specified in subsection 12.02(a) of the Agreement, subject to any
limitation specified in the Loan Agreement. The repurchase price of any such
repurchase shall be equal to the Invested Amount plus accrued and unpaid
interest on the Series 1996-_ Certificates through the Distribution Date on
which the repurchase occurs.
SECTION 5. Delivery and Payment for the Series 1996-_ Certificates.
-------------------------------------------------------
The Trustee shall deliver the Class A Certificates when authenticated in
accordance with Section 6.02 of the Agreement. The Collateral Interest shall be
acquired in accordance with the Loan Agreement.
SECTION 6. Form of Delivery of the Series 1996-_ Certificates. The
--------------------------------------------------
Class A Certificates shall be delivered as Book Entry Certificates as provided
in Section 6.01 of the Agreement. The Collateral Interest shall be delivered in
uncertificated form as provided in the Loan Agreement.
SECTION 7. Article IV of Agreement. Any provision of Article IV of
-----------------------
the Agreement which distributes Collections to the Seller on the basis of the
Seller's Percentage shall continue to apply irrespective of the issuance of the
Series 1996-_ Certificates. With respect to the Series 1996-_ Certificates,
Article IV of the Agreement (except for Section 4.01 thereof) shall read as
follows:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.02 Rights of Series 1996-_ Certificateholders. The
------------------------------------------
Investor Certificates of Series 1996-_ shall represent fractional Undivided
Interests in the Trust, consisting of the right to receive, to the extent
necessary to make the required payments with respect to such Investor
Certificates at the times and in the amounts specified in this Agreement, (a)
the related Invested Percentage of Collections received with respect to the
Receivables (including the Interchange Amount
17
<PAGE>
allocable to the Series 1996-_ Certificateholders), (b) funds on deposit in the
Collection Account and (c) funds on deposit in the Cash Collateral Account (the
"Series 1996-_ Certificateholders' Interest"). The Exchangeable Seller's
Certificate and any other Series of investor certificates outstanding shall
represent fractional Undivided Interests in the Trust Assets not allocated
pursuant to this Agreement to the Series 1996-_ Certificateholders' Interest,
including the right to receive Collections with respect to the Receivables and
other amounts at the times and in the amounts specified in this Article IV to be
paid to the Holder of the Exchangeable Seller's Certificate; provided, however,
-------- -------
such interests shall not represent any interest in the Cash Collateral Account
or funds on deposit therein.
Section 4.03 Collections and Allocations.
---------------------------
(a) Collections. The Trustee will apply or will instruct the
-----------
Servicer to apply all funds on deposit in the Collection Account as described in
this Article IV.
(b) Payments to the Holder of the Exchangeable Seller's Certificate.
---------------------------------------------------------------
On each Determination Date preceding a Distribution Date, the Servicer shall
determine whether a Liquidation Event is deemed to have occurred in the Due
Period relating to such Determination Date with respect to the Series 1996-_
Certificates, and the Servicer shall allocate Collections with respect to the
Due Period for such Distribution Date to the Holder of the Exchangeable Seller's
Certificate as follows:
(i) for Determination Dates with respect to the Revolving
Period, in addition to amounts allocated to the Holder of the Exchangeable
Seller's Certificate pursuant to subsection 4.01(d) of the Agreement, an
amount equal to the Invested Percentage for the Distribution Date of the
aggregate amount of such Collections in respect of Principal Receivables,
but not exceeding the First Chicago Amount (determined as of such
Determination Date after giving effect to any Principal Receivables
transferred to the Trust for the Due Period relating to such Determination
Date), and excluding any such Collections to be applied as Collateral
Monthly Principal pursuant
18
<PAGE>
to Section 4.07 and any Reallocated Principal Collections;
(ii) for Determination Dates with respect to the Amortization
Period, an amount equal to the excess of the Invested Percentage for the
Distribution Date of the aggregate amount of such Collections in respect of
Principal Receivables over the related Controlled Amount, but not exceeding
the First Chicago Amount (determined as of such Determination Date after
giving effect to any Principal Receivables transferred to the Trust for the
Due Period relating to such Determination Date), and excluding any such
Collections to be applied as Collateral Monthly Principal pursuant to
Section 4.07 and any Reallocated Principal Collections; and
(iii) for Determination Dates with respect to any Rapid
Amortization Period, the amount of payments made to the Holder of the
Exchangeable Seller's Certificate shall be determined only as provided in
subsection 4.01(d) of the Agreement;
provided, however, that in the event that principal shall be payable to or for
- -------- -------
the benefit of other Series on such Distribution Date, and amounts allocable to
such Series are not sufficient to make the maximum principal payment which could
be made under the terms of the applicable Supplement to the certificateholders
of such Series for such Distribution Date (such deficiencies, "Principal
Shortfalls"), amounts otherwise allocable to the Holder of the Exchangeable
Seller's Certificate pursuant to this subsection 4.03(b) shall instead be paid
to or for the benefit of such other Series on a pro rata basis (based on the
numerator used in calculating the invested percentage of Collections of
Principal Receivables for such Series) if such other Series provide for the
sharing of Collections of Principal Receivables to pay Principal Shortfalls.
The allocations to be made pursuant to this Section 4.03 also apply to
deposits into the Collection Account that are treated as Collections, including
Transfer Deposit Amounts, Excess Finance Charge Collections, Adjustment
Payments, proceeds from the sale, disposition or liquidation of the Receivables
pursuant to
19
<PAGE>
Section 9.02, 10.01, 12.01 or 12.02 of the Agreement and Section 4 of this
Series Supplement and the Interchange Amount allocable to the Series 1996-_
Certificateholders. Such deposits to be treated as Collections will be
allocated as Finance Charge Receivables or Principal Receivables as indicated in
the Agreement. For purposes of this Series Supplement, the Interchange Amount
shall be treated as Finance Charge Receivables, except that a portion of the
Interchange Amount shall be available solely to pay the Servicer the Interchange
Monthly Servicing Fee pursuant to subsection 4.12(b) of the Agreement.
Section 4.04 Determination of Monthly Interest for the Series 1996-_
-------------------------------------------------------
Certificates. (a) The amount of monthly interest ("Class A Monthly Interest")
- ------------
distributable from the Collection Account with respect to the Class A
Certificates on any Distribution Date commencing with the ______ 1996
Distribution Date shall be an amount equal to the product of (i)(A) a fraction,
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) the Class A Certificate
Rate in effect with respect to the related Interest Period, and (ii) the Class A
Invested Amount determined as of the Record Date preceding such Distribution
Date (or in the case of the ____ 1996 Distribution Date, the Class A Initial
Invested Amount); provided, however, that Class A Monthly Interest for the
-------- -------
______ 1996 Distribution Date shall be the sum of the amounts calculated
pursuant to clauses (i) and (ii) above for the Interest Period from and
including the Closing Date to but excluding the ____ 1996 Distribution Date and
for the Interest Period from and including the ____ 1996 Distribution Date to
but excluding the _____ 1996 Distribution Date.
On each Determination Date preceding a Distribution Date, commencing
with the ______ 1996 Distribution Date, the Servicer shall determine the amount
(the "Class A Interest Shortfall Amount"), if any, of the excess of Class A
Monthly Interest over the amount that will be on deposit in the Collection
----
Account on such Distribution Date and available for payment of Class A Monthly
Interest. An additional amount ("Class A Additional Interest") shall be payable
as provided herein with respect to Class A Certificates on each Distribution
Date following such Distribution Date, to and including the Distribution Date on
which such Class A Interest Shortfall Amount is paid in full, in an amount equal
to
20
<PAGE>
the product of (i)(A) a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360, times
(B) the Class A Certificate Rate in effect with respect to the related Interest
Period plus 2% per annum and (ii) the unpaid portion of such Class A Interest
Shortfall Amount.
(b) The amount of monthly interest ("Collateral Monthly Interest")
distributable from the Collection Account with respect to the Collateral
Interest on any Distribution Date commencing with the ______ 1996 Distribution
Date shall be an amount equal to the product of (i)(A) a fraction, the numerator
of which is the actual number of days in the related Interest Period and the
denominator of which is 360, times (B) the Collateral Rate in effect with
respect to the related Interest Period and (ii) the Collateral Invested Amount
determined as of the Record Date preceding such Distribution Date (or in the
case of the ____ 1996 Distribution Date, the Collateral Initial Invested
Amount); provided, however, that Collateral Monthly Interest for the ______ 1996
-------- -------
Distribution Date shall be the sum of the amounts calculated pursuant to clauses
(i) and (ii) above for the Interest Period from and including the Closing Date
to but excluding the ______ 1996 Distribution Date and for the Interest Period
from and including the ____ 1996 Distribution Date to but excluding the ______
1996 Distribution Date.
On each Determination Date preceding a Distribution Date, commencing
with the _______ 1996 Distribution Date, the Servicer shall determine the amount
(the "Collateral Interest Shortfall Amount"), if any, of the excess of
Collateral Monthly Interest over the amount that will be on deposit in the
----
Collection Account on such Distribution Date and available for payment of
Collateral Monthly Interest. An additional amount ("Collateral Additional
Interest") shall be payable as provided herein with respect to the Collateral
Interest on each Distribution Date following such Distribution Date, to and
including the Distribution Date on which such Collateral Interest Shortfall
Amount is paid in full, in an amount equal to the product of (i)(A) a fraction,
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) the Collateral Rate in
effect with respect to the related Interest Period and (ii) the unpaid portion
of such Collateral Interest Shortfall Amount.
21
<PAGE>
(c) Collections of Finance Charge Receivables allocable to any Series
issued on or after May 25, 1994 (including, but not limited to, the Series I
Certificates, the Series J Certificates, the Series K Certificates, the Series L
Certificates, the Series M Certificates, the Series N Certificates, the Series O
Certificates, the Series P Certificates and the Series 1996-_ Certificates) and
the proceeds thereof that would otherwise be payable to the Seller (whether
pursuant to the Supplement relating to such Series or an agreement relating to
the Enhancement for such Series), excluding any payments made to the Seller in
its capacity as Servicer or any payments made with respect to the Investor
Default Amount, shall, unless the Supplement with respect to any such Series
specifies otherwise, be payable on each Distribution Date on a pro rata basis
(based on the numerator used in calculating the invested percentage of
Collections of Finance Charge Receivables) to or for the benefit of other Series
issued on or after May 25, 1994 (including, but not limited to, the Series I
Certificates, the Series J Certificates, the Series K Certificates, the Series L
Certificates, the Series M Certificates, the Series N Certificates, the Series O
Certificates, the Series P Certificates and the Series 1996-_ Certificates)
experiencing shortfalls in amounts payable from Collections of Finance Charge
Receivables allocable to such other Series as provided for pursuant to the
Supplement for any such Series, so long as the Supplement for any such other
Series permits and provides for the payment of such excess Collections of
Finance Charge Receivables and the proceeds thereof ("Excess Finance Charge
Collections") to such Series. The shortfall payable from Excess Finance Charge
Collections allocable to the Series 1996-_ Certificates for any Distribution
Date (the "Shortfall Amount") shall equal the amount by which the sum of (i) the
Class A Monthly Interest, (ii) any Class A Monthly Interest previously due but
not paid to the Class A Certificateholders, (iii) any Class A Additional
Interest, (iv) the Class A Investor Default Amount, (v) to the extent payable to
a Successor Servicer that is not an Affiliate of the Seller, the Monthly
Servicing Fee, (vi) any unreimbursed Class A Investor Charge-Offs, (vii) the
Collateral Monthly Interest, (viii) any Collateral Monthly Interest previously
due but not paid to the Collateral Interest Holder, (ix) any Collateral
Additional Interest, (x) the Collateral Default Amount and (xi) the amounts, if
any, payable pursuant to subsections 4.09(e), 4.09(f) and 4.09(g), exceeds the
Floating Allocation Percentage of Collections in
22
<PAGE>
respect of Finance Charge Receivables allocable to the Series 1996-_
Certificates. Such Excess Finance Charge Collections shall be available only to
pay the amounts referred to in clauses (i) through (xi) above.
The Seller hereby directs the Servicer to direct the Trustee to
deposit any amounts payable to FCCNB pursuant to Section 2.11 of the Loan
Agreement with respect to any Distribution Date, to the extent such amounts
constitute Excess Finance Charge Collections for other Series, into the
Collection Account for payment on such Distribution Date.
Section 4.05 Determination of Monthly Principal for the Series 1996-_
--------------------------------------------------------
Certificates. (a) The amount of monthly principal ("Class A Monthly
- ------------
Principal") distributable from the Collection Account with respect to the Class
A Certificates on each Distribution Date beginning with the earlier to occur of
(i) the first Distribution Date to occur with respect to any Rapid Amortization
Period and (ii) the first Distribution Date to occur with respect to the
Amortization Period shall be equal to Class A Available Principal Collections;
provided, however, that for each Distribution Date with respect to the
- -------- -------
Amortization Period (unless and until a Liquidation Event is deemed to have
occurred), Class A Monthly Principal shall not exceed the Controlled Amount for
such Distribution Date; provided, further, that with respect to any Distribution
-------- -------
Date, Class A Monthly Principal shall not exceed the Class A Invested Amount.
(b) The amount of monthly principal ("Collateral Monthly Principal")
distributable from the Collection Account with respect to the Collateral
Interest on each Distribution Date beginning with the ______ 1996 Distribution
Date shall be equal to an amount calculated as follows:
(i) on any Distribution Date prior to the Distribution Date on
which the Class A Invested Amount is paid in full, the lesser of (A) the
sum of (x) Collateral Principal Collections with respect to such
Distribution Date not applied to Class A Monthly Principal on such
Distribution Date and (y) Class A Available Principal Collections not
applied to Class A Monthly Principal on such Distribution Date and (B) the
Enhancement Surplus on such Distribution Date (including any Enhancement
23
<PAGE>
Surplus which will result from the transfer of funds to the Cash Collateral
Account pursuant to Section 2.11(d) of the Loan Agreement and subsection
4.11(d) of the Agreement); and
(ii) on and after the Distribution Date on which the Class A
Invested Amount is paid in full, the sum of (A) Collateral Principal
Collections with respect to such Distribution Date not applied to Class A
Monthly Principal on such Distribution Date and (B) Class A Available
Principal Collections not applied to Class A Monthly Principal on such
Distribution Date;
(iii) notwithstanding the foregoing subsections (i) and (ii) of
this subsection 4.05(b), on any Distribution Date prior to the commencement
of a Rapid Amortization Period and after the determination by the Seller to
make a Conversion Deposit pursuant to, and in accordance with, subsection
4.11(e), the sum of (A) Collateral Principal Collections with respect to
such Distribution Date not applied to Class A Monthly Principal on such
Distribution Date and (B) Class A Available Principal Collections not
applied to Class A Monthly Principal on such Distribution Date;
provided, however, that with respect to any Distribution Date, Collateral
- -------- -------
Monthly Principal shall not exceed the Collateral Invested Amount.
(c) Collections of Principal Receivables allocable to a Series (other
than Series 1991-D and Series 1992-E, and any other Series which specifically
prohibits sharing of Excess Principal Collections) with respect to any
Distribution Date but not payable to or for the benefit of such Series on such
Distribution Date ("Excess Principal Collections") shall be payable on such
Distribution Date on a pro rata basis (based on the numerator used in
calculating the invested percentage of Collections of Principal Receivables) to
or for the benefit of other Series experiencing a Principal Shortfall for such
Distribution Date, provided that the Supplement for such other Series permits
the payment of Excess Principal Collections to such Series.
Section 4.06 Coverage of Required Amount for the Class A
-------------------------------------------
Certificates. (a) On each Determination
24
<PAGE>
Date, the Servicer shall determine the amount (the "Class A Required Amount"),
if any, by which the sum of (i) Class A Monthly Interest for the related
Distribution Date payable with respect to the Class A Invested Amount, (ii) any
Class A Monthly Interest previously due but not paid to the Class A
Certificateholders, (iii) any Class A Additional Interest, (iv) the Class A
Investor Default Amount, if any, for such Distribution Date and (v) to the
extent payable to a Successor Servicer that is not an Affiliate of the Seller,
the Monthly Servicing Fee (the sum of (i) through (v), the "Class A Covered
Amount") exceeds the sum of (x) Class A Available Funds for such Distribution
Date which are available to pay (i) through (v) (after taking into consideration
the pro rata portion of the Monthly Servicing Fee payable in accordance with the
first proviso to subsection 4.07(a) of the Agreement), (y) Excess Spread
available pursuant to Section 4.09 of the Agreement and (z) Excess Finance
Charge Collections allocable to the Series 1996-_ Certificates pursuant to
subsection 4.04(c) of the Agreement (up to the Shortfall Amount). In the event
that the Class A Required Amount is greater than zero, the Servicer shall give
written notice to the Trustee of such positive Class A Required Amount,
specifying therein the amount to be withdrawn pursuant to this subsection
4.06(a), on or after the Determination Date but in no event later than three
Business Days prior to such Distribution Date. On the Transfer Date, the
Trustee (or the Servicer on the Trustee's behalf) shall withdraw the Withdrawal
Amount from the Cash Collateral Account and immediately deposit such amount into
the Collection Account. In the event that the Class A Required Amount exceeds
the Available Cash Collateral Amount with respect to such Distribution Date,
Reallocated Principal Collections with respect to such Distribution Date in an
amount equal to such excess shall be distributed from the Collection Account on
such Distribution Date pursuant to Section 4.10.
(b) If the Servicer fails to make any payment or deposit (other than
as required by Sections 2.07, 7.04, 8.04, 9.02 (upon receipt of sale proceeds
thereunder) and 10.01 of the Agreement) required to be made by the Servicer at
the time specified in the Agreement (including applicable grace periods), the
Trustee, without instruction from the Servicer, shall make such payment or
deposit from the Collection Account.
If the Servicer fails to give the notice of a positive Class A
Required Amount required to be
25
<PAGE>
given by the Servicer pursuant to subsection 4.06(a) of the Agreement, the
Trustee shall make a withdrawal from the Cash Collateral Account in accordance
with the certificate delivered pursuant to subsection 3.04(b) of the Agreement
without instruction from the Servicer. In the event that the Servicer fails to
deliver the certificate required by subsection 3.04(b) of the Agreement, no
withdrawal from the Cash Collateral Account shall be made; provided, however,
-------- -------
that if the Trustee, in its sole discretion, is able to determine and confirm
the amount of interest payable pursuant to subsection 4.07(a)(i) of the
Agreement, the Trustee shall, if necessary after application of the funds in the
Collection Account, make a withdrawal from the Cash Collateral Account in the
amount of the interest shortfall.
The Servicer shall, upon request of the Trustee, promptly provide the
Trustee with all information necessary to allow the Trustee to comply with the
provisions of this subsection 4.06(b).
Section 4.07 Application of Class A Available Funds, Collateral
--------------------------------------------------
Available Funds, Class A Available Principal Collections and Collateral
- -----------------------------------------------------------------------
Principal Collections on Deposit in the Collection Account for the Series 1996-_
- --------------------------------------------------------------------------------
Certificates. The Trustee shall apply or shall cause the Servicer to apply
- ------------
(provided FCCNB is the Servicer and the Collection Account is maintained with
FNBC) or shall cause the Paying Agent, to the extent Section 6.06 of the
Agreement is applicable, to apply, on each Distribution Date, Class A Available
Funds, Collateral Available Funds, Class A Available Principal Collections and
Collateral Principal Collections on deposit in the Collection Account with
respect to such Distribution Date to make the following distributions.
(a) An amount equal to Class A Available Funds with respect to such
Distribution Date shall be distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
----
previously due but not distributed on a prior Distribution Date, plus the
----
amount of any Class A Additional Interest for such Distribution Date, shall
be distributed by the Servicer or the Trustee to the Paying Agent for
payment to the Class A Certificateholders;
26
<PAGE>
(ii) an amount equal to the Monthly Servicing Fee for such
Distribution Date shall be distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount for
such Distribution Date, if any, shall be treated as a portion of Class A
Available Principal Collections; and
(iv) the balance shall constitute Excess Spread and shall be
distributed pursuant to Section 4.09;
provided, however, in the event that there are insufficient funds (before giving
- -------- -------
effect to any Withdrawal Amount payable from the Cash Collateral Account
pursuant to Section 4.06, Excess Spread payable pursuant to Section 4.09, Excess
Finance Charge Collections allocable to the Series 1996-_ Certificates pursuant
to subsection 4.04(c) or any Reallocated Principal Collections available
pursuant to subsection 4.10(a)) to pay in full the amounts distributable
pursuant to subsections 4.07(a)(i), 4.07(a)(ii) and 4.07(a)(iii), such amounts
shall be paid, to the extent of such funds, on a pro rata basis.
(b) An amount equal to Collateral Available Funds with respect to
such Distribution Date shall constitute Excess Spread and shall be distributed
pursuant to Section 4.09
(c) On each Distribution Date with respect to the Revolving Period,
an amount equal to Class A Available Principal Collections, to the extent not
allocated in accordance with subsection 4.05(b) shall be applied as set forth in
subsection 4.03(b).
(d) On each Distribution Date with respect to the Revolving Period,
an amount equal to Collateral Principal Collections for the related Due Period
plus any amount of Class A Available Principal Collections available therefor in
accordance with subsection 4.05(b) shall be distributed and applied in the
following priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date shall be applied in accordance with the Loan Agreement
or, if a Conversion Event shall
27
<PAGE>
have occurred, deposited in the Cash Collateral Account pursuant to
subsection 4.11(e); and
(ii) the balance shall be treated as a portion of Class A
Available Principal Collections for such Distribution Date.
(e) On each Distribution Date with respect to the Amortization Period
or the Rapid Amortization Period, an amount equal to the Class A Available
Principal Collections for the related Due Period shall be distributed and
applied in the following priority:
(i) an amount equal to Class A Monthly Principal for such
Distribution Date shall be distributed by the Servicer or the Trustee to
the Paying Agent for payment to the Class A Certificateholders; and
(ii) the balance shall be included in Collateral Monthly
Principal to the extent permitted in accordance with subsection 4.05(b).
(f) On each Distribution Date with respect to the Amortization
Period, an amount equal to Collateral Principal Collections for the related Due
Period plus any amount of Class A Available Principal Collections included in
Collateral Monthly Principal pursuant to subsection 4.07(e)(ii) shall be
distributed and applied in the following priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date shall be applied in accordance with the Loan Agreement
or, if a Conversion Event shall have occurred, deposited in the Cash
Collateral Account pursuant to subsection 4.11(e); and
(ii) the balance shall be treated as a portion of Class A
Available Principal Collections for such Distribution Date.
(g) On each Distribution Date with respect to the Rapid Amortization
Period, an amount equal to Collateral Principal Collections for the related Due
Period shall be treated as a portion of Class A Available Principal Collections
for such Distribution Date.
28
<PAGE>
(h) The distributions to be made pursuant to this Section 4.07 are
subject to the provisions of Sections 2.07, 4.08, 9.02, 10.01, 12.01 and 12.02
of the Agreement and Section 4 of this Series Supplement.
Section 4.08 Investor Charge-Offs. (a) On each Distribution Date,
--------------------
the Servicer shall calculate the Class A Investor Default Amount, if any, for
such Distribution Date. If on any Distribution Date, the Class A Investor
Default Amount exceeds the Available Cash Collateral Amount and the amount of
Reallocated Principal Collections with respect to such Due Period available
therefor, then the Collateral Invested Amount (after giving effect to any
reductions pursuant to subsections (b) and (c) below) shall be reduced by the
amount of such excess, but not by more than the Class A Investor Default Amount
for such Distribution Date. In the event that such reduction would cause the
Collateral Invested Amount to be a negative number, the Collateral Invested
Amount shall be reduced to zero and the Class A Invested Amount shall be reduced
by the amount by which the Collateral Invested Amount would have been reduced
below zero, but not by more than the Class A Investor Default Amount for such
Distribution Date (a "Class A Investor Charge-Off"). Class A Investor Charge-
Offs shall thereafter be reimbursed and the Class A Invested Amount increased
(but not by an amount in excess of the aggregate Class A Investor Charge-Offs)
on any Distribution Date by the amount of Excess Spread available for such
purpose pursuant to Section 4.09.
(b) If, on any Distribution Date, Reallocated Principal Collections
for such Distribution Date are applied pursuant to subsection 4.10(a), then the
Collateral Invested Amount shall be reduced by the amount of such Reallocated
Principal Collections so applied.
(c) If, on any Distribution Date, the Collateral Default Amount
exceeds the amount of Excess Spread available in respect thereof pursuant to
Section 4.09 on such Distribution Date, then the Collateral Invested Amount
shall be reduced by the amount of such excess.
Section 4.09 Excess Spread. The Trustee shall apply or shall cause
-------------
the Servicer to apply, on each Distribution Date, Excess Spread to make the
following distributions in the following priority:
29
<PAGE>
(a) an amount equal to the amount by which the Class A Covered
Amount with respect to such Distribution Date exceeds Class A Available
Funds with respect to such Distribution Date shall be distributed to fund
any such deficiency, in the order of priority of the enumerated items in
the definition of Class A Covered Amount;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed shall be treated as a
portion of Class A Available Principal Collections for such Distribution
Date;
(c) an amount equal to Collateral Monthly Interest for such
Distribution Date, plus the amount of any Collateral Monthly Interest
----
previously due but not distributed on a prior Distribution Date, plus the
----
amount of any Collateral Additional Interest for such Distribution Date,
shall be applied in accordance with the Loan Agreement;
(d) an amount equal to the Collateral Default Amount for such
Distribution Date shall be treated as a portion of Collateral Principal
Collections with respect to such Distribution Date;
(e) an amount equal to the aggregate amount by which the
Collateral Invested Amount has been reduced pursuant to clause (b) of the
definition of "Collateral Invested Amount" (but not in excess of the
aggregate amount of such reductions which have not been previously
reimbursed pursuant to this subsection 4.09(e) or Section 2.12(b) of the
Loan Agreement) shall be applied in accordance with the Loan Agreement;
(f) an amount up to the excess, if any, of the Required Cash
Collateral Amount over the Adjusted Available Cash Collateral Amount
(without giving effect to any deposit made on such date hereunder or any
deposit pursuant to subsection 4.11(d) or 4.11(e)) shall be deposited into
the Cash Collateral Account;
30
<PAGE>
(g) an amount equal to any unpaid portion of the Monthly
Servicing Fee for such Distribution Date, plus the amount of any Monthly
----
Servicing Fee previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer; and
(h) the balance shall be applied in accordance with the Loan
Agreement.
Section 4.10 Reallocated Principal Collections. The Trustee shall
---------------------------------
apply or shall cause the Servicer to apply on each Distribution Date, to the
extent required hereunder, the Collateral Principal Percentage of Collections of
Principal Receivables with respect to such Distribution Date, to make the
following distributions in the following priority:
(a) an amount equal to the amount by which the Class A Covered
Amount with respect to such Distribution Date exceeds the sum of (x) the
amount of Class A Available Funds, Excess Spread and Excess Finance Charge
Collections allocable to the Series 1996-_ Certificates with respect to
such Distribution Date and (y) the Available Cash Collateral Amount with
respect to such Distribution Date shall be distributed by the Trustee to
fund any such deficiency in the order of priority of the enumerated items
in the definition of Class A Covered Amount; and
(b) the balance of such Reallocated Principal Collections shall
be treated as a portion of Collateral Principal Collections to be applied
in accordance with Section 4.07.
Section 4.11 Cash Collateral Account.
-----------------------
(a) Establishment of Cash Collateral Account. The Seller hereby
----------------------------------------
directs the Trustee, for the benefit of the Series 1996-_ Certificateholders, to
establish and maintain or cause to be established and maintained in the name of
the Trustee, on behalf of the Series 1996-_ Certificateholders, with an Eligible
Institution (which initially shall be FNBC) a segregated trust account (the
"Cash Collateral Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 1996-_
Certificateholders. The Seller does hereby transfer, assign,
31
<PAGE>
set over and otherwise convey to the Trustee for the benefit of the Series
1996-_ Certificateholders, without recourse, all of its right, title and
interest in, to and under the Cash Collateral Account, any Eligible Investments
on deposit therein and any proceeds of the foregoing. The Seller, to the extent
of any interest it may have in the Cash Collateral Account, Eligible Investments
or other amounts on deposit therein and the proceeds thereof, hereby grants a
security interest in the Cash Collateral Account, Eligible Investments or other
amounts on deposit therein and proceeds thereof to the Trustee for the benefit
of the Series 1996-_ Certificateholders, and the parties intend that the grant
contained in this subsection 4.11(a) constitute a security agreement under the
UCC to secure the obligations of the Seller and the Trustee herein. The Trustee
shall possess all right, title and interest in all Eligible Investments or other
amounts on deposit from time to time in the Cash Collateral Account and in all
proceeds thereof. The Cash Collateral Account shall be under the sole dominion
and control of the Trustee for the benefit of the Series 1996-_
Certificateholders. If, at any time, the institution holding the Cash Collateral
Account ceases to be an Eligible Institution, the Trustee (or the Servicer on
its behalf) shall within 10 Business Days (or within 5 Business Days if such
institution is an Affiliate of First Chicago) establish a new Cash Collateral
Account meeting the conditions specified above with an Eligible Institution,
transfer any cash and/or any Eligible Investments or other amounts on deposit in
the Cash Collateral Account to such new Cash Collateral Account and from the
date such new Cash Collateral Account is established, it shall be the "Cash
Collateral Account." The Seller hereby directs the Trustee (or the Servicer on
the Trustee's behalf) to deposit $_________ in the Cash Collateral Account on
the Closing Date, and the Trustee hereby acknowledges receipt of such deposit
from the Seller. Pursuant to the authority granted to the Servicer in subsection
3.01(b), the Servicer shall have the power, revocable by the Trustee, to
instruct the Trustee to make withdrawals and payments from the Cash Collateral
Account for the purposes of carrying out the Servicer's and the Trustee's duties
hereunder and under the Loan Agreement. Withdrawals from the Cash Collateral
Account shall be made only as provided herein.
32
<PAGE>
(b) Administration of the Cash Collateral Account. Funds on deposit
---------------------------------------------
in the Cash Collateral Account shall at all times be invested by the Trustee in
Eligible Investments, which may be obligations of Affiliates of the Seller or
the Servicer and which may, with the written consent of Standard & Poor's, be
rated A-1 instead of A-1+. The Seller shall direct the Trustee as to the
selection of such Eligible Investments. Funds on deposit in the Cash Collateral
Account for any Distribution Date, after giving effect to any deposits to or
withdrawals from the Cash Collateral Account for such Distribution Date, shall
be invested in Eligible Investments that will mature so that such funds will be
available for withdrawal on the following Transfer Date. The proceeds of any
such investments shall at all times be invested in Eligible Investments that
will mature so that such funds will be available for withdrawal on or prior to
the Transfer Date immediately following the date of such investment. The Seller
shall furnish or cause to be furnished to the Trustee a monthly statement
reporting all activity with respect to the Cash Collateral Account. The Trustee
shall maintain for the benefit of the Series 1996-_ Certificateholders,
possession, itself or through a bailee, of the negotiable instruments or
securities, if any, evidencing the Eligible Investments described in clause (a)
of the definition thereof from the time of purchase thereof until the time of
sale or maturity. On each Transfer Date, all interest and other investment
earnings (net of losses and investment expenses) earned during the period since
the preceding Transfer Date on funds on deposit in the Cash Collateral Account
shall be paid to, or upon the order of, the Seller. In addition, after the
occurrence of a Conversion Deposit, any Cash Collateral Account Surplus shall be
withdrawn on any Transfer Date for application in accordance with the Loan
Agreement. For purposes of determining the availability of funds or the
balances in the Cash Collateral Account for any reason under this Agreement, all
investment earnings on such funds shall be deemed not to be available or on
deposit.
(c) Final Payment of the Series 1996-_ Certificates. The Trustee
-----------------------------------------------
shall, no later than the Termination Payment Date, upon the prior payment of all
amounts owing to the Class A Certificateholders and the Servicer and payable
from the Cash Collateral Account as provided herein, withdraw from the Cash
Collateral Account all amounts on deposit in the Cash Collateral
33
<PAGE>
Account for application in accordance with Section 2.11 of the Loan Agreement.
(d) Optional Deposit. Pursuant to the terms of and subject to the
----------------
limitation contained in the Loan Agreement, the Seller, at its option, may at
any time prior to the commencement of the Rapid Amortization Period elect to
cause one or more additional deposits to be made into the Cash Collateral
Account (each, an "Optional Deposit"). The Seller may cause any such deposit to
be made on a Distribution Date after forwarding notice of such deposit
(including the amount thereof) to the Trustee in accordance with Section 3.04
relating to the furnishing of monthly reports to the Trustee. Any such deposit
shall be deemed to be available in the Cash Collateral Account for purposes of
calculating any Enhancement Surplus for such related Distribution Date, but
shall not be included in the Available Cash Collateral Amount for such
Distribution Date, but shall be included in the Available Cash Collateral Amount
for the subsequent Distribution Date.
(e) Conversion Deposit. The Seller, at its option, may at any time
------------------
following the occurrence of a Conversion Event and prior to the commencement of
the Rapid Amortization Period elect to cause Collateral Monthly Principal with
respect to a Distribution Date (in an amount calculated pursuant to subsection
4.05(b)(iii)) to be deposited into the Cash Collateral Account (each such
deposit, a "Conversion Deposit"); provided, however, that the Trustee shall have
-------- -------
received written confirmation from each Rating Agency which has rated any
outstanding Series that such Rating Agency will not reduce or withdraw its
rating on any outstanding Series rated by it as a result of the making of
Conversion Deposits. The Seller may cause any such deposit to be made on a
Distribution Date after forwarding notice of such deposit to the Trustee in
accordance with Section 3.04 relating to the furnishing of monthly reports to
the Trustee. Any such deposit shall not be included in the Available Cash
Collateral Amount for such Distribution Date, but shall be included in the
Available Cash Collateral Amount for the subsequent Distribution Date.
(f) Tax Reporting. The Seller shall report all investment earnings
-------------
on amounts from time to time on deposit in the Cash Collateral Account as its
income for applicable federal, state and local tax purposes.
34
<PAGE>
Section 4.12 Interchange; Interchange Monthly Servicing Fee. (a) On
----------------------------------------------
or prior to each Determination Date, the Seller shall notify the Servicer of the
Interchange Amount to be included as Collections of Finance Charge Receivables
with respect to the related Distribution Date. Not later than 12:00 noon,
Chicago, Illinois time, on each Transfer Date, the Seller shall deposit into
the Collection Account in immediately available funds the Interchange Amount
(less the Interchange Monthly Servicing Fee) to be included as Finance Charge
Receivables with respect to the preceding Due Period.
(b) In addition to the Monthly Servicing Fee payable pursuant to
Section 4.07 of the Agreement and the remaining Monthly Servicing Fee payable
pursuant to Section 4.09 of the Agreement, the Servicer shall be entitled to
receive on each Transfer Date a servicing fee payable solely from the
Interchange Amount equal to the lesser of (a) the Interchange Amount with
respect to the related Distribution Date and (b) one-twelfth of the product of
____% per annum and the Invested Amount as of the Record Date for such
Distribution Date (or, in the case of the first Distribution Date, the Initial
Invested Amount) (such servicing fee, the "Interchange Monthly Servicing Fee").
Section 4.13 Determination of LIBOR. (a) On each LIBOR
----------------------
Determination Date, the Servicer will determine LIBOR for the Interest Period
following such LIBOR Determination Date on the basis of the rate for deposits in
United States Dollars for the Interest Period following such LIBOR Determination
Date which appears on Telerate Page 3750 as of 11:00 A.M. (London time) on such
LIBOR Determination Date.
(b) If, on any LIBOR Determination Date, such rate does not appear on
Telerate Page 3750, LIBOR will be determined on the basis of the rates at which
deposits for United States Dollars are offered by at least two of the Reference
Banks at approximately 11:00 A.M. (London time) on such LIBOR Determination Date
to prime banks in the London interbank market for the Interest Period following
such LIBOR Determination Date. The Servicer shall request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, LIBOR for such LIBOR Determination Date
shall be the arithmetic mean of such quotations (rounded up, if necessary, to
the nearest multiple of 0.0625% per annum).
35
<PAGE>
(c) If, on any LIBOR Determination Date, only one or none of the
Reference Banks provides such offered quotations, LIBOR will be the rate per
annum (rounded, as aforesaid) that the Servicer determines to be either (x) the
arithmetic mean of the offered quotations that leading banks in the City of New
York selected by the Servicer are quoting on the relevant LIBOR Determination
Date for one-month United States Dollar deposits to the principal London office
of each of the Reference Banks or those of them (being at least two in number)
to which such offered quotations are, in the opinion of the Servicer, being so
quoted or (y) in the event that the Servicer can determine no such arithmetic
mean, the arithmetic mean of the offered quotations that leading banks in the
City of New York selected by the Servicer are quoting on such LIBOR
Determination Date to leading European banks for one-month United States Dollar
deposits; or
(d) If, on the LIBOR Determination Date, the banks selected as
aforesaid by the Servicer are not quoting as described in clause (c) above,
LIBOR for such Interest Period will be LIBOR as determined on the previous LIBOR
Determination Date (or ______%, in the case of the first LIBOR Determination
Date).
(e) The Class A Certificate Rate applicable to the then current and
the immediately preceding Interest Periods may be obtained by any Class A
Certificateholder by telephoning the Servicer at 708-931-3222.
[END OF ARTICLE IV]
SECTION 8. With respect to the Series 1996-_ Certificates, Article V
of the Agreement shall read as follows:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.01 Distributions. (a) On each Payment Date for the Series
-------------
1996-_ Certificates, the Paying Agent shall distribute to each Class A
Certificateholder on the preceding Record Date (other than as provided in
Section 12.02 of the Agreement respecting a final distri-
36
<PAGE>
bution) such Class A Certificateholder's pro rata share (based on the aggregate
Undivided Interests represented by related Class A Certificates held by such
Class A Certificateholder) of the funds on deposit in the Collection Account
payable to such Class A Certificateholders pursuant to the Agreement in respect
of interest.
(b) On each Distribution Date with respect to the Amortization Period
or any Rapid Amortization Period and the Termination Payment Date for the Series
1996- Certificates, the Paying Agent shall distribute to each Class A
Certificateholder on the preceding Record Date (other than as provided in
Section 12.02 of the Agreement respecting a final distribution) such Class A
Certificateholder's pro rata share (based on the aggregate Undivided Interests
represented by related Class A Certificates held by such Class A
Certificateholder) of the funds on deposit in the Collection Account payable to
such Class A Certificateholders pursuant to the Agreement in respect of
principal.
(c) Distributions to Class A Certificateholders hereunder shall be
made by check mailed to each Class A Certificateholder, except that with respect
to Class A Certificates registered in the name of a Clearing Agency, such
distribution shall be made in immediately available funds.
(d) On each Payment Date for the Series 1996-_ Certificates, the
Paying Agent shall distribute to the Collateral Interest Holder on such Payment
Date the funds on deposit in the Collection Account payable to or with respect
to the Collateral Interest for application pursuant to the terms of the Loan
Agreement. Distributions to be made hereunder to or with respect to the
Collateral Interest shall be made in immediately available funds at the
direction of the Collateral Interest Holder.
Section 5.02 Statements to Certificateholders. (a)
--------------------------------
Certificateholders' Payment Date Statement. On each Payment Date, the Paying
- ------------------------------------------
Agent, on behalf of the Trustee, shall forward to each Class A Certificateholder
(or to the Clearing Agency to the extent Section 6.11 of the Agreement applies),
to the Collateral Interest Holder and to each Rating Agency a statement
substantially in the form of Exhibit B prepared by the Servicer setting forth
the information set forth in the Monthly Servicer's
37
<PAGE>
Certificate furnished to the Trustee with respect to such Distribution Date.
(b) Annual Certificateholders' Tax Statement. On or before January
----------------------------------------
31 of each calendar year, beginning with calendar year 1997, the Servicer will
cause the Paying Agent, on behalf of the Trustee, to furnish or cause to be
furnished to each Person who at any time during the preceding calendar year was
a Class A Certificateholder, a statement prepared by the Servicer containing
information relating to the amounts distributed to such Person aggregated for
such calendar year or the applicable portion thereof during which such Person
was a Class A Certificateholder, together with such other information as is
required to be provided by an issuer of debt under the Internal Revenue Code and
such other customary information as is necessary to enable the Class A
Certificateholders to prepare their tax returns. Such obligation of the
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Paying Agent pursuant to any
requirements of the Internal Revenue Code as from time to time in effect. In
addition, the Servicer shall make available to Certificate Owners of Class A
Certificates such information as is required by the Code and the regulations
thereunder to be made available to holders of debt instruments having the
characteristics of the Class A Certificates.
[END OF ARTICLE V]
SECTION 9. Additional Liquidation Events. If any one of the events
-----------------------------
specified in Section 9.01 of the Agreement (after any grace periods or consents
applicable thereto) or any one of the following events shall occur during either
the Revolving Period or the Amortization Period with respect to the Series
1996-_ Certificates:
(a) failure on the part of the Seller (i) to make any payment or
deposit required by the terms of the Agreement or this Series Supplement on or
before five Business Days after the date such payment or deposit is required to
be made therein or herein, or (ii) duly to observe or perform in any material
respect the covenant of the Seller set forth in subsection 2.08(b) of the
Agreement, or (iii) duly to observe or perform in any material respect any other
covenants or agreements of the Seller set forth in the Agreement or this Series
Supple-
38
<PAGE>
ment, which, in the case of clause (iii), continues unremedied for a period of
60 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Seller by the Trustee, or to
the Seller and the Trustee by a Rating Agency, the Collateral Interest Holder or
the Holders of Class A Certificates evidencing Undivided Interests aggregating
not less than 10% of the Class A Invested Amount;
(b) any representation or warranty made by the Seller in the
Agreement or this Series Supplement or any information contained in a computer
file or microfiche list required to be delivered by the Seller pursuant to
Section 2.01 or 2.05 of the Agreement shall prove to have been incorrect in any
material respect when made or when delivered, which continues to be incorrect in
any material respect for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Seller by the Trustee, or to the Seller and the Trustee by a Rating
Agency, the Collateral Interest Holder or the Holders of Class A Certificates
evidencing Undivided Interests aggregating not less than 10% of the Class A
Invested Amount and as a result of which the interests of the Series 1996-_
Certificateholders are materially and adversely affected; provided, however,
-------- -------
that a Liquidation Event pursuant to this subparagraph 9(b) shall not be deemed
to have occurred hereunder with respect to the Series 1996-_ Certificates if the
Seller has accepted the transfer of the related Receivable, or all of such
Receivables, if applicable, during such period (or such longer period as the
Trustee may specify), in accordance with the provisions hereof;
(c) the average Portfolio Yield (the calculation of which shall
include the Interchange Amount as a component of Finance Charge Receivables) for
any three consecutive Due Periods shall be less than the average of the Base
Rates for the related Interest Periods;
(d) the Seller shall fail to convey Additional Accounts to the Trust,
as required by subsection 2.05(a) of the Agreement, (i) in the case of the
calculation provided in subsection 2.05(a)(1) of the Agreement 10 days after the
failure to meet such calculation or (ii) in the case of the calculation provided
in
39
<PAGE>
subsection 2.05(a)(2) of the Agreement immediately upon the occurrence of the
failure to meet such calculation;
(e) the Class A Invested Amount shall not be paid in full on the
Class A Expected Final Distribution Date; or
(f) any Servicer Default shall occur which would have a material
adverse effect on the Series 1996-_ Certificateholders;
then, (y) in the case of any event described in subparagraph (a), (b) or (f),
after any applicable grace period set forth in or applicable to such
subparagraph, either the Trustee or the Holders of Series 1996-_ Certificates
evidencing Undivided Interests aggregating not less than 50% of the Invested
Amount of the Series 1996-_ Certificates by notice then given in writing to the
Seller and the Servicer (and to the Trustee if given by the Series 1996-_
Certificateholders) may declare that a liquidation event (a "Liquidation Event")
has occurred with respect to the Series 1996-_ Certificates as of the date of
such notice, and (z) in the case of subparagraph (c), (d) or (e) (or any of the
events specified in Section 9.01 of the Agreement), a Liquidation Event with
respect to such Series 1996-_ Certificates shall occur without any notice or
other action on the part of the Trustee or all investor certificateholders or
the Series 1996-_ Certificateholders, as applicable, immediately upon the
occurrence of such event.
SECTION 10. Related Interest Periods. For purposes of this Series
------------------------
Supplement, the Interest Period related to any Due Period shall be the Interest
Period ending on the day prior to the Distribution Date for such Due Period.
SECTION 11. Eligible Servicer. The Trustee hereby agrees that, in
-----------------
the event that it appoints an Eligible Servicer as Successor Servicer pursuant
to Section 10.02 of the Agreement, such Eligible Servicer shall have a long term
debt rating of at least A by Standard & Poor's and A2 by Moody's; provided,
--------
however, that if the Trustee has a long term debt rating of at least A by
- -------
Standard & Poor's and A2 by Moody's, such Eligible Servicer need have only a
long term debt rating of BBB- by Standard & Poor's and Baa3 by Moody's.
40
<PAGE>
SECTION 12. Trustee Resignation. The Trustee shall not resign
-------------------
pursuant to Section 11.07 of the Agreement without written confirmation from
each Rating Agency that such resignation will not result in the Rating Agency's
reducing or withdrawing its rating on any Class of any then outstanding Series
rated by it.
SECTION 13. Tax Opinion. As permitted in subsection 6.09(b) of the
------------
Agreement, it shall be a condition of the Exchange contemplated hereby and the
issuance of the Series 1996-_ Certificates that an Opinion of Counsel be
furnished pursuant to clause (c) of subsection 6.09(b) to the effect that the
Class A Certificates will be treated as debt for Federal income tax purposes and
that the issuance of the Series 1996-_ Certificates will not adversely affect
the Federal income tax characteristics of any outstanding Series of Investor
Certificates or any Certificate Owner.
SECTION 14. Subordination of Certain Termination Payments.
----------------------------------------------
Notwithstanding anything contained in subsection 12.02(c) of the Agreement, upon
the sale of Receivables or interests therein as provided in Section 12.02(c) of
the Agreement, the net proceeds of any such sale payable to the Series 1996-_
Certificates shall be paid pro rata to the Class A Certificates and then to the
--- ----
Collateral Interest Holder for application pursuant to the terms of the Loan
Agreement.
SECTION 15. Ratification of Pooling and Servicing Agreement;
------------------------------------------------
Representations; Security Interest. (a) As supplemented by this Series
- ----------------------------------
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Series Supplement shall be read, taken, and
construed as one and the same instrument; provided, however, that pursuant to
-------- -------
clause (D) of the fifth sentence of subsection 9.02(a) of the Agreement, the
required written instruction pursuant to such fifth sentence of subsection
9.02(a) shall include the Holders of Investor Certificates representing
Undivided Interests aggregating more than 50% of the Invested Amount of each
Series issued prior to April 19, 1995.
41
<PAGE>
(b) The Seller hereby represents and warrants to the Trustee that all
approvals, authorizations, consents, orders or other actions of any person or of
any governmental body or official required in connection with the execution and
delivery by the Seller of the Agreement, any Supplement and the Certificates,
the performance by the Seller of the transactions contemplated by the Agreement
and any Supplement and the fulfillment by the Seller of the terms of the
Agreement, any Supplement and the Certificates have been obtained; provided,
--------
however, that the Seller makes no representation or warranty regarding state
- -------
securities or "Blue Sky" laws in connection with the distribution of the
Certificates.
(c) If the Agreement does not constitute a valid transfer and
assignment of all right, title and interest of the Seller in the Receivables and
the proceeds thereof (excluding Recoveries relating thereto), the parties hereto
intend that the Agreement, which constitutes a security agreement under the UCC,
is a grant of a security interest for the purposes of (i) securing the rights of
the Trustee for the benefit of the Investor Certificateholders and (ii) securing
the right and ability of the Trustee to make the distributions set forth in the
Agreement.
SECTION 16. Counterparts. This Series 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 17. Governing Law. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
42
<PAGE>
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Series Supplement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.
FCC NATIONAL BANK
By _______________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By _______________________
Name:
Title:
43
<PAGE>
EXHIBIT A
---------
REGISTERED FIRST CHICAGO MASTER TRUST II REGISTERED
Unless this certificate is presented by an authorized representative
of The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
FLOATING RATE CREDIT CARD CERTIFICATES SERIES 1996-_
No. _____ $_____________
Each $1,000 minimum denomination represents 1/_______ Undivided Interest in
certain assets of the
FIRST CHICAGO MASTER TRUST II
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 in a
portfolio of "Classic VISA", "Standard MasterCard", "VISA Gold" and "Gold
MasterCard" consumer revolving credit accounts
by
FCC NATIONAL BANK
(Not an interest in or obligation of FCC National Bank or any affiliate thereof
except to the limited extent described herein)
CUSIP NO. 31945 RA_ _
A-1
<PAGE>
This certifies that
CEDE & CO.
(the "Certificateholder") is the registered owner of the Undivided Interest in
certain assets of a trust (the "Trust"), created pursuant to the Pooling and
Servicing Agreement, dated as of June 1, 1990, as supplemented by a Series
1996-_ Supplement, dated as of ____ , 1996, by and between FCC National Bank
("FCCNB"), a national bank, as Seller and Servicer, and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee") (collectively referred to
herein as the "Agreement"). The corpus of the Trust consists of (i) a portfolio
of all receivables (the "Receivables") existing in the consumer revolving credit
card accounts identified under the Agreement from time to time (the "Accounts"),
(ii) all Receivables generated under the Accounts from time to time thereafter,
(iii) funds collected or to be collected from cardholders in respect of the
Receivables (other than Recoveries), (iv) all funds which are from time to time
on deposit in the Collection Account and any other account or accounts held for
the benefit of investor certificateholders (the "Investor Certificateholders"),
(v) the benefits of funds on deposit in the Cash Collateral Account and any
other Enhancements to be issued by Enhancement Providers with respect to one or
more Series of investor certificates (the "Investor Certificates") up to the
amount available thereunder, and (vi) all other assets and interests
constituting the Trust. The holder of this Certificate is entitled to the
benefit of funds on deposit in the Cash Collateral Account, and the benefits of
the subordination of the Collateral Interest Series 1996-_ (the "Collateral
Interest"), and is not entitled to the benefit of any other Enhancement which
may be part of the Trust's assets. Although a summary of certain provisions of
the Agreement is set forth below, this Certificate does not purport to summarize
the Agreement, is qualified in its entirety by the terms and provisions of the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A copy of the
Agreement may be requested from the Trustee by writing to the Trustee at Sixth
Street and Marquette Avenue, Minneapolis, Minnesota 55479-0069, Attention:
Corporate Trust Department. To the extent not defined herein, the capitalized
terms used
A-2
<PAGE>
herein have the meanings ascribed to them in the Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, as amended from time to time, to
which the Certificateholder, by virtue of the acceptance hereof, assents and is
bound.
It is the intent of FCCNB and the Class A Certificateholders that, for
federal, state and local income and franchise tax purposes only, the Class A
Certificates will be evidence of debt secured by the Receivables. FCCNB and the
Certificateholder, by the acceptance of this Certificate, agree to treat this
Certificate for federal, state and local income and franchise tax purposes as
debt.
Subject to the Agreement, payments of principal are limited to the
unpaid Class A Invested Amount of the Class A Certificates at the commencement
of the Rapid Amortization Period, which may be less than the unpaid balance of
the Class A Certificates pursuant to the terms of the Agreement. All principal
of and interest on the Class A Certificates is due and payable no later than the
________ ____ Distribution Date (the "Series Termination Date"). After the
Series Termination Date, neither the Trust nor FCCNB will have any further
obligation to distribute principal or interest on the Class A 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, and pay the
proceeds, to the extent necessary, to the Class A Certificateholders pro rata in
final payment of the Class A Invested Amount, an amount of interests in the
Receivables or certain of the Receivables up to 110% of the Invested Amount at
the close of business on such date (but not more than the total amount of
Receivables allocable to the Certificates, including the Collateral Interest).
The Receivables consist of Principal Receivables which arise generally
from the purchase of goods and services and amounts advanced to cardholders as
cash advances and Finance Charge Receivables which arise from the Periodic Rate
Finance Charges, Cash Advance Fees, Late Fees, Overlimit Fees, annual fees with
respect to the Accounts, Returned Check Fees and all other fees and charges
payable by Obligors with respect to the Accounts.
A-3
<PAGE>
Finance Charge Receivables also include certain Interchange allocable to the
Accounts. This Certificate is one of a class of a series of Investor
Certificates entitled "First Chicago Master Trust II Floating Rate Credit Card
Certificates Series 1996-_ (the "Class A Certificates" and together with the
Collateral Interest, the "Certificates"), each of which represents an Undivided
Interest in certain assets of the Trust. The Trust's assets are allocated in
part to the Class A Certificateholders and to the holder of the Collateral
Interest (the "Collateral Interest Holder"), with the remainder allocated to
holders of other Series of Investor Certificates issued by the Trust, if any,
and to FCCNB (the "Seller"). In addition to the Certificates, an Exchangeable
Seller's Certificate will be issued to the Seller pursuant to the Agreement
which will represent the Seller's interest in the Trust. The Exchangeable
Seller's Certificate will represent the interest in the Principal Receivables
not represented by the Investor Certificates. The Exchangeable Seller's
Certificate may be exchanged by the Seller pursuant to the Agreement for one or
more Series of Investor Certificates and a reissued Exchangeable Seller's
Certificate upon the conditions set forth in the Agreement. In addition, to the
extent permitted for any Series of Investor Certificates by the related
Supplement, the Investor Certificateholders of such Series may tender their
Investor Certificates and the Seller may tender the Exchangeable Seller's
Certificate in exchange for one or more Series of Investor Certificates and a
reissued Exchangeable Seller's Certificate.
The aggregate interest represented by the Certificates at any time in
the Principal Receivables in the Trust shall not exceed an amount equal to the
Invested Percentage with respect to Principal Receivables at such time. The
Invested Amount, for any date, will be an amount equal to the sum of the Class A
Invested Amount and the Collateral Invested Amount. The Initial Invested Amount
is $___________. The Class A Initial Invested Amount is $___________. The
Class A Invested Amount, for any date, will be an amount equal to (a)
$___________ minus (b) the aggregate amount of principal payments made to the
-----
Class A Certificateholders prior to such date and minus (c) the excess, if any,
-----
of the aggregate amount of Class A Investor Charge-Offs for all Distribution
Dates preceding such date over the aggregate amount of Class A Investor Charge-
Offs reimbursed pursuant to Section 4.09 of the Agreement for all Distribution
Dates preceding such date. The Invested Percentage, when used with
A-4
<PAGE>
respect to Principal Receivables during the Revolving Period and Finance Charge
Receivables and Defaulted Receivables at any time, means the percentage
equivalent of a fraction the numerator of which is the Invested Amount for such
Distribution Date and the denominator of which is the Aggregate Principal
Receivables for the Due Period relating to such Distribution Date. The Invested
Percentage, when used with respect to Principal Receivables during the
Amortization Period or a Rapid Amortization Period, means the percentage
equivalent of a fraction the numerator of which is the Invested Amount as of the
end of the day on the last Distribution Date relating to the Revolving Period
and the denominator of which is the greater of (a) Aggregate Principal
Receivables for the Due Period related to the current Distribution Date and (b)
the sum of the numerators used to calculate the Invested Percentages with
respect to Principal Receivables for all Series of Investor Certificates
outstanding for the current Distribution Date. Collections of Finance Charge
Receivables and Principal Receivables will be further allocated between the
Class A Certificates and the Collateral Interest as described in the Agreement.
Interest will be distributed monthly on the fifteenth day of each
month (or, if such fifteenth day is not a Business Day, on the next succeeding
Business Day) (each a "Distribution Date"), commencing ______ __, 1996, at the
applicable rate on the Class A Invested Amount as of the preceding Record Date
to each Class A Certificateholder of record as of the Record Date. Interest
will accrue from ____ __, 1996 through ____ __, 1996 at the rate of ______% per
annum, and with respect to each Interest Period thereafter, at a rate of ____%
per annum above LIBOR determined in the manner set forth in the Agreement.
Interest is derived from Collections of Finance Charge Receivables, Excess
Spread, Excess Finance Charge Collections, withdrawals from the Cash Collateral
Account and Reallocated Principal Collections, in each case to the extent funds
are available from such source in accordance with the Agreement. The Record
Date with respect to any Distribution Date shall be the last day of the calendar
month preceding such Distribution Date.
No principal will be payable to Certificateholders until the _______
____ Distribution Date or such earlier date as may result from the occurrence of
a Liquidation Event. During the Revolving Period, Collections of Principal
Receivables otherwise allocable to Certificateholders will be paid to the
Seller, to other
A-5
<PAGE>
amortizing Series or, in certain circumstances, to the Collateral Interest
Holder.
As described in the Agreement, Collections of Principal Receivables
with respect to any Due Period will be allocated to the Certificates on the
related Determination Date on the basis of the Invested Percentage with respect
to Principal Receivables. Such Collections will be further allocated between
the Class A Certificates and the Collateral Interest as described in the
Agreement. Such allocations will be performed during the Revolving Period, the
Amortization Period and any Rapid Amortization Period. Under the Agreement,
such Collections will be paid to the Seller, to other amortizing Series or to
the Collateral Interest Holder, as described above, during the Revolving Period.
During the Amortization Period, Collections of Principal Receivables allocable
to the Class A Certificateholders up to the Controlled Amount will be paid to
the Class A Certificateholders, with the excess paid to the Seller, to other
amortizing Series or to the Collateral Interest Holder. During any Rapid
Amortization Period, all Collections of Principal Receivables allocable to the
Certificateholders will be paid to the Class A Certificateholders on each
Distribution Date. In each case, such payments to the Class A
Certificateholders shall not exceed the Class A Invested Amount.
Unless or until a Liquidation Event (as described in the Agreement)
shall have occurred, during the period beginning on the first day of the Due
Period relating to the _______ ____ Distribution Date (the "Controlled
Amortization Date") and ending on the earlier of (a) but not including, the
first day of the Due Period in which a Liquidation Event occurs or is deemed to
have occurred, (b) and including, the date on which the Invested Amount is paid
in full, or (c) the Series Termination Date (the "Amortization Period"),
Collections of Principal Receivables allocable to the Class A Certificates up to
the Controlled Amount will be paid to Class A Certificateholders monthly on each
Distribution Date beginning with the Distribution Date related to the Due Period
in which the Controlled Amortization Date occurs. The amount of monthly
principal ("Class A Monthly Principal") allocable to Class A Certificateholders
shall equal the sum of (i) an amount equal to the Class A Principal Percentage
of the Fixed Allocation Percentage of all Collections with respect to Principal
Receivables for such Due Period, (ii) the amount, if any, of Unallocated
A-6
<PAGE>
Principal Collections on deposit in the Collection Account allocable to the
Certificates, (iii) a portion of the amount of Collections of Principal
Receivables allocable to certain other Series but not needed to make payment to
or for the benefit of such Series and (iv) certain other amounts as described in
the Agreement.
If Class A Monthly Principal for the related Due Period is equal to or
greater than the sum of the Controlled Amortization Amount and the existing
Deficit Controlled Amortization Amount (such sum, the "Controlled Amount"), the
amount of the Controlled Amount will be paid to Class A Certificateholders and
the excess of such sum over the Controlled Amount will be paid from the Trust to
the Seller, but not more than the First Chicago Amount, to other amortizing
Series or to the Collateral Interest Holder.
If Class A Monthly Principal for the related Due Period is less than
the Controlled Amount, the entire amount of Class A Monthly Principal will be
paid to Class A Certificateholders and the amount of the excess of the
Controlled Amount over the Class A Monthly Principal will be the Deficit
Controlled Amortization Amount for the next succeeding Distribution Date.
During the period beginning on the first day of the Due Period in
which a Liquidation Event occurs or is deemed to occur and continuing to and
including the earlier of the date on which the Invested Amount has been paid in
full or the Series Termination Date (the "Rapid Amortization Period"),
Collections of Principal Receivables allocable to the Class A Certificates will
no longer be paid to the Seller, to other amortizing Series, to the Collateral
Interest Holder, or to the Class A Certificateholders (to the extent of the
Controlled Amount) as described above, but instead will be distributed monthly
on each Distribution Date to Class A Certificateholders. During the Rapid
Amortization Period, Class A Monthly Principal will be paid to the Class A
Certificateholders regardless of the level of any Controlled Amortization Amount
or Controlled Amount.
On each Distribution Date, the Paying Agent shall distribute to each
Class A Certificateholder of record on the related Record Date such Class A
Certificateholder's pro rata share (based on the aggregate Undivided Interest
--- ----
represented by the Certificate held by such Class A Certificateholder) of
amounts on
A-7
<PAGE>
deposit in the Collection Account as are payable to the Class A
Certificateholders pursuant to the Agreement. The amount to be distributed on
each Distribution Date to the Certificateholder will be equal to the product of
the aggregate Undivided Interest represented by this Certificate and the
aggregate of all payments to be made to Class A Certificateholders on such
Distribution Date. Distributions with respect to this Certificate will be made
by the Paying Agent by check mailed to the address of the Certificateholder of
record appearing in the Certificate Register without the presentation or
surrender of this Certificate or the making of any notation (except for the
final distribution in respect of this Certificate) except that if all Class A
Certificates are registered in the name of CEDE & CO., the nominee registration
for The Depository Trust Company, distributions will be made in the form of
immediately available funds. Final payment of this Certificate will be made
only upon presentation and surrender of this Certificate at the office or agency
specified in the notice of final distribution delivered by the Trustee to the
Certificateholder in accordance with the Agreement.
On the Distribution Date occurring after the Invested Amount is
reduced to 5% of the Initial Invested Amount or less, the Seller may repurchase
the Certificateholders' Interest in the Trust unless certain events of
bankruptcy, insolvency or receivership have occurred with respect to FCCNB. The
repurchase price will be equal to the Invested Amount plus accrued and unpaid
interest thereon.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST
IN, FCCNB, THE SERVICER (IF THE SERVICER IS NOT FCCNB) OR ANY AFFILIATE OF
EITHER OF THEM (EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN) AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY. THIS CERTIFICATE IS LIMITED IN RIGHT OF PAYMENT TO CERTAIN
COLLECTIONS RESPECTING THE RECEIVABLES (AND CERTAIN OTHER AMOUNTS), ALL AS MORE
SPECIFICALLY SET FORTH HEREINABOVE AND IN THE AGREEMENT.
The Agreement may be amended by the Seller, the Servicer and the
Trustee, without Certificateholder consent, to cure any ambiguity, to correct or
supplement any provision therein which may be inconsistent with any other
provision therein, or to add any other provisions with respect to matters or
questions arising under the
A-8
<PAGE>
Agreement which are not inconsistent with the provisions of the Agreement.
Additionally, the Agreement may be amended from time to time by the Servicer,
the Seller and the Trustee, without the consent of any of the
Certificateholders, to add to or change any of the provisions of the Agreement
to provide that Bearer Certificates may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of 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, provided any such
action shall not adversely affect the interests of the Holders of Bearer
Certificates of any Series or any related Coupons in any material respect. No
such amendment, however, may adversely affect in any material respect the
interests of the Certificateholders unless such amendment is necessary to comply
with the Bearer Rules. Any Supplement and any amendments regarding the addition
to or removal of Receivables from the Trust as provided in Sections 2.05, 2.10
and 6.09 of the Agreement, respectively, shall not be considered amendments to
the Agreement.
Subject to the preceding paragraph, the Agreement may be amended by
the Servicer, the Seller and the Trustee with the consent of the Investor
Certificateholders owning Undivided Interests aggregating not less than 66-2/3%
of the invested amount of all Series adversely affected for the purpose of
adding any provisions to, changing in any manner or eliminating any of the
provisions of the Agreement or of modifying in any manner the rights of Investor
Certificateholders of any Series then issued and outstanding, provided, however,
-------- -------
that no such amendment shall (a) reduce in any manner the amount of, or delay
the timing of, distributions which are required to be made on any Investor
Certificate without the consent of such Investor Certificateholder, (b) change
the definition of or the manner of calculating the interest of any Investor
Certificateholder, without the consent of such Investor Certificateholder, or
(c) reduce the aforesaid percentage required to consent to any such amendment,
without the consent of such Investor Certificateholder. Any such amendment and
any such consent by the Holder of this Certificate shall be conclusive and
binding on such Certificateholder and upon all future Holders
A-9
<PAGE>
of this Certificate and of any Certificate issued in exchange hereof or in lieu
hereof whether or not notation thereof is made upon this Certificate.
The Class A Certificates are issuable only in denominations of $1,000
and integral multiples of $1,000 in excess hereof. 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 the Certificateholder's
attorney, and duly authorized in writing with such signature guaranteed, and
thereupon one or more new Class A Certificates of authorized denominations and
for the same aggregate Undivided Interest will be issued to the designated
transferee or transferees.
As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for new Class A Certificates
evidencing a like aggregate Undivided Interest, as requested by the
Certificateholder surrendering this Certificate. No service charge may be
imposed for any such exchange but the Servicer, the Seller or 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 Servicer, the Trustee, the Paying Agent and the Transfer Agent and
Registrar, and any agent of any of them, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer, nor the Trustee, the Paying Agent, the Transfer Agent and Registrar,
nor any agent of any of them shall be affected by notice to the contrary except
in certain circumstances described in the Agreement.
This Certificate shall be construed in accordance with and governed by
the laws of the State of Delaware.
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 Agreement, or be valid for any purpose.
A-10
<PAGE>
IN WITNESS WHEREOF, FCCNB has caused this Certificate to be duly
executed.
Dated:
FCC NATIONAL BANK
By: ---------------------
Chairman of the Board
By: --------------------
Cashier
A-11
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates described in the within-
mentioned Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA, NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION NATIONAL ASSOCIATION
as Trustee as Trustee
OR
By:
Authorized Officer By: THE FIRST NATIONAL
BANK OF CHICAGO
Authenticating Agent
By:
Authorized Officer
A-12
<PAGE>
_________________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE(S)
[ ______________________ ]
(PLEASE PRINT OR TYPEWRITE
NAME AND ADDRESS OF ASSIGNEE)
................................................................................
................................................................................
the within certificate and all rights thereunder,
and hereby irrevocably constitutes and appoints
attorney, with full power of substitution in the
premises, to transfer said certificate on the books
kept for registration thereof.
Dated:............................................................
Note: The signature(s) to this Assignment must
correspond with the name(s) as written on the
face of the within certificate in every
particular, without alteration or enlarge-ment
or any change whatever.
A Non-U.S. Person as defined in
the Code must certify to the
Trustee in writing as to its Non-
U.S. Person status and such further
information as may be required under
the Code or reasonably requested by
the Trustee.
A-13
<PAGE>
EXHIBIT B
---------
FORM OF CERTIFICATEHOLDERS' PAYMENT DATE STATEMENT
(To be delivered by the Payment Agent on each
Payment Date pursuant to Section 5.02(a) of
the Pooling and Servicing Agreement)
FCC NATIONAL BANK
_________________________________________________
FIRST CHICAGO MASTER TRUST II
SERIES 1996-_
__________________________________________________
Under the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of June 1, 1990 by and between FCC National Bank, as
Seller and Servicer ("FCCNB"), and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee"), as amended and supplemented by the
Series 1996-_ Supplement dated as of ____ , 1996 by and between FCCNB and
the Trustee, FCCNB, as Servicer, is required to prepare certain information
for each Payment Date regarding current distributions to Class A
Certificateholders and the performance of the First Chicago Master Trust II
(the "Trust") during the previous period. The information which is
required to be prepared with respect to the distribution on the
_________________, 199_ Payment Date and with respect to the performance of
the Trust during the Due Period for such Payment Date is set forth below.
Certain of the information is presented on the aggregate amounts for the
Trust as a whole. All capitalized terms used herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
B-1
<PAGE>
A. Information Regarding the Current Distribution (Stated on the Basis of
----------------------------------------------------------------------
$1,000 Original Principal Amount).
---------------------------------
1. The total amount of the distri-
bution to Class A Certificate-
holders on the Payment Date
per $1,000 interest $________
2. The amount of the distribution
set forth in paragraph 1 above
in respect of principal on the
Class A Certificates, per
$1,000 interest $________
3. The amount of the distribution
set forth in paragraph 1 above
in respect of interest on the
Class A Certificates, per
$1,000 interest $________
B. Information Regarding the Performance of the Trust.
--------------------------------------------------
1. Collections of Receivables.
--------------------------
a. The aggregate amount of Collections
of Receivables processed for the Due
Period with respect to the current
Distribution Date which were allo-
cated in respect of the Investor
Certificates of all Series $________
b. The aggregate amount of Collections
of Receivables processed for
the Due Period with respect to
the current Distribution Date which
were allocated in respect of the
Series 1996-_ Certificates $________
c. The aggregate amount of Collections
of Receivables processed for
the Due Period with respect to
the current Distribution Date which
were allocated in respect of the
Class A Certificates $________
B-2
<PAGE>
d. The amount of Collections of
Receivables processed for the
Due Period with respect to the
current Distribution Date which
were allocated in respect of
Class A Certificates, per $1,000
interest $________
e. The amount of Excess Spread for the
Due Period with respect to the cur-
rent Distribution Date $________
f. The amount of Reallocated Principal
Collections for the Due Period with
respect to the current Distribution
Date allocated in respect of the Class
A Certificates $________
g. The amount of Excess Finance Charge
Collections allocated in respect of
the Series 1996-_ Certificates, if
any $________
h. The amount of Excess Principal Col-
lections allocated in respect of the
Series 1996-_ Certificates, if any $________
2. Receivables in Trust.
--------------------
a. Aggregate Principal Receivables for
the Due Period with respect to the
current Distribution Date (which
reflects the Principal Receivables
represented by the Exchangeable
Seller's Certificate and by the
Investor Certificates of all
Series) $________
b. The amount of Principal Receivables
in the Trust represented by the
Series 1996-_ Certificates (the
"Invested Amount") for the Due Period
with respect to the current Distri-
bution Date $________
B-3
<PAGE>
c. The amount of Principal Receivables
in the Trust represented by the
Class A Certificates (the "Class A
Invested Amount") for the Due Period
with respect to the current Distri-
bution Date $________
d. The Invested Percentage with respect
to Finance Charge Receivables
(including Interchange) and Defaulted
Receivables for the Series 1996-_
Certificates for the Due Period with
respect to the current Distribution
Date ________%
e. The Invested Percentage with respect
to Principal Receivables for the
Series 1996-_ Certificates for the Due
Period with respect to the current
Distribution Date ________%
f. The Class A Floating Percentage
for the Due Period with respect
to the current Distribution Date ________%
g. The Class A Principal Percentage
for the Due Period with respect
to the current Distribution Date ________%
h. The Collateral Floating Percentage
for the Due Period with respect
to the current Distribution Date ________%
i. The Collateral Principal Percentage
for the Due Period with respect
to the current Distribution Date ________%
3. Delinquent Balances.
-------------------
The aggregate amount of outstanding
balances in the Accounts which were 30
or more days delinquent as of the end
of the Due Period for the current
Distribution Date $________
B-4
<PAGE>
4. Investor Default Amount.
-----------------------
a. The aggregate amount of all
Defaulted Receivables written off
as uncollectible during the Due Period
with respect to the current Distri-
bution Date allocable to the Series
1996-_ Certificates (the "Investor
Default Amount") $________
b. The Class A Investor Default
Amount $________
c. The Collateral Investor Default
Amount $________
5. Investor Charge-Offs.
--------------------
a. The amount of the Class A Investor
Charge-Offs per $1,000 interest
after reimbursement of any such
Class A Investor Charge-Offs for the
Due Period with respect to the
current Distribution Date $________
b. The amount attributable to Class A
Investor Charge-Offs, if any, by
which the principal balance of the
Class A Certificates exceeds the
Class A Invested Amount as of the
end of the day on the Record Date
with respect to the current
Distribution Date $________
c. The amount of the Collateral Charge-Offs,
if any, for the Due Period with respect
to the current Distribution Date $________
6. Monthly Servicing Fee.
---------------------
a. The amount of the Monthly Servicing
Fee payable by the Trust to the
Servicer with respect to the
current Distribution Date $________
B-5
<PAGE>
b. The amount of the Interchange Monthly
Servicing Fee payable to the Servicer
with respect to the current
Distribution Date $________
7. Available Cash Collateral Amount.
--------------------------------
a. The amount, if any, withdrawn from
the Cash Collateral Account for the
current Distribution Date (the
"Withdrawal Amount") $________
b. The amount available to be withdrawn
from the Cash Collateral Account as of
the end of the day on the current Distribution
Date, after giving effect to all withdrawals,
deposits and payments to be made on such
Distribution Date (the "Available Cash
Collateral Amount" for the next Distribution Date) $________
c. The amount as computed in 7.b as a
percentage of the Class A Invested
Amount after giving effect to all re-
ductions thereof on the current Dist-
ribution Date $________
8. Collateral Invested Amount.
--------------------------
a. The Collateral Invested Amount for
the current Distribution Date $________
b. The Collateral Invested Amount after
giving effect to all withdrawals,
deposits and payments on the current
Distribution Date $________
9. Total Enhancement.
-----------------
a.The total Enhancement for the
current Distribution Date $________
b. The total Enhancement after giving effect to all
withdrawals, deposits and payments on the
current Distribution Date $________
B-6
<PAGE>
C. The Pool Factor.
---------------
1. The Pool Factor (which represents
the ratio of the Class A Invested
Amount on the last day of the month
ending on the Record Date adjusted
for Class A Investor Charge-Offs
set forth in B.5.a above and for
the distributions of principal set
forth in A.2 above to the Class A
Initial Invested Amount). The
amount of a Class A Certificate-
holder's pro rata share of the
Class A Invested Amount can be
determined by multiplying the
original denomination of the
holder's Class A Certificate by
the Pool Factor ________%
D. Deficit Controlled Amortization Amount.
--------------------------------------
1. The Deficit Controlled Amortization
Amount for the preceding
Due Period $_________
FCC NATIONAL BANK,
Servicer
By___________________________
Title:
B-7
<PAGE>
EXHIBIT 4.21
SUBJECT TO COMPLETION, DATED APRIL 9, 1996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED _________, 1996
$_____________
FIRST CHICAGO MASTER TRUST II
FLOATING RATE ASSET BACKED CERTIFICATES SERIES 1996-_
FCC NATIONAL BANK, SELLER AND SERVICER
Each of the Floating Rate Asset Backed Certificates Series 1996-_ (the "Class A
Certificates") offered hereby will evidence an undivided interest in the First
Chicago Master Trust II (the "Trust") created pursuant to a Pooling and
Servicing Agreement between FCC National Bank, as seller and servicer (the
"Bank"), and Norwest Bank Minnesota, National Association, as trustee. The
Trust assets include receivables (the "Receivables") generated from time to time
in the ordinary course of business in a portfolio of consumer revolving credit
card accounts and will include the benefits of funds, if any, on deposit in the
Cash Collateral Account, all as more fully described herein. Certain assets of
the Trust will be allocated to the holders of the Class A Certificates (the
"Class A Certificateholders"), including the right to receive a varying
percentage of each month's collections with respect to the Receivables. In
addition, the Collateral Interest Series 1996-__ (the "Collateral Interest" and,
together with the Class A Certificates, the "Certificates") evidencing an
undivided interest in the Trust will be issued in the initial amount of
$____________ and will be subordinated to the Class A Certificates as described
herein. Only
(Continued on the following page)
THE CLASS A CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF THE BANK OR ANY AFFILIATE THEREOF
EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN. NEITHER THE CLASS A
CERTIFICATES, THE UNDERLYING ACCOUNTS, THE RECEIVABLES NOR ANY COLLECTIONS
THEREON ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public(1) Discount Bank(1)(2)
Per Class A Certificate
Total
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, at the Certificate Rate from _____ __, 1996.
(2) Before deducting expenses payable by the Bank estimated to be $________.
The Class A Certificates are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Class A Certificates will be made in book-
entry form only through the facilities of The Depository Trust Company, Cedel
Bank, societe anonyme and the Euroclear System on or about __________ __, 1996.
- --------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED WITHOUT THE DELIVERY OF A FINAL PROSPECTUS SUPPLEMENT
AND ACCOMPANYING PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
- --------------------------------------------------------------------------------
<PAGE>
One or more affiliates of the Bank may from time to time purchase or acquire a
position in the Class A Certificates and may, at its option, hold or resell such
Class A Certificates. First Chicago Capital Markets, Inc. ("FCCM"), an
affiliate of the Bank, expects to offer and sell previously issued Class A
Certificates in the course of its business as a broker-dealer. FCCM may act as
a principal or agent in such transactions. The accompanying Prospectus and this
Prospectus Supplement may be used by FCCM in connection with such transactions.
Such sales, if any, will be made at varying prices related to prevailing market
prices at the time of sale.
[Underwriters]
The date of this Prospectus Supplement is __________ __, 1996.
S-2
<PAGE>
(Continued from previous page)
the Class A Certificates are being offered hereby. The Cash Collateral Account,
in an initial amount of $______, will provide additional credit support for the
Class A Certificates and will be available to make distributions to the Class A
Certificateholders as described herein. The Bank owns the remaining interest in
the Trust not allocable to the Class A Certificates, the Collateral Interest or
previously issued Series. From time to time, the Bank may offer other Series
which evidence undivided interests in the Trust by exchanging a portion of its
interest in the Trust. Interest will accrue on the Class A Certificates from
________ __, 1996 through _______ __, 1996, from ________ __, 1996 through
_______ __, 1996 and with respect to each Interest Period thereafter at _____%
per annum above the London interbank offered quotations for one-month United
States dollar deposits ("LIBOR") prevailing on the related LIBOR Determination
Date (as defined herein). Interest with respect to the Class A Certificates is
payable on the 15th day of each month (or, if such day is not a business day,
the next succeeding business day) (each, a "Distribution Date"), commencing with
the _______ 1996 Distribution Date. Principal with respect to the Class A
Certificates is payable on each Distribution Date beginning with the _________
Distribution Date (or sooner under certain limited circumstances described
herein).
_______________________
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
_______________________
The Class A Certificates offered hereby constitute a separate Series of
Certificates being offered by the Seller from time to time pursuant to its
Prospectus dated _________ __, 1996. This Prospectus Supplement does not
contain complete information about the offering of the Class A Certificates.
Additional information is contained in the Prospectus and purchasers are urged
to read both this Prospectus Supplement and the Prospectus in full. Sales of
the Class A Certificates may not be consummated unless the purchaser has
received both this Prospectus Supplement and the Prospectus.
S-3
<PAGE>
The following summaries are qualified in their entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Certain capitalized terms which are used herein are
defined elsewhere in this Prospectus Supplement and the accompanying Prospectus.
See "Index of Terms for Prospectus Supplement" and "Index of Terms for
Prospectus." Unless the context otherwise requires, certain capitalized terms,
when used herein, relate only to the Class A Certificates and the Collateral
Interest. Other Series issued pursuant to other similar prospectuses or
disclosure documents may also use such capitalized terms in such prospectuses or
documents. However, in such cases, reference to such terms, unless the context
otherwise requires, is made only in the context of the issuance of such other
Series.
SUMMARY OF SERIES TERMS
Trust First Chicago Master Trust II.
Title of Security Floating Rate Asset Backed Certificates Series
1996-_ (the "Class A Certificates").
Initial Invested Amount $ _____.
Class A Initial Invested Amount $ _____.
Collateral Initial Invested Amount $ _____.
Class A Certificate Rate LIBOR plus ___% per annum.
Distribution Dates The fifteenth day of each month (or, if such day is not a
business day, the next succeeding business day),
commencing _____ __, 1996.
Expected Initial Principal Payment Date _____ __, ____.
Controlled Amortization Amount $______.
Class A Expected Final Distribution Date _____ __, ____.
Series ___ Closing Date _____ __, 1996.
Series Termination Date _____ __, ____.
SUMMARY OF SERIES PROVISIONS
Issuer The Class A Certificates and the
Collateral Interest (collectively,
the "Certificates") each represent an undivided
interest in the Trust. As used herein, the term
"Series 1996-_" refers to the Class A Certificates
and the Collateral Interest, and the term
"Certificateholders" refers to holders of the
Class A Certificates and the holder of the
Collateral Interest, while the term "Series"
S-4
<PAGE>
refers to any Series issued by the Trust,
including Series 1996-_. Only the Class A
Certificates are being offered hereby.
Seller FCC National Bank (the "Bank"),
a national bank and a wholly-owned
subsidiary of First Chicago NBD Corporation
("First Chicago NBD"), is the transferor of
ownership interests in certain receivables and the
originator of the Trust. The Bank is referred to
herein as the "Seller."
Trustee Norwest Bank Minnesota, National
Association (the "Trustee").
The Accounts and the
Receivables The aggregate amount of Receivables in the
Accounts as of the end of the _______ 1996 Due
Period was $___________ of which $_________ were
Principal Receivables and $_________ were Finance
Charge Receivables (including those for the
related Due Period as well as unpaid Finance
Charge Receivables for previous Due Periods).
Certain Interchange attributable to cardholder
charges for merchandise and services will be
treated as Finance Charge Receivables for purposes
of the Series 1996-_ Supplement. See "The Bank's
Credit Card Business--Interchange" in the
Prospectus.
The monthly periodic charge currently assessed,
when applicable, on all Principal Receivables may
be a fixed rate (currently, 19.8% per annum on
most fixed rate Accounts) or a variable rate
(currently equal on a per annum basis to the prime
rate as published from time to time in The Wall
Street Journal plus a spread which varies from
program to program and generally ranges from 6.9%
to 9.9%). In addition, substantially all recently
opened Accounts, for an initial period (generally
ranging from 6 to 15 months), may be assessed a
fixed monthly periodic charge (generally, 6.9% or
9.9% per annum) for purchases, which monthly
periodic rate will then convert after such initial
period into a variable rate. See "The Accounts--
Billing and Payments" herein and in the
Prospectus. As of the end of the ________ 1996
Due Period, the Receivables assessed a fixed
monthly periodic charge and a variable monthly
periodic charge as a percentage of the total
Receivables balance of the Accounts were
approximately ____% and _____%, respectively.
S-5
<PAGE>
Class A Certificates The Class A Certificates will be issued in book-entry
form only, in the Initial Class A Invested Amount,
on the Series ____ Closing Date and will initially
be represented by Class A Certificates registered
in the name of Cede. A Certificate Owner will not
be entitled to receive a definitive certificate
representing such person's interest, except in the
event that Definitive Certificates are issued
under the limited circumstances described in the
Prospectus. See "Description of the Certificates
and the Agreement--Definitive Certificates" in the
Prospectus. In such event, interests in the Class
A Certificates will be available in denominations
of $1,000 and in integral multiples thereof. All
references herein to Class A Certificateholders
shall refer to Certificate Owners, except as
otherwise specified herein. The Trust's assets
will be allocated to either the interest of the
Class A Certificateholders, the interest of the
holder of the Collateral Interest (the "Collateral
Interest Holder"), the interest of the holders of
other outstanding Series or the interest of the
Seller (the last being referred to as the "First
Chicago Interest"). Each Class A Certificate
offered hereby evidences an undivided interest in
the Trust assets allocated to the Class A
Certificateholders, and represents the right to
receive from such Trust assets funds up to (but
not in excess of) the amounts required to make
payments of interest at the interest rate
described on the cover hereof and under "Monthly
Interest" below and payments of principal during
the Controlled Amortization Period and Rapid
Amortization Period to the extent of the Class A
Invested Amount (which may be less than the
aggregate unpaid principal balance of the Class A
Certificates as provided below). See "Maturity
and Principal Payment Considerations" herein and
in the Prospectus.
The Class A Invested Amount will, except if there
are unreimbursed Class A Investor Charge-Offs or
if a Liquidation Event occurs, remain fixed at the
Class A Initial Invested Amount during the
Revolving Period and decline thereafter during any
Controlled Amortization Period or Rapid
Amortization Period as principal is paid on the
Class A Certificates. The Class A Invested Amount
is subject to reduction as a result of allocating
Defaulted Receivables to the Class A Certificates
when amounts available from Excess Spread, the
Cash Collateral Account and collections of
Principal Receivables allocable to the Collateral
Interest ("Reallocated Princi-
S-6
<PAGE>
pal Collections") have been exhausted and the
Collateral Invested Amount has been reduced to
zero.
The Collateral Interest will be issued on the
Series ___ Closing Date to the Collateral Interest
Holder in the Collateral Initial Invested Amount
(The Collateral Initial Invested Amount, together
with the Class A Initial Invested Amount, is
referred to herein as the "Initial Invested
Amount"). The amount of the Collateral Interest
from time to time (the "Collateral Invested
Amount" and, together with the Class A Invested
Amount, the "Invested Amount") will form a portion
of the Enhancement available to the Class A
Certificateholders.
As of the end of the day on the ________ 1996
Distribution Date, the Trust has issued and
outstanding the other Series identified in Annex I
to this Prospectus Supplement.
The Class A Certificates, to the extent of the
Class A Invested Amount, will include the right to
receive varying percentages of the collections of
Finance Charge Receivables and Principal
Receivables for each Due Period. Collections of
Finance Charge Receivables and Defaulted
Receivables will be allocated at all times to the
Class A Certificateholders based on the Class A
Floating Percentage of the Floating Allocation
Percentage with respect to any Distribution Date.
The "Class A Floating Percentage" for any
Distribution Date is the percentage equivalent
(which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class A
Invested Amount for such Distribution Date and the
denominator of which is the Invested Amount for
such Distribution Date. The "Floating Allocation
Percentage" for any Distribution Date is the
percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of
which is the Invested Amount for such Distribution
Date, and the denominator of which is Aggregate
Principal Receivables for the related Due Period.
During the Revolving Period, collections of
Principal Receivables will be allocated to the
Class A Certificateholders, and generally paid to
the Seller or, under certain circumstances, to the
Collateral Interest Holder or to other Series,
based on the Class A Principal Percentage of the
Floating Allocation Percentage with respect to any
Distribution Date. During the Controlled
Amortization Period or Rapid Amortization Period,
S-7
<PAGE>
collections of Principal Receivables will be
allocated to the Class A Certificateholders based
on the Class A Principal Percentage of the Fixed
Allocation Percentage. The "Class A Principal
Percentage" for any Distribution Date (i) relating
to the Revolving Period, is the percentage
equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the
Class A Invested Amount for such Distribution
Date, and the denominator of which is the Invested
Amount for such Distribution Date and (ii)
relating to the Controlled Amortization Period or
the Rapid Amortization Period, is the percentage
equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the
Class A Invested Amount as of the end of the day
on the last Distribution Date relating to the
Revolving Period, and the denominator of which is
the Invested Amount as of such day. The "Fixed
Allocation Percentage" for any Distribution Date
is the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the
numerator of which is the Invested Amount as of
the end of the day on the last Distribution Date
relating to the Revolving Period and the
denominator of which is the greater of (a)
Aggregate Principal Receivables for the Due Period
related to the current Distribution Date and (b)
the sum of the numerators used to calculate the
Invested Percentages with respect to Principal
Receivables for all Series outstanding for the
current Distribution Date. The Class A
Certificates will also be entitled to the benefit
of the subordination of certain collections of
Finance Charge Receivables and Principal
Receivables allocated to the Collateral Interest
as described herein. See "Description of the
Class A Certificates and the Agreement--Allocation
Percentages," "-Allocation of Funds" and "--
Liquidation Events" herein.
As of the end of the _______ 1996 Due Period,
Principal Receivables totaled $___________ and
upon issuance of the Certificates, the sum of the
initial invested amounts (or full invested amount
for the Series 1991-D Certificates) for all
outstanding Series issued by the Trust will be
$_____________ and the aggregate current invested
amount for all outstanding Series will be
$_____________. See Annex I to this Prospectus
Supplement for information regarding calculation
of the numerator in respect of Principal
Receivables for outstanding Series.
S-8
<PAGE>
In addition to their rights to collections of
Finance Charge Receivables and Principal
Receivables allocated to the Class A Invested
Amount, the Class A Certificates will also have
the benefits of the funds, if any, available in
the Cash Collateral Account as described herein.
See "Description of the Class A Certificates and
the Agreement--The Cash Collateral Account" and "-
-Application of Collections" herein.
The Class A Certificates represent undivided
interests in the Trust only and do not represent
interests in or obligations of the Seller or any
affiliate thereof except to the limited extent
described herein. Neither the Class A
Certificates, the Accounts, the Receivables nor
any collections thereon are insured or guaranteed
by the Federal Deposit Insurance Corporation (the
"FDIC") or any other governmental agency.
Registration of Class
A Certificates The Class A Certificates will initially
be represented by one or more Class A Certificates
registered in the name of Cede & Co. ("Cede"), as
the nominee of The Depository Trust Company
("DTC"). No person acquiring an interest in the
Class A Certificates will be entitled to receive a
definitive certificate representing such person's
interest, except in the event that Definitive
Certificates are issued under the limited
circumstances described in the Prospectus. See
"Description of the Certificates and the
Agreement--Definitive Certificates" in the
Prospectus. Class A Certificateholders may elect
to hold their Class A Certificates through DTC in
the United States or, in Europe, through Cedel,
societe anonyme ("Cedel") or the Euroclear System
("Euroclear"). Transfers will be made in
accordance with the rules and operating procedures
described in the Prospectus. See "Description of
Certificates and the Agreement--Book-Entry
Registration" in the Prospectus.
Monthly Interest Interest at the applicable Class A Certificate
Rate on the Class A Certificates for each Interest
Period will be distributed to Class A
Certificateholders on each Distribution Date, in
an amount equal to the product of (i)(a) the
actual number of days in the related Interest
Period divided by 360, times (b) the Class A
Certificate Rate for the related Interest Period
and (ii) the Class A Invested Amount as of the
preceding Record Date (or, in the case of the
first Distribution Date, as of the Series __
Closing Date). Except as set forth on the cover
page hereof with respect to the Interest Periods
relating to the
S-9
<PAGE>
_______ 1996 Distribution Date, an "Interest
Period," with respect to any Distribution Date,
will be the period from the previous Distribution
Date through the day preceding such Distribution
Date. Interest for any Distribution Date due but
not paid on such Distribution Date will be due on
the next succeeding Distribution Date together
with additional interest on such amount at the
applicable Class A Certificate Rate plus 2% per
annum. Interest payments on the Class A
Certificates will be derived from collections
allocated to Finance Charge Receivables based on
the Class A Floating Percentage of the Floating
Allocation Percentage with respect to a Due Period
(as well as any available Excess Spread and Excess
Finance Charge Collections) and, if necessary,
withdrawals from the Cash Collateral Account and
Reallocated Principal Collections.
Revolving Period No principal will be payable to the Class A
Certificateholders until the Expected Initial
Principal Payment Date or, upon the occurrence of
a Liquidation Event as described herein, the first
Distribution Date with respect to the Rapid
Amortization Period. For each Due Period during
the period from and including the Series __
Closing Date, up to and including the day prior to
the day on which the Controlled Amortization
Period or the Rapid Amortization Period commences
(the "Revolving Period"), collections of Principal
Receivables allocable to the Class A
Certificateholders will, subject to certain
limitations, be paid to the Seller, to the
Collateral Interest Holder or to other Series.
See "Description of the Class A Certificates and
the Agreement--Liquidation Events" for a
discussion of the events which might lead to the
termination of the Revolving Period prior to its
scheduled ending date.
Principal Payments;
Certain Allocations Collections of Principal Receivables with respect to
any Due Period will be allocated to the Class A
Invested Amount on the related Determination Date
on the basis of the Class A Principal Percentage
of the Invested Percentage for Series 1996-__
applicable to Principal Receivables for such Due
Period. Under the Agreement, such collections for
a Distribution Date will be paid (i) generally to
the Seller, to the Collateral Interest Holder or
to other Series, as described above, during the
Revolving Period, (ii) to the Class A
Certificateholders up to the Controlled Amount,
and to the Seller, to the Collateral Interest
Holder or to other Series to the extent
S-10
<PAGE>
that such collections of Principal Receivables
exceed the Controlled Amount for the Distribution
Date, during the Controlled Amortization Period,
or (iii) to the Class A Certificateholders up to
the Class A Invested Amount, during the Rapid
Amortization Period.
Other Series offered by the Trust may or may not
have Amortization Periods like the Controlled
Amortization Period or the Rapid Amortization
Period for the Class A Certificates, and such
periods may have different lengths and begin on
different dates than such Controlled Amortization
Period or Rapid Amortization Period. Thus,
certain Series may be in their Revolving Periods,
while others are in periods over which collections
of Principal Receivables are distributed to or
accumulated for the benefit of such Series. Under
certain circumstances, one or more Series may be
in their Amortization Periods or Accumulation
Periods, while other Series are not. In addition,
other Series may allocate Principal Receivables
based upon different Invested Percentages. See
"Description of the Certificates and the
Agreement--Exchanges" in the Prospectus for a
discussion of the potential terms of other Series.
As of the date hereof, two series previously
issued by the Trust are currently in their
Amortization Periods.
Principal Payments;
Controlled Amortization
Period Unless or until an event which causes the
Certificates to enter the Rapid Amortization
Period (a "Liquidation Event") has occurred,
commencing on the first day of the Due Period
relating to the _______ ____ Distribution Date
(the "Controlled Amortization Date") and ending
when the Invested Amount has been paid in full,
when Series 1996-__ terminates or upon the
occurrence of a Liquidation Event (the "Controlled
Amortization Period"), collections of Principal
Receivables allocable to the Class A Certificates
will be distributed monthly, in payment of
principal of the Class A Certificates, as provided
herein, on each Distribution Date beginning with
the Distribution Date for the Due Period
commencing on the Controlled Amortization Date.
During such period, the amount of collections of
Principal Receivables allocable to the Class A
Certificates will equal the product of such
collections and the Class A Principal Percentage
of the Invested Percentage for Series 1996-__ with
respect to Principal Receivables and such
collections will be paid to the Class A
Certificateholders as
S-11
<PAGE>
principal, to the extent of the lesser of such
product and the Controlled Amount.
Principal Payments; Rapid
Amortization Period During the period beginning on the earlier of the
first day of the Due Period in which a Liquidation
Event occurs or is deemed to occur and continuing
to and including the earlier of (a) the date on
which the Invested Amount has been paid in full
and (b) the date on which Series 1996-__
terminates (the "Rapid Amortization Period"),
collections of Principal Receivables and certain
other amounts allocable to the Class A
Certificateholders will no longer be paid to the
Seller, to the Collateral Interest Holder (except
in certain cases when an Enhancement Surplus
exists) or to other Series but instead will be
distributed to the Class A Certificateholders
monthly, in payment of principal on the Class A
Certificates, on each Distribution Date beginning
with the first Distribution Date related to such
Rapid Amortization Period. See "Description of the
Class A Certificates and the Agreement--
Liquidation Events" for a discussion of the events
which might lead to the commencement of a Rapid
Amortization Period.
Excess Finance Charge To the extent that collections of Finance
Collections Charge Receivables allocated to the Certificates
are not needed to make payments to
Certificateholders or other payments required in
respect of Series 1996-__, such collections may be
applied to cover shortfalls in amounts payable
from collections of Finance Charge Receivables
allocable to certain other Series. In addition,
certain collections of Finance Charge Receivables
allocated to certain other Series, to the extent
such collections are not needed to make payments
required in respect of each such Series, may be
applied to cover shortfalls in amounts payable
from collections of Finance Charge Receivables
allocable to Series 1996-__.
Shared Collections of
Principal Receivables To the extent that collections of
Principal Receivables allocated
to the Certificates are not needed to make
payments to Certificateholders or other payments
required in respect of Series 1996-__, such
collections may be applied to cover principal
payments due to or for the benefit of other
Series. Any such application of collections will
not result in a reduction of the Invested Amount
of the Certificates. In addition, certain
collections of Principal Receivables allocated to
certain other
S-12
<PAGE>
Series, to the extent such collections are not
needed to make payments required in respect of
each such Series, will be applied, if necessary,
to cover principal payments due to
Certificateholders of Series 1996-__.
Cash Collateral Account The Certificates will have the benefit of an account
(the "Cash Collateral Account"), which will be
held in the name of the Trustee for the benefit of
the Certificateholders. The Cash Collateral
Account will be funded on the Series __ Closing
Date in the amount of $_________ (the "Initial
Cash Collateral Amount"). Withdrawals will be
made from the Cash Collateral Account, to the
extent of available funds on deposit therein, to
pay the Class A Required Amount. See "Description
of the Class A Certificates and the Agreement--
Application of Collections." The amount of funds
available on deposit in the Cash Collateral
Account may be increased (i) under certain
circumstances, and subject to certain conditions
described herein, in connection with the
application of collections of Principal
Receivables to decrease the Collateral Invested
Amount and (ii) to the extent Excess Spread and
Excess Finance Charge Collections are required and
available to be deposited therein as described
herein. See "Description of the Class A
Certificates and the Agreement--The Cash
Collateral Account" herein.
If the Class A Investor Default Amount for any
Distribution Date cannot be covered out of excess
collections of Finance Charge Receivables
allocable to Series 1996-__ as described under
"Description of the Class A Certificates and the
Agreement--Application of Collections" herein, the
Trustee will make a withdrawal from the Cash
Collateral Account for any such deficiency up to
the Available Cash Collateral Amount. If the Cash
Collateral Account is exhausted, Reallocated
Principal Collections will be applied to reduce
any such deficiency. If such Reallocated
Principal Collections are insufficient to fund any
such deficiency, then the Collateral Invested
Amount (to the extent not already reduced) will be
reduced by the amount of such remaining
deficiency. In the event that such reduction of
the Collateral Invested Amount would cause the
Collateral Invested Amount to be a negative
number, the Collateral Invested Amount will be
reduced to zero and the Class A Invested Amount
will be reduced by the amount of such remaining
deficiency (a "Class A Investor Charge-Off").
Accordingly, in the event that the Cash Collateral
Account is
S-13
<PAGE>
exhausted and the Collateral Invested Amount has
been reduced to zero, and there is such a
deficiency which has not been reimbursed, in
future Due Periods interest paid to Class A
Certificateholders and the amount of principal
returned to Class A Certificateholders will be
reduced. The "Class A Investor Default Amount"
for any Due Period is the product of the Class A
Floating Percentage for the related Distribution
Date and the Investor Default Amount. The
"Investor Default Amount" for any Due Period is
the Floating Allocation Percentage for the related
Distribution Date times the amount of Defaulted
Receivables. Payment (made from the Cash
Collateral Account or otherwise) with respect to a
Class A Investor Default Amount will be treated in
the same manner as collections allocable to
Principal Receivables and generally will be, (x)
during the Revolving Period, paid to the Seller,
to the Collateral Interest Holder or to other
Series, and (y) during the Controlled Amortization
Period or Rapid Amortization Period, paid to Class
A Certificateholders (and, in certain
circumstances during the Controlled Amortization
Period, to the Collateral Interest Holder) until
the Class A Invested Amount is paid in full. See
"Description of the Class A Certificates and the
Agreement--Application of Collections," "--
Defaulted Receivables; Rebates and Fraudulent
Charges" and "--Liquidation Events" herein.
Amounts Available as
Enhancement The Cash Collateral Account and the
Collateral Interest constitute the Enhancement for
Series 1996-__. The amount of Enhancement
available to the Class A Certificateholders
for any Distribution Date will equal the lesser of
(i) the sum of the Collateral Invested Amount and
the amount, if any, on deposit in the Cash
Collateral Account (such sum, the "Available
Enhancement Amount") and (ii) the Required
Enhancement Amount. The "Required Enhancement
Amount" with respect to any Distribution Date
means, subject to certain limitations more fully
described herein, the greater of (i) the product
of (a) the Invested Amount related to such
Distribution Date and (b) ____% and (ii) the sum
of (A) $__________ and (B) the product of (I) two
and (II) the excess, if any, of $________ over the
amount of funds on deposit in the Cash Collateral
Account with respect to such Distribution Date.
With respect to any Distribution Date, if the
Available Enhancement Amount is less than the
Required Enhancement Amount, certain excess
collections of Finance Charge Receivables
allocable to Series 1996-__ will be deposited into
the
S-14
<PAGE>
Cash Collateral Account to the extent of such
shortfall. See "Description of the Class A
Certificates and the Agreement--Application of
Collections." On any Distribution Date, after
taking into account all distributions, deposits
and withdrawals to be made for such date, the
Servicer will determine the amount by which the
sum of the amount on deposit in the Cash
Collateral Account and the Collateral Invested
Amount (prior to distributions to the Collateral
Interest Holder) exceeds the Required Enhancement
Amount with respect to the next succeeding
Distribution Date (such excess, the "Enhancement
Surplus"). Collateral Monthly Principal up to
such amount may be paid to the Collateral Interest
Holder and will not be available to the Class A
Certificateholders, thereby reducing the
Collateral Invested Amount. See "Description of
the Class A Certificates and the Agreement--The
Cash Collateral Account" herein.
Final Payment of Principal;
Termination of the Trust The final distribution of principal and interest on
the Class A Certificates will be made no later
than the Series Termination Date in the manner
provided in "Description of the Class A
Certificates and the Agreement--Final Payment of
Principal; Termination of Trust" herein. After
such date, neither the Trust nor the Seller will
have any further obligation to pay principal or
interest on the Class A Certificates.
The Class A Certificates will be subject to
optional repurchase by the Seller on any
Distribution Date on or after which the Invested
Amount of the Certificates is reduced to an amount
less than or equal to 5% of the Initial Invested
Amount, unless certain events of bankruptcy,
insolvency or receivership have occurred with
respect to the Seller. The repurchase price will
be equal to the Invested Amount plus accrued and
unpaid interest on the Certificates through the
day preceding the Distribution Date on which the
repurchase occurs. In any event, the final
payment of principal on the Certificates will be
no later than the Series Termination Date. See
"Description of the Class A Certificates and the
Agreement--Final Payment of Principal; Termination
of Trust" herein.
S-15
<PAGE>
Servicing Fee As servicing compensation from the Trust, the
Servicer receives a Servicing Fee payable from
Interchange and from allocations of Finance Charge
Receivables based upon the invested amounts, from
time to time, of Series issued by the Trust, and
from certain other amounts as described herein.
See "Description of the Certificates and the
Agreement--Servicing Compensation and Payment of
Expenses" in the Prospectus and "Description of
the Class A Certificates and Agreement--Servicing
Compensation and Payment of Expenses" herein.
Tax Status Counsel is of the opinion that the Class A
Certificates will be characterized as debt for
Federal income tax purposes. Under the Agreement,
the Bank, the Class A Certificateholders and
Certificate Owners will agree to treat the Class A
Certificates as debt for Federal and state tax
purposes. If the Class A Certificates are not
characterized as debt, there may be adverse tax
consequences for Certificateholders. See "Tax
Matters" in the Prospectus for additional
information concerning the application of Federal
income tax laws and certain state tax laws.
ERISA Considerations The acquisition and holding of Class A
Certificates by employee benefit plans and
individual retirement accounts that are subject to
the "prohibited transaction" rules of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Code of 1986,
as amended (the "Code"), may result in "prohibited
transactions." Under the regulations issued by the
Department of Labor, the Trust's assets would not
be deemed "plan assets" of any employee benefit
plan holding interests in the Class A Certificates
if certain conditions are met, including that
interests in the Class A Certificates be held by
at least 100 persons upon completion of the public
offering being made hereby. Based on information
provided by the Underwriters, the Bank will notify
the Trustee as to whether or not the Class A
Certificates will be held by at least 100
separately named persons at the conclusion of the
offering, and it is anticipated that the other
conditions of the regulations will be met. If the
Trust's assets were deemed to be "plan assets" of
such a plan, there is uncertainty as to whether
existing exemptions from the "prohibited
transaction" rules of ERISA would apply to all
transactions involving the Trust's assets.
Accordingly, employee benefit plans contemplating
purchasing interests in Class A Certificates
should consult their
S-16
<PAGE>
counsel before making a purchase. See "ERISA
Considerations" in the Prospectus.
Rating of the Class A
Certificates It is a condition to the issuance of the
Class A Certificates that they be rated in one of
the two highest rating categories by at least one
Rating Agency. The rating of the Class A
Certificates is based primarily on the value of
the Receivables, the Collateral Invested Amount
and the amount to be deposited in the Cash
Collateral Account. See "Risk Factors--Rating of
the Certificates" in the Prospectus.
S-17
<PAGE>
THE BANK'S CREDIT CARD PORTFOLIO
GENERAL
The interests in Receivables which the Seller has conveyed or will convey
to the Trust pursuant to the Agreement are generated from transactions made by
holders of certain Classic VISA and VISA Gold credit card accounts and certain
Standard MasterCard and Gold MasterCard credit card accounts. These accounts
were generated under the VISA or MasterCard International programs and were
either originated by the Bank or FNBC, or purchased by the Bank or FNBC from
other credit card issuers. Effective as of July 1, 1987, FNBC transferred its
credit card operation and all its credit card accounts to the Bank, although
FNBC retained ownership of all receivables comprising the existing balances in
such accounts. Subsequently, such receivables also were transferred to the
Bank. For a further description of the Bank's credit card business, see "The
Bank's Credit Card Business" in the Prospectus.
LOSS AND DELINQUENCY EXPERIENCE
The following tables set forth the loss and delinquency experience with
respect to payments by cardholders for each of the periods shown for
substantially all VISA and MasterCard consumer revolving credit card accounts
owned at the dates indicated by the Bank (excluding certain affinity accounts
and certain accounts not originated by the Bank or FNBC) (the "Bank's
Portfolio") during the periods shown. As of the end of the ______ 1996 Due
Period, the Receivables in the Accounts represented substantially all
Receivables in the Bank's Portfolio. There can be no assurance, however, that
the loss and delinquency experience for the Receivables in the future will be
similar to the historical experience set forth below for the Bank's Portfolio.
LOSS EXPERIENCE FOR THE BANK'S PORTFOLIO
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31,
--------------------- ----------------------------
1996 1995 1995 1994 1993
----- ------ ------ ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Average Receivables $ $ $ $8,125,341 $6,701,079
Outstanding(1)...........
Gross Charge-offs(2)....... 433,743 348,699
Gross Charge-offs as a %(3) %(3) % 5.34% 5.20%
Percentage of Average
Receivables Outstanding..
- ------------
</TABLE>
(1) Average Receivables Outstanding is the arithmetic average of receivables
outstanding during the period indicated.
(2) Gross Charge-offs are charge-offs before recoveries and do not include the
amount of any reductions in Average Receivables Outstanding due to fraud,
returned goods or customer disputes.
(3) On an annualized basis.
[Charge-offs for the Bank's Portfolio measured as a percentage of average
receivables outstanding increased during 1994 and 1995 due, in part, to certain
strategies employed by the Bank to increase the cardholder base which the Bank
believes, in turn, will result in the increase of overall revenues for the
Bank's Portfolio in the future. In addition, during 1995, consumer debt service
burden and defaults increased as a result of the growing consumer debt levels
coupled with stagnant real wage growth. The Bank believes that the current
level of unemployment and personal bankruptcy filings make reductions in the
loss rates unlikely in the immediate future. Losses are also affected by other
factors including
S-18
<PAGE>
competitive behavior and social conditions. The loss rates for the Bank's
Portfolio could increase in the future if economic conditions were to worsen and
could continue to increase for several months even after such conditions begin
to improve. The loss rates set forth above do not reflect the reversal of
unpaid fees and finance charges at the time a charge-off occurs.]
The Bank has policies to allow delinquent accounts whose cardholders are
making good faith efforts to repay overdue amounts to be deemed current
("reaged") provided certain conditions are satisfied. If an account is 90 days
delinquent or greater, it qualifies for reaging treatment if the sum of the
payments received during the preceding five months (or in certain circumstances
the lesser of (a) five months or (b) the number of months since the account was
last current) is at least equal to the sum of the three oldest minimum payments.
The reaging process permits only one reaging of an account from 90 days
delinquent or greater categories in a 12-month period. With respect to accounts
that are 30 to 90 days delinquent, reaging treatment occurs pursuant to a
process which uses criteria that are more liberal than the criteria described
above. An account 30 to 90 days delinquent can be reaged so long as these
criteria are met. The entire process is system controlled. In addition to
automatic reaging, account closure and usage restrictions are system controlled.
When an account is 30 days delinquent, charge privileges are suspended. Account
closure occurs automatically when an account is 60 days delinquent.
Reinstatement of closed accounts requires a full credit review; only a minimal
number of closed accounts qualify for reinstatement. The Bank may terminate,
alter or modify its reaging process at any time. Currently, the Bank is
evaluating various collection strategies which, if implemented, would alter the
reaging process for certain accounts. The delinquency information in the
following tables reflects the application of the Bank's current reaging process.
AVERAGE DELINQUENCIES FOR THE BANK'S PORTFOLIO
<TABLE>
<CAPTION>
AVERAGE OF
THREE MONTHS ENDED AVERAGE OF TWELVE MONTHS ENDED DECEMBER 31,
------------------------ -----------------------------------------------------------------------------
MARCH 31, 1996 1995 1994 1993
------------------------ ------------------------ ------------------------ ------------------------
PAYMENT STATUS DELINQUENT PERCENTAGE(1) DELINQUENT PERCENTAGE(1) DELINQUENT PERCENTAGE(1) DELINQUENT PERCENTAGE(1)
AMOUNT AMOUNT AMOUNT AMOUNT
- -------------- ---------- ------------ ----------- ------------ ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
30-59 days delinquent.. $ % $ % $132,025 1.62% $107,551 1.60%
60-89 days delinquent.. 55,188 0.68 44,609 0.67
90 days delinquent or 98,283 1.21 76,972 1.15
more................. -------- ---- -------- ----
Total...... $ % $ % $285,496 3.51% $229,132 3.42%
========== ========== ======== ==== ======== ====
- ------
</TABLE>
(1) The percentages are the result of dividing Delinquent Amount by Average
Receivables Outstanding for the applicable period.
Delinquencies as a percentage of average receivables outstanding reflect a
pattern similar to loss rates as a result of the same factors discussed with
respect to the table set forth above for Loss Experience for the Bank's
Portfolio.
REVENUE EXPERIENCE
The gross revenues from monthly periodic charges and fees billed to
cardholders on the Bank's Portfolio for each of the three years in the period
ended December 31, 1995, and the three months ended March 31, 1996 and 1995,
respectively, are set forth in the following table.
S-19
<PAGE>
The historic gross revenue figures in the table are calculated on an as-
billed basis and represent amounts billed to cardholders in each billing cycle
before deduction of charge-offs, reductions due to fraud, returned goods and
customer disputes or other expenses. Cash collections on receivables may not
reflect the historical experience in the table. During periods of increasing
delinquencies, billings of monthly periodic charges and fees may exceed cash as
amounts collected on credit card receivables lag behind amounts billed to
cardholders. Conversely, as delinquencies decrease, cash may exceed billings of
monthly periodic charges and fees as amounts collected in a current period may
include amounts billed during prior periods. However, the Bank believes that,
during the periods shown, revenues on a billed basis closely approximated
revenues on a cash basis. Revenues from monthly periodic charges and fees on
both a billed and a cash basis will be affected by numerous factors, including
the monthly periodic charges on principal receivables, the amount of the annual
membership fees, the amount of other fees paid by cardholders, the percentage of
cardholders who pay off their balances in full each month and do not incur
monthly periodic charges on purchases, fees and finance charges and changes in
the delinquency rate on the Receivables. See "Risk Factors" in the Prospectus.
REVENUE EXPERIENCE FOR THE BANK'S PORTFOLIO
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31,
------------------- ----------------------------
1996 1995 1995 1994 1993
------- ------ ------- --------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Average Receivables Outstanding(1).......... $ $ $ $8,125,341 $6,701,079
Finance Charges and Fees Billed............. 1,405,786 1,182,391
Average Finance Charges and Fees Billed(2).. %(3) %(3) % 17.30% 17.64%
- ---------
</TABLE>
(1) Average Receivables Outstanding is the arithmetic average of receivables
outstanding during the period indicated.
(2) Average Finance Charges and Fees Billed is the result of dividing Finance
Charges and Fees Billed by Average Receivables Outstanding and does not
include revenue attributable to Interchange.
(3) On an annualized basis.
The revenues for the Bank's Portfolio shown in the Revenue Experience table
are related to monthly periodic charges and other fees billed to cardholders but
do not include revenue attributable to Interchange. The revenues related to
monthly periodic charges and fees depend in part upon the collective preference
of cardholders to use their credit cards as revolving debt instruments for
purchases and cash advances and paying off account balances over several months
as opposed to convenience use, where the cardholders prefer instead to pay off
their entire balance each month, thereby avoiding monthly periodic charges on
purchases, fees and finance charges. Revenues related to monthly periodic
charges and fees also depend on the types of charges and fees assessed by the
Bank on the accounts. The Bank introduced a variable rate card in 1987 and has
offered cardholders the option of utilizing either a fixed or variable rate
monthly periodic charge. From 1989 through 1994, the Bank emphasized the
origination of variable rate accounts and substantially all new accounts
originated during that time were variable rate accounts. Depending upon
fluctuations in interest rates, the variable rate monthly periodic charge (which
is based on the prime rate) assessed on variable rate accounts may change from
month to month and could be less than the fixed charge applicable to most
standard fixed rate accounts. Commencing in 1994, the Bank began offering most
new accounts, for purchase transactions, a fixed rate monthly periodic charge
for an initial period (ranging from 6 to 15 months) which then converts into a
variable rate. The initial fixed rate offered on such accounts is either 6.9%
or 9.9% per annum, a rate which is substantially lower
S-20
<PAGE>
than that currently assessed on the variable rate accounts or the standard fixed
rate accounts. The total yield on such accounts during the initial fixed rate
period is therefore lower than that of a variable rate account or standard fixed
rate account. As of the end of the _______ 1996 Due Period, Receivables
assessed a variable monthly periodic charge constituted approximately _____% of
the total Receivables balance of Accounts in the Trust. Fluctuations in the
prime interest rate and/or the continued use of the initial fixed/variable rate
pricing for certain new accounts, may affect future revenue experience.
Throughout the periods shown above, the Bank made certain changes in the charges
and fees assessed on the accounts. In 1993, the Bank waived fees (including
annual fees) and removed a minimum rate floor of 19.8% or offered a lower rate
on some cash advances for certain cardholders. [In 1994 and 1995,] the Bank
continued to offer a lower rate on some cash advances and/or purchases for
certain cardholders for limited periods of time. In addition, the Bank is
currently waiving annual fees and offering a lower variable interest rate on
certain selected accounts. The Bank has no basis to predict how these changes
and any future changes in the terms of accounts may affect the revenue for the
Bank's Portfolio. See "The Accounts--Billing and Payments" herein.
INTERCHANGE
Pursuant to the terms of the Series 1996-__ Supplement, the Seller will
transfer to the Trust the Floating Allocation Percentage of Interchange
attributable to cardholder charges for merchandise and services in the Accounts.
Interchange allocable to Series 1996-__ in an amount equal to 1/12 of the
product of ____% per annum and the Invested Amount with respect to each Due
Period will be used exclusively to pay the Servicer part of its Monthly
Servicing Fee. See "Description of the Class A Certificates and the Agreement--
Servicing Compensation and Payment of Expenses." Interchange in excess of the
portion thereof required to be used exclusively to pay the Servicer part of such
Monthly Servicing Fee will be included in Finance Charge Receivables pursuant to
the Series 1996-__ Supplement for purposes of determining the amount of Finance
Charge Receivables and allocating collections and payments to the
Certificateholders. Interchange (including the portion used exclusively to pay
the Servicer) will be included in Finance Charge Receivables for purposes of
calculating the Portfolio Yield.
THE ACCOUNTS
The Receivables arising from the Accounts as of the end of the _______ 1996
Due Period totaled $__________ and included $_________ of Principal Receivables.
The Accounts had an average Principal Receivables balance of $___ and an average
credit limit of $_____. The aggregate total Receivables balance as a percentage
of the aggregate total credit limit was ____%.
The following tables summarize the Accounts by various criteria as of the end
of the _______ 1996 Due Period. Approximately _______ cardholder accounts
included in the Accounts as of the end of the _______ 1996 Due Period are
Classic VISA accounts with respect to which the cardholder has been upgraded to
a VISA Gold account. The upgraded accounts generally have certain additional
features, including higher credit limits, which are not generally included in
the Classic VISA accounts. For some period of time (not exceeding three years),
both accounts are active for a particular cardholder although the Classic VISA
account is eventually closed. Upon any cardholder upgrade, the receivables
balance in the Classic VISA account is transferred to the VISA Gold account
(which account is considered to have the same account opening date as the
Classic VISA account) and any new receivables created on the Classic VISA
account are immediately transferred to the VISA Gold account. In addition,
pursuant to the ordinary operating procedures of the Bank, accounts which expire
and have no outstanding balance
S-21
<PAGE>
are not removed immediately from the Bank's Portfolio, but rather are removed
periodically from the Bank's Portfolio and therefore may still be included as an
Account for some period of time after expiration. As of the end of the _______
1996 Due Period, approximately _______ expired accounts with a credit balance or
no balance were included in the Accounts. Because the composition of the
Accounts may change in the future, these tables are not necessarily indicative
of the characteristics of the Trust at any time after the end of the _______
1996 Due Period.
COMPOSITION OF THE ACCOUNTS BY ACCOUNT BALANCES
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
ACCOUNT BALANCE NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Credit Balance(1) % $ %
No Balance(2)...........
$0.01 to $1,499.99......
$1,500.00 to $2,999.99..
$3,000.00 to $4,499.99..
$4,500.00 to $9,999.99..
$10,000 or more......... ------- -------- ------------ --------
Total................. 100.00% $ 100.00%
======= ======== ============= ========
- ------------
</TABLE>
(1) Credit Balances are a result of cardholder payments and credit adjustments
applied in excess of an Account's unpaid balance. Accounts currently with a
credit balance are included, as Receivables may be generated with respect
thereto in the future.
(2) Accounts currently with no balance are included, as Receivables may be
generated with respect thereto in the future.
COMPOSITION OF ACCOUNTS BY CREDIT LIMIT
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
CREDIT LIMIT NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
$0.01 to $1,499.99 % $ %
$1,500.00 to $2,999.99..
$3,000.00 to $4,499.99..
$4,500.00 to $9,999.99..
$10,000 or more(1)...... --------- ------ ------- ------
Total................. 100.00% $ 100.00%
========== ====== ======== =======
- --------------
</TABLE>
(1) Maximum current credit limit on an Account is $65,000.
S-22
<PAGE>
COMPOSITION OF ACCOUNTS BY PAYMENT STATUS
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
PAYMENT STATUS NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Current(1) % $ %
30-59 days delinquent.......
60-89 days delinquent.......
90 days delinquent or more.. ------ ------- -------- -------
Total..................... 100.00% $ 100.00%
====== ======= ======== ========
- ---------
</TABLE>
(1) Includes Accounts on which the minimum payment has not yet been received
prior to the second billing date following the issuance of the related bill.
COMPOSITION OF THE ACCOUNTS BY AGE
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
AGE NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Not more than 6 months % $ %
Over 6 months to 12 months...
Over 12 months to 24 months..
Over 24 months to 48 months..
Over 48 months............... ------ ------- ------- ---------
Total...................... 100.00% $ 100.00%
====== ======= ====== =======
</TABLE>
S-23
<PAGE>
GEOGRAPHIC COMPOSITION OF THE ACCOUNTS
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF RECEIVABLES
STATE ACCOUNTS OUTSTANDING
----- -------- ----------
California................. % %
New York...................
Illinois...................
Florida....................
Texas......................
New Jersey.................
Ohio.......................
Michigan...................
Pennsylvania...............
Indiana....................
Missouri...................
Minnesota..................
Tennessee..................
Colorado...................
North Carolina.............
Georgia....................
Arizona....................
Virginia...................
Massachusetts..............
Maryland...................
Washington.................
Alabama....................
Oregon.....................
Kentucky...................
Louisiana..................
Connecticut................
Oklahoma...................
Iowa.......................
South Carolina.............
All Other(1)............... _______ _______
Total.................... 100.0% 100.0%
===== =====
_________
(1) States and foreign countries with less than 1.00% of Total Receivables
Outstanding.
BILLING AND PAYMENTS
The credit card accounts owned by the Bank include accounts originated
or purchased by the Bank or FNBC. These accounts have various billing and
payment structures, including varying annual fees and monthly periodic charges.
The following is information on the current billing and payment characteristics
of the Accounts
S-24
<PAGE>
Monthly billing statements are sent by the Bank to cardholders. Each
month, a cardholder must make a minimum payment equal to the sum of: (i) 1/48 of
the new balance (excluding any amount that is past due and any fees charged on
the Account by the Bank), but not less than the greater of $10 or the amount of
the finance charges (due to periodic rate) billed to the Account for the billing
period, plus (ii) any amount that is past due (unless its inclusion in the
minimum payment is waived in accordance with the Servicer's guidelines), plus
(iii) the amount of any fees charged to the Account. Balances under $10 must be
paid in full. In addition, if the new balance in the Account less the minimum
payment amount computed as described above exceeds the assigned credit limit,
the difference between such amounts may be added to the required minimum payment
shown on the monthly billing statement.
A monthly periodic charge is assessed on the Accounts. The monthly
periodic charge is calculated by multiplying the finance charge balance in an
Account by the applicable monthly periodic rate. The finance charge balance is
the average daily balance owing on the Account during the billing period
including in its calculation any fees charged to the Account by the Bank and any
billed but unpaid finance charge. Monthly periodic charges are not assessed on
purchases, fees or finance charges if all balances shown on the billing
statement are paid in full by the cardholder's payment due date shown on the
cardholder's billing statement each month. As of the end of the _______ 1996
Due Period, the Receivables assessed a fixed monthly periodic rate and a
variable monthly periodic rate as a percentage of the total Receivables balance
of the Accounts was approximately _____% and _____%, respectively. The current
periodic rate assessed on Receivables arising in most standard fixed rate
Accounts is 19.8% per annum, although certain fixed rate Accounts are assessed
at lower rates. With respect to Receivables arising in the variable rate
Accounts, the periodic rate assessed is equal on a per annum basis to the
interest rate index plus a spread. The interest rate index is determined on
each billing date based on the prime rate listed in the money rate section of
The Wall Street Journal on the 15th day of the month (or if the 15th is a
Saturday, Sunday or holiday, the next business day) immediately preceding the
month in which the billing date occurs. The spread on variable rate Accounts
ranges generally from 6.9% to 9.9% per annum. Commencing in 1994, the Bank began
offering most new Accounts a fixed rate monthly periodic charge on purchases for
an initial period (ranging from 6 to 15 months) which then converts into a
variable rate. The initial fixed rate offered on such Accounts is generally
either 6.9% or 9.9% per annum. Upon conversion to a variable rate, the monthly
periodic charge is computed as described above for variable rate Accounts.
By the terms of the most recent cardholder agreements governing the
Accounts, the Bank may change the periodic rate at any time upon written notice
to the cardholders In addition, the cardholder agreements governing most
standard fixed rate Accounts give cardholders the option of electing a variable
periodic rate to be effective for transactions on or after the election is
processed, equal on a per annum basis to the interest rate index plus 9.9% (with
a minimum per annum rate of 19.8% for cash advances). Finally, the Bank, under
limited circumstances, has offered to existing cardholders a variable periodic
rate equal on a per annum basis to the interest rate index plus 4.9%.
Since 1988, substantially all preapproved Accounts have not been
assessed an annual membership fee; in addition, over the last few years, the
Bank generally has not assessed or has waived the annual fee for most other new
Accounts and also has waived the annual fee for certain other selected Accounts.
The annual membership fee when assessed on Accounts ranges from $12 to $36.
Annual fees, to the extent assessed on the Accounts, will be included in the
Receivables transferred to the Trust. The Bank may expand or discontinue the
fee waiver program or institute other similar programs in the future.
S-25
<PAGE>
The Bank generally charges Accounts miscellaneous additional fees,
including: (i) a late fee not to exceed $15, if the Bank does not receive the
required minimum monthly payment within 10 days following the payment due date
shown on the monthly billing statement; (ii) a returned payment check fee not to
exceed $15, for each cardholder check received by the Bank and not paid by the
cardholder's bank; (iii) an over-limit fee not to exceed $15, if the new balance
of an Account (less new monthly periodic charges and fees imposed on the current
billing date) exceeds the cardholder's stated credit limit by a specified amount
on the billing date; (iv) a returned convenience check fee equal to $15, if a
convenience check is returned unpaid because it exceeds a cardholder's available
credit at the time it is presented to the Bank for payment or if the
cardholder's account is delinquent at the time the convenience check is
presented to the Bank for payment; and (v) a cash advance fee equal to 2% of the
cash advance transaction amount for cash advances obtained from a financial
institution or an automatic teller machine or for cash advances obtained by
writing a check on an Account. From time to time, the Bank has waived, and may
continue to waive, the cash advance fee for certain cash advance transactions
including certain balance transfers. Any of the fees described herein may be
waived or modified at any time. Currently, the above-described fees may not be
charged on certain Accounts or may be charged at lower rates under certain
circumstances. Certain of these fees assessed by various credit card issuers
have been challenged in lawsuits. See "Risk Factors--Certain Legal Aspects" in
the Prospectus.
Commencing in 1993, the Bank waived fees and removed the minimum rate
floor of 19.8% or offered a lower rate on some cash advances for certain
cardholders. The Bank [, in ____,] offered and, in the future, may continue to
offer a reduced rate for purchases and cash advances to certain accounts for a
limited period of time. Commencing in 1994, the Bank also introduced an initial
fixed rate/variable rate Account described above. The Bank may expand or
discontinue any of these programs or institute other similar programs in the
future.
THE SELLER
As of March 31, 1996, and based on the Consolidated Reports of
Condition and Income (the "Call Report") of the Seller at such date, the Seller
had total deposits of approximately $_____ billion, total assets of
approximately $_____ billion, net income for the first quarter of 1996 of
approximately $___ million and total equity capital of approximately $____
million. The Call Report is required to be prepared in accordance with
regulatory accounting principles, which differ in some respects from generally
accepted accounting principles.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
The Series 1996-__ Supplement provides that the Controlled
Amortization Period will commence on the Controlled Amortization Date and that
the Rapid Amortization Period will commence on the first day of the Due Period
during which a Liquidation Event occurs or is deemed to occur. Although it is
anticipated that principal payments will be made to the Class A
Certificateholders in an amount equal to the Controlled Amortization Amount
beginning on the _______ ____ Distribution Date, no assurance can be given in
that regard. Payments of Class A Monthly Principal are scheduled to be made to
Class A Certificateholders on each Distribution Date during the Controlled
Amortization Period, in an amount equal to the lesser of (a) the Controlled
Amount and (b) an amount ("Class A Available Principal Collections") equal to
the sum of (i) the Class A Principal Percentage of the Fixed Allocation
Percentage of all collections of Principal Receivables in respect of the
applicable Due Period, (ii) the amount of any
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<PAGE>
Unallocated Principal Collections allocable to the Certificates on deposit in
the Collection Account on such Distribution Date, (iii) the amount of certain
collections of Principal Receivables otherwise allocable to other Series, to the
extent such collections are not needed to make payments in respect of such other
Series, and (iv) certain other amounts that are treated as Class A Available
Principal Collections in accordance with the Series 1996-__ Supplement.
Although the Seller expects that there will be sufficient funds on each
Distribution Date of the Controlled Amortization Period to pay the Controlled
Amount on such date, no assurance can be given in this regard. The actual rate
of payment of principal will depend, among other factors, on the rate of
repayment and the rate of default by cardholders.
In the event of the occurrence of a Liquidation Event, the Rapid
Amortization Period will begin on the first day of the Due Period in which such
Liquidation Event occurs. During the Rapid Amortization Period, distributions
of principal to Class A Certificateholders will not be subject to the Controlled
Amount. In addition, principal payable to Class A Certificateholders on the
Distribution Date following a sale, disposition or other liquidation of the
Receivables (or interests therein) in the event of an insolvency event as
described herein under "Description of the Class A Certificates and the
Agreement-Liquidation Events" or in connection with the Series Termination Date
as described herein under "Description of the Class A Certificates and the
Agreement--Final Payment of Principal; Termination of Trust," will be equal to
the Class A Invested Amount. A "Liquidation Event" occurs, with respect to the
Certificates, either automatically or after a specified period after notice,
upon (i) failure of the Seller to make certain payments or transfers of funds
for the benefit of the Certificateholders within the time periods stated in the
Agreement, (ii) material breaches of certain representations, warranties or
covenants of the Seller, (iii) certain insolvency events involving the Seller,
(iv) the average Portfolio Yield for any three consecutive Due Periods being
less than the average of the Base Rates for the related Interest Periods, (v)
the Trust becoming an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (vi) a failure by the Seller to convey the
Receivables in Additional Accounts to the Trust when required by the Agreement,
(vii) failure to pay the Class A Invested Amount on the _______ ____
Distribution Date (the "Class A Expected Final Distribution Date") or (viii) the
occurrence of a Servicer Default which would have a material adverse effect on
the Certificateholders. The term "Portfolio Yield" means, with respect to any
Due Period, the annualized percentage equivalent of a fraction the numerator of
which is the amount of the Finance Charge Receivables (including Interchange)
collected during such Due Period, calculated on a cash basis after subtracting
certain Defaulted Receivables during such period, and the denominator of which
is Aggregate Principal Receivables. The Term "Base Rate" means, with respect to
any Interest Period, the annualized percentage equivalent of a fraction, the
numerator of which is equal to the sum of (i) Class A Monthly Interest, (ii)
Collateral Monthly Interest and (iii) the Monthly Servicing Fee, and the
denominator of which is the Invested Amount as of the end of the day on the
first day of such Interest Period. Although the Seller believes that the
likelihood of a Liquidation Event occurring is remote, there can be no assurance
that a Liquidation Event will not occur. See "Description of the Class A
Certificates and the Agreement--Liquidation Events" herein.
The following table sets forth the highest and lowest cardholder
monthly payment rates for the Bank's Portfolio during any month in the period
shown and the average cardholder monthly payment rates for all months during the
periods shown, in each case calculated as a percentage of total opening monthly
account balances during the periods shown. Payments shown in the table include
amounts which would be deemed payments of Principal Receivables and Finance
Charge Receivables with respect to the Accounts but do not include Interchange.
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<PAGE>
CARDHOLDER MONTHLY PAYMENT RATES FOR THE BANK'S PORTFOLIO
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -------------------------
1996 1995 1994 1993
-------- ------ ------- ------
<S> <C> <C> <C> <C>
Lowest........... % % 13.05% 13.50%
Highest.......... 15.77 16.47
Monthly Average.. 14.93 15.16
</TABLE>
The amount of collections on Receivables may vary from month to month
due to seasonal variations, general economic conditions and payment habits of
individual cardholders. There can be no assurance that collections of Principal
Receivables with respect to the Accounts, and thus the rate at which Class A
Certificateholders can expect principal allocated on the basis of the Class A
Principal Percentage of the Fixed Allocation Percentage to be paid during the
Controlled Amortization Period or the Rapid Amortization Period, will be similar
to the historical experience set forth above. In addition, since the Trust, as
a master trust, may issue additional Series from time to time, there can be no
assurance that the issuance of additional Series or the Principal Terms of any
additional Series might not have an impact on the timing of payments received by
Class A Certificateholders. Further, if a Liquidation Event occurs, the average
life and maturity of the Class A Certificates could be significantly reduced.
Likewise, the sharing of collections of Principal Receivables allocated to other
Series with this Series during a Rapid Amortization Period could significantly
reduce the duration of such period for the Class A Certificates. See
"Description of the Class A Certificates and the Agreement--Shared Collections
of Principal Receivables" herein.
Because there may be a slow-down in the payment rate with respect to
the Accounts or a Liquidation Event may occur which would initiate a Rapid
Amortization Period, there can be no assurance that the actual number of months
elapsed from the date of issuance of the Class A Certificates to the final
payment of the Class A Invested Amount will equal the expected number of months.
The amount of outstanding Receivables and the rates of payments, delinquencies,
charge-offs and new borrowings on the Accounts depend upon a variety of factors,
including seasonal variations, the availability of other sources of credit,
general economic conditions and consumer spending and borrowing patterns.
Accordingly, there can be no assurance that future cardholder monthly payment
rate experience will be similar to historical experience.
DESCRIPTION OF THE CLASS A CERTIFICATES AND THE AGREEMENT
The Certificates will be issued pursuant to the Agreement and the
Supplement relating thereto (the "Series 1996-__ Supplement") entered into
between the Bank, as transferor of interests in the Receivables and as Servicer
of the Accounts and the Receivables and Norwest Bank Minnesota, National
Association, as Trustee for the Certificateholders. Pursuant to the Agreement,
the Seller may execute further Supplements thereto between the Seller and the
Trustee in order to issue additional Series. See "Description of the
Certificates and the Agreement--Exchanges" in the Prospectus. The following
summary describes certain terms of the Agreement and the Series 1996-__
Supplement and is qualified in its entirety by reference to the Agreement and
the Series 1996-__ Supplement. See "Description of
S-28
<PAGE>
the Certificates and the Agreement" in the Prospectus for additional information
concerning the Class A Certificates and the Agreement. Only the Class A
Certificates are being offered hereby.
GENERAL
Payments of interest and principal will be made on each related
Distribution Date to Class A Certificateholders in whose names the Class A
Certificates were registered on the last day of the calendar month preceding
such Distribution Date (each, a "Record Date"). Interest will be distributed to
Class A Certificateholders on the 15th day of each month (or, if such day is not
a business day, on the next succeeding business day) (each, a "Distribution
Date"), commencing ______ __, 1996. Class A Monthly Interest will be
distributed to Certificateholders in an amount equal to the product of (i)(a)
the actual number of days in the related Interest Period divided by 360, times
(b) the Class A Certificate Rate for the related Interest Period and (ii) the
Class A Invested Amount as of the preceding Record Date (or, in the case of the
first Distribution Date, as of the Series P Closing Date). Interest will be
calculated on the basis of the actual number of days in the related Interest
Period and a 360-day year. Class A Monthly Interest due but not paid on any
Distribution Date will be due on the next succeeding Distribution Date with
additional interest on such amount at the Class A Certificate Rate plus 2% per
annum. Interest payments will be derived from collections allocated to Finance
Charge Receivables available to the Class A Certificates (including Excess
Spread and Excess Finance Charge Collections allocable to Series 1996-__) and,
if necessary, withdrawals from the Cash Collateral Account and Reallocated
Principal Collections.
The Class A Certificate Rate will be _____% per annum above the rate
for deposits in United States dollar deposits ("LIBOR") determined as set forth
below.
The Servicer will determine LIBOR for the Interest Period from the
Series __ Closing Date through ________ __, 1996 on the second business day
prior to the Series __ Closing Date. The Servicer will determine LIBOR on
_______ __, 1996 for the Interest Period from ________ __, 1996 through ________
__, 1996, and, for each Interest Period thereafter, on the second business day
prior to the Distribution Date on which such Interest Period commences (each, a
"LIBOR Determination Date"). For purposes of calculating LIBOR, a business day
is any day on which banks in London and New York are open for the transaction of
international business. The Servicer will determine LIBOR in accordance with
the following provisions:
(i) On each LIBOR Determination Date, the Servicer will determine
LIBOR on the basis of the rate for deposits in United States dollars for
the Interest Period following the LIBOR Determination Date which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such date. "Telerate
Page 3750" means the display page currently so designated on the Dow Jones
Telerate Service (or such other page as may replace such page on such
service for the purpose of displaying comparable rates or prices); or
(ii) If, on the LIBOR Determination Date, such rate does not appear
on Telerate Page 3750, LIBOR will be determined on the basis of the rates
at which deposits in United States dollars are offered by at least two of
the Reference Banks at approximately 1:00 a.m., London time, on such day to
prime banks in the London interbank market for the Interest Period
following such LIBOR Determination Date. "Reference Banks" means four
major banks in the London interbank market selected by the Servicer. The
Servicer will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two
S-29
<PAGE>
such quotations are provided, the rate for such LIBOR Determination Date
will be the arithmetic mean of such quotations (rounded, if necessary, to
the nearest multiple of 0.0625% per annum); or
(iii) If, on the LIBOR Determination Date, only one or none of the
Reference Banks provides such offered quotations, LIBOR will be the rate
per annum (rounded as aforesaid) that the Servicer determines to be either
(x) the arithmetic mean of the offered quotations that leading banks in The
City of New York selected by the Servicer are quoting on the relevant LIBOR
Determination Date for one-month United States dollar deposits to the
principal London office of each of the Reference Banks or those of them
(being at least two in number) to which such offered quotations are, in the
opinion of the Servicer, being so made or (y) in the event the Servicer can
determine no such arithmetic mean, the arithmetic mean of the offered
quotations that leading banks in The City of New York selected by the
Servicer are quoting on such LIBOR Determination Date to leading European
banks for one-month United States dollar deposits; or
(iv) If, on the LIBOR Determination Date, the banks selected as
aforesaid by the Servicer are not quoting as described in paragraph (iii)
above, LIBOR for such Interest Period will be LIBOR as determined on the
previous LIBOR Determination Date (or LIBOR as determined with respect to
the Series __ Closing Date, in the case of the first LIBOR Determination
Date).
The Class A Certificate Rate applicable to the then current and immediately
preceding Interest Period may be obtained by telephoning the Servicer at (708)
931-3222.
No principal payments are scheduled to be made on the Class A Certificates
prior to the _______ ____ Distribution Date. Monthly principal distributions
will begin on the first Distribution Date following the Due Period in which
either the Controlled Amortization Period or the Rapid Amortization Period
commences. The Controlled Amortization Period is scheduled to begin on the
first day of the Due Period relating to the _______ ____Distribution Date (the
"Controlled Amortization Date"). The Rapid Amortization Period may begin at any
time due to the occurrence of a Liquidation Event. See "--Liquidation Events"
below for a discussion of events which might lead to the commencement of the
Rapid Amortization Period.
The Class A Certificates will initially be represented by certificates
registered in the name of the nominee of The Depository Trust Company ("DTC").
The interests of holders of beneficial interests in the Class A Certificates
("Certificate Owners") will be available for purchase in denominations of
$1,000 and integral multiples thereof in book-entry form only. The Seller has
been informed by DTC that DTC's nominee will be Cede. Accordingly, Cede is
expected to be the holder of record of the Class A Certificates. Unless and
until Definitive Certificates are issued under the limited circumstances
described under "Description of the Certificates and the Agreement--Definitive
Certificates" in the Prospectus, no Certificate Owner will be entitled to
receive a certificate representing such person's interest in the Class A
Certificates. All references herein to actions by Class A Certificateholders
shall refer to actions taken by DTC upon instructions from its participating
organizations (the "Participants") and all references herein to distributions,
notices, reports and statements to Class A Certificateholders shall refer to
distributions, notices, reports and statements to DTC or Cede, as the registered
holder of the Class A Certificates, as the case may be, for distribution to
Certificate Owners in accordance with DTC procedures.
S-30
<PAGE>
Class A Certificateholders may hold their Certificates through DTC (in the
United States) or Cedel or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations that are participants in such
systems. Cede, as nominee for DTC, will hold the global Class A Certificates.
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective Depositaries which in turn will hold such positions in customers'
securities accounts in the Depositaries' names on the books of DTC. See
"Description of the Certificates and Agreement-General," "-Book-Entry
Registration" and "-Definitive Certificates" in the Prospectus.
ALLOCATION PERCENTAGES
Pursuant to the Agreement, during each Due Period the Servicer will
allocate between Series 1996-_, any other Series issued by the Trust and the
First Chicago Interest all amounts collected on Finance Charge Receivables and
all amounts collected on Principal Receivables and the amount of all Defaulted
Receivables. Collections of Finance Charge Receivables (including the
applicable portion of Interchange) and Defaulted Receivables will be allocated
at all times to Series 1996-_, and collections of Principal Receivables will be
allocated during the Revolving Period with respect to Series 1996-_ and
generally paid to the Seller or, in certain circumstances, to the Collateral
Interest Holder or to other Series, based on the percentage equivalent of a
fraction, the numerator of which is the Invested Amount for such Distribution
Date, and the denominator of which is Aggregate Principal Receivables for the
related Due Period (the "Floating Allocation Percentage"). During the
Controlled Amortization Period or Rapid Amortization Period for Series 1996-_,
collections of Principal Receivables will be allocated to Series 1996-_ based on
the percentage equivalent of a fraction, the numerator of which is the Invested
Amount as of the end of the day on the last Distribution Date relating to the
Revolving Period for Series 1996-_ and the denominator of which is the greater
of (a) Aggregate Principal Receivables for the Due Period related to the current
Distribution Date and (b) the sum of the numerators used to calculate the
Invested Percentages with respect to Principal Receivables for all Series
outstanding for the current Distribution Date (the "Fixed Allocation
Percentage").
As used herein, the following terms have the following meanings:
"Class A Floating Percentage" means, with respect to any Distribution Date,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class A Invested Amount for such
Distribution Date and the denominator of which is the Invested Amount for such
Distribution Date.
"Class A Invested Amount" means, on any date of determination, an amount
equal to (a) the Class A Initial Invested Amount, minus (b) the aggregate amount
of principal payments made to the Class A Certificateholders prior to such date,
minus (c) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs for all prior Distribution Dates over the aggregate amount of Class
A Investor Charge-Offs reimbursed prior to such date.
"Class A Principal Percentage" means, with respect to any Distribution Date
(i) relating to the Revolving Period for Series 1996-_, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Class A Invested Amount for such Distribution Date,
and the denominator of which is the Invested Amount for such Distribution Date
and (ii) relating to the Controlled Amortization Period or the Rapid
Amortization Period for Series 1996-_, the percentage
S-31
<PAGE>
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Class A Invested Amount as of the end of the day on
the last Distribution Date relating to the Revolving Period for Series 1996-___,
and the denominator of which is the Invested Amount as of such day.
"Collateral Floating Percentage" means, with respect to any Distribution
Date, the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Collateral Invested Amount for such
Distribution Date, and the denominator of which is the Invested Amount for such
Distribution Date.
"Collateral Invested Amount" means, for any date of determination, an
amount equal to (a) the Collateral Initial Invested Amount, minus (b) an amount
equal to the amount by which the Collateral Invested Amount has been reduced on
all prior Distribution Dates to avoid the occurrence of a Class A Investor
Charge-Off, minus (c) the amount of Collateral Charge-Offs for all prior
Distribution Dates, minus (d) the aggregate amount of principal payments made to
the Collateral Interest Holder prior to such date; provided, however, that the
Collateral Invested Amount may not be reduced below zero.
"Collateral Principal Percentage" means, with respect to any Distribution
Date (i) relating to the Revolving Period for Series 1996-__, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Collateral Invested Amount for such Distribution Date,
and the denominator of which is the Invested Amount for such Distribution Date
and (ii) relating to the Controlled Amortization Period or the Rapid
Amortization Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Invested
Amount as of the end of the day on the last Distribution Date relating to the
Revolving Period for Series 1996-A, and the denominator of which is the Invested
Amount as of such day.
"Invested Amount" means, with respect to any date of determination, an
amount equal to the sum of (a) the Class A Invested Amount and (b) the
Collateral Invested Amount.
"Invested Percentage" means, on any date of determination with respect to
any Distribution Date: (a) when used with respect to Principal Receivables
during the Controlled Amortization Period or a Rapid Amortization Period for
Series 1996-__, the Fixed Allocation Percentage; and (b) when used with respect
to Principal Receivables during the Revolving Period for Series 1996-__, and
Finance Charge Receivables and Defaulted Receivables at any time, the Floating
Allocation Percentage.
"First Chicago Percentage" means when used with respect to allocations of
collections of Finance Charge Receivables and Principal Receivables and the
amount of Defaulted Receivables, 100% minus the sum of the applicable Invested
Percentages with respect to all Series then issued and outstanding.
APPLICATION OF COLLECTIONS
The Bank, as Servicer, uses for its own benefit all collections received
with respect to the Receivables in each Due Period until the related Transfer
Date at which time such collections are applied as described below and under
"Description of the Certificates and the Agreement--Application of Collections"
in the Prospectus.
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<PAGE>
Throughout the existence of the Trust, the Servicer allocates to the
Seller, as holder of the Exchangeable Seller's Certificate, an amount equal to
the First Chicago Percentage of the aggregate amount of Collections allocable to
Principal Receivables and Finance Charge Receivables in respect of such Due
Period. On each Determination Date with respect to the Revolving Period for
Series 1996-__, the Servicer will allocate to the Seller or, in certain
circumstances, to other Series, from collections an amount equal to the Floating
Allocation Percentage of the aggregate amount of collections in respect of
Principal Receivables for the related Distribution Date, except that the amount
of such allocation with respect to Principal Receivables shall not exceed the
amount of the First Chicago Interest in Principal Receivables (after giving
effect to any new Receivables transferred to the Trust for the Due Period
relating to such Determination Date) and will exclude any such collections to be
applied as Collateral Monthly Principal.
On each Determination Date with respect to the Controlled Amortization
Period for Series 1996-_, the Servicer will allocate to the Seller or, in
certain circumstances, to other Series, from collections an amount equal to the
excess of the Fixed Allocation Percentage for the related Distribution Date of
the aggregate amount of collections in respect of Principal Receivables over the
related Controlled Amount, except that the amount of such allocation with
respect to Principal Receivables shall not exceed the amount of the First
Chicago Interest in Principal Receivables (after giving effect to any new
Receivables transferred to the Trust for the Due Period relating to such
Determination Date) and will exclude any such collections to be applied as
Collateral Monthly Principal.
On each Distribution Date with respect to a Rapid Amortization Period, the
Servicer will distribute all collections in respect of Principal Receivables
allocable to Series 1996-___ with respect to the related Due Period in payment
of principal on the Certificates (as more fully described below under "--
Allocation of Funds").
REALLOCATION OF COLLECTIONS
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the "Class A Required Amount"), if any, by
which (a) the sum of (i) Class A Monthly Interest for such Distribution Date,
(ii) any Class A Monthly Interest previously due but not paid to Class A
Certificateholders on a prior Distribution Date, (iii) any Class A Additional
Interest and any Class A Additional Interest previously due but not paid to
Class A Certificateholders on a prior Distribution Date, (iv) if there is a
successor Servicer not affiliated with the Seller, the Monthly Servicing Fee for
such Distribution Date and (v) the Class A Investor Default Amount, if any, for
such Distribution Date exceeds the Class A Available Funds (as defined below
under "--Allocation of Funds"). If the Class A Required Amount is greater than
zero, Excess Spread and Excess Finance Charge Collections allocated to Series
1996-_ and available for such purpose will be used to fund the Class A Required
Amount with respect to such Distribution Date. If such Excess Spread and Excess
Finance Charge Collections available with respect to such Distribution Date are
less than the Class A Required Amount, amounts, if any, on deposit in the Cash
Collateral Account will then be used to fund the remaining Class A Required
Amount. If such Excess Spread and Excess Finance Charge Collections and
amounts, if any, on deposit in the Cash Collateral Account are insufficient to
fund the Class A Required Amount, collections of Principal Receivables allocable
to the Collateral Interest for the related Due Period ("Reallocated Principal
Collections") will then be used to fund the remaining Class A Required Amount
which will have the effect of reducing the Collateral Invested Amount. If
Reallocated Principal Collections with respect to the related Due Period,
together with Excess Spread and Excess Finance Charge Collections allocated
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<PAGE>
to Series 1996-_ and amounts, if any, on deposit in the Cash Collateral Account
are insufficient to fund the Class A Required Amount, then the Collateral
Invested Amount will be reduced by the amount of such excess (but not by more
than the Class A Investor Default Amount for such Distribution Date). In the
event that such reduction would cause the Collateral Invested Amount to be a
negative number, the Collateral Invested Amount will be reduced to zero, and the
Class A Invested Amount will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero. Any such reduction in the
Class A Invested Amount will have the effect of slowing or reducing the return
of principal and interest to the Class A Certificateholders. In such case, the
Class A Certificateholders will bear directly the credit and other risks
associated with their interest in the Trust. See "--Defaulted Receivables;
Rebates and Fraudulent Charges."
Reductions of the Class A Invested Amount will thereafter be reimbursed and
the Class A Invested Amount increased to the extent of Excess Spread and Excess
Finance Charge Collections and Reallocated Principal Collections available for
such purpose on each Distribution Date. See "--Allocation of Funds Excess
Spread--Excess Finance Charge Collections."
ALLOCATION OF FUNDS
The Servicer shall apply, or shall instruct the Trustee (or the Paying
Agent, in the case of distributions to Class A Certificateholders) to apply,
Class A Available Funds, Collateral Available Funds, Class A Available Principal
Collections and Collateral Principal Collections on each Distribution Date to
make the following distributions from the Collection Account for such
Distribution Date.
Payment of Interest, Fees and Other Items.
(a) An amount equal to the Class A Available Funds with respect to
such Distribution Date will be distributed in the following order of
priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not paid to the Class A Certificateholders on a
prior Distribution Date, plus any additional interest with respect to
interest amounts that were due but not paid to the Class A
Certificateholders on a prior Distribution Date at a rate equal to the
Class A Certificate Rate plus 2% per annum ("Class A Additional
Interest"), will be distributed to the Class A Certificateholders;
(ii) an amount equal to the Monthly Servicing Fee with respect
to Series 1996-_, for such Distribution Date will be distributed to
the Servicer;
(iii) an amount equal to the Class A Investor Default Amount for
such Distribution Date will be treated as a portion of Class A
Available Principal Collections for such Distribution Date; and
(iv) the balance, if any, will constitute Excess Spread and will
be allocated and distributed as described under "--Excess Spread;
Excess Finance Charges Collections" below;
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provided, however, that in the event that there are insufficient funds to
pay in full the amounts distributable pursuant to clauses (i), (ii) and
(iii) above (before giving effect to any Excess Spread or withdrawal from
the Cash Collateral Account, application of Reallocated Principal
Receivables or reduction in the Collateral Invested Amount for such
purpose), such amounts shall be paid on a pro rata basis.
(b) An amount equal to the Collateral Available Funds with respect to
such Distribution Date will constitute Excess Spread and will be allocated
and distributed as described under "--Excess Spread; Excess Finance Charge
Collections" below.
"Class A Available Funds" means, with respect to any Due Period, an amount
equal to the Class A Floating Percentage of the Floating Allocation Percentage
of Collections of Finance Charge Receivables (including any amounts that are to
be treated as Collections of Finance Charge Receivables in accordance with the
Series 1996-_ Supplement).
"Class A Monthly Interest" means, with respect to any Distribution Date, an
amount equal to the product of (i)(A) a fraction, the numerator of which is the
actual number of days in the Interest Period and the denominator of which is
360, times (B) the Class A Certificate Rate and (ii) the Class A Invested Amount
as of the preceding Record Date; provided, however, with respect to the first
Distribution Date, Class A Monthly Interest shall be equal to the interest
accrued on the Class A Invested Amount at the applicable Class A Certificate
Rates for the Interest Periods from the Series_ Closing Date through _______
__, 1996.
"Collateral Available Funds" means, with respect to any Due Period, an
amount equal to the Collateral Floating Percentage of the Floating Allocation
Percentage of Finance Charge Receivables (including any amounts that are to be
treated as collections of Finance Charge Receivables in accordance with the
Series 1996-_ Supplement).
"Collateral Monthly Interest" means, with respect to any Distribution Date,
an amount equal to the product of (i) (A) a fraction, the numerator of which is
the actual number of days in the Interest Period and the denominator of which is
360, times (B) the Collateral Rate and (ii) the Collateral Invested Amount as of
the preceding Record Date; provided, however, with respect to the first
Distribution Date, Collateral Monthly Interest shall be equal to the interest
accrued on the initial Collateral Invested Amount at the applicable Collateral
Rates for the Interest Periods from the Series_ Closing Date through _______
__, 1996.
"Collateral Rate" means a rate not greater than LIBOR plus 1.00% per annum.
"Excess Spread" means, with respect to any Distribution Date, an amount
equal to the sum of the amounts described in clause (a) (iv) and clause (B)
above under "--Payment of Interest, Fees and Other Items."
Excess Spread; Excess Finance Charge Collections. On each Distribution
Date, the Trustee will apply or cause the Servicer to apply Excess Spread and
Excess Finance Charge Collections allocated to Series 1996-_ with respect to the
related Due Period to make the following distributions in the following order of
priority:
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(a) an amount equal to the Class A Required Amount, if any, with
respect to such Distribution Date will be used to fund any deficiency
pursuant to clauses (a) (i), (ii) and (iii) above under "--Payment of
Interest, Fees and Other Items," in that order of priority; provided,
however, that no payment shall be made to fund a deficiency pursuant to
such clause (a) (ii) unless there is a successor Servicer not affiliated
with the Seller;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated as a
portion of Class A Available Principal Collections for such Distribution
Date as described under "--Payments of Principal" below;
(c) an amount equal to Collateral Monthly Interest for such
Distribution Date, plus the amount of any Collateral Monthly Interest
previously due but not paid to the Collateral Interest Holder on a prior
Distribution Date, plus any additional interest with respect to amounts
that were due but not paid to the Collateral Interest Holder on a prior
Distribution Date at a rate equal to the Collateral Rate ("Collateral
Additional Interest") will be distributed to the Collateral Interest Holder
for application in accordance with the agreement between the Collateral
Interest Holder, the Seller, the Servicer and the Trustee (the "Loan
Agreement");
(d) an amount equal to the Collateral Default Amount for such
Distribution Date shall be treated as a portion of Collateral Principal
Collections with respect to such Distribution Date;
(e) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced pursuant to clauses (b) and (c) of the
definition of "Collateral Invested Amount" under "--Allocation Percentages"
above (but not in excess of the aggregate amount of such reductions which
have not been previously reimbursed, including pursuant to the Loan
Agreement) will be applied in accordance with the Loan Agreement;
(f) an amount up to the excess, if any, of the Required Cash
Collateral Amount over the remaining Available Cash Collateral Amount
(without giving effect to any deposit to the Cash Collateral Account made
on such date) shall be deposited into the Cash Collateral Account;
(g) an amount equal to any unpaid portion of the Monthly Servicing
Fee with respect to Series 1996-_ for such Distribution Date, plus the
amount of any such Monthly Servicing Fee previously due but not distributed
to the Servicer on a prior Distribution Date shall be distributed to the
Servicer; and
(h) the balance shall be applied in accordance with the Loan
Agreement.
Payments of Principal. On each Distribution Date, the Trustee will apply
or cause the Servicer to apply Class A Available Principal Collections and
Collateral Principal Collections in the following order of priority:
(a) on each Distribution Date with respect to the Revolving Period for
Series 1996-__, all such Class A Available Principal Collections which are
not allocated at the option of the Seller as part of Collateral Monthly
Principal to make a payment with respect to the Collateral Interest will be
allocated to the Seller or to other Series;
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(b) on each Distribution Date with respect to the Controlled
Amortization Period or the Rapid Amortization Period for Series 1996-__,
all such Class A Available Principal Collections will be distributed or
deposited in the following order of priority:
(i) an amount equal to Class A Monthly Principal will be paid to
the Class A Certificateholders; and
(ii) the balance, if any, will be paid to the Collateral
Interest Holder, the Seller or to other Series;
(c) on each Distribution Date with respect to the Revolving Period for
Series 1996-_, Collateral Principal Collections will be distributed or
deposited in the following order of priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date will be applied in accordance with the Loan
Agreement; and
(ii) the balance, if any, will be treated as Class A Available
Principal Collections and applied as described in clause (a) above;
(d) on each Distribution Date with respect to the Controlled
Amortization Period for Series 1996-__, Collateral Principal Collections
will be distributed or deposited in the following priority:
(i) an amount equal to Collateral Monthly Principal will be
applied in accordance with the Loan Agreement; and
(ii) the balance, if any, will be treated as Class A Available
Principal Collections and applied as described in clause (b) above;
and
(e) on each Distribution Date with respect to the Rapid Amortization
Period, Collateral Principal Collections will be treated as Class A
Available Principal Collections.
"Class A Available Principal Collections" means, with respect to any
Distribution Date, the sum of (a) the Class A Principal Percentage of the
Invested Percentage of collections of Principal Receivables, (b) the amount, if
any, of Unallocated Principal Collections on deposit in the Collection Account
allocated to the Certificates, (c) Excess Principal Collections allocated to the
Certificates and (d) any other amounts which are to be treated as Class A
Available Principal Collections in accordance with the Series 1996-_ Supplement.
"Class A Monthly Principal" means, on each Distribution Date beginning with
the earlier to occur of (i) the first Distribution Date to occur with respect to
any Rapid Amortization Period for Series 1996-_ and (ii) the first Distribution
Date to occur with respect to the Controlled Amortization Period for Series
1996-_, an amount equal to Class A Available Principal Collections; provided,
however, that for each Distribution Date with respect to the Controlled
Amortization Period (unless and until a Liquidation Event is deemed to have
occurred), Class A Monthly Principal shall not exceed the Controlled Amount for
such Distribution Date; provided, further, that with respect to any Distribution
Date, Class A Monthly Principal shall not exceed the Class A Invested Amount.
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"Collateral Monthly Principal" means, on each Distribution Date, an amount
calculated as follows:
(i) on any Distribution Date prior to the Distribution Date on which
the Class A Invested Amount is paid in full, the lesser of (A) the sum of
(x) Collateral Principal Collections with respect to such Distribution Date
and (y) Class A Available Principal Collections not applied to Class A
Monthly Principal on such Distribution Date and (B) the Enhancement Surplus
on such Distribution Date; and
(ii) on the Distribution Date on which the Class A Invested Amount is
paid in full, the sum of (A) Collateral Principal Collections with respect
to such Distribution Date and (B) Class A Available Principal Collections
not applied to Class A Monthly Principal on such Distribution Date;
notwithstanding the foregoing, prior to the occurrence of a Liquidation
Event and under certain limited circumstances specified in the Series 1996-
_ Supplement, "Collateral Monthly Principal" shall mean for any applicable
Distribution Date, the sum of (I) Collateral Principal Collections with
respect to such Distribution Date and (II) Class A Available Principal
Collections not applied to Class A Monthly Principal on such Distribution
Date; provided, however, that an amount not less than the Collateral
Monthly Principal as so calculated is deposited into the Cash Collateral
Account on such Distribution Date.
"Collateral Principal Collections" means, with respect to any Due Period,
the Collateral Principal Percentage of the Invested Percentage of Collections of
Principal Receivables, plus any other amounts which are to be treated as
Collateral Principal Collections in accordance with the provisions of the Series
1996-_ Supplement, minus the amount of Reallocated Principal Collections with
respect to such Due Period applied for the benefit of the Class A Certificates.
"Controlled Amount" for any Distribution Date with respect to the
Controlled Amortization Period shall mean an amount equal to the sum of the
Controlled Amortization Amount and any existing Deficit Controlled Amortization
Amount.
"Deficit Controlled Amortization Amount" means, on the first Distribution
Date with respect to the Controlled Amortization Period for Series 1996-__, the
excess, if any, of the Controlled Amortization Amount over the amount of Class A
Monthly Principal for such Distribution Date and, on each subsequent
Distribution Date with respect to the Controlled Amortization Period for Series
1996-__, the excess, if any, of the Controlled Amount over the amount of Class A
Monthly Principal for such Distribution Date.
Payments to Certificateholders will be made from the Collection Account.
In addition to the amounts deposited in the Collection Account, as described
above, from payments on the Receivables, amounts required for any optional
repurchase or other purchase of the Certificates by the Seller or the proceeds
of any sale of the Receivables will be deposited in the Collection Account.
The paying agent (the "Paying Agent") will initially be FNBC. The Paying
Agent shall have the revocable power to withdraw funds from the Collection
Account for the purposes of making distributions to the Certificateholders.
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SHARED COLLECTIONS OF FINANCE CHARGE RECEIVABLES
To the extent that collections of Finance Charge Receivables allocated to
the Certificates are not needed to make payments to Certificateholders or other
payments required in respect of Series 1996-__, such collections may be applied
to cover shortfalls in amounts payable from collections of Finance Charge
Receivables allocable to certain other Series (including Series 1994-I, Series
1994-J, Series 1994-K, Series 1994-L, Series 1995-M, Series 1995-N, Series 1995-
O, Series 1995-P and certain subsequently issued Series). To the extent
collections of Finance Charge Receivables allocated to certain other Series
(including Series 1994-I, Series 1994-J, Series 1994-K, Series 1994-L, Series
1995-M, Series 1995-N, Series 1995-O, Series 1995-P and certain subsequently
issued Series) are not needed to make payments required in respect of each such
Series, such collections ("Excess Finance Charge Collections") may be applied to
cover shortfalls in amounts payable from collections of Finance Charge
Receivables allocable to Series 1996-_ and to other Series experiencing
shortfalls. There can be no assurance that such Excess Finance Charge
Collections will be available to cover shortfalls in amounts payable from
collections of Finance Charge Receivables allocable to the Class A Certificates.
To the extent Excess Finance Charge Collections are also allocated to other
Series, the pro rata share of such Excess Finance Charge Collections available
to the Class A Certificates will be reduced.
SHARED COLLECTIONS OF PRINCIPAL RECEIVABLES
To the extent that collections of Principal Receivables allocated to the
Certificates are not needed to make payments to the Certificateholders, such
collections may be applied to cover principal payments due to or for the benefit
of any other Series. Any such application of collections will not result in a
reduction of the Invested Amount of the Certificates.
Similarly, certain collections of Principal Receivables allocated to other
Series (including Series 1993-F, Series 1993-G, Series 1993-H, Series 1994-I,
Series 1994-J, Series 1994-K, Series 1994-L, Series 1995-M, Series 1995-N,
Series 1995-O, Series 1995-P and certain subsequently issued Series), to the
extent such collections are not needed to make payments to or for the benefit of
such other Series ("Excess Principal Collections"), will be applied, if
necessary, to cover Class A Monthly Principal due to Class A Certificateholders
(and Collateral Monthly Principal due to the Collateral Interest Holder). There
can be no assurance that such Excess Principal Collections will be available to
cover Class A Monthly Principal due on any Distribution Date. Such Excess
Principal Collections may also be allocated to other Series (including Series
1993-F, Series 1993-G, Series 1993-H, Series 1994-I, Series 1994-J, Series 1994-
K, Series 1994-L, Series 1995-M, Series 1995-N, Series 1995-O, Series 1995-P and
certain subsequently issued Series). To the extent such Excess Principal
Collections are also allocated to other Series, the pro rata share of such
Excess Principal Collections allocated to the Certificates will be reduced.
THE CASH COLLATERAL ACCOUNT
The Trust will have the benefit of the Cash Collateral Account, which will
be held with the trust department of The First National Bank of Chicago for the
benefit of the Certificateholders. Funds on deposit in the Cash Collateral
Account will be invested in Eligible Investments.
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The Cash Collateral Account will have an initial Available Cash Collateral
Amount of $_______. On each Distribution Date, the amount available to be
withdrawn from the Cash Collateral Account (the "Available Cash Collateral
Amount") will be equal to the lesser of (i) the amount on deposit in the Cash
Collateral Account (before giving effect to any deposit to, or withdrawal from,
the Cash Collateral Account on such Distribution Date) and (ii) the Required
Cash Collateral Amount. The "Required Cash Collateral Amount" means, on any
date of determination, the Required Enhancement Amount less the Collateral
Invested Amount. The "Required Enhancement Amount" with respect to any
Distribution Date means the greater of (i) the product of (a) the Invested
Amount related to such Distribution Date and (b) ____% and (ii) the sum of (a)
$______ and (b) the product of (I) two and (II) the excess, if any, of $_______
over the amount on deposit in the Cash Collateral Account with respect to such
Distribution Date; provided, however, that (i) if any withdrawal is made from
the Cash Collateral Account in respect of the Class A Required Amount or if a
Liquidation Event occurs or if there are certain reductions in the Collateral
Invested Amount, the Required Enhancement Amount for such Distribution Date
shall equal the Required Enhancement Amount for the Distribution Date
immediately preceding the occurrence of such withdrawal, such Liquidation Event
or such reduction, (ii) in no event shall the Required Enhancement Amount exceed
the Class A Invested Amount on any such date, and (iii) the Required Enhancement
Amount may be reduced without the consent of the Certificateholders, if the
Seller shall have received written notice from each Rating Agency that such
reduction will not result in the reduction or withdrawal of the then current
rating of any of the Certificates for which such Rating Agency furnishes a
rating and the Seller shall have delivered to the Trustee a certificate of an
authorized officer to the effect that, based on the facts known to such officer
at such time, in the reasonable belief of the Seller, such reduction will not
cause a Liquidation Event or an event that, after the giving of notice or the
lapse of time, would constitute a Liquidation Event to occur.
For each Distribution Date, a withdrawal may be made from the Cash
Collateral Account in an amount up to the lesser of (i) the sum of the Class A
Required Amount and any unreimbursed Class A Investor Charge-Offs (to the extent
such sum has not been paid from Excess Spread and Excess Finance Charge
Collections allocated to Series 1996-_) and (ii) the Available Cash Collateral
Amount, to fund the unpaid portion of the Class A Required Amount and
unreimbursed Class A Investor Charge-Offs.
Under certain circumstances specified in the Loan Agreement, the Seller
will have the option to elect to deposit certain amounts held pursuant to the
Loan Agreement into the Cash Collateral Account, which will result in a
reduction of the Collateral Invested Amount. Any such election will have the
effect of converting all or a portion of the Enhancement in the form of the
Collateral Invested Amount into Enhancement in the form of amounts on deposit in
the Cash Collateral Account. The amount of such reduction of the Collateral
Invested Amount for any given Distribution Date will not exceed the Collateral
Monthly Principal.
In addition, under certain limited circumstances specified in the Series
1996-_ Supplement and prior to the occurrence of a Liquidation Event, the Seller
may elect to deposit Collateral Monthly Principal (as determined in accordance
with clauses (I) and (II) of the definition thereof appearing under "--
Allocation of Funds" above) into the Cash Collateral Account, which will result
in a reduction of the Collateral Invested Amount. Any such election will have
the effect of converting all or a portion of the Enhancement in the form of the
Collateral Invested Amount into Enhancement in the form of amounts on deposit in
the Cash Collateral Account.
On each Distribution Date, the Servicer or the Trustee, acting pursuant to the
Servicer's instructions, will apply Excess Spread and Excess Finance Charge
Collections to the extent described above under
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"--Allocation of Funds--Excess Spread; Excess Finance Charge Collections" to
increase the amount on deposit in the Cash Collateral Account to the extent such
amount is less than the Required Cash Collateral Amount. In addition, if on any
Distribution Date, after taking into account all distributions, deposits and
withdrawals to be made for such date, the amount on deposit in the Cash
Collateral Account and the Collateral Invested Amount exceeds the Required
Enhancement Amount for the next succeeding Distribution Date, the Collateral
Invested Amount may be reduced. The amount of such reduction will not exceed
the Collateral Monthly Principal for such Distribution Date.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
The term "Investor Default Amount" means, for any Due Period, the product
of the Floating Allocation Percentage for such Distribution Date and the amount
of Defaulted Receivables.
A portion of the Investor Default Amount will be allocated to the Class A
Certificateholders (the "Class A Investor Default Amount") on each Distribution
Date in an amount equal to the product of the Class A Floating Percentage for
such Distribution Date and the Investor Default Amount. An amount equal to the
Class A Investor Default Amount will be paid from Class A Available Funds,
Excess Spread and Excess Finance Charge Collections allocated to Series 1996-_
or from amounts, if any, on deposit in the Cash Collateral Account and
Reallocated Principal Collections and applied as described above under "--
Allocation of Funds--Payments of Interest, Fees and Other Items" and "--
Reallocation of Collections."
On each Distribution Date, if the Class A Investor Default Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-_, amounts, if any, on deposit in the Cash
Collateral Account and Reallocated Principal Collections, the Collateral
Invested Amount (to the extent not already reduced as a result of a Collateral
Charge-Off with respect to such Distribution Date) will be reduced by the amount
of such excess, but not by more than the Class A Investor Default Amount for
such Distribution Date. In the event that such reduction would cause the
Collateral Invested Amount to be a negative number, the Collateral Invested
Amount will be reduced to zero, and the Class A Invested Amount will be reduced
by the amount by which the Collateral Invested Amount would have been reduced
below zero (a "Class A Investor Charge-Off"), which will have the effect of
slowing or reducing the return of principal to the Class A Certificateholders.
If the Class A Invested Amount has been reduced by the amount of any Class A
Investor Charge-Offs, it will thereafter be increased on any Distribution Date
(but not by an amount in excess of the aggregate unreimbursed Class A Investor
Charge-Offs) by the amount of Excess Spread and Excess Finance Charge
Collections allocated to Series 1996-_ and available for such purpose as
described under "--Allocation of Funds--Excess Spread; Excess Finance Charge
Collections."
A portion of the Investor Default Amount will be allocated to the
Collateral Interest Holder (the "Collateral Default Amount") on each
Distribution Date in an amount equal to the product of the Collateral Floating
Percentage for such Distribution Date and the Investor Default Amount. On each
Distribution Date, if the Collateral Default Amount exceeds the Excess Spread
and Excess Finance Charge Collections allocable to Series 1996-_ and available
to cover such amount as described above under "--Allocation of Funds--Excess
Spread; Excess Finance Charge Collections," the Collateral Invested Amount will
be reduced by the amount of such excess (a "Collateral Charge-Off"). If the
Collateral Invested Amount has been reduced by the amount of any Collateral
Charge-Offs, the Collateral Interest Holder will thereafter be reimbursed for
such Collateral Charge-Offs on any Distribution Date (but not by an amount in
excess of the aggregate unreimbursed Collateral Charge-Offs) by the amount
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of Excess Spread and Excess Finance Charge Collections allocated to Series 1996-
_ and available for such purpose as described under "--Allocation of Funds--
Excess Spread; Excess Finance Charge Collections."
FINAL PAYMENT OF PRINCIPAL; TERMINATION OF TRUST
The Class A Certificates will be subject to optional repurchase by the
Seller on any Distribution Date on or after which the Invested Amount is reduced
to an amount less than or equal to 5% of the Initial Invested Amount, unless
certain events of bankruptcy, insolvency or receivership have occurred with
respect to the Seller. The repurchase price of the Certificates will be equal
to the Invested Amount plus accrued and unpaid interest on the Certificates
through, and including, the day preceding the Distribution Date with respect to
which the repurchase occurs. In any event, the last payment of principal and
interest on the Certificates will be due and payable no later than the ________
____ Distribution Date. In the event that the Invested Amount is greater than
zero on the _________ ____ Distribution Date, the Trustee will sell or cause to
be sold interests in the Receivables or certain Receivables, as specified in the
Agreement and the Series 1996-_ Supplement, in an amount up to 110% of the
Invested Amount of the Certificates at the close of business on such date (but
not more than the total amount of Receivables allocable to the Certificates).
The net proceeds of such sale and any collections on the Receivables will be
paid, pro rata to the Class A Certificateholders, then to the Collateral
Interest Holder, on the Series Termination Date, as final payment of the
Certificates.
LIQUIDATION EVENTS
The Revolving Period for Series 1996-_ will continue through the end of the
________ ____ Due Period and the Controlled Amortization Period will begin at
such time, unless a Liquidation Event occurs. A Rapid Amortization Period will
commence at the beginning of the Due Period during which a Liquidation Event
occurs or is deemed to occur. A Liquidation Event with respect to the
Certificates refers to any of the following events:
(i) failure on the part of the Seller (a) to make any payment or
deposit on the date required under the Agreement or the Series 1996-_
Supplement (or within the applicable grace period which will not exceed
five business days), (b) duly to observe or perform in any material respect
the covenant of the Seller not to sell, pledge, assign or transfer to any
person, or grant any unpermitted lien on, any Receivable, or (c) duly to
observe or perform in any material respect any other covenants or
agreements of the Seller, which in the case of subclause (c) hereof,
continues unremedied for a period of 60 days after written notice;
(ii) any representation or warranty made by the Seller in the
Agreement or the Series 1996-_ Supplement or any information required to be
given by the Seller to the Trustee to identify the Accounts proves to have
been incorrect in any material respect when made and continues to be
incorrect in any material respect for a period of 60 days after written
notice and as a result of which the interests of the Certificateholders are
materially and adversely affected; provided, however, that a Liquidation
Event described in this clause (ii) shall not be deemed to occur if the
Seller has accepted the transfer of the related Receivable or all such
Receivables, if applicable, during such period (or such longer period as
the Trustee may specify) in accordance with the provisions thereof;
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(iii) certain events of insolvency, conservatorship or receivership
relating to the Seller;
(iv) the average Portfolio Yield for any three consecutive Due
Periods is less than the average of the Base Rates for the related Interest
Periods;
(v) the Trust becomes an "investment company" within the meaning of
the Investment Company Act of 1940, as amended;
(vi) after any applicable grace period, a failure by the Seller to
convey Additional Accounts to the Trust when required by the Agreement;
(vii) the Class A Invested Amount is not paid in full on the Class A
Expected Final Distribution Date; or
(viii) any Servicer Default occurs which would have a material
adverse effect on the Certificateholders.
In the case of any event described in clause (i), (ii) or (viii), a
Liquidation Event will be deemed to have occurred with respect to any Series
only if, after any applicable grace period described in such clauses, either the
Trustee or Certificateholders of such Series evidencing undivided interests
aggregating not less than 50% of the Invested Amount of such Series, by written
notice to the Seller and the Servicer (and to the Trustee, if given by such
Certificateholders) declare that a Liquidation Event has occurred as of the date
of such notice. In the case of any event described in clause (iii) or (v), a
Liquidation Event with respect to all Series, and in the case of any event
described in clause (iv), (vi) or (vii), a Liquidation Event with respect to
only Series 1996-_, will be deemed to have occurred without any notice or other
action on the part of the Trustee or the applicable Certificateholders
immediately upon the occurrence of such event. The Rapid Amortization Period
for Series 1996-__ will commence on the first day of the Due Period in which a
Liquidation Event occurs or is deemed to occur. Monthly distributions of
principal to the Class A Certificateholders will begin (if they have not already
begun) on the first Distribution Date following such Due Period in the manner
described herein. See "--Allocation of Funds." Thus, Class A Certificateholders
may begin receiving distributions of principal earlier than they otherwise would
have, which may shorten the final maturity of the Class A Certificates. If a
Liquidation Event occurs and the FDIC is appointed as the receiver for the Bank
and no Liquidation Event other than such receivership or insolvency exists, the
FDIC may have the power to prevent commencement of the Rapid Amortization
Period.
In addition to the consequences of a Liquidation Event discussed above, if
pursuant to certain provisions of Federal law, the Seller voluntarily goes into
liquidation or the FDIC or any other person is appointed a receiver or
conservator of the Seller, on the day of such appointment the Seller will
immediately cease to transfer Principal Receivables to the Trust and promptly
give notice to the Trustee of such appointment. Within 15 days, the Trustee
will publish a notice of the liquidation or the appointment stating that the
Trustee intends to sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and to the best of its ability. Unless otherwise
instructed within a specified period by certificateholders representing
undivided interests aggregating more than 50% of the invested amount of any
Preexisting Series, the Trustee will sell, dispose of or otherwise liquidate the
Receivables of all Series in a commercially reasonable manner and on
commercially reasonable terms. Furthermore, even if the Receivables are not
sold pursuant to the preceding sentence, with respect to Series 1995-M, Series
1995-N, Series 1995-O, Series 1995-P, Series 1996-__ and any subsequently or
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contemporaneously issued Series, unless otherwise instructed within a specified
period by holders representing undivided interests aggregating more than 50% of
the invested amount of each Preexisting Series and each class of each such
Series (including a majority in interest in each collateral interest) (unless
otherwise specified in the related Supplement), each holder of an interest in
the First Chicago Interest and any other person specified in any Supplement, the
Trustee will sell, dispose of or otherwise liquidate the portion of the
Receivables allocable to all Series other than the Preexisting Series in a
commercially reasonable manner and on commercially reasonable terms in
accordance with the Agreement. The proceeds from the sale, disposition or
liquidation of the Receivables will be treated as collections on the Receivables
and such proceeds will be distributed to the applicable certificateholders. See
"Certain Legal Aspects of the Receivables-Certain Matters Relating to
Receivership" in the Prospectus for a discussion of how Federal legislation may
affect the Trustee's ability to liquidate the Receivables.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The portion of the Servicing Fee allocable to Series 1996-_ on each
Distribution Date (the "Monthly Servicing Fee") generally will be equal to 1/12
of the product of (a) ___% per annum and (b) the Invested Amount with respect to
the related Due Period. A portion of the Monthly Servicing Fee equal to 1/12 of
the product of ____% per annum and the Invested Amount with respect to the
related Due Period will be paid solely from Interchange allocable to Series
1996-_, before such Interchange is used for any other purpose. A portion of the
Monthly Servicing Fee equal to 1/12 of the product of ___% per annum and the
Invested Amount with respect to the related Due Period will be paid from
collections of Finance Charge Receivables allocable to the Certificates. The
remaining portion of the Servicing Fee will be allocable to the First Chicago
Interest or to other Series. The Monthly Servicing Fee will be paid each month
from the Collection Account; provided, however, that in the event there are
insufficient collections of Finance Charge Receivables (excluding amounts
payable from Excess Spread or the Cash Collateral Account) available to make the
distribution of the Class A Monthly Interest, the Class A Investor Default
Amount and the portion of the Monthly Servicing Fee payable from such funds,
such Class A Monthly Interest, Class A Investor Default Amount and Monthly
Servicing Fee will be paid on a pro rata basis to the extent of such funds. If
a successor Servicer has been appointed, Excess Spread may be used, and
withdrawals from the Cash Collateral Account may be made, if there are
insufficient collections of Finance Charge Receivables available to the
Certificates to pay the portion of the Monthly Servicing Fee of such successor
Servicer payable from such funds.
REPORTS TO CLASS A CERTIFICATEHOLDERS
On each Distribution Date, there will be forwarded to each Class A
Certificateholder of record a statement (the "Monthly Servicer Report") prepared
by the Servicer setting forth: (i) the total amount distributed with respect to
the Class A Certificates; (ii) the amount of the distribution on such
Distribution Date allocable to principal; (iii) the amount of such distribution
allocable to interest; (iv) the amount of collections processed during the
preceding Due Period and allocated in respect of the Certificates; (v) the
Invested Amount, the Class A Invested Amount, the Collateral Invested Amount,
the Class A Floating Percentage, the Class A Principal Percentage and the
Invested Percentages; (vi) the aggregate outstanding balance of Accounts which
are 30 days or more delinquent as of the close of business at the end of the
preceding Due Period; (vii) the Investor Default Amount and the Class A Investor
Default Amount for such Distribution Date; (viii) the amount of Class A Investor
Charge-Offs for such Distribution Date and the amount of reimbursements of such
Class A Investor Charge-Offs; (ix) the amount of the Monthly
S-44
<PAGE>
Servicing Fee for such Distribution Date; (x) the Available Cash Collateral
Amount and the Collateral Invested Amount at the close of business on such
Distribution Date; (xi) the Class A Required Amount, if any, for such
Distribution Date; (xii) the amount of Excess Spread and Reallocated Principal
Collections, if any, available with respect to such Distribution Date; (xiii)
the amount, if any, by which the principal balance of the Class A Certificates
exceeds the Class A Invested Amount as of the end of the day on the Record Date;
(xiv) the "pool factor" as of the end of the related Record Date (consisting of
an eight-digit decimal expressing the ratio of the Class A Invested Amount to
the Class A Initial Invested Amount); and (xv) the existing Deficit Controlled
Amortization Amount.
On or before January 31 of each calendar year, beginning with 1997, there
will be furnished to each person who at any time during the preceding calendar
year was a Class A Certificateholder of record (or, if so provided in applicable
Treasury regulations, made available to Certificate Owners) a statement prepared
by the Servicer containing the information required to be provided by an issuer
of indebtedness under the Code for such calendar year or the applicable portion
thereof during which such person was a Class A Certificateholder, together with
such other customary information as the Servicer deems necessary or desirable to
enable the Class A Certificateholders to prepare their tax returns. See "Tax
Matters" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated ______, __, 199_ and a Terms Agreement dated ______, __, 1996 (such
agreements, collectively, the "Underwriting Agreement") between the Seller and
the underwriters named below (collectively, the "Underwriters"), the Seller has
agreed to sell to each of the Underwriters named below, and each of the
Underwriters has severally agreed to purchase, the principal amount of Class A
Certificates as set forth opposite its name:
<TABLE>
<CAPTION>
Principal
Amount of
Class A
Underwriters Certificates
- -------------- ------------
<S> <C>
Total....... $
=============
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the Class
A Certificates offered hereby if any Class A Certificates are purchased. In the
event of a default by any Underwriter, the Underwriting Agreement provides that,
in certain circumstances, purchase commitments of the nondefaulting Underwriters
may be increased or the Underwriting Agreement may be terminated. The Seller
has been advised by the several Underwriters that the several Underwriters
propose initially to offer the Class A Certificates to the public at the public
offering price set forth on the cover page of this Prospectus Supplement, and to
certain dealers at such price less a concession not in excess of ____% of the
principal amount of the Class A Certificates. Underwriters may allow and such
dealers may reallow a concession not in excess of ____% of such principal
amount.
S-45
<PAGE>
The Underwriting Agreement provides that the Seller will indemnify the
several Underwriters against certain liabilities, including liabilities under
applicable securities laws, or contribute to payments the several Underwriters
may be required to make in respect thereof.
First Chicago Capital Markets, Inc. ("FCCM") is an affiliate of the Seller.
Any obligations of FCCM are the sole obligations of FCCM and do not create any
obligations on the part of any affiliate of FCCM.
FCCM may from time to time purchase or acquire a position in the Class A
Certificates and may, at its option, hold or resell such Class A Certificates.
FCCM expects to offer and sell previously issued Class A Certificates in the
course of its business as a broker-dealer. FCCM may act as a principal or agent
in such transactions. The accompanying Prospectus and this Prospectus
Supplement may be used by FCCM in connection with such transactions. Such
sales, if any, will be made at varying prices related to prevailing market
prices at the time of sale.
S-46
<PAGE>
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------- -------
<S> <C>
Available Cash Collateral Amount S-40
Available Enhancement Amount S-14
Bank 1, S-5
Bank's Portfolio S-18
Base Rate S-27
Call Report S-26
Cash Collateral Account S-13
Cede S-9
Cedel S-9
Certificate Owners S-30
Certificateholders S-4
Certificates 1, S-4
Class A Additional Interest S-34
Class A Available Funds S-35
Class A Available Principal
Collections S-26, S-37
Class A Certificateholders 1
Class A Certificate Rate S-4
Class A Certificates 1, S-4
Class A Expected Final
Distribution Date S-4, S-27
Class A Floating Percentage S-7, S-31
Class A Initial Invested Amount S-4
Class A Invested Amount S-31
Class A Investor Charge-Off S-13, S-41
Class A Investor Default Amount S-14, S-41
Class A Monthly Interest S-35
Class A Monthly Principal S-37
Class A Principal Percentage S-8, S-31
Class A Required Amount S-32
Code S-16
Collateral Additional Interest S-36
Collateral Available Funds S-35
Collateral Charge-Off S-41
Collateral Default Amount S-41
Collateral Floating Percentage S-32
Collateral Initial Invested Amount S-4
Collateral Interest 1
Collateral Interest Holder S-6
Collateral Invested Amount S-7, S-32
Collateral Monthly Interest S-35
Collateral Monthly Principal S-38
Collateral Principal Collections S-38
Collateral Rate S-35
Controlled Amortization Amount S-4
Controlled Amortization Date S-11, S-30
Controlled Amortization Period S-11
Controlled Amount S-38
Deficit Controlled Amortization
Amount S-38
Distribution Date S-3, S-4,
S-29
</TABLE>
<TABLE>
TERM PAGE
- ---------------------------------- -------
<S> <C>
DTC S-9, S-30
Enhancement Surplus S-15
ERISA S-16
Euroclear S-9
Excess Finance Charge Collections S-35, S-39
Excess Principal Collections S-39
Excess Spread S-35
Expected Initial Principal Payment
Date S-4
FCCM 2, S-46
FDIC S-9
First Chicago Interest S-6
First Chicago NBD S-5
First Chicago Percentage S-32
Fixed Allocation Percentage S-8
Floating Allocation Percentage S-7, S-31
Initial Cash Collateral Amount S-13
Initial Invested Amount S-4, S-7
Interest Period S-10
Invested Amount S-7, S-32
Invested Percentage S-32
Investor Default Amount S-14, S-40
LIBOR S-3, S-29
LIBOR Determination Date S-29
Liquidation Event S-11, S-47
Loan Agreement S-36
Monthly Servicer Report S-44
Monthly Servicing Fee S-44
Participants S-30
Paying Agent S-38
Portfolio Yield S-27
Rapid Amortization Period S-12
Reallocated Principal Collections S-6, S-32
Receivables 1
Record Date S29-
Reference Banks S-29
Required Cash Collateral Amount S-49
Required Enhancement Amount S-14, S-40
Revolving Period S-10
Seller S-5
Series S-4
Series_Closing Date S-4
Series 1996-_ S-4
Series 1996-_Supplement S-28
Series Termination Date S-4
Telerate Page 3750 S-29
Trust 1, S-4
Trustee S-5
Underwriters S-45
Underwriting Agreement S-45
</TABLE>
S-47
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained or incorporated by reference in
this Prospectus Supplement or the accompanying Prospectus and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Seller or the Underwriters. Neither the delivery of this
Prospectus Supplement or the accompanying Prospectus nor the sale hereunder or
thereunder shall under any circumstances create any implication that there has
been no change in the affairs of FCC National Bank or in the Receivables or the
Accounts since the date hereof or thereof or that the information contained or
incorporated by reference herein or therein is correct as of any time subsequent
to its date. Neither this Prospectus Supplement not the accompanying Prospectus
constitutes an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Prospectus Supplement Page
- ------------------------------------------------- ----
<S> <C>
Summary of Series Terms........................ S-4
Summary of Series Provisions................... S-4
The Bank's Credit Card Portfolio............... S-18
The Accounts................................... S-21
The Seller...................................... S-26
Maturity and Principal Payment Considerations S-26
Description of the Class A Certificates and the
Agreement...................................... S-28
Underwriting..................................... S-45
Index of Terms for Prospectus Supplement......... S-47
Annex I: Prior Issuances of Certificates........ A-1
<CAPTION>
Prospectus
----------
Prospectus Supplement.............................. 2
Reports to Certificateholders...................... 2
Available Information.............................. 2
Incorporation of Certain Documents by Reference.... 2
Prospectus Summary................................. 3
Risk Factors....................................... 15
The Bank's Credit Card Business.................... 22
The Accounts....................................... 25
The Seller......................................... 26
The Trust.......................................... 26
Use of Proceeds.................................... 27
Maturity and Principal Payment Considerations...... 27
Description of the Certificates and the Agreement.. 27
Enhancement........................................ 50
Certain Legal Aspects of the Receivables........... 52
Tax Matters........................................ 54
State and Local Taxation........................... 59
ERISA Considerations............................... 60
Plan of Distribution............................... 61
Legal Matters...................................... 62
Index of Terms for Prospectus...................... 63
Annex I: Global Clearance, Settlement and Tax
Documentation Procedures......................... A-1
</TABLE>
Until ________, 1996, all dealers effecting transactions in the Class A
Certificates, whether or not participating in this distribution, may be required
to deliver a Prospectus Supplement and a Prospectus. This delivery requirement
is in addition to the obligation of dealers to deliver a Prospectus Supplement
and a Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
$___________
FIRST CHICAGO
MASTER TRUST II
FLOATING RATE ASSET
BACKED CERTIFICATES
SERIES 1996-_
FCC NATIONAL BANK
SELLER AND SERVICER
PROSPECTUS SUPPLEMENT
[UNDERWRITERS]
DATED __________, 1996
<PAGE>
ANNEX I
PRIOR ISSUANCES OF CERTIFICATES
The table below sets forth the principal characteristics of the 13
Series heretofore issued by the Trust that are currently outstanding. For more
specific information with respect to any Series, any prospective investor should
contact First Chicago NBD. First Chicago NBD will provide, without charge, to
any prospective purchaser of the Certificates, a copy of the Disclosure Document
for any previous publicly-issued Series. Requests should be addressed to First
Chicago NBD Corporation, One First National Plaza, Chicago, Illinois 60670,
Attention: Investor Relations (312) 732-8013.
<TABLE>
<CAPTION>
SERIES 1991-D
<S> <C>
Initial Principal Amount...................... $1,000,000,000
Certificate Rate.............................. 8.40%
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Current Principal Amount...................... $1,000,000,000
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
Controlled Amortization Amount................ $83,333,333.33
Controlled Amortization Date.................. First day of the Due Period
relating to the January
1996 Distribution Date
Monthly Servicing Fee......................... 2.00%
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $120,000,000
Minimum First Chicago Interest Percentage..... 7%
Series Termination Date....................... June 1998 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$50,000,000
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
SERIES 1992-E
<S> <C>
Initial Principal Amount...................... $1,000,000,000
Certificate Rate.............................. 6.25%
Schedule Interest Payment Dates............... The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Current Principal Amount...................... $1,000,000,000
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
Controlled Amortization Amount................ $83,333,333.33
Controlled Amortization Date.................. First day of the Due Period
relating to the March
1997 Distribution Date
Monthly Servicing Fee......................... 2.00%
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $120,000,000
Minimum First Chicago Interest Percentage..... 7%
Series Termination Date....................... August 1999 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$50,000,000
SERIES 1993-F
Initial Principal Amount...................... $700,000,000
Certificate Rate.............................. LIBOR plus a spread of
0.30% per annum, but
in no event in excess of
12% per annum
Scheduled Interest Payment Dates.............. The fifteenth day
of each month (or, if such day
is not a business day, the
next succeeding business day)
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C>
Current Principal Amount...................... $ 700,000,000
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera
tors specified for all
Series in respect of
Principal Receivables
Controlled Amortization Amount................ $58,333,333.33
Controlled Amortization Date.................. First day of the Due Period
relating to the January
1998 Distribution Date
Monthly Servicing Fee......................... 2.10% (of which 1.60% is
payable solely from
Interchange allocable to
Series 1993-F)
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $91,000,000
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... February 2000 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$35,000,000
SERIES 1993-G
Initial Principal Amount...................... $300,000,000
Certificate Rate.............................. LIBOR plus a spread of
0.18% per annum, but
in no event in excess of
12% per annum
Scheduled Interest Payment Date............... The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Current Principal Amount...................... $300,000,000
</TABLE>
A-3
<PAGE>
<TABLE>
<S> <C>
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
Controlled Amortization Amount................ $25,000,000
Controlled Amortization Date.................. First day of the Due Period
relating to the January
1996 Distribution Date
Monthly Servicing Fee......................... 2.10% (of which 1.60% is
payable solely from
interchange allocable to
Series 1993-G)
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $39,000,000
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Sales Termination Date........................ February 1998 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$15,000,000
SERIES 1993-H
Initial Principal Amount...................... $700,000,000
Certificate Rate.............................. LIBOR plus a spread of
0.20% per annum, but
in no event in excess of
12% per annum
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day, the
next succeeding business
day)
Current Principal Amount...................... $700,000,000
</TABLE>
A-4
<PAGE>
<TABLE>
<S> <C>
Invested Percentage of Principal Receivables.. Principal Amount at end of
the Revolving Period
divided by the greater
of Aggregate Principal
Receivables or the sum
of all numerators speci-
fied for all Series in
respect of Principal
Receivables
Controlled Amortization Amount................ $58,333,333.33
Controlled Amortization Date.................. First day of the Due Period
relating to the March
1998 Distribution Date
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
Interchange allocable to
Series 1993-H)
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $91,000,000
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... April 2000 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$35,000,000
SERIES 1994-I
Initial Principal Amount...................... $500,000,000
Certificate Rate.............................. LIBOR plus a spread of
0.17% per annum, but
in no event in excess of
11% per annum.
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Current Principal Amount...................... $500,000,000
</TABLE>
A-5
<PAGE>
<TABLE>
<S> <C>
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
Controlled Amortization Amount................ $41,666,666.67
Controlled Amortization Date.................. First day of the Due Period
relating to the Decem-
ber 1996 Distribution
Date
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
Interchange allocable to
Series 1994-I)
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $62,500,000
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... January 1999 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$25,000,000
SERIES 1994-J
Initial Principal Amount...................... $500,000,000
Certificate Rate.............................. LIBOR plus a spread of
0.22% per annum, but
in no event in excess of
12% per annum.
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Current Principal Amount...................... $500,000,000
</TABLE>
A-6
<PAGE>
<TABLE>
<S> <C>
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
Controlled Amortization Amount................ $41,666,666.67
Controlled Amortization Date.................. First day of the Due Period
relating to the Decem-
ber 1998 Distribution
Date
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
Interchange allocable to
Series 1994-J)
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $65,000,000
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... January 2001 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$25,000,000
SERIES 1994-K
Initial Principal Amount...................... $500,000,000
Certificate Rate.............................. LIBOR plus a spread of
0.1875% per annum
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Current Principal Amount...................... $500,000,000
</TABLE>
A-7
<PAGE>
<TABLE>
<S> <C>
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
Controlled Amortization Amount................ $41,666,666.67
Controlled Amortization Date.................. First day of the Due Period
relating to the March
1999 Distribution Date
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
Interchange allocable to
Series 1994-K)
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $57,500,000
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... April 2001 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$25,000,000
SERIES 1994-L
Initial Principal Account..................... $500,000,000
Certificate Rate.............................. 7.15% per annum
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
</TABLE>
A-8
<PAGE>
<TABLE>
<S> <C>
Series in respect of
Principal Receivables
Controlled Amortization Amount................ $41,666,666.67
Controlled Amortization Date.................. First day of the Due Period
relating to the March
1999 Distribution Date
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
interchange allocable to
Series 1994-L)
Enhancement................................... Cash Collateral Account
Remaining Cash Collateral Amount.............. $57,500,000
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... April 2001 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$25,000,000
SERIES 1995-M
Initial Principal Amount...................... $571,428,572 (including
Collateral Interest)
Class A Certificate Rate...................... LIBOR plus a spread of
0.24% per annum
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
</TABLE>
A-9
<PAGE>
<TABLE>
<S> <C>
Class A Controlled Amortization Amount........ $41,666,666.67
Class A Controlled Amortization Date.......... First day of the Due Period
relating to the Novem-
ber 2001 Distribution
Date
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
Interchange allocable to
Series 1995-M)
Enhancement................................... Collateral Interest and
Cash Collateral Account
Initial Collateral Invested Amount............ $71,428,572
Initial Cash Collateral Amount................ $5,714,286
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... December 2003 Distribu-
tion Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$28,571,428
SERIES 1995-N
Initial Principal Amount...................... $571,428,572 (including
Collateral Interest)
Class A Certificate Rate...................... LIBOR plus a spread of
0.16% per annum
Scheduled Interest Payment Date............... The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
Class A Controlled Amortization Amount........ $41,666,666.67
</TABLE>
A-10
<PAGE>
<TABLE>
<S> <C>
Class A Controlled Amortization Date.......... First day of the Due Period
relating to the Novem-
ber 1998 Distribution
Date
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
Interchange allocable to
Series 1995-N)
Enhancement................................... Collateral Interest and
Cash Collateral Account
Initial Collateral Invested Amount............ $71,428,572
Initial Cash Collateral Amount................ $5,714,286
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... December 2000 Distribu-
tion Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$28,571,428
SERIES 1995-O
Initial Principal Amount...................... $571,428,572 (including
Collateral Interest)
Class A Certificate Rate...................... LIBOR plus a spread of
0.23% per annum
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera-
tors specified for all
Series in respect of
Principal Receivables
Class A Controlled Amortization Amount........ $41,666,666.67
</TABLE>
A-11
<PAGE>
<TABLE>
<S> <C>
Class A Controlled Amortization Date.......... First day of the Due Period
relating to the January
2002 Distribution Date
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
Interchange allocable to
Series 1995-P)
Enhancement................................... Collateral Interest and
Cash Collateral Account
Initial Collateral Invested Amount............ $71,428,572
Initial Cash Collateral Amount................ $5,714,286
Minimum First Chicago Interest Percentage..... 7% (or such lower percent-
age acceptable to the
Rating Agencies)
Series Termination Date....................... February 2004 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$28,571,428
SERIES 1995-P
Initial Principal Amount...................... $571,428,572 (including
Collateral Interest)
Class A Certificate Rate...................... LIBOR plus a spread of
0.18% per annum
Scheduled Interest Payment Dates.............. The fifteenth day of each
month (or, if such day
is not a business day,
the next succeeding
business day)
Invested Percentage of Principal Receivables.. Principal Amount at the
end of the Revolving
Period divided by the
greater of Aggregate
Principal Receivables or
the sum of all numera
tors specified for all
Series in respect of
Principal Receivables
Class A Controlled Amortization Amount........ $41,666,666.67
Class A Controlled Amortization Date.......... First day of the Due Period
relating to the January
2000 Distribution Date
</TABLE>
A-12
<PAGE>
<TABLE>
<S> <C>
Monthly Servicing Fee......................... 2.00% (of which 1.25% is
payable solely from
Interchange allocable to
Series 1995-P)
Enhancement................................... Collateral Interest and
Cash Collateral Account
Initial Collateral Invested Amount............ $71,428,572
Initial Cash Collateral Amount................ $5,714,286
Minimum First Chicago Interest Percentage..... 7% (or such lower percent
age acceptable to the
Rating Agencies)
Series Termination Date....................... February 2002 Distribution
Date
Repurchase Terms.............................. Optional repurchase by the
Seller on any Distribu-
tion Date on or after the
Invested Amount is
reduced to an amount
less than or equal to
$28,571,428
</TABLE>
A-13
<PAGE>
[First Chicago NBD Letterhead]
Exhibits 5.1 and 23.1
April 9 , 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: First Chicago Master Trust II
Form S-3 Registration Statement
-------------------------------
Ladies and Gentlemen:
I am Executive Vice President, General Counsel and Secretary of First
Chicago NBD Corporation, a Delaware corporation, which is the sole parent
corporation of FCC National Bank, a national banking association (the "Bank").
In the aforementioned capacities, I am, or members of my staff subject to my
supervision are, familiar with (i) the Articles of Association and By-Laws of
the Bank; (ii) the Registration Statement on Form S-3 of the Bank as
concurrently being filed with the Securities and Exchange
Commission (the "Registration Statement") relating to the proposed issuance and
sale of asset backed certificates (the "Certificates") of First Chicago Master
Trust II (the "Trust"), a trust created by the Bank and to which the Bank has
and will transfer receivables generated in a portfolio of revolving credit cards
accounts; (iii) the Pooling and Servicing Agreement dated as of June 1, 1990, as
amended to the date hereof, between the Bank and Norwest Bank Minnesota,
National Association, as trustee, filed as an exhibit to the Registration
Statement (the "Pooling and Servicing Agreement"); (iv) the form of the Series
Supplement to the Pooling and Servicing Agreement filed concurrently as an
exhibit to the Registration Statement (the "Supplement"); and (v) such other
documents, proceedings and matters as I deem necessary in order to enable me to
render the opinion hereinafter expressed.
The Certificates will be sold or delivered from time to time as set forth
in the Registration Statement, any amendment thereto, the prospectus contained
therein (the "Prospectus") and supplements to the Prospectus (each, a
"Prospectus Supplement"). A form of Prospectus Supplement is an exhibit to the
Registration Statement.
Based upon the foregoing, it is my opinion that, assuming due execution of
the applicable Supplement relating to a series of Certificates, upon the
issuance, authentication and delivery of the Certificates in accordance with the
provisions of the Pooling and Servicing Agreement and such Supplement, against
payment therefor, the Certificates will be legally
<PAGE>
Continuing our letter of April 9, 1996
Sheet no. 2
issued, fully paid and nonassessable Certificates representing undivided
interests in the Trust enforceable in accordance with their terms, subject, as
to enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights generally from
time to time in effect and to general principles of equity, and will be entitled
to the benefits of the Pooling and Servicing Agreement and the Supplement.
I am a member of the Bar of the State of Illinois, and I do not express any
opinion herein concerning any law other than the law of the State of Illinois,
the federal law of the United States and the Delaware General Corporation Law.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name wherever it appears in the
Registration Statement, including the Prospectus and any Prospectus Supplement
constituting a part thereof, as originally filed or as subsequently amended.
Very truly yours,
Sherman I. Goldberg
Executive Vice President,
General Counsel and Secretary
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Scott P. Marks, Jr., Sherman I. Goldberg, Robert
A. Rosholt, Peter J. Nowak, Jr., M. Eileen Kennedy and Sharon A. Renchof,
jointly and severally, his attorney-in-fact, each with power of substitution,
for him in any and all capacities to sign a Registration Statement on Form S-3
relating to certificates or other securities of FCC National Bank (the "Bank")
or any trust, partnership, corporation or other entity established by the
foregoing, to be issued pursuant to resolutions adopted by the Board of
Directors of the Bank on December 6, 1995, and any amendments thereto (including
any post-effective amendments) and any subsequent registration statement filed
by the Bank pursuant to Rule 462(b) of the Securities Act of 1933, and to file
the same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Signature Title
--------- -----
/s/Frederick M. Adams Director
- ----------------------------------------
Frederick M. Adams
/s/S. Faye Dadzie Director
- -------------------------------------------
S. Faye Dadzie
/s/Joseph M. Dudzinsky Director
- ----------------------------------------
Joseph M. Dudzinsky
__________________________________________ Director
Richard P. Eckman
/s/William J. Garner Director
- ------------------------------------------
William J. Garner
/s/Michael J. Majchrzak Director
- ----------------------------------------
Michael J. Majchrzak
/s/Scott P. Marks, Jr. Director and
- -------------------------------------------
Scott P. Marks, Jr. Principal Executive Officer
/s/Ralph R. Mueller Director
- ------------------------------------------
Ralph R. Mueller
<PAGE>
/s/Anthony K. Metta Director
- -----------------------------------------
Anthony K. Metta
/s/Peter J. Nowak, Jr. Director, Principal Accounting Officer
- --------------------------------------- and Principal Financial Officer
Peter J. Nowak, Jr.
/s/Jeremiah P. Shea Director
- ------------------------------------------
Jeremiah P. Shea
Dated: March 15, 1996
