AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 1999
Registration No. 333-87653
SECURITIES AND EXCHANGE COMMISSION
------------------------
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
First USA Bank, National Association
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
First USA Credit Card Master Trust
(ISSUER OF THE CERTIFICATES)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DELAWARE First USA Bank, National Association 51 - 0269396
(State or other jurisdiction of 201 North Walnut Street (I.R.S. employer
incorporation or organization) Wilmington, Delaware 19801 identification number)
(302) 594-4000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
</TABLE>
WILLIAM P. BOARDMAN
201 North Walnut Street
Wilmington, Delaware 19801
(302) 594-4100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
<TABLE>
<CAPTION>
Copies to:
<S> <C> <C>
Joanne K. Sundheim Andrew M. Faulkner, Esq.
Senior Vice President and Associate General Counsel Skadden, Arps, Slate, Meagher & Flom LLP
201 North Walnut Street 919 Third Avenue
Wilmington, Delaware 19801 New York, New York 10022
(302) 594-4000 (212) 735-2000
</TABLE>
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 registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. | |
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. | |
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. | |
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE AMOUNT TO OFFERING PRICE PER PROPOSED MAXIMUM REGISTRATION
REGISTERED BE REGISTERED UNIT (1) OFFERING PRICE (1) FEE (2)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed
Certificates......... $6,000,000,000 100% $6,000,000,000 $1,667,722
=====================================================================================================
(1) Estimated solely for purpose of calculating the registration fee.
(2) $278.00 of which was previously paid.
</TABLE>
The Registrant hereby amends the Registration Statement on such date or
dates as may be necessary to delay its effective date until 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.
[FLAG]
The information in this prospectus is not complete and may be changed. We
can not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 28, 1999
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED _______, ____)
$------------
FIRST USA CREDIT CARD MASTER TRUST
$_________ CLASS A FLOATING RATE ASSET BACKED
CERTIFICATES, SERIES 1999-__
$________ CLASS B FLOATING RATE ASSET BACKED CERTIFICATES,
SERIES 1999-__
FIRST USA BANK, N.A.
TRANSFEROR AND SERVICER
<TABLE>
<CAPTION>
CLASS A CERTIFICATES CLASS B CERTIFICATES
<S> <C> <C>
Principal Amount $___________ $___________
Price $___________ (____%) $___________ (____%)
Underwriting Discount $___________ (____%) $___________ (____ %)
Proceeds to the Transferor $___________ (_____%) $___________ (_____%)
Certificate Rate one-month LIBOR+____% p.a. one-month LIBOR+____%
p.a.
Interest Payment Dates monthly on the ____ monthly on the ____
First Interest Payment Date ______ __, _____ ______ __, _____
Scheduled Principal Payment
Date ______ __, _____ ______ __, _____
</TABLE>
THE CLASS B CERTIFICATES ARE SUBORDINATED TO THE CLASS A
CERTIFICATES.
THESE SECURITIES ARE INTERESTS IN FIRST USA CREDIT CARD MASTER
TRUST AND ARE BACKED ONLY BY THE ASSETS OF THE TRUST. NEITHER THESE
SECURITIES NOR THE ASSETS OF THE TRUST ARE OBLIGATIONS OF FIRST USA BANK,
N.A. OR ANY OF ITS AFFILIATES, OR OBLIGATIONS INSURED BY THE FDIC.
THESE SECURITIES ARE HIGHLY STRUCTURED. BEFORE YOU PURCHASE THESE
SECURITIES, BE SURE YOU UNDERSTAND THE STRUCTURE AND THE RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE S-__ IN THIS PROSPECTUS SUPPLEMENT.
We have applied to list these securities on the Luxembourg Stock
Exchange.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED ON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS SUPPLEMENT
AND THE ATTACHED PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
These securities are offered subject to availability. We expect
that these securities will be delivered in book-entry form on ___________
through The Depository Trust Company, Cedelbank, societe anonyme and the
Euroclear System.
[Underwriters of the Class A Certificates]
[Underwriter of the Class B Certificates]
The date of this Prospectus Supplement is ______ __, _____
TABLE OF CONTENTS
WHERE TO FIND INFORMATION IN THESE DOCUMENTS.............................S-3
SUMMARY OF TERMS.........................................................S-4
STRUCTURAL SUMMARY.......................................................S-5
SELECTED TRUST PORTFOLIO SUMMARY DATA....................................S-8
PAYMENT DATA.............................................................S-9
RISK FACTORS............................................................S-10
Potential Early Repayment or Delayed
Payment due to Reduced Portfolio Yield..........................S-10
Allocations of Charged-Off Receivables
Could Reduce Payments to
Certificateholders..............................................S-12
Limited Ability to Resell Certificates..................................S-12
Certain Liens Could Be Given Priority Over
Your Securities.................................................S-12
Insolvency or Bankruptcy of First USA Could
Result in Accelerated, Delayed or
Reduced Payments to Certificateholders..........................S-13
Issuance of Additional Series by the Trust May
Affect the Timing of Payments...................................S-14
Individual Certificateholders Will
Have Limited Control of Trust Actions...........................S-14
Class B Bears Additional Credit Risk....................................S-14
FIRST USA'S CREDIT CARD PORTFOLIO.......................................S-15
General ................................................................S-15
Assessment of Fees and Finance and Other
Charges.........................................................S-16
Delinquency and Loss Experience.........................................S-16
Interchange.............................................................S-18
THE RECEIVABLES.........................................................S-19
General ................................................................S-19
MATURITY CONSIDERATIONS.................................................S-23
RECEIVABLE YIELD CONSIDERATIONS.........................................S-25
USE OF PROCEEDS.........................................................S-25
FIRST USA BANK, N.A.....................................................S-25
DESCRIPTION OF THE CERTIFICATES.........................................S-26
General ................................................................S-26
Status of the Certificates..............................................S-26
Prescription............................................................S-26
Interest Payments.......................................................S-27
Principal Payments......................................................S-28
Postponement of Accumulation Period.....................................S-29
Excess Principal Collections....................................S-30
Subordination of the Class B Certificates...............................S-30
Investor Percentage and Transferor
Percentage..........................................................S-30
Reallocation of Cash Flows..............................................S-33
Application of Collections..............................................S-33
Allocation of Collections of Finance Charge
Receivables.....................................................S-37
Excess Finance Charge Collections.......................................S-37
Payments of Principal...................................................S-39
Allocation of Collections of Principal
Receivables.........................................................S-40
Reallocated Principal Collections.......................................S-41
Defaulted Receivables; Investor Charge-Offs.............................S-41
Principal Funding Account...............................................S-43
Reserve Account.........................................................S-43
Companion Series........................................................S-44
Pay Out Events..........................................................S-44
Optional Repurchase.....................................................S-46
Servicing Compensation and Payment of
Expenses............................................................S-46
Reports to Certificateholders...........................................S-46
LISTING AND GENERAL INFORMATION.........................................S-46
ERISA CONSIDERATIONS....................................................S-47
Class A Certificates....................................................S-47
Class B Certificates....................................................S-48
Consultation with Counsel...............................................S-48
UNDERWRITING............................................................S-49
EXCHANGE LISTING........................................................S-50
ANNEX I
OTHER SERIES...........................................................A-I-1
ANNEX II: GLOBAL CLEARANCE,
SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES............................................................A-II-1
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
The attached prospectus provides general information about First USA
Credit Card Master Trust, including terms and conditions that are generally
applicable to the securities issued by the Trust. The specific terms of
Series 1999-__ are described in this supplement.
This supplement begins with several introductory sections
describing your series and First USA Credit Card Master Trust in
abbreviated form:
o Summary of Terms provides important amounts, dates and other
terms of your series;
o Structural Summary gives a brief introduction of the key
structural features of your series and directions for
locating further information;
o Selected Trust Portfolio Summary Data gives certain
financial and statistical information about the assets of
the Trust; and
o Risk Factors describes risks that apply to your series.
As you read through these sections, cross-references will direct
you to more detailed descriptions in the attached prospectus and elsewhere
in this supplement. You can also directly reference key topics by looking
at the table of contents pages in this supplement and the attached
prospectus.
This supplement and the attached prospectus may be used by Banc One
Capital Markets, Inc. in connection with offers and sales related to
market-making transactions in the certificates offered by this supplement
and the attached prospectus. Banc One Capital Markets, Inc. may act as
principal or agent in such transactions. Such sales, if any, will be made
at varying prices related to prevailing market prices at the time of sale.
To understand the structure of these securities, you must read
carefully the attached prospectus and this supplement in their entirety.
SUMMARY OF TERMS
Trust: First USA Credit Card Master Trust - "Trust"
Transferor: First USA Bank, N.A.--"First USA" or the "Bank"
Servicer: First USA
Trustee: The Bank of New York (Delaware)
Pricing Date: _________, ____
Closing Date: _________, ____
Clearance and Settlement: DTC/Cedelbank/Euroclear
Trust Assets: receivables originated in VISA(R) and
MasterCard(R) accounts, including recoveries
on charged-off receivables
Series Structure: Amount % of Total Series
Class A $___________ ____%
Class B $___________ ____%
Excess Collateral $___________ ____%
Annual Servicing Fee: ____%
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Anticipated Ratings:*
(Moody's / Standard & Poor's / Fitch IBCA) Aaa/AAA/AAA A2/A/A+
Credit Enhancement: subordination of subordination of the
Class B and the excess collateral
excess collateral
Interest Rate: one-month LIBOR +__% p.a. one-month LIBOR +__% p.a.
Interest Accrual Method: actual / 360 actual / 360
Interest Payment Dates: monthly (__th) monthly (__th)
Interest Rate Index Reset Date: 2 London business days 2 London business days
before each interest before each interest
payment date payment date
First Interest Payment Date: _________, ____ _________, ____
Scheduled Payment Date: _________, ____ _________, ____
Commencement of Accumulation
Period (subject to adjustment): _________, ____ _________, ____
Stated Series Termination Date: _________, ____ _________, ____
Application for Exchange Listing: Luxembourg Luxembourg
CUSIP Number: ______________ ______________
ISIN Number: ______________ ______________
Common Code: ______________ ______________
* It is a condition to issuance that one of these ratings be obtained.
</TABLE>
STRUCTURAL SUMMARY
This summary briefly describes certain major structural components
of Series 1999-__. To fully understand the terms of Series 1999-__ you will
need to read both this supplement and the attached prospectus in their
entirety.
THE SERIES 1999-__ CERTIFICATES
Your certificates represent the right to a portion of collections
on the underlying Trust assets. Your certificates will also be allocated a
portion of net losses on receivables, if any. Any collections of finance
charges allocated to your series will be used to make interest payments, to
pay a portion of the fees of First USA as servicer and to cover net losses
allocated to your series. Any remaining collections of finance charges
allocated to your series will be applied for the benefit of the holder of
the excess collateral. Any principal collections allocated to your series
in excess of the amount owed to certificates of your series on any
distribution date will be shared with other series of certificates issued
by First USA Credit Card Master Trust, retained in a trust account, or
returned to First USA. In no case will you receive more than the principal
and interest owed to you under the terms described in this supplement and
the attached prospectus.
For further information on allocations and payments, see
"Description of the Certificates--Investor Percentage and Transferor
Percentage" and "--Application of Collections" in this supplement. For
further information about the receivables supporting your certificates, see
"The Receivables" and "Receivable Yield Considerations" in this supplement.
For a more detailed discussion of the certificates, see "Description of the
Certificates" in this supplement and the attached prospectus.
Your certificates feature credit enhancement by means of the
subordination of other interests, which is intended to protect you from net
losses and shortfalls in cash flow. Credit enhancement for your series is
for your series' benefit only. Credit enhancement is provided to Class A by
the following:
o subordination of Class B; and
o subordination of the excess collateral.
Credit enhancement is provided to Class B by the following:
o subordination of the excess collateral.
The effect of subordination is that the more subordinated interests
will absorb any net losses allocated to Series 1999-__, and make up any
shortfalls in cash flow, before the more senior interests are affected. On
the closing date the excess collateral will be $_______, or ___% of the sum
of the initial Class A invested amount, the initial Class B invested amount
and the initial excess collateral amount. If the cash flow and any
subordinated interest do not cover all net losses allocated to Series
1999-__, your payments of interest and principal will be reduced and you
may suffer a loss of principal.
For a more detailed description of the subordination provisions of
Series 1999-__, see "Description of the Certificates--Subordination of the
Class B Certificates" in this supplement. For a discussion of losses, see
"Description of the Certificates--Defaulted Receivables; Investor
Charge-Offs" in this supplement. See "Risk Factors" in this supplement for
more detailed discussions of the risks of investing in Series 1999-__.
FIRST USA CREDIT CARD MASTER TRUST
Your series is one of __________ series issued by First USA Credit
Card Master Trust which are expected to remain outstanding as of the
closing date.
First USA Credit Card Master Trust is maintained by the trustee,
for the benefit of:
o certificateholders of Series 1999-__;
o certificateholders of other series issued
by First USA Credit Card Master Trust;
o providers of credit enhancements for
Series 1999-__ and other series issued
by First USA Credit Card Master Trust;
and
o First USA.
For a summary of the terms of the other series that will be
outstanding on the closing date see "Annex I:
Other Series."
Each series has a claim to a fixed dollar amount of First USA
Credit Card Master Trust's assets, regardless of the total amount of
receivables in the Trust at any time. First USA holds the remaining claim
to First USA Credit Card Master Trust's assets, which fluctuates with the
total amount of receivables in the Trust. First USA, as the holder of that
amount, has the right to purchase the outstanding Series 1999-__
certificates at any time when the outstanding amount of the Series 1999-__
certificateholders' interest in the First USA Credit Card Master Trust is
less than or equal to 5% of the original amount of that interest. The
purchase price for these outstanding Series 1999-__ certificates will be
equal to the outstanding amount plus accrued and unpaid interest on the
certificates through the last day of the period on which the repurchase
occurs.
For more information on First USA Credit Card Master Trust's
assets, see "First USA's Credit Card Portfolio" and "The Receivables" in
this supplement and "First USA's Credit Card Activities" and "The
Receivables" in the attached prospectus. For more information on the final
payment of principal and optional repurchase of the certificates by the
Transferor, see "Description of the Certificates--Optional Repurchase" in
this supplement and "Description of the Certificates--Final Payment of
Principal; Termination" in the attached prospectus.
SCHEDULED PRINCIPAL PAYMENTS AND POTENTIAL LATER PAYMENTS
First USA Credit Card Master Trust expects to pay the entire
principal amount of Class A and the entire principal amount of Class B in
one payment on __________, ____. In order to accumulate the funds to pay
Class A and Class B on their scheduled payment date, the Trust will
accumulate principal collections in a principal funding account. The Trust
will deposit funds into the principal funding account during an
"accumulation period" on each "transfer date." The length of the
accumulation period may be as long as twelve months, but will be shortened
if First USA expects that a shorter period will suffice for the
accumulation of the Class A, Class B and excess collateral payment amounts.
If Class A is not fully repaid on the scheduled payment date, Class
A will begin to amortize by means of monthly payments of all monthly
principal collections allocated to Series 1999-__ until it is fully repaid.
After Class A is fully repaid the Trust will use principal
collections allocated to Series 1999-__ to repay Class B. If Class B is not
fully repaid on the scheduled payment date, Class B will begin to amortize
by means of monthly payments of all monthly principal collections allocated
to Series 1999-__ after Class A is fully repaid.
For more information on scheduled principal payments and the
accumulation period, see "Maturity Considerations" and "Description of the
Certificates--Principal Payments," "--Postponement of Accumulation Period"
and "--Application of Collections" in this supplement and "Maturity
Assumptions" and "Description of the Certificates--Principal Payments" in
the attached prospectus.
Prior to the commencement of an accumulation or amortization period
for Series 1999-__, principal collections will be paid to First USA,
retained in a trust account or shared with other series that are amortizing
or in an accumulation period.
MINIMUM YIELD ON THE RECEIVABLES; POSSIBLE EARLY
PRINCIPAL REPAYMENT OF SERIES 1999-__
Class A or Class B may be repaid earlier than its scheduled payment
date if collections on the underlying receivables, together with other
amounts available for payment to securityholders, are too low. The minimum
amount that must be available for payment to Series 1999-__ in any month,
referred to as the "base rate," is the sum of the Class A interest rate,
the Class B interest rate and the excess collateral minimum interest rate,
plus 2.0%. If the average Trust portfolio yield, net of losses allocated to
your series, for any three consecutive months is less than the average base
rate for the same three consecutive months, a "pay out event" will occur
with respect to Series 1999-__ and the Trust will commence a rapid
amortization of Series 1999-__, and holders of Series 1999-__ certificates
will receive principal payments earlier than the scheduled principal
payment date.
Series 1999-__ is also subject to several other pay out events,
which could cause Series 1999-__ to amortize, and which are summarized
under the headings "Maturity Considerations" and "Description of the
Certificates--Pay Out Events" in this supplement. If Series 1999-__ begins
to amortize, Class A will receive monthly payments of principal until it is
fully repaid; Class B will then receive monthly payments of principal until
it is fully repaid. In that event, your certificates may be repaid prior to
the scheduled payment date.
The final payment of principal and interest will be made no later
than ___________, ______, which is the stated series termination date.
For more information on pay out events, the portfolio yield and
base rate, early principal repayment and rapid amortization, see "Maturity
Considerations," "Description of the Certificates--Principal Payments" and
"--Pay Out Events" in this supplement and "Description of the
Certificates--Principal Payments" and "--Final Payment of Principal;
Termination" in the attached prospectus.
TAX STATUS OF CLASS A AND CLASS B
Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to
First USA, is of the opinion that under existing law the Class A and Class
B certificates will be characterized as debt for U.S. Federal income tax
purposes.
The Transferor, the Servicer, the holders of the Class A
certificates and the Class B certificates and the owners of such
certificates will treat the Class A certificates and the Class B
certificates as debt for Federal, state, local and foreign income and
franchise tax purposes.
For further information regarding the application of U.S. Federal
income tax laws, see "Certain U.S. Federal Income Tax Consequences" in the
attached prospectus.
ERISA CONSIDERATIONS
Class A Certificates: The underwriters anticipate that the Class A
certificates will meet the criteria for treatment as "publicly-offered
securities." If so, subject to important considerations described under
"ERISA Considerations" in this supplement and in the attached prospectus,
the Class A certificates will be eligible for purchase by persons investing
assets of employee benefit plans or individual retirement accounts.
Class B Certificates: It is not anticipated that the Class B certificates
will meet the criteria for treatment as "publicly-offered securities." As
such, pension plans and other investors subject to ERISA cannot acquire
Class B certificates. Prohibited investors include:
o "employee benefit plans" as defined in
section 3(3) of ERISA;
o any "plan" as defined in section 4975 of
the U.S. Internal Revenue Code; and
o any entity whose underlying assets may be deemed to include
"plan assets" under ERISA by reason of any such plan's
investment in the entity, including insurance company
general accounts.
By purchasing any Class B certificates you certify that you are not
within any of those categories.
For further information regarding the application of ERISA, see
"ERISA Considerations" in this supplement and the attached prospectus.
MAILING ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL
EXECUTIVE OFFICES
The mailing address of First USA Bank, N.A. is 201 North Walnut Street,
Wilmington, Delaware, 19801 and the telephone number is (302) 594-4000.
SELECTED TRUST PORTFOLIO SUMMARY DATA
[chart showing geographic distribution]
The chart above shows the geographic distribution of the
receivables in the Trust portfolio among the 50 states, the District of
Columbia and the other United States territories and possessions. Other
than the states specifically shown in the chart, no state accounts for more
than 5% of the receivables in the Trust portfolio.
PAYMENT DATA
[chart showing payment data]
The chart above shows the yield percentage, payment rate and loss
percentage for the Trust portfolio for each month from
September, 1997 to June, 1999.
The "YIELD PERCENTAGE" for any month is the sum of the amounts of
collected finance charges and fees and discount receivables allocated to a
representative series for the month expressed as an annualized percentage
of the invested amount of that series. The collected finance charges and
fees and discount receivables are allocated to the representative series
based on the floating allocation percentage applicable on each day. If
there is an addition of accounts during the month the floating allocation
percentage will change on the date of the addition. A representative series
is one that is outstanding at its initial invested amount for each day
during the month.
The "PAYMENT RATE" for any month is the total amount of principal
collections allocated to the Trust for the monthly period, expressed as a
percentage of average monthly principal receivable balances.
The "LOSS PERCENTAGE" for any monthly period is the sum of the
principal receivables in charged-off accounts, net of recoveries from
previously charged-off accounts, allocated to a representative series for
the month expressed as an annualized percentage of the invested amount of
that series. Principal receivables in charged-off accounts are allocated to
the representative series on a daily basis during the month based on the
floating allocation percentage applicable on each day. If there is an
addition of accounts during the month the floating allocation percentage
will change on the date of the addition. Recoveries from previously
charged-off accounts are allocated to the representative series at the end
of the month based on the weighted average floating allocation percentage
for the month. A representative series is one that is outstanding at its
initial invested amount for each day during the month.
RISK FACTORS
You should consider the following risk factors in deciding whether
to purchase the asset backed certificates described herein.
POTENTIAL EARLY
REPAYMENT OR DELAYED
PAYMENT DUE TO
REDUCED PORTFOLIO YIELD If the average Trust portfolio yield, net
of losses allocated to your series, for
any three consecutive months is less than
the average base rate for the same three
consecutive months, a "pay out event"
will occur with respect to Series 1999-__
and the Trust will commence a rapid
amortization of Series 1999-__, and
holders of Series 1999-__ certificates
will receive principal payments earlier
than the scheduled principal repayment
date. Moreover, if principal collections
on receivables allocated to other series
are available for application to a rapid
amortization of any outstanding
securities, the period during which that
rapid amortization occurs may be
substantially shortened. Because of the
potential for early repayment if
collections on the receivables fall below
the minimum amount, any circumstances
that tend to reduce collections may
increase the risk of early repayment of
Series 1999-__.
Conversely, any reduction in
collections may cause the period during
which collections are accumulated in
the principal funding account for
payment of Series 1999-__ certificates
to be longer than otherwise would have
been the case.
The following factors could result in
circumstances that tend to reduce
collections:
FIRST USA MAY CHANGE THE TERMS AND
CONDITIONS OF THE ACCOUNTS
First USA will transfer receivables to
the First USA Credit Card Master Trust
arising under specified credit card
accounts, but First USA will continue
to own those accounts. As the owner of
those accounts, First USA retains the
right to change various terms and
conditions of those accounts, including
finance charges and other fees it
charges and the required minimum
monthly payment. First USA may change
the terms of the accounts to maintain
its competitive position in the credit
card industry. Changes in the terms of
the accounts may reduce the amount of
receivables arising under the accounts,
reduce the amount of collections on
those receivables, or otherwise alter
payment patterns.
First USA has agreed that it will not
change the terms of the accounts or its
policies relating to the operation of
its credit card business, including the
reduction of the required minimum
monthly payment and the calculation of
the amount or the timing of finance
charges, other fees and charge-offs,
unless it reasonably believes such a
change would not result in a pay out
event for any series and takes the same
action on its other substantially
similar accounts, to the extent
permitted by those accounts.
As Servicer, First USA is also required
to exercise the same care and apply the
same policies that it exercises in
handling similar matters for its own
comparable accounts.
FIRST USA MAY ADD ACCOUNTS TO THE TRUST
PORTFOLIO
In addition to the accounts already
designated for First USA Credit Card
Master Trust, First USA is permitted to
designate additional accounts for the
Trust portfolio and to transfer the
receivables in those accounts to the
Trust. Any new accounts and receivables
may have different terms and conditions
than the accounts and receivables already
in the Trust portfolio--such as higher or
lower fees or interest rates, or longer
or shorter principal payment terms.
Credit card accounts purchased by First
USA may be included as additional
accounts if certain conditions are
satisfied. Credit card accounts purchased
by First USA will have been originated
using the account originator's
underwriting criteria, not those of First
USA. The account originator's
underwriting criteria may be more or less
stringent than those of First USA.
Additionally, additional credit card
accounts may have been originated by
First USA using credit criteria which are
different from those which were applied
by First USA to the current credit card
accounts. The new accounts and
receivables may produce higher or lower
collections or charge-offs over time than
the accounts and receivables already in
the Trust and could tend to reduce the
amount of collections allocated to Series
1999-__.
Also, if First USA's percentage interest
in the accounts of the Trust falls to 4%
or less, First USA will be required to
maintain that level by designating
additional accounts for the Trust
portfolio and transferring the
receivables in those accounts to the
Trust. If First USA is required to add
accounts to the Trust, it may not have
any accounts available to be added to the
Trust. If First USA fails to add accounts
when required, a "pay out event" will
occur and you could receive payment of
principal sooner than expected. See
"Description of the
Certificates--Addition of Accounts" in
the attached prospectus.
CERTIFICATE AND RECEIVABLES INTEREST RATE
RESET TERMS MAY DIFFER
Finance charges on the accounts in the
First USA Credit Card Master Trust may
accrue at a fixed rate or a variable rate
above a designated prime rate or other
designated index. The certificate rate of
your certificate is based on LIBOR.
Changes in the LIBOR might not be
reflected in the prime rate or the
designated index, resulting in a higher
or lower spread, or difference, between
the amount of collections of finance
charge receivables on the accounts and
the amounts of interest payable on Series
1999-__ and other amounts required to be
funded out of collections of finance
charge receivables.
A decrease in the spread between
collections of finance charge
receivables and interest payments on
your certificate could increase the
risk of early repayment.
CHANGES TO CONSUMER PROTECTION LAWS MAY
IMPEDE FIRST USA'S COLLECTION EFFORTS
Federal and state consumer protection
laws regulate the creation and
enforcement of consumer loans, including
credit card accounts and receivables.
Changes or additions to those regulations
could make it more difficult for the
servicer of the receivables to collect
payments on the receivables. The U.S.
Congress or state or local legislatures
could pass legislation limiting the
finance charges and fees that may be
charged on credit card accounts. The
impact could be a reduction of the
portfolio yield which could result in a
pay out event. See "Description of the
Certificates--Pay Out Events" in this
supplement and "Certain Legal Aspects of
the Receivables--Consumer Protection
Laws" in the attached prospectus.
Receivables that do not comply with
consumer protection laws may not be valid
or enforceable in accordance with their
terms against the obligors on those
receivables. First USA makes
representations and warranties relating
to the validity and enforceability of the
receivables arising under the accounts in
the Trust portfolio. Subject to certain
conditions described under "Description
of the Certificates--Representations and
Warranties" in the attached prospectus,
First USA must accept reassignment of
each receivable that does not comply in
all material respects with all
requirements of applicable law. However,
we do not anticipate that the trustee
under the pooling and servicing agreement
will make any examination of the
receivables or the related records for
the purpose of determining the presence
or absence of defects, compliance with
representations and warranties, or for
any other purpose. The only remedy if any
representation or warranty is violated,
and the violation continues beyond the
period of time First USA has to correct
the violation, is that First USA must
accept reassignment of the receivables
affected by the violation, subject to
certain conditions described under
"Description of the
Certificates--Representations and
Warranties" in the attached prospectus.
See also "Certain Legal Aspects of the
Receivables--Consumer Protection Laws" in
the attached prospectus.
If a cardholder sought protection under
Federal or state bankruptcy or debtor
relief laws, a court could reduce or
discharge completely the cardholder's
obligations to repay amounts due on its
account and, as a result, the related
receivables would be written off as
uncollectible. See "Description of the
Certificates--Defaulted Receivables;
Investor Charge-Offs" in this
supplement and "Description of the
Certificates--Defaulted Receivables;
Rebates and Fraudulent Charges" and
"--Investor Charge-Offs" in the
attached prospectus.
SLOWER GENERATION OF RECEIVABLES COULD
REDUCE COLLECTIONS
The receivables transferred to the
First USA Credit Card Master Trust may
be paid at any time. The credit card
industry is highly competitive. We
cannot assure the creation of
additional receivables in the accounts
in the Trust portfolio or that any
particular pattern of cardholder
payments will occur. A significant
decline in the amount of new
receivables generated by the accounts
in the Trust portfolio could result in
reduced collections. See "Maturity
Considerations."
ALLOCATIONS OF
CHARGED-OFF RECEIVABLES
COULD REDUCE PAYMENTS
TO CERTIFICATEHOLDERS First USA anticipates that it will write
off as uncollectible some portion of the
receivables arising in accounts in the
Trust portfolio. Each class of Series
1999- __ will be allocated a portion of
those charged-off receivables. See
"Description of the
Certificates--Investor Percentage and
Transferor Percentage" and "First USA's
Credit Card Portfolio--Delinquency and
Loss Experience." If the amount of
charged-off receivables allocated to any
class of certificates exceeds the amount
of other funds available for
reimbursement of those charge-offs (which
could occur if the amount of credit
enhancement for those certificates is
reduced to zero) the holders of those
certificates may not receive the full
amount of principal and interest due to
them. See "Description of the
Certificates--Reallocation of Cash
Flows," "--Application of Collections"
and "--Defaulted Receivables; Investor
Charge-Offs."
LIMITED ABILITY TO
RESELL CERTIFICATES The underwriters may assist in the
reselling of Class A and Class B
certificates but they are not required to
do so. A secondary market for any such
securities may not develop. If a
secondary market does develop, it might
not continue or it might not be
sufficiently liquid to allow you to
resell any of your securities.
CERTAIN LIENS COULD BE
GIVEN PRIORITY OVER
YOUR SECURITIES First USA accounts for the transfer of
the receivables to the Trust as a sale.
However, a court could conclude that
First USA still owns the receivables and
that the Trust holds only a security
interest. First USA will take steps to
give the trustee a "first priority
perfected security interest" in the
receivables. If First USA became
insolvent and the Federal Deposit
Insurance Corporation were appointed
conservator or receiver of First USA, the
FDIC's administrative expenses might be
paid from the receivables before the
Trust received any payments on the
receivables. If a court concludes that
the transfer to the Trust is only a grant
of a security interest in the receivables
certain liens on First USA's property
arising before new receivables come into
existence may get paid before the Trust's
interest in those receivables. Those
liens include a tax or government lien or
other liens permitted under the law
without the consent of First USA. See
"Certain Legal Aspects of the
Receivables--Transfer of Receivables" and
"Description of the
Certificates--Representations and
Warranties" in the attached prospectus.
INSOLVENCY OR
BANKRUPTCY OF FIRST
USA COULD RESULT IN
ACCELERATED, DELAYED OR
REDUCED PAYMENTS TO
CERTIFICATEHOLDERS Under the Federal Deposit Insurance Act,
as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of
1989, if First USA becomes insolvent and
the FDIC is appointed conservator or
receiver of First USA, the FDIC could--
o require The Bank of New York
(Delaware), as trustee for the
Trust, to go through an
administrative claims procedure
under which the FDIC could have
up to 180 days to determine the
trustee's right to payments
collected on the receivables in
the Trust;
o request a stay of up to 90 days
of any judicial action or
proceeding involving First USA;
or
o repudiate the pooling and
servicing agreement
establishing the Trust up to
180 days following the date of
receivership and limit the
Trust's resulting claim to
"actual direct compensatory
damages" measured as of the
date of receivership.
If the FDIC were to take any of these
actions your payments of outstanding
principal and interest could be delayed
and possibly reduced. In this regard,
among other possibilities, it is likely
that the FDIC would not pay you the
interest accrued from the date of
receivership to the date of repudiation
or payment. See "Certain Legal Aspects
of the Receivables--Certain Matters
Relating to Receivership" in the
attached prospectus.
If a conservator or receiver were
appointed for First USA, then a "pay
out event" could occur for all
outstanding series. Under the terms of
the pooling and servicing agreement new
principal receivables would not be
transferred to the Trust and the
trustee would sell the receivables
allocated to a series unless holders of
more than 50% of the invested amount of
the series or, if the series has more
than one class, each class of the
series gave the trustee other
instructions. The Trust would terminate
earlier than was planned if each series
did not vote to continue the Trust. You
could have a loss if the sale of the
receivables produced insufficient net
proceeds to pay you in full. The
conservator or receiver may nonetheless
have the power--
o regardless of the terms of the
pooling and servicing agreement,
(a) to prevent the beginning of a
rapid amortization period, (b) to
prevent the early sale of the
receivables and termination of
the Trust or (c) to require new
principal receivables to continue
being transferred to the Trust;
or
o regardless of the instructions of
the certificateholders, (a) to
require the early sale of the
Trust's receivables, (b) to
require termination of the Trust
and retirement of the Trust's
certificates (including Series
1999- __) or (c) to prohibit the
continued transfer of principal
receivables to the Trust.
The FDIC as conservator or receiver
would also have the power to repudiate
or refuse to perform any obligations of
First USA, including any obligations of
First USA as servicer, and to request a
stay of up to 90 days of any judicial
action or proceeding involving First
USA. In addition, if First USA, as
servicer, defaults on its obligations
under the pooling and servicing
agreement solely because the FDIC is
appointed conservator or receiver for
First USA, the FDIC might have the
power to prevent either the trustee or
the certificateholders from appointing
a new servicer under the related
pooling and servicing agreement. See
"Certain Legal Aspects of the
Receivables--Certain Matters Relating
to Receivership" in the attached
prospectus.
ISSUANCE OF ADDITIONAL
SERIES BY THE TRUST MAY
AFFECT THE TIMING OF
PAYMENTS First USA Credit Card Master Trust, as a
master trust, may issue series of
certificates from time to time. The Trust
may issue additional series with terms
that are different from your series
without the prior review or consent of
any certificateholders. It is a condition
to the issuance of each new series that
each rating agency that has rated an
outstanding series confirm in writing
that the issuance of the new series will
not result in a reduction or withdrawal
of its rating of any class of any
outstanding series.
However, the terms of a new series
could affect the timing and amounts of
payments on any other outstanding
series. See "Description of the
Certificates--Exchanges" in the
attached prospectus.
INDIVIDUAL
CERTIFICATEHOLDERS WILL
HAVE LIMITED CONTROL OF
TRUST ACTIONS Certificateholders of any series or any
class within a series may need the
consent or approval of a specified
percentage of the invested amount of
other series or a class of such other
series to take or direct certain actions,
including to require the appointment of a
successor servicer after First USA, as
servicer, defaults on its obligations
under the pooling and servicing
agreement, to amend the pooling and
servicing agreement in some cases, and to
direct a repurchase of all outstanding
series after certain violations of First
USA's representations and warranties. The
interests of the certificateholders of
any such series may not coincide with
yours, making it more difficult for any
particular certificateholder to achieve
the desired results from such vote.
CLASS B BEARS
ADDITIONAL CREDIT RISK Because Class B is subordinated to Class
A, principal payments to Class B will not
begin until Class A is repaid in full.
Additionally, if collections of finance
charge receivables allocated to Series
1999-__ are insufficient to cover amounts
due to Class A, the invested amount for
Class B might be reduced. This would
reduce the amount of the collections of
finance charge receivables available to
Class B in future periods and could cause
a possible delay or reduction in
principal and interest payments on Class
B. If the receivables are sold, the net
proceeds of that sale available to pay
principal would be paid first to Class A
and any remaining net proceeds would be
paid to Class B. See "Description of the
Certificates--Subordination of the Class
B Certificates."
FIRST USA'S CREDIT CARD PORTFOLIO
Capitalized terms are defined in this supplement and if not, in the
attached prospectus. Definitions are indicated by boldface type. Both the
attached prospectus and this supplement contain an index of terms listing
the page numbers where definitions can be found.
GENERAL
The receivables (the "RECEIVABLES") conveyed or to be conveyed to
the Trust pursuant to a pooling and servicing agreement (as the same may be
amended from time to time, the "POOLING AND SERVICING AGREEMENT"), between
First USA Bank, National Association ("FIRST USA" or the "BANK") as
transferor (in such capacity, the "TRANSFEROR") and as servicer of the
Receivables (in such capacity, the "SERVICER"), and The Bank of New York
(Delaware), as trustee (the "TRUSTEE"), as supplemented by the Series
Supplement relating to the Offered Certificates (the "OFFERED SERIES
SUPPLEMENT") (the term "POOLING AND SERVICING AGREEMENT," unless the
context requires otherwise, refers to the Pooling and Servicing Agreement,
dated as of September 1, 1992, as amended, and as supplemented by the
Offered Series Supplement) have been or will be generated from transactions
made by holders of MasterCard and VISA credit card accounts ("ACCOUNTS")
selected by First USA, including premium accounts and standard accounts,
from the Bank Portfolio. Each Class A Floating Rate Asset Backed
Certificate, Series 1999-__ (collectively, the "CLASS A CERTIFICATES") and
each Class B Floating Rate Asset Backed Certificate, Series 1999-__
(collectively, the "CLASS B CERTIFICATES" and, together with the Class A
Certificates, the "OFFERED CERTIFICATES") will represent the right to
receive certain payments from the Trust. As used in this supplement, the
term "CERTIFICATEHOLDERS" refers to holders of the Certificates, the term
"CLASS A CERTIFICATEHOLDERS" refers to holders of the Class A Certificates,
the term "CLASS B CERTIFICATEHOLDERS" refers to holders of the Class B
Certificates, and the term "EXCESS COLLATERAL HOLDERS" refers to the
holders of the Excess Collateral, Series 1999-__ (the "EXCESS COLLATERAL"
and, together with the Offered Certificates, the "CERTIFICATES").
On September 17, 1999, the Bank's predecessor, also named First USA
Bank, N.A. (the "PREDECESSOR BANK"), a direct wholly-owned subsidiary of
BANK ONE CORPORATION ("BANK ONE") was merged with and into FCC National
Bank, an affiliated national banking association and a direct wholly-owned
subsidiary of BANK ONE, with FCC National Bank as the surviving bank. The
surviving bank has been renamed "First USA Bank, National Association" with
its executive offices located at 201 North Walnut Street, Wilmington,
Delaware 19801, telephone number (302) 594-4000.
In connection with the merger of the Predecessor Bank and FCC
National Bank, the credit card portfolios of the Predecessor Bank and FCC
National Bank were consolidated, thereby increasing the size of the
Predecessor Bank's portfolio by approximately $17 billion. Prior to this
merger, on July 1, 1998, BANC ONE CORPORATION ("BANC ONE") consolidated
substantially all of its consumer credit card operations in the Predecessor
Bank. The Predecessor Bank has since added receivables in accounts
originated by the Predecessor Bank, Bank One, N.A., Bank One Arizona, NA
and other affiliates of the Predecessor Bank to the Trust. On September 30,
1998, the Predecessor Bank purchased the credit card portfolio of Chevy
Chase Bank F.S.B. ("CHEVY CHASE"). On November 16, 1998, the Predecessor
Bank acquired accounts formerly owned by First National Bank of Commerce
("FIRST COMMERCE") as a result of a merger between First Commerce and Bank
One, Louisiana, N.A. and the transfer by Bank One, Louisiana, N.A. to the
Predecessor Bank of substantially all of such accounts. On December 24,
1998, the Predecessor Bank purchased a portfolio of VISA and MasterCard
credit card loans from General Electric Capital Corporation ("GE CAPITAL").
The portfolio includes approximately $2.2 billion in managed credit card
loans. On July 2, 1999, the Predecessor Bank purchased an additional
portfolio of VISA and MasterCard credit card loans from GE Capital,
totaling approximately $300 million in managed credit card loans. The
Predecessor Bank has added receivables from the accounts acquired from GE
Capital on December 24, 1998 to the Trust. The Predecessor Bank had not
added and the Bank has not added to the Trust receivables in any of the
accounts acquired from Chevy Chase or First Commerce. A substantial portion
of these portfolios (other than the GE Capital portfolio) is currently
subject to securitization through other credit card master trusts. The Bank
may, from time to time, add to the Trust additional Receivables arising in
accounts originated by affiliates of the Bank or purchased by the Bank or
the Predecessor Bank. Each such addition to the Trust of receivables in
accounts originated by the Bank and affiliates of the Bank or purchased by
the Bank to the trust is subject to certain restrictions on addition of
Accounts in the Pooling and Servicing Agreement, including satisfaction of
the Rating Agency Condition with respect to such addition. "RATING AGENCY
CONDITION" with respect to any proposed action means the condition that
each Rating Agency then rating any Series of Certificates outstanding
confirms in writing that such action would not result in any downgrading or
withdrawal of such Rating Agency's rating of any Series of Certificates
then outstanding. See "Description of the Certificates-Addition of
Accounts" herein. Prior to acquiring a portfolio, the Bank reviews the
historical performance and seasoning of the portfolio and the policies and
practices of the selling institution, but individual accounts are not
requalified by the Bank. There can be no assurance that Accounts so
acquired were originated in a manner consistent with the Bank's policies as
described under "--Growth Strategy and Origination" and "--Underwriting
Procedures" above or that the underwriting and qualification of such
Accounts conformed to any given standards. The Accounts include accounts
previously acquired by the Bank. Such accounts and any accounts acquired in
the future may become Additional Accounts provided that, at such time, they
constitute Eligible Accounts. See "The Receivables," "Description of the
Certificates--Transfer and Assignment of Receivables" and
"--Representations and Warranties."
Effective October 2, 1998, First Chicago NBD Corporation, a
Delaware corporation, merged with and into BANK ONE, the parent corporation
of the Bank. Immediately prior to such merger, BANC ONE CORPORATION, an
Ohio corporation ("BANC ONE"), also merged with and into BANK ONE, which
had been a subsidiary of BANC ONE prior to such merger. BANK ONE is a bank
holding company headquartered in Chicago, Illinois and registered under the
Bank Holding Company Act of 1956, as amended.
ASSESSMENT OF FEES AND FINANCE AND OTHER CHARGES
A billing statement is sent to each cardholder at the end of each
monthly billing cycle in which the account has a debit or credit balance of
more than one dollar or if a finance charge has been imposed. With minor
exceptions, the minimum payment due each month on each account is equal to
the greater of $10 or 2% of the balance shown on the statement, plus the
greater of any amount past due or any amount over the cardholder's credit
line. The Bank may assess a late payment fee, generally ranging from $10 to
$35 for most accounts, if it does not receive the minimum payment by the
payment due date shown on the monthly billing statement. The Bank may
assess a return check fee, generally ranging from $10 to $35, for each
payment check that is dishonored or that is unsigned or otherwise
irregular, an overlimit fee, generally ranging from $10 to $29, for
Purchases or Cash Advances that cause the credit line to be exceeded and
administrative fees for certain functions performed at the request of the
cardholder. Unless otherwise arranged between the Bank and the cardholder,
any late payment fee, return check fee, overlimit fee or administrative fee
is added to the account and treated as a Purchase. In some cases, the Bank
charges a non-refundable Annual Membership Fee. In addition, the Bank
assesses on some cardholder accounts, a transaction fee for the purchase of
money orders, the use of wire transfers, the use of convenience checks and
certain balance transfer transactions, equal to the greater of 2-3% of the
amount thereof and $5, with a cap ranging from $35 to $50.
Periodic finance charges ("PERIODIC FINANCE CHARGES") are not
assessed in most circumstances on Purchases and convenience checks if all
balances shown in the billing statement are paid by the payment due date,
which is approximately 20 to 25 days from the previous cycle billing date.
Periodic Finance Charges are assessed on new Purchases and convenience
checks from the day that they are posted to the account if all balances
shown in the prior billing statement were not paid in full by the payment
due date. Periodic Finance Charges are assessed on Cash Advances from the
later of the day that they are made or the first day of the billing cycle
during which they were posted to the account. Aggregate finance charges for
each account in any given monthly billing cycle consist of Periodic Finance
Charges equal to either (i) the product of the monthly periodic rate
multiplied by the average daily balance or (ii) the product of the daily
balance and the daily periodic rate totaled, in each case, for each day
during the monthly billing cycle; plus, if applicable, an additional Cash
Advance finance charge or transaction finance charge (not applicable for
certain accounts), generally equal to a one-time charge of 2% to 3% of the
Cash Advance or purchase of a money order, wire transfer or use of a
convenience check or a balance transfer request (with a minimum ranging
from $2 to $15 and a maximum ranging from $10 to unlimited), for each of
these transactions posted to the account. Certain accounts in the portfolio
of VISA(R) and MasterCard(R)(1) credit card accounts serviced bY the Bank,
including accounts originated by the affiliates of the Bank whose consumer
credit card operations were consolidated in the Bank on July 1, 1998 (the
"BANK PORTFOLIO") have an introductory period annual percentage rate
ranging from 3.90% to 9.90%. The introductory rates on the accounts in the
Bank Portfolio are primarily fixed annual percentage rates. The annual
percentage rates, after the introductory rate period, are usually fixed or
floating periodic rates that adjust periodically according to an index.
Post-introductory annual percentage rates generally range from 9.99% to
26.99%.
DELINQUENCY AND LOSS EXPERIENCE
The Bank considers an account contractually delinquent if the
minimum payment due thereunder is not received by the Bank by the date of
the statement following the statement on which the amount is first stated
to be due. An account is not treated as delinquent by the Bank if the
minimum payment is received by the next billing date.
Efforts to collect delinquent credit card receivables are made by
the Bank's collection department personnel, collection agencies and
attorneys retained by the Bank. For a description of the Bank's collection
practices and policies, see "First USA's Credit Card
Activities--Delinquencies and Charge-Offs" in the attached prospectus.
- --------
1 VISA(R) and MasterCard(R) are registered trademarks of VISA USA
Incorporated and MasterCard International Incorporated, respectively.
The Bank generally charges off an account immediately prior to the
end of the sixth billing cycle after having become contractually past due.
See "First USA's Credit Card Activities--Delinquencies and Charge-Offs" in
the attached prospectus.
The following tables set forth the delinquency and loss experience
for each of the periods shown for the Trust Portfolio. Reported loss and
delinquency percentages for the Trust Portfolio may be reduced as a result
of the addition of newly originated receivables. Receivables in newly
originated accounts generally have lower delinquency and loss levels than
receivables in more seasoned accounts and the addition of these receivables
to the Trust Portfolio increases the outstanding Receivables balance for
the Trust Portfolio.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE
TRUST PORTFOLIO
(DOLLARS IN THOUSANDS)
AS OF DECEMBER 31,
AS OF JUNE 30, 1999 1998 1997 1996
------------------- ---- ---- ----
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
DOLLAR RECEIVABLES DOLLAR RECEIVABLES DOLLAR RECEIVABLES DOLLAR RECEIVABLES
AMOUNT(1) OUTSTANDING AMOUNT(1) OUTSTANDING AMOUNT(1) OUTSTANDING AMOUNT(1) OUTSTANDING
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables Outstanding... $33,987,395 100.00% $33,988,293 100.00% $26,059,175 100.00% $ 19,717,111 100.00%
Number of Days
Delinquent:(2)
35-64 days.......... $ 441,916 1.30% $ 468,434 1.38% $ 413,888 1.59% $ 349,531 1.77%
65-94 days.......... 282,873 0.83 307,108 0.90 269,870 1.03 244,013 1.24
95 or more days..... 638,575 1.88 615,051 1.81 572,987 2.20 538,583 2.73
----------- ------ ----------- ------- ----------- ------- ------------ ------
Total............. $ 1,363,364 4.01% $ 1,390,593 4.09% $ 1,256,745 4.82% $ 1,132,127 5.74%
=========== ====== =========== ======= ========== ======= =========== ======
(1) The Dollar Amount reflected includes all amounts due from
cardholders as posted to the accounts as of the date specified.
(2) The amount of receivables delinquent 95 or more days as of June 30,
1999, December 31, 1998 and as of December 31, 1997 is stated on a
basis consistent with the Bank's current policy of charging off an
account immediately prior to the end of the sixth billing cycle
after having become contractually past due. The amount of
receivables delinquent 95 or more days as of December 31, 1996 is
stated on a basis consistent with the Bank's prior policy of
charging off accounts immediately prior to the end of the seventh
billing cycle after having become contractually past due. The
policy change was implemented to conform the charge-off policy of
the Bank with that of BANK ONE.
</TABLE>
<TABLE>
<CAPTION>
LOSS EXPERIENCE
TRUST PORTFOLIO
(DOLLARS IN THOUSANDS)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 1998 1997 1996
<S> <C> <C> <C> <C>
Net Losses(1)(2)............... $846,062 $1,465,749 $1,273,354 $803,857
Net Loss Percentage(3)......... 5.11% 5.17% 5.90% 4.92%
(1) Net Losses shown for the six months ended June 30, 1999 and the
year ended December 31, 1998 are stated on a basis consistent with
the Bank's current policy of charging off an account immediately
prior to the end of the sixth billing cycle after having become
contractually past due. Its prior policy was to charge off an
account immediately prior to the end of the seventh billing cycle
after having become contractually past due. During the year ended
December 31, 1997, the Bank's charge-off policy was changed to
conform with that of BANK ONE. The prior policy applied for the
year ended December 31, 1996.
(2) Net Losses as a percentage of gross charge-offs for June 30, 1999
and for each of the years ended December 31, 1998, 1997 and 1996
were 90.8%, 90.5%, 91.9% and 95.7%, respectively. Gross charge-offs
are principal charge-offs before recoveries and do not include the
amount of any reductions in principal receivables due to fraud,
returned goods or customer disputes.
(3) The Net Loss Percentage represents the average of the net loss
percentages for all months during the periods shown calculated as
described in "Selected Trust Portfolio Summary Data."
</TABLE>
The Trust's delinquency and net loss percentages at any time
reflect, among other factors, the quality of the related credit card loans,
the average seasoning of the related accounts, the success of the Bank's
collection efforts and general economic conditions. Total Receivables
delinquent as a percentage of total Principal Receivables outstanding
decreased from 5.74% at December 31, 1996 to 4.82% at December 31, 1997 to
4.09% at December 31, 1998 and increased to 4.24% at March 31, 1999. The
net loss percentage increased from 4.92% for 1996 to 5.90% for 1997 and
decreased to 5.17% for 1998 and to 5.13% for the three months ended March
31, 1999. The industry continues to experience intense competition, which
results in increased account turnover and higher costs per account. The
Bank's focus continues to be to optimize the profitability of each account
within the context of acceptable risk characteristics. As the Bank
increases market penetration, it will continue to focus on segments of the
credit market which have been highly profitable, and the Bank believes the
Trust's delinquency and loss rates will generally follow industry trends.
INTERCHANGE
Creditors participating in the VISA and MasterCard associations
receive Interchange as partial compensation for taking credit risk,
absorbing fraud losses and funding receivables for a limited period prior
to initial billing. Under the VISA and MasterCard systems a portion of this
Interchange in connection with cardholder charges for goods and services is
collected by banks that issue credit cards by applying a discount to the
amount paid by such banks to the banks that clear the related transactions
for merchants. Interchange currently ranges from approximately 1.0% to 2.0%
of the transaction amount. Interchange will be allocated to the Trust by
treating 1.3% (subject to adjustment at the option of the Transferor upon
the satisfaction of certain conditions as described in the attached
prospectus under "Description of the Certificates--Discount Receivables")
of collections on the Receivables (whether arising from Purchases or Cash
Advances), other than collections with respect to Periodic Finance Charges,
Annual Membership Fees and Other Charges, as collections of Discount
Receivables.
THE RECEIVABLES
GENERAL
The receivables conveyed to the Trust have arisen and will arise in
accounts selected by First USA from the Bank Portfolio on the basis of
criteria set forth in the Pooling and Servicing Agreement as applied on
August 21, 1992 (the "CUTOFF DATE") and, with respect to additional
accounts, as of the related dates of their designations (the "TRUST
PORTFOLIO"). The receivables in the Trust Portfolio (including the
additional accounts added to the Trust on June 10, 1999 and July 9, 1999),
as of the close of business on June 30, 1999, consisted of $34,250,637,393
of Principal Receivables and $1,110,457,097 of finance charge receivables.
On the closing date, the Transferor will deposit $__________ into the
Finance Charge Account, which will be applied as collections of finance
charge receivables received during the initial monthly period and allocated
to Series 1999-__. The accounts, including such additional accounts, had an
average principal receivable balance of $1,332 (including accounts with a
zero balance) and an average credit limit of $8,416. The percentage of the
aggregate total receivable balance to the aggregate total credit limit was
16.3%.
As of June 30, 1999, cardholders whose accounts are included in the
Trust Portfolio, including such additional accounts, had billing addresses
in 50 states, the District of Columbia and other United States territories
and possessions. As of June 30, 1999, 82% of the accounts, including such
additional accounts, were premium accounts and 18% were standard accounts,
and the aggregate principal receivable balances of premium accounts and
standard accounts, as a percentage of the aggregate total principal
receivables, were 72% and 28%, respectively.
Pursuant to the Pooling and Servicing Agreement, First USA has the
right, subject to certain limitations and conditions set forth therein, to
designate from time to time Additional Accounts and to transfer to the
Trust all Receivables of such Additional Accounts, whether such receivables
are then existing or thereafter created. Any Additional Accounts designated
pursuant to the Pooling and Servicing Agreement must be Eligible Accounts
as of the date First USA designates such accounts as Additional Accounts,
and must have been selected as Additional Accounts absent a selection
procedure believed by First USA to be materially adverse to the interests
of the holders of any Series of certificates. Additionally, First USA must
have received notice from the applicable Rating Agencies that the inclusion
of such accounts as Additional Accounts will not result in a reduction or
withdrawal by such Rating Agencies of any then existing rating of any Class
of certificates of any Series then outstanding. First USA will be required
to designate Additional Accounts, to the extent available, (a) to maintain
the Transferor Interest so that the Transferor Interest averaged over the
preceding 30 consecutive days and expressed as a percentage of the
aggregate amount of Principal Receivables averaged over the same period
equals or exceeds the Minimum Transferor Interest and (b) to maintain, for
so long as certificates of any Series (including the Offered Certificates)
remain outstanding, the aggregate amount of Principal Receivables to be
equal to or greater than the Minimum Aggregate Principal Receivables. See
"Description of the Certificates--Addition of Accounts" in the attached
prospectus.
The Minimum Transferor Interest applicable to the Certificates is
currently 4%. The Minimum Aggregate Principal Receivables applicable to the
Certificates is an amount equal to (i) the sum of the initial invested
amounts of all Series then outstanding other than any Series of variable
funding certificates, (ii) with respect to any Series of variable funding
certificates in its revolving period, the then current invested amount of
such Series and (iii) with respect to any Series of variable funding
certificates in its amortization period, the invested amount of such Series
at the end of the last day of the Revolving Period for such Series.
Further, pursuant to the Pooling and Servicing Agreement, First USA
will have the right (subject to certain limitations and conditions) to
designate certain Accounts and to require the Trustee to reconvey all
Receivables in such Accounts (the "REMOVED ACCOUNTS") to First USA, whether
such Receivables are then existing or thereafter created. See "Description
of the Certificates--Removal of Accounts" in the attached prospectus.
Throughout the term of the Trust, the Accounts from which the Receivables
arise will be the Accounts designated by First USA on the Cut-Off Date plus
any Additional Accounts minus any Removed Accounts.
The following tables summarize the Trust Portfolio (including the
Additional Accounts added to the Trust on June 10, 1999 and July 9, 1999)
by various criteria as of the close of business on June 30, 1999. Because
the future composition of the Trust Portfolio may change over time, these
tables are not necessarily indicative of the composition of the Trust
Portfolio at any subsequent time.
<TABLE>
<CAPTION>
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER AMOUNT OF AMOUNT OF
ACCOUNT BALANCE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- --------------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Credit Balance....................... 406,384 1.6% $ (76,140,875) (0.2%)
No Balance........................... 13,043,520 50.7 -- --
$0.01 to $2,000.00................... 6,765,896 26.3 4,153,913,415 11.7
$2,000.01 to $5,000.00............... 3,036,997 11.8 10,469,875,084 29.6
$5,000.01 to $10,000.00.............. 1,914,502 7.4 13,310,922,731 37.7
$10,000.01 or More................... 555,631 2.2 7,502,524,133 21.2
---------- ------- ---------------- --------
TOTAL........................ 25,722,930 100.0% $ 35,361,094,488 100.0%
========== ======= ================ ========
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER AMOUNT OF AMOUNT OF
CREDIT LIMIT RANGE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------ -------- ----------- ----------- -----------
$0.00 to $2,000.00................... 2,500,608 9.7% $ 860,334,687 2.4%
$2,000.01 to $5,000.00............... 5,967,275 23.2 6,347,947,495 18.0
$5,000.01 to $10,000.00.............. 9,215,131 35.8 12,912,870,911 36.5
$10,000.01 or More................... 8,039,916 31.3 15,239,941,395 43.1
---------- ------- ---------------- --------
TOTAL........................ 25,722,930 100.0% $ 35,361,094,488 100.0%
========== ======= ================ ========
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
PAYMENT STATUS (DAYS NUMBER OF NUMBER AMOUNT OF AMOUNT OF
CONTRACTUALLY DELINQUENT) ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
Not Delinquent....................... 25,012,887 97.3% $ 32,419,758,923 91.7%
Up to 34 Days........................ 424,245 1.6 1,565,597,847 4.4
35 to 64 Days........................ 103,173 0.4 446,238,139 1.3
65 to 94 Days........................ 59,990 0.2 285,812,817 0.8
95 or More Days...................... 122,635 0.5 643,686,762 1.8
---------- ------- ---------------- --------
TOTAL........................ 25,722,930 100.0% $ 35,361,094,488 100.0%
========== ======= ================ ========
COMPOSITION OF ACCOUNTS BY AGE
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER AMOUNT OF AMOUNT OF
ACCOUNT AGE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- ----------- --------- ----------- ----------- -----------
Less than or equal to 6 Months....... 2,392,508 9.3% $ 3,899,389,166 11.0%
Over 6 Months to 12 Months........... 3,503,946 13.6 4,699,628,961 13.3
Over 12 Months to 24 Months.......... 6,722,945 26.1 7,993,948,273 22.6
Over 24 Months to 36 Months.......... 4,211,920 16.4 5,213,581,815 14.7
Over 36 Months to 48 Months.......... 2,651,051 10.3 4,273,155,132 12.1
Over 48 Months to 60 Months.......... 2,958,550 11.5 4,339,151,690 12.3
Over 60 Months....................... 3,282,010 12.8 4,942,239,451 14.0
---------- ------- ---------------- --------
TOTAL........................ 25,722,930 100.0% $35,361,094,488 100.0%
========== ======= =============== ========
</TABLE>
<TABLE>
<CAPTION>
COMPOSITION BY GEOGRAPHIC DISTRIBUTION
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF AMOUNT OF AMOUNT OF
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----- --------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Alabama............................. 306,280 1.2% $ 441,434,050 1.2%
Alaska.............................. 52,503 0.2 95,503,660 0.3
Arizona............................. 439,106 1.7 617,678,645 1.7
Arkansas............................ 206,091 0.8 277,159,710 0.8
California.......................... 3,064,426 11.9 4,639,298,008 13.0
Colorado............................ 483,019 1.9 629,313,188 1.8
Connecticut......................... 379,796 1.5 542,000,590 1.5
Delaware............................ 80,901 0.3 109,593,520 0.3
District of Columbia................ 41,717 0.2 66,276,596 0.2
Florida............................. 1,566,617 6.1 2,161,312,055 6.1
Georgia............................. 581,394 2.3 885,417,317 2.5
Hawaii.............................. 102,822 0.4 163,422,746 0.5
Idaho............................... 113,576 0.4 154,977,875 0.4
Illinois............................ 1,144,465 4.4 1,500,164,343 4.2
Indiana............................. 581,476 2.3 719,768,145 2.0
Iowa................................ 85,776 0.3 114,301,862 0.3
Kansas.............................. 237,573 0.9 313,349,105 0.9
Kentucky............................ 415,571 1.6 466,225,309 1.3
Louisiana........................... 408,921 1.6 551,413,704 1.6
Maine............................... 103,797 0.4 136,389,358 0.4
Maryland............................ 499,918 1.9 763,029,959 2.2
Massachusetts....................... 691,639 2.7 886,622,604 2.5
Michigan............................ 805,095 3.1 1,119,390,504 3.2
Minnesota........................... 391,262 1.5 438,277,525 1.2
Mississippi......................... 173,667 0.7 241,805,120 0.7
Missouri............................ 476,332 1.9 605,970,214 1.7
Montana............................. 92,209 0.4 122,246,208 0.3
Nebraska............................ 159,574 0.6 173,318,076 0.5
Nevada.............................. 202,852 0.8 338,487,840 1.0
New Hampshire....................... 118,094 0.5 162,803,122 0.5
New Jersey.......................... 867,564 3.4 1,206,235,654 3.4
New Mexico.......................... 151,192 0.6 219,487,885 0.6
New York............................ 1,685,310 6.6 2,330,209,882 6.6
North Carolina...................... 564,593 2.2 766,843,920 2.2
North Dakota........................ 56,232 0.2 64,147,832 0.2
Ohio................................ 1,519,383 5.9 1,897,072,145 5.4
Oklahoma............................ 372,127 1.4 487,614,308 1.4
Oregon.............................. 372,459 1.4 514,197,530 1.5
Pennsylvania........................ 1,138,651 4.4 1,362,857,510 3.9
Rhode Island........................ 101,953 0.4 137,147,499 0.4
South Carolina...................... 268,298 1.0 358,895,674 1.0
South Dakota........................ 58,782 0.2 73,417,164 0.2
Tennessee........................... 389,286 1.5 496,630,607 1.4
Texas............................... 2,101,490 8.2 3,162,016,993 8.8
Utah................................ 200,396 0.8 234,626,446 0.7
Vermont............................. 54,735 0.2 74,973,522 0.2
Virginia............................ 622,511 2.4 909,263,160 2.6
Washington.......................... 613,560 2.4 902,994,638 2.6
West Virginia....................... 180,153 0.7 230,329,732 0.7
Wisconsin........................... 274,558 1.1 314,185,817 0.9
Wyoming............................. 51,720 0.2 67,976,630 0.2
Other U.S. territories 71,508 0.3 113,018,982 0.3
----------- ---- ---------------- -----
TOTAL 25,722,930 100.0% $ 35,361,094,488 100.0%
=========== ===== ================ =====
</TABLE>
Since the largest number of cardholders (based on billing
addresses) whose Accounts were included in the Trust Portfolio as of June
30, 1999 were in California, Texas, New York, Florida and Ohio, adverse
changes in the economic conditions in these areas could have a direct
impact on the timing and amount of payments on the Certificates.
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement provides that Class A
Certificateholders will not receive payments of principal until the _____
Distribution Date (the "CLASS A SCHEDULED PAYMENT DATE"), or earlier in the
event of a Pay Out Event which results in the commencement of the Rapid
Amortization Period. The Pooling and Servicing Agreement also provides that
Class B Certificateholders will not receive payments of principal until the
Class A Invested Amount has been paid in full. Principal of the Class B
Certificates is expected to be paid on the Class B Scheduled Payment Date
which is the _____ Distribution Date (the "CLASS B SCHEDULED PAYMENT DATE,"
and sometimes referred to herein collectively with the Class A Scheduled
Payment Date and the Excess Collateral Scheduled Payment Date as the
"SCHEDULED PAYMENT DATE"), or earlier in the event of a Pay Out Event which
results in the commencement of the Rapid Amortization Period (in either
case, only after the Class A Invested Amount has been paid in full).
On each Transfer Date during the Accumulation Period prior to the
earlier of the payment of the Class A Invested Amount in full and the
commencement of the Rapid Amortization Period, an amount equal to the least
of (a) the Available Investor Principal Collections with respect to the
preceding Monthly Period, (b) the applicable "CONTROLLED DEPOSIT AMOUNT"
for such Monthly Period, which is equal to the sum of the applicable
Controlled Accumulation Amount for such Monthly Period and the applicable
Accumulation Shortfall, if any, from the previous Monthly Period, and (c)
the Class A Adjusted Invested Amount prior to any deposits on such day will
be deposited in the Principal Funding Account until the amount on deposit
in the Principal Funding Account (the "PRINCIPAL FUNDING ACCOUNT BALANCE")
equals the Class A Invested Amount. After the full amount of the Class A
Invested Amount has been deposited in the Principal Funding Account, an
amount equal to the least of (a) the Available Investor Principal
Collections with respect to the preceding Monthly Period remaining after
the application thereof to the Class A Invested Amount, if any, (b) the
applicable Controlled Deposit Amount (minus the Class A Monthly Principal)
for such Monthly Period and (c) the Class B Adjusted Invested Amount prior
to any deposits on such day will be deposited in the Principal Funding
Account until the Principal Funding Account Balance equals the sum of the
Class A Invested Amount and the Class B Invested Amount. On and after the
Transfer Date preceding the Distribution Date on which the Class A Invested
Amount and the Class B Invested Amount will be paid in full, an amount
equal to, for each Monthly Period, the least of (a) the Available Investor
Principal Collections with respect to the preceding Monthly Period
remaining after the application thereof to the Class A Invested Amount and
the Class B Invested Amount, if any, (b) the applicable Controlled Deposit
Amount (minus the Class A Monthly Principal and the Class B Monthly
Principal) for such Monthly Period and (c) the Excess Collateral Adjusted
Amount prior to any deposits on such day will be deposited in the Principal
Funding Account until the Principal Funding Account Balance equals the sum
of the Class A Invested Amount, the Class B Invested Amount and the Excess
Collateral Amount and such amount will be distributed to the Excess
Collateral Holders on the Excess Collateral Scheduled Payment Date and, if
the Excess Collateral Amount is not paid in full on such date, on each
subsequent Transfer Date (other than the Transfer Date prior to the Stated
Series Termination Date) and on the Stated Series Termination Date until
the earlier of the date on which the Excess Collateral Amount has been paid
in full and the Stated Series Termination Date. Although it is anticipated
that collections of Principal Receivables will be available on each
Transfer Date during the Accumulation Period to make a deposit of the
applicable Controlled Deposit Amount and that amounts in the Principal
Funding Account will be available to pay the Class A Invested Amount to the
Class A Certificateholders on the Class A Scheduled Payment Date and the
Class B Invested Amount to the Class B Certificateholders on the Class B
Scheduled Payment Date, respectively, no assurance can be given in this
regard. If the amount required to pay the Class A Invested Amount or the
Class B Invested Amount in full is not available on the Class A Scheduled
Payment Date or the Class B Scheduled Payment Date, respectively, the Rapid
Amortization Period will commence.
If a Pay Out Event occurs during the Accumulation Period, the Rapid
Amortization Period will commence and the amount on deposit in the
Principal Funding Account up to the Class A Invested Amount will be paid to
the Class A Certificateholders on the first Distribution Date with respect
to the Rapid Amortization Period. In addition, to the extent that the Class
A Invested Amount has not been paid in full on the Class A Scheduled
Payment Date, the Class A Certificateholders will be entitled to monthly
payments of principal on each succeeding Distribution Date equal to the
Available Investor Principal Collections until the Class A Certificates
have been paid in full. After the Class A Certificates have been paid in
full, Available Investor Principal Collections will be paid to the Class B
Certificates on each Distribution Date until the earlier of the date on
which the Class B Invested Amount has been paid in full and the ______
Distribution Date (the "STATED SERIES TERMINATION DATE").
A Pay Out Event occurs, either automatically or after specified
notice, upon (a) the failure of the Transferor to make certain payments or
transfers of funds for the benefit of the Certificateholders within the
time periods stated in the Pooling and Servicing Agreement, (b) material
breaches of certain representations, warranties or covenants of the
Transferor, which are not cured within the time periods stated in the
Pooling and Servicing Agreement, (c) certain events of insolvency or
receivership relating to the Transferor, (d) the occurrence of a Servicer
Default which would have a material adverse effect on the
Certificateholders, (e) the failure of the Transferor to convey Receivables
arising under Additional Accounts to the Trust when required by the Pooling
and Servicing Agreement, (f) the Trust's becoming subject to regulation as
an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or (g) a reduction in the average Portfolio Yield for any
three consecutive Monthly Periods to a rate which is less than the average
Base Rate for such three consecutive Monthly Periods. The "BASE RATE"
means, with respect to any Monthly Period, the weighted average of the
Class A Certificate Rate, the Class B Certificate Rate and the Excess
Collateral Minimum Rate as of the last day of such Monthly Period (weighted
based on the Class A Invested Amount, the Class B Invested Amount and the
Excess Collateral Amount, respectively, as of the last day of such Monthly
Period) plus the product of 2.00% per annum and a fraction the numerator of
which is the sum of the Class A Adjusted Invested Amount, the Class B
Adjusted Invested Amount and the Excess Collateral Adjusted Amount and the
denominator of which is the Invested Amount, each as of the last day of
such Monthly Period. The term "PORTFOLIO YIELD" means, with respect to any
Monthly Period, the annualized percentage equivalent of a fraction the
numerator of which is an amount equal to the sum of (i) the amount of
collections of Finance Charge Receivables allocable to the
Certificateholders for such Monthly Period, (ii) the investment proceeds on
amounts on deposit in the Principal Funding Account which are deposited in
the Finance Charge Account on the Transfer Date related to such Monthly
Period and (iii) the amount, if any, withdrawn from the Reserve Account to
be deposited in the Finance Charge Account on the Transfer Date relating to
such Monthly Period, calculated on a cash basis after subtracting an amount
equal to the Investor Default Amount for such Monthly Period, and the
denominator of which is the Invested Amount as of the last day of the
preceding Monthly Period. See "Description of the Certificates--Pay Out
Events" herein and in the attached prospectus.
The following table sets forth the highest and lowest cardholder
monthly payment rates for the Trust Portfolio during any month in the
periods shown and the average cardholder monthly payment rates for all
months during the periods shown, in each case calculated as a percentage of
average monthly principal receivable balances during the periods shown.
Payment rates shown in the table are based on amounts which would be deemed
payments of Principal Receivables with respect to the Accounts.
CARDHOLDER MONTHLY PAYMENT RATES
TRUST PORTFOLIO
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1999 1998 1997 1996
---- ---- ---- ----
Lowest Month 14.54% 13.43% 10.79% 9.54%
Highest Month 16.63% 15.32% 14.66% 11.10%
Monthly Average 15.30% 14.16% 12.24% 10.33%
The amount of collections of Receivables may vary from month to
month due to seasonal variations, general economic conditions, payment
habits of individual cardholders and number of collection days. There can
be no assurance that future collections of Principal Receivables with
respect to the Trust Portfolio will be similar to the historical experience
set forth above. If a Pay Out Event occurs, the average life and maturity
of the Certificates could be significantly reduced. In addition, there can
be no assurance that the issuance of other Series or the terms of any such
other Series might not have an impact on the timing of the payments
received by the Certificateholders.
Because there may be a slowdown in the payment rate to a rate below
the payment rate used to determine the Controlled Accumulation Amount or a
Pay Out Event may occur which would initiate the 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 and the Class B Certificates
to their respective final Distribution Dates will equal the expected number
of months. See "Maturity Assumptions" in the attached prospectus. As
described under "Description of the Certificates--Postponement of
Accumulation Period," the Servicer may shorten the Accumulation Period and,
in such event, there can be no assurance that the duration of the
Accumulation Period will be sufficient for the accumulation of all amounts
necessary to pay the Class A Invested Amount and the Class B Invested
Amount on the Class A Scheduled Payment Date and the Class B Scheduled
Payment Date, respectively, especially if a pay out event were to occur
with respect to one or more other Series thereby limiting the amount of
Excess Principal Collections allocable to the Offered Series.
RECEIVABLE YIELD CONSIDERATIONS
The portfolio yield on the Trust Portfolio for the six months ended
June 30, 1999 and for each of the three years contained in the period ended
December 31, 1998 is set forth in the following table. The portfolio yields
in the table are calculated on a cash basis. Portfolio yield will be
affected by numerous factors, including changes in the periodic rates,
variations in the rate of payments and new borrowings on the Accounts, the
amount of the Annual Membership Fees and Other Charges, changes in the
delinquency and loss rates on the Receivables and the percentage of
cardholders who pay their balances in full each month and do not incur
Periodic Finance Charges, which may in turn be caused by a variety of
factors, including seasonal variations, the availability of other sources
of credit and general economic conditions. See "Maturity Assumptions" in
the attached prospectus. Interchange will be included in the Trust on an
estimated basis by initially treating 1.3% of collections on the
Receivables, other than collections with respect to Periodic Finance
Charges, Annual Membership Fees and Other Charges, as collections of
Discount Receivables.
<TABLE>
<CAPTION>
YIELD PERCENTAGE
TRUST PORTFOLIO
(DOLLARS IN THOUSANDS)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 1998 1997 1996
------------- ---- ---- ----
<S> <C> <C> <C> <C>
Finance Charges and Fees and
Discount Receivables $3,240,262 $5,388,376 $3,807,617 $2,722,289
Average Yield Percentage(1) 19.47% 18.86% 17.44% 16.77%
(1) Average Yield Percentage represents the average of the yield
percentages for all months during the periods shown calculated as
described in "Selected Trust Portfolio Summary Data."
</TABLE>
USE OF PROCEEDS
The net proceeds from the sale of the Offered Certificates, in the
amount of $________, before deduction of expenses, will be (i) used to make
an initial deposit to the Finance Charge Account in the amount of $________
and (ii) paid to First USA. First USA will use such balance of the proceeds
for its general corporate purposes.
FIRST USA BANK, N.A.
The Bank is among the nation's largest issuers of VISA and
MasterCard credit cards in the United States, with more than 37.2 million
credit cards issued and approximately $50.0 billion in managed credit card
loans outstanding as of June 30, 1999, including approximately 2.7 million
credit card accounts and approximately $3.9 billion of credit card loans
purchased from Chevy Chase on September 30, 1998 and approximately 1.7
million credit card accounts and approximately $2.1 billion in managed
credit card loans purchased from GE Capital on December 24, 1998.See "First
USA and BANK ONE CORPORATION" in the attached prospectus.
DESCRIPTION OF THE CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement, and the Offered Series Supplement. Pursuant to the
Pooling and Servicing Agreement, First USA and the Trustee may execute
further Series Supplements in order to issue additional Series. The
following summary of the Offered Certificates does not purport to be
complete and is subject to, and is qualified in its entirety by reference
to, all of the provisions of the Pooling and Servicing Agreement and the
Offered Series Supplement. See "Description of the Certificates" in the
attached prospectus for additional information concerning the Offered
Certificates and the Pooling and Servicing Agreement.
GENERAL
The Certificates will represent undivided interests in certain
assets of the Trust, including the right to the applicable allocation
percentage of all cardholder payments on the Receivables in the Trust. Each
Class A Certificate represents the right to receive payments of interest at
the applicable Class A Certificate Rate for the related Interest Period and
payments of principal on the Class A Scheduled Payment Date, or on each
Distribution Date during the Rapid Amortization Period, funded from
collections of Finance Charge Receivables (and Excess Finance Charge
Collections and Reallocated Principal Collections, as necessary) and
Principal Receivables, respectively, allocated to the Class A
Certificateholders' Interest and certain other amounts. Each Class B
Certificate represents the right to receive payments of interest at the
applicable Class B Certificate Rate for the related Interest Period and
payments of principal on the Class B Scheduled Payment Date or on each
Distribution Date during the Rapid Amortization Period after the Class A
Invested Amount has been paid in full, funded from collections of Finance
Charge Receivables (and Reallocated Excess Collateral Principal
Collections, as necessary) and Principal Receivables, respectively,
allocated to the Class B Certificateholders' Interest and certain other
amounts. Payments of interest and principal will be made on each
Distribution Date to Certificateholders in whose names the Certificates
were registered on the last day of the calendar month preceding such
Distribution Date (each, a "RECORD DATE").
The Class A Certificates and the Class B Certificates initially
will be represented by certificates registered in the name of the nominee
of DTC.
Application has been made to list the Class A Certificates and the
Class B Certificates on the Luxembourg Stock Exchange.
In the event that Definitive Certificates are issued, an Offered
Certificate that is mutilated, destroyed, lost or stolen may be exchanged
or replaced, as the case may be, at the offices of the co-transfer agent
and co-registrar in Luxembourg upon presentation of the Offered Certificate
or satisfactory evidence of the mutilation, destruction, loss or theft
thereof to the co-transfer agent and co-registrar. An indemnity
satisfactory to the co-transfer agent and co-registrar and the Trustee may
be required at the expense of the Certificateholder before a replacement
Offered Certificate will be issued. The Certificateholder will be required
to pay any tax or other governmental charge imposed in connection with such
exchange or replacement and any other expenses (including the fees and
expenses of the Trustee and the co-transfer agent and co-registrar)
connected therewith. The transfer agent and registrar shall not be required
to register the transfer or exchange of Definitive Certificates for a
period of fifteen days preceding the due date for any payment with respect
to such Definitive Certificates.
The Trustee will maintain a paying agent in Luxembourg for so long
as the Offered Certificates are outstanding. The name and address of the
paying agent in Luxembourg are set forth at the end of this supplement. If
Definitive Certificates are issued, such paying agent also will act as
co-transfer agent and co-registrar with respect to the Definitive
Certificates and transfers of the Definitive Certificates may be made
through the facilities of such co-transfer agent. In addition, upon
maturity or final payment, such Definitive Certificates may be presented
for payment at the offices of such paying agent in Luxembourg up to two
years after maturity or final payment.
STATUS OF THE CERTIFICATES
The Offered Series will rank pari passu with all other outstanding
Series. Payments on the Class B Certificates are subordinated to payments
on the Class A Certificates to the extent described herein and in the
attached prospectus.
Payments on the Excess Collateral are subordinated to payments on
the Class A Certificates and the Class B Certificates to the extent
described herein and in the attached prospectus.
PRESCRIPTION
The Pooling and Servicing Agreement provides that any money paid by
the Trust to any of the paying agents for the payment of principal or
interest which remains unclaimed for two years after such principal or
interest shall have become due and payable will be repaid to the Trust, and
thereafter any holder of an Offered Certificate may look only to the Trust
for payment thereof.
INTEREST PAYMENTS
Interest will accrue on the outstanding principal balance of the
Class A Certificates at the applicable Class A Certificate Rate and on the
outstanding principal balance of the Class B Certificates at the applicable
Class B Certificate Rate from _________ (the "CLOSING DATE"). Interest will
accrue on the Certificates and be payable on ________, and on the __th day
of each month thereafter, or if such __th day is not a business day, on the
next succeeding business day (each, a "DISTRIBUTION DATE"), in an amount
equal to (i) with respect to the Class A Certificates, the product of (a)
the actual number of days in the related Interest Period divided by 360,
(b) the Class A Certificate Rate and (c) the outstanding principal amount
of the Class A Certificates as of the preceding Record Date (or in the case
of the first Distribution Date, an amount equal to the product of (x) the
outstanding principal amount of the Class A Certificates on the Closing
Date, (y) __ divided by 360 and (z) the Class A Certificate Rate determined
on _________) and (ii) with respect to the Class B Certificates, the
product of (a) the actual number of days in the related Interest Period
divided by 360, (b) the Class B Certificate Rate and (c) the outstanding
principal amount of the Class B Certificates as of the preceding Record
Date (or in the case of the first Distribution Date, an amount equal to the
product of (x) the outstanding principal amount of the Class B Certificates
on the Closing Date, (y) __ divided by 360 and (z) the Class B Certificate
Rate determined on __________). Interest payments on the Certificates will
be funded, (i) with respect to the Class A Certificates, from the portion
of Finance Charge Receivables collected during the preceding Monthly Period
(or with respect to the first Distribution Date, from and including the
Closing Date to and including __________) allocated to the Class A
Certificateholders' Interest and, if necessary, from Excess Finance Charge
Collections allocated to the Class A Certificates and Reallocated Principal
Collections (to the extent available), (ii) with respect to the Class B
Certificates, from the portion of Finance Charge Receivables collected
during the preceding Monthly Period (or with respect to the first
Distribution Date, from and including the Closing Date to and including
_________) allocated to the Class B Certificateholders' Interest and, if
necessary, from Excess Finance Charge Collections allocated to the Class B
Certificates and Reallocated Excess Collateral Principal Collections (to
the extent available) remaining after certain other payments have been made
with respect to the Class A Certificates and (iii) with respect to the
Excess Collateral Amount, from Excess Finance Charge Collections allocated
to the Excess Collateral Holders. The "INTEREST PERIOD" with respect to any
Distribution Date, or related Transfer Date, as the case may be, will be
the period from the previous Distribution Date through the day preceding
such Distribution Date, except that the initial Interest Period will be the
period from the Closing Date through the day preceding the initial
Distribution Date.
The Class A Certificates will bear interest at the rate of ____%
above LIBOR determined as set forth below from the Closing Date through
_________, and with respect to each Interest Period thereafter (the "CLASS
A CERTIFICATE RATE"). The Class B Certificates will bear interest at the
rate of____% above LIBOR determined as set forth below from the Closing
Date through ________, and with respect to each Interest Period thereafter
(the "CLASS B CERTIFICATE RATE," sometimes referred to herein collectively
with the Class A Certificate Rate as the "CERTIFICATE RATE").
The Trustee will determine LIBOR on _________, ____ for the period
from the Closing Date through _________, ____, and for each Interest Period
following the initial Interest Period, on the second London business day
prior to the Distribution Date on which such Interest Period commences
(each, a "LIBOR DETERMINATION DATE"). For purposes of calculating LIBOR, a
"LONDON BUSINESS DAY" is any day, other than a Saturday, Sunday or day on
which banking institutions in London, England trading in U.S. dollar
deposits in the London interbank market, or banking institutions in New
York, New York or in Newark, Delaware, are authorized or obligated by law
or executive order to be closed.
"LIBOR" means, as of any LIBOR Determination Date, the rate for
deposits in United States dollars for a one-month period which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such
rate does not appear on Telerate Page 3750, the rate for that LIBOR
Determination Date will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the
London interbank market for a one-month period. The Trustee will 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, the
rate for that LIBOR Determination Date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested, the
rate for that LIBOR Determination Date will be the arithmetic mean of the
rates quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in
United States dollars to leading European banks for a one-month period.
"TELERATE PAGE 3750" means the display page currently so designated
on the Dow Jones Telerate Service (or such other page as may replace that
page on that service for the purpose of displaying comparable rates or
prices).
"REFERENCE BANKS" means four major banks in the London interbank
market selected by the Servicer.
The Class A Certificate Rate and the Class B Certificate Rate
applicable to the then current and immediately preceding Interest Period
may be obtained by telephoning The Bank of New York at (800) 254-2826. The
Trustee will cause the Class A Certificate Rate and the Class B Certificate
Rate, as well as the amount of Class A Monthly Interest and Class B Monthly
Interest applicable to an Interest Period, to be provided to the Luxembourg
Stock Exchange and to be published in a daily newspaper in Luxembourg
(expected to be the Luxemburger Wort) as soon as possible after its
determination but in no event later than the first day of such Interest
Period. Such information will also be included in a statement to the
Certificateholders of record prepared by the Servicer. See "Description of
the Certificates--Reports to Certificateholders" in the attached
prospectus.
Interest on the Class A Certificates and the Class B Certificates
will be calculated on the basis of the actual number of days in the
Interest Period and a 360-day year.
PRINCIPAL PAYMENTS
On each Transfer Date relating to the period from and including the
Closing Date and ending at the commencement of the Accumulation Period or,
if earlier, the Rapid Amortization Period (the "REVOLVING PERIOD"),
collections of Principal Receivables allocable to the Invested Amount will,
subject to certain limitations, including the allocation of any Reallocated
Principal Collections with respect to the related Monthly Period to pay the
Class A Required Amount and the Class B Required Amount, be treated as
Excess Principal Collections.
On each Transfer Date following the commencement of the
Accumulation Period, prior to the earlier of the payment of the Class A
Invested Amount in full and the commencement of the Rapid Amortization
Period, the Trustee will deposit in the Principal Funding Account an amount
equal to the least of (a) Available Investor Principal Collections with
respect to the preceding Monthly Period, (b) the applicable Controlled
Deposit Amount for such Monthly Period and (c) the Class A Adjusted
Invested Amount prior to any such deposit on such day. Amounts in the
Principal Funding Account will be paid to the Class A Certificateholders on
the Class A Scheduled Payment Date. Beginning with the Transfer Date on
which the full amount of the Class A Invested Amount has been deposited in
the Principal Funding Account and prior to the commencement of the Rapid
Amortization Period, the Trustee will deposit in the Principal Funding
Account an amount equal to the least of (a) the Available Investor
Principal Collections with respect to the preceding Monthly Period
remaining after application thereof to the Class A Invested Amount, if any,
(b) the applicable Controlled Deposit Amount (minus the Class A Monthly
Principal with respect to such Transfer Date) for such Monthly Period and
(c) the Class B Adjusted Invested Amount prior to any such deposit on such
day. After payment in full of the Class A Invested Amount on the Class A
Scheduled Payment Date, amounts in the Principal Funding Account will be
paid to the Class B Certificateholders on the Class B Scheduled Payment
Date. Beginning with the Transfer Date on which the full amount of the sum
of the Class A Invested Amount and the Class B Invested Amount has been
deposited in the Principal Funding Account, prior to the commencement of
the Rapid Amortization Period, the Trustee will deposit in the Principal
Funding Account an amount equal to the least of (a) the Available Investor
Principal Collections with respect to the preceding Monthly Period
remaining after the application thereof to the Class A Invested Amount and
the Class B Invested Amount, if any, (b) the applicable Controlled Deposit
Amount (minus the Class A Monthly Principal and the Class B Monthly
Principal with respect to such Transfer Date) for such Monthly Period and
(c) the Excess Collateral Adjusted Amount prior to any such deposit on such
day. If the Class A Invested Amount and the Class B Invested Amount will be
paid in full on the Class A Scheduled Payment Date and the Class B
Scheduled Payment Date, respectively, amounts in the Principal Funding
Account will be paid to the Excess Collateral Holders on the Excess
Collateral Scheduled Payment Date. The "EXCESS COLLATERAL SCHEDULED PAYMENT
DATE" is the _________, ____ Transfer Date. During the Accumulation Period,
the portion of Available Investor Principal Collections not applied to
Class A Monthly Principal, Class B Monthly Principal or Excess Collateral
Monthly Principal on a Transfer Date will generally be treated as Excess
Principal Collections.
"AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" means, with respect to
any Monthly Period, an amount equal to the sum of (i) an amount equal to,
during the Revolving Period, the Investor Percentage, and during an
Amortization Period, the Fixed/Floating Allocation Percentage of all
collections in respect of Principal Receivables received during such
Monthly Period, plus (ii) the amount, if any, of collections of Finance
Charge Receivables and Excess Finance Charge Collections allocated and
available on the next succeeding Distribution Date to (A) fund the Class A
Investor Default Amount, the Class B Investor Default Amount and the Excess
Collateral Default Amount with respect to the next succeeding Distribution
Date and (B) reimburse Class A Investor Charge-Offs and previous reductions
in the Class B Invested Amount and the Excess Collateral Amount, minus
(iii) the amount of Reallocated Principal Collections with respect to such
Monthly Period used to fund the Class A Required Amount and the Class B
Required Amount.
The "RAPID AMORTIZATION PERIOD" is the period beginning on the
earliest of the day on which a Pay Out Event occurs, the Class A Scheduled
Payment Date if the Class A Invested Amount is not paid in full on such
date, and the Class B Scheduled Payment Date if the Class B Invested Amount
is not paid in full on such date, and ending on the earlier of (i) the date
on which the Class A Invested Amount, the Class B Invested Amount and the
Excess Collateral Amount have each been paid in full and (ii) the Stated
Series Termination Date. On each Distribution Date following the Monthly
Period in which the Rapid Amortization Period commences, the Class A
Certificateholders will be entitled to receive Available Investor Principal
Collections for the preceding Monthly Period in an amount up to the Class A
Invested Amount until the earlier of the date the Class A Invested Amount
is paid in full and the Stated Series Termination Date. In addition, if a
Pay Out Event occurs during the Accumulation Period, the Rapid Amortization
Period will commence and any amount on deposit in the Principal Funding
Account will be paid to the Certificateholders of each Class of
Certificates, sequentially, in order of seniority, on the Distribution Date
(or on the Transfer Date in the case of Excess Collateral Holders)
following the Monthly Period in which the Rapid Amortization Period
commences. After payment in full of the Class A Invested Amount, the Class
B Certificateholders will be entitled to receive Available Investor
Principal Collections on each Distribution Date during the Rapid
Amortization Period until the earlier of the date the Class B Invested
Amount is paid in full and the Stated Series Termination Date. After
payment in full of the Class B Invested Amount, the Excess Collateral
Holders will be entitled to receive Available Investor Principal
Collections on each Transfer Date (other than the Transfer Date prior to
the Stated Series Termination Date) and on the Stated Series Termination
Date until the earlier of the date on which the Excess Collateral Amount is
paid in full and the Stated Series Termination Date. See "--Pay Out Events"
below for a discussion of events which might lead to the commencement of
the Rapid Amortization Period.
In the event of a sale of the Receivables and an early termination
of the Trust due to an event of insolvency, a material breach of certain
representations and warranties, an optional repurchase of the Receivables
by the Bank, a repurchase of the Receivables in connection with a Servicer
Default or a sale of the Receivables in connection with the Stated Series
Termination Date (each as described under "Description of the
Certificates--Pay Out Events," "--Servicer Default" and "--Final Payment of
Principal; Termination" in the attached prospectus), distributions of
principal will be made to the Certificateholders upon surrender of their
Certificates. The proceeds of any such sale or repurchase of Receivables
will be allocated first to pay amounts due with respect to the Class A
Certificates, then to pay amounts due with respect to the Class B
Certificates and then to pay amounts due with respect to the Excess
Collateral as described herein.
POSTPONEMENT OF ACCUMULATION PERIOD
The accumulation period with respect to the Certificates (the
"ACCUMULATION PERIOD") is scheduled to begin at the close of business on
___________ (the Accumulation Period, together with the Rapid Amortization
Period sometimes referred to as an "AMORTIZATION PERIOD" and collectively
as the "AMORTIZATION PERIODS"). Upon written notice to the Trustee, the
Servicer may elect to postpone the commencement of the Accumulation Period,
and extend the length of the Revolving Period, subject to certain
conditions including those set forth below. The Servicer may make such
election only if the Accumulation Period Length (determined as described
below) is less than twelve months. On each Determination Date, until the
Accumulation Period begins, the Servicer will determine the "ACCUMULATION
PERIOD LENGTH," which is the number of months expected to be required to
fully fund the Principal Funding Account no later than the Excess
Collateral Scheduled Payment Date, based on (a) the expected monthly
collections of Principal Receivables expected to be distributable to the
certificateholders of all Series (unless Excess Principal Collections from
any such other Series are not allocated to be shared with the Offered
Series), assuming a principal payment rate no greater than the lowest
monthly principal payment rate on the Receivables for the preceding twelve
months and (b) the amount of principal expected to be distributable to
certificateholders of Series (which may exclude certain other Series) which
are not expected to be in their revolving periods during the Accumulation
Period. If the Accumulation Period Length is less than twelve months, the
Servicer may, at its option, postpone the commencement of the Accumulation
Period such that the number of months included in the Accumulation Period
will be equal to or exceed the Accumulation Period Length. The effect of
the foregoing calculation is to permit the reduction of the length of the
Accumulation Period based on the invested amounts of certain other Series
which are scheduled to be in their revolving periods during the
Accumulation Period and on increases in the principal payment rate
occurring after the Closing Date. The length of the Accumulation Period
will not be less than one month. If the Accumulation Period is postponed in
accordance with the foregoing, and if a Pay Out Event occurs after the date
originally scheduled as the commencement of the Accumulation Period, it is
probable that Certificateholders would receive some of their principal
later than if the Accumulation Period had not been so postponed.
EXCESS PRINCIPAL COLLECTIONS
Collections of Principal Receivables for any Monthly Period
allocated to the Invested Amount will first be used to cover, with respect
to any Monthly Period during either Amortization Period, payments to the
Class A Certificateholders and the Class B Certificateholders and then
payments to the Excess Collateral Holders. The Servicer will determine the
amount of collections of Principal Receivables for any Monthly Period
allocated to the Invested Amount remaining after covering required payments
to the Certificateholders or deposits with respect thereto and any similar
amount remaining for any other Series ("EXCESS PRINCIPAL COLLECTIONS"). The
Servicer will allocate the Excess Principal Collections to cover any
scheduled or permitted principal distributions to certificateholders and
deposits to principal funding accounts, if any, for any Series which have
not been covered out of the collections of Principal Receivables allocable
to such Series and certain other amounts for such Series. Excess Principal
Collections will not be used to cover investor charge-offs for any Series.
If principal shortfalls for all Series exceed Excess Principal Collections
for any Monthly Period, Excess Principal Collections will be allocated pro
rata among the applicable Series based on the relative amounts of principal
shortfalls. To the extent that Excess Principal Collections exceed
principal shortfalls for all Series, the balance will, subject to certain
limitations, be paid to the holder of the Exchangeable Transferor
Certificate. "PRINCIPAL SHORTFALLS" means with respect to the Offered
Series and any Distribution Date (a) the sum of the amount, if any, by
which during the Accumulation Period the Controlled Deposit Amount exceeds
the sum of the Class A Monthly Principal, Class B Monthly Principal and
Excess Collateral Monthly Principal for the related Transfer Date or (b)
during the Rapid Amortization Period, (i) the amount, if any, by which the
Class A Invested Amount on such Distribution Date exceeds the Class A
Monthly Principal for the related Transfer Date, (ii) on and after the
Class B Principal Commencement Date, the amount, if any, by which the Class
B Invested Amount on such Distribution Date exceeds the Class B Monthly
Principal for the related Transfer Date and (iii) on and after the date on
which the Class B Invested Amount has been deposited in full in the
Principal Funding Account or paid in full, the amount, if any, by which the
Excess Collateral Amount on such Distribution Date exceeds the Excess
Collateral Monthly Principal for the related Transfer Date. "CLASS B
PRINCIPAL COMMENCEMENT DATE" means (a) with respect to the Accumulation
Period, the first Distribution Date on which an amount equal to the Class A
Invested Amount has been deposited in the Principal Funding Account or (b)
with respect to the Rapid Amortization Period, the Distribution Date on
which the Class A Invested Amount is paid in full or, if there are no
Available Investor Principal Collections remaining after payments have been
made to the Class A Certificates on such Distribution Date, the
Distribution Date following the Distribution Date on which the Class A
Invested Amount is paid in full.
SUBORDINATION OF THE CLASS B CERTIFICATES
The Class B Certificateholders' Interest will be subordinated to
the extent necessary to fund payments with respect to the Class A
Certificates. To the extent the Class B Invested Amount is reduced, the
percentage of collections of Finance Charge Receivables allocated to the
Class B Certificateholders in subsequent Monthly Periods will be reduced.
Moreover, to the extent the amount of such reduction in the Class B
Invested Amount is not reimbursed, the amount of principal distributable to
the Class B Certificateholders will be reduced. No principal will be paid
to the Class B Certificateholders until the Class A Invested Amount is paid
in full.
If collections of Finance Charge Receivables allocable to the Class
A Certificateholders' Interest for any Monthly Period are insufficient to
pay Class A Monthly Interest, any overdue Class A Monthly Interest (with
default interest thereon), the Class A Investor Default Amount for such
Monthly Period, and, if the Transferor is not the Servicer, the Class A
Monthly Servicing Fee for such Monthly Period, then Excess Finance Charge
Collections will be applied to fund the amount of such deficiency. If
Excess Finance Charge Collections available with respect to such Monthly
Period are less than the Class A Required Amount, Reallocated Principal
Collections will be applied to fund the remaining Class A Required Amount
and the Excess Collateral Amount will be reduced until the Excess
Collateral Amount is equal to zero and then the Class B Invested Amount
will be reduced by the amount of Reallocated Class B Principal Collections
so used.
If Reallocated Principal Collections available with respect to such
Monthly Period are insufficient to fund the remaining Class A Required
Amount and the Excess Collateral Amount is reduced to zero, then a portion
of the Class B Invested Amount equal to such insufficiency (but not in
excess of the lesser of the Class A Investor Default Amount for such
Monthly Period and the Class B Invested Amount) will be allocated to the
Class A Certificates to avoid a reduction in the Class A Invested Amount,
and the Class B Invested Amount will be reduced by the amount so allocated.
Such reductions of the Class B Invested Amount will thereafter be
reimbursed and the Class B Invested Amount increased on each Distribution
Date by the amount, if any, of Excess Finance Charge Collections for such
Distribution Date allocated and available for such purpose. See "--Excess
Finance Charge Collections" and "--Reallocated Principal Collections"
herein.
INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
Pursuant to the Pooling and Servicing Agreement, during each
Monthly Period the Servicer will allocate among the Class A
Certificateholders (the "CLASS A CERTIFICATEHOLDERS' INTEREST"), the Class
B Certificateholders (the "CLASS B CERTIFICATEHOLDERS' INTEREST," and
together with the Class A Certificateholders' Interest, the "INVESTOR
INTEREST"), the Excess Collateral Holders (the "EXCESS COLLATERAL HOLDERS'
INTEREST"), the Transferor Interest and the interest of the holders of the
other Series outstanding at such time all collections of Finance Charge
Receivables and all collections of Principal Receivables and all amounts of
Receivables in Defaulted Accounts with respect to such calendar month (each
such month, a "MONTHLY PERIOD"). Collections of Finance Charge Receivables
and the amount of Receivables in Defaulted Accounts at all times and
collections of Principal Receivables during the Revolving Period will be
allocated to the Class A Certificateholders' Interest, the Class B
Certificateholders' Interest and the Excess Collateral Holders' Interest
based on the percentage equivalent of the ratio which each of the amount of
the Class A Adjusted Invested Amount, the Class B Adjusted Invested Amount
or the Excess Collateral Adjusted Amount, respectively, on the last day of
the preceding Monthly Period bears to the total amount of Principal
Receivables on the last day of the preceding Monthly Period (the "CLASS A
FLOATING ALLOCATION PERCENTAGE," the "CLASS B FLOATING ALLOCATION
PERCENTAGE" and the "EXCESS COLLATERAL FLOATING ALLOCATION PERCENTAGE,"
respectively, and the sum of all three percentages, the "INVESTOR
PERCENTAGE"). During the initial Monthly Period, the Class A Floating
Allocation Percentage, the Class B Floating Allocation Percentage and the
Excess Collateral Floating Allocation Percentage will equal the percentage
equivalent of the ratio which the amount of the initial Class A Invested
Amount, the initial Class B Invested Amount and the initial Excess
Collateral Amount, respectively, bears to the total amount of Principal
Receivables on the Closing Date. During the Revolving Period, all Principal
Receivables allocable to the Class A Certificates, the Class B Certificates
and the Excess Collateral will be allocated and paid to the holder of the
Exchangeable Transferor Certificate (except for (i) Reallocated Principal
Collections used to pay interest and certain other amounts on the Class A
Certificates and Class B Certificates and, if the Bank is not the Servicer,
the Investor Servicing Fee, as described under "--Reallocated Principal
Collections" and "--Servicing Compensation and Payment of Expenses," (ii)
amounts paid to the holders of certificates of other Series as Excess
Principal Collections, if any, and (iii) Unallocated Principal
Collections). During an Amortization Period, all Principal Receivables
collected will be allocated to the Investor Interest and the Excess
Collateral Holders' Interest based on the percentage equivalent of the
ratio which each of the Class A Invested Amount, the Class B Invested
Amount and the Excess Collateral Amount, respectively, at the end of the
last day of the Revolving Period bears to the greater of (a) the total
amount of Principal Receivables at the end of the last day of the preceding
Monthly Period and (b) the sum of the numerators used to calculate
allocation percentages with respect to Principal Receivables for each Class
of each Series outstanding for the current Distribution Date (the "CLASS A
FIXED/FLOATING ALLOCATION PERCENTAGE," the "CLASS B FIXED/FLOATING
ALLOCATION PERCENTAGE" and the "EXCESS COLLATERAL FIXED/FLOATING ALLOCATION
PERCENTAGE," respectively, and the sum of all three percentages, the
"FIXED/FLOATING ALLOCATION PERCENTAGE") and the remainder will be allocated
to the Transferor Interest and the interest of certificateholders of other
Series, if any. Reallocated Excess Collateral Principal Collections will be
allocated during the Revolving Period based on the Excess Collateral
Floating Allocation Percentage. Reallocated Excess Collateral Principal
Collections will be allocated during an Amortization Period based on the
Excess Collateral Fixed/Floating Allocation Percentage. Reallocated Class B
Principal Collections will be allocated during the Revolving Period based
on the Class B Floating Allocation Percentage. Reallocated Class B
Principal Collections will be allocated during an Amortization Period based
on the Class B Fixed/Floating Allocation Percentage. However, with respect
to any Monthly Period in which Additional Accounts are added on a specified
date (an "ADDITION DATE") to the Trust and the Servicer need not make daily
deposits of collections into the Collection Account, the denominator in the
definitions of the Class A Floating Allocation Percentage, the Class B
Floating Allocation Percentage and the Excess Collateral Floating
Allocation Percentage and the denominator determined pursuant to clause (a)
of the definitions of Fixed/Floating Allocation Percentage, Class A
Fixed/Floating Allocation Percentage, Class B Fixed/Floating Allocation
Percentage and Excess Collateral Fixed/Floating Allocation Percentage above
shall be the Average Principal Balance; provided, however, that with
respect to any Monthly Period in which an Addition Date occurs and the
Servicer is required to make daily deposits of collections into the
Collection Account, the denominators in the definitions of the Class A
Floating Allocation Percentage, the Class B Floating Allocation Percentage
and the Excess Collateral Floating Allocation Percentage and the
denominator determined pursuant to clause (a) of the definitions of
Fixed/Floating Allocation Percentage, Class A Fixed/Floating Allocation
Percentage, Class B Fixed/Floating Allocation Percentage and Excess
Collateral Fixed/Floating Allocation Percentage shall be (1) for the period
from and including the first day of such Monthly Period to but excluding
the related Addition Date, the aggregate amount of Principal Receivables in
the Trust at the end of the day on the last day of the prior Monthly Period
and (2) for the period from and including the Addition Date through the
last day of such Monthly Period, the aggregate amount of Principal
Receivables in the Trust at the end of the day on the related Addition
Date. "AVERAGE PRINCIPAL BALANCE" means, for a Monthly Period in which
Additional Accounts are designated for inclusion in the Trust, the weighted
average of the Principal Receivables in the Trust at the end of the day on
the last day of the prior Monthly Period and the Principal Receivables in
the Trust at the end of the day on the related Addition Date, weighted,
respectively, by a fraction, the numerator of which is the number of days
from and including the first day of such Monthly Period to but excluding
the related Addition Date, and the denominator of which is the number of
days in such Monthly Period, and by a fraction, the numerator of which is
the number of days from and including the related Addition Date to and
including the last day of such Monthly Period, and the denominator of which
is the number of days in such Monthly Period.
As used herein, the term "CLASS A INVESTED AMOUNT" for any day
means an amount equal to (a) the initial principal balance of the Class A
Certificates, minus (b) the amount of principal payments made to Class A
Certificateholders prior to such day and 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 any reimbursements of Class
A Investor Charge-Offs for all Distribution Dates preceding such date;
provided, however, that the Class A Invested Amount may not be reduced
below zero.
As used herein, the term "CLASS A ADJUSTED INVESTED AMOUNT" for any
date of determination, means an amount not less than zero equal to the then
current Class A Invested Amount, minus the Principal Funding Account
Balance on such date.
As used herein, the term "CLASS B INVESTED AMOUNT" for any day
means an amount equal to (a) the initial principal balance of the Class B
Certificates, minus (b) the amount of principal payments made to Class B
Certificateholders prior to such day, minus (c) the aggregate amount of
Class B Investor Charge-Offs for all prior Distribution Dates, minus (d)
the aggregate amount of Reallocated Class B Principal Collections for which
the Excess Collateral Amount has not been reduced for all prior
Distribution Dates, minus (e) the aggregate amount by which the Class B
Invested Amount has been reduced to fund the Class A Investor Default
Amount on all prior Distribution Dates as described herein under
"--Defaulted Receivables; Investor Charge-Offs," and plus (f) the aggregate
amount of Excess Finance Charge Collections and certain other amounts
applied for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e); provided, however, that the Class B
Invested Amount may not be reduced below zero.
As used herein, the term "CLASS B ADJUSTED INVESTED AMOUNT" for any
date of determination, means an amount not less than zero equal to the
Class B Invested Amount minus the excess, if any, of the Principal Funding
Account Balance over the Class A Invested Amount on such date.
As used herein, the term "EXCESS COLLATERAL AMOUNT" for any day
means an amount equal to (a) the initial Excess Collateral Amount, minus
(b) the amount of principal payments made to the Excess Collateral Holders
prior to such day, minus (c) the aggregate amount of Excess Collateral
Charge-Offs for all prior Distribution Dates, minus (d) the aggregate
amount of Reallocated Principal Collections for all prior Distribution
Dates which have been used to fund the Class A Required Amount or the Class
B Required Amount, minus (e) an amount equal to the aggregate amount by
which the Excess Collateral Amount has been reduced to fund the Class A
Investor Default Amount and the Class B Investor Default Amount on all
prior Distribution Dates as described under "--Defaulted Receivables;
Investor Charge-Offs," and plus (f) the aggregate amount of Excess Finance
Charge Collections and certain other amounts allocated and available for
purposes of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided, however, that the Excess Collateral Amount may
not be reduced below zero.
As used herein, the term "EXCESS COLLATERAL ADJUSTED AMOUNT" for
any date of determination, means an amount not less than zero equal to the
Excess Collateral Amount minus the excess, if any, of the Principal Funding
Account Balance over the sum of the Class A Invested Amount and the Class B
Invested Amount on such date.
As used herein, the term "INVESTED AMOUNT" means the sum of the
Class A Invested Amount, the Class B Invested Amount and the Excess
Collateral Amount.
As used herein, the term "TRANSFEROR PERCENTAGE" means (a) when
used with respect to collections of Finance Charge Receivables and the
amount of Receivables in Defaulted Accounts, 100% minus the sum of the
Class A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Excess Collateral Floating Allocation Percentage and the
floating allocation percentages for all other Series, (b) when used with
respect to collections of Principal Receivables during the Revolving
Period, 100% minus the sum of the Class A Floating Allocation Percentage,
the Class B Floating Allocation Percentage and the Excess Collateral
Floating Allocation Percentage and the allocation percentages for Principal
Receivables for all other Series and (c) when used with respect to
collections of Principal Receivables during the Accumulation Period or the
Rapid Amortization Period, 100% minus the sum of the Fixed/Floating
Allocation Percentage and the allocation percentages for Principal
Receivables for all other Series.
As a result of the Class A Floating Allocation Percentage, the
Class B Floating Allocation Percentage and the Excess Collateral Floating
Allocation Percentage, the portion of Receivables in Defaulted Accounts
allocated to the Class A Certificateholders, the Class B Certificateholders
and the Excess Collateral Holders as well as the collections of Finance
Charge Receivables allocated to the Class A Certificateholders, the Class B
Certificateholders and the Excess Collateral Holders will change for each
Monthly Period based on the relationship of the amount of the Class A
Invested Amount, the Class B Invested Amount and the Excess Collateral
Amount to the total amount of Principal Receivables on the last day of the
preceding Monthly Period.
The numerator of the percentages of collections of Principal
Receivables allocable to the Class A Certificateholders, the Class B
Certificateholders and the Excess Collateral Holders, however, will remain
fixed during either Amortization Period. Collections of Principal
Receivables allocable to the Class B Certificates are subject to possible
reallocation for the benefit of the Class A Certificateholders and
collections of Principal Receivables allocable to the Excess Collateral are
subject to possible reallocation for the benefit of the Class A
Certificateholders and the Class B Certificateholders as described under
"--Reallocation of Cash Flows" below.
REALLOCATION OF CASH FLOWS
On each Determination Date, the Servicer will determine the Class A
Required Amount and the Class B Required Amount. The "CLASS A REQUIRED
AMOUNT" means the amount, if any, by which the sum of Class A Monthly
Interest and any overdue Class A Monthly Interest on the related
Distribution Date (and default interest thereon), the Class A Investor
Default Amount for the related Monthly Period and, if the Bank is no longer
the Servicer, the Class A Monthly Servicing Fee for the related Monthly
Period exceeds the Class A Available Funds with respect to the related
Monthly Period. The "CLASS B REQUIRED AMOUNT" means the sum of (i) the
amount, if any, by which the sum of Class B Monthly Interest and any
overdue Class B Monthly Interest on the related Distribution Date (and
default interest thereon) and, if the Bank is no longer the Servicer, the
Class B Monthly Servicing Fee for the related Monthly Period exceeds the
Class B Available Funds with respect to the related Monthly Period and (ii)
the amount, if any, by which the Class B Investor Default Amount for the
related Monthly Period exceeds the amount of Excess Finance Charge
Collections available to make payments with respect thereto on the related
Transfer Date. If the Class A Required Amount is greater than zero, Excess
Finance Charge Collections will be used to pay the Class A Required Amount
with respect to such Distribution Date. If such Excess Finance Charge
Collections are insufficient to pay the Class A Required Amount,
Reallocated Principal Collections will then be used to fund the remaining
Class A Required Amount. If Reallocated Principal Collections with respect
to the related Monthly Period are insufficient to fund the remaining Class
A Required Amount for such related Monthly Period, then a portion of the
Excess Collateral Amount equal to such insufficiency (but not in excess of
the lesser of the Class A Investor Default Amount for such Monthly Period
and the Excess Collateral Amount) will be allocated to the Class A
Certificates to avoid a charge-off with respect to the Class A
Certificates. If the Excess Collateral Amount is reduced to zero, then a
portion of the Class B Invested Amount equal to any remaining insufficiency
(but not in excess of the lesser of the Class A Investor Default Amount for
such Monthly Period and the Class B Invested Amount) will be allocated to
the Class A Certificates to avoid a charge-off with respect to the Class A
Certificates. If the Class B Invested Amount is reduced to zero, the Class
A Invested Amount will be reduced by any remaining deficiency (but not in
excess of the Class A Investor Default Amount for such Monthly Period).
If the Class B Required Amount is greater than zero, any
Reallocated Excess Collateral Principal Collections remaining after
application of such amounts to any Class A Required Amount (after the
application of Excess Finance Charge Collections) will then be used to fund
the Class B Required Amount. If such remaining Reallocated Excess
Collateral Principal Collections with respect to the related Monthly Period
are insufficient to fund the Class B Required Amount for such related
Monthly Period, then a portion of any remaining Excess Collateral Amount
equal to such insufficiency (but not in excess of the lesser of the Class B
Investor Default Amount for such Monthly Period and the remaining Excess
Collateral Amount) will be allocated to the Class B Certificates to avoid a
charge-off with respect to the Class B Certificates. If the Excess
Collateral Amount is reduced to zero, the Class B Invested Amount will be
reduced by any remaining deficiency (but not in excess of the Class B
Investor Default Amount for such Monthly Period).
APPLICATION OF COLLECTIONS
Daily Allocations. The Servicer will instruct the Trustee to
withdraw from the Collection Account on each business day an amount equal
to the Transferor Percentage of the aggregate amount of such deposits in
respect of Principal Receivables and Finance Charge Receivables,
respectively, and pay such amounts to the holder of the Exchangeable
Transferor Certificate; provided, however, that if the Transferor Interest
expressed as a percentage of the aggregate amount of Principal Receivables
is equal to or less than the Minimum Transferor Interest such amount shall
instead be retained in the Collection Account and applied as Unallocated
Principal Collections; provided, further, that on any business day
thereafter when the Transferor Interest expressed as a percentage of the
aggregate amount of Principal Receivables is greater than the Minimum
Transferor Interest, the amount of Unallocated Principal Collections shall
be released to the holder of the Exchangeable Transferor Certificate.
With respect to the Certificates, the Servicer will instruct the
Trustee to make the following payments and deposits on each date of
processing; provided, however, that for so long as the Bank remains the
Servicer under the Pooling and Servicing Agreement and the Servicer has and
maintains a certificate of deposit rating of "P-1" by Moody's and of "A-1"
by Standard & Poor's and deposit insurance provided by either BIF or SAIF,
then the Servicer may make such deposits and payments on each Transfer Date
in an amount equal to the net amount of such deposits and payments which
would have been made had the conditions of this proviso not applied:
(a) during the Revolving Period, (i) allocate to the
Certificateholders an amount equal to the Investor Percentage of
collections of Finance Charge Receivables and deposit in the
Finance Charge Account (A) prior to the Calculation Date in each
Monthly Period an amount equal to the product of the Investor
Percentage and the aggregate amount of collections of Finance
Charge Receivables, or (B) on and after each such Calculation Date,
the lesser of (x) the product of the Investor Percentage and the
aggregate amount of collections of Finance Charge Receivables and
(y) the excess of (1) the amounts owing to Certificateholders with
respect to interest for the Distribution Date following the then
current Monthly Period (plus, if the Transferor is not the
Servicer, the Investor Servicing Fee) over (2) the amounts
previously deposited in the Finance Charge Account with respect
thereto; on each date of processing on and after the Calculation
Date collections of Finance Charge Receivables allocated to the
Certificates in excess of the amount required to be retained in the
Finance Charge Account as provided above shall be held by the
Servicer and applied on each Transfer Date as described below and
(ii) allocate to the Certificateholders an amount equal to the
product of (A) the Investor Percentage and (B) the aggregate amount
of collections of Principal Receivables on such date of processing
and pay such amount to the holder of the Exchangeable Transferor
Certificate subject to the obligation of such holder to make an
amount equal to the Reallocated Principal Collections and Excess
Principal Collections for such Monthly Period available on the
related Transfer Date as described below; provided, however, that
the amount to be paid to the holder of the Exchangeable Transferor
Certificate shall be paid only if the Transferor Interest expressed
as a percentage of the aggregate amount of Principal Receivables is
greater than the Minimum Transferor Interest (after giving effect
to all Principal Receivables transferred to the Trust on such day)
and otherwise will be retained in the Collection Account and
applied as Unallocated Principal Collections; and provided,
further, that on and after the Calculation Date if the amounts
previously deposited in the Finance Charge Account with respect to
the current Monthly Period are less than the sum of the amounts
owing to Certificateholders with respect to interest for the
Distribution Date following the then current Monthly Period (plus,
if the Transferor is not the Servicer, the Investor Servicing Fee)
(the amount of such shortfall, the "FINANCE CHARGE DEFICIT"), an
amount not to exceed the product of (x) the sum of the Class B
Floating Allocation Percentage and the Excess Collateral Floating
Allocation Percentage and (y) collections of Principal Receivables
on any date of processing ("SUBORDINATE PRINCIPAL COLLECTIONS")
with respect to the then current Monthly Period will be deposited
into the Principal Account on a daily basis during such Monthly
Period in an aggregate amount not to exceed the Finance Charge
Deficit; and, at such time as the Finance Charge Deficit is equal
to zero, such amounts may be paid from the Principal Account to the
holder of the Exchangeable Transferor Certificate;
(b) during the Accumulation Period, (i) allocate to the
Certificateholders and retain in the Finance Charge Account an
amount equal to the product of (A) the Investor Percentage and (B)
the aggregate amount of collections of Finance Charge Receivables
and (ii) allocate to the Certificateholders and retain in the
Principal Account an amount equal to the product of (x) the
Fixed/Floating Allocation Percentage and (y) the aggregate amount
of collections of Principal Receivables (for any such date, a
"PERCENTAGE ALLOCATION"); provided, however, that if the sum of
such Percentage Allocations with respect to the same Monthly Period
exceeds the Controlled Deposit Amount for the related Distribution
Date, then such excess shall be paid to the holder of the
Exchangeable Transferor Certificate (subject to the obligation of
such holder to make an amount equal to the Reallocated Principal
Collections and Excess Principal Collections for such Monthly
Period available on the related Transfer Date as described below),
only if the Transferor Interest expressed as a percentage of the
aggregate amount of Principal Receivables is greater than the
Minimum Transferor Interest (after giving effect to all Principal
Receivables transferred to the Trust on such day) and otherwise
shall be retained in the Collection Account and applied as
Unallocated Principal Collections; provided, further, that on and
after the Calculation Date, if there is a Finance Charge Deficit,
Subordinate Principal Collections with respect to each Monthly
Period will be deposited into the Principal Account on a daily
basis during such Monthly Period in an aggregate amount not to
exceed the Finance Charge Deficit; at such time as the Finance
Charge Deficit is equal to zero, such amounts may be paid from the
Principal Account to the holder of the Exchangeable Transferor
Certificate; and
(c) during the Rapid Amortization Period, (i) allocate to
the Certificateholders and retain in the Finance Charge Account an
amount equal to the product of (A) the Investor Percentage and (B)
the aggregate amount of collections of Finance Charge Receivables
and (ii) allocate to the Certificateholders and retain in the
Principal Account an amount equal to the product of (x) the
Fixed/Floating Allocation Percentage and (y) the aggregate amount
of collections of Principal Receivables; provided, however, that
after the date on which an amount of such collections equal to the
Invested Amount has been deposited into the Collection Account and
allocated to the Certificateholders, the amount determined above
will be paid to the holder of the Exchangeable Transferor
Certificate only if the Transferor Interest expressed as a
percentage of the aggregate amount of Principal Receivables is
greater than the Minimum Transferor Interest (after giving effect
to all Principal Receivables transferred to the Trust on such day)
and otherwise will be retained in the Collection Account and
applied as Unallocated Principal Collections.
"CALCULATION DATE" means _________, ____ and the second business
day (which is a business day as defined for purposes of determining LIBOR)
prior to the 15th day of each calendar month thereafter.
Monthly Deposits During the Revolving Period and Accumulation
Period. During the Revolving Period, the Servicer will deposit in the
Finance Charge Account on each Transfer Date an amount equal to (i) the
lesser of (A) the product of (x) the Investor Percentage with respect to
the preceding Monthly Period and (y) the aggregate amount of collections of
Finance Charge Receivables for the preceding Monthly Period, and (B) the
aggregate of the amounts to be applied from amounts on deposit in the
Finance Charge Account on such Transfer Date pursuant to clauses (a)(i)
through (iii), (b)(i) and (ii) and (c)(i) under "--Monthly Allocations" as
described below and clauses (a) through (k) of "--Excess Finance Charge
Collections" less (ii) the amounts deposited in the Finance Charge Account
daily during such Monthly Period as described above in "--Daily
Allocations." During the Revolving Period and the Accumulation Period, on
each Transfer Date the holder of the Exchangeable Transferor Certificate
will deposit in the Principal Account an amount equal to the sum of (I) the
excess of the amount of Reallocated Principal Collections over the amount
retained in the Collection Account as described above in "--Daily
Allocations" with respect to the Revolving Period or Accumulation Period,
respectively, and (II) an amount equal to the amount of Excess Principal
Collections to be applied for the benefit of other Series from amounts that
were originally allocated to the Offered Series, not to exceed (a) during
the Revolving Period, the Investor Percentage of collections of Principal
Receivables for the related Monthly Period or (b) during the Accumulation
Period, the Fixed/Floating Allocation Percentage of collections of
Principal Receivables for the related Monthly Period less the amount
thereof applied to pay Class A Monthly Principal, Class B Monthly Principal
or Excess Collateral Monthly Principal on the related Distribution Date or
Transfer Date, as applicable.
Monthly Allocations. On each Transfer Date, the Trustee, acting
pursuant to the Servicer's instructions, will make the following payments
and deposits:
(a) An amount equal to the Class A Available Funds for the
preceding Monthly Period will be distributed in the following
priority:
(i) an amount equal to Class A Monthly Interest for
such Distribution Date, plus the amount of any overdue Class
A Monthly Interest, plus any default interest with respect
to interest amounts that were due but not paid on a prior
Distribution Date, such interest to be computed at the Class
A Certificate Rate plus 2.0% per annum, will be deposited
into the Distribution Account for distribution to Class A
Certificateholders on the next succeeding Distribution Date;
(ii) if the Bank is no longer the Servicer, an amount
equal to the Class A Monthly Servicing Fee for the related
Monthly Period will be paid to the Servicer;
(iii) an amount equal to the Class A Investor Default
Amount, if any, for the related Monthly Period will be paid
in respect of principal to the holder of the Exchangeable
Transferor Certificate during the Revolving Period (provided
that if such amount exceeds the Transferor Interest, the
excess will be treated as Unallocated Principal Collections)
and deposited in the Principal Account and treated as a
portion of Available Investor Principal Collections during
an Amortization Period; and
(iv) the balance, if any, will constitute a portion
of Excess Finance Charge Collections and will be allocated
and distributed as described under "--Excess Finance
Charge Collections" below.
(b) An amount equal to the Class B Available Funds for the
preceding Monthly Period will be distributed in the following
priority:
(i) an amount equal to Class B Monthly Interest for
such Distribution Date, plus the amount of any overdue Class
B Monthly Interest, plus any default interest with respect
to interest amounts that were due but not paid on a prior
Distribution Date, such interest to be computed at the Class
B Certificate Rate plus 2.0% per annum, will be deposited
into the Distribution Account for distribution to Class B
Certificateholders on the next succeeding Distribution Date;
(ii) if the Bank is no longer the Servicer, an amount
equal to the Class B Monthly Servicing Fee for the related
Monthly Period will be paid to the Servicer; and
(iii) the balance, if any, will constitute a portion
of Excess Finance Charge Collections and will be allocated
and distributed as described under "--Excess Finance
Charge Collections" below.
(c) An amount equal to the Excess Collateral Available Funds
for the preceding Monthly Period will be distributed in the
following priority:
(i) if the Bank is no longer the Servicer, an amount
equal to the Excess Collateral Monthly Servicing Fee for the
related Monthly Period will be paid to the Servicer; and
(ii) the balance, if any, will constitute a portion
of Excess Finance Charge Collections and will be allocated
and distributed as described under "--Excess Finance
Charge Collections" below.
"EXCESS FINANCE CHARGE COLLECTIONS" means, with respect to any
Transfer Date, an amount equal to the sum of the amounts described in
clause (a)(iv), clause (b)(iii) and clause (c)(ii) above.
"CLASS A MONTHLY INTEREST" with respect to any Distribution Date
will be equal to the product of (i) the Class A Certificate Rate for the
related Interest Period, (ii) the actual number of days in such Interest
Period divided by 360 and (iii) the outstanding principal balance of the
Class A Certificates on the related Record Date or with respect to the
first Distribution Date, the initial Class A Invested Amount.
"CLASS A AVAILABLE FUNDS" means, with respect to any Monthly
Period, an amount equal to the sum of (a) the Class A Floating Allocation
Percentage of collections of Finance Charge Receivables in respect of such
Monthly Period and (b) with respect to any Monthly Period during the
Accumulation Period prior to the payment in full of the Class A Invested
Amount, the product of (i) the Class A Account Percentage and (ii) the sum
of the Principal Funding Investment Proceeds, if any, with respect to the
related Transfer Date and the amounts, if any, to be withdrawn from the
Reserve Account which will be deposited into the Finance Charge Account on
the related Transfer Date as described under "--Reserve Account" herein.
"CLASS A ACCOUNT PERCENTAGE" means, with respect to any
Determination Date, the percentage equivalent of a fraction, the numerator
of which is the aggregate amount on deposit in the Principal Funding
Account with respect to the Class A Certificates and the denominator of
which is the aggregate amount on deposit in the Principal Funding Account,
in each case as of the last day of the preceding Monthly Period.
"CLASS B MONTHLY INTEREST" with respect to any Distribution Date
will be equal to the product of (i) the Class B Certificate Rate for the
related Interest Period, (ii) the actual number of days in such Interest
Period divided by 360 and (iii) the Class B Invested Amount on the related
Record Date or with respect to the first Distribution Date, the initial
Class B Invested Amount.
"CLASS B AVAILABLE FUNDS" means, with respect to any Monthly
Period, an amount equal to the sum of (a) the Class B Floating Allocation
Percentage of collections of Finance Charge Receivables in respect of such
Monthly Period and (b) with respect to any Monthly Period during the
Accumulation Period prior to the payment in full of the Class B Invested
Amount, the product of (i) the Class B Account Percentage and (ii) the sum
of the Principal Funding Investment Proceeds, if any, with respect to the
related Transfer Date and the amounts, if any, to be withdrawn from the
Reserve Account which will be deposited into the Finance Charge Account on
the related Transfer Date as described under "--Reserve Account" herein.
"CLASS B ACCOUNT PERCENTAGE" means, with respect to any
Determination Date, the percentage equivalent of a fraction, the numerator
of which is the aggregate amount on deposit in the Principal Funding
Account with respect to the Class B Certificates, if any, and the
denominator of which is the aggregate amount on deposit in the Principal
Funding Account, in each case as of the last day of the preceding Monthly
Period.
"EXCESS COLLATERAL AVAILABLE FUNDS" means, with respect to any
Monthly Period, an amount equal to the sum of (a) the Excess Collateral
Floating Allocation Percentage of collections of Finance Charge Receivables
in respect of such Monthly Period and (b) with respect to any Monthly
Period during the Accumulation Period prior to the payment in full of the
Excess Collateral Amount, the product of (i) the Excess Collateral Account
Percentage and (ii) the sum of the Principal Funding Investment Proceeds,
if any, with respect to the related Transfer Date and the amounts, if any,
to be withdrawn from the Reserve Account which will be deposited into the
Finance Charge Account on the related Transfer Date as described under
"--Reserve Account" herein.
"EXCESS COLLATERAL ACCOUNT PERCENTAGE" means, with respect to any
Determination Date, the percentage equivalent of a fraction, the numerator
of which is the aggregate amount on deposit in the Principal Funding
Account with respect to the Excess Collateral, if any, and the denominator
of which is the aggregate amount on deposit in the Principal Funding
Account, in each case as of the last day of the preceding Monthly Period.
ALLOCATION OF COLLECTIONS OF FINANCE CHARGE RECEIVABLES
The figure below demonstrates the manner in which collections of
Finance Charge Receivables are allocated and applied to Series 1999-__. The
figure is a simplified demonstration of certain allocation and payment
provisions and is qualified by the full descriptions of these provisions in
this supplement and the attached prospectus.
[chart showing allocation of collections of Finance Charge Receivables]
EXCESS FINANCE CHARGE COLLECTIONS
On each Transfer Date, the Servicer will apply or cause the Trustee
to apply Excess Finance Charge Collections with respect to the related
Monthly Period, to make the following distributions in the
following priority:
(a) an amount equal to the Class A Required Amount, if any,
with respect to the related Monthly Period will be used to fund the
Class A Required Amount;
(b) an amount equal to the aggregate amount of Class A
Investor Charge-Offs, which have not been previously reimbursed
(after giving effect to the allocation with respect to the related
Distribution Date of certain other amounts applied for that
purpose), will be distributed to the holder of the Exchangeable
Transferor Certificate on each Transfer Date with respect to the
Revolving Period (but not exceeding the Transferor Interest in
Principal Receivables on such day (after giving effect to any new
Principal Receivables transferred to the Trust on such day)) and
thereafter will be deposited into the Principal Account and treated
as a portion of Available Investor Principal Collections for the
related Distribution Date as described under "--Payments of
Principal" below;
(c) an amount equal to the amount of interest which has
accrued with respect to the outstanding aggregate principal amount
of the Class B Certificates at the applicable Class B Certificate
Rate but has not been deposited in the Distribution Account for the
benefit of the Class B Certificateholders either on such Transfer
Date or on a prior Transfer Date and any other amounts due on the
related Distribution Date or on any prior Distribution Date as
described in clause (b)(i) of "--Application of
Collections--Monthly Allocations" above but not yet paid will be
deposited into the Distribution Account for payment to the Class B
Certificateholders;
(d) an amount equal to the aggregate Class B Investor
Default Amount, if any, for the related Distribution Date will be
distributed to the holder of the Exchangeable Transferor
Certificate on each Transfer Date with respect to the Revolving
Period (but not exceeding the Transferor Interest on such day
(after giving effect to any new Principal Receivables transferred
to the Trust on such day)) and on Transfer Dates with respect to an
Amortization Period will be deposited into the Principal Account
and treated as a portion of Available Investor Principal
Collections for the related Distribution Date as described under
"--Payments of Principal" below;
(e) an amount equal to the aggregate amount by which the
Class B Invested Amount has been reduced below the initial Class B
Invested Amount for reasons other than the payment of principal to
the Class B Certificateholders (but not in excess of the aggregate
amount of such reductions which have not been previously
reimbursed) will be distributed to the holder of the Exchangeable
Transferor Certificate on each Transfer Date with respect to the
Revolving Period, but not in an amount exceeding the Transferor
Interest on such day (after giving effect to any new Principal
Receivables transferred to the Trust on such day) and on Transfer
Dates with respect to an Amortization Period will be deposited into
the Principal Account and treated as a portion of Available
Investor Principal Collections for the related Distribution Date as
described under "--Payments of Principal" below;
(f) an amount equal to Excess Collateral Minimum Monthly
Interest for the related Transfer Date, plus the amount of any
overdue Excess Collateral Minimum Monthly Interest, will be paid to
the Excess Collateral Holders in accordance with the Transfer and
Administration Agreement;
(g) an amount equal to the unpaid Investor Servicing Fee
will be paid to the Servicer;
(h) an amount equal to the aggregate Excess Collateral
Default Amount, if any, for the related Distribution Date will be
distributed to the holder of the Exchangeable Transferor
Certificate on each Transfer Date with respect to the Revolving
Period (but not exceeding the Transferor Interest on such day
(after giving effect to any new Principal Receivables transferred
to the Trust on such day)) and on Transfer Dates with respect to an
Amortization Period will be deposited into the Principal Account
and treated as a portion of Available Investor Principal
Collections for the related Distribution Date as described under
"--Payments of Principal" below;
(i) an amount equal to the aggregate amount by which the
Excess Collateral Amount has been reduced below the initial Excess
Collateral Amount for reasons other than the payment of principal
to the Excess Collateral Holders (but not in excess of the
aggregate amount of such reductions which have not been previously
reimbursed) will be distributed to the holder of the Exchangeable
Transferor Certificate on each Transfer Date with respect to the
Revolving Period, but not in an amount exceeding the Transferor
Interest in Principal Receivables on such day (after giving effect
to any new Principal Receivables transferred to the Trust on such
day) and on Transfer Dates with respect to an Amortization Period
will be deposited into the Principal Account and treated as a
portion of Available Investor Principal Collections for the related
Distribution Date as described under "--Payments of Principal"
below;
(j) on each Transfer Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account
terminates as described under "--Reserve Account," an amount up to
the excess, if any, of the Required Reserve Account Amount over the
Available Reserve Account Amount shall be deposited into the
Reserve Account; and
(k) the balance, if any, after giving effect to the payments
made pursuant to clauses (a) through (j) above shall be paid to the
Excess Collateral Holders in accordance with a Transfer and
Administration Agreement between a Delaware business trust and the
Bank (the "TRANSFER AND ADMINISTRATION AGREEMENT").
"EXCESS COLLATERAL MINIMUM MONTHLY INTEREST" with respect to any
Transfer Date will be equal to the product of (i) the Excess Collateral
Minimum Rate for the related Interest Period, (ii) the actual number of
days in the related Interest Period divided by 360 and (iii) the Excess
Collateral Amount on the related Record Date or, with respect to the first
Transfer Date, the initial Excess Collateral Amount.
"EXCESS COLLATERAL MINIMUM RATE" means LIBOR plus ___% per annum or
such lesser rate as may be specified in the Transfer and Administration
Agreement.
PAYMENTS OF PRINCIPAL
The Trustee, acting pursuant to the Servicer's instructions, will
distribute Available Investor Principal Collections (see "--Principal
Payments" above) on deposit in the Principal Account in the
following priority:
(a) on each Transfer Date with respect to the Revolving
Period, all Available Investor Principal Collections with respect
to the preceding Monthly Period will be treated as Excess Principal
Collections and applied as described under "--Excess Principal
Collections" herein and "Description of the Certificates--Shared
Collections of Principal Receivables" in the attached prospectus;
(b) with respect to the Accumulation Period or the Rapid
Amortization Period, all Available Investor Principal Collections
with respect to the preceding Monthly Period and the other amounts
specified below will be distributed or deposited in the following
priority:
(i) an amount equal to the Class A Monthly Principal
plus, to the extent of any applicable Principal Shortfall,
Excess Principal Collections from other Series and
Unallocated Principal Collections, to the extent available,
will be deposited on each Transfer Date in the Principal
Funding Account for distribution to the Class A
Certificateholders on the Class A Scheduled Payment Date
(with respect to the Accumulation Period) or distributed to
the Class A Certificateholders on each Distribution Date
until the Class A Invested Amount is paid in full (with
respect to the Rapid Amortization Period);
(ii) on the Transfer Date related to the Class B
Principal Commencement Date and on each Transfer Date
thereafter, an amount equal to the Class B Monthly Principal
plus, to the extent of any applicable Principal Shortfall,
Excess Principal Collections from other Series and
Unallocated Principal Collections, to the extent available,
will be deposited in the Principal Funding Account for
distribution to the Class B Certificateholders on the Class
B Scheduled Payment Date (with respect to the Accumulation
Period) or distributed to the Class B Certificateholders on
each Distribution Date until the Class B Invested Amount is
paid in full (with respect to the Rapid Amortization
Period); and
(iii) on the Transfer Date related to the
Distribution Date on which the Class B Invested Amount is
deposited in full in the Principal Funding Account or paid
in full to the Class B Certificateholders and on each
Transfer Date thereafter, an amount equal to the Excess
Collateral Monthly Principal plus, to the extent of any
applicable Principal Shortfall, Excess Principal Collections
from other Series and Unallocated Principal Collections, to
the extent available, will be deposited in the Principal
Funding Account for distribution to the Excess Collateral
Holders on the Transfer Date immediately preceding the
Excess Collateral Scheduled Payment Date (with respect to
the Accumulation Period) or distributed to the Excess
Collateral Holders on each Transfer Date until the Excess
Collateral Amount is paid in full (with respect to the Rapid
Amortization Period); and
(c) on each Transfer Date with respect to the Accumulation
Period and the Rapid Amortization Period, the balance of Available
Investor Principal Collections not applied pursuant to (a) and (b)
above, if any, will be treated as Excess Principal Collections and
applied as described under "--Excess Principal Collections" herein
and "Description of the Certificates--Shared Collections of
Principal Receivables" in the attached prospectus.
"CLASS A MONTHLY PRINCIPAL" means, with respect to any Transfer
Date relating to the Accumulation Period or the Rapid Amortization Period,
prior to the payment in full of the Class A Invested Amount, an amount
equal to the least of (i) the Available Investor Principal Collections on
deposit in the Principal Account, (ii) for each Transfer Date with respect
to the Accumulation Period, prior to the payment in full of the Class A
Invested Amount, and on or prior to the Class A Scheduled Payment Date, the
applicable Controlled Deposit Amount and (iii) the Class A Adjusted
Invested Amount on such Transfer Date.
"CLASS B MONTHLY PRINCIPAL" with respect to each Transfer Date
relating to the Accumulation Period or the Rapid Amortization Period
beginning with the Transfer Date first preceding the Class B Principal
Commencement Date, prior to the payment in full of the Class B Invested
Amount, will equal the least of (i) the Available Investor Principal
Collections remaining on deposit in the Principal Account after application
thereof to Class A Monthly Principal on such Transfer Date, if any, (ii)
for each Transfer Date with respect to the Accumulation Period, prior to
the Class B Scheduled Payment Date, the applicable Controlled Deposit
Amount (minus the Class A Monthly Principal with respect to such Transfer
Date) and (iii) the Class B Adjusted Invested Amount on such Transfer Date.
"EXCESS COLLATERAL MONTHLY PRINCIPAL" with respect to each Transfer
Date relating to the Accumulation Period or the Rapid Amortization Period
beginning with the Transfer Date first preceding the Distribution Date on
which the Class B Invested Amount is deposited in full in the Principal
Funding Account or paid in full, prior to the payment in full of the Excess
Collateral Amount, will equal the least of (i) the Available Investor
Principal Collections remaining on deposit in the Principal Account after
application thereof to Class A Monthly Principal and Class B Monthly
Principal on such Transfer Date, if any, (ii) for each Transfer Date with
respect to the Accumulation Period, prior to the Excess Collateral
Scheduled Payment Date, the applicable Controlled Deposit Amount (minus the
Class A Monthly Principal and the Class B Monthly Principal with respect to
such Transfer Date) and (iii) the Excess Collateral Adjusted Amount on such
Transfer Date.
"CONTROLLED ACCUMULATION AMOUNT" means for any Transfer Date with
respect to the Accumulation Period, prior to the payment in full of the
Invested Amount, $________; provided, however, that if the commencement of
the Accumulation Period is delayed as described above under "--Postponement
of Accumulation Period," the Controlled Accumulation Amount may be higher
than the amount stated above for each Transfer Date with respect to the
Accumulation Period and will be determined by the Servicer in accordance
with the Pooling and Servicing Agreement based on the principal payment
rates for the Accounts and on the invested amounts of other Series (other
than certain excluded Series) which are scheduled to be in their revolving
periods and then scheduled to create Excess Principal Collections during
the Accumulation Period.
"ACCUMULATION SHORTFALL" initially means zero and thereafter means,
with respect to any Monthly Period during the Accumulation Period, the
excess, if any, of the Controlled Deposit Amount for the previous Monthly
Period over the amount deposited into the Principal Funding Account as
described in clause (b) of this section with respect to the Certificates
for the previous Monthly Period.
ALLOCATION OF COLLECTIONS OF PRINCIPAL RECEIVABLES
The figure below demonstrates the manner in which collections of
Principal Receivables are allocated and applied to Series 1999-__. The
figure is a simplified demonstration of certain allocation and payment
provisions and is qualified by the full descriptions of these provisions in
this supplement and the attached prospectus.
[chart showing allocation of collections of Principal Receivables]
REALLOCATED PRINCIPAL COLLECTIONS
On each Distribution Date, the Servicer will apply or cause the
Trustee to apply an amount, not to exceed the Excess Collateral Amount,
equal to the product of (a)(i) during the Revolving Period, the Excess
Collateral Floating Allocation Percentage or (ii) during an Amortization
Period, the Excess Collateral Fixed/Floating Allocation Percentage and (b)
the amount of collections of Principal Receivables with respect to the
related Monthly Period in the following priority (such collections applied
in accordance with clause (a) below are called "REALLOCATED EXCESS
COLLATERAL PRINCIPAL COLLECTIONS"):
(a) an amount equal to the sum of (i) the excess, if any, of
the Class A Required Amount with respect to such related Monthly
Period over the amount of Excess Finance Charge Collections with
respect to such related Monthly Period and (ii) the Class B
Required Amount with respect to the related Monthly Period; and
(b) any such collections not applied in the foregoing manner
(and therefore not constituting Reallocated Excess Collateral
Principal Collections) will, on each Distribution Date with respect
to the Revolving Period, first be applied as Excess Principal
Collections for the benefit of other Series and then be distributed
to the holder of the Exchangeable Transferor Certificate, if the
Transferor Interest expressed as a percentage of the aggregate
amount of Principal Receivables is greater than the Minimum
Transferor Interest, or applied as Unallocated Principal
Collections and on Distribution Dates with respect to an
Amortization Period will be included in the funds available to make
principal payments to the Class A Certificateholders until the
Class A Invested Amount is paid in full and then to the Class B
Certificateholders until the Class B Invested Amount is paid in
full and then to the Excess Collateral Holders until the Excess
Collateral Amount is paid in full.
On each Distribution Date, the Servicer will apply or cause the
Trustee to apply an amount, not to exceed the Class B Invested Amount,
equal to the product of (a)(i) during the Revolving Period, the Class B
Floating Allocation Percentage or (ii) during an Amortization Period, the
Class B Fixed/Floating Allocation Percentage and (b) the amount of
collections of Principal Receivables with respect to the related Monthly
Period in the following priority (such collections applied in accordance
with clause (a) below are called "REALLOCATED CLASS B PRINCIPAL
COLLECTIONS" and the sum of Reallocated Excess Collateral Principal
Collections and Reallocated Class B Principal Collections is called
"REALLOCATED PRINCIPAL COLLECTIONS"):
(a) an amount equal to the excess, if any, of the Class A
Required Amount with respect to such related Monthly Period over
the sum of (i) the amount of Excess Finance Charge Collections with
respect to such related Monthly Period and (ii) the amount of
Reallocated Excess Collateral Principal Collections applied with
respect thereto for the related Monthly Period; and
(b) any such collections not applied in the foregoing manner
(and therefore not constituting Reallocated Class B Principal
Collections) will, on each Distribution Date with respect to the
Revolving Period, first be applied as Excess Principal Collections
for the benefit of other Series and then be distributed to the
holder of the Exchangeable Transferor Certificate, if the
Transferor Interest expressed as a percentage of the aggregate
amount of Principal Receivables is greater than the Minimum
Transferor Interest, or applied as Unallocated Principal
Collections and on Distribution Dates with respect to an
Amortization Period will be included in the funds available to make
principal payments to the Class A Certificateholders until the
Class A Invested Amount is paid in full and then to the Class B
Certificateholders until the Class B Invested Amount is paid in
full and then to the Excess Collateral Holders until the Excess
Collateral Amount is paid in full.
On each Distribution Date the Excess Collateral Amount will be
reduced by the amount of Reallocated Excess Collateral Principal
Collections and by the amount of Reallocated Class B Principal Collections
for such Distribution Date. In the event that such reduction would cause
the Excess Collateral Amount to be a negative number, the Excess Collateral
Amount will be reduced to zero and the Class B Invested Amount will be
reduced by the amount by which the Excess Collateral Amount would have been
reduced below zero. In the event that the reallocation of collections of
Principal Receivables would cause the Class B Invested Amount to be a
negative number on any Distribution Date, collections of Principal
Receivables will be reallocated on such Distribution Date in an aggregate
amount not to exceed the amount which would cause the Class B Invested
Amount to be reduced to zero.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On each Determination Date, the Servicer will calculate the
Investor Default Amount for the preceding Monthly Period. The term "DEFAULT
AMOUNT" means, for any Monthly Period, an amount (which shall not be less
than zero) equal to (a) the aggregate amount of Principal Receivables
(other than Ineligible Receivables) in Defaulted Accounts on the day such
Account became a Defaulted Account for each day in such Monthly Period
minus (b) the aggregate amount of Recoveries received in such Monthly
Period. The term "INVESTOR DEFAULT AMOUNT" means, for any Monthly Period,
the product of (i) the Investor Percentage with respect to such Monthly
Period and (ii) the Default Amount for such Monthly Period. A portion of
the 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 Allocation Percentage
applicable during the related Monthly Period and the Default Amount for
such Monthly Period. A portion of the Default Amount will be allocated to
the Class B Certificateholders (the "CLASS B INVESTOR DEFAULT Amount") on
each Distribution Date in an amount equal to the product of the Class B
Floating Allocation Percentage applicable during the related Monthly Period
and the Default Amount for such Monthly Period. A portion of the Default
Amount will be allocated to the Excess Collateral Holders (the "EXCESS
COLLATERAL DEFAULT AMOUNT") on each Distribution Date in an amount equal to
the product of the Excess Collateral Floating Allocation Percentage
applicable during the related Monthly Period and the Default Amount for
such Monthly Period.
On each Distribution Date, if the Class A Investor Default Amount
for such Distribution Date exceeds the sum of the Class A Floating
Allocation Percentage of collections in respect of Finance Charge
Receivables allocable with respect thereto, and the Excess Finance Charge
Collections and the Reallocated Principal Collections available to cover
such amount with respect to the Monthly Period immediately preceding such
Distribution Date, the Excess Collateral Amount will be reduced by the
amount of such excess, but not more than the lesser of the Class A Investor
Default Amount and the Excess Collateral Amount for such Distribution Date.
In the event that, but for the limitation on the amount of such reduction
in the preceding sentence, such reduction would cause the Excess Collateral
Amount to be a negative number, the Excess Collateral Amount will be
reduced to zero, and the Class B Invested Amount will be reduced by the
amount by which the Excess Collateral Amount would have been reduced below
zero. In the event that such reduction would cause the Class B Invested
Amount to be a negative number, the Class B Invested Amount will be reduced
to zero, and the Class A Invested Amount will be reduced by the amount by
which the Class B Invested Amount would have been reduced below zero, but
not more than the Class A Investor Default Amount for such Distribution
Date (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 be reimbursed on any
Transfer Date (but not by an amount in excess of the aggregate Class A
Investor Charge-Offs) by the amount of Excess Finance Charge Collections
allocated and available for such purpose as described above under "--Excess
Finance Charge Collections."
If on any Distribution Date, the Class B Investor Default Amount
for such Distribution Date exceeds the amount of Excess Finance Charge
Collections and Reallocated Excess Collateral Principal Collections which
are allocated and available to fund such amount, the Excess Collateral
Amount (after giving effect to any adjustments with respect thereto as
described in the preceding paragraph) will be reduced by the amount of such
excess, but not more than the lesser of the Class B Investor Default Amount
and the Excess Collateral Amount for such Distribution Date. In the event
that, but for the limitation on the amount of such reduction in the
preceding sentence, such reduction would cause the Excess Collateral Amount
to be a negative number, the Excess Collateral Amount will be reduced to
zero and the Class B Invested Amount will be reduced by the amount by which
the Excess Collateral Amount would have been reduced below zero, but not
more than the Class B Investor Default Amount for such Distribution Date (a
"CLASS B INVESTOR Charge-Off"). The Class B Invested Amount will also be
reduced by the amount of Reallocated Class B Principal Collections applied
to cover shortfalls in excess of the Excess Collateral Amount and the
amount of any portion of the Class B Invested Amount allocated to the Class
A Certificates to avoid a reduction in the Class A Invested Amount. The
Class B Invested Amount will thereafter be reimbursed (but not in the
excess of the unpaid principal balance of the Class B Certificates) on any
Transfer Date by the amount of Excess Finance Charge Collections allocated
and available for that purpose as described above under "--Excess Finance
Charge Collections."
If on any Distribution Date, the Excess Collateral Default Amount
for such Distribution Date exceeds the amount of Excess Finance Charge
Collections which are allocated and available to fund such amount as
described above under "--Excess Finance Charge Collections," the Excess
Collateral Amount (after giving effect to any adjustments with respect
thereto as described in the preceding paragraphs) will be reduced by the
amount of such excess, but not more than the lesser of the Excess
Collateral Default Amount and the Excess Collateral Amount for such
Distribution Date (an "EXCESS COLLATERAL CHARGE-OFF"). The Excess
Collateral Amount will also be reduced by the amount of Reallocated
Principal Collections and the amount of any portion of the Excess
Collateral Amount allocated to the Class A Certificates to avoid a
reduction in the Class A Invested Amount or to the Class B Certificates to
avoid a reduction in the Class B Invested Amount. The Excess Collateral
Amount will thereafter be reimbursed on any Transfer Date by the amount of
Excess Finance Charge Collections allocated and available for that purpose
as described above under "--Excess Finance Charge Collections."
PRINCIPAL FUNDING ACCOUNT
The Servicer will establish and maintain with a Qualified
Institution a principal funding account as a segregated trust account held
for the benefit of the Certificateholders (the "PRINCIPAL FUNDING
ACCOUNT"). During the Accumulation Period, the Trustee at the direction of
the Servicer shall transfer collections in respect of Principal Receivables
(other than Reallocated Principal Collections) and Excess Principal
Collections from other Series, if any, allocated to Series 1999-__ from the
Principal Account to the Principal Funding Account as described under
"--Application of Collections." Such collections will be retained in the
Principal Funding Account and ultimately used to pay the principal of the
Certificates on the Class A Scheduled Payment Date, the Class B Scheduled
Payment Date and the Excess Collateral Scheduled Payment Date or the first
Distribution Date with respect to the Rapid Amortization Period, whichever
occurs earlier.
Funds on deposit in the Principal Funding Account will be invested
to the following Transfer Date by the Trustee at the direction of the
Servicer in Permitted Investments. Investment earnings (net of investment
losses and expenses) on funds on deposit in the Principal Funding Account
(the "PRINCIPAL FUNDING INVESTMENT PROCEEDS") during the Accumulation
Period will be included in Class A Available Funds, Class B Available Funds
and Excess Collateral Available Funds. If, for any Interest Period, the
Principal Funding Investment Proceeds are less than an amount equal to, for
each Interest Period, the Covered Amount, the amount of such deficiency
will be paid from the Reserve Account to the extent of the Available
Reserve Account Amount and, if necessary, from Excess Finance Charge
Collections and Reallocated Principal Collections.
RESERVE ACCOUNT
Pursuant to the Offered Series Supplement, the Servicer will
establish and maintain with a Qualified Institution the reserve account as
a segregated trust account held for the benefit of the Certificateholders
(the "RESERVE ACCOUNT"). The Reserve Account is established to assist with
the subsequent distribution of interest on the Certificates during the
Accumulation Period. On each Transfer Date from and after the Reserve
Account Funding Date, but prior to the termination of the Reserve Account,
the Trustee, acting pursuant to the Servicer's instructions, will apply
Excess Finance Charge Collections allocated to the Certificates (to the
extent described above under "--Excess Finance Charge Collections") to
increase the amount on deposit in the Reserve Account (to the extent such
amount is less than the Required Reserve Account Amount). The "RESERVE
ACCOUNT FUNDING DATE" will be the Transfer Date which commences no later
than three months prior to the commencement of the Accumulation Period, or
such earlier date as the Servicer may determine. The "REQUIRED RESERVE
ACCOUNT AMOUNT" for any Transfer Date on or after the Reserve Account
Funding Date will be equal to (a) 0.5% of the Invested Amount or (b) any
other amount designated by First USA; provided, that if such designation is
of a lesser amount, First USA shall have provided the Servicer, the Excess
Collateral Holders and the Trustee with evidence that the Rating Agency
Condition with respect to such designation has been satisfied and First USA
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 First USA, such designation will not cause a
Pay Out Event or an event that, after the giving of notice or the lapse of
time, would cause a Pay Out Event to occur with respect to the Offered
Series. If the Accumulation Period is shortened to one month and First USA
believes the condition described in the preceding sentence will be
satisfied, First USA intends to provide such an officer's certificate
designating that the Required Reserve Account Amount will be zero.
Provided that the Reserve Account has not terminated as described
below, all amounts on deposit in the Reserve Account on any Transfer Date
(after giving effect to any deposits to, or withdrawals from, the Reserve
Account to be made on such Transfer Date) will be invested to the following
Transfer Date by the Trustee at the direction of the Servicer in Permitted
Investments. The interest and other investment income (net of investment
expenses and losses) earned on such investments will be retained in the
Reserve Account (to the extent the amount on deposit is less than the
Required Reserve Account Amount) or deposited in the Finance Charge Account
for application as described above under "--Application of
Collections--Monthly Allocations."
On or before each Transfer Date with respect to the Accumulation
Period and on the first Transfer Date with respect to the Rapid
Amortization Period, a withdrawal will be made from the Reserve Account and
the amount of such withdrawal will be included in Class A Available Funds,
Class B Available Funds and Excess Collateral Available Funds to be applied
to the payment of interest on the Certificates for such Transfer Date in an
amount equal to the lesser of (a) the Available Reserve Account Amount with
respect to such Transfer Date and (b) the excess, if any, of (x) the sum of
(a) with respect to the Class A Certificates, the product of (i) a fraction
the numerator of which is the actual number of days in such Interest Period
and the denominator of which is 360, (ii) the Class A Certificate Rate in
effect with respect to such Interest Period and (iii) the aggregate amount
on deposit in the Principal Funding Account with respect to Class A Monthly
Principal as of the last day of the Monthly Period preceding the Monthly
Period in which such Interest Period ends, (b) with respect to the Class B
Certificates, the product of (i) a fraction the numerator of which is the
actual number of days in such Interest Period and the denominator of which
is 360, (ii) the Class B Certificate Rate in effect with respect to such
Interest Period and (iii) the aggregate amount on deposit in the Principal
Funding Account with respect to Class B Monthly Principal as of the last
day of the Monthly Period preceding the Monthly Period in which such
Interest Period ends and (c) with respect to the Excess Collateral, the
product of (i) a fraction, the numerator of which is the actual number of
days in such Interest Period and the denominator of which is 360, (ii) the
Excess Collateral Minimum Rate in effect with respect to such Interest
Period and (iii) the aggregate amount on deposit in the Principal Funding
Account with respect to Excess Collateral Monthly Principal as of the last
day of the Monthly Period preceding the Monthly Period in which such
Interest Period ends (the "COVERED AMOUNT") over (y) the Principal Funding
Investment Proceeds with respect to such Transfer Date; provided, that the
amount of such withdrawal shall be reduced to the extent that funds
otherwise would be available to be deposited in the Reserve Account on such
Transfer Date. On each Transfer Date, the amount available to be withdrawn
from the Reserve Account (the "AVAILABLE RESERVE ACCOUNT AMOUNT") will be
equal to the lesser of the amount on deposit in the Reserve Account (before
giving effect to any deposit to be made to the Reserve Account on such
Transfer Date) and the Required Reserve Account Amount for such Transfer
Date.
The Reserve Account will be terminated following the earliest to
occur of (a) the termination of the Trust pursuant to the Pooling and
Servicing Agreement, (b) the date on which the Invested Amount is paid in
full, (c) if the Accumulation Period has not commenced, the occurrence of a
Pay Out Event with respect to the Certificates and (d) if the Accumulation
Period has commenced, the earlier of the first Transfer Date with respect
to the Rapid Amortization Period and the Class A Scheduled Payment Date.
Upon the termination of the Reserve Account, all amounts on deposit therein
(after giving effect to any withdrawal from the Reserve Account on such
date as described above) will be deposited in the Finance Charge Account
and applied in accordance with the priority of payments described above
under "--Application of Collections--Monthly Allocations." Any amounts
withdrawn from the Reserve Account and distributed to the Excess Collateral
Holders as described above will not be available for distribution to the
Class A Certificateholders or the Class B Certificateholders.
COMPANION SERIES
The Series 1999-__ Certificates may be paired with one or more
other Series (each a "COMPANION SERIES"). Each Companion Series either will
be prefunded with an initial deposit to a prefunding account in an amount
up to the initial principal balance of such Companion Series, funded
primarily from the proceeds for the sale of such Companion Series, or will
have a variable principal amount. Any such prefunding account will be held
for the benefit of such Companion Series and not for the benefit of
Certificateholders. As principal is paid with respect to the Series 1999-__
Certificates, either (i) in the case of a prefunded Companion Series, an
equal amount of funds on deposit in any prefunding account for such
prefunded Companion Series will be released (which funds will be
distributed to First USA) or (ii) in the case of a Companion Series having
a variable principal amount, an interest in such variable Companion Series
in an equal or lesser amount may be sold by the Trust (and the proceeds
thereof will be distributed to First USA) and, in either case, the invested
amount in the Trust of such Companion Series will increase by a
corresponding amount. Upon payment in full of the Series 1999-__
Certificates, assuming that there have been no unreimbursed charge-offs
with respect to any related Companion Series, the aggregate invested amount
of such related Companion Series will have been increased by an amount up
to an aggregate amount equal to the Series 1999-__ Investor Interest paid
to the Series 1999-__ Certificateholders since the issuance of such
Companion Series. The issuance of a Companion Series will be subject to the
conditions described under "Description of the Certificates--Exchanges" in
the attached prospectus. There can be no assurance, however, that the terms
of any Companion Series might not have an impact on the timing or amount of
payments received by a Series 1999-__ Certificateholder. In particular, the
denominator of the Fixed/Floating Allocation Percentage may be increased
upon the occurrence of a Pay Out Event with respect to a Companion Series
resulting in a possible reduction of the percentage of collections of
Principal Receivables allocated to Series 1999-__ if such event allowed the
payment of principal at such time to the Companion Series and required
reliance by Series 1999-__ on clause (y) of the denominator of the
Fixed/Floating Allocation Percentage for Series 1999-__. See "Maturity
Considerations."
PAY OUT EVENTS
As described above, the Revolving Period will continue until the
commencement of the Accumulation Period, unless a Pay Out Event occurs
prior to such date. A "PAY OUT EVENT" refers to any of the following
events:
(a) failure on the part of the Transferor (i) to make any
payment or deposit on the date required under the Pooling and
Servicing Agreement or the offered Series Supplement (or within the
applicable grace period which will not exceed five days) or (ii) to
observe or perform in any material respect any other covenants or
agreements of the Transferor set forth in the Pooling and Servicing
Agreement or the Offered Series Supplement, which failure has a
material adverse effect on the Certificateholders and which
continues unremedied for a period of 60 days after written notice
and continues to materially and adversely affect the interests of
the Certificateholders (which determination shall be made without
regard to whether funds are available pursuant to any Enhancement)
for such period;
(b) any representation or warranty made by the Transferor in
the Pooling and Servicing Agreement or any information required to
be given by the Transferor to the Trustee to identify the Accounts
proves to have been incorrect in any material respect when made and
which 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 and continue to be materially and adversely affected for
such period; provided, however, that a Pay Out Event pursuant to
this clause (b) shall not be deemed to occur thereunder if the
Transferor has accepted reassignment of the related Receivable or
all such Receivables, if applicable, during such period (or such
longer period as the Trustee may specify) in accordance with the
provisions thereof;
(c) certain events of insolvency or receivership relating to
the Transferor;
(d) the average Portfolio Yield for any three consecutive
Monthly Periods is less than the average Base Rate for such three
consecutive Monthly Periods;
(e) the Trust becomes subject to regulation as an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended;
(f) a failure by the Transferor to convey Receivables
arising under Additional Accounts to the Trust when required by the
Pooling and Servicing Agreement; or
(g) any Servicer Default occurs which would have a material
adverse effect on the Certificateholders.
In the case of any event described in clause (a), (b) or (g) above,
a Pay Out Event will be deemed to have occurred with respect to the
Certificates only if, after any applicable grace period, either the Trustee
or Certificateholders evidencing undivided interests aggregating more than
50% of the Investor Interest, by written notice to the Transferor and the
Servicer (and to the Trustee if given by the Certificateholders) declare
that a Pay Out Event has occurred with respect to the Certificates as of
the date of such notice. In the case of any event described in clause (c)
or (e), a Pay Out Event with respect to all Series then outstanding, and in
the case of any event described in clause (d) or (f), a Pay Out Event with
respect to only the Certificates, will be deemed to have occurred without
any notice or other action on the part of the Trustee or the
Certificateholders or all certificateholders, as appropriate, immediately
upon the occurrence of such event. On the date on which a Pay Out Event is
deemed to have occurred, the Rapid Amortization Period will commence. In
such event, distributions of principal to the Certificateholders will begin
on the first Distribution Date following the month in which such Pay Out
Event occurred. If, because of the occurrence of a Pay Out Event, the Rapid
Amortization Period begins earlier than the Monthly Period preceding the
month in which the Scheduled Payment Date occurs, Certificateholders will
begin receiving distributions of principal earlier than they otherwise
would have, which may shorten the average life of the Certificates.
If pursuant to certain provisions of Federal law, the Transferor
voluntarily enters liquidation or a receiver is appointed for the
Transferor, on the day of such event the Transferor will immediately cease
to transfer Principal Receivables to the Trust and promptly give notice to
the Trustee of such event. 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. With respect to each Series outstanding at
such time, unless otherwise instructed within a specified period by
certificateholders representing undivided interests aggregating more than
50% of the invested amount of such Series (or, if such Series has more than
one Class, of each Class of such Series, and with respect to Series
required to vote as a group, all Classes of all such Series), the Trustee
will sell, dispose of, or otherwise liquidate the portion of the
Receivables allocated to the Series with respect to which all outstanding
Classes did not vote to continue the Trust in accordance with the Pooling
and Servicing Agreement in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from the sale, disposition or
liquidation of the Receivables will be treated as collections of the
Receivables and applied with respect to such Series as provided above under
"--Application of Collections." If the only Pay Out Event to occur is
either the insolvency of the Transferor or the appointment of a conservator
or receiver for the Transferor, the conservator or receiver may have the
power to prevent the early sale, liquidation or disposition of the
Receivables and the commencement of the Rapid Amortization Period. In
addition, a conservator or receiver may have the power to cause the early
sale of the Receivables and the early retirement of the Certificates. See
"Description of the Certificates--Pay Out Events" in the attached
prospectus for an additional discussion of the consequences of an
insolvency, conservatorship or receivership of the Transferor.
OPTIONAL REPURCHASE
The Invested Amount will be subject to optional repurchase by the
Transferor on any Distribution Date on or after the Distribution Date on
which the Invested Amount is reduced to an amount less than or equal to
$_________ (5% of the initial Invested Amount), if certain conditions set
forth in the Pooling and Servicing Agreement are met. The repurchase price
will be equal to the Invested Amount plus accrued and unpaid interest on
the Certificates through the last day of the Interest Period related to the
Distribution Date on which the repurchase occurs. See "Description of the
Certificates--Final Payment of Principal; Termination" in the attached
prospectus.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and
reimbursement for its expenses will take the form of the payment to it of a
monthly servicing fee in an amount equal to the sum of, with respect to all
Series, one-twelfth of the product of the applicable servicing fee
percentages with respect to each Series and the allocable portion of the
Transferor Interest and the average amount of the Principal Receivables
during each month. The monthly servicing fee will be allocated between the
Transferor Interest, the Investor Interest and the Excess Collateral
Holders' Interest and the investor interests for all other Series. The
portion of the servicing fee allocable to the Investor Interest and the
Excess Collateral Holders' Interest on each Distribution Date (the
"INVESTOR SERVICING FEE") will be equal to one-twelfth of the product of
the Servicing Fee Percentage and the sum of the Class A Adjusted Invested
Amount, the Class B Adjusted Invested Amount and the Excess Collateral
Adjusted Amount on the last day of the related Monthly Period or, in the
case of the first Distribution Date, the product of (i) the actual number
of days from and including the Closing Date to and including __________
divided by 365, (ii) the Servicing Fee Percentage and (iii) the initial
Invested Amount. "CLASS A MONTHLY SERVICING FEE," "CLASS B MONTHLY
SERVICING FEE," and "EXCESS COLLATERAL MONTHLY SERVICING FEE," mean, with
respect to any Distribution Date, one-twelfth of the product of the
Servicing Fee Percentage and the Class A Adjusted Invested Amount, Class B
Adjusted Invested Amount or Excess Collateral Adjusted Amount, as
applicable, on the last day of the preceding Monthly Period. The "SERVICING
FEE PERCENTAGE" will mean 1.5% for so long as the Bank is the Servicer or
2.0% if the Bank is no longer the Servicer. The Investor Servicing Fee will
be funded from Excess Finance Charge Collections and, with respect to a
Servicer other than the Bank, from the Investor Percentage of collections
of Finance Charge Receivables and Reallocated Principal Collections. The
remainder of the servicing fee will be allocable to the Transferor Interest
and the investor interests of other Series. Neither the Trust nor the
Certificateholders will have any obligation to pay such portion of the
servicing fee.
The Servicer will pay from its servicing compensation certain
expenses incurred in connection with servicing the Receivables including,
without limitation, payment of the fees and disbursements of the Trustee
and independent certified public accountants and other fees which are not
expressly stated in the Pooling and Servicing 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.
REPORTS TO CERTIFICATEHOLDERS
The Trustee will publish or will cause to be published following
each Distribution Date (including the Stated Series Termination Date) in a
daily newspaper in Luxembourg (expected to be the Luxemburger Wort) a
notice to the effect that the information described in "Description of the
Certificates--Reports to Certificateholders" in the attached prospectus
will be available for review at the main office of the listing agent of the
Trust in Luxembourg.
Notices to Certificateholders will be given by publication in a
daily newspaper in Luxembourg, which is expected to be the Luxemburger
Wort. In the event that Definitive Certificates are issued, notices to
Certificateholders will also be given by mail to the addresses of such
holders as they appear in the Certificate register.
LISTING AND GENERAL INFORMATION
Application has been made to list the Offered Certificates on the
Luxembourg Stock Exchange. In connection with the listing application, the
Amended and Restated Articles of Association and By-laws of the Bank, as
well as legal notice relating to the issuance of the Offered Certificates
will be deposited prior to listing with the Chief Registrar of the District
Court in Luxembourg, where copies thereof may be obtained upon request.
Once the Offered Certificates have been so listed, trading of the Offered
Certificates may be effected on the Luxembourg Stock Exchange. The Class A
Certificates and the Class B Certificates have been accepted for clearance
through the facilities of DTC, Cedelbank and Euroclear (ISIN number for the
Class A Certificates _____________, and for the Class B Certificates
_____________, and Common Code number for the Class A Certificates
_____________, and for the Class B Certificates -------------.
The Bank has taken all reasonable care to ensure that the
information contained in this prospectus supplement and the prospectus in
relation to the Bank and the Offered Certificates is true and correct in
all material respects and that in relation to the Bank and the Offered
Certificates there are no facts the omission of which would make misleading
any statement herein or in the attached prospectus, whether fact or
opinion. The Bank accepts responsibility accordingly.
The transactions contemplated in this preliminary prospectus
supplement were authorized by unanimous consent by the Bank on September
17, 1999.
Copies of the Pooling and Servicing Agreement, the Offered Series
Supplement, the annual report of independent public accountants described
in "Description of the Certificates--Evidence as to Compliance" in the
attached prospectus, the documents listed under "Where You Can Find More
Information" and the reports to Certificateholders referred to under
"Reports to Certificateholders" and "Description of the
Certificates--Reports to Certificateholders" in the attached prospectus
will be available at the office of the listing agent of the Trust in
Luxembourg, whose address is 14 Boulevard Royal, 2449 Luxembourg,
Grand-Duche de Luxembourg. Financial information regarding the Bank is
included in the consolidated financial statements of BANK ONE in BANK ONE's
Annual Report for the fiscal year ended December 31, ____, which documents
are also available without charge at the office of the listing agent in
Luxembourg.
The Certificates, the Pooling and Servicing Agreement and the
Offered Series Supplement are governed by the laws of the State of
Delaware.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and Section 4975 of the Code prohibit certain
pension, profit sharing or other employee benefit plans, individual
retirement accounts or annuities and employee annuity plans and Keogh plans
(collectively, "BENEFIT PLANS") from engaging in certain transactions
involving "plan assets" with persons that are "parties in interest" under
ERISA or "disqualified persons" under the Code (collectively, "PARTIES IN
INTEREST") with respect to the Benefit Plan. A violation of these
"prohibited transaction" rules may generate excise tax and other
liabilities under ERISA and Section 4975 of the Code for such persons,
unless a statutory, regulatory or administrative exemption is available.
Benefit Plans that are governmental plans (as defined in section 3(32) of
ERISA) and certain church plans (as defined in section 3(33) of ERISA) are
not subject to ERISA requirements.
CLASS A CERTIFICATES
A violation of the prohibited transaction rules could occur if the
Class A Certificates were to be purchased with assets of any Benefit Plan
and the Transferor, the Trustee, any underwriters of such Series or any of
their affiliates were a Party in Interest with respect to such Benefit
Plan, unless a statutory, regulatory or administrative exemption is
available or an exemption applies under a regulation (the "PLAN ASSET
REGULATION") issued by the Department of Labor ("DOL"). The Transferor, the
Trustee, any underwriters of a Series and their affiliates are likely to be
Parties in Interest with respect to many Benefit Plans. Before purchasing
the Class A Certificates, a Benefit Plan fiduciary or other Benefit Plan
investor should consider whether a prohibited transaction might arise by
reason of the relationship between the Benefit Plan and the Transferor, the
Trustee, any underwriters of such Series or any of their affiliates and
consult their counsel regarding the purchase in light of the considerations
described below and in the attached prospectus.
Under certain circumstances, the Plan Asset Regulation treats the
assets of an entity in which a Benefit Plan holds an equity interest as
"plan assets" of such Benefit Plan. Because the Class A Certificates will
represent beneficial interests in the Trust, and despite the agreement of
the Transferor and the Certificate Owners to treat the Class A Certificates
as debt instruments, the Class A Certificates are likely to be considered
equity interests in the Trust for purposes of the Plan Asset Regulation,
with the result that the assets of the Trust are likely to be treated as
"plan assets" of the investing Benefit Plans for purposes of ERISA and
Section 4975 of the Internal Revenue Code of 1986, as amended (the "CODE"),
unless the exception for "publicly-offered securities" is applicable as
described in the attached prospectus. The Underwriters anticipate that the
Class A Certificates will meet the criteria for treatment as
"publicly-offered securities" as described in the attached prospectus. No
restrictions will be imposed on the transfer of the Class A Certificates.
It is expected that the Class A Certificates will be held by at least 100
or more investors who are independent of the issuer and of one another
("INDEPENDENT INVESTORS") at the conclusion of the initial public offering
although no assurance can be given, and no monitoring or other measures
will be taken to ensure, that such condition is met. The Class A
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act and then will be timely
registered under the Exchange Act.
If the foregoing exception under the Plan Asset Regulation were not
satisfied, transactions involving the Trust and Parties in Interest with
respect to a Benefit Plan that purchases or holds Class A Certificates or
Class B Certificates might be prohibited under Section 406 of ERISA and/or
Section 4975 of the Code and result in excise tax and other liabilities
under ERISA and Section 4975 of the Code unless an exemption were
available. The five DOL class exemptions described in the attached
prospectus may not provide relief for all transactions involving the assets
of the Trust even if they would otherwise apply to the purchase of a Class
A Certificate by a Benefit Plan.
CLASS B CERTIFICATES
The Underwriters currently do not expect that the Class B
Certificates will be held by at least 100 Independent Investors and,
therefore, do not expect that such Class B Certificates will qualify as
"publicly-offered securities" under the regulation referred to in the
preceding paragraph. Accordingly, the Class B Certificates may not be
acquired or held by (a) any employee benefit plan that is subject to ERISA,
(b) any plan or other arrangement (including an individual retirement
account or Keogh plan) that is subject to Section 4975 of the Code, or (c)
any entity whose underlying assets include "plan assets" under the
regulation by reason of any such plan's investment in the entity. By its
acceptance of a Class B Certificate, each Class B Certificateholder will be
deemed to have represented and warranted that it is not and will not be
subject to the foregoing limitation.
CONSULTATION WITH COUNSEL
In light of the foregoing, fiduciaries or other persons
contemplating purchasing Class A Certificates or Class B Certificates on
behalf or with "plan assets" of any Benefit Plan should consult their own
counsel regarding whether the Trust assets represented by the Class A
Certificates or Class B Certificates would be considered "plan assets," the
consequences that would apply if the Trust's assets were considered "plan
assets," and the possibility of exemptive relief from the prohibited
transaction rules.
Finally, Benefit Plan fiduciaries and other Benefit Plan investors
should consider the fiduciary standards under ERISA or other applicable law
in the context of the Benefit Plan's particular circumstances before
authorizing an investment of a portion of the Benefit Plan's assets in the
Certificates. Accordingly, among other factors, Benefit Plan fiduciaries
and other Benefit Plan investors should consider whether the investment (i)
satisfies the diversification requirement of ERISA or other applicable law,
(ii) is in accordance with the Benefit Plan's governing instruments, and
(iii) is prudent in light of the "Risk Factors" and other factors discussed
in this supplement.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement dated __________, ____ (the "UNDERWRITING AGREEMENT") between
First USA and the underwriters named below (the "UNDERWRITERS"), First USA
has agreed to sell to the Underwriters and the Underwriters have agreed to
purchase, the principal amount of the Offered Certificates offered hereby
if any of the Offered Certificates are not purchased.
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
UNDERWRITERS CLASS A CERTIFICATES CLASS B CERTIFICATES
- ------------ -------------------- --------------------
$ $
-------------- -----------------
Total $ $
============== =================
The price to public, Underwriters' discounts and commissions, the
concessions that the Underwriters may allow to certain dealers, and the
discounts that such dealers may reallow to certain other dealers, each
expressed as a percentage of the principal amount of the Class A and Class
B Certificates, shall be as follows:
UNDERWRITING
PRICE TO DISCOUNT AND
PUBLIC COMMISSION
-------- ------------
Class A Certificates % %
Class B Certificates % %
After the offering is completed, First USA will receive the
proceeds, after deduction of the underwriting and other expenses, listed
below:
<TABLE>
<CAPTION>
PROCEEDS TO TRANSFEROR UNDERWRITING
PROCEEDS TO (AS % OF THE PRINCIPAL DISCOUNTS AND
TRANSFEROR AMOUNT OF THE CERTIFICATES) CONCESSIONS
----------- -------------------------- ------------
<S> <C> <C>
Class A Certificates $ % $
Class B Certificates $ % $
</TABLE>
After the initial public offering, the public offering price and
other selling terms may be changed by the Underwriters. Additional offering
expenses are estimated to be $________.
The Underwriters may engage in over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty bids
with respect to the Offered Certificates in accordance with Regulation M
under the Exchange Act. Over-allotment transactions involve syndicate sales
in excess of the offering size, which create a syndicate short position.
Stabilizing transactions permit bids to purchase the Offered Certificates
so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchases of the Offered
Certificates in the open market after the distribution has been completed
in order to cover syndicate short positions. Penalty bids permit the
Underwriters to reclaim a selling concession from a syndicate member when
the Offered Certificates originally sold by such syndicate member are
purchased in a syndicate covering transaction to cover syndicate short
positions. Such over-allotment transactions, stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the
Offered Certificates to be higher than it would otherwise be in the absence
of such transactions. Neither the Transferor nor the Underwriters represent
that the Underwriters will engage in any such transactions or that such
transactions, once commenced, will not be discontinued without notice at
any time.
The Transferor has been advised by each Underwriter that it
proposes initially to offer the Class A Certificates to the public at the
price set forth on the cover page hereof and to certain dealers at such
price less concessions not in excess of 0.____% of the principal amount of
the Class A Certificates. Each Underwriter may allow, and such dealers may
reallow, concessions not in excess of 0.081% of the principal amount of the
Class A Certificates to certain brokers and dealers. The Transferor has
been advised by each Underwriter that it proposes initially to offer the
Class B Certificates to the public at the price set forth on the cover page
hereof and to certain dealers at such price less concessions not in excess
of 0.____% of the principal amount of the Class B Certificates. Each
Underwriter may allow, and such dealers may reallow, concessions not in
excess of 0.____% of the principal amount of the Class B Certificates to
certain brokers and dealers. After the initial public offering, the public
offering price and other selling terms may be changed bu the Underwriters.
Each Underwriter has represented and agreed that (a) it has only
issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Offered
Certificates to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996 (as amended) or who is a person to whom the document may otherwise
lawfully be issued or passed on, (b) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 and other
applicable laws and regulations with respect to anything done by it in
relation to the Offered Certificates in, from or otherwise involving the
United Kingdom and (c) if the Underwriter is an authorized person under the
Financial Services Act 1986, it has only promoted and will only promote (as
that term is defined in Regulation 1.02 of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991) to any person in the
United Kingdom the scheme described herein if that person is of a kind
described either in Section 76(2) of the Financial Services Act 1986 or in
Regulation 1.04 of the Financial Services (Promotion of Unregulated
Schemes) Regulations 1991.
The Transferor will indemnify each Underwriter against certain
liabilities, including liabilities under the Securities Act or contribute
to payments the Underwriter may be required to make in respect thereof.
Each Underwriter has agreed to reimburse the Transferor for certain
expenses incurred in connection with the issuance and distribution of the
Offered Certificates.
In the ordinary course of business, each Underwriter and its
affiliates have engaged and may engage in investment banking and/or
commercial banking transactions with the Transferor, its affiliates and the
Trust. In addition, each Underwriter may from time to time take positions
in the Certificates and other certificates issued by the Trust.
Banc One Capital Markets, Inc. ("BOCM") is an affiliate of the
Transferor. Any obligations of BOCM are the sole obligations of BOCM and do
not create any obligations on the part of any of its affiliates.
BOCM may from time to time purchase or acquire a position in the
Certificates and may, at its option, hold or resell such Certificates. BOCM
expects to offer and sell previously issued Certificates in the course of
its business respective as a broker-dealer. BOCM may act as a principal or
agent in such transactions. This supplement and the attached prospectus may
be used by BOCM and its successors 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.
EXCHANGE LISTING
We have applied to list the Certificates on the Luxembourg Stock
Exchange. We cannot guaranty that the application for the listing will be
accepted. You should consult with Banque de Luxembourg, the Luxembourg
listing agent for the Certificates, 14 Boulevard Royal, 2449 Luxembourg,
Grand-Duche de Luxembourg, phone number (352) 499243063, to determine
whether or not the Certificates are listed on the Luxembourg Stock
Exchange.
ANNEX I
OTHER SERIES
The Trust has previously issued thirty-eight other Series that the
Transferor anticipates will remain outstanding on the Closing Date. The
table below sets forth the principal characteristics of such Series: Series
1994-4, Series 1994-6, Series 1994-7, Series 1994-8, Series 1995-2, Series
1995-5, Series 1995-6, Series 1996-1, Series 1996-2, Series 1996-4, Series
1996-6, Series 1996-7, Series 1996-8, Series 1997-1, Series 1997-2, Series
1997-3, Series 1997-4, Series 1997-5, Series 1997-6, Series 1997-7, Series
1997-8, Series 1997-9, Series 1997-10, Series 1998-1, Series 1998-2, Series
1998-3, Series 1998-4, Series 1998-5, Series 1998-6, Series 1998-7, Series
1998-8, Series 1998-9, Series 1999-1, Series 1999-2, Series 1999-3, Series
1999-4, Series 1999-A and Series 1999-B. For more specific information with
respect to any Series, any prospective investor should contact the Servicer
at (214) 849-3700. The Servicer will provide, without charge, to any
prospective purchaser of the Certificates, a copy of the disclosure
documents for any previous publicly issued Series.
<TABLE>
<CAPTION>
SERIES 1994-4
<S> <C>
1. Class A Certificates
Initial Invested Amount $726,450,000
Certificate Rate One Month LIBOR + 0.37%
Controlled Amortization Amount $60,537,500
Commencement of Controlled Amortization Period November 1, 2000
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Collateral Invested Amount $87,000,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date November 15, 2001
Scheduled Series Termination Date August 15, 2003
Series Issuance Date June 9, 1994
2. Class B Certificates
Initial Invested Amount $56,550,000
Certificate Rate One Month LIBOR + 0.58%
Controlled Amortization Amount $56,550,000
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Collateral Invested Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1994-6
1. Class A Certificates
Initial Invested Amount $750,000,000
Certificate Rate One Month LIBOR + 0.35%
Controlled Amortization Amount $62,500,000
Commencement of Controlled Amortization Period January 1, 2001
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Collateral Invested Amount $89,820,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date January 15, 2002
Scheduled Series Termination Date October 15, 2003
Series Issuance Date August 24, 1994
2. Class B Certificates
Initial Invested Amount $58,380,000
Certificate Rate One Month LIBOR + 0.58%
Controlled Amortization Amount $58,380,000
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Collateral Invested Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1994-7
1. Class A Certificates
Initial Invested Amount $750,000,000
Certificate Rate One Month LIBOR + 0.18%
Controlled Accumulation Amount
(subject to adjustment) $750,000,000
Commencement of Controlled Accumulation
Period (subject to adjustment) September 30, 1999
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Collateral Invested Amount $94,880,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date November 15, 1999
Scheduled Series Termination Date June 15, 2002
Series Issuance Date November 8, 1994
2. Class B Certificates
Initial Invested Amount $58,735,000
Certificate Rate One Month LIBOR + 0.40%
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Collateral Invested Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1994-8
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate Three Month LIBOR + 0.24%
Controlled Accumulation Amount
(subject to adjustment) $41,666,667
Commencement of Controlled Accumulation Period
(subject to adjustment) October 31, 2000
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Collateral Invested Amount $63,253,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date November 15, 2001
Scheduled Series Termination Date June 15, 2004
Series Issuance Date November 8, 1994
2. Class B Certificates
Initial Invested Amount $39,157,000
Certificate Rate Three Month LIBOR + 0.45%
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Collateral Invested Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1995-2
1. Class A Certificates
Initial Invested Amount $660,000,000
Certificate Rate One Month LIBOR + 0.24%
Controlled Accumulation Amount
(subject to adjustment) $55,000,000
Commencement of Controlled Accumulation Period
(subject to adjustment) February 28, 2001
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Collateral Invested Amount $83,500,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date March 15, 2002
Scheduled Series Termination Date October 15, 2004
Series Issuance Date March 1, 1995
2. Class B Certificates
Initial Invested Amount $51,700,000
Certificate Rate One Month LIBOR + 0.425%
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Collateral Invested Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1995-5
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.17%
Controlled Accumulation Amount
(subject to adjustment) $41,666,667
Commencement of Controlled Accumulation Period
(subject to adjustment) August 31, 1999
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Collateral Invested Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date September 15, 2000
Scheduled Series Termination Date April 15, 2003
Series Issuance Date September 14, 1995
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.29%
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Collateral Invested Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1995-6
1. Class A Certificates
Initial Invested Amount $1,245,000,000
Certificate Rate One Month LIBOR + 0.17%
Controlled Accumulation Amount
(subject to adjustment) $103,750,000
Commencement of Controlled Accumulation Period
(subject to adjustment) October 31, 1999
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Collateral Invested Amount $142,500,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date November 10, 2000
Scheduled Series Termination Date July 10, 2003
Series Issuance Date December 7, 1995
2. Class B Certificates
Initial Invested Amount $112,500,000
Certificate Rate One Month LIBOR + 0.33%
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Collateral Invested Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1996-1
1. Class A Certificates
Initial Invested Amount $750,000,000
Certificate Rate One Month LIBOR + 0.16%
Controlled Accumulation Amount
(subject to adjustment) $75,301,250
Commencement of Controlled Accumulation Period
(subject to adjustment) February 29, 2000
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $85,845,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date March 15, 2001
Scheduled Series Termination Date November 15, 2003
Series Issuance Date March 6, 1996
2. Class B Certificates
Initial Invested Amount $67,770,000
Certificate Rate One Month LIBOR + 0.29%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1996-2
1. Class A Certificates
Initial Invested Amount $600,000,000
Certificate Rate One Month LIBOR + 0.18%
Controlled Accumulation Amount
(subject to adjustment) $60,250,000
Commencement of Controlled Accumulation Period
(subject to adjustment) May 31, 2002
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $68,700,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date June 10, 2003
Scheduled Series Termination Date February 10, 2006
Series Issuance Date June 4, 1996
2. Class B Certificates
Initial Invested Amount $54,300,000
Certificate Rate One Month LIBOR + 0.33%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1996-4
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.19%
Controlled Accumulation Amount
(subject to adjustment) $50,200,834
Commencement of Controlled Accumulation Period
(subject to adjustment) July 31, 2005
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date August 10, 2006
Scheduled Series Termination Date April 10, 2009
Series Issuance Date August 6, 1996
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.37%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1996-6
1. Class A Certificates
Initial Invested Amount $862,650,000
Certificate Rate One Month LIBOR + 0.14%
Controlled Accumulation Amount
(subject to adjustment) $86,616,667
Commencement of Controlled Accumulation Period
(subject to adjustment) October 31, 2002
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $98,750,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date November 10, 2003
Scheduled Series Termination Date July 10, 2006
Series Issuance Date November 13, 1996
2. Class B Certificates
Initial Invested Amount $78,000,000
Certificate Rate One Month LIBOR + 0.35%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1996-7
1. Class A Certificates
Initial Invested Amount $483,060,000
Certificate Rate One Month LIBOR + 0.095%
Controlled Accumulation Amount
(subject to adjustment) $48,500,000
Commencement of Controlled Accumulation Period
(subject to adjustment) January 1, 2000
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $55,290,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date February 10, 2000
Scheduled Series Termination Date October 10, 2002
Series Issuance Date December 11, 1996
2. Class B Certificates
Initial Invested Amount $43,650,000
Certificate Rate One Month LIBOR + 0.29%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1996-8
1. Class A Certificates
Initial Invested Amount $400,000,000
Certificate Rate One Month LIBOR + 0.12%
Controlled Accumulation Amount
(subject to adjustment) $40,166,667
Commencement of Controlled Accumulation Period
(subject to adjustment) December 31, 2002
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $45,800,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date January 10, 2004
Scheduled Series Termination Date September 10, 2006
Series Issuance Date December 11, 1996
2. Class B Certificates
Initial Invested Amount $36,200,000
Certificate Rate One Month LIBOR + 0.34%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-1
1. Class A Certificates
Initial Invested Amount $750,000,000
Certificate Rate One Month LIBOR + 0.10%
Controlled Accumulation Amount
(subject to adjustment) $75,301,250
Commencement of Controlled Accumulation Period
(subject to adjustment) January 31, 2003
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $85,845,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date February 17, 2004
Scheduled Series Termination Date October 17, 2006
Series Issuance Date February 4, 1997
2. Class B Certificates
Initial Invested Amount $67,770,000
Certificate Rate One Month LIBOR + 0.31%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-2
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.13%
Controlled Accumulation Amount
(subject to adjustment) $50,200,834
Commencement of Controlled Accumulation Period
(subject to adjustment) April 30, 2003
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date May 17, 2004
Scheduled Series Termination Date January 17, 2007
Series Issuance Date May 8, 1997
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.33%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-3
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.11%
Controlled Accumulation Amount
(subject to adjustment) $50,200,834
Commencement of Controlled Accumulation Period
(subject to adjustment) May 31, 2001
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date June 17, 2002
Scheduled Series Termination Date February 17, 2005
Series Issuance Date June 10, 1997
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.29%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-4
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.21%
Controlled Accumulation Amount
(subject to adjustment) $50,200,834
Commencement of Controlled Accumulation Period
(subject to adjustment) May 31, 2006
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date June 17, 2007
Scheduled Series Termination Date February 17, 2010
Series Issuance Date June 10, 1997
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.41%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-5
1. Class A Certificates
Initial Invested Amount $650,000,000
Certificate Rate One Month LIBOR + 0.14%
Controlled Accumulation Amount
(subject to adjustment) $65,260,834
Commencement of Controlled Accumulation Period
(subject to adjustment) July 31, 2003
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $74,395,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date August 17, 2004
Scheduled Series Termination Date April 17, 2007
Series Issuance Date August 7, 1997
2. Class B Certificates
Initial Invested Amount $58,735,000
Certificate Rate One Month LIBOR + 0.33%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-6
1. Class A Certificates
Initial Invested Amount $1,300,000,000
Certificate Rate 6.42%
Controlled Accumulation Amount
(subject to adjustment) $130,521,667
Commencement of Controlled Accumulation Period
(subject to adjustment) June 30, 2001
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $148,790,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date July 17, 2002
Scheduled Series Termination Date March 17, 2005
Series Issuance Date September 9, 1997
2. Class B Certificates
Initial Invested Amount $117,470,000
Certificate Rate 6.58%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-7
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.098%
Controlled Accumulation Amount
(subject to adjustment) $50,200,834
Commencement of Controlled Accumulation Period
(subject to adjustment) August 31, 2003
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date September 17, 2004
Scheduled Series Termination Date May 17, 2007
Series Issuance Date September 9, 1997
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.30%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-8
1. Class A Certificates
Initial Invested Amount $780,000,000
Certificate Rate One Month LIBOR + 0.15%
Controlled Accumulation Amount
(subject to adjustment) $78,313,334
Commencement of Controlled Accumulation Period
(subject to adjustment) August 31, 2006
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $89,278,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date September 17, 2007
Scheduled Series Termination Date March 17, 2010
Series Issuance Date September 23, 1997
2. Class B Certificates
Initial Invested Amount $70,482,000
Certificate Rate One Month LIBOR + 0.36%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-9
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.06%
Controlled Accumulation Amount
(subject to adjustment) $50,200,834
Commencement of Controlled Accumulation Period
(subject to adjustment) September 30, 2003
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificate Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date October 17, 2004
Scheduled Series Termination Date June 17, 2007
Series Issuance Date October 9, 1997
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.33%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1997-10
1. Class A Certificates
Initial Invested Amount $700,000,000
Certificate Rate One Month LIBOR + 0.09%
Controlled Accumulation Amount
(subject to adjustment) $70,281,167
Commencement of Controlled Accumulation Period
(subject to adjustment) December 31, 1999
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial CIA Certificates Amount $80,121,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date January 17, 2001
Scheduled Series Termination Date September 17, 2003
Series Issuance Date December 23, 1997
2. Class B Certificates
Initial Invested Amount $63,253,000
Certificate Rate One Month LIBOR + 0.27%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial CIA Certificate Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-1
1. Class A Certificates
Initial Invested Amount $700,000,000
Certificate Rate One Month LIBOR + 0.08%
Controlled Accumulation Amount
(subject to adjustment) $70,281,167
Commencement of Controlled Accumulation Period
(subject to adjustment) April 30, 2002
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $80,121,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date May 18, 2003
Scheduled Series Termination Date January 18, 2006
Series Issuance Date May 21, 1998
2. Class B Certificates
Initial Invested Amount $63,253,000
Certificate Rate One Month LIBOR + 0.25%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-2
1. Class A Certificates
Initial Invested Amount $579,000,000
Certificate Rate One Month LIBOR - 0.125%
Controlled Accumulation Amount
(subject to adjustment) $58,132,667
Commencement of Controlled Accumulation Period
(subject to adjustment) May 31, 2007
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $66,272,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date June 18, 2008
Scheduled Series Termination Date February 18, 2011
Series Issuance Date May 21, 1998
2. Class B Certificates
Initial Invested Amount $52,320,000
Certificate Rate One Month LIBOR - 0.125%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-3
1. Class A Certificates
Initial Invested Amount $800,000,000
Certificate Rate One Month LIBOR + 0.06%
Controlled Accumulation Amount
(subject to adjustment) $80,321,334
Commencement of Controlled Accumulation Period
(subject to adjustment) May 31, 2000
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $91,567,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date June 18, 2001
Scheduled Series Termination Date February 18, 2004
Series Issuance Date June 25, 1998
2. Class B Certificates
Initial Invested Amount $72,289,000
Certificate Rate One Month LIBOR + 0.22%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-4
1. Class A Certificates
Initial Invested Amount $700,000,000
Certificate Rate One Month LIBOR + 0.12%
Controlled Accumulation Amount
(subject to adjustment) $70,281,167
Commencement of Controlled Accumulation Period
(subject to adjustment) June 30, 2004
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $80,121,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date July 18, 2005
Scheduled Series Termination Date March 18, 2008
Series Issuance Date July 22, 1998
2. Class B Certificates
Initial Invested Amount $63,253,000
Certificate Rate One Month LIBOR + 0.30%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-5
1. Class A Certificates
Initial Invested Amount $650,000,000
Certificate Rate One Month LIBOR + 0.10%
Controlled Accumulation Amount
(subject to adjustment) $65,260,834
Commencement of Controlled Accumulation Period
(subject to adjustment) July 31, 2002
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $74,395,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date August 18, 2003
Scheduled Series Termination Date April 18, 2006
Series Issuance Date August 27, 1998
2. Class B Certificates
Initial Invested Amount $58,735,000
Certificate Rate One Month LIBOR + 0.28%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-6
1. Class A Certificates
Initial Invested Amount $800,000,000
Certificate Rate One Month LIBOR + 0.16%
Controlled Accumulation Amount
(subject to adjustment) $80,321,334
Commencement of Controlled Accumulation Period
(subject to adjustment) July 31, 2007
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $91,567,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date August 18, 2008
Scheduled Series Termination Date April 18, 2011
Series Issuance Date August 27, 1998
2. Class B Certificates
Initial Invested Amount $72,289,000
Certificate Rate One Month LIBOR + 0.36%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-7
1. Class A Certificates
Initial Invested Amount $750,000,000
Certificate Rate One Month LIBOR + 0.10%
Controlled Accumulation Amount
(subject to adjustment) $75,301,250
Commencement of Controlled Accumulation Period
(subject to adjustment) July 31, 2000
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $85,845,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date August 18, 2001
Scheduled Series Termination Date April 18, 2004
Series Issuance Date September 17, 1998
2. Class B Certificates
Initial Invested Amount $67,770,000
Certificate Rate One Month LIBOR + 0.30%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-8
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.15%
Controlled Accumulation Amount
(subject to adjustment) $50,200,833
Commencement of Controlled Accumulation Period
(subject to adjustment) August 31, 2004
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date September 19, 2005
Scheduled Series Termination Date May 19, 2008
Series Issuance Date September 17, 1998
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.41%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1998-9
1. Class A Certificates Initial Invested Amount $650,000,000
Certificate Rate 5.28%
Controlled Accumulation Amount
(subject to adjustment) $62,260,584
Commencement of Controlled Accumulation Period
(subject to adjustment) December 31, 2002
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $52,299,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date January 20, 2004
Scheduled Series Termination Date September 18, 2006
Series Issuance Date December 22, 1998
2. Class B Certificates
Initial Invested Amount $44,828,000
Certificate Rate 5.55%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1999-1
1. Class A Certificates
Initial Invested Amount $1,000,000,000
Certificate Rate One Month LIBOR + 0.15%
Controlled Accumulation Amount
(subject to adjustment) $100,401,584
Commencement of Controlled Accumulation Period
(subject to adjustment) January 31, 2003
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $114,458,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date February 19, 2004
Scheduled Series Termination Date October 19, 2006
Series Issuance Date February 24, 1999
2. Class B Certificates
Initial Invested Amount $90,361,000
Certificate Rate One Month LIBOR + 0.40%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1999-2
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.19%
Controlled Accumulation Amount
(subject to adjustment) $50,200,834
Commencement of Controlled Accumulation Period
(subject to adjustment) January 31, 2005
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $57,230,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date February 21, 2006
Scheduled Series Termination Date October 20, 2008
Series Issuance Date February 24, 1999
2. Class B Certificates
Initial Invested Amount $45,180,000
Certificate Rate One Month LIBOR + 0.44%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1999-3
1. Class A Certificates
Initial Invested Amount $700,000,000
Certificate Rate One Month LIBOR + 0.15%
Controlled Accumulation Amount
(subject to adjustment) $69,444,500
Commencement of Controlled Accumulation Period
(subject to adjustment) March 31, 2003
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $79,167,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date April 19, 2004
Scheduled Series Termination Date December 19, 2006
Series Issuance Date May 4, 1999
2. Class B Certificates
Initial Invested Amount $54,167,000
Certificate Rate One Month LIBOR + 0.36%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1999-4
1. Class A Certificates
Initial Invested Amount $500,000,000
Certificate Rate One Month LIBOR + 0.09%
Controlled Accumulation Amount
(subject to adjustment) $49,603,250
Commencement of Controlled Accumulation Period
(subject to adjustment) April 30, 2001
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Initial Excess Collateral Amount $56,548,000
Other Enhancement Subordination of Class B Certificates
Expected Final Payment Date May 20, 2000
Scheduled Series Termination Date January 19, 2005
Series Issuance Date May 26, 1999
2. Class B Certificates
Initial Invested Amount $38,691,000
Certificate Rate One Month LIBOR + 0.30%
Controlled Accumulation Amount
(subject to adjustment) Same as above for Class A Certificates
Commencement of Controlled Accumulation Period
(subject to adjustment) Same as above for Class A Certificates
Annual Servicing Fee Percentage Same as above for Class A Certificates
Initial Excess Collateral Amount Same as above for Class A Certificates
Expected Final Payment Date Same as above for Class A Certificates
Scheduled Series Termination Date Same as above for Class A Certificates
Series Issuance Date Same as above for Class A Certificates
SERIES 1999-A
Initial Invested Amount $450,000,000
Invested Amount as of _______, 1999 $___________
Maximum Permitted Invested Amount $750,000,000
Certificate Rate Commercial Paper Index
Commencement of Amortization Period June 2002
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Scheduled Series Termination Date January 2005
Series Issuance Date June 28, 1999
SERIES 1999-B
Initial Invested Amount $550,000,000
Invested Amount as of _______, 1999 $____________
Maximum Permitted Invested Amount $550,000,000
Certificate Rate Commercial Paper Index
Commencement of Amortization Period June 2002
Annual Servicing Fee Percentage 1.5%, subject to increase to 2.0%
Scheduled Series Termination Date January 2005
Series Issuance Date June 28, 1999
ANNEX II
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES
Except in certain limited circumstances, the globally offered First
USA Credit Card Master Trust Asset Backed Certificates, Series 1999-__,
Class A and Class B (the "GLOBAL SECURITIES") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedelbank
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 Cedelbank and Euroclear will be conducted in the
ordinary way in accordance with their normal rules and operating procedures
and in accordance with conventional eurobond practice (i.e., seven calendar
day settlement).
Secondary market trading between investors holding Global
Securities through DTC will be conducted according to the rules and
procedures applicable to U.S. corporate debt obligations and prior First
USA Credit Card Master Trust issues.
Secondary cross-market trading between Cedelbank Customers or
Euroclear Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of
Cedelbank and Euroclear (in such capacity) and as Cedelbank Customers or
Euroclear Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
Initial Settlement. All Global Securities will be held in
book-entry form by DTC in the name of Cede & Co. as nominee of DTC.
Investors' interests in the Global Securities will be represented through
financial institutions acting on their behalf as direct and indirect
Participants. As a result, Cedelbank and Euroclear will hold positions on
behalf of their customers and participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to U.S. corporate debt
obligations and prior First USA Credit Card Master Trust issues. 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
Cedelbank or Euroclear accounts will follow the settlement procedures
applicable to conventional eurobonds, except that there will be no
temporary global security and no "lock-up" or restricted period. Global
Securities will be credited to the securities custody accounts on the
settlement date against payment in same-day funds.
Secondary Market Trading. Since the purchaser determines the place
of delivery, it is important to establish at the time of the trade where
both the purchaser's and seller's accounts are located to ensure that
settlement can be made on the desired value date.
Trading between DTC Participants. Secondary market trading between
DTC Participants will be settled using the procedures applicable to prior
First USA Credit Card Master Trust issues in same-day funds.
Trading between Cedelbank Customers and/or Euroclear Participants.
Secondary market trading between Cedelbank Customers or Euroclear
Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser.
When Global Securities are to be transferred from the account of a DTC
Participant to the accounts of a Cedelbank Customer or a Euroclear
Participant, the purchaser will send instructions to Cedelbank or Euroclear
through a Cedelbank Customer or Euroclear Participant at least one business
day prior to settlement. Cedelbank or Euroclear, as the case may be, will
instruct their respective Depositaries 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, on the basis of actual days elapsed and a 360 day
year. Payment will then be made by the respective Depositary to the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to
the respective clearing system and by the clearing system, in accordance
with its usual procedures, to the Cedelbank Customer'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 Cedelbank or Euroclear cash debit will be valued instead as of
the actual settlement date.
Cedelbank Customers and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within
Cedelbank or Euroclear. Under this approach, they may take on credit
exposure to Cedelbank or Euroclear until the Global Securities are credited
to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank Customers or Euroclear Participants can elect not
to pre-position funds and allow that credit line to be drawn upon the
finance settlement. Under this procedure, Cedelbank Customers 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 Cedelbank Customer's or Euroclear
Participant's particular cost of funds.
Since the settlement is taking place during New York business
hours, DTC Participants can employ their usual procedures for sending
Global Securities to the respective Depositary for the benefit of Cedelbank
Customers or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between
two DTC Participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser.
Due to time zone differences in their favor, Cedelbank Customers and
Euroclear Participants may employ their customary procedures for
transactions in which Global Securities are to be transferred by the
respective clearing system, through the respective Depositary, to a DTC
Participant. The seller will send instructions to Cedelbank or Euroclear
through a Cedelbank Customer or Euroclear Participant at least one business
day prior to settlement. In these cases, Cedelbank or Euroclear will
instruct their respective Depositary, as appropriate, to deliver the bonds
to the DTC Participant's account against payment. Payment will include
interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date on the basis of
actual days elapsed and a 360 day year. The payment will then be reflected
in the account of the Cedelbank Customer or Euroclear Participant the
following day, and receipt of the cash proceeds in the Cedelbank Customer's
or Euroclear Participant's account would be back-valued to the value date
(which would be the preceding day, when settlement occurred in New York).
Should the Cedelbank Customer 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 Cedelbank
Customer's or Euroclear Participant's account would instead be valued as of
the actual settlement date.
Finally, day traders that use Cedelbank or Euroclear and that
purchase Global Securities from DTC Participants for delivery to Cedelbank
Customers or Euroclear Participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken.
At least three techniques should be readily available to eliminate this
potential problem:
(a) borrowing through Cedelbank or Euroclear for one day
(until the purchase side of the day trade is reflected in their
Cedelbank or Euroclear accounts) in accordance with the clearing
system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would
give the Global Securities sufficient time to be reflected in their
Cedelbank or Euroclear accounts in order to settle the sale side of
the trade; or
(c) staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the
Participant is at least one day prior to the value date for the
sale to the Cedelbank Customer or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons, unless (i) each clearing system,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business in the chain of intermediaries
between such beneficial owner and the U.S. entity required to withhold tax
complies with applicable certification requirements and (ii) such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Certificates that are non-U.S. Persons can obtain a complete exemption from
the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must
be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be imposed at
that rate unless the filer alternatively files Form W-8. Form 1001 may be
filed by the Certificate Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner
of a Global Security or, in the case of a Form 1001 or a Form 4224 filer,
his agent, files by submitting the appropriate form to the person through
whom it holds (the clearing agency, in the case of persons holding directly
on the books of the clearing agency).
The procedures described above would be changed under new Treasury
regulations which are effective for payments made after December 31, 2000.
The new Treasury regulations would combine several existing forms,
including Form W-8, Form 4224 and Form 1001, into a single, expanded Form
W-8. The new Forms W-8 are Form W-8BEN, Certificate of Foreign Status of
Beneficial Owner for U.S. Tax Withholding, that replaces the existing Form
W-8; Form W-8ECI, Certificate of Foreign Person's Claim for Exemption From
Withholding on Income Effectively Connected With the Conduct Of a Trade or
Business in the United States, that replaces the existing Form 4224;
Revised Form W-8 used as a substitute for existing Form 1001 to secure
treaty benefits; Form W-8EXP, Certificate of Foreign Government Or Other
Foreign Organization for United States Tax Withholding; and Form W-8IMY,
Certificate of Foreign Intermediary, Foreign Partnership, or Certain U.S.
Branches for U.S. Tax Withholding.
Certifications currently made on Forms W-8, 4224 or 1001 remain
valid until they expire under the existing regulations, but not after
December 31, 2000, and a beneficial owner of a Global Certificate would
have to timely sign the appropriate W-8 Form to avoid withholding at a rate
of 30% in respect of payments of interest (including original issue
discount) made after December 31, 2000, or after the expiration of the
current certificate.
The term "U.S. PERSON" means (i) a citizen or resident of the
United States, (ii) a corporation or partnership organized in or under the
laws of the United States or any political subdivision thereof, (iii) an
estate the income of which is includible in gross income for United States
tax purposes, regardless of its source or (iv) a trust if a U.S. court is
able to exercise primary supervision over the administration of such trust
and one or more U.S. persons have the authority to control all substantial
decisions of such trust. This summary does not deal with all aspects of
U.S. Federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of
the Global Securities.
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
TERM PAGE
- ---- ----
Accounts..................................................................S-15
Accumulation Period.......................................................S-29
Accumulation Period Length................................................S-29
Accumulation Shortfall....................................................S-40
Addition Date.............................................................S-31
Amortization Period.......................................................S-29
Amortization Periods......................................................S-29
Available Investor Principal Collections..................................S-28
Available Reserve Account Amount..........................................S-44
Average Principal Balance.................................................S-31
BANC ONE............................................................S-15, S-16
Bank......................................................................S-15
BANK ONE..................................................................S-15
Bank Portfolio............................................................S-16
base rate............................................................S-6, S-24
Benefit Plans.............................................................S-47
BOCM......................................................................S-50
Calculation Date..........................................................S-35
Certificate Rate..........................................................S-27
Certificateholders........................................................S-15
Certificates..............................................................S-15
Chevy Chase...............................................................S-15
Class A Account Percentage................................................S-36
Class A Adjusted Invested Amount..........................................S-32
Class A Available Funds...................................................S-36
Class A Certificate Rate..................................................S-27
Class A Certificateholders................................................S-15
Class A Certificateholders' Interest......................................S-31
Class A Certificates......................................................S-15
Class A Fixed/Floating Allocation Percentage..............................S-31
Class A Floating Allocation Percentage....................................S-31
Class A Invested Amount...................................................S-32
Class A Investor Charge-Off...............................................S-42
Class A Investor Default Amount...........................................S-42
Class A Monthly Interest..................................................S-36
Class A Monthly Principal.................................................S-39
Class A Monthly Servicing Fee.............................................S-46
Class A Required Amount...................................................S-33
Class A Scheduled Payment Date............................................S-23
Class B Account Percentage................................................S-36
Class B Adjusted Invested Amount..........................................S-32
Class B Available Funds...................................................S-36
Class B Certificate Rate..................................................S-27
Class B Certificateholders................................................S-15
Class B Certificateholders' Interest......................................S-31
Class B Certificates......................................................S-15
Class B Fixed/Floating Allocation Percentage..............................S-31
Class B Floating Allocation Percentage....................................S-31
Class B Invested Amount...................................................S-32
Class B Investor Charge-Off...............................................S-42
Class B Investor Default Amount...........................................S-42
Class B Monthly Interest..................................................S-36
Class B Monthly Principal.................................................S-40
Class B Monthly Servicing Fee.............................................S-46
Class B Principal Commencement Date.......................................S-30
Class B Required Amount...................................................S-33
Class B Scheduled Payment Date............................................S-23
Closing Date..............................................................S-27
Code......................................................................S-47
Companion Series..........................................................S-44
Controlled Accumulation Amount............................................S-40
Controlled Deposit Amount.................................................S-23
Covered Amount............................................................S-44
Cut-Off Date..............................................................S-19
Default Amount............................................................S-41
Distribution Date.........................................................S-27
DOL ......................................................................S-47
employee benefit plans.....................................................S-7
ERISA.....................................................................S-47
ERISA Considerations.......................................................S-7
Excess Collateral.........................................................S-15
Excess Collateral Account Percentage......................................S-37
Excess Collateral Adjusted Amount.........................................S-32
Excess Collateral Amount..................................................S-32
Excess Collateral Available Funds.........................................S-36
Excess Collateral Charge-Off..............................................S-42
Excess Collateral Default Amount..........................................S-42
Excess Collateral Fixed/Floating Allocation
Percentage............................................................S-31
Excess Collateral Floating Allocation Percentage..........................S-31
Excess Collateral Holders.................................................S-15
Excess Collateral Holders' Interest.......................................S-31
Excess Collateral Minimum Monthly Interest................................S-39
Excess Collateral Minimum Rate............................................S-39
Excess Collateral Monthly Principal.......................................S-40
Excess Collateral Monthly Servicing Fee...................................S-46
Excess Collateral Scheduled Payment Date..................................S-28
Excess Finance Charge Collections.........................................S-36
Excess Principal Collections..............................................S-30
Finance Charge Deficit....................................................S-34
First Commerce............................................................S-15
First USA.................................................................S-15
Fixed/Floating Allocation Percentage......................................S-31
GE Capital................................................................S-15
Global Securities.......................................................A-II-1
Independent Investors.....................................................S-47
Interest Period...........................................................S-27
Invested Amount...........................................................S-32
Investor Default Amount...................................................S-42
Investor Interest.........................................................S-31
Investor Percentage.......................................................S-31
Investor Servicing Fee....................................................S-46
LIBOR.....................................................................S-27
LIBOR Determination Date..................................................S-27
London business day.......................................................S-27
loss percentage............................................................S-9
Monthly Period............................................................S-31
Offered Certificates......................................................S-15
Offered Series Supplement.................................................S-15
Parties in Interest.......................................................S-47
Pay Out Event.............................................................S-44
payment rate...............................................................S-9
Percentage Allocation.....................................................S-34
Periodic Finance Charges..................................................S-16
plan.......................................................................S-7
Plan Asset Regulation.....................................................S-47
plan assets................................................................S-7
Pooling and Servicing Agreement...........................................S-15
Portfolio Yield...........................................................S-24
Predecessor Bank..........................................................S-15
Principal Funding Account.................................................S-43
Principal Funding Account Balance.........................................S-23
Principal Funding Investment Proceeds.....................................S-43
Principal Shortfalls......................................................S-30
publicly-offered securities................................................S-7
Rapid Amortization Period.................................................S-29
Rating Agency Condition...................................................S-15
Reallocated Class B Principal Collections.................................S-41
Reallocated Excess Collateral Principal
Collections...........................................................S-41
Reallocated Principal Collections.........................................S-41
Receivables...............................................................S-15
Record Date...............................................................S-26
Reference Banks...........................................................S-28
Removed Accounts..........................................................S-19
Required Reserve Account Amount...........................................S-43
Reserve Account...........................................................S-43
Reserve Account Funding Date..............................................S-43
Revolving Period..........................................................S-28
Scheduled Payment Date....................................................S-23
Servicer..................................................................S-15
Servicing Fee Percentage..................................................S-46
Stated Series Termination Date............................................S-23
Subordinate Principal Collections.........................................S-34
Telerate Page 3750........................................................S-28
Transfer and Administration Agreement.....................................S-38
Transferor................................................................S-15
Transferor Percentage.....................................................S-32
Trust Portfolio...........................................................S-19
Trustee...................................................................S-15
U.S. Person.............................................................A-II-3
Underwriters..............................................................S-49
Underwriting Agreement....................................................S-49
yield percentage...........................................................S-9
PRINCIPAL OFFICE OF
FIRST USA BANK, N.A.
201 North Walnut Street
Wilmington, Delaware 19801
TRUSTEE
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
PAYING AGENTS
The Bank of New York Banque de Luxembourg
101 Barclay Street, Floor 12E 14 Boulevard Royal
New York, New York 10286 2449 Luxembourg
Grand-Duche de Luxembourg
LISTING AGENT
Banque de Luxembourg
14 Boulevard Royal
2449 Luxembourg
Grand-Duche de Luxembourg
LEGAL ADVISOR TO THE BANK AND THE UNDERWRITERS
AS TO UNITED STATES LAW
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS TO THE BANK
Arthur Andersen, LLP
33 West Monroe Street
Chicago, Illinois 60603
$--------------
FIRST USA CREDIT
CARD MASTER TRUST
$--------------
CLASS A FLOATING RATE
ASSET BACKED CERTIFICATES,
SERIES 1999-__
$--------------
CLASS B FLOATING RATE
ASSET BACKED CERTIFICATES,
SERIES 1999-__
FIRST USA BANK, N.A.
TRANSFEROR AND SERVICER
PROSPECTUS SUPPLEMENT
----------, -----
UNDERWRITERS OF THE CLASS A CERTIFICATES
[NAME OF UNDERWRITERS]
UNDERWRITER OF THE CLASS B CERTIFICATES
[NAME OF UNDERWRITER]
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THE CERTIFICATES IN ANY STATE WHERE THE OFFER
IS NOT PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AS OF ANY DATE OTHER THAN THE DATES STATED ON
THEIR RESPECTIVE COVERS.
DEALERS WILL DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS OF THE CERTIFICATES AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS. IN ADDITION, ALL DEALERS SELLING THE
CERTIFICATES WILL DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS UNTIL
_________, _____.
A certificate is not a deposit and neither the certificates nor the
underlying accounts or receiv ables are insured or guaranteed by the
Federal Deposit Insurance Corporation or any other gov ernmental agency.
The certificates will represent interests in the trust only and will not
represent interests in or obligations of First USA Bank, N.A., the servicer
or any of their affiliates.
This prospectus may be used to offer and sell any series of certif icates
only if accompanied by the prospectus supplement for that series.
[FLAG]
The information in this prospectus is not complete and may be changed. We
can not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 28, 1999
PROSPECTUS
FIRST USA CREDIT CARD MASTER TRUST
Issuer
FIRST USA BANK, N.A.
Transferor and Servicer
ASSET BACKED CERTIFICATES
THE TRUST--
o may periodically issue asset backed certificates in one or
more series with one or more classes; and
o will own--
o receivables in a portfolio of consumer revolving credit card
accounts;
o payments due on those receivables; and
o other property described in this prospectus and in the
prospectus supplement.
THE CERTIFICATES--
o will represent interests in a trust and will be paid only
from the assets of the trust;
o offered by this prospectus will be rated in one of the four
highest rating categories by at least one nationally
recognized rating organization;
o may have one or more forms of enhancement; and
o will be issued as part of a designated series which may
include one or more classes of certificates and enhancement.
THE CERTIFICATEHOLDERS--
o will receive interest and principal payments from a varying
percentage of credit card account collections.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------, ------
TABLE OF CONTENTS
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN
THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT.......................................................3
THE TRUST................................................................5
FIRST USA'S CREDIT CARD ACTIVITIES.......................................5
General..........................................................5
Description of FDR...............................................7
Billing and Payments.............................................7
Delinquencies and Charge-Offs....................................8
Interchange......................................................9
Recoveries.......................................................9
THE RECEIVABLES..........................................................9
MATURITY ASSUMPTIONS....................................................11
USE OF PROCEEDS.........................................................11
FIRST USA AND BANK ONE CORPORATION......................................11
Year 2000 Readiness Disclosure..................................13
DESCRIPTION OF THE CERTIFICATES.........................................13
General.........................................................13
Book-Entry Registration.........................................15
Definitive Certificates.........................................18
Interest Payments...............................................18
Principal Payments..............................................19
Revolving Period................................................19
Controlled Amortization Period..................................19
Accumulation Period.............................................20
Rapid Amortization Period.......................................20
Shared Excess Finance Charge
Collections..............................................21
Shared Collections of Principal
Receivables..............................................21
Companion Series................................................21
Transfer and Assignment of
Receivables..............................................21
Exchanges.......................................................21
Representations and Warranties..................................23
Addition of Accounts............................................24
Removal of Accounts.............................................25
Collection and Other Servicing
Procedures...............................................25
Trust Accounts..................................................26
Discount Receivables............................................26
Investor Percentage and Transferor
Percentage...............................................26
Application of Collections......................................27
Funding Period..................................................27
Defaulted Receivables; Rebates and
Fraudulent Charges.......................................28
Investor Charge-Offs............................................28
Defeasance......................................................28
Final Payment of Principal;
Termination..............................................29
Pay Out Events..................................................29
Certain Matters Regarding the Transferor
and the Servicer.........................................30
Servicer Default................................................31
Reports to Certificateholders...................................32
Reports; Notices................................................33
Evidence as to Compliance.......................................33
Amendments......................................................33
List of Certificateholders......................................34
The Trustee.....................................................34
ENHANCEMENT.............................................................34
General.........................................................34
Subordination...................................................35
Letter of Credit................................................35
Cash Collateral Guaranty or Account.............................35
Collateral Invested Amount......................................36
Surety Bond or Insurance Policy.................................36
Spread Account..................................................36
Reserve Account.................................................36
CERTIFICATE RATINGS.....................................................37
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES................................37
Transfer of Receivables.........................................37
Certain Matters Relating to Receivership........................38
Consumer Protection Laws........................................39
Industry Litigation.............................................40
Other Litigation................................................40
CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES....................................................40
General.........................................................40
Characterization of the Certificates as
Indebtedness.............................................41
Proposed Legislation............................................41
Taxation of Interest Income of
Certificateholders.......................................42
Sale or Other Disposition of a
Certificate..............................................43
Tax Characterization of the Trust...............................43
FASIT Legislation...............................................44
Foreign Investors...............................................44
State and Local Taxation........................................45
ERISA CONSIDERATIONS....................................................45
PLAN OF DISTRIBUTION....................................................48
LEGAL MATTERS...........................................................48
REPORTS TO CERTIFICATEHOLDERS...........................................48
WHERE YOU CAN FIND MORE INFORMATION.....................................49
INDEX OF TERMS FOR PROSPECTUS...........................................49
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two
separate documents that progressively provide more detail: (a) this
prospectus, which provides general information, some of which may not apply
to a particular series of certificates, including your series, and (b) the
prospectus supplement, which will describe the specific terms of your
series of certificates, including:
o the timing and amount of interest and principal payments;
o information about the receivables;
o information about credit enhancement for each offered class;
o credit ratings; and
o the method for selling the certificates.
WHENEVER INFORMATION IN THE PROSPECTUS SUPPLEMENT IS MORE SPECIFIC
THAN THE INFORMATION IN THIS PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION
IN THE PROSPECTUS SUPPLEMENT.
You should rely only on the information provided in this prospectus
and the prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information.
We include cross-references in this prospectus and in the
prospectus supplement to captions in these materials where you can find
further related discussions. The preceding table of contents and the table
of contents included in the prospectus supplement provide the pages on
which these captions are located.
You can find a listing of the pages where capitalized terms are
defined under the caption "Index of Terms for Prospectus" beginning on page
49 in this prospectus.
THE TRUST
The First USA Credit Card Master Trust (the "TRUST") was formed, in
accordance with the laws of the State of Delaware, pursuant to the Pooling
and Servicing Agreement dated as of September 1, 1992, as amended and
supplemented (the "POOLING AND SERVICING AGREEMENT"). The Trust was formed
for the transaction relating to the issuance of the Series 1992-1
Certificates, this transaction and similar transactions, as contemplated by
the Pooling and Servicing Agreement, and prior to formation had no assets
or obligations. The Trust will not engage in any business activity, other
than as described herein and in the related supplement to this Prospectus
(the "PROSPECTUS SUPPLEMENT"), but rather will only acquire and hold the
Receivables, issue (or cause to be issued) certificates representing
undivided interests in the Trust (the "CERTIFICATES"), the Exchangeable
Transferor Certificate and certificates representing additional Series or
Classes of Series and related activities (including, with respect to any
Series or Class of such Series, entering into any Enhancement agreement)
and make payments thereon. As a consequence, the Trust is not expected to
have any need for additional capital resources.
FIRST USA'S CREDIT CARD ACTIVITIES
GENERAL
The Receivables which First USA Bank, N.A. (the "BANK") has
conveyed and will convey to the Trust pursuant to the Pooling and Servicing
Agreement have been and will be generated from transactions made by holders
of selected VISA(R) and MasterCard(R) credit card accounts. The Bank
currently services the credit card accounts (the "TRUST PORTFOLIO").
Certain data processing and administrative functions associated with such
servicing are performed on behalf of the Bank by First Data Resources, Inc.
("FDR"). See "--Description of FDR."
The following discussion describes certain terms and
characteristics that generally apply to the accounts in the Bank Portfolio
from which the Accounts in the Trust Portfolio were selected. The Eligible
Accounts from which the Accounts were selected do not represent the entire
Bank Portfolio. In addition, Additional Accounts consist of Eligible
Accounts which may or may not currently be in existence and which may be
selected using different criteria from those used in selecting the Accounts
already included in the Trust Portfolio. See "Description of the
Certificates--Addition of Accounts." Consequently, actual loss and
delinquency, revenue and monthly payment rate experience with respect to
the Eligible Accounts and the Additional Accounts may be different from
such experience for the Trust Portfolio described in the related Prospectus
Supplement.
Growth Strategy and Origination. To achieve steady and diversified
growth, the Bank originates credit card accounts through several different
programs: (i) First USA brand products, (ii) partnership products such as
affinity group, financial institutions, sports marketing and co-branding
programs, and (iii) the acquisition of credit card portfolios from other
financial institutions. These programs (excluding portfolio acquisitions)
emphasize segmentation and use direct mail, telemarketing, take-one
application displays, events, media and the Internet as channels to market
the Bank's products. The Bank has also originated credit card accounts
through mailings to BANK ONE customers and prospects. Management believes
that such multi-faceted account origination programs help to ensure
balanced and reliable growth for the Bank.
- ---------------------
1 VISA(R) and MasterCard(R) are registered trademarks of VISA USA
Incorporated and MasterCard International Incorporated, respectively.
The First USA brand direct solicitation program represents the
greatest share of new account origination. The Bank has historically
emphasized direct solicitation as a source of new accounts as its expertise
has increased through experience and the benefit of numerous marketing,
credit and risk management tests. Currently, the Bank conducts national
direct mail and telemarketing solicitation to geographic areas that have
been selected from a process that includes a rigorous analysis of the
economic indicators of each region of the nation and targets the most
favorable regions. The Bank carefully targets consumers through various
data mining methods and targeting models. The Bank aligns the product
offering with the target customer segment along with the number and
sequence of offers in order to maximize penetration, response rates and
usage.
The affinity groups, financial institutions and sports marketing
programs are partnership programs which involve the active participation of
endorsing organizations. The affinity group marketing program involves the
solicitation of prospective individual cardmembers from identifiable groups
with a common interest or affiliation. In this program, the Bank has
entered into exclusive marketing arrangements with a number of affinity
groups. The Bank typically pays referral compensation to the affinity
groups for each new account generated. The Bank has a similar relationship
with certain professional sports organizations.
In its financial institutions program, the Bank maintains exclusive
marketing partnership relationships with banks, as well as mortgage
companies, insurance companies, brokerage firms and other financial
institutions. Through this program, participating financial institutions
offer VISA and MasterCard products to their customers without becoming
primary issuers. In addition to placing the name of the participating
financial institution on the front of the plastic card, the Bank typically
pays a referral fee for each account. The Bank believes that the
endorsement of the participating financial institution reduces overall
origination costs and encourages cardmember usage.
The Bank also participates in co-branding, which involves a
partnership between the Bank and a consumer products or services company to
solicit the customers of such company. Companies such as airlines, computer
on-line services, catalog companies and general retailers participate with
financial institutions in co-branding programs. The Bank typically pays a
portion of on-going revenue to the co-branding partner, with the benefit of
such payment generally accruing to the customer in the form of "points"
which can then be redeemed with the co-branding partner.
The Bank currently has relationships with over 1,500 partners in
these various programs. Management believes this network is one of the
largest of its kind in the nation.
Underwriting Procedures. Generally, the credit risk of each
applicant is evaluated by application of a credit scoring system, which is
intended to provide a general indication, based on the information
available, of the applicant's willingness and ability to repay his or her
obligations. Most applications are scored based on the information received
on the application as well as data obtained from an independent credit
reporting agency. In select cases, based on certain criteria, including
likelihood of fraud, and in accordance with criteria established by Bank
management, employment and earnings are verified by telephone. Credit
limits are determined based on income and score or, in the case of
applications that have not been scored, based on income and certain
information obtained from the application and the independent credit
reporting agency. Cardholder requests for increased credit limits are
evaluated based on a current credit bureau report, updated application
data, and prior account performance. In addition, credit limit increases
are effected periodically by the Bank for all cardholders meeting specific
criteria.
For preapproved solicitations, the Bank generally purchases
prospect names that meet established credit criteria from credit bureaus.
These lists are further edited and matched against internal and external
sources to insure optimal quality and accuracy. The Bank then mails
preapproved solicitation packages requiring only the signature and a brief
amount of information from the prospect. Preapproved solicitations are
targeted to high quality prospects and exhibit similar credit quality
results as compared to non-preapproved solicitations.
For non-preapproved solicitations, the Bank purchases prospect
names from a variety of sources and then edits the list utilizing internal
and external sources to insure quality and accuracy. The prospective
customers on the final list are mailed solicitations which include full
applications. Respondents are approved or declined based on both the
demographic characteristics drawn from the application and a credit bureau
check.
Portfolio Acquisitions and Mergers. In connection with the merger
of the Bank's predecessor, also named First USA Bank, National Association
(referred to in this document for the period prior to the merger as the
"PREDECESSOR BANK") and FCC National Bank, the credit card portfolios of
the Predecessor Bank and FCC National Bank were consolidated, thereby
increasing the size of the Predecessor Bank's portfolio by approximately
$17 billion. Prior to this merger, on July 1, 1998, BANC ONE CORPORATION
("BANC ONE") consolidated substantially all of its consumer credit card
operations in the Predecessor Bank. The Predecessor Bank has since added
receivables in accounts originated by the Predecessor Bank, Bank One, N.A.,
Bank One Arizona, NA and other affiliates of the Predecessor Bank to the
Trust. On September 30, 1998, the Predecessor Bank purchased the credit
card portfolio of Chevy Chase Bank F.S.B. ("CHEVY CHASE"). On November 16,
1998, the Predecessor Bank acquired accounts formerly owned by First
National Bank of Commerce ("FIRST COMMERCE") as a result of a merger
between First Commerce and Bank One, Louisiana, N.A. and the transfer by
Bank One, Louisiana, N.A. to the Predecessor Bank of substantially all of
such accounts. On December 24, 1998, the Predecessor Bank purchased a
portfolio of VISA and MasterCard credit card loans from General Electric
Capital Corporation ("GE CAPITAL"). The portfolio includes approximately
$2.2 billion in managed credit card loans. On July 2, 1999, the Predecessor
Bank purchased an additional portfolio of VISA and MasterCard credit card
loans from GE Capital, totaling approximately $300 million in managed
credit card loans. The Predecessor Bank has added receivables from the
accounts acquired from GE Capital on December 24, 1998 to the Trust. The
Predecessor Bank had not added and the Bank has not added to the Trust
receivables in any of the accounts acquired from Chevy Chase or First
Commerce. A substantial portion of these portfolios (other than the GE
Capital portfolio) is currently subject to securitization through other
credit card master trusts. The Bank may, from time to time, add to the
Trust additional Receivables arising in accounts originated by affiliates
of the Bank or purchased by the Bank or the Predecessor Bank. Each such
addition of receivables in accounts originated by the bank and affiliates
of the Bank or purchased by the Bank to the trust is subject to certain
restrictions on addition of Accounts in the Pooling and Servicing
Agreement, including satisfaction of the Rating Agency Condition with
respect to such addition. "RATING AGENCY CONDITION" with respect to any
proposed action means the condition that each Rating Agency then rating any
Series of Certificates outstanding confirms in writing that such action
would not result in any downgrading or withdrawal of such Rating Agency's
rating of any Series of Certificates then outstanding. See "Description of
the Certificates-Addition of Accounts" herein. Prior to acquiring a
portfolio, the Bank reviews the historical performance and seasoning of the
portfolio and the policies and practices of the selling institution, but
individual accounts are not requalified by the Bank. There can be no
assurance that Accounts so acquired were originated in a manner consistent
with the Bank's policies as described under "--Growth Strategy and
Origination" and "--Underwriting Procedures" above or that the underwriting
and qualification of such Accounts conformed to any given standards. The
Accounts include accounts previously acquired by the Bank. Such accounts
and any accounts acquired in the future may become Additional Accounts
provided that, at such time, they constitute Eligible Accounts. See "The
Receivables," "Description of the Certificates--Transfer and Assignment of
Receivables" and "--Representations and Warranties."
DESCRIPTION OF FDR
With respect to the Accounts, certain data processing and
administrative functions associated with servicing the Receivables will
initially be performed by FDR. If FDR were to fail or become insolvent,
delays in processing and recovery of information with respect to charges
incurred by the respective cardholders could occur, and the replacement of
the services FDR currently provides to the Bank could be time-consuming. As
a result, delays in payments to Certificateholders could occur.
FDR is located in Omaha, Nebraska and provides computer data
processing services primarily to the bankcard industry. FDR is a subsidiary
of First Data Corp.
The Bank utilizes a variety of the services provided by FDR in
originating and servicing the Bank's VISA and MasterCard accounts,
including provision of network interface to other card processors through
VISA USA Incorporated and MasterCard International Incorporated. This
network provides cardholder authorizations in addition to a conduit for
funds transfer and settlement.
BILLING AND PAYMENTS
Cardholder Agreement. Each cardholder is subject to an agreement
with the Bank governing the terms and conditions of the related VISA or
MasterCard account. Pursuant to each such agreement, the Bank generally
reserves the right, upon advance notice to the cardholder, to add or to
change any terms, conditions, services or features of its VISA or
MasterCard accounts at any time, including increasing or decreasing
periodic finance charges, other charges or minimum payment terms. The
agreement with each cardholder provides that, subject to the requirements
of applicable law, after notice to a cardholder of any such new or changed
terms, such new or changed terms will become effective at the time stated
in such notice and will apply to all outstanding unpaid indebtedness as
well as new transactions.
A cardholder may use the credit card to purchase or lease goods or
services wherever the card is honored ("PURCHASES") or to obtain cash loans
("CASH ADVANCES") from any financial institution that accepts the card.
Purchases and Cash Advances may also be obtained through the use of
"Convenience Checks" issued by the Bank which may be completed and signed
by the cardholder in the same way as a regular personal check.
Billing, Payments and Fees. A billing statement is sent to each
cardholder at the end of each monthly billing cycle in which the account
has a debit or credit balance of more than one dollar or if a finance
charge has been imposed. The Bank may assess a late payment fee if it does
not receive the minimum payment by the payment due date shown on the
monthly billing statement. The Bank may assess a return check fee for each
payment check that is dishonored or that is unsigned or otherwise
irregular, an overlimit fee for Purchases or Cash Advances that cause the
credit line to be exceeded and administrative fees for certain functions
performed at the request of the cardholder. Unless otherwise arranged
between the Bank and the cardholder, any late payment fee, return check fee
or administrative fee is added to the account and treated as a Purchase. In
some cases, the Bank charges a nonrefundable Annual Membership Fee.
Periodic Finance Charges are not assessed in most circumstances on
Purchases if the entire balance shown on the previous billing statement was
paid in full by the payment due date. New Purchases and Cash Advances are
included in the calculation of the balance subject to finance charge as of
the later of the day that they are made and the first day of the billing
cycle during which they were posted to the account; or, if a Convenience
Check is used, the transaction date of the check. Aggregate monthly finance
charges for each account consist of the sum of the Cash Advance finance
charge (not applicable for certain accounts) for each new Cash Advance
posted to the account, transaction finance charge (not applicable for
certain accounts) plus the Periodic Finance Charge. The Bank issues
accounts with fixed periodic rates and accounts with floating periodic
rates that adjust periodically according to an index.
The foregoing provisions apply with respect to cardholders that
have entered into one of the Bank's standard agreements by, in the case of
a new account, signature, recorded verbal confirmation of disclosure
information or, in the case of an account acquired by the Bank from another
institution, acceptance of the terms of the Bank's agreement in writing or
by using the credit card after disclosure that the account will be governed
by such terms. If the cardholder of an account acquired by the Bank from
another institution has not entered into one of the Bank's standard
agreements, the terms of the account may continue to be governed by the
agreement between the cardholder and the seller of the account, which may
differ in material respects from the provisions described above.
DELINQUENCIES AND CHARGE-OFFS
The Bank considers any account contractually delinquent if the
minimum payment due thereunder is not received by the Bank by the date of
the statement following the statement on which the amount is first stated
to be due. An account is not treated as delinquent by the Bank if the
minimum payment is received by the next billing date. The Bank classifies
an account as "over limit" if its posted balance exceeds its credit limit.
Efforts to collect delinquent credit card receivables currently are
made by the Bank's collection department personnel with regional collection
units located in Wilmington, Delaware, Orlando, Florida, Columbus, Ohio,
Austin, Texas and Frederick, Maryland. Collection activities include
statement messages, telephone calls and formal collection letters.
Collectors generally initiate telephone contact with cardholders whose
accounts have become 5 days or more 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 as approved by one of the Bank's collection managers. Delinquency
levels are monitored daily by the respective collectors and aggregate
delinquency information is reported daily to senior management.
The Bank generally charges off an account immediately prior to the
end of the sixth billing cycle after having become contractually past due
unless a payment has been received in an amount sufficient to bring the
account into a different delinquency category or to bring the account
current. Charge-offs may occur earlier in some circumstances, as in the
case of bankrupt cardholders. At the time of charge-off, an evaluation is
made on a case by case basis whether to pursue further remedies. In most
cases outside collection agencies and, in some cases, outside attorneys,
are engaged. In some cases charged off accounts are sold to outside
collection agencies. The credit evaluation, servicing and charge-off
policies and collection practices of the Bank may change from time to time
in accordance with the Bank's business judgment and applicable law.
The Bank has a policy of restoring or "reaging" a delinquent
account to current status when the cardholder has made two consecutive
payments and, in the collector's judgment, has the ability to keep the
account current. A collector may recommend that an account be reaged in
other circumstances. All reaging must be approved by a supervisor and an
account may be reaged no more than once per year.
The Federal Financial Institutions Examination Council has adopted
a revised policy statement on the classification of retail credit. The
revised policy statement provides guidance for loans affected by
bankruptcy, fraudulent activity, and death; establishes standards for
reaging, extending, deferring, or rewriting of past due accounts; and
broadens the circumstances under which partial payments are recognized as
full payments for purposes of determining that a loan is no longer
delinquent.
INTERCHANGE
Creditors participating in the VISA and MasterCard associations
receive certain fees ("INTERCHANGE") as partial compensation for taking
credit risk, absorbing fraud losses and funding receivables for a limited
period prior to initial billing. Under the VISA and MasterCard systems, a
portion of Interchange in connection with cardholder charges for goods and
services is collected by banks that issue credit cards by applying a
discount to the amount paid by such banks to the banks that clear the
related transactions for merchants. Interchange will be allocated to the
Trust, by treating 1.3% (subject to adjustment at the option of the
Transferor upon the satisfaction of certain conditions as described herein
in "Description of the Certificates--Discount Receivables," which adjusted
percentage, if applicable will be specified in the applicable Prospectus
Supplement) of collections on the Receivables (whether arising from
Purchases or Cash Advances), other than collections with respect to
Periodic Finance Charges, Annual Membership Fees and Other Charges, as
collections of Discount Receivables.
RECOVERIES
The Transferor and the Servicer will be required, pursuant to the
terms of the Pooling and Servicing Agreement, to transfer to the Trust all
amounts received by the Transferor or the Servicer with respect to
Receivables in Defaulted Accounts, including amounts received by the
Transferor or the Servicer from the purchaser or transferee with respect to
the sale or other disposition of Receivables in Defaulted Accounts
("RECOVERIES"). In the event of any such sale or other disposition of
Receivables, Recoveries will not include amounts received by the purchaser
or transferee of such Receivables but will be limited to amounts received
by the Transferor or the Servicer from the purchaser or transferee.
Collections of Recoveries will be treated as collections of Principal
Receivables; provided, however, that to the extent the aggregate amount of
Recoveries received with respect to any Monthly Period exceeds the
aggregate amount of Principal Receivables (other than Ineligible
Receivables) in Defaulted Accounts on the day such Account became a
Defaulted Account for each day in such Monthly Period, the amount of such
excess will be treated as collections of Finance Charge Receivables.
THE RECEIVABLES
The property of the Trust includes and will include receivables
(the "RECEIVABLES") arising under certain VISA and MasterCard revolving
credit card accounts (the "ACCOUNTS") selected from the portfolio of VISA
and MasterCard accounts owned by the Transferor (the "BANK PORTFOLIO"), all
monies due or to become due in payment of the Receivables, all proceeds of
the Receivables and all monies on deposit in certain bank accounts of the
Trust (other than certain investment earnings on such amounts), Recoveries
and any Enhancement issued with respect to any Series or Class, as
described in the related Prospectus Supplement. The term "Enhancement"
means, with respect to any Series or Class thereof, any letter of credit,
cash collateral account or guaranty, collateral invested amount, guaranteed
rate agreement, maturity guaranty facility, tax protection agreement,
interest rate swap or other contract or agreement for the benefit of
Certificateholders of such Series. Enhancement may also take the form of
subordination of one or more Classes of a Series to any other Class or
Classes of a Series or a cross-support feature which requires collections
on Receivables of one Series to be paid as principal and/or interest with
respect to another Series. The Receivables included in the Trust may
consist of Accounts originated and owned by the Transferor and/or Accounts
otherwise acquired by the Transferor, as specified in the related
Prospectus Supplement.
The Predecessor Bank, as Transferor originally conveyed to the
Trustee all Receivables existing under certain Accounts that were selected
from the Bank Portfolio based on criteria provided in the Pooling and
Servicing Agreement as applied on August 21, 1992 (the "ORIGINAL CUT-OFF
DATE"), and on certain additional cut off dates with respect to additional
eligible revolving credit card accounts to be included as Accounts (the
"ADDITIONAL ACCOUNTS") and has conveyed and the Bank will convey all
Receivables arising under such Accounts from time to time thereafter until
termination of the Trust. See "Description of the Certificates--Addition of
Accounts."
The Receivables conveyed to the Trust have arisen and will arise in
Accounts selected from the Bank Portfolio on the basis of criteria set
forth in the Pooling and Servicing Agreement. The Transferor will have the
right (subject to certain limitations and conditions set forth in the
Pooling and Servicing Agreement) to designate from time to time Additional
Accounts and to transfer to the Trust all Receivables of such Additional
Accounts, whether such Receivables are then existing or thereafter created.
Any Additional Accounts designated pursuant to the Pooling and Servicing
Agreement must be Eligible Accounts as of the date the Transferor
designates such accounts as Additional Accounts. In addition, the
Transferor is required to designate Additional Accounts (x) to maintain the
Transferor Interest so that, during any period of 30 consecutive days, the
Transferor Interest averaged over that period and expressed as a percentage
of the aggregate amount of Principal Receivables equals or exceeds such
percentage as may be specified in any Series Supplement (such percentage,
the "MINIMUM TRANSFEROR INTEREST") of the average of the aggregate amount
of Principal Receivables for the same period, or (y) to maintain, for so
long as certificates of any Series (including the Certificates) remain
outstanding, an aggregate amount of Principal Receivables in amount equal
to or greater than the Minimum Aggregate Principal Receivables. "MINIMUM
AGGREGATE PRINCIPAL RECEIVABLES" shall mean an amount equal to (i) the sum
of the initial invested amounts for all Series then outstanding other than
any Series of variable funding certificates, (ii) with respect to any
Series of variable funding certificates in its revolving period, the then
current invested amount of such Series and (iii) with respect to any Series
of variable funding certificates in its amortization period, the invested
amount of such Series at the end of the last day of the Revolving Period
for such Series. The Transferor will convey the Receivables then existing
or thereafter created under such Additional Accounts to the Trust.
Throughout the term of the Trust, the Accounts from which the Receivables
arise will be the Accounts designated by the Transferor on the Original
Cut-Off Date plus any Additional Accounts minus any Removed Accounts. See
"Description of the Certificates--Representations and Warranties."
The Receivables consist of amounts charged by cardholders for goods
and services and cash advances (such amounts, less the amount of Discount
Receivables, the "PRINCIPAL RECEIVABLES"), plus the related periodic
finance charges (the "PERIODIC FINANCE CHARGES"), annual membership fees
(the "ANNUAL MEMBERSHIP FEES"), and amounts charged to the Accounts in
respect of cash advance finance charges, late fees, overlimit fees, return
check fees and similar fees and charges (the "OTHER CHARGES"). Receivables
in an amount equal to the product of the Yield Factor (initially 1.3%) and
amounts charged by cardholders for goods and services and cash advances
(the "DISCOUNT RECEIVABLES") will be treated as Finance Charge Receivables
(Discount Receivables, together with the Periodic Finance Charges, Annual
Membership Fees and Other Charges, the "FINANCE CHARGE RECEIVABLES"). See
"Description of the Certificates--Discount Receivables." The Finance Charge
Receivables will not affect the amount of the Invested Amount represented
by the Certificates or the amount of the Transferor Interest, which are
determined on the basis of the amount of Principal Receivables in the
Trust.
During the term of the Trust, all new Receivables arising in the
Accounts will be transferred automatically to the Trust by the Transferor.
The total amount of Receivables in the Trust will fluctuate from day to day
because the amount of new Receivables arising in the Accounts and the
amount of payments collected on existing Receivables usually differ each
day. Because the Transferor Interest represents the interest in the
Principal Receivables in the Trust not represented by the Certificates or
any other Series of Certificates, the amount of the Transferor Interest
will fluctuate from day to day as Receivables are collected and new
Receivables are transferred to the Trust.
The aggregate undivided interest in the Principal Receivables in
the Trust evidenced by the Certificates will never exceed the aggregate
Invested Amount regardless of the total amount of Principal Receivables in
the Trust at any time.
The Prospectus Supplement relating to each Series of Certificates
will provide certain information about the Receivables in the Accounts
selected from the Bank Portfolio included in the Trust on the basis of
criteria set forth in the Pooling and Servicing Agreement (the "TRUST
PORTFOLIO") as of the date specified. Such information will include, but
not be limited to, the amount of Principal Receivables, the amount of
Finance Charge Receivables, the range of principal balances of the Accounts
and the average thereof, the range of credit limits of the Accounts and the
average thereof, the range of ages of the Accounts and the average thereof,
the geographic distribution of the Accounts, the types of Accounts and
delinquency and loss statistics relating to the Accounts.
MATURITY ASSUMPTIONS
Unless otherwise specified in the related Prospectus Supplement,
for each Series, following the Revolving Period, collections of Principal
Receivables are expected to be distributed to the holders of each class of
Certificates (the "CERTIFICATEHOLDERS") of such Series or any specified
class of Certificates (each, a "CLASS") thereof on each specified
Distribution Date during the Controlled Amortization Period or are expected
to be accumulated for payment to Certificateholders of such Series or any
specified Class thereof during the Accumulation Period and distributed on a
Scheduled Payment Date; provided, however, that, if the Rapid Amortization
Period commences, collections of Principal Receivables will be paid to
Certificateholders in the manner described herein and in the related
Prospectus Supplement. The related Prospectus Supplement will specify the
date on which the Controlled Amortization Period or the Accumulation
Period, as applicable, will commence, or how such date will be determined,
the principal payments expected or available to be received or accumulated
during such Controlled Amortization Period or Accumulation Period, or on
the Scheduled Payment Date, as applicable, the manner and priority of
principal accumulations and payments among the Classes of a Series of
Certificates and the Pay Out Events which, if any were to occur, would lead
to the commencement of the Rapid Amortization Period.
No assurance can be given, however, that collections of Principal
Receivables allocated to be paid to Certificateholders or the holders of
any specified Class thereof will be available for distribution or
accumulation for payment to Certificateholders on each Distribution Date
during the Controlled Amortization Period, or, with respect to the
Accumulation Period, on the Scheduled Payment Date, as applicable. In
addition, the Transferor can give no assurance that the payment rate
assumptions for any Series will prove to be correct. The related Prospectus
Supplement will provide certain historical data relating to payments by
cardholders, total charge-offs and other related information relating to
the Trust Portfolio. There can be no assurance that future events will be
consistent with such historical data.
The amount of collections of Receivables may vary from month to
month due to seasonal variations, general economic conditions and payment
habits of individual cardholders and number of collection days. There can
be no assurance that collections of Principal Receivables with respect to
the Trust Portfolio, and thus the rate at which the related
Certificateholders could expect to receive or accumulate payments of
principal on their Certificates during the Controlled Amortization Period,
Accumulation Period, Rapid Amortization Period or other type of
amortization period (each an "AMORTIZATION PERIOD") or on any Scheduled
Payment Date, as applicable, will be similar to any historical experience
set forth in a related Prospectus Supplement. If a Pay Out Event occurs,
the average life and maturity of such Series of Certificates could be
significantly reduced. In addition, there can be no assurance that the
issuance of other Series of Certificates or the terms of such other Series
might not have an impact on the timing of the payments received by
Certificateholders.
The actual payment rate for any Series of Certificates may be
slower than the payment rate used to determine the amount of collections of
Principal Receivables scheduled or available to be distributed or
accumulated for later payment to Certificateholders or any specified Class
thereof during the Controlled Amortization Period or the Accumulation
Period or on the Scheduled Payment Date, as applicable, or a Pay Out Event
may occur which would initiate the Rapid Amortization Period. There can be
no assurance that the actual number of months elapsed from the date of
issuance of such Series of Certificates to the final Distribution Date with
respect to the Certificates will equal the expected number of months. In
addition if, after the issuance of a Series, a related Companion Series is
issued and a Rapid Amortization Period commences, payments to the Holders
of such Series may be delayed. See "Description of the
Certificates--Companion Series."
USE OF PROCEEDS
Unless otherwise specified in the related Prospectus Supplement,
the net proceeds from the sale of each Series of Certificates offered
hereby will be paid to the l Transferor. The Transferor will use such
proceeds for its general corporate purposes.
FIRST USA AND BANK ONE CORPORATION
First USA Bank, National Association. On September 17, 1999, the
Bank's predecessor, also named First USA Bank, National Association, a
direct wholly-owned subsidiary of BANK ONE CORPORATION ("BANK ONE") was
merged with and into FCC National Bank, an affiliated national banking
association and a direct wholly-owned subsidiary of BANK ONE, with FCC
National Bank as the surviving bank. The surviving bank was renamed "First
USA Bank, National Association" with its executive offices located at 201
North Walnut Street, Wilmington, Delaware 19801, telephone number (302)
594-4000.
The Bank is one of the nation's two largest issuers of VISA and
MasterCard credit cards in the United States. The Bank's revenues derive
primarily from interest income and fees on its credit card accounts and
interchange income. Its primary cash expenses include the cost of funding
credit card loans, credit losses, salaries and employee benefits, marketing
expenses, processing expenses and income taxes.
The Bank offers a broad array of bankcard products to targeted
segments of creditworthy consumers. The Bank's primary target market is
experienced users of general purpose credit products. The strategy of the
Bank is to offer uniquely tailored individualized products to profitable
consumer segments.
The Bank markets over 1,000 credit card products to customers
throughout the United States. These products cover a range which includes
standard card products, those that are identified and developed through
data mining efforts, as well as products that are developed and marketed
through partnership relationships. Products include designs that are
tailored to an individual's lifestyle, profession or interest; those that
are built around affiliations, such as universities or fraternal
organizations, co-brand relationships and programs with financial
institutions and an upscale platinum card product.
The Bank's products feature low interest rates, specific features
and benefits, unique card design and individualized credit lines. The
Bank's strategy is to target customers through a carefully matched
combination of pricing, credit analysis and packaging. Rates, fees, other
features and credit lines offered vary depending on the profile of targeted
prospect groups. The Bank generally markets its products with low
introductory and regular rates and no annual fee.
In line with its product diversity, the Bank has built and
maintains a broad set of distribution channels. The Bank is one of the
leading direct mailers and telemarketers in the industry and manages a
large active sales force to distribute its products via fairs, tradeshows
and other events. The Bank also markets its products through an array of
Web sites and utilizes other direct response media channels for
distribution.
FCC National Bank, on June 24, 1999, launched WingspanBank.com, an
internet site offering consumers a wide range of financial products and
services brought together at one website, including traditional banking,
investment and planning services, and objective search tools.
BANK ONE CORPORATION. BANK ONE is a multi-bank holding company
organized in 1998 under the laws of the State of Delaware to effect the
merger, effective October 2, 1998, of First Chicago NBD Corporation with
BANC ONE CORPORATION.
Throughout its banking subsidiaries, BANK ONE provides domestic
retail banking, worldwide corporate and institutional banking and trust and
investment management services. BANK ONE operates banking offices in
Arizona, Colorado, Delaware, Florida, Illinois, Indiana, Kentucky,
Louisiana, Michigan, Ohio, Oklahoma, Texas, Utah, West Virginia and
Wisconsin. BANK ONE also owns nonbank subsidiaries that engage in
businesses related to banking and finance, including credit card and
merchant processing, consumer and education finance, mortgage lending and
servicing, insurance, venture capital, investment and merchant banking,
trust, brokerage, investment management, leasing, community development and
data processing.
Effective October 2, 1998, First Chicago NBD, a Delaware
corporation, merged with and into BANK ONE, the parent corporation of the
Bank. Immediately prior to such merger, BANC ONE CORPORATION, an Ohio
corporation ("BANC ONE"), also merged with and into BANK ONE, which had
been a subsidiary, of BANC ONE prior to such merger. BANK ONE is a bank
holding company headquartered in Chicago, Illinois and registered under the
Bank Holding Company Act of 1956, as amended.
BANK ONE's executive offices are located at One First National
Plaza, Chicago, Illinois 60670, and its telephone number is (312)732-4000.
YEAR 2000 READINESS DISCLOSURE
BANK ONE, like most other companies, utilizes computer programs
which process transactions based on using two digits for the year of the
transaction rather than a full four digits. Programs processing Year 2000
transactions using only the last two digits "00" for the year may read the
date as 1900, not 2000. This can lead to significant processing
inaccuracies or render systems inoperable.
Solving the Year 2000 problem is a top priority for BANK ONE
CORPORATION. A focused comprehensive effort addresses every area of BANK
ONE to ensure products and services are able to accurately process dates
within and between the 20th and 21st centuries, including leap year
calculations. The Year 2000 issue is being addressed by either modifying,
retiring or replacing existing software applications and systems or
installing vendor upgrades.
A plan has been developed and is being followed to ensure that the
modifications, replacements and upgrades are implemented and thoroughly
tested on a timely basis. BANK ONE has met the regulatory guidelines for
June 30, 1999 that state testing of mission critical systems be complete
and that the implementation of mission critical systems be substantially
complete. Our applications, computers, systems software, telecommunications
systems, security devices, desktop PCs and servers, and office equipment
have undergone extensive testing and are largely Year 2000 ready. We will
continue to verify the readiness of computer applications, equipment and
contingency plans by testing them throughout the remainder of 1999. Other
areas of focus include the assessment of Year 2000 risk posed by our
customers and ensuring the availability of cash to meet customer demands.
Year 2000 readiness is highly dependent on external entities and is
not limited to operating risk. BANK ONE is working extensively with
external entities to ensure that their systems will be Year 2000 compliant;
however, BANK ONE bears risk and could be adversely affected if outside
parties, such as customers, vendors, utilities and government agencies, do
not appropriately address Year 2000 readiness issues.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued in Series. Each Series will
represent an interest in the Trust other than the interests represented by
any other Series of Certificates issued by the Trust (which may include
Series offered pursuant to this Prospectus) and the Exchangeable Transferor
Certificate. Each Series will be issued pursuant to the Pooling and
Servicing Agreement entered into by the Bank and the Trustee and a series
supplement (a "SERIES SUPPLEMENT") to the Pooling and Servicing Agreement,
a copy of the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Prospectus Supplement for
each Series will describe any provisions of the Pooling and Servicing
Agreement relating to such Series which may differ materially from the
Pooling and Servicing Agreement filed as an exhibit to the Registration
Statement. The following is a summary of the provisions common to each
Series of Certificates. The summary is qualified in its entirety by
reference to all of the provisions of the related Pooling and Servicing
Agreement and Series Supplement.
GENERAL
The assets of the Trust will be allocated among the
Certificateholders of each Series (the "INVESTOR INTEREST") of the Trust
and the holder of the Exchangeable Transferor Certificate and, in certain
circumstances, the related Enhancement Providers. The aggregate principal
amount of the interest of the Certificateholders of a Series in the Trust
is referred to herein as the "INVESTED AMOUNT" and is based on the
aggregate amount of the Principal Receivables in the Trust allocated to
such Series. The aggregate principal amount of the interest of the
Transferor in the Trust is referred to herein as the "TRANSFEROR INTEREST,"
and is based on the aggregate amount of Principal Receivables (the
"TRANSFEROR AMOUNT") in the Trust not allocated to the Certificateholders
or any Enhancement Provider. The certificate that evidences the Transferor
Interest is referred to herein as the "EXCHANGEABLE TRANSFEROR
CERTIFICATE."
The Certificates of each Series will represent undivided interests
in certain assets of the Trust, including the right to the applicable
Investor Percentage of all cardholder payments on the Receivables. For each
Series of Certificates, unless otherwise specified in the related
Prospectus Supplement, the Invested Amount on any date will be equal to the
initial Invested Amount as of the related Series Closing Date for such
Series minus the amount of principal paid to the Certificateholders prior
to such date and minus the amount of unreimbursed Investor Charge-Offs with
respect to such related Series prior to such date. If so specified in the
Prospectus Supplement relating to any Series of Certificates, under certain
circumstances the Invested Amount may be further adjusted by the amount of
principal allocated to Certificateholders, the funds on deposit in any
specified account, and any other amount specified in the related Prospectus
Supplement.
Each Series of Certificates may consist of one or more Classes, one
or more of which may be senior certificates ("SENIOR CERTIFICATES") and one
or more of which may be subordinated certificates ("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, interest rate per annum
("CERTIFICATE RATE") and the availability of Enhancement.
The Certificateholders of each Series will have the right to
receive (but only to the extent needed to make required payments under the
Pooling and Servicing Agreement and the related Series Supplement and
subject to any reallocation of such amounts if the Series Supplement so
provides) varying percentages of the collections of Finance Charge
Receivables and Principal Receivables for each month and will be allocated
a varying percentage of the amount of Receivables in Accounts which were
written off as uncollectible by the Servicer ("DEFAULTED ACCOUNTS") for
such month (each such percentage, an "INVESTOR PERCENTAGE"). The related
Prospectus Supplement will specify the Investor Percentages with respect to
the allocation of collections of Principal Receivables, Finance Charge
Receivables and Receivables in Defaulted Accounts during the Revolving
Period, any Amortization Period and any Accumulation Period, as applicable.
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 "--Investor Percentage
and Transferor Percentage."
The Certificates of each Series will represent interests in the
Trust only and will not represent interests in or recourse obligations of
the Bank or any of its affiliates. A Certificate is not a deposit and
neither the Certificates nor the underlying Accounts or Receivables are
insured or guaranteed by the Federal Deposit Insurance Corporation ("FDIC")
or any other governmental agency.
For each Series of Certificates, payments of interest and principal
will be made on Distribution Dates or other payment dates as specified in
the related Prospectus Supplement to Certificateholders in whose names the
Certificates 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 Transferor initially will own
the Exchangeable Transferor Certificate. The Exchangeable Transferor
Certificate will represent the undivided interest in the Trust not
represented by the Certificates issued and outstanding under the Trust or
the rights, if any, of any Enhancement Providers to receive payments from
the Trust. The holder of the Exchangeable Transferor Certificate will have
the right to a percentage (the "TRANSFEROR PERCENTAGE") of all cardholder
payments from the Receivables in the Trust.
Unless otherwise specified in the related Prospectus Supplement,
with respect to each Series of Certificates, during the Revolving Period,
the Invested Amount will remain constant except under certain limited
circumstances. See "--Defaulted Receivables; Rebates and Fraudulent
Charges" and "--Investor Charge-Offs." The amount of Principal Receivables
in the Trust, however, will vary each day as new Principal Receivables are
created and others are paid or charged-off. The amount of the Transferor
Interest will fluctuate each day, therefore, to reflect the changes in the
amount of the Principal Receivables in the Trust. When a Series is
amortizing, the Invested Amount of such Series will generally decline as
payments of Principal Receivables are collected and distributed to the
Certificateholders. As a result, the Transferor Interest will generally
increase each month during an Amortization Period for any Series to reflect
the reductions in the Invested Amount of such Series and will also change
to reflect the variations in the amount of Principal Receivables in the
Trust. The Transferor Interest may also be reduced as the result of an
Exchange. See "--Exchanges."
Unless otherwise specified in the related Prospectus Supplement,
Certificates of each Series initially will be represented by certificates
registered in the name of the nominee of DTC (together with any successor
depository selected by the Transferor, the "DEPOSITORY") except as set
forth below. Unless otherwise specified in the related Prospectus
Supplement, with respect to each Series of Certificates, beneficial
interests in the Certificates will be available for purchase in minimum
denominations of $1,000 and integral multiples thereof in book-entry form
only. The Transferor has been informed by DTC that DTC's nominee will be
Cede & Co. ("CEDE"). No Certificate Owner acquiring an interest in the
Certificates will be entitled to receive a certificate representing such
person's interest in the Certificates unless Definitive Certificates are
issued. 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 DTC Participants (as defined below), and all references
herein to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of the Certificates, as
the case may be, for distribution to Certificate 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 in book-entry form,
Certificateholders may hold their Certificates through DTC (in the United
States) or Cedelbank or Euroclear (in Europe) which in turn hold through
DTC, 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 Certificates.
Cedelbank and Euroclear will hold omnibus positions on behalf of the
Cedelbank Customers and the Euroclear Participants, respectively, through
customers' securities accounts in Cedelbank's and Euroclear's names on the
books of their respective depositaries (collectively, the "DEPOSITARIES")
which in turn will hold such positions in customers' securities accounts in
the Depositaries' names on the books of DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"). DTC
holds securities that its participating organizations ("DTC Participants")
deposit with DTC. DTC also facilitates the clearance and settlement among
DTC Participants of securities transactions, such as transfers and pledges,
in deposited securities through electronic book-entry changes in DTC
Participants' accounts, thereby eliminating the need for physical movement
of securities certificates. DTC Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. DTC is owned by a number of its DTC
Participants and the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.
Indirect access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a DTC Participant, either
directly or indirectly ("INDIRECT PARTICIPANTS"). The rules applicable to
DTC and DTC Participants are on file with the Securities and Exchange
Commission (the "SEC").
DTC management is aware that some computer applications and systems
used for processing data were written using two digits rather than four to
define the applicable year, and therefore may not recognize a date using
"00" as the Year 2000. This could result in the inability of these systems
to properly process transactions with dates in the Year 2000 and
thereafter. DTC has developed and is implementing a program to address this
problem so that its applications and systems as the same relate to the
timely payment of distributions (including principal and interest payments)
to securityholders, book-entry deliveries and settlement of trades within
DTC continue to function properly. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC plans to implement a testing phase of this program which is expected to
be completed within appropriate time frames.
In addition, DTC is contacting (and will continue to contact) third
party vendors that provide services to DTC to determine the extent of their
Year 2000 compliance, and DTC will develop contingency plans as it deems
appropriate to address failures in Year 2000 compliance on the part of
third party vendors. However, there can be no assurance that the systems of
third party vendors will be timely converted and will not adversely affect
the proper functioning of DTC's services.
The information set forth in the preceding two paragraphs has been
provided by DTC for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
The Transferor makes no representations as to the accuracy or completeness
of such information.
Transfers between DTC Participants will occur in accordance with
DTC rules. Transfers between Cedelbank Customers 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 in the United States, on the one hand, and directly
or indirectly through Cedelbank Customers 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. Cedelbank
Customers and Euroclear Participants may not deliver instructions directly
to the Depositaries.
Because of time-zone differences, credits of securities in
Cedelbank or Euroclear as a result of a transaction with a DTC Participant
will be made during the subsequent securities settlement processing, dated
the business day following the DTC settlement date, and such credits or any
transactions in such securities settled during such processing will be
reported to the relevant Cedelbank Customer or Euroclear Participant on
such business day. Cash received in Cedelbank or Euroclear as a result of
sales of securities by or through a Cedelbank Customer or a Euroclear
Participant will be received with value on the DTC settlement date but will
be available in the relevant Cedelbank or Euroclear cash account only as of
the business day following settlement in DTC.
Certificate Owners that are not DTC Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership
of, or other interests in, Certificates may do so only through the DTC
Participants and Indirect Participants. In addition, Certificate Owners
will receive all distributions of principal of and interest on the
Certificates from the Trustee through DTC 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 Trustee to Cede, as nominee for DTC. DTC will
forward such payments to DTC Participants which thereafter will forward
them to Indirect Participants or Certificate Owners. It is anticipated that
the only "Certificateholder" of Certificates in book-entry form will be
Cede, as nominee of DTC. Certificate Owners will not be recognized by the
Trustee as Certificateholders, as such term is used in the Pooling and
Servicing Agreement, and Certificate Owners will only be permitted to
exercise the rights of Certificateholders indirectly through the DTC
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
DTC 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. DTC 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 DTC 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 Transferor that it will take any action
permitted to be taken by a Certificateholder under the Pooling and
Servicing Agreement only at the direction of one or more DTC Participants
to whose account with DTC the Certificates are credited. Additionally, DTC
has advised the Transferor that it will take such actions with respect to
specified percentages of the Invested Amount only at the direction of and
on behalf of DTC 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 DTC Participants whose holdings include such
undivided interests.
Cedelbank, societe anonyme ("CEDELBANK") is incorporated under the
laws of Luxembourg as a professional depository. Cedelbank holds securities
for its participating organizations ("CEDELBANK CUSTOMERS") and facilitates
the clearance and settlement of securities transactions between Cedelbank
Customers through electronic book-entry changes in accounts of Cedelbank
Customers, thereby eliminating the need for physical movement of
securities. Transactions may be settled in Cedelbank in any of 36
currencies, including United States dollars. Cedelbank provides to its
Cedelbank Customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank deals with
domestic securities markets in over 30 countries through established
depository and custodial relationships. Cedelbank has established an
electronic bridge with Morgan Guaranty Trust as the Operator of the
Euroclear System ("MGT/EOC") in Brussels to facilitate settlement of trades
between Cedelbank and MGT/EOC. Cedelbank currently accepts over 110,000
securities issues on its books. As a professional depository, Cedelbank is
subject to regulation by the Luxembourg Commission for the Supervision of
the Financial Sector, which supervises Luxembourg banks. Cedelbank
Customers are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
underwriters of any Series of Certificates. Cedelbank Customers in the
United States are limited to securities brokers and dealers and banks.
Currently, Cedelbank has approximately 2,000 customers located in over 80
countries, including all major European countries, Canada and the United
States. Indirect access to Cedelbank is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Cedelbank Customer, either directly or
indirectly.
The Euroclear System (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 securities
and any risk from lack of simultaneous transfers of securities and cash.
Transactions may now be settled in any of 34 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's Brussels, Belgium
office (the "EUROCLEAR OPERATOR" or "EUROCLEAR"), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"COOPERATIVE"). All operations are conducted by the Euroclear Operator, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The Cooperative
establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central
banks), securities brokers and dealers and other professional financial
intermediaries and may include the underwriters of any Series of
Certificates. Indirect access to the Euroclear System is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "TERMS AND CONDITIONS"). The
Terms and Conditions govern transfers of securities and cash within the
Euroclear System, withdrawal of securities and cash from the Euroclear
System, and receipts of payments with respect to securities in the
Euroclear System. All securities in the Euroclear System are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms
and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedelbank
or Euroclear will be credited to the cash accounts of Cedelbank Customers
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 "Certain U.S. Federal Income
Tax Consequences." Cedelbank or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a Certificateholder
under the Pooling and Servicing Agreement on behalf of a Cedelbank Customer
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, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Certificates among
participants of DTC and Euroclear and customers of Cedelbank, 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 otherwise issued in book-entry form will be
issued in fully registered, certificated form to Certificate Owners or
their nominees ("DEFINITIVE CERTIFICATES") rather than to DTC or its
nominee, only if (i) the Transferor advises the Trustee in writing that DTC
is no longer willing or able to discharge properly its responsibilities as
Depository with respect to such Series of Certificates, and the Trustee or
the Transferor is unable to locate a qualified successor, (ii) the
Transferor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through DTC or (iii) after the occurrence
of a Servicer Default, Certificate Owners representing not less than 50%
(or such other percentage specified in the related Prospectus Supplement)
of the Invested Amount advise the Trustee and DTC through participants in
writing that the continuation of a book-entry system through DTC (or a
successor thereto) 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 certificate representing the Certificates and
instructions for re-registration, the Trustee will issue the Certificates
as Definitive Certificates, and thereafter the Trustee will recognize the
holders of such Definitive Certificates as holders under the Pooling and
Servicing Agreement ("HOLDERS").
Distribution of principal and interest on the Certificates will be
made by the Trustee directly to Holders of Definitive Certificates in
accordance with the procedures set forth herein and in the Pooling and
Servicing Agreement. Interest payments and any principal payments on each
Distribution Date or other payment date as specified in the related
Prospectus Supplement 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 register maintained by the Trustee or, if such
Holder holds more than an aggregate principal amount of such Definitive
Certificates to be specified in the Pooling and Servicing Agreement, by
wire transfer to such Holder's account. The final payment on any
Certificate (whether Definitive Certificates or the Certificates registered
in the name of Cede representing the Certificates), however, will be made
only upon presentation and surrender of such Certificate at the office or
agency specified in the notice of final distribution to Certificateholders.
The Trustee will provide such notice to registered Certificateholders not
later than the fifth day of the month of such final distributions.
Definitive Certificates will be transferable and exchangeable at
the offices of the Transfer Agent and Registrar specified in the Pooling
and Servicing Agreement, which shall initially be the Trustee. 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.
INTEREST PAYMENTS
For each Series of Certificates and Class thereof, interest will
accrue from the relevant Closing Date on the applicable Invested Amount,
plus, if applicable, the Pre-Funding Amount (or other amount specified in
the related Prospectus Supplement) 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 in the amounts and on the dates (which may be monthly,
quarterly, semiannually or otherwise as specified in the related Prospectus
Supplement) (each, a "DISTRIBUTION DATE"). Interest payments on any
Distribution Date will generally be funded from collections of Finance
Charge Receivables allocated to the Investor Interest during the preceding
monthly period or periods (each, a "MONTHLY PERIOD") and may be funded from
certain investment earnings on funds held in accounts of the Trust, 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 the Investor Interest of 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 for each Class
thereof, and, for a Series or each Class thereof bearing interest at a
floating Certificate Rate, the initial Certificate Rate, the dates and the
manner for determining subsequent Certificate Rates, and the formula, index
or other method by which such Certificate Rates are determined.
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, as described below, or on an expected date specified
in, or determined in the manner specified in, the related Prospectus
Supplement (the "SCHEDULED PAYMENT DATE"), in which case such Series will
have an Accumulation Period, as described below. If a Series has more than
one Class of Certificates, 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 applicable 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, Scheduled Payment Date or
other expected date, if a Pay Out Event occurs and the Rapid Amortization
Period commences with respect to such Series or Class or under certain
other circumstances described herein or in the related Prospectus
Supplement.
Unless otherwise specified in the related Prospectus Supplement,
during the Revolving Period for each Series of Certificates (which begins
on the Series Closing Date relating to such Series and ends with the
commencement of an Amortization Period), no principal payments will be made
to the Certificateholders of such Series. During the Controlled
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 Pay Out
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 trust account established for the benefit of such
Certificateholders (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 Monthly Period or Periods as
specified in the related Prospectus Supplement and allocated to the
Investor Interest of 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 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 payment guaranty or other similar arrangement
specified in the related Prospectus Supplement.
REVOLVING PERIOD
Unless otherwise specified in the related Prospectus Supplement,
with respect to each Series and any Class thereof, no principal will be
payable to Certificateholders until the Principal Commencement Date or the
Scheduled Payment Date with respect to such Series or Class. For the period
beginning on the Closing Date and ending with the commencement of an
Amortization Period (the "REVOLVING PERIOD"), collections of Principal
Receivables otherwise allocable to the Investor Interest will, subject to
certain limitations, be paid from the Trust to the holder of the
Exchangeable Transferor Certificate or, under certain circumstances and if
so specified in the related Prospectus Supplement, will be treated as
Excess Principal Collections and paid to the holders of other Series of
Certificates issued by the Trust, as described herein and in the related
Prospectus Supplement. See "--Shared Collections of Principal Receivables."
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 Certificates of such Series or any Class thereof will have an
amortization period (the "CONTROLLED AMORTIZATION PERIOD") during which
collections of Principal Receivables allocable to the Investor Interest of
such Series (and certain other amounts if so specified in the related
Prospectus Supplement) will be used on each Distribution Date to make
principal distributions in scheduled amounts to the Certificateholders of
such Series or any Class of such Series then scheduled to receive such
distributions. The amount to be distributed on any Distribution Date during
the Controlled Amortization Period will be limited to an amount (the
"CONTROLLED 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 Supplement may describe certain priorities among
such Classes with respect to such distributions. The Controlled
Amortization Period will commence at the close of business on the Principal
Commencement Date and continue until the earliest of (a) the commencement
of the Rapid Amortization Period, (b) payment in full of the Invested
Amount of the Certificates of such Series or Class and (c) the close of
business on the Stated Series Termination Date with respect to such Series.
ACCUMULATION 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
accumulation period (the "ACCUMULATION PERIOD") during which collections of
Principal Receivables allocable to the Investor Interest of such Series
(and certain other amounts if so specified in the related Prospectus
Supplement) will be deposited prior to each Distribution Date in a
Principal Funding Account and used to make distributions of principal to
the Certificateholders of such Series or Class on the Scheduled Payment
Date. If the Prospectus Supplement relating to a series so specifies, the
amount to be deposited in the Principal Funding Account on any date will be
limited to an amount (the "CONTROLLED DEPOSIT AMOUNT") equal to an amount
specified in the related Prospectus Supplement (the "CONTROLLED
ACCUMULATION AMOUNT") plus the amount of any shortfalls arising from the
failure to pay the Controlled Accumulation Amount on any 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 deposits of principal into
such Principal Funding Account. The Accumulation Period will commence at
the close of business on a date specified in the related Prospectus
Supplement (subject to adjustment if so 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 Invested Amount of
the Certificates of such Series or Class and (c) the close of business on
the Stated Series Termination Date with respect to such Series.
Funds on deposit in any Principal Funding Account may be invested
in permitted investments or subject to a guaranteed rate or investment
agreement or other arrangement intended to assure a specified return on the
investment of such funds. Investment earnings on such funds may be applied
to pay interest on the related Series of Certificates. In order to enhance
the likelihood of payment in full of principal at the end of an
Accumulation Period with respect to a Series of Certificates, such Series
may be subject to a principal guaranty or other similar arrangement. See
"--Principal Payments."
RAPID AMORTIZATION PERIOD
During the period from the day on which a Pay Out Event has
occurred with respect to a Series to the earlier of the date on which the
Invested Amount of the Certificates of such Series has been paid in full or
the related Stated Series Termination Date (the "RAPID AMORTIZATION
PERIOD"), unless otherwise provided in the related Prospectus Supplement,
collections of Principal Receivables allocable to the Investor Interest of
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 order of priority set forth in the
related Prospectus Supplement. During the Rapid Amortization Period with
respect to a Series, distributions of principal to Certificateholders will
not be limited by any Controlled Distribution Amount or Controlled Deposit
Amount. In addition, upon the commencement of the Rapid Amortization Period
with respect to a Series, unless otherwise specified in the related
Prospectus Supplement, 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 Series or Class on the first Distribution Date
in the Rapid Amortization Period. See "--Pay Out Events" for a discussion
of the events which might lead to commencement of the Rapid Amortization
Period.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
If so specified in the related Prospectus Supplement, the
Certificateholders of a Series or any Class thereof may be entitled to
receive all or a portion of Excess Finance Charge Collections with respect
to another Series to cover any shortfalls with respect to amounts payable
from collections of Finance Charge Receivables allocable to such Series or
Class.
SHARED COLLECTIONS OF PRINCIPAL RECEIVABLES
Unless otherwise specified in the related Prospectus Supplement, to
the extent that collections of Principal Receivables and certain other
amounts that are allocated to the Invested Amount of any Series are not
needed to make payments or deposits with respect to such Series, such
collections ("EXCESS PRINCIPAL COLLECTIONS") will be applied to cover
principal payments due to or for the benefit of Certificateholders of
another Series. Any such reallocation will not result in a reduction in the
Invested Amount of the Series to which such collections were initially
allocated.
COMPANION SERIES
If so provided in the Prospectus Supplement relating to a Series,
each such Series is subject to being paired with another Series (in such
case, a "COMPANION SERIES"). The Prospectus Supplement for such Series and
the Prospectus Supplement for the Companion Series will each specify the
relationship between the Series.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
With respect to the Trust, the Transferor has transferred and
assigned to the Trust of all its right, title and interest in and to
Receivables in certain Accounts which were selected from the Bank Portfolio
based upon criteria set forth in the Pooling and Servicing Agreement.
In connection with the transfer of the Receivables to the Trust,
the Transferor has indicated in its computer files that the Receivables
have been conveyed to the Trust. In addition, the Transferor has provided
to the Trustee computer files or microfiche lists containing a true and
complete list showing each Account, including each Additional Account,
identified by account number and by total outstanding balance,
respectively. The Transferor has not delivered and will not deliver to the
Trustee any other records or agreements relating to the Accounts or the
Receivables, except in connection with additions or removals of Accounts.
Except as stated above, the records and agreements relating to the Accounts
and the Receivables maintained by the Transferor or the Servicer are not
segregated by the Transferor or the Servicer from other documents and
agreements relating to other credit card accounts and receivables and are
not stamped or marked to reflect the transfer of the Receivables to the
Trust, but the computer records of the Transferor are required to be marked
to evidence such transfer. The Transferor has filed UCC financing
statements with respect to the Receivables meeting the requirements of
Delaware state law. See "Certain Legal Aspects of the Receivables."
EXCHANGES
The Pooling and Servicing Agreement provides for the Trustee to
issue two types of certificates: (i) one or more Series of Certificates
that will be transferable and have the characteristics described below and
(ii) the Exchangeable Transferor Certificate, a certificate which evidences
the Transferor Interest, which initially will be held by the Transferor and
will be transferable only as provided in the Pooling and Servicing
Agreement. The Pooling and Servicing Agreement also provides that, pursuant
to any one or more Series Supplements, the holder of the Exchangeable
Transferor Certificate may tender the Exchangeable Transferor Certificate,
or, if provided in the relevant Series Supplement, Certificates
representing any Series and the Exchangeable Transferor Certificate, to the
Trustee in exchange for one or more new Series (which may include Series
offered pursuant to this Prospectus) and a reissued Exchangeable Transferor
Certificate (any such tender, an "EXCHANGE"). However, after giving effect
to the Exchange the Transferor Interest expressed as a percentage of the
aggregate amount of Principal Receivables must be equal to or exceed the
Minimum Transferor Interest. Pursuant to the Pooling and Servicing
Agreement, the holder of the Exchangeable Transferor Certificate may
define, with respect to any newly issued Series, certain terms including:
(i) its initial invested amount (or method for calculating such amount)
which amount may not be greater than the current principal amount of the
Exchangeable Transferor Certificate; (ii) its certificate rate (or formula
for the determination thereof); (iii) its payment dates and the date from
which interest shall accrue; (iv) its series termination date; and (v) such
other terms as the Transferor may deem appropriate (all such terms, the
"PRINCIPAL TERMS" of such Series). Upon the issuance of an additional
Series of Certificates, none of the Transferor, the Servicer, the Trustee
or the Trust will be required or will intend to obtain the consent of any
Certificateholder of any other Series previously issued by the Trust.
However, as a condition of an Exchange, the holder of the Exchangeable
Transferor Certificate will deliver to the Trustee written confirmation
that the Exchange will not result in the Rating Agency reducing or
withdrawing its rating of any Certificates of any outstanding Series. As
used herein, "RATING AGENCY" means a nationally recognized rating
organization selected by the Bank to rate any Series. The Transferor may
offer any Series to the public or other investors under a Prospectus or
other disclosure document (a "DISCLOSURE DOCUMENT") in offerings pursuant
to this Prospectus or in transactions either registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT") or exempt from
registration thereunder directly, through the Underwriter or one or more
other underwriters, purchasers 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
by the Transferor. Other Series have been issued by the Trust and may be
issued concurrently herewith. The Transferor intends to offer, from time to
time, additional Series issued by the Trust.
Unless otherwise specified in the related Prospectus Supplement,
the holder of the Exchangeable Transferor Certificate may perform Exchanges
and define Principal Terms such that each Series issued by the Trust 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 or accumulation periods while
other Series are not. Moreover, each Series may have the benefit of an
Enhancement which is available only to such Series. Under the Pooling and
Servicing Agreement, the Trustee will hold any such form of Enhancement
only on behalf of the Series with respect to which it relates. The holder
of the Exchangeable Transferor Certificate may deliver a different form of
Enhancement agreement with respect to each Series. The holder of the
Exchangeable Transferor Certificate may specify different certificate rates
and monthly servicing fees with respect to each Series (or a particular
Class within such Series). The holder of the Exchangeable Transferor
Certificate will also have the option under the Pooling and Servicing
Agreement to vary between Series the terms upon which a Series (or a
particular Class within such Series) may be repurchased by the Transferor.
Additionally, certain Series may be subordinated to other Series,
or Classes within a Series may have different priorities. There will be no
limit to the number of Exchanges that may be performed under the Pooling
and Servicing Agreement.
Under the Pooling and Servicing Agreement and pursuant to a Series
Supplement, an Exchange may only occur upon the satisfaction of certain
conditions provided in the Pooling and Servicing Agreement. Under the
Pooling and Servicing Agreement, the holder of the Exchangeable Transferor
Certificate may perform an Exchange by notifying the Trustee at least five
days in advance of the date upon which the Exchange is to occur. Under the
Pooling and Servicing 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) which amount may not be greater than the current
principal amount of the Exchangeable Transferor Certificate, (ii) its
certificate rate (or method of calculating such rate) and (iii) the
Enhancement Provider, if any, which is expected to provide credit support
with respect to it. On the date of the Exchange, the Pooling and Servicing
Agreement provides that the Trustee will authenticate any such Series only
upon delivery to it of the following, among other things, (i) a Series
Supplement specifying the Principal Terms of such Series, (ii) an opinion
of counsel to the effect that, unless otherwise stated in the related
Series Supplement, the certificates of such Series will be characterized as
indebtedness for Federal income tax purposes under existing law, and that
the issuance of such Series will not have a material adverse effect on the
Federal income tax characterization of any outstanding Series, (iii) if
required by the related Series Supplement, the form of Enhancement, (iv) if
an Enhancement is required by the Series Supplement, an appropriate
Enhancement agreement with respect thereto, (v) written confirmation from
each Rating Agency that the Exchange will not result in such Rating
Agency's reducing or withdrawing its rating on any then outstanding Series
rated by it, (vi) the existing Exchangeable Transferor Certificate and, if
applicable, the certificates representing the Series to be exchanged, and
(vii) an officer's certificate of the Transferor to the effect that on the
date of the Exchange the Transferor, after giving effect to the Exchange,
would not be required to add Receivables from Additional Accounts pursuant
to the Pooling and Servicing Agreement, and the Transferor Interest
averaged expressed as a percentage of the aggregate amount of Principal
Receivables would be at least equal to a certain specified minimum
percentage (the "MINIMUM TRANSFEROR INTEREST"). Upon satisfaction of such
conditions, the Trustee will cancel the existing Exchangeable Transferor
Certificate and the certificates of the exchanged Series, if applicable,
and authenticate the new Series and a new Exchangeable Transferor
Certificate.
REPRESENTATIONS AND WARRANTIES
The Transferor has made and will make certain representations and
warranties to the Trust to the effect that, among other things, (a) as of
the date of issuance of a Series (a "SERIES CLOSING Date"), the Transferor
was duly incorporated and in good standing and that it has the authority to
consummate the transactions contemplated by the Pooling and Servicing
Agreement and (b) as of the relevant cut-off date for each Series as
defined herein and in the related Prospectus Supplement (the "SERIES
CUT-OFF DATES") (or as of the date of the designation of Additional
Accounts), each Account was an Eligible Account (as defined below). If (i)
any of these representations and warranties proves to have been incorrect
in any material respect when made, and continues to be incorrect for 60
days after notice to the Transferor by the Trustee or to the Transferor and
the Trustee by the Certificateholders holding more than 50% of the Investor
Interest of the related Series, and (ii) as a result the interests of the
Certificateholders are materially and adversely affected, and continue to
be materially and adversely affected during such period, then the Trustee
or Certificateholders holding more than 50% of the Investor Interest may
give notice to the Transferor (and to the Trustee in the latter instance)
declaring that a Pay Out Event has occurred, thereby commencing the Rapid
Amortization Period. See "--Pay Out Events."
The Transferor has made and will make representations and
warranties to the Trust relating to the Receivables to the effect, among
other things, that (a) as of the Series Closing Date of the initial Series
of Certificates, the 1992-1 Series issued by the Trust (the "INITIAL
CLOSING DATE"), each of the Receivables then existing was an Eligible
Receivable (as defined below) and (b) as of the date of creation of any new
Receivable, such Receivable is an Eligible Receivable and the
representation and warranty set forth in clause (b) in the immediately
following paragraph is true and correct with respect to such Receivable. In
the event (i) of a breach of any representation and warranty set forth in
this paragraph, within 60 days, or such longer period as may be agreed to
by the Trustee, of the earlier to occur of the discovery of such breach by
the Transferor or Servicer or receipt by the Transferor of written notice
of such breach given by the Trustee, or, with respect to certain breaches
relating to prior liens, immediately upon the earlier to occur of such
discovery or notice and (ii) that as a result of such breach, the
Receivables in the related Accounts are charged off as uncollectible, the
Trust's rights in, to or under the Receivables or its proceeds are impaired
or the proceeds of such Receivables are not available for any reason to the
Trust free and clear of any lien, the Transferor shall accept reassignment
of each Principal Receivable as to which such breach relates (an
"INELIGIBLE RECEIVABLE") on the terms and conditions set forth below;
provided, however, that no such reassignment shall be required to be made
with respect to such Ineligible Receivable if, on any day within the
applicable period (or such longer period as may be agreed to by the
Trustee), the representations and warranties with respect to such
Ineligible Receivable shall then be true and correct in all material
respects. The Transferor shall accept reassignment of each such Ineligible
Receivable by (i) directing the Servicer to deduct the amount of each such
Ineligible Receivable from the aggregate amount of Principal Receivables
used to calculate the Transferor Interest and (ii) depositing into the
Collection Account an amount equal to the finance charge at the annual
percentage rate applicable to such Ineligible Receivable from the last date
billed through the end of the Monthly Period in which such reassignment
obligation arises. In the event that the exclusion of an Ineligible
Receivable from the calculation of the Transferor Interest would cause the
Transferor Interest to be a negative number, on the date of reassignment of
such Ineligible Receivable the Transferor shall make a deposit in the
Principal Account in immediately available funds in an amount equal to the
amount by which the Transferor Interest would be reduced below zero. Any
such deduction or deposit shall be considered a repayment in full of the
Ineligible Receivable. The obligation of the Transferor to accept
reassignment of any Ineligible Receivable is the sole remedy respecting any
breach of the representations and warranties set forth in this paragraph
with respect to such Receivable available to the Certificateholders or the
Trustee on behalf of Certificateholders.
The Transferor has made representations and warranties to the Trust
to the effect, among other things, that as of the Initial Closing Date (a)
the Pooling and Servicing Agreement constituted a legal, valid and binding
obligation of the Transferor and (b) the transfer of Receivables by it to
the Trust under the Pooling and Servicing Agreement constituted either a
valid transfer and assignment to the Trust of all right, title and interest
of the Transferor in and to the Receivables (other than Receivables in
Additional Accounts), whether then existing or thereafter created and the
proceeds thereof (including amounts in any of the accounts established for
the benefit of Certificateholders) or the grant of a first priority
perfected security interest in such Receivables (except for certain tax
liens) and the proceeds thereof (including amounts in any of the accounts
established for the benefit of Certificateholders), which is effective as
to each such Receivable upon the creation thereof. In the event of a breach
of any of the representations and warranties described in this paragraph,
either the Trustee or the holders of certificates evidencing undivided
interests in the Trust aggregating more than 50% of the Investor Interest
of all Series outstanding, by written notice to the Transferor (and to the
Trustee and the Servicer if given by the Certificateholders of all Series
outstanding), may direct the Transferor to accept reassignment of the Trust
Portfolio within 60 days of such notice, or within such longer period
specified in such notice. The Transferor will be obligated to accept
reassignment of the Trust Portfolio on a Distribution Date occurring within
such applicable period. Such reassignment will not be required to be made,
however, if at any time during such applicable period, or such longer
period, the representations and warranties shall then be true and correct
in all material respects. The deposit amount for such reassignment will be
equal to the Invested Amount for all Series of Certificates required to be
repurchased on the last day of the Monthly Period preceding the
Distribution Date on which the reassignment is scheduled to be made less
the amount, if any, previously allocated for payment of principal to such
Certificateholders on such Distribution Date, plus an amount equal to all
accrued and unpaid interest on such Certificates at the applicable
certificate rate through such last day of such Monthly Period, less the
amount transferred to the Distribution Account from the Finance Charge
Account in respect of interest on such Certificates. The payment of the
reassignment deposit amount and the transfer of all other amounts deposited
for the preceding month in the Distribution Account will be considered a
payment in full of the invested amount for all Series of Certificates
required to be repurchased and will be distributed upon presentation and
surrender of the Certificates for each such Series. If the Trustee or
Certificateholder gives a notice as provided above, the obligation of the
Transferor to make any such deposit will constitute the sole remedy
respecting a breach of the representations and warranties available to the
Trustee or such Certificateholders.
An "ELIGIBLE ACCOUNT" means, as of the Original Cut-Off Date (or,
with respect to Additional Accounts, as of their date of designation for
inclusion in the Trust), each Account owned by the Transferor (a) which was
in existence and maintained with the Transferor, (b) which is payable in
United States dollars, (c) the cardholder of which has provided, as his
most recent billing address, an address located in the United States or its
territories or possessions or any mailing address on any United States
armed forces military base of operations, including APO and FPO addresses,
(d) which has not been classified by the Transferor in its computer files
as being involved in a voluntary or involuntary bankruptcy proceeding, (e)
which has not been identified as an Account with respect to which the
related card has been lost or stolen, (f) which is not sold or pledged to
any other party at the time of its inclusion in the Trust, (g) which does
not have receivables which are sold or pledged to any other party at the
time of their inclusion in the Trust, and (h) which is a VISA or MasterCard
revolving credit card account.
An "ELIGIBLE RECEIVABLE" means each Receivable (a) which has arisen
under an Eligible Account, (b) which was created in compliance, in all
material respects, with all requirements of law applicable to the
Transferor, and pursuant to a credit card agreement which complies in all
material respects with all requirements of law applicable to the
Transferor, (c) with respect to which all consents, licenses or
authorizations of, or registrations with, any governmental authority
required to be obtained or given by the Transferor in connection with the
creation of such Receivable or the execution, delivery, creation and
performance by the Transferor of the related credit card agreement have
been duly obtained or given and are in full force and effect as of the date
of the creation of such Receivable, (d) as to which, at the time of its
inclusion in the Trust, the Transferor or the Trust had good and marketable
title free and clear of all liens and security interests arising under or
through the Transferor (other than certain tax liens for taxes not then due
or which the Transferor is contesting), (e) which is the legal, valid and
binding payment obligation of the cardholder thereof, legally enforceable
against such cardholder in accordance with its terms (with certain
bankruptcy-related exceptions) and (f) which constitutes an "account" under
Article 9 of the UCC as then in effect in the State of Delaware.
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 defects, compliance with the Transferor's representations and
warranties or for any other purpose. The Servicer, however, will 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 in "The Receivables," the Transferor will have
the right to designate for the Trust, from time to time, Additional
Accounts to be included as Accounts. In addition, the Transferor will be
required to designate Additional Accounts (i) if the average of the
Transferor Interest for any 30 consecutive days expressed as a percentage
of the aggregate amount of Principal Receivables is less than the Minimum
Transferor Interest, or (ii) if, on the last day of any Monthly Period, the
aggregate amount of Principal Receivables is less than the Minimum
Aggregate Principal Receivables. Receivables from such Additional Accounts
shall be transferred to the Trust on or before the tenth business day
following such 30-day period or the last day of any Monthly Period, as the
case may be. The Transferor will convey to the Trust its interest in all
Receivables of such Additional Accounts, whether such Receivables are then
existing or thereafter created. The total amount of Receivables in the
Trust will fluctuate from day to day, because the amount of new Receivables
arising in the Accounts and the amount of payments collected on existing
Receivables usually differ each day.
Each Additional Account must be an Eligible Account at the time of
its designation. However, Additional Accounts may not be of the same credit
quality as the initial Accounts. Additional Accounts may have been
originated by the Transferor using credit criteria different from those
which were applied by the Transferor to the initial Accounts or may have
been acquired by the Transferor from a third-party financial institution
which may have had different credit criteria.
A conveyance by the Transferor to the Trust of Receivables in
Additional Accounts is subject to the following conditions, among others:
(i) the Transferor shall give the Trustee, each Rating Agency and the
Servicer written notice that such Additional Accounts will be included,
which notice shall specify the approximate aggregate amount of the
Receivables to be transferred; (ii) the Transferor shall have delivered to
the Trustee a written assignment (including an acceptance by the Trustee on
behalf of the Trust for the benefit of the Certificateholders) as provided
in the Pooling and Servicing Agreement relating to such Additional Accounts
(the "ASSIGNMENT") and, within five (5) business days thereafter, the
Transferor shall have delivered to the Trustee a computer file or
microfiche list, dated the date of such Assignment, containing a true and
complete list of such Additional Accounts; (iii) the Transferor shall
represent and warrant that (x) each Additional Account is, as of the date
the Account is selected to have its receivables added to the Trust (the
"ADDITION CUT-OFF DATE"), an Eligible Account, and each Receivable in such
Additional Account is, as of the Addition Cut-Off Date, an Eligible
Receivable, (y) no selection procedures believed by the Transferor to be
materially adverse to the interests of the Certificateholders were utilized
in selecting the Additional Accounts from the available Eligible Accounts
from the Bank Portfolio, and (z) as of the Addition Cut-Off Date, the
Transferor is not insolvent; (iv) the Transferor shall deliver an opinion
of counsel with respect to the security interest of the Trust in the
Receivables in the Additional Accounts transferred to the Trust; and (v)
the Trustee shall have received notice that the Rating Agency Condition has
been satisfied with respect to such addition.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in the next succeeding
sentence, the Transferor may, but shall not be obligated to, designate from
time to time, all Receivables from certain Accounts to be Removed Accounts,
all Receivables in which shall be subject to deletion and removal from the
Trust; provided, however, that the Transferor shall not make more than one
such designation in any Monthly Period. The Transferor will be permitted to
designate and require reassignment to it of the Receivables from Removed
Accounts only upon satisfaction of the following conditions: (i) the
removal of any Receivables of any Removed Accounts shall not, in the
reasonable belief of the Transferor, cause a Pay Out Event for any Series
to occur, cause the Transferor Interest expressed as a percentage of the
aggregate amount of Principal Receivables to be less than the Minimum
Transferor Interest on such date of removal, or result in the failure to
make any payment specified in the related Series Supplement with respect to
any Series; (ii) the Transferor shall have delivered to the Trustee for
execution a written assignment and, within five business days thereafter, a
computer file or microfiche list containing a true and complete list of all
Removed Accounts identified by account number and the aggregate amount of
the Receivables in such Removed Accounts; (iii) not more than 15% of the
Trust Portfolio is more than 34 days delinquent; (iv) the Transferor shall
represent and warrant that no selection procedures believed by the
Transferor to be materially adverse to the interests of the
Certificateholders were utilized in selecting the Removed Accounts to be
removed from the Trust; (v) the Rating Agency shall have received notice of
such proposed removal of Accounts and the Transferor shall not have
received notice from the Rating Agency that such proposed removal will
result in a downgrade of its then-current rating for any Series of
Certificates; (vi) the Principal Receivables of the Removed Accounts shall
not equal or exceed 5% of the aggregate amount of the Principal Receivables
in the Trust at such time; provided, that if any Series has been paid in
full, the Principal Receivables in such Removed Accounts may equal the
initial invested amount of such Series; and (vii) the Transferor shall have
delivered to the Trustee an officer's certificate confirming the items set
forth in clauses (i) through (vi) above.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer will
be responsible for servicing and administering the Receivables in
accordance with the Servicer's policies and procedures for servicing credit
card receivables comparable to the Receivables. The Servicer will be
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.
TRUST ACCOUNTS
The Trustee has established and maintains in the name of the Trust
two separate accounts in a segregated trust account (which need not be a
deposit account), a "FINANCE CHARGE ACCOUNT" and a "PRINCIPAL ACCOUNT" for
the benefit of the Certificateholders of each Series. The Trustee has also
established a "DISTRIBUTION ACCOUNT" (a non-interest bearing segregated
demand deposit account established with a "QUALIFIED INSTITUTION" other
than the Transferor). The Servicer has established and maintains, in the
name of the Trust, for the benefit of Certificateholders of all Series, a
"COLLECTION ACCOUNT," which is a non-interest bearing segregated account
established and maintained with the Servicer or with a Qualified
Institution, defined as a depository institution, which may include the
Trustee, organized under the laws of the United States or any one of the
states thereof, which at all times has a certificate of deposit rating of
P-1 by Moody's Investors Service, Inc. (" MOODY'S") and of A-1+ by Standard
& Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.
("STANDARD & POOR'S") or long-term unsecured debt obligation (other than
such obligation the rating of which is based on collateral or on the credit
of a person other than such institution or trust company) rating of Aa3 by
Moody's and AA- by Standard & Poor's and deposit insurance provided by
either the Bank Insurance Fund ("BIF") or the Savings Association Insurance
Fund ("SAIF"), each administered by the FDIC, or a depository institution,
which may include the Trustee, which is acceptable to the Rating Agency.
Funds in the Principal Account and the Finance Charge Account will be
invested, at the direction of the Servicer, in (i) obligations fully
guaranteed by the United States of America, (ii) demand deposits, time
deposits or certificates of deposit of depository institutions or trust
companies, the certificates of deposit of which have the highest rating
from Moody's and Standard & Poor's, (iii) commercial paper having, at the
time of the Trust's investment, a rating in the highest rating category
from Moody's and Standard & Poor's, (iv) bankers acceptances issued by any
depository institution or trust company described in clause (ii) above, (v)
money market funds which have the highest rating from, or have otherwise
been approved in writing by, Moody's and Standard & Poor's, (vi) certain
open end diversified investment companies, and (vii) any other investment
if the Rating Agency confirms in writing that such investment will not
adversely affect its then-current rating of the Certificates (such
investments, "PERMITTED INVESTMENTS"). Any earnings (net of losses and
investment expenses) on funds in the Finance Charge Account or the
Principal Account will be paid to the Transferor. 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 Finance
Charge Account and the Principal Account for the purpose of carrying out
the Servicer's duties under the Pooling and Servicing Agreement. The Paying
Agent specified in the Pooling and Servicing Agreement has the revocable
power to withdraw funds from the Distribution Account for the purpose of
making distributions to the Certificateholders.
DISCOUNT RECEIVABLES
The Pooling and Servicing Agreement provides that 1.3% (the "YIELD
FACTOR") of the amount of Receivables consisting of amounts charged by
cardholders for goods and services and cash advances will be treated as
Finance Charge Receivables (the "DISCOUNT RECEIVABLES"). On the date of
processing of any collections, the product of the Yield Factor and
collections of Receivables consisting of amounts charged by cardholders for
goods and services and cash advances on such day which otherwise would be
Principal Receivables will be deemed "DISCOUNT RECEIVABLE COLLECTIONS." An
amount equal to the product of (i) the Investor Percentage with respect to
Finance Charge Receivables for each Series of Certificates issued and
outstanding and (ii) the amount of such Discount Receivable Collections
will be deposited by the Servicer into the Collection Account and an amount
equal to the product of (i) the Transferor Percentage and (ii) the amount
of the Discount Receivable Collections will be paid to the holder of the
Exchangeable Transferor Certificate. The former amount deposited into the
Collection Account will be applied as provided below regarding payments
with respect to Finance Charge Receivables. The Transferor may at any time
increase the Yield Factor to a fixed percentage up to 4%; provided that the
Transferor must provide 30 days' prior written notice to the Servicer, the
Trustee, any Enhancement Provider and the Rating Agency of any such
designation, and such designation will become effective on the date
specified therein only if (i) in the reasonable belief of the Transferor
such designation would not cause a Pay Out Event to occur or an event
which, with notice or the lapse of time or both, would constitute a Pay Out
Event and (ii) the Rating Agency confirms in writing its then-current
rating on any outstanding series.
INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
The Servicer will allocate between the Invested Amount of each
Series issued by the Trust (and between each Class of each Series) and the
Transferor Interest, and, in certain circumstances, the interest of certain
Enhancement Providers, all amounts collected on Finance Charge Receivables,
all amounts collected on Principal Receivables and all Receivables in
Defaulted Accounts. The Servicer will make each allocation by reference to
the applicable Investor Percentage of each Series and the Transferor
Percentage, and, in certain circumstances, the percentage interest of
certain Enhancement Providers (the "ENHANCEMENT PERCENTAGE") with respect
to such Series. The Prospectus Supplement relating to a Series will specify
the Investor Percentage and, if applicable, the Enhancement Percentage (or
the method of calculating such percentage) with respect to the allocations
of collections of Principal Receivables, Finance Charge Receivables and
Receivables in Defaulted Accounts during the Revolving Period and any
Amortization Period, as applicable. In addition, for each Series of
Certificates having more than one Class, the related Prospectus Supplement
will specify the method of allocation between each Class.
The Transferor Percentage will, in all cases, be equal to 100%
minus the aggregate Investor Percentages and, if applicable, the
Enhancement Percentages, for all Series then outstanding.
APPLICATION OF COLLECTIONS
Allocations. Except as otherwise provided below or in a Series
Supplement, the Servicer will deposit into the Collection Account, no later
than the second business day following the date of processing, any payment
collected by the Servicer on the Receivables; provided, however, that the
Servicer need not deposit amounts to be paid to the holder of the
Exchangeable Transferor Certificate and certain amounts allocated to
Certificateholders of a Series, as specified in the related Series
Supplement, into the Collection Account, and provided, further, that for as
long as the Bank remains the Servicer under the Pooling and Servicing
Agreement, and (a)(i) the Servicer provides to the Trustee a letter of
credit covering collection risk of the Servicer acceptable to the Rating
Agency and (ii) the Transferor shall not have received a notice from the
Rating Agency that such letter of credit would result in the lowering of
such Rating Agency's then existing rating of any Series of Certificates
then outstanding, or (b) the Servicer has and maintains a certificate of
deposit rating of P-1 by Moody's and of A-1 by Standard & Poor's and
deposit insurance provided by either BIF or SAIF, then the Servicer may
make such deposits and payments on the business day immediately prior to
the Distribution Date (the "TRANSFER DATE") in an amount equal to the net
amount of such deposits and payments which would have been made had the
conditions of this proviso not applied.
Any amounts collected in respect of Principal Receivables not paid
to the Transferor because the Transferor Interest expressed as a percentage
of the aggregate amount of Principal Receivables has been reduced below the
Minimum Transferor Interest ("UNALLOCATED PRINCIPAL COLLECTIONS"), together
with any adjustment payments, as described below, will be held in the
Collection Account and only paid to the Transferor if and to the extent
that such percentage with respect to the Transferor Interest is greater
than the Minimum Transferor Interest. Unallocated Principal Collections
will be applied to principal shortfalls for each Series on the applicable
Transfer Date. If principal shortfalls for all Series exceed Unallocated
Principal Collections for any Monthly Period, Unallocated Principal
Collections will be allocated pro rata among the applicable Series based on
the relative amounts of principal shortfalls.
FUNDING PERIOD
For any Series of Certificates, the related Prospectus Supplement
may specify that for a period beginning on the Series Closing Date and
ending on a specified date before the commencement of an Amortization
Period or Accumulation Period with respect to such Series (the "FUNDING
PERIOD"), the aggregate amount of Principal Receivables in the Trust
allocable to such Series may be less than the aggregate principal amount of
the Certificates of such Series and that the amount of such deficiency (the
"PRE-FUNDING AMOUNT") will be held in a trust account established with the
Trustee for the benefit of the Certificateholders of such Series (the
"PRE-FUNDING ACCOUNT") pending the transfer of additional Receivables to
the Trust or pending the reduction of the Invested Amounts of other Series.
The related Prospectus Supplement will specify the initial Invested Amount
with respect to such 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 Invested Amount.
The Invested Amount of such a Series will increase as Receivables are
delivered to the Trust or as the Invested Amounts of other Series are
reduced. The Invested Amount may also decrease due to Investor Charge-Offs
as provided in the related Prospectus Supplement.
During the Funding Period, funds on deposit in the Pre-Funding
Account for a Series of Certificates will be withdrawn and paid to the
Transferor to the extent of any increases in the Invested Amount. In the
event that the Invested Amount does not for any reason equal the Full
Invested Amount by the end of the Funding Period, any amount remaining in
the Pre-Funding Account and any additional amounts specified in the related
Prospectus Supplement will be payable to the Certificateholders of such
Series in the manner and at such time as set forth in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, monies in the
Pre-Funding Account will be invested by the Trustee in Permitted
Investments or 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 during the related Monthly Period 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.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
For each Series of Certificates, on the first business day on or
before the eighth calendar day prior to each Distribution Date (the
"DETERMINATION DATE"), the Servicer will calculate the Investor Default
Amount for the preceding Monthly Period. Receivables in any Account will be
charged off as uncollectible in accordance with the Servicer's customary
and usual policies and procedures for servicing its own comparable credit
card accounts (such an Account, a "DEFAULTED ACCOUNT"). The term "DEFAULT
AMOUNT" means, for any Monthly Period, an amount (which shall not be less
than zero) equal to (a) the aggregate amount of Principal Receivables
(other than Ineligible Receivables) in Defaulted Accounts on the day such
Account became a Defaulted Account for each day in such Monthly Period
minus (b) the aggregate amount of Recoveries received in such Monthly
Period. A portion of the Default Amount (the "INVESTOR DEFAULT AMOUNT")
will be allocated to the Certificateholders for each Distribution Date in
an amount equal to the product of the Investor Percentage for the relevant
Series applicable during the related Monthly Period and the Default Amount
for such related Monthly Period. 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 Monthly Period may be paid
from other amounts, including from Enhancement, and applied to pay
principal to Certificateholders or the holder of the Exchangeable
Transferor Certificate, 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
Holders of the Senior Certificates to make up any Investor Default Amount
allocable to such Holders of the Senior Certificates.
If the Servicer adjusts the amount of any Principal Receivable
because of transactions occurring in respect of a rebate or refund to a
cardholder, or because such Principal Receivable was created in respect of
merchandise which was refused or returned by a cardholder, then the amount
of the Transferor Interest in the Trust will be reduced, on a net basis, by
the amount of the adjustment. In addition, the Transferor Interest in the
Trust will be reduced, on a net basis, as a result of transactions in
respect of any Principal Receivable which was discovered as having been
created through a fraudulent or counterfeit charge.
INVESTOR CHARGE-OFFS
With respect to each Series of Certificates, if the amount payable
on a Distribution Date or other specified date in respect of interest on
the Certificates, the Investor Servicing Fee (unless otherwise specified in
the related Prospectus Supplement), the Investor Default Amount and other
required fees exceeds the amount on deposit in the Collection Account
available therefor, available Enhancement amounts, if any, and amounts
available from other specified sources, then the Invested Amount with
respect to such Series will be reduced by the amount of such excess, but
not more than the Investor Default Amount (an "INVESTOR CHARGE-OFF").
Investor Charge-Offs will be reimbursed on any Distribution Date to the
extent amounts on deposit in the Collection Account and otherwise available
therefor exceed such interest, fees and any aggregate Investor Default
Amount payable on such date. Such reimbursement of Investor Charge-Offs
will result in an increase in the Invested Amount with respect to such
Series. 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
Invested Amounts of the Classes.
DEFEASANCE
If so specified in the related Prospectus Supplement relating to a
Series, the Transferor may terminate its substantive obligations in respect
of such Series or the Trust by depositing with the Trustee, from amounts
representing, or acquired with, collections of Receivables, money or
Permitted Investments sufficient to make all remaining scheduled interest
and principal payments on such Series or all outstanding Series of
Certificates of the Trust, as the case may be, on the dates scheduled for
such payments and to pay all amounts owing to any Enhancement Provider with
respect to such Series or all outstanding Series, as the case may be, if
such action would not result in a Pay Out Event for any Series. Prior to
its first exercise of its right to substitute money or Permitted
Investments for Receivables, the Transferor 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 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, for
Federal income tax purposes, (a) such action will not adversely affect the
tax characterization as debt of Certificates of such Series or Class that
were characterized as debt at the time of their issuance, (b) following
such action the Trust will not be deemed to be an association (or publicly
traded partnership) taxable as a corporation and (c) such action will not
cause or constitute an event in which gain or loss would be recognized by
any Certificateholder or the Trust (an opinion of counsel with respect to
any matter to the effect referred to in clause (ii) with respect to any
action is referred to herein as a "TAX OPINION").
FINAL PAYMENT OF PRINCIPAL; TERMINATION
With respect to each Series, the Certificates will be subject to
optional repurchase by the Transferor on any Distribution Date after the
Invested Amount of such Series is reduced to an amount less than or equal
to the percentage of the initial outstanding principal amount of the
Certificates specified in the related Prospectus Supplement, if certain
conditions set forth in the Pooling and Servicing Agreement are met. Unless
otherwise specified in the related Prospectus Supplement, the repurchase
price will be equal to the Invested Amount of such Series (less the amount,
if any, on deposit in any Principal Funding Account with respect to such
Series), plus accrued and unpaid interest on the Certificates.
The Certificates of each Series will be retired on the day
following the Distribution Date on which the final payment of principal is
scheduled to be made to the Certificateholders, whether as a result of
optional reassignment to the Transferor or otherwise. Each Prospectus
Supplement will specify the final date on which principal and interest with
respect to the related Series of Certificates will be scheduled to be
distributed (the "STATED SERIES TERMINATION DATE"); provided, however, that
the Certificates may be subject to prior termination as provided above. If
the Invested Amount is greater than zero on the Stated Series Termination
Date, the Trustee will be required to sell or cause to be sold certain
Receivables allocable to such Series in the manner provided in the Pooling
and Servicing Agreement and Series Supplement and to pay the net proceeds
of such sale and any collections on the Receivables, up to an amount equal
to the sum of the Invested Amount plus accrued interest due on the
Certificates and any other amounts specified in the related Prospectus
Supplement, to the Certificateholders of such Series on such Stated Series
Termination Date as final payment of the Certificates.
Unless the Servicer and the holder of the Exchangeable Transferor
Certificate instruct the Trustee otherwise, the Trust will terminate on the
earlier of (a) the day after the Distribution Date with respect to any
Series following the date on which funds shall have been deposited in the
Distribution Account for the payment to Certificateholders of each Series
outstanding sufficient to pay in full the aggregate Investor Interest of
all Series outstanding plus accrued interest thereon at the applicable
certificate rates through the end of the related Monthly Period, or (b)
August 1, 2032. Upon the termination of the Trust and the surrender of the
Exchangeable Transferor Certificate, the Trustee shall convey to the holder
of the Exchangeable Transferor Certificate 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 Distribution Account and other similar bank
accounts of the Trust with respect to other Series).
PAY OUT EVENTS
Unless otherwise specified in the related Prospectus Supplement, as
described above, the Revolving Period will continue through the date
specified in the related Prospectus Supplement unless a Pay Out Event
occurs prior to such date. A "PAY OUT EVENT" occurs with respect to all
Series issued by the Trust upon the occurrence of either of the following
events:
(a) certain events of insolvency or receivership relating to
the Transferor; or
(b) the Trust becomes subject to regulation as an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
In addition, a Pay Out Event may occur with respect to any Series
upon the occurrence of any other event specified in the related Prospectus
Supplement. On the date on which a Pay Out Event is deemed to have
occurred, the Rapid Amortization Period will commence. If, because of the
occurrence of a Pay Out Event, the Rapid Amortization Period begins earlier
than the scheduled commencement of a Controlled Amortization Period or an
Accumulation Period or prior to a Scheduled Payment Date,
Certificateholders will begin receiving distributions of principal earlier
than they otherwise would have, which may shorten the average life of the
Certificates.
If the only Pay Out Event to occur is either the insolvency of the
Transferor or the appointment of a receiver or conservator for the
Transferor, the receiver or conservator for the Transferor may have the
power to delay or prevent commencement of the Rapid Amortization Period.
In addition to the consequences of a Pay Out Event discussed above,
unless otherwise specified in the related Prospectus Supplement, if
pursuant to certain provisions of Federal law, the Transferor voluntarily
enters liquidation or a receiver is appointed for the Transferor, on the
day of such event the Transferor will immediately cease to transfer
Principal Receivables to the Trust and promptly give notice to the Trustee
of such event. 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. Unless otherwise instructed within a specified period by
Certificateholders representing undivided interests aggregating more than
50% of the Invested Amount of each such Series (or if any Series has more
than one Class, of each Class, and any other person specified in the
Pooling and Servicing Agreement) issued and outstanding, the Trustee will
sell, dispose of, or otherwise liquidate the portion of the Receivables
allocated to the Certificates and the Receivables allocable to other Series
with respect to which all outstanding Classes did not vote to continue the
Trust in accordance with the Pooling and Servicing Agreement in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds from the sale, disposition or liquidation of the Receivables will
be treated as collections of the Receivables and applied with respect to
such Series as provided above in "--Application of Collections" and in the
related Prospectus Supplement.
If the only Pay Out Event to occur is either the insolvency of the
Transferor or the appointment of a conservator or receiver for the
Transferor, the conservator or receiver may have the power to prevent the
early sale, liquidation or disposition of the Receivables and the
commencement of the Rapid Amortization Period. In addition, a conservator
or receiver may have the power to cause the early sale of the Receivables
and the early retirement of the Certificates. See "Certain Legal Aspects of
the Receivables--Certain Matters Relating to Receivership."
CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
First USA Bank, N.A. will service the Receivables (in such
capacity, the "SERVICER"). The principal executive office of the Bank is
located at 201 North Walnut Street, Wilmington, Delaware 19801, telephone
number (302) 594-4000. The Servicer will receive a fee as servicing
compensation from the Trust in respect of each Series in the amounts and at
the times specified in the related Prospectus Supplement (the "INVESTOR
SERVICING FEE"). The Investor Servicing Fee may be payable from Finance
Charge Receivables, Interchange or other amounts as specified in the
related Prospectus Supplement.
The Servicer may not resign from its obligations and duties under
the Pooling and Servicing Agreement, except upon determination that
performance of its duties is 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 Pooling and Servicing Agreement. The Bank, as initial Servicer,
has delegated some of its servicing duties to FDR; however, such delegation
does not relieve it of its obligation to perform such duties in accordance
with the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Servicer will
indemnify the Trust and Trustee from and against any reasonable loss,
liability, expense, damage or injury suffered or sustained by reason of any
acts or omissions or alleged acts or omissions of the Servicer with respect
to the activities of the Trust or the Trustee; provided, however, that the
Servicer shall not indemnify (a) the Trustee for liabilities imposed by
reason of fraud, negligence, or willful misconduct by the Trustee in the
performance of its duties under the Pooling and Servicing Agreement, (b)
the Trust, the Certificateholders or the Certificate Owners for liabilities
arising from actions taken by the Trustee at the request of
Certificateholders, (c) the Trust, the Certificateholders or the
Certificate Owners for any losses, claims, damages or liabilities incurred
by any of them in their capacities as investors, including without
limitation, losses incurred as a result of defaulted Receivables or
Receivables which are written off as uncollectible or (d) the Trust, the
Certificateholders or the Certificate Owners for any liabilities, costs or
expenses of the Trust, the Certificateholders or the Certificate Owners
arising under any tax law, including without limitation, any Federal, state
or local income or franchise tax or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith) required to be paid by the Trust, the
Certificateholders or the Certificate Owners in connection with the Pooling
and Servicing Agreement to any taxing authority.
In addition, the Pooling and Servicing Agreement provides that,
subject to certain exceptions, the Transferor will indemnify the Trust and
the Trustee from and against any reasonable loss, liability, expense,
damage or injury arising out of or based upon the arrangement created by
the Pooling and Servicing Agreement as though the Pooling and Servicing
Agreement created a partnership under the New York Uniform Partnership Act
in which the Transferor is a general partner.
The Pooling and Servicing Agreement provides that neither the
Transferor nor the Servicer nor any of their respective directors,
officers, employees or agents will be under any other liability to the
Trust, the Certificateholders or any other person for any action taken, or
for refraining from taking any action, in good faith pursuant to the
Pooling and Servicing Agreement. Neither the Transferor, the Servicer, nor
any of their respective 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 the Transferor,
the Servicer or any such person in the performance of its duties or by
reason of reckless disregard of obligations and duties thereunder. In
addition, the Pooling and Servicing 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 Pooling
and Servicing Agreement and which in its opinion may expose it to any
expense or liability.
The Pooling and Servicing Agreement provides that, in addition to
Exchanges, the Transferor may transfer its interest in a portion of the
Exchangeable Transferor Certificate, provided that prior to any such
transfer (a) the Trustee receives written notification from each Rating
Agency that such transfer will not result in a lowering of its
then-existing rating of the Certificates rated by it and (b) the Trustee
receives a written opinion of counsel confirming that such transfer would
not adversely affect the treatment of the Certificates for each outstanding
Series as debt for Federal income tax purposes.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Transferor or the Servicer may be merged or consolidated or
any person resulting from any merger or consolidation to which the
Transferor or the Servicer is a party, or any person succeeding to the
business of the Transferor or the Servicer, upon execution of a supplement
to the Pooling and Servicing Agreement and delivery of an opinion of
counsel with respect to the compliance of the transaction with the
applicable provisions of the Pooling and Servicing Agreement, will be the
successor to the Transferor or the Servicer, as the case may be, under the
Pooling and Servicing Agreement.
SERVICER DEFAULT
In the event of any Servicer Default (as defined below), either the
Trustee or Certificateholders representing undivided interests aggregating
more than 50% of the aggregate investor interests for all outstanding
Series of Certificates, 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 as servicer under the Pooling and
Servicing Agreement and in and to the Receivables and the proceeds thereof
and the Trustee may appoint a new Servicer (a "SERVICE TRANSFER"). The
rights and interest of the Transferor under the Pooling and Servicing
Agreement and in the Transferor Interest will not be affected by such
termination. The Trustee shall as promptly as possible appoint a successor
Servicer. If no such Servicer has been appointed 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 Pooling and
Servicing Agreement shall pass to and be vested in the Trustee. 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 transfer of
servicing, and if the Trustee is legally unable to act as successor
Servicer, then the Trustee shall give the Transferor the right of first
refusal to purchase the Receivables on terms equivalent to the best
purchase offer as determined by the Trustee.
A "SERVICER DEFAULT" refers to any of the following events:
(a) failure by the Servicer to make any payment, transfer or
deposit, or to give instructions to the Trustee to make certain
payments, transfers or deposits, on the date the Servicer is
required to do so under the Pooling and Servicing Agreement or any
Series Supplement (or within the applicable grace period, which
shall not exceed five (5) business days);
(b) failure on the part of the Servicer duly to observe or
perform in any respect any other covenants or agreements of the
Servicer which has a material adverse effect on the
Certificateholders of any Series then outstanding and which
continues unremedied for a period of 60 days after written notice
and continues to have a material adverse effect on the
Certificateholders of any Series, including the Certificates (which
determination shall be made without regard to whether funds are
available from any Enhancement), then outstanding for such period;
or the delegation by the Servicer of its duties under the Pooling
and Servicing Agreement, except as specifically permitted
thereunder;
(c) any representation, warranty or certification made by
the Servicer in the Pooling and Servicing Agreement, or in any
certificate delivered pursuant to the Pooling and Servicing
Agreement, proves to have been incorrect when made which has a
material adverse effect on the Certificateholders of any Series,
including the Certificates (which determination shall be made
without regard to whether funds are available from any
Enhancement), then outstanding, and which continues to be incorrect
in any material respect for a period of 60 days after written
notice and continues to have a material adverse effect on such
Certificateholders for such period; or
(d) the occurrence of certain events of bankruptcy,
insolvency or receivership of the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in clause (a) above for a period of ten (10) business days, or
referred to under clause (b) or (c) 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 Pooling and Servicing Agreement, and
the Servicer shall provide the Trustee, any Enhancement Provider, the
Transferor and the holders of Certificates of all Series outstanding prompt
notice of such failure or delay by it, together with a description of the
cause of such failure or delay and its efforts to perform its obligations.
In the event of a Servicer Default, if a conservator or receiver is
appointed for the Servicer and no Servicer Default other than such
conservatorship or receivership or the insolvency of the Servicer exists,
the conservator or receiver may have the power to prevent either the
Trustee or the majority of the Certificateholders from effecting a Service
Transfer.
REPORTS TO CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement,
for each Series of Certificates, on each Distribution Date, or as soon
thereafter as is practicable, as specified in the related Prospectus
Supplement, the Trustee or any Paying Agent appointed by the Trustee will
forward to each Certificateholder of record a statement prepared by the
Servicer setting forth certain information with respect to the Trust and
the Certificates of each Series, including, among other things: (a) the
total amount distributed, (b) the amount of the distribution allocable to
principal of the Certificates, (c) the amount of distribution on such
Distribution Date allocable to interest on the Certificates, (d) the amount
of collections of Principal Receivables processed during the preceding
month or months since the last Distribution Date and allocated in respect
of the Certificates, (e) the amount of collections of Finance Charge
Receivables processed during the related Monthly Period and allocated in
respect of the Certificates, (f) the Investor Percentage for the related
Monthly Period, (g) the aggregate outstanding balance of Accounts which are
35 or more days contractually delinquent, by class of delinquency, as of
the end of the last day of the related Monthly Period, (h) the applicable
Investor Default Amount for the related Monthly Period, (i) the applicable
Investor Charge-Offs for the related Monthly Period and the amount of
Investor Charge-Offs reimbursed on the Transfer Date immediately preceding
the Distribution Date, (j) the amount of the Investor Servicing Fee for the
related Monthly Period, (k) the Invested Amount at the close of business on
the last day of the related Monthly Period, and (l) the amount available,
if any, pursuant to the applicable Enhancement.
On or before January 31 of each calendar year or such other date as
specified in the related Prospectus Supplement, the Trustee or any Paying
Agent appointed by the Trustee will furnish to each person who at any time
during the preceding calendar year was a Certificateholder of record, a
statement prepared by the Servicer containing the information required to
be contained in the regular monthly report to Certificateholders, as set
forth in clauses (a), (b) and (c) above aggregated for such calendar year
or the applicable portion thereof during which such person was a
Certificateholder, together with such other customary information
(consistent with the treatment of the Certificates as debt) as the Trustee
or the Servicer deems necessary or desirable to enable the
Certificateholders to prepare their United States tax returns.
REPORTS; NOTICES
With respect to any Series which is listed on the Luxembourg Stock
Exchange, the Trustee will publish or will cause to be published following
each Distribution Date in a daily newspaper in Luxembourg (expected to be
the Luxemburger Wort) a notice to the effect that the information set forth
in the foregoing paragraph will be available for review at the main office
of the listing agent of the Trust in Luxembourg, Luxembourg.
In addition, with respect to such Series, notices to
Certificateholders will be given by publication in a daily newspaper in
Luxembourg, which is expected to be the Luxemburger Wort. In the event that
Definitive Certificates are issued, notices to Certificateholders will also
be given by mail to the addresses of such holders as they appear in the
Certificate Register referred to in the Pooling and Servicing Agreement.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that the Servicer will
cause a firm of independent public accountants to furnish to the Trustee on
an annual basis a report to the effect that such firm has reviewed the
Servicer's computer reports regarding the Receivables, including
information regarding delinquencies, charge-offs and yield and that such
reports are in agreement with monthly statements prepared by the Servicer
and distributed to the Trustee and the Certificateholders, except as set
forth in such report.
The Pooling and Servicing Agreement provides that the Servicer will
cause a firm of independent public accountants to furnish to the Trustee on
an annual basis a report to the effect that such firm has made a study and
evaluation in accordance with generally accepted auditing standards of the
Servicer's internal accounting controls relative to the servicing of the
Accounts and that, on the basis of such examination, such firm is of the
opinion (assuming the accuracy of reports by the Servicer's third party
agents) that the system of internal controls in effect for the reporting
period relating to servicing procedures performed by the Servicer, taken as
a whole, provided reasonable assurance that the internal control system was
sufficient for the prevention and detection of errors and irregularities
and that such servicing was conducted in compliance with such provisions of
the Pooling and Servicing Agreement with which such accountants can
reasonably be expected to possess adequate knowledge of the subject matter,
which are susceptible of positive assurance by such accountants and for
which their professional competence is relevant, except for such exceptions
as such firm shall believe to be immaterial and such other exceptions as
shall be set forth in such statement.
The Pooling and Servicing Agreement also provides for delivery to
the Trustee, on or before a certain date each year, of a certificate signed
by an officer of the Servicer stating that the Servicer has fulfilled its
obligations under the Pooling and Servicing Agreement throughout the
preceding twelve months or, if there has been a default in the fulfillment
of any such obligations, describing each such default.
AMENDMENTS
The Pooling and Servicing Agreement and any Series Supplement may
be amended by the Transferor, the Servicer and the Trustee, without the
consent of Certificateholders of any Series then outstanding for any
purpose, provided that (i) the Transferor shall deliver an opinion of
counsel acceptable to the Trustee to the effect that such amendment will
not adversely affect in any material respect the interest of such
Certificateholders, and (ii) the Rating Agency Condition will be satisfied
with respect to such amendment. Such an amendment may be entered into in
order to comply with or obtain the benefits of certain current and future
tax legislation (such as the legislation creating FASITs) as described
below under "Certain U.S. Federal Income Tax Consequences-FASIT
Legislation" or to modify the provisions of the Pooling and Servicing
Agreement relating to the removal of Accounts to be consistent with
accounting requirements for off balance sheet treatment for Receivables in
the Trust.
The Pooling and Servicing Agreement and the Series Supplement may
be amended by the Transferor, 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 Investor Interests 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 Pooling and Servicing
Agreement or the Series Supplement or of modifying in any manner the rights
of Certificateholders of any then outstanding Series. No such amendment,
however, may (a) reduce in any manner the amount of, or delay the timing
of, distributions required to be made on any such Series, (b) change the
definition of or the manner of calculating the interest of any
Certificateholder of such Series, or (c) 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 Pooling and Servicing Agreement, the Trustee will furnish
written notice of the substance of such amendment to each
Certificateholder. Any Series Supplement and any amendments regarding the
addition or removal of Receivables from the Trust will not be considered an
amendment requiring Certificateholder consent under the provisions of the
Pooling and Servicing Agreement and any Series Supplement.
LIST OF CERTIFICATEHOLDERS
With respect to each Series of Certificates, upon written request
of Certificateholders of record representing undivided interests in the
Trust aggregating not less than 10% (or such other percentage specified in
the related Prospectus Supplement) of the Invested Amount of a Series, the
Trustee after having been adequately indemnified by such Certificateholders
for its costs and expenses, and having given the Servicer notice that such
request has been made, 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 Pooling and Servicing Agreement. See "--Book-Entry
Registration" and "--Definitive Certificates" above.
THE TRUSTEE
The Bank of New York (Delaware) is currently the Trustee under the
Pooling and Servicing Agreement. The Transferor, the Servicer and their
respective affiliates may from time to time enter into normal banking and
trustee relationships with the Trustee and its affiliates. The Trustee, the
Transferor, the Servicer and any of their respective affiliates may hold
Certificates in their own names. In addition, for purposes of meeting the
legal requirements of certain local jurisdictions, the Trustee shall have
the power to appoint a co-trustee or separate trustees of all or any part
of the Trust. In the event of such appointment, all rights, powers, duties
and obligations conferred or imposed upon the Trustee by the Pooling and
Servicing Agreement shall be conferred or imposed upon the Trustee and such
separate trustee or co-trustee jointly, or, in any jurisdiction in which
the Trustee shall be incompetent or unqualified to perform certain acts,
singly upon such separate trustee or co-trustee who shall exercise and
perform such rights, powers, duties and obligations solely at the direction
of the Trustee.
The Trustee may resign at any time, in which event the Transferor
will be obligated to appoint a successor Trustee. The Transferor may also
remove the Trustee if the Trustee ceases to be eligible to continue as such
under the Pooling and Servicing Agreement or if the Trustee becomes
insolvent. In such circumstances, the Transferor 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. Enhancement may be in the form of the
subordination of one or more Classes of the Certificates of such Series,
the establishment of a cash collateral guaranty or account, a letter of
credit, a surety bond, an insurance policy, a spread account, a reserve
account, the use of cross support features or another method of Enhancement
described in the related Prospectus Supplement, or any combination of the
foregoing. 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.
The type, characteristics and amount of the Enhancement for any
Series or Class will be determined based on several factors, including the
characteristics of the Receivables and Accounts included in the Trust
Portfolio as of the Closing Date with respect to such Series and the
desired rating for each Class, and will be established on the basis of
requirements of each Rating Agency rating the Certificates of such Series
or Class.
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 the
issuer of any third party Enhancement (the "ENHANCEMENT PROVIDER"),
including (i) a brief description of its principal business activities,
(ii) its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business, (iii)
if applicable, the identity of regulatory agencies which exercise primary
jurisdiction over the conduct of its business and (iv) its total assets,
and its stockholders' or policy holders' surplus, if applicable, and other
appropriate financial information as of the date specified in the related
Prospectus Supplement. If so specified in the related Prospectus
Supplement, the Enhancement with respect to a Series may be available to
pay principal of the Certificates of such Series following the occurrence
of certain Pay Out Events with respect to such Series. In such event, the
Enhancement Provider may have an interest in certain cash flows in respect
of the Receivables to the extent described in such Prospectus Supplement
(the "ENHANCEMENT INVESTED AMOUNT").
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 or specified Certificates of another Series. The
rights of the holders of any such 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 information concerning the amount of
subordination of a Class or Classes of Subordinated Certificates in a
Series, the circumstances in which such subordination will be applicable,
the manner, if any, in which the amount of subordination will decrease over
time, and the conditions under which amounts available from payments that
would otherwise be made to holders of such Subordinated Certificates will
be distributed to holders of Senior Certificates. If collections of
Receivables otherwise distributable to holders of a subordinated Class of a
Series will be used as support for a Class of another Series, the related
Prospectus Supplement will specify the manner and conditions for applying
such a cross-support feature.
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 (the "L/C BANK") will be obligated to honor
demands with respect to such letter of credit, to the extent of the amount
available thereunder, to provide funds under the circumstances and subject
to such conditions as are specified in the related Prospectus Supplement.
The maximum liability of an L/C Bank under its letter of credit
will generally be an amount equal to a percentage specified in the related
Prospectus Supplement of the initial 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.
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 INVESTED AMOUNT
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 INVESTED AMOUNT") in an
amount initially equal to a percentage of the Senior Certificates of such
Series as specified in the related 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 of zero or such amount as
specified in the related Prospectus Supplement which will be increased (i)
to the extent the Transferor elects, subject to certain conditions
specified in such Prospectus Supplement, to apply collections of Principal
Receivables allocable to the Collateral Invested Amount to decrease the
Collateral Invested Amount, (ii) to the extent collections of Principal
Receivables allocable to the Collateral Invested Amount are required to be
deposited into the Cash Collateral Account as specified in such 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 such Prospectus Supplement. The total amount of the
Enhancement available pursuant to the Collateral Invested Amount and the
Cash Collateral Guaranty or Cash Collateral Account will be the lesser of
the sum of the Collateral Invested Amount 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 Invested Amount will be distributed to holders of Senior
Certificates and, if applicable, the circumstances under which payment will
be made to the beneficiaries of the Cash Collateral Guaranty or from the
Cash Collateral Account directly.
If so specified in the related Prospectus Supplement, the
Collateral Invested Amount may be issued in certificated form and may have
voting and certain other rights of a subordinated Class of Certificates.
Any Collateral Invested Amount issued in certificated form may be offered
hereby or under a separate Disclosure Document in transactions either
registered under the Securities Act or exempt from registration thereunder.
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.
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 on and principal of 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 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 both, or the
provision of a letter of credit, guaranty, insurance policy or other form
of credit 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 in the manner
provided in the related Prospectus Supplement.
CERTIFICATE RATINGS
Any rating of the Certificates by a Rating Agency will indicate:
o its view on the likelihood that Certificateholders
will receive required interest and principal
payments; and
o its evaluation of the Receivables and the
availability of any Enhancement for the Certificates.
Among the things a rating will not indicate are:
o the likelihood that principal payments will be made
on a scheduled payment date;
o the likelihood that a Pay Out Event will occur;
o the likelihood that a United States withholding tax
will be imposed on non-U.S. Certificateholders;
o the marketability of the Certificates;
o the market price of the Certificates; or
o whether the Certificates are an appropriate
investment for any purchaser.
A rating will not be a recommendation to buy, sell or hold the
Certificates. A rating may be lowered or withdrawn at any time by a Rating
Agency.
The Transferor will request a rating of the Certificates offered by
this Prospectus and the related Prospectus Supplement from at least one
Rating Agency. It will be a condition to the issuance of the Certificates
of each Series or Class offered pursuant to this Prospectus and the related
Prospectus Supplement (including each Series that includes a Pre-Funding
Account) that they be rated in one of the four highest rating categories by
at least one nationally recognized rating organization (each such rating
agency selected by the Transferor to rate any Series, a "RATING AGENCY").
The rating or ratings applicable to the Certificates of each Series or
Class offered hereby will be set forth in the related Prospectus
Supplement. Rating agencies other than those requested could assign a
rating to the Certificates and such a rating could be lower than any rating
assigned by a Rating Agency chosen by the Transferor.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The Transferor has represented and warranted in the Pooling and
Servicing Agreement that the transfer of Receivables by it to the Trust is
either a valid transfer and assignment to the Trust of all right, title and
interest of the Transferor in and to the related Receivables, except for
the interest of the Transferor as holder of the Exchangeable Transferor
Certificate, or the grant to the Trust of a security interest in such
Receivables. The Transferor has also represented and warranted in the
Pooling and Servicing Agreement that, in the event the transfer of
Receivables by the Transferor to the Trust is deemed to create a security
interest under the Uniform Commercial Code as in effect in the State of
Delaware (the "UCC") there will exist a valid, subsisting and enforceable
first priority perfected security interest in such Receivables created
thereafter in favor of the Trust on and after their creation, except for
certain tax and other governmental liens, subject to the limitations below.
For a discussion of the Trust's rights arising from a breach of these
warranties, see "Description of the Certificates--Representations and
Warranties."
The Transferor has represented as to Receivables to be conveyed to
the Trust, that the Receivables are "accounts" for purposes of the UCC.
Both the transfer and assignment of accounts and the transfer of accounts
as security for an obligation are treated under Article 9 of the UCC as
creating a security interest therein and are subject to its provisions, and
the filing of an appropriate financing statement is required to perfect the
security interest of the Trust. Financing statements covering the
Receivables have been and will be filed with the appropriate governmental
authority to protect the interests of the Trust in the Receivables.
There are certain limited circumstances under the UCC in which a
prior or subsequent transferee of Receivables coming into existence after a
Series Closing Date could have an interest in such Receivables with
priority over the Trust's interest. Under the Pooling and Servicing
Agreement, however, the Transferor has represented and warranted that it
transferred the Receivables to the Trust free and clear of the lien of any
third party. In addition, the Transferor has covenanted that it will not
sell, pledge, assign, transfer or grant any lien on any Receivable (or any
interest therein) other than to the Trust. A tax or government lien or
other nonconsensual lien on property of the Transferor arising prior to the
time a Receivable comes into existence may also have priority over the
interest of the Trust in such Receivable. If the FDIC were appointed as
receiver of the Transferor, certain administrative expenses of the receiver
may also have priority over the interest of the Trust in such Receivable.
CERTAIN MATTERS RELATING TO RECEIVERSHIP
The Bank is chartered as a national banking association and is
subject to regulation and supervision by the United States Comptroller of
the Currency (the "COMPTROLLER"). If the Bank becomes insolvent or is in an
unsound condition or if certain other circumstances occur, the Comptroller
is authorized to appoint the FDIC as receiver.
The Federal Deposit Insurance Act ("FDIA"), as amended by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989,
("FIRREA"), sets forth certain powers that the FDIC may exercise if it were
appointed as conservator or receiver of the Transferor or the Servicer.
Among other things, the FDIA grants such a conservator or receiver the
power to repudiate contracts of, and to request a stay of up to 90 days of
any judicial action or proceeding involving, the Transferor or the
Servicer.
To the extent that (i) the Transferor granted a security interest
in the Receivables to the Trust, (ii) the interest was validly perfected
before the Transferor's insolvency, (iii) the interest was not taken or
granted in contemplation of the Transferor's insolvency or with the intent
to hinder, delay or defraud the Transferor or its creditors, (iv) the
Pooling and Servicing Agreement is continuously a record of the Bank, and
(v) the Pooling and Servicing Agreement represents a bona fide and arm's
length transaction undertaken for adequate consideration in the ordinary
course of business and that the Trustee is the secured party and is not an
insider or affiliate of the Transferor, such valid perfected security
interest of the Trustee would be enforceable (to the extent of the Trust's
"actual direct compensatory damages") notwithstanding the insolvency of, or
the appointment of a receiver or conservator for, the Transferor and
payments to the Trust with respect to the Receivables (up to the amount of
such damages) should not be subject to an automatic stay of payment or to
recovery by the FDIC as conservator or receiver of the Transferor. If,
however, the FDIC were to assert that the security interest was unperfected
or unenforceable or were to require the Trustee to establish its right to
those payments by submitting to and completing the administrative claims
procedure established under FIRREA or the FDIC as conservator or receiver
were to request a stay of proceedings with respect to the Transferor as
provided under FIRREA, delays in payments on the Certificates and possible
reductions in the amount of those payments could occur. The FDIA does not
define the term "actual direct compensatory damages." The FDIC has stated
that a claim for "actual direct compensatory damages" is limited to such
damages determined as of the date of appointment of the FDIC as conservator
or receiver. Since the FDIC may delay repudiation or disaffirmation for up
to 180 days following such appointment, investors may not have a claim for
interest accrued during this 180 day period. In addition, in one case
involving the repudiation by the Resolution Trust Corporation, formerly a
sister agency of the FDIC, of certain secured zero-coupon bonds issued by a
savings association, a United States Federal district court held that
"actual direct compensatory damages" in the case of a marketable security
meant the market value of the repudiated bonds as of the date of
repudiation. If that court's view were applied to determine the Trust's
"actual direct compensatory damages" in the event the FDIC repudiated the
Transferor's obligations under the Pooling and Servicing Agreement, the
amount paid to Certificateholders could, depending upon circumstances
existing on the date of the repudiation, be less than the principal of the
Certificates and the interest accrued thereon to the date of payment.
The Pooling and Servicing Agreement provides that, upon the
appointment of a conservator or receiver or upon a voluntary liquidation
with respect to the Transferor, the Transferor will promptly give notice
thereof to the Trustee and a Pay Out Event will occur with respect to all
Series then outstanding. Pursuant to the Pooling and Servicing Agreement,
newly created Principal Receivables will not be transferred to the Trust on
and after any such appointment or voluntary liquidation, and the Trustee
will proceed to sell, dispose of or otherwise liquidate the Receivables in
a commercially reasonable manner and on commercially reasonable terms,
unless otherwise instructed within a specified period by holders of
Certificates representing undivided interests aggregating more than 50% of
the Invested Amount of each Series (or if any Series has more than one
Class, of each Class, and any other person specified in the Pooling and
Servicing Agreement or a Series Supplement), or unless otherwise required
by the FDIC as receiver or conservator of the Transferor. Under the Pooling
and Servicing Agreement, the proceeds from the sale of the Receivables
allocable to the Certificates would be treated as collections of the
Receivables and would be distributed to the Certificateholders. This
procedure could be delayed, as described above. If the only Pay Out Event
to occur is either the insolvency of the Transferor or the appointment of a
conservator or receiver for the Transferor, the FDIC as conservator or
receiver may have the power to prevent the early sale, liquidation or
disposition of the Receivables and the commencement of the Rapid
Amortization Period. In addition, a conservator or receiver may have the
power to cause the early sale of the Receivables and the early retirement
of the Certificates or to prohibit the continued transfer of Principal
Receivables to the Trust. However, if no Servicer Default other than the
conservatorship or receivership of the Servicer exists, the conservator or
receiver for the Servicer may have the power to prevent either the Trustee
or the Certificateholders from appointing a successor Servicer under the
Pooling and Servicing Agreement. See "Description of the Certificates--Pay
Out Events."
If, upon the insolvency of the Servicer, the Servicer were to be
placed into conservatorship or receivership, the FDIC as conservator or
receiver would have the power to repudiate and refuse to perform any
obligations, including servicing obligations, of the Servicer under the
Pooling and Servicing Agreement or any other contract, and to request a
stay of up to 90 days of any judicial action or proceeding involving the
Servicer.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993), cert. denied, 114 S. Ct. 554 (1993) ("OCTAGON"), the United States
Court of Appeals for the 10th Circuit suggested that even where a transfer
of accounts from a seller to a buyer constitutes a "true sale," the
accounts would nevertheless constitute property of the seller's bankruptcy
estate in a bankruptcy of the seller. If the Transferor were to be placed
into receivership and a court were to follow the Octagon court's reasoning,
Certificateholders might experience delays in payment or possibly losses in
their investment in the Certificates. Counsel has advised the Transferor
that the facts of the Octagon case are distinguishable from those in the
sale transactions between the Transferor and the Trust and that the
reasoning of the Octagon case appears to be inconsistent with established
precedent and the UCC. In addition, because the Transferor, the Trust and
the transactions governed by the Pooling and Servicing Agreement do not
have any particular link to the 10th Circuit, it is unlikely that the
Transferor would be subject to a receivership proceeding in the 10th
Circuit. Accordingly, the Octagon case should not be binding precedent on a
court in a receivership proceeding.
CONSUMER PROTECTION LAWS
The relationship of the cardholder and credit card issuer is
extensively regulated by Federal and state consumer protection laws. With
respect to credit cards issued by First USA, the most significant laws
include the Federal Truth-in-Lending, Equal Credit Opportunity, Fair Credit
Reporting, Fair Debt Collection Practices and Electronic Funds Transfer
Acts. These statutes impose disclosure requirements when a credit card
account is advertised, when it is opened, at the end of monthly billing
cycles, and at year end. In addition, these statutes limit customer
liability for unauthorized use, prohibit certain discriminatory practices
in extending credit, and impose certain limitations on the type of
account-related charges that may be assessed. Cardholders are entitled
under these laws to have payments and credits applied to the credit card
accounts promptly, to receive prescribed notices 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 related Receivables, either as assignee
from the Transferor with respect to obligations arising before transfer of
the Receivables to the Trust or as a party directly responsible for
obligations arising after the transfer. In addition, a cardholder may be
entitled to assert such violations by way of set-off against his obligation
to pay the amount of Receivables owing. The Transferor warrants in the
Pooling and Servicing Agreement that all related Receivables have been and
will be created in compliance with the requirements of such laws. The
Servicer also agrees in the Pooling and Servicing Agreement to indemnify
the Trust for, among other things, any liability arising from such
violations caused by the Servicer. For a discussion of the Trust's rights
arising from the breach of these warranties, see "Description of the
Certificates--Representations and Warranties."
Various proposed laws and amendments to existing laws have from
time to time been introduced in Congress and certain state and local
legislatures that, if enacted, would further regulate the credit card
industry, certain of which would, among other things, impose a ceiling on
the rate at which a financial institution may assess finance charges and
fees on credit card accounts that would be substantially below the rates of
the finance charges and fees the Bank currently assesses on its accounts.
In particular, on May 5, 1999 an amendment to the Federal Truth-in-Lending
Act was passed by the House of Representatives as a part of the bankruptcy
reform bill and referred to the Senate. This amendment, among other things,
requires (i) disclosure as to the time it would take a consumer to repay a
balance if the consumer makes only the minimum payments, (ii) disclosure as
to when any introductory rate will expire, as well as the rate that will
then apply and (iii) disclosure in internet based solicitations
identical to that contained in direct mail solicitations. In addition, on
May 4, 1999, President Clinton proposed similar legislation to require
additional disclosure in credit cards bills and solicitations.
The potential effect of any legislation which limits the amount of
finance charges and fees that may be charged on credit cards could be to
reduce the portfolio yield on the Accounts. If such portfolio yield is
reduced, a Pay Out Event may occur, and the Rapid Amortization Period would
commence.
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 related Receivables being written off as uncollectible when the amount
available under any Enhancement is equal to zero. See "Description of the
Certificates--Defaulted Receivables; Rebates and Fraudulent Charges."
INDUSTRY LITIGATION
In October 1998, the United States Department of Justice (the
"DOJ") filed an antitrust lawsuit in Federal court in Manhattan against
VISA U.S.A., Inc., VISA International Inc. (together, "VISA") and
MasterCard International Incorporated ("MASTERCARD INTERNATIONAL") alleging
that the two credit card associations restrain competition and limit
consumer choice. The DOJ in such lawsuit challenges, among other things,
the control of both VISA and MasterCard International by the same set of
banks, as well as the rules adopted by the two associations prohibiting
members from offering credit cards of competitors. In public statements,
both VISA and MasterCard International have contested the DOJ's
allegations. The Bank is unable to predict what the effect of such lawsuit
may ultimately be on the Bank's credit card business. A final adverse
decision against VISA and MasterCard International, or a similar settlement
with the DOJ by the two associations, could result in changes in the
current associations and may result in adverse consequences for members of
the two associations, such as the Bank.
OTHER LITIGATION
A number of lawsuits seeking class action certification have been
filed in both state and federal courts against the Bank. These lawsuits
challenge certain of the policies and practices of the Bank's credit card
business. Practices of the Bank which have been challenged in such cases
include, but are not limited to, the Bank's manner of charging fees on
certain accounts, the Bank's mailing of unsolicited credit cards, the
Bank's processing of payments and subsequent posting of late fees and
increasing annual percentage rates on certain accounts and the Bank's
policies on releasing certain cardholder information to third parties. A
few of these lawsuits have been preliminarily certified as class actions.
The Bank has defended itself against similar claims in the past and intends
to continue to do so in the future. While it is impossible to predict the
outcome of any of these lawsuits, the Bank believes that any liability
which might result from any of these lawsuits will not have a material
adverse effect on the Receivables of the Trust.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion, summarizing certain anticipated United
States ("U.S.") 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 U.S. 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 U.S. Federal income tax laws (for example, banks
and life insurance companies). Each prospective Certificate Owner is urged
to consult its own tax advisor in determining the Federal, state, local and
foreign income and any other tax consequences of the purchase, ownership
and disposition of a Certificate.
CHARACTERIZATION OF THE CERTIFICATES AS INDEBTEDNESS
Unless otherwise specified in the related Prospectus Supplement,
special tax counsel to the Bank ("SPECIAL TAX COUNSEL") specified in such
Prospectus Supplement will, upon issuance of a Series of Certificates,
advise the Bank based on the assumptions and qualifications set forth in
the opinion that the Certificates of such Series that are offered pursuant
to a Prospectus Supplement (the "OFFERED CERTIFICATES," and for purposes of
this section "Certain U.S. Federal Income Tax Consequences" the term
"CERTIFICATE OWNER" refers to a holder of a beneficial interest in an
Offered Certificate) 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 Transferor expresses in the Pooling and Servicing 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 Transferor 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, local and foreign income or
franchise tax purposes. However, because different criteria are used to
determine the non-tax accounting characterization of the transactions
contemplated by the Pooling and Servicing Agreement, the Transferor 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 secured loan.
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 loan 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, Special 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 Special 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.
PROPOSED LEGISLATION
On February 1, 1999, President Clinton's Fiscal Year 2000 Budget
Proposal, or the Budget Proposal, was submitted to Congress. Among other
things, the Budget Proposal contains a legislative proposal that, if
adopted in its current form, would generally preclude taxpayers from taking
positions inconsistent with the "form" of their transaction if a "tax
indifferent party" has a direct or indirect interest in the transaction.
The Budget proposal would only apply to transactions entered into on or
after the date of first committee action. In addition, the Budget Proposal
provides several exceptions to this rule. One such exception would apply
where reporting the substance of a transaction more clearly reflects the
income of the taxpayer than reporting it in accordance with its "form." The
Budget Proposal would authorize the IRS to prescribe regulations to carry
out the purpose of the rule, including the exceptions thereto.
As currently drafted, it is unclear whether the Budget Proposal
would apply to securities such as the Certificates. It is impossible to
predict whether the proposed legislation will be enacted, and if so, in
what form. Prospective investors should consult their own tax advisors
regarding the proposed legislation.
TAXATION OF INTEREST INCOME OF CERTIFICATEHOLDERS
As set forth above, it is expected that, unless otherwise specified
in a Prospectus Supplement, Special 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 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.
While it is not anticipated that the Offered Certificates will be
issued at a greater than de minimis discount, under applicable 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
treated as "qualified stated interest" because the IRS determines that (i)
no reasonable legal remedies exist to compel timely payment and (ii) the
Offered Certificates do not have terms and conditions that make the
likelihood of late payment (other than a late payment that occurs within a
reasonable grace period) or nonpayment a remote contingency. Applicable
regulations provide that, for purposes of the foregoing test, the
possibility of nonpayment due to default, insolvency, or similar
circumstances, is ignored. Although this provision does not directly apply
to the Offered Certificates (because they have no actual default
provisions) the Transferor intends to take the position that, because
nonpayment can occur only as a result of events beyond its control
(principally, loss rates and payment delays on the Receivables
substantially in excess of those anticipated), nonpayment is a remote
contingency. Based on the foregoing, and on the fact that generally
interest will accrue on the Offered Certificates at a "qualified floating
rate," the Transferor intends to take the position that interest payments
on the Offered Certificates constitute qualified stated interest. 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 in income 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, the
following rules will apply. The excess of the "stated redemption price at
maturity" of an Offered Certificate over its 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 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
treated as having been 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 Certificate Owner who purchases an Offered Certificate at a
discount from its adjusted issue price after its original issuance 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 Certificate Owner who purchases an Offered Certificate after its
original issuance for an amount in excess of the sum of all amounts payable
on such Certificate after the purchase date other than payment of qualified
stated interest (the "REMAINING REDEMPTION AMOUNT") shall be considered to
have purchased the Certificate at a premium. Such Certificate Owner may
generally elect to amortize such premium (as an offset to interest income),
using a constant yield method, over the remaining term of the Certificate.
A Certificate Owner who purchases an Offered Certificate that was
issued with OID after its original issuance for an amount less than, or
equal to, the Remaining Redemption Amount but in excess of the Certificate
adjusted issue price (any such excess being "acquisition premium")
generally is permitted to reduce the daily portion of OID otherwise
includible in such Certificate Owner's taxable income.
SALE OR OTHER DISPOSITION 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 (which is equal, in general,
to the purchase price of the Certificate 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). 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 and provided, further,
that if the rules applicable to Prepayable Instruments apply, any OID not
previously accrued will be treated as ordinary income. The maximum ordinary
income tax rate for individuals, estates, and trusts exceeds the maximum
long-term capital gains tax rate for such taxpayers. In addition, capital
losses generally may be used only to offset capital gains.
TAX CHARACTERIZATION OF THE TRUST
The Pooling and Servicing 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 Transferor and holder of certain classes of
Certificates are partners, and which has issued debt represented by other
Classes of Certificates (including, unless otherwise specified in a
Supplement, the Offered Certificates). In connection with the issuance of
Certificates of any Series, Special Tax Counsel will render an opinion to
the Bank, based on the assumptions and qualifications set forth therein,
that under then current law, the issuance of the Certificates of such
Series will not cause the Trust to be characterized for Federal income tax
purposes as an association (or publicly traded partnership) taxable as a
corporation. The assumptions and qualifications set forth in such opinion
will include the qualification that the opinion is limited to the issuance
of the Certificates of such Series by the Trust and an assumption that any
secondary transactions entered into with respect to any Class of
Certificates (such as the deposit of Certificates into a second trust and
the issuance of securities out of that trust) will not adversely affect the
Federal income tax status of the Trust.
The opinion of Special Tax Counsel with respect to Offered
Certificates and the Trust 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 Prospectus Supplement
constitutes a sale of the Receivables (or an interest therein) to the
Certificate Owners of one or more Series 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, a publicly traded
partnership taxable as a corporation, or an association taxable as a
corporation. The Transferor 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, as is permitted by the Pooling and Servicing Agreement, an
interest in the Trust which is issued or sold 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 of one or more Series 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 the term "financial business" for
this purpose, it is unclear whether this exception applies. The Transferor
has taken and intends to take measures designed to reduce the risk that the
Trust could be classified as a publicly traded partnership taxable as a
corporation by reason of trading of interests in the Trust other than the
Offered Certificates and other certificates with respect to which an
opinion is rendered that such certificates constitute debt for Federal
income tax purposes. 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 Transferor. Furthermore, certain Series issued prior to May
2, 1995 may not be able to be conformed to the measures taken by the
Transferor with respect to Series issued on or after that date.
If a transaction were treated as creating a partnership between the
Transferor and the Certificate Owners 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 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 amount of
income than the stated rate on the Offered Certificates. Finally, if the
partnership were a publicly traded partnership that 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.
Partnership characterization also may have adverse state and local income
or franchise tax consequences for a Certificate Owner.
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. Certain
corporate Certificate Owners might qualify for dividends-received
deductions in respect of such dividends.
FASIT LEGISLATION
Certain provisions of the Code provide for the creation of a new
type of entity for Federal income tax purposes, the "financial asset
securitization investment trust" ("FASIT"). However, although these
provisions were effective September 1, 1997, many technical issues
concerning FASITs must be addressed by Treasury regulations which have not
yet been issued. Although transition rules permit an entity in existence on
August 31, 1997, such as the Trust, to elect FASIT status, at the present
time it is not clear how outstanding interests of such an entity would be
treated subsequent to such an election. The Pooling and Servicing Agreement
may be amended in accordance with the provisions thereof to provide that
the Transferor may cause a FASIT election to be made for the Trust if the
Transferor delivers to the Trustee an opinion of counsel to the effect
that, for Federal income tax purposes, (i) the issuance of FASIT regular
interests 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
Certificate Owners or the Trust.
FOREIGN INVESTORS
As set forth above, it is expected that Special 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 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, (iii) an estate the income of which is includible in
gross income for U.S. Federal income tax purposes, regardless of its source
or (iv) a trust if a U.S. court is able to exercise primary supervision
over the administration and one or more U.S. persons have the authority to
control all its substantial decisions.
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 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 Transferor 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
Transferor (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 Transferor Certificate other than the Transferor
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.
On October 6, 1997, the Department of the Treasury issued new
regulations (the "NEW REGULATIONS") which make certain modifications to the
withholding, backup withholding and information reporting rules described
above. The New Regulations attempt to unify certification requirements and
modify reliance standards. The New Regulations will generally be effective
for payments made after December 31, 2000, subject to certain transition
rules. For payments made after December 31, 2000, Foreign Investors would
generally be required to provide IRS Forms W-8BEN and W-8ECI in lieu of IRS
Form 1001 or Form 4224, respectively. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
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 (iii) in the case of gain representing
accrued interest, the conditions described in the second 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 Certificateholder 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
The discussion above does not address the tax treatment of the
Trust, the Certificates of any Series, or the Certificate Owners of any
Series under state tax laws. Each investor should consult its own tax
advisor regarding state and local tax consequences of purchase, ownership
or disposition of the Certificates of any Series under any state or local
tax law.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("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. 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.
Plan fiduciaries must determine whether the acquisition and holding
of the Certificates of a Series and the operations of the Trust would
result in direct or indirect prohibited transactions under ERISA and the
Code. The operations of the Trust could result in prohibited transactions
if Benefit Plans that purchase the Certificates of a Series 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 of a Series, the Trust could be deemed
to hold plan assets unless one of the exceptions under the Final Regulation
is applicable to the Trust.
The Plan Asset Regulation only applies to the purchase by a Benefit
Plan of an "equity interest" in an entity. Assuming that interests in
Certificates of a Series are equity interests, the Plan Asset 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 Securities Act and the class of securities of which
such security is a part is registered under the Exchange Act within 120
days (or such later time as may be allowed by the SEC) after the end of the
fiscal year of the issuer during which the offering of such securities to
the public occurred. In addition, the Plan Asset Regulation provides that
if a Benefit Plan invests in an "equity interest" of an entity that is
neither a "publicly-offered security" nor a security issued by an
investment company registered under the Investment Company Act of 1940, as
amended, the Benefit Plan's assets include both the equity interest and an
undivided interest in each of the entity's underlying assets, unless it is
established that equity participation by "benefit plan investors" is not
"significant" or that another exception applies.
Under the Plan Asset Regulation, equity participation in an entity
by "benefit plan investors" is "significant" on any date if, immediately
after the most recent acquisition of any equity interest in the entity
(other than a publicly-offered class of equity), 25% or more of the value
of any class of equity interests in the entity (other than a
publicly-offered class) is held by "benefit plan investors." For purposes
of this determination, the value of equity interests held by a person
(other than a benefit plan investor) that has discretionary authority or
control with respect to the assets of the entity or that provides
investment advice for a fee with respect to such assets (or any affiliate
of such person) is disregarded. The term "benefit plan investor" is defined
in the Plan Asset Regulation as (a) any employee benefit plan (as defined
in Section 3(3) of ERISA), whether or not it is subject to the provisions
of Title I of ERISA, (b) any plan described in Section 4975(e)(1) of the
Code and (c) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity.
Unless otherwise specified in the related Prospectus Supplement, it
is anticipated that interests in the Certificates of a Series will meet the
criteria of publicly-offered securities as set forth above. Unless
otherwise specified in the related Prospectus Supplement, the underwriters
expect (although no assurances can be given) that interests in each Class
of Certificates of each Series offered hereby will be held by at least 100
independent investors at the conclusion of the offering for such Series;
there are no restrictions imposed on the transfer of interests in the
Certificates of such Series; and interests in the Certificates of such
Series will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act and then will be timely
registered under the Exchange Act.
If interests in the Certificates of a Series fail to meet the
criteria of publicly-offered securities or investment by benefit plan
investors becomes significant 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. In addition, the
Transferor or any underwriter of such 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. 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. Such transactions may, however, be subject to statutory or
administrative exemptions from the penalties normally associated with
prohibited transactions. Five class exemptions issued by the DOL that could
apply in such event are DOL Prohibited Transaction Exemption ("PTE") 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), 95-60 (Class Exemption for Certain Transactions
Involving Insurance Company General Accounts) and 96-23 (Class Exemption
for Plan Asset Transactions Determined by In-House Asset Managers). There
is no assurance that these exemptions, even if all of the conditions
specified therein are satisfied, or any other exemption will apply to all
transactions involving the Trust's assets.
IN LIGHT OF THE FOREGOING, FIDUCIARIES OF A BENEFIT PLAN
CONSIDERING THE PURCHASE OF INTERESTS IN CERTIFICATES OF ANY SERIES 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 OF ANY SERIES 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 employee benefits
counsel 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 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.
In addition, insurance companies considering the purchase of
Certificates using assets of a general account should consult their own
employee benefits counsel or other appropriate counsel with respect to the
effect of the Small Business Job Protection Act of 1996 which added a new
Section 401(c) of ERISA relating to the status of the assets of insurance
company general accounts under ERISA and Section 4975 of the Code. Pursuant
to Section 401(c), the DOL is required to issue final regulations (the
"GENERAL ACCOUNT REGULATIONS") with respect to insurance policies issued on
or before December 31, 1998 that are supported by an insurer's general
account. The General Account Regulations are intended to provide guidance
on which assets held by the insurer constitute "plan assets" for purposes
of the fiduciary responsibility provisions of ERISA and Section 4975 of the
Code. Section 401(c) also provides that, except in the case of avoidance of
the General Account Regulations and actions brought by the Secretary of
Labor relating to certain breaches of fiduciary duties that also constitute
breaches of state or Federal criminal law, until the date that is 18 months
after the General Account Regulations become final, no liability under the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 may result on the basis of a claim that the assets of the
general account of an insurance company constitute the plan assets of any
Benefit Plan. The DOL has recently issued proposed regulations under
Section 401(c). It should be noted that if the General Account Regulations
are adopted substantially in the form in which proposed, the General
Account Regulations may not exempt the assets of insurance company general
accounts from treatment as "plan assets" after December 31, 1998. The plan
asset status of insurance company separate accounts is unaffected by new
Section 401(c) of ERISA, and separate account assets continue to be treated
as the plan assets of any Benefit Plan invested in a separate account. Plan
investors considering the purchase of Certificates of any Series on behalf
of an insurance company general account should consult their legal advisors
regarding the effect of the General Account Regulations on such purchase.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting
agreement (an "UNDERWRITING AGREEMENT") to be entered into with respect to
a Series of Certificates, the Transferor 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
Transferor, 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 Prospectus Supplement will set forth the price at which each
Series of Certificates or Class being offered thereby initially will be
offered to the public and any concessions that may be offered to certain
dealers participating in the offering of such Certificates. After the
initial public offering, the public offering price and such concessions may
be changed.
Each Underwriting Agreement will provide that the Transferor will
indemnify the related underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or contribute to
payments such 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 will be set forth in the accompanying
Prospectus Supplement.
Banc One Capital Markets, Inc. ("BOCM") is an affiliate of the
Transferor. Any obligations of BOCM are the sole obligations of BOCM, and
do not create any obligations on the part of any of its affiliates.
BOCM may from time to time purchase or acquire a position in the
Certificates and may, at its option, hold or resell such Certificates. BOCM
expects to offer and sell previously issued Certificates in the course of
its business as a broker-dealer. BOCM may act as a principal or an agent in
such transactions. This Prospectus and the related Prospectus Supplement
may be used by BOCM and 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.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Certificates
will be passed upon for the Transferor by Joanne K. Sundheim, Senior Vice
President and Associate General Counsel of First USA Bank, N.A., and by
special counsel, Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York. Certain legal matters relating to the issuance of the Certificates
and ERISA matters will be passed upon for the underwriters by Skadden,
Arps, Slate, Meagher & Flom LLP, New York, New York.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, annual,
monthly and special reports, containing information concerning the Trust
and prepared by the Servicer, will be sent on behalf of the Trust to Cede
as nominee of DTC and registered holder of the related Certificates,
pursuant to the Pooling and Servicing Agreement. See "Description of the
Certificates--Book-Entry Registration," "--Reports to Certificateholders"
and "--Evidence as to Compliance." Such reports will not constitute
financial statements prepared in accordance with generally accepted
accounting principles. The Servicer does not intend to send any financial
reports of the Bank to Certificateholders or to the Certificate Owners. The
Servicer will file with the SEC such periodic reports with respect to the
Trust as are required under the Exchange Act and the rules and regulations
of the SEC thereunder.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the Certificates with
the SEC. This Prospectus is part of the registration statement, but the
registration statement includes additional information.
The Servicer will file with the SEC all required annual, monthly
and special SEC reports and other information about the Trust.
You may read and copy any reports, statements or other information
we file at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call the SEC at
(800) SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the
SEC Internet site (http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is considered to be part of this Prospectus. Information that we file later
with the SEC will automatically update the information in this Prospectus.
In all cases, you should rely on the later information over different
information included in this Prospectus or the related Prospectus
Supplement. We incorporate by reference any future annual, monthly and
special SEC reports and proxy materials filed by or on behalf of the Trust
until we terminate our offering of the Certificates.
As a recipient of this Prospectus, you may request a copy of any
document we incorporate by reference, except exhibits to the documents
(unless the exhibits are specifically incorporated by reference), at no
cost, by writing or calling us at: First USA Bank, National Association,
201 North Walnut Street, Wilmington, Delaware 19801, (302) 594-4000.
INDEX OF TERMS FOR PROSPECTUS
TERM PAGE
- ---- ----
Accounts......................................................... 5, 9
Accumulation Period ..................................................20
Addition Cut-Off Date ................................................25
Additional Accounts ...................................................9
Amortization Period ..................................................11
Annual Membership Fees ...............................................10
Assignment ...........................................................25
BANC ONE ..........................................................7, 12
Bank ..................................................................5
BANK ONE .............................................................11
Bank Portfolio ........................................................9
Benefit Plans ........................................................46
BIF ..................................................................26
BOCM .................................................................48
Cash Advances .........................................................8
Cash Collateral Account .............................................35
Cash Collateral Guaranty .............................................35
Cede .................................................................15
Cedelbank ............................................................17
Cedelbank Customers ..................................................17
Certificate Rate ....................................................14
Certificateholders ...................................................11
Certificates .........................................................5
Chevy Chase .........................................................7
Class ................................................................11
Code ................................................................40
Collateral Invested Amount ...........................................36
Collection Account ...................................................26
Companion Series .....................................................21
Comptroller ..........................................................38
Controlled Accumulation Amount .......................................20
Controlled Amortization Amount .......................................20
Controlled Amortization Period .......................................20
Controlled Deposit Amount ............................................20
Controlled Distribution Amount....................................20, 28
Cooperative ..........................................................17
Default Amount........................................................28
Defaulted Account.....................................................28
Defaulted Accounts....................................................14
Definitive Certificates ..............................................18
Depositaries .........................................................15
Depository ......................................................14, 27
Determination Date ...................................................28
Disclosure Document...................................................22
Discount Receivable Collections ......................................26
Discount Receivables .............................................10, 26
Distribution Account .................................................26
Distribution Date .................................................18
DOJ .................................................................40
DOL .................................................................46
DTC Participants .....................................................15
Eligible Account .....................................................24
Eligible Receivable ..................................................24
Enhancement .......................................................9, 34
Enhancement Invested Amount ..........................................35
Enhancement Percentage ...............................................27
Enhancement Provider ................................................35
ERISA ..............................................................45
Euroclear ............................................................17
Euroclear Operator ...................................................17
Euroclear Participants................................................17
Euroclear System .....................................................17
Excess Principal Collections..........................................21
Exchange .............................................................21
Exchange Act .........................................................15
Exchangeable Transferor Certificate...................................13
FASIT.................................................................44
FDIA .................................................................38
FDIC .................................................................14
FDR ..................................................................5
Final Regulation ....................................................46
Finance Charge Account ...............................................26
Finance Charge Receivables ...........................................10
FIRREA ...............................................................38
First Commerce.........................................................7
Full Invested Amount..................................................27
Funding Period........................................................27
GE Capital.............................................................7
General Account Regulations...........................................47
Holders...............................................................18
Indirect Participants.................................................15
Ineligible Receivable.................................................23
Initial Closing Date .................................................23
Interchange............................................................9
Interest Funding Account..............................................18
Invested Amount.......................................................13
Investor Charge-Off...................................................28
Investor Interest ....................................................13
Investor Percentage ..................................................14
Investor Servicing Fee ...............................................30
IRA...................................................................46
IRS...................................................................41
L/C Bank..............................................................35
MasterCard International..............................................40
MGT/EOC...............................................................17
Minimum Aggregate Principal Receivables ..............................10
Minimum Transferor Interest ......................................10, 22
Monthly Period........................................................18
Moody's...............................................................26
New Regulations.......................................................45
Octagon...............................................................39
Offered Certificates..................................................41
OID...................................................................42
Original Cut-Off Date..................................................9
Other Charges.........................................................10
Pay Out Event.........................................................29
Periodic Finance Charges..............................................10
Permitted Investments ................................................26
Pooling and Servicing Agreement........................................5
Pre-Funding Account...................................................27
Pre-Funding Amount....................................................27
Predecessor Bank.......................................................7
Prepayable Instrument.................................................42
Principal Account.....................................................26
Principal Commencement Date...........................................19
Principal Funding Account.............................................19
Principal Receivables ................................................10
Principal Terms.......................................................21
Prospectus Supplement .................................................5
PTE ..................................................................47
Purchases .............................................................8
Qualified Institution ................................................26
Rapid Amortization Period ............................................20
Rating Agency ....................................................22, 37
Rating Agency Condition ...............................................7
Receivables............................................................9
Record Date...........................................................14
Recoveries.............................................................9
Regulations...........................................................42
Remaining Redemption Amount...........................................42
Reserve Account.......................................................36
Revolving Period......................................................19
SAIF..................................................................26
Scheduled Payment Date ...............................................19
SEC...................................................................15
Securities Act........................................................22
Senior Certificates...................................................14
Series Closing Date ..................................................23
Series Cut-Off Dates..................................................23
Series Supplement.....................................................13
Service Transfer......................................................31
Servicer..............................................................30
Special Tax Counsel ..................................................41
Spread Account........................................................36
Standard & Poor's.....................................................26
Stated Series Termination Date .......................................29
Subordinated Certificates ............................................14
Tax Opinion...........................................................29
Terms and Conditions .................................................17
Transferor Amount.....................................................13
Transferor Interest ..................................................13
Transferor Percentage.................................................14
Trust Portfolio........................... ...........................10
Trust Portfolio........................................................5
U.S...................................................................40
UCC...................................................................37
Unallocated Principal Collections ....................................27
Underwriting Agreement................................................48
VISA..................................................................40
Yield Factor..........................................................26
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.
Registration Fee $1,668,000
Printing and Engraving 660,000
Trustee's Fees 24,000
Legal Fees and Expenses 770,000
Accountant's Fees and Expenses 220,000
Rating Agency Fees 3,410,000
Miscellaneous Fees 120,000
----------
Total $6,872,000
==========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article Tenth of the Bank's Articles of Incorporation provides that the
Bank shall indemnify every person who is or was a director, officer or
employee of the Bank or of any corporation which he served as a director,
officer or employee at the request of the Bank as part of his regularly
assigned duties against all liability (including, without limitation,
judgments, fines, penalties and settlements) and all reasonable expenses
(including, without limitation, attorneys' fees and investigative expenses)
that may be incurred or paid by him in connection with any claim, action,
suit or proceeding, whether civil, criminal or administrative (all referred
to hereafter as "claims") or in connection with any appeal relating thereto
in which he may become involved as a party or otherwise or with which he
may be threatened by reason of his being or having been a director, officer
or employee of the Bank or such other corporation, or by reason of any
action taken or omitted by him in his capacity as such director, officer or
employee, whether or not he continues to be such at the time such liability
or expenses are incurred; provided that nothing contained in Article Tenth
shall be construed to permit indemnification of any such person who is
adjudged guilty of, or liable for, willful misconduct, gross neglect of
duty or criminal acts, unless, at the time such indemnification is sought,
such indemnification in such instance is permissible under applicable law
and regulations, including published rulings of the Comptroller of the
Currency or other appropriate supervisory or regulatory authority; and
provided further that there shall be no indemnification of directors,
officers or employees against expenses, penalties or other payments
incurred in an administrative proceeding or action instituted by an
appropriate regulatory agency which proceeding or action results in a final
order assessing civil money penalties or requiring affirmative action by an
individual or individuals in the form of payments to the Bank.
Article Tenth provides that every person who may be indemnified under
the provisions of Article Tenth and who has been wholly successful on the
merits with respect to any claim shall be entitled to indemnification as of
right. Except as provided in the preceding sentence, any indemnification
under Article Tenth shall be at the sole discretion of the Board of
Directors and shall be made only if the Board of Directors or the Executive
Committee acting by a quorum consisting of directors who are not parties to
such claim shall find, or if independent legal counsel (who may be the
regular counsel of the Bank) selected by the Board of Directors or
Executive Committee, whether or not a disinterested quorum exists, shall
render their opinion that in view of all of the circumstances then
surrounding the claim, such indemnification is equitable and in the best
interest of the Bank. Among the circumstances to be taken into
consideration in arriving at such a finding or opinion is the existence or
non-existence of a contract of insurance or indemnity under which the Bank
would be wholly or partiall reimbursed for such indemnification, but the
existence or non-existence of such insurance is not the sole circumstance
to be considered nor shall it be whooly determinative of whether such
indemnification shall be made. In addition to such finding or opinion, no
indemnification under Article Tenth shall be made unless the Board of
Directors or the Executive Committee acting by a quorum consisting of
directors who are not parties to such claim shall find, or if independent
legal counsel (who may be the regular counsel of the Bank) selected by the
Board of Directors or the Executive Committee, whether or not a
disinterested quorum exists, shall render their opinion that the directors,
officer or employee acted in good faith in what he reasonably believed to
be the best interests of the Bank or such other corporation and further in
the case of any criminal action or proceeding, that the director, officer
or employee reasonably believed his conduct to be lawful. Determination of
any claim by judgment adverse to a director, officer or employee by
settlement with or without Court approval or conviction upon a pleas of
guilty or of nolo contendere or its equivalent shall not create a
presumption that a director, officer or employee failed to meet the
standards of conduct set forth in Article Tenth.
Article Tenth provides that expenses incurred with respect to any claim
may be advanced by the Bank prior to the final disposition thereof upon
receipt of an undertaking satisfactory to the Bank by or on behalf of the
recipient to repay such amount unless it is ultimately determined that he
is entitled to indemnification under Article Tenth.
Article Tenth provides that the rights to indemnification in Article
Tenth shall be in addition to any rights to which any director, officer or
employee may otherwise be entitled by contract or as a matter of law. Every
person who shall act as a director, officer or employee of the Bank shall
be conclusively presumed to be doing so in reliance upon the right of
indemnification provided for in Article Tenth.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Articles of Association of the Bank. *
3.2 Bylaws of the Bank. *
4.1 Pooling and Servicing Agreement and agreements as
exhibits thereto; the first through eleventh amendments
thereto.*
4.2 Form of Series Supplement and exhibits.*
5.1 Opinion of Joanne K. Sundheim with respect to legality.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with
respect to tax matters.
23.1 Consent of Joanne K. Sundheim included in her opinions,
filed as Exhibit 5.1.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
included in its opinions filed as Exhibit 8.1.
--------------
* Previously filed.
(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 on behalf of the First USA Credit Card
Master Trust (the "TRUST") hereby undertakes as follows:
(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 (the "ACT"); (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 the 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 SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than
20 percent 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
clauses (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 with or furnished to the SEC
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 Act, 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 that remain unsold
at the termination of the offering.
(d) That, for purposes of determining any liability under
the Act, each filing of the Trust's annual report pursuant to
Section 13(a) or 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) That insofar as indemnification for liabilities arising
under the Act 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.
(f) That, for purposes of determining any liability under
the Act, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) under the Act shall be deemed to
be part of this Registrant Statement as of the time it was declared
effective.
(g) That, for the purpose of determining any liability under
the Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Wilmington, State of Delaware, on October 28, 1999.
FIRST USA BANK, N.A.,
as originator of the Trust and co-registrant and as
servicer on behalf of the First USA Credit Card
Master Trust as co-registrant
By /s/ Jerry D. Holbrook
------------------------------
Jerry D. Holbrook
Vice President
Pursuant to the Requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
FIRST USA BANK, N.A.
SIGNATURE TITLE
- --------- -----
PRINCIPAL EXECUTIVE OFFICER:
/s/ William P. Boardman Chairman of the Board and October 28, 1999
- ---------------------------- Chief Executive Officer
William P. Boardman
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
* Executive Vice President October 28, 1999
- -------------------------- and Chief Financial Officer
George P. Hubley
DIRECTORS:
* October 28, 1999
- -------------------------
Roger S. Deacon
* October 28, 1999
- --------------------------
George P. Hubley
/s/ Gary J. Marino October 28, 1999
- ---------------------------
Gary J. Marino
/s/William P. Boardman October 28, 1999
- ----------------------------
William P. Boardman
* October 28, 1999
- ----------------------------
James W. Stewart
* October 28, 1999
- -----------------------------
William J. Garner
- -----------------
* The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 1 to the Registration Statement on behalf of each of the
above-indicated officers and directors of the Registrant pursuant to a
power of attorney signed by such directors and officers.
/s/ Jerry D. Holbrook
--------------------------
Jerry D. Holbrook
Attorney-in-fact
</TABLE>
EXHIBIT 5.1
October 28, 1999
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Re: Registration Statement on Form S-3
(Registration No. 333-87653)
Ladies and Gentlemen:
We have served as counsel First USA Bank, National Association, a
national banking association a subsidiary of BANK ONE CORPORATION (the
"Bank") and have acted as counsel for the Bank in connection with the
transfer of receivables ("Receivables") generated from time to time in a
portfolio of VISA and MasterCard revolving credit card accounts by the Bank
to The Bank of New York (Delaware), as trustee (in such capacity, the
"Trustee") for the First USA Credit Card Master Trust (the "Trust") formed
pursuant to a Pooling and Servicing Agreement, dated as of September 1,
1992, as supplemented and amended (the "Pooling and Servicing Agreement")
between the Bank, as transferor and as servicer of the Receivables, and the
Trustee, in exchange for certain Asset Backed Certificates (the
"Certificates"), each such Certificate evidencing an interest in the Trust,
which Certificates will be offered and sold pursuant to the Registration
Statement filed on Form S-3 (Registration No. 333-87653), as amended from
time to time (the "Registration Statement") being filed concurrently
herewith under the Securities Act of 1933.
In connection herewith, we have examined and relied upon the forms
of the Pooling and Servicing Agreement and the Underwriting Agreement
previously filed as exhibits to the Registration Statement. We also have
examined such corporate records, certificates and other documents, and
reviewed such questions of law as we deemed appropriate.
In rendering the following opinions, we have assumed the accuracy
and truthfulness of all public records of the Bank and of all
certifications, documents and other proceedings examined by me that have
been produced by officials of the Bank acting within the scope of their
official capacities, without verifying the accuracy or truthfulness of such
representations. We also have assumed the genuineness of such signatures
appearing upon such public records, certifications, documents and
proceedings. In addition, we have assumed that the Underwriting Agreement
will be executed and delivered in substantially the form filed as an
exhibit to the Registration Statement, and that the Certificates will be
sold as described therein.
We express no opinion as to the laws of any jurisdiction other
than the laws of the State of New York, the general corporate laws of the
State of Delaware and the federal laws of the United States of America.
Based upon and subject to the foregoing, it is our opinion that
when a particular series of Certificates to be issued under the
Registration Statement has been duly and validly authorized by the Bank,
and when such Certificates are executed by the Trustee in accordance with
the provisions of the Pooling and Servicing Agreement and are paid for by
the Underwriters pursuant to the Underwriting Agreement, such series of
Certificates will be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us under the heading
"Legal Matters" in the Prospectus included in the Registration Statement
without implying or admitting that we are an "expert" within the meaning of
the Securities Act of 1933, as amended, or other rules and regulations of
the Securities Act of 1933, as amended, or other rules and regulations of
the Securities and Exchange Commission issued thereunder with respect to
any part of the Registration Statement including this exhibit.
Sincerely,
/s/ Joanne K. Sundheim
The Law Department
EXHIBIT 8.1
October 28, 1999
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Re: Registration Statement No. 333-87653
on Form S-3 relating to First USA
Credit Card Master Trust
Ladies and Gentlemen:
In connection with the filing of Registration Statement No. 333-
87653 on Form S-3 relating to First USA Credit Card Master Trust (the
"Registration Statement") with the Securities and Exchange Commission, you
have requested our opinion regarding certain descriptions of tax
consequences contained in the form of prospectus (the "Prospectus")
included in the Registration Statement.
Our opinion is based on an examination of the Prospectus, the
Pooling and Servicing Agreement, dated as of September 1, 1992 between
First USA Bank, National Association(the "Bank"), as Transferor and
Servicer, and The Bank of New York (Delaware), as trustee (the "Trustee"),
as supplemented and amended (the "Agreement") and such other documents,
instruments and information as we considered necessary. Our opinion is
also based upon the Internal Revenue Code of 1986, as amended,
administrative rulings, judicial decisions, Treasury regulations and other
applicable authorities. The statutory provisions, regulations and
interpretations on which our opinion is based are subject to changes, and
such changes could apply retroactively. In addition, there can be no
assurance that positions contrary to those stated in our opinion may not be
taken by the Internal Revenue Service.
We also note that the Prospectus and the Agreement do not relate
to a specific transaction. Accordingly, the above-referenced description
of Federal income tax consequences may, under certain circumstances,
require modification in the context of an actual transaction.
Based on the foregoing, we hereby confirm that the statements in
the Prospectus under the headings "Certain U.S. Federal Income Tax
Consequences," and "State and Local Taxation," subject to the
qualifications set forth therein, accurately describe the material federal
and Delaware income tax consequences to holders of the Offered
Certificates, under existing law and the assumptions stated therein.
We express no opinion with respect to the matters addressed in
this letter other than as set forth above.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
