<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 33-99328
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 8, 1997)
CITIBANK CREDIT CARD MASTER TRUST I
$750,000,000 FLOATING RATE CLASS A CREDIT CARD PARTICIPATION CERTIFICATES,
SERIES 1997-8
CITIBANK (SOUTH DAKOTA), N.A.
SELLER AND SERVICER
CITIBANK (NEVADA), NATIONAL ASSOCIATION
SELLER
The Floating Rate Class A Credit Card Participation Certificates, Series
1997-8 (the "Class A Certificates") offered hereby evidence undivided
interests in certain assets of Citibank Credit Card Master Trust I (the
"Trust") created by Citibank (South Dakota), N.A. ("Citibank (South Dakota)")
and Citibank (Nevada), National Association ("Citibank (Nevada)"), as sellers
(collectively, the "Banks"). The Trust assets include receivables (the
"Receivables") generated from time to time in a portfolio of revolving credit
card accounts and collections thereon. Concurrently with the issuance of the
Class A Certificates, the Trust will issue $48,000,000 aggregate initial
principal amount of Class B Credit Card Participation Certificates not offered
hereby (the "Class B Certificates"; the Class A Certificates and the Class B
Certificates are herein collectively referred to as the "Investor
Certificates"). The fractional undivided interest in the Trust represented by
the Class B Certificates will be subordinated to the Class A Certificates to
the extent described herein. Following the completion of the offering made
hereby, additional Series 1997-8 Investor Certificates may be issued from time
to time if certain conditions have been met. See "Supplemental Series
Provisions--Issuance of Additional Investor Certificates" in this Prospectus
Supplement. The Trust previously has issued thirty-four other series of
investor certificates which evidence undivided interests in the Trust which
are still outstanding; additional series of investor certificates are expected
to be issued from time to time by the Trust.
(Continued on next page)
THE CLASS A CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE BANKS OR CITICORP OR ANY
AFFILIATE THEREOF. NEITHER THE CLASS A CERTIFICATES NOR THE UNDERLYING
ACCOUNTS OR RECEIVABLES ARE INSURED OR GUARANTEED BY THE UNITED STATES
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT THE BANKS(1)(2)
<S> <C> <C> <C>
Per Class A Certificate........ 100.000% .200% 99.800%
Total.......................... $750,000,000 $1,500,000 $748,500,000
</TABLE>
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(1) Plus accrued interest, if any, from September 15, 1997.
(2) Before deducting expenses payable by the Banks, estimated to be $625,000.
The Class A Certificates are offered subject to receipt and acceptance by the
Underwriters and to their right to reject any order in whole or in part and to
withdraw, cancel or modify the offer without notice. It is expected that
delivery of the Class A Certificates will be made in book-entry form through
the facilities of The Depository Trust Company ("DTC"), Cedel Bank, societe
anonyme ("Cedel") and the Euroclear System ("Euroclear") on or about September
15, 1997.
SALOMON BROTHERS INC
CITIBANK
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
The date of this Prospectus Supplement is September 8, 1997
<PAGE>
(Continued from previous page)
Interest with respect to the Class A Certificates will accrue from September
15, 1997 and will be payable quarterly on or about the fifteenth day of
December, March, June and September, commencing December 15, 1997, and on the
maturity date or, under certain limited circumstances described herein,
monthly on or about the fifteenth day of each month. The principal of the
Class A Certificates is scheduled to be paid on the September 2000
Distribution Date, but principal with respect to the Class A Certificates may
be paid earlier or later under certain limited circumstances described herein.
Except under certain limited circumstances described herein, principal
payments will not be made to Class B Certificateholders until the final
principal payment has been made in respect of the Class A Certificates. See
"Summary of Series Terms--Class A Certificates" and "--Class B Certificates"
in this Prospectus Supplement.
The Trust will have the benefit of funds on deposit in a Cash Collateral
Account. The Cash Collateral Account will be funded by an initial deposit of
$55,860,000, of which $39,900,000 will be for the benefit of both the Class A
Certificates and the Class B Certificates and $15,960,000 will be for the
exclusive benefit of the Class B Certificates. Amounts available to be
withdrawn from the Cash Collateral Account will be applied as described under
"Summary of Series Terms--Credit Enhancement" in this Prospectus Supplement
and "Series Provisions--Series Enhancements" in the Prospectus. Additional
credit enhancement will be provided in the event that additional Series 1997-8
Investor Certificates are issued. See "Supplemental Series Provisions--
Issuance of Additional Investor Certificates" in this Prospectus Supplement.
Application will be made to list the Class A Certificates on the Luxembourg
Stock Exchange.
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE DISCUSSION
UNDER "SPECIAL CONSIDERATIONS" THAT BEGINS ON PAGE 13 OF THE PROSPECTUS.
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A
CERTIFICATES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH CLASS A CERTIFICATES, AND THE IMPOSITION OF A PENALTY
BID, IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING" HEREIN.
----------------
This Prospectus Supplement does not contain complete information about the
offering of the Class A Certificates. Additional information is contained in
the Prospectus and purchasers are urged to read both this Prospectus
Supplement and the Prospectus in full. Sales of the Class A Certificates may
not be consummated unless the purchaser has received both this Prospectus
Supplement and the Prospectus.
This Prospectus Supplement and the Prospectus may be used by Citicorp
Securities, Inc., Citibank International plc and Citibank, N.A., affiliates of
the Banks and wholly owned subsidiaries of Citicorp, in connection with offers
and sales related to market-making transactions in the Class A Certificates.
Citicorp Securities, Inc., Citibank International plc or Citibank, N.A. may
act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
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<PAGE>
SUMMARY OF SERIES TERMS
This Summary of Series Terms (the "Summary of Terms") sets forth and defines
specific terms of the Class A Certificates offered by this Prospectus
Supplement and the Prospectus. The Summary of Terms is qualified in its
entirety by reference to the detailed information appearing elsewhere in this
Prospectus Supplement and in the Prospectus. Reference is made to the Glossary
Supplement at the end of this Prospectus Supplement and to the Glossary at the
end of the Prospectus for the location in this Prospectus Supplement and the
Prospectus of the definitions of certain capitalized terms used herein and
therein.
Title of Securities $750,000,000 Floating Rate Class A Credit
Offered..................... Card Participation Certificates, Series
1997-8.
Class A Certificates
Class A Certificate Rate... For each Interest Period, a per annum rate
equal to the arithmetic mean of London
interbank offered quotations for U.S. dollar
deposits ("LIBOR") for a period of three
months, plus .03%, calculated on the basis
of the actual number of days in the year
divided by a 360-day year. LIBOR will be
determined as of the applicable LIBOR
Determination Date as described herein. See
"Supplemental Series Provisions--
Determination of LIBOR".
Class A Interest Payment The fifteenth day of each December, March,
Dates....................... June and September (or, if such day is not a
business day, the next succeeding business
day), commencing December 15, 1997.
Class A Controlled
Amortization Amount.......
$68,181,818 or, if the Servicer elects to
postpone the commencement of the
Accumulation Period, an amount sufficient so
that the aggregate of the Class A Controlled
Amortization Amounts for each Distribution
Date during the Accumulation Period equals
the Class A Invested Amount as of the Class
A Expected Final Payment Date. See
"Supplemental Series Provisions--
Postponement of Accumulation Period" in this
Prospectus Supplement.
Class A Expected Final
Payment Date..............
The September 2000 Distribution Date.
Class A Investment Fee..... $735,561.
Class A Enhancement........ On each Distribution Date, the Available
Shared Enhancement Amount will be available
to fund certain amounts with respect to both
the Class A Certificates and the Class B
Certificates. See "Credit Enhancement" in
this Summary of Terms and "Series
Provisions--Series Enhancements" in the
Prospectus.
Collections of Principal Receivables and
related amounts (excluding collections of
Finance Charge Receivables) otherwise
allocable to the Class B Certificateholders
will be
S-3
<PAGE>
subordinated to the payment of amounts due
with respect to the Class A Certificates and
in order to maintain the Class A
Certificateholders' interest in the Trust.
No principal will be payable on the Class B
Certificates until the final principal
payment has been made on the Class A
Certificates, except that, on the first
Special Payment Date following an Economic
Early Amortization Event, a portion of the
Available Enhancement Amount will be used to
pay principal of the Class B Certificates.
See "Series Provisions--Allocations,
Reallocations and Subordination" in the
Prospectus.
Initial Shared Enhancement
Amount...................
$39,900,000.
Class A ERISA Class A Certificates may be eligible for
Eligibility................. purchase by Benefit Plans. See "ERISA
Considerations" in the Prospectus.
Class A Ratings............ It is a condition to the issuance of the
Class A Certificates that they be rated in
the highest rating category by at least one
nationally recognized rating agency. The
rating of the Class A Certificates is based
primarily on the value of the Receivables,
the extent of the Initial Shared Enhancement
Amount, the circumstances in which funds may
be withdrawn from the Cash Collateral
Account for the benefit of the Investor
Certificateholders and the terms of the
Class B Certificates. See "Special
Considerations--Series Considerations--
Ratings of the Investor Certificates" in the
Prospectus.
Class B Certificates (not
offered hereby)
Class B Certificate Rate... For each Interest Period, a per annum rate
based on LIBOR for a period of one month,
calculated on the basis of the actual number
of days in the year divided by a 360-day
year. LIBOR will be determined as of the
applicable LIBOR Determination Date as
described herein.
Class B Interest Payment The fifteenth day of each month (or, if such
Dates....................... day is not a business day, the next
succeeding business day), commencing October
15, 1997.
Class B Expected Final
Payment Date..............
The September 2000 Distribution Date.
Class B Enhancement........ On each Distribution Date, the Available
Shared Enhancement Amount (after giving
effect to the application thereof, if
necessary, to fund the Required Amount) will
be
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<PAGE>
available to fund certain amounts with
respect to the Class B Certificates. The
Initial Class B Enhancement Amount will be
for the exclusive benefit of the Class B
Certificateholders. See "Credit Enhancement"
in this Summary of Terms and "Series
Provisions--Series Enhancements" in the
Prospectus.
Initial Shared Enhancement
Amount....................
$39,900,000.
Initial Class B
Enhancement Amount........
$15,960,000.
Class B Ratings............ It is a condition to the issuance of the
Class B Certificates that they be rated at
least "A" or its equivalent by at least one
nationally recognized rating agency. The
rating of the Class B Certificates is based
primarily on the value of the Receivables,
the extent of the Initial Cash Collateral
Amount, the circumstances in which funds may
be withdrawn from the Cash Collateral
Account for the benefit of the Investor
Certificateholders and the credit ratings of
the Servicer and the Banks. See "Special
Considerations--Series Considerations--
Ratings of the Investor Certificates" in the
Prospectus.
Distribution Date........... The fifteenth day of each month (or, if such
day is not a business day, the next
succeeding business day), commencing
October 15, 1997.
Credit Enhancement.......... A cash collateral account (the "Cash
Collateral Account") will be established in
the name of the Trustee, for the benefit of
the Investor Certificateholders. The Cash
Collateral Account will be funded on the
Series Issuance Date in the amount of
$55,860,000 (the "Initial Cash Collateral
Amount"). Of the Initial Cash Collateral
Amount, $39,900,000 (the "Initial Shared
Enhancement Amount") will be for the benefit
of both the Class A Certificates and the
Class B Certificates and the remaining
$15,960,000 of the Initial Cash Collateral
Amount (the "Initial Class B Enhancement
Amount") will be for the exclusive benefit
of the Class B Certificates. See "Series
Provisions--Series Enhancements" in the
Prospectus. Additional credit enhancement
will be provided in the event of an
Additional Issuance.
For each Distribution Date, the Available
Shared Enhancement Amount will be applied to
fund the following amounts in the following
priority: (a) with respect to the Class A
Certificates, the excess, if any, of the
Required Amount with respect to such
Distribution Date over the amount of Excess
Finance Charge Collections allocated and
available to fund such Required Amount and
(b) with respect to the Class B
Certificates, (i) the excess, if any, of
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<PAGE>
the accrued and unpaid interest on the
outstanding principal balance of the Class B
Certificates (plus any interest payable on
such unpaid interest) over the amount to be
deposited in the Class B Interest Funding
Account on such Distribution Date and (ii)
the excess, if any, of the Class B Investor
Default Amount for such Distribution Date
over the amount of Excess Finance Charge
Collections allocated and available to fund
such Class B Investor Default Amount.
On the first Special Payment Date following
an Economic Early Amortization Event, the
Available Shared Enhancement Amount (after
giving effect to other withdrawals from the
Cash Collateral Account on such Distribution
Date) will be applied to pay principal of
the Class A Certificates and the remainder
of the Available Cash Collateral Amount will
be applied to pay principal of the Class B
Certificates. Following such withdrawals
from the Cash Collateral Account on such
Special Payment Date, the Cash Collateral
Account will be terminated and no further
deposits to, or withdrawals from, the Cash
Collateral Account will be made for the
benefit of the Investor Certificateholders.
On each Distribution Date commencing with the
Class B Principal Commencement Date,
provided that an Economic Early Amortization
Event has not occurred, the Available Cash
Collateral Amount (after giving effect to
other withdrawals from the Cash Collateral
Account on such Distribution Date) will be
applied to pay principal of the Class B
Certificates to the extent that the unpaid
principal amount of the Class B Certificates
exceeds the Class B Invested Amount. See
"Series Provisions--Series Enhancements--
Credit Enhancement Generally" and "--The
Cash Collateral Account" in the Prospectus.
Issuance of Additional
Investor Certificates......
After the completion of the offering made
hereby, the Banks may cause the Trustee to
issue additional Series 1997-8 Investor
Certificates ("Additional Investor
Certificates") from time to time during the
Revolving Period, provided that certain
conditions included in the Supplement
relating to the Series 1997-8 Certificates
(the "Series Supplement") are met. In
connection with each Additional Issuance,
the outstanding principal amounts of the
Class A Certificates and the Class B
Certificates and the aggregate amount of
Series Enhancement will all be increased pro
rata. When issued, the Additional Investor
Certificates of each class will be identical
in all respects to the other outstanding
Investor Certificates of that class. See
"Supplemental Series
S-6
<PAGE>
Provisions--Issuance of Additional Investor
Certificates" in this Prospectus Supplement.
Previously Issued Series.... Thirty-four Series of investor certificates
in Group One previously issued by the Trust
are still outstanding. See "Annex I: Prior
Issuances of Investor Certificates" in this
Prospectus Supplement for a summary of the
outstanding Series of investor certificates
previously issued by the Trust.
Participation with Other The Investor Certificates are expected to be
Series...................... the thirty-fifth Series issued by the Trust,
outstanding as of the Series Issuance Date,
in a group of Series ("Group One") issued
from time to time by the Trust. Collections
of Finance Charge Receivables allocable to
each Series in Group One will be aggregated
and made available for required payments for
all Series in Group One. Consequently, the
issuance of a new Series in Group One may
have the effect of reducing or increasing
the amount of collections of Finance Charge
Receivables allocable to the Investor
Certificates. See "Series Provisions--
Allocations, Reallocations and
Subordination--Reallocations Among Investor
Certificates of Different Series" in the
Prospectus.
The Receivables............. The aggregate amount of Receivables in the
Accounts included in the Trust as of July 6,
1997 was $35,331,169,719, of which
$34,840,611,467 were Principal Receivables
and $490,558,252 were Finance Charge
Receivables (which amounts include overdue
Principal Receivables and overdue Finance
Charge Receivables).
Series Cut-Off Date......... August 26, 1997.
Series Issuance Date........ September 15, 1997.
Revolving Period and
Accumulation Period........
Unless an Early Amortization Event has
occurred, the Revolving Period will end and
the Accumulation Period will commence at the
close of business on the fourth-to-last
business day of August 1999; provided,
however, the Servicer may, based on the
amount of principal available to the
investor certificates of all Series
determined based on the principal payment
rate on the Receivables and the amount of
principal distributable to investor
certificateholders of all outstanding Series
(excluding certain specified Series),
shorten the length of the Accumulation
Period and extend by an equivalent period
the length of the Revolving Period. See
"Supplemental Series Provisions--
Postponement of Accumulation Period" in this
Prospectus Supplement.
S-7
<PAGE>
Servicing Compensation...... On each Distribution Date, Servicer
Interchange with respect to the related Due
Period that is on deposit in the Collection
Account will be withdrawn from the
Collection Account and paid to the Servicer.
In addition, the Class A Monthly Servicing
Fee, the Class B Monthly Servicing Fee and
the Seller Servicing Fee will be paid on
each Distribution Date as described under
"Series Provisions--Allocations,
Reallocations and Subordination--
Reallocations Among Investor Certificates of
Different Series--Group One Investor Finance
Charges" in the Prospectus. See "Series
Provisions--Servicing Compensation and
Payment of Expenses" in the Prospectus.
Servicer Interchange Rate... 1.50% per annum.
Net Servicing Fee Rate...... 0.37% per annum so long as Citibank (South
Dakota) or an affiliate of Citibank (South
Dakota) is the Servicer or 0.77% per annum
if Citibank (South Dakota) or an affiliate
of Citibank (South Dakota) is not the
Servicer.
Registration, Clearance and
Settlement.................
The Class A Certificates initially will be
registered in the name of Cede, as the
nominee of DTC, and no purchaser of Class A
Certificates will be entitled to receive a
Definitive Certificate except under certain
limited circumstances. Certificateholders
may elect to hold their Class A Certificates
through DTC (in the United States) or Cedel
or Euroclear (in Europe). Transfers will be
made in accordance with the rules and
operating procedures described herein.
Series Termination Date..... The September 2002 Distribution Date.
S-8
<PAGE>
THE CREDIT CARD BUSINESS OF CITIBANK (SOUTH DAKOTA)
GENERAL
Citibank (South Dakota) services the Accounts at its facilities located in
Sioux Falls, South Dakota, and through affiliated credit card processors
pursuant to service contracts. The Receivables conveyed to the Trust to date
were generated under the VISA or MasterCard International programs and were
either originated by Citibank (South Dakota) or purchased by Citibank (South
Dakota) from other credit card issuers. The Accounts are owned by Citibank
(South Dakota) but a participation in the Receivables in certain of these
Accounts has been or will be sold to Citibank (Nevada) prior to their
conveyance to the Trust.
Subject to certain conditions, the Banks may convey to the Trust receivables
arising in credit card accounts of a type not currently included in the
Accounts. Affiliates of the Banks also currently conduct credit card
businesses. For example, Citicorp Retail Services, Inc. manages private label
credit card programs for several retailers. Receivables arising in such
accounts may be participated to the Banks and sold to the Trust. In addition,
the Banks may purchase portfolios of credit card accounts from other credit
card issuers which may be included in the Trust. Such accounts may not be
originated, used or collected in the same manner as the VISA and MasterCard
International accounts described below and may differ with respect to loss and
delinquency and revenue experience and historical payment rates. Such accounts
may also have different terms than the accounts described below, including
lower periodic finance charges. Consequently, the addition of the receivables
arising in such accounts to the Trust could have the effect of reducing the
Portfolio Yield.
The following discussion describes certain terms and characteristics of the
Accounts. The Eligible Accounts from which the Accounts were selected
represent only a portion of the entire portfolio of consumer revolving credit
loans arising in the VISA and MasterCard accounts currently owned by Citibank
(South Dakota) (the "Portfolio"). In addition, Additional Accounts may consist
of Eligible Accounts which are not currently in existence and which are
selected using different eligibility criteria from those used in selecting the
Accounts already included in the Trust.
Citibank (South Dakota) is a member of VISA and MasterCard International.
The VISA and MasterCard credit cards are issued as part of the worldwide VISA
and MasterCard International systems, and transactions creating the
receivables through the use of the credit cards are processed through the VISA
and MasterCard International authorization and settlement systems. Should
either system materially curtail its activities, or should Citibank (South
Dakota) cease to be a member of VISA or MasterCard International, for any
reason, an Early Amortization Event, as such term is defined in the related
Series Supplement, could occur, and delays in payments on the Receivables and
possible reductions in the amounts thereof could also occur. The VISA and
MasterCard accounts, the receivables in which have been conveyed to the Trust,
include both nonpremium and premium VISA and MasterCard accounts.
The VISA and MasterCard credit cards of the type pursuant to which the
Accounts were established may be used to purchase merchandise and services and
to obtain cash advances. A cash advance is made when a credit card account is
used to obtain cash from a financial institution or automated teller machine,
which may be located at a financial institution, supermarket or other business
establishment. Amounts due with respect to both purchases and cash advances
will be included in the Receivables.
The VISA and MasterCard credit card accounts owned by Citibank (South
Dakota) were principally generated through: (i) applications mailed directly
to prospective cardholders; (ii) applications made available to prospective
cardholders at the banking facilities of Citibank (South Dakota), at other
financial institutions and at retail outlets; (iii) applications generated by
advertising on television, on radio and in magazines; (iv) direct mail and
telemarketing solicitation for accounts on a pre-approved credit basis; (v)
solicitation of cardholders of existing nonpremium accounts for premium
accounts; (vi) applications through affinity and co-brand marketing programs;
and (vii) purchases of accounts from other credit card issuers.
S-9
<PAGE>
ACQUISITION AND USE OF CREDIT CARDS
When Citibank (South Dakota) generates new VISA and MasterCard accounts
through the solicitation of individual applications to open an account, it
reviews each application for completeness and creditworthiness. In addition,
Citibank (South Dakota) generally obtains a credit report issued by an
independent credit reporting agency with respect to the applicant. In the
event there are discrepancies between the application and the credit report
and in certain other circumstances, Citibank (South Dakota) may verify certain
of the information regarding the applicant. Citibank (South Dakota) generally
evaluates the ability of an applicant for a VISA or MasterCard credit card
account to repay credit card balances by applying a credit scoring system
using models developed in-house and models developed with the assistance of an
independent firm with extensive experience in developing credit scoring
models. Credit scoring 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. Credit scoring evaluates a potential cardholder's
credit profile to arrive at an estimate of the associated credit risk. Models
for credit scoring are developed by using statistics to evaluate common
characteristics and their correlation with credit risk. The credit scoring
model used to evaluate a particular applicant is based on a variety of
factors, including the manner in which the application was made or the manner
in which the account was acquired as well as the type of residence of the
applicant or cardholder. From time to time the credit scoring models used by
Citibank (South Dakota) are reviewed and, if necessary, updated to reflect
more current statistical information. Once an application to open an account
is approved an initial credit limit is established for the account based on,
among other things, the applicant's credit score and the source from which the
account was acquired.
Citibank (South Dakota) also generates new VISA and MasterCard accounts
through direct mail and telemarketing solicitation campaigns directed at
individuals who have been pre-approved by Citibank (South Dakota). Citibank
(South Dakota) identifies potential cardholders for pre-approved direct mail
or telemarketing solicitation campaigns by supplying a list of credit criteria
to a credit bureau which generates a list of individuals who meet such
criteria and forwards such list to a processing vendor. The processing vendor
screens the list in accordance with the credit criteria of Citibank (South
Dakota) to determine the eligibility of the individuals on the list for a pre-
approved solicitation. Individuals qualifying for pre-approved direct mail or
telemarketing solicitation are offered a credit card without having to
complete a detailed application. In the case of pre-approved solicitations, a
predetermined credit limit is reserved for each member of the group being
solicited, which credit limit may be based upon, among other things, each
member's individual credit profile, level of existing and potential
indebtedness relative to assumed income and estimated income and the
availability of additional demographic data for such member.
In recent years, Citibank (South Dakota) has added affinity and co-brand
marketing to its other means of business development. Affinity marketing
involves the solicitation of prospective cardholders from identifiable groups
with a common interest and/or common cause. Affinity marketing is conducted
through two approaches: the first relies on the solicitation of organized
membership groups with the written endorsement of the group's leadership and
the second utilizes direct mail solicitation of prospective cardholders
through the use of a list purchased from a group. Co-brand marketing is an
outgrowth of affinity marketing. It involves the solicitation of customers of
a retailer, service provider or manufacturer which has a recognizable brand
name or logo. Consumers are likely to acquire and use a co-branded card
because of the benefits provided by the co-brander. The co-brander may play a
major role in the marketing and solicitation of co-branded cards. Solicitation
activities used in connection with affinity and co-brand marketing also
include solicitations in appropriate magazines, telemarketing and applications
made available to prospective cardholders in appropriate locations. In certain
cases, pre-approved solicitations will be used in the same manner as described
in the preceding paragraph.
Credit card accounts that have been purchased by Citibank (South Dakota)
were originally opened using criteria established by the institution from
which the accounts were purchased or by the
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<PAGE>
institution from which the selling institution originally purchased the
accounts. Purchased accounts are screened against criteria which are set at
the time of acquisition to determine whether any of the purchased accounts
should be closed immediately. Any accounts failing the criteria are closed and
no further purchases or cash advances are authorized. All other such accounts
remain open. The credit limits on such accounts are based initially on the
limits established or maintained by the selling institution. It is expected
that portfolios of credit card accounts purchased by the Banks from other
credit card issuers will be added to the Trust from time to time. It is
expected that such accounts will be screened in the manner described above.
Each cardholder is subject to an agreement governing the terms and
conditions of the accounts. Pursuant to such agreement, Citibank (South
Dakota) reserves the right to change or terminate any terms, conditions,
services or features of the accounts (including increasing or decreasing
periodic finance charges, other charges or minimum payments). Credit limits
may be adjusted periodically based upon an evaluation of the cardholder's
performance.
COLLECTION OF DELINQUENT ACCOUNTS
Generally, Citibank (South Dakota) considers a VISA or MasterCard account
delinquent if a minimum payment due thereunder is not received by Citibank
(South Dakota) by the due date indicated on the cardholder's statement.
Efforts to collect delinquent credit card receivables are made by the
personnel of Citibank (South Dakota) and affiliated credit card processors
pursuant to service contracts, supplemented by collection agencies and
attorneys retained by Citibank (South Dakota). Under current practice,
Citibank (South Dakota) includes a request for payment of overdue amounts on
all billing statements issued after the account becomes delinquent. While
collection personnel initiate telephone contact with cardholders whose credit
card accounts have become as little as five days delinquent, based on credit
scoring criteria, generally such contact is initiated when an account is 35
days or more delinquent. In the event that initial telephone contact fails to
resolve the delinquency, Citibank (South Dakota) continues to contact the
cardholder by telephone and by mail. Generally, 15 days after an account
becomes delinquent or whenever a cardholder exceeds such cardholder's credit
limit by more than 5% no additional extensions of credit through such account
are authorized, and no more than 95 days after an account becomes delinquent
it is closed. The Servicer may also, at its discretion, enter into
arrangements with delinquent cardholders to extend or otherwise change payment
schedules. The current policy of the Servicer is to charge-off the receivables
in an account when that account becomes 185 days delinquent or, if the
Servicer receives notice that a cardholder has filed for bankruptcy or has had
a bankruptcy petition filed against it, the Servicer will charge-off the
receivables in such account not later than 60 days after the Servicer receives
such notice. The credit evaluation, servicing and charge-off policies and
collection practices of Citibank (South Dakota) may change over time in
accordance with the business judgment of Citibank (South Dakota), applicable
law and guidelines established by applicable regulatory authorities.
S-11
<PAGE>
THE ACCOUNTS
GENERAL
The Receivables arise in the Accounts. The Accounts have been selected from
substantially all of the Eligible Accounts in the Portfolio. Citibank (South
Dakota) believes that the Accounts are representative of the Eligible Accounts
in the Portfolio and that the inclusion of the Accounts, as a whole, does not
represent an adverse selection from among the Eligible Accounts.
The Accounts include receivables which have been charged-off as
uncollectible prior to their addition to the Trust in accordance with normal
servicing policies. However, for purposes of calculation of the amount of
Principal Receivables and Finance Charge Receivables in the Trust for any
date, the balance of such charged-off receivables is zero and the Trust owns
only the right to receive recoveries with respect to such receivables.
As of January 11, 1991 (the "Trust Cut-Off Date") and any Series Cut-Off
Date, as such term is defined in the prospectus supplement relating to such
Series (and on the date any new Receivables are generated), the Banks have
represented and warranted, and will represent and warrant, to the Trust that
the Receivables (and such new Receivables) meet the eligibility requirements
set forth in the Pooling Agreement. There can be no assurance that all of the
Accounts will continue to meet applicable eligibility requirements throughout
the life of the Trust.
The Accounts consist of Eligible Accounts, which consist of VISA and
MasterCard credit card accounts. The Banks may (subject to certain limitations
and conditions), and, in certain circumstances, will be obligated to,
designate from time to time Additional Accounts and to convey to the Trust all
Receivables of such Additional Accounts, whether such Receivables are then
existing or thereafter created. The Banks have made Lump Sum Additions to the
Trust which, in the aggregate, included approximately $22.42 billion of
Principal Receivables. The Lump Sum Additions consist primarily of receivables
arising from (a) certain premium and nonpremium VISA and MasterCard credit
card accounts which had been previously transferred by the Banks to credit
card trusts originated by the Banks which had reached their maturity dates and
terminated pursuant to their terms and (b) certain other premium and non-
premium VISA and MasterCard credit card accounts.
Additional Accounts may be subject to different eligibility criteria from
those used in selecting the Initial Accounts and may not be accounts of the
same type previously included in the Trust. Therefore there can be no
assurance that such Additional Accounts will be of the same credit quality as
the Initial Accounts or the Additional Accounts, the Receivables in which have
been conveyed previously to the Trust. Moreover, Additional Accounts may
contain Receivables which consist of fees, charges and amounts which are
different from the fees, charges and amounts described below. Such Additional
Accounts may also be subject to different credit limits, balances and ages.
Consequently, there can be no assurance that the Accounts will continue to
have the characteristics described below as Additional Accounts are added. In
addition, the inclusion in the Trust of Additional Accounts with lower
periodic finance charges may have the effect of reducing the Portfolio Yield.
The Banks intend to file with the Securities and Exchange Commission, on
behalf of the Trust, a Current Report on Form 8-K with respect to any addition
of accounts which would have a material effect on the composition of the
Accounts.
LOSS AND DELINQUENCY EXPERIENCE
The following tables set forth the loss and delinquency experience with
respect to payments by cardholders for each of the periods shown for the
Accounts. With respect to the Loss Experience table below, loss experience is
shown on a cash basis for Principal Receivables. If accrued Finance Charge
Receivables which have been written off were included in losses in the
following table, Net Losses would be higher as an absolute number and as a
percentage of the average of Principal and Finance Charge Receivables
outstanding during the periods indicated. There can be no assurance that the
loss and delinquency experience for the Receivables in the future will be
similar to the historical experience set forth below with respect to the
Accounts.
S-12
<PAGE>
LOSS EXPERIENCE FOR THE ACCOUNTS(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED -------------------------------------
JUNE 30, 1997 1996 1995 1994
---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Average Principal
Receivables
Outstanding(2)......... $32,519,081 $31,225,337 $25,083,447 $18,066,914
Net Losses(3)........... $ 1,043,301 $ 1,678,991 $ 956,261 $ 685,118
Net Losses as a
Percentage of Average
Principal Receivables
Outstanding(4)......... 6.47% 5.38% 3.81% 3.79%
</TABLE>
- --------
(1) Losses consist of write-offs of Principal Receivables.
(2) Average Principal Receivables Outstanding is the average of Principal
Receivables outstanding during the periods indicated.
(3) Net losses as a percentage of gross charge-offs for the first six months
of 1997 were 92.62% and for each of the years ended December 31, 1996,
1995 and 1994 were 92.46%, 88.49% and 86.14%, respectively. Gross charge-
offs are charge-offs before recoveries and do not include the amount of
any reductions in Average Principal Receivables Outstanding due to fraud,
returned goods, customer disputes or certain other miscellaneous write-
offs.
(4) The percentage for the six months ended June 30, 1997 is an annualized
number.
DELINQUENCIES AS A PERCENTAGE OF THE ACCOUNTS(1)(2)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------------------------
AS OF JUNE 30, 1997 1996 1995 1994
------------------------ ------------------------ ------------------------ ------------------------
NUMBER OF DAYS DELINQUENT DELINQUENT DELINQUENT DELINQUENT
DELINQUENT AMOUNT(1) PERCENTAGE(2) AMOUNT(1) PERCENTAGE(2) AMOUNT(1) PERCENTAGE(2) AMOUNT(1) PERCENTAGE(2)
-------------- ---------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
35-64 days.......... $ 631,761 1.91% $ 714,532 2.25% $ 699,878 2.75% $ 439,224 2.40%
65-94 days.......... 362,657 1.10 394,432 1.25 353,832 1.39 228,335 1.25
95 days or more..... 671,945 2.04 687,988 2.17 558,613 2.20 360,774 1.97
---------- ---- ---------- ---- ---------- ---- ---------- ----
Total.............. $1,666,363 5.05% $1,796,952 5.67% $1,612,323 6.34% $1,028,333 5.62%
========== ==== ========== ==== ========== ==== ========== ====
</TABLE>
- --------
(1) The Delinquent Amount includes both the Principal Receivables and Finance
Charge Receivables.
(2) The percentages are the result of dividing the Delinquent Amount by the
average of Principal and Finance Charge Receivables outstanding during the
periods indicated.
REVENUE EXPERIENCE
The revenues for the Accounts from finance charges, fees paid by cardholders
and interchange for the six months ended June 30, 1997 and for each year of
the three-year period ended December 31, 1996 are set forth in the following
table.
The revenue experience in the following table is presented on a cash basis
before deduction for charge-offs. Revenues from finance charges, fees and
interchange will be affected by numerous factors, including the periodic
finance charge on the Receivables, the amount of any annual membership fee,
other fees paid by cardholders, the percentage of cardholders who pay off
their balances in full each month and do not incur periodic finance charges on
purchases, the percentage of Accounts bearing finance charges at promotional
rates and changes in the level of delinquencies on the Receivables.
S-13
<PAGE>
REVENUE EXPERIENCE FOR THE ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------
JUNE 30, 1997 1996 1995 1994
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Finance Charges and Fees
Paid....................... $3,038,488 $5,732,865 $4,545,420 $3,397,756
Average Revenue
Yield(1)(2)................ 18.84% 18.36% 18.11% 18.81%
</TABLE>
- --------
(1) Average Revenue Yield is the result of dividing Finance Charges and Fees
Paid by Average Principal Receivables Outstanding during the periods
indicated.
(2) The percentage for the six months ended June 30, 1997 is an annualized
number.
The revenues related to periodic finance charges and fees (other than annual
fees) depend in part upon the collective preference of cardholders to use
their credit cards as revolving debt instruments for purchases and cash
advances and to pay off account balances over several months as opposed to
convenience use (where the cardholders prefer instead to pay off their entire
balance each month, thereby avoiding periodic finance charges on purchases)
and upon other services of which the cardholder chooses to avail himself and
which are paid for by the use of the card. Fees for these other services will
be treated for purposes of the Pooling Agreement and the Series Supplement as
Principal Receivables rather than Finance Charge Receivables; however, the
Banks will be permitted to specify that any such fees will be treated as
Finance Charge Receivables. Revenues related to periodic finance charges and
fees also depend on the types of charges and fees assessed on the Accounts.
Accordingly, revenues will be affected by future changes in the types of
charges and fees assessed on the Accounts and in the types of Additional
Accounts added from time to time. Revenues could be adversely affected by
future changes in fees and charges assessed by Citibank (South Dakota) and
other factors.
Citibank (South Dakota) has previously reduced the finance charges and
reduced or eliminated the annual fees applicable to, and modified some other
terms of, certain of the Accounts. These changes have reduced the gross yield
of the Accounts. See "The Accounts--Billing and Payments" in this Prospectus
Supplement.
CARDHOLDER MONTHLY PAYMENT RATES FOR THE ACCOUNTS
Monthly payment rates on the Receivables may vary because, among other
things, cardholders may fail to make a required payment, may only make
payments as low as the minimum required payment or may make payments as high
as the entire outstanding balance. Monthly payment rates on the Receivables
may also vary due to seasonal purchasing and payment habits of cardholders.
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Accounts during any month in the periods shown and the
average of the cardholder monthly payment rates for all months during the
periods shown, in each case calculated as a percentage of the total beginning
account balances for such month. Monthly payment rates reflected in the table
include amounts which would be deemed payments of Principal Receivables and
Finance Charge Receivables with respect to the Accounts. In addition, the
amount of outstanding Receivables and the rates of payments, delinquencies,
charge-offs and new borrowings on the Accounts depend on a variety of factors
including seasonal variations, the availability of other sources of credit,
general economic conditions, tax laws, consumer spending and borrowing
patterns and the terms of the Accounts (which are subject to change by
Citibank (South Dakota)).
CARDHOLDER MONTHLY PAYMENT RATES FOR THE ACCOUNTS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------
JUNE 30, 1997 1996 1995 1994
------------- ------- ------- -------
<S> <C> <C> <C> <C>
Lowest Month.......................... 18.05% 17.65% 17.59% 18.21%
Highest Month......................... 21.80% 21.05% 20.92% 21.33%
Average of the Months in the Period... 19.62% 19.39% 19.09% 19.69%
</TABLE>
S-14
<PAGE>
INTERCHANGE
Creditors participating in the VISA and MasterCard International
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 International systems,
a portion of this Interchange in connection with cardholder charges for
merchandise and services is passed from banks which clear the transactions for
merchants to credit card-issuing banks. Interchange ranges from approximately
1% to 1.85% of the transaction amount. Citibank (South Dakota) is required,
pursuant to the terms of the Pooling Agreement, to transfer to the Trust
Interchange attributed to cardholder charges for merchandise and services in
the Accounts. Interchange is allocated to the Trust on the basis of the
percentage equivalent of the ratio which the amount of cardholder charges for
merchandise and services in the Accounts bears to the total amount of
cardholder charges for merchandise and services in the Portfolio. VISA and
MasterCard International may from time to time change the amount of
Interchange reimbursed to banks issuing their credit cards. On each
Distribution Date, Servicer Interchange with respect to the related Due Period
that is on deposit in the Collection Account will be withdrawn from the
Collection Account and paid to the Servicer as described under "Series
Provisions--Servicing Compensation and Payment of Expenses" in the Prospectus.
THE RECEIVABLES
The Receivables in the Accounts as of July 6, 1997 included $490,558,252 of
Finance Charge Receivables and $34,840,611,467 of Principal Receivables (which
amounts include overdue Finance Charge Receivables and overdue Principal
Receivables). As of July 6, 1997 there were 28,525,134 Accounts. Included
within the Accounts are inactive Accounts that have no balance. The Accounts
had an average Principal Receivable balance of $1,221 and an average credit
limit of $5,007. The average total Receivable balance in the Accounts as a
percentage of the average credit limit with respect to the Accounts was 25%.
Approximately 86% of the Accounts were opened prior to June 1995.
Approximately 13.21%, 11.01%, 6.66% and 5.62% of the Accounts related to
cardholders having billing addresses in California, New York, Texas and
Florida, respectively. Not more than 5% of the Accounts related to cardholders
having billing addresses in any other single state.
S-15
<PAGE>
The following tables summarize the Accounts by various criteria as of July
6, 1997. References to "Receivables Outstanding" in the following tables
include both Finance Charge Receivables and Principal Receivables. Because the
composition of the Accounts will change in the future, these tables are not
necessarily indicative of the future composition of the Accounts.
COMPOSITION OF ACCOUNTS BY ACCOUNT BALANCE
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT BALANCE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
--------------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Credit Balance(1).......... 238,253 0.84% $ (44,249,790) (0.13)%
No Balance(2).............. 12,730,262 44.62 0 0.00
Less than or equal to
$500.00................... 3,824,274 13.41 773,517,978 2.20
$500.01 to $1,000.00....... 2,226,585 7.81 1,653,326,107 4.68
$1,000.01 to $2,000.00..... 3,360,583 11.78 4,940,885,194 13.98
$2,000.01 to $3,000.00..... 2,009,392 7.04 4,961,863,797 14.04
$3,000.01 to $4,000.00..... 1,269,500 4.45 4,403,913,369 12.46
$4,000.01 to $5,000.00..... 1,016,892 3.56 4,595,029,292 13.01
$5,000.01 to $6,000.00..... 612,010 2.15 3,345,493,629 9.47
$6,000.01 to $7,000.00..... 393,120 1.38 2,544,712,738 7.20
$7,000.01 to $8,000.00..... 275,952 0.97 2,062,819,498 5.84
$8,000.01 to $9,000.00..... 182,423 0.64 1,546,486,507 4.38
$9,000.01 to $10,000.00.... 137,474 0.48 1,303,885,461 3.69
Over $10,000.00............ 248,414 0.87 3,243,485,939 9.18
---------- ------ --------------- ------
Total.................... 28,525,134 100.00% $35,331,169,719 100.00%
========== ====== =============== ======
</TABLE>
- --------
(1) Credit balances are a result of cardholder payments and credit adjustments
applied in excess of an Account's unpaid balance. Accounts which currently
have a credit balance are included because Receivables may be generated
with respect thereto in the future.
(2) Accounts which currently have no balance are included because Receivables
may be generated with respect thereto in the future.
COMPOSITION OF ACCOUNTS BY CREDIT LIMIT
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
CREDIT LIMIT ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
------------ ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Less than or equal to
$500.00.................... 1,701,722 5.97% $ 90,507,589 0.27%
$500.01 to $1,000.00........ 1,829,965 6.42 527,235,954 1.49
$1,000.01 to $2,000.00...... 4,696,488 16.45 2,900,034,916 8.21
$2,000.01 to $3,000.00...... 3,503,092 12.28 3,008,037,607 8.51
$3,000.01 to $4,000.00...... 2,395,534 8.40 2,601,273,529 7.36
$4,000.01 to $5,000.00...... 3,342,605 11.72 4,389,238,371 12.42
Over $5,000.00.............. 11,055,728 38.76 21,814,841,753 61.74
---------- ------ --------------- ------
Total..................... 28,525,134 100.00% $35,331,169,719 100.00%
========== ====== =============== ======
</TABLE>
S-16
<PAGE>
COMPOSITION OF ACCOUNTS BY PAYMENT STATUS
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
PAYMENT STATUS ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
-------------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Current(1)................... 27,079,535 94.93% $31,646,535,341 89.57%
Up to 34 days delinquent..... 832,418 2.92 2,018,270,966 5.71
35 to 64 days delinquent..... 269,054 0.94 631,761,462 1.79
65 to 94 days delinquent..... 129,111 0.45 362,656,605 1.03
95 to 124 days delinquent.... 87,378 0.31 264,254,378 0.75
125 to 154 days delinquent... 70,023 0.25 224,662,333 0.64
155 to 184 days delinquent... 57,615 0.20 183,028,634 0.51
---------- ------ --------------- ------
Total...................... 28,525,134 100.00% $35,331,169,719 100.00%
========== ====== =============== ======
</TABLE>
- --------
(1) Includes Accounts on which the minimum payment has not been received prior
to the next billing date following the issuance of the related bill.
COMPOSITION OF ACCOUNTS BY AGE
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
AGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
--- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Less than or equal to 6
months..................... 0 0.00% $ 0 0.00%
Over 6 months to 12 months.. 761,630 2.67 1,200,145,554 3.40
Over 12 months to 24
months..................... 3,252,649 11.40 4,120,266,624 11.66
Over 24 months to 36
months..................... 4,810,917 16.87 5,172,471,801 14.64
Over 36 months to 48
months..................... 2,983,364 10.46 3,322,278,590 9.40
Over 48 months.............. 16,716,574 58.60 21,516,007,150 60.90
---------- ------ --------------- ------
Total..................... 28,525,134 100.00% $35,331,169,719 100.00%
========== ====== =============== ======
</TABLE>
BILLING AND PAYMENTS
The Accounts have various billing and payment structures, including varying
periodic finance charges and fees. The following is information on the current
billing and payment characteristics of the Accounts.
Monthly billing statements are sent by Citibank (South Dakota) to
cardholders with balances at the end of the billing period. Each month a VISA
or MasterCard cardholder must make a minimum payment equal to (a) with respect
to nonpremium accounts, the sum of (i) the greater of $20 (or, if the then
current balance is less than $20, such balance) and 1/48 of the then current
balance, (ii) any amount which is past due and (iii) any amount which is in
excess of the credit limit; or (b) with respect to premium accounts, the sum
of (i) the greater of $50 (or, if the then current balance is less than $50,
such balance) and 1/48 of the then current balance, (ii) any amount which is
past due and (iii) any amount which is in excess of the credit limit;
provided, that in each case the required minimum payment will not be less than
the finance charges billed. Prior to December 1993, the minimum payments were
determined by reference to 1/36 of the then current balance, rather than 1/48.
A periodic finance charge is assessed on the Accounts. The periodic finance
charge assessed on balances for cash advances is calculated by multiplying (i)
the average daily balances for cash advances during the billing cycle by (ii)
the number of days in the billing cycle by (iii) the applicable daily periodic
finance charge. Cash advances are included in the average daily balance for
cash
S-17
<PAGE>
advances from the date such advances are made. The periodic finance charge
assessed on balances for purchases is calculated by multiplying the average
daily balance for purchases (the balance thereof on which finance charges are
assessed) by the applicable monthly periodic finance charge. Purchases are
included in the average daily balance for purchases generally from the date of
purchase. Periodic finance charges are not assessed in most circumstances on
purchase amounts if all balances shown in the previous billing statement are
paid in full by the due date indicated on such statement. The periodic finance
charge assessed on balances in most accounts for cash advances and purchases
is currently the Prime Rate (as published in The Wall Street Journal ) plus a
percentage ranging from 5.4% to 10.4% for accounts in good standing, and the
Prime Rate plus 12.9% for accounts which have been recently, or currently are,
delinquent. As of the most recent quarterly reset date, the periodic finance
charge ranged from 13.90% to 18.90% for most accounts in good standing, and
was 21.40% for most accounts which have been recently, or currently are,
delinquent. Citibank (South Dakota) may change the periodic finance charge on
accounts at any time by written notice to the cardholders. Any announced
increase in such rate will become effective upon the earlier of subsequent use
of a card and the expiration of a 25-day period from the date such change was
made effective (assuming failure on the part of the cardholder to object to
the new rate). Citibank (South Dakota) also offers promotional rates of
limited duration to attract new cardholders and to promote balance transfers
from other credit card issuers and, under certain circumstances, the periodic
finance charge on a limited number of accounts may be greater or less than
those assessed by Citibank (South Dakota) generally.
Prior to December 1993, Citibank (South Dakota) generally assessed an annual
membership fee of between $20 and $100 per account. Effective December 1,
1993, Citibank (South Dakota) eliminated the annual membership fee for certain
premium and nonpremium cardholders who met specified non-delinquency criteria.
This change did not apply to affinity or co-branded card products. In
addition, effective January 1, 1995, Citibank (South Dakota) eliminated the
annual fees applicable to certain other accounts, including certain of its
affinity and co-branded card products. These changes have reduced the gross
yield of the Accounts. Citibank (South Dakota) management believes that the
elimination of annual fees is within industry norms and is an important
component of management's initiative to maintain Citibank (South Dakota)'s
leadership position in the market for bank credit cards. Certain of the
Accounts may be subject to certain additional fees, including: (a) a late fee
of $20 if Citibank (South Dakota) does not receive a required minimum payment
by the payment due date shown on the monthly billing statement, which fee is
assessed monthly until the account is less than 30 days past due; (b) a cash
advance fee which is generally equal to 2% of the amount of the cash advance
(subject to a minimum fee of $2 with no maximum); (c) a returned payment fee
of $20; (d) a returned check fee of $20; (e) a stop payment fee of $20 and (f)
a fee of $20 with respect to each account with an outstanding balance over the
credit limit established for such account.
Payments by cardholders to Citibank (South Dakota) on the Accounts are
processed and applied to all minimum amounts due, from the oldest to the most
current, with respect to the following items in the following order: (i)
periodic finance charges on cash advances; (ii) periodic finance charges on
purchases; (iii) cash advance amounts and (iv) purchase amounts. When all
minimum amounts due are paid, payments are generally allocated first to cash
advance balances and then to purchase balances. There can be no assurance that
periodic finance charges, fees and other charges will remain at current levels
in the future.
S-18
<PAGE>
THE BANKS
Citibank (South Dakota), a national banking association and an indirect
wholly owned subsidiary of Citicorp located in Sioux Falls, South Dakota, was
formed in 1981 and conducts nationwide consumer lending programs primarily
comprised of credit card-related activities. Citibank (South Dakota) is the
nation's largest bank credit card issuer. The principal executive office of
Citibank (South Dakota) is located at 701 East 60th Street, North, Sioux
Falls, South Dakota 57117 (telephone (605) 331-2626).
Citibank (Nevada), a national banking association and an indirect wholly
owned subsidiary of Citicorp located in Las Vegas, Nevada, was formed in 1985
and conducts a retail banking business in the Las Vegas, Nevada area and
services credit card accounts for certain of its affiliates. The principal
executive office of Citibank (Nevada) is located at 8725 West Sahara Avenue,
Las Vegas, Nevada 89163 (telephone (702) 797-4444).
SUPPLEMENTAL SERIES PROVISIONS
CERTAIN DEFINITIONS
"Class A Monthly Interest" means, with respect to any Distribution Date, the
product of (a) the Class A Certificate Rate in effect with respect to the
relevant Interest Period, (b) the outstanding principal amount of the Class A
Certificates as of the close of business on the preceding Distribution Date
(after subtracting therefrom the aggregate amount of all distributions of
Class A Monthly Principal previously made either to the Class A Principal
Funding Account or to the Class A Certificateholders) and (c) a fraction, the
numerator of which is the actual number of days from and including the prior
Distribution Date to but excluding such Distribution Date and the denominator
of which is 360 or, with respect to the first Distribution Date, interest on
the initial Class A Invested Amount at the Class A Certificate Rate from and
including the Series Issuance Date to but excluding such Distribution Date,
provided that such amount will be adjusted to reflect any Additional Issuance
during the related Due Period.
"Class B Monthly Interest" means, with respect to any Distribution Date, the
product of (a) the Class B Certificate Rate in effect with respect to the
relevant Interest Period, (b) the Class B Invested Amount as of the close of
business on the preceding Distribution Date (after giving effect to any
increase or decrease in the Class B Invested Amount on such preceding
Distribution Date) and (c) a fraction, the numerator of which is the actual
number of days from and including the prior Distribution Date to but excluding
such Distribution Date and the denominator of which is 360 or, with respect to
the first Distribution Date, interest on the initial Class B Invested Amount
at the Class B Certificate Rate from and including the Series Issuance Date to
but excluding such Distribution Date, provided that such amount will be
adjusted to reflect any Additional Issuance during the related Due Period.
DETERMINATION OF LIBOR
The Servicer will determine LIBOR for each applicable Interest Period on the
second business day prior to the applicable Payment Date (or, in the case of
the initial Interest Period, the second business day prior to the Series
Issuance Date) on which such Interest Period commences (each a "LIBOR
Determination Date"). For purposes of calculating LIBOR, a business day is any
day on which dealings in deposits in U.S. Dollars are transacted in the London
interbank market.
"LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
U.S. Dollars for a period of the Designated Maturity (commencing on the first
day of the relevant Interest Period) which appears on the 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 day will be determined on the basis of
the rates at which deposits in U.S. 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 period of the Designated Maturity (commencing on
the first day of the relevant Interest Period). The Servicer will request the
S-19
<PAGE>
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
day will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the rate for that day
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 U.S. Dollars to leading European banks for a
period of the Designated Maturity (commencing on the first day of the relevant
Interest Period).
"Designated Maturity" shall mean, for any LIBOR Determination Date, with
respect to the Revolving Period or the Accumulation Period, three months for
the Class A Certificates and one month for the Class B Certificates, and for
any LIBOR Determination Date with respect to the Early Amortization Period,
one month.
"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.
ISSUANCE OF ADDITIONAL INVESTOR CERTIFICATES
The Series Supplement provides that, from time to time during the Revolving
Period, the Banks may, subject to certain conditions described below, cause
the Trustee to issue Additional Investor Certificates (each such issuance, an
"Additional Issuance"). When issued, the Additional Investor Certificates of
each class will be identical in all respects to the other outstanding Investor
Certificates of that class and will be equally and ratably entitled to the
benefits of the Pooling Agreement and the Series Supplement without
preference, priority or distinction.
In connection with each Additional Issuance, the outstanding principal
amounts of the Class A Certificates and the Class B Certificates and the
aggregate amount of Series Enhancement will all be increased pro rata. The
additional Series Enhancement provided in connection with an Additional
Issuance may take the form of an additional deposit to the Cash Collateral
Account, the purchase of interest rate caps or swaps and/or another form of
Series Enhancement, provided that the form and amount of additional Series
Enhancement will not cause a Ratings Effect.
Following an Additional Issuance, the respective portions of the Series
Enhancement that are for the benefit of the Class A Certificateholders and the
Class B Certificateholders will remain the same, as a percentage of the total
Series Enhancement, as the respective proportions in effect on the Series
Issuance Date. The Class A Controlled Amortization Amount will be increased
proportionately to reflect the principal amount of additional Class A
Certificates, and the Class A Investment Fee will also be increased, provided
that the ratio of the maximum possible Class A Investment Fee to the Invested
Amount after giving effect to the Additional Issuance shall not be more than
150% of that ratio as in effect on the Series Issuance Date.
Additional Investor Certificates may be issued only upon the satisfaction of
certain conditions provided in the Series Supplement, including the following:
(a) on or before the fifth Business Day immediately preceding the date on
which the Additional Investor Certificates are to be issued, the Banks shall
have given the Trustee, the Servicer and any provider of Series Enhancement
written notice of such issuance and the date upon which it is to occur; (b)
after giving effect to the Additional Issuance, the total amount of Principal
Receivables shall be at least equal to the Required Minimum Principal Balance;
(c) the Banks shall have delivered to the Trustee any additional Series
Enhancement agreement related to the Additional Issuance, executed by each of
the parties to such agreement; (d) the Trustee shall have received
confirmation from the Rating Agency that such Additional Issuance will not
result in a Ratings Effect; (e) the Banks shall have delivered to the Trustee
a certificate of an authorized officer, dated the date upon which the
Additional Issuance is to occur, to
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<PAGE>
the effect that the Banks reasonably believe that such issuance will not at
the time of its occurrence or at a future date cause an Adverse Effect; (f) as
of the date of the Additional Issuance and taking the Additional Issuance into
account, the amount on deposit in the Cash Collateral Account, together with
any additional Series Enhancement, shall not be less than the amount required
so that the Additional Issuance will not result in a Ratings Effect; (g) as of
the date of the Additional Issuance, all amounts due and owing to the holders
of Investor Certificates shall have been paid, and there shall not be any
unreimbursed Class A or Class B Investor Charge-Offs; (h) the excess of the
principal amount of the Additional Investor Certificates over their issue
price shall not exceed the maximum amount permitted under the Code without the
creation of original issue discount; (i) the Banks' remaining interest in
Principal Receivables shall not be less than 2% of the total amount of
Principal Receivables, in each case as of the date upon which the Additional
Issuance is to occur after giving effect to such issuance; (j) as of the date
of the Additional Issuance and taking the Additional Issuance into account,
the Notional Amount must equal the sum of the initial principal amount of the
Class A Certificates and the principal amount of any Class A Certificates
issued pursuant to such Additional Issuance; and (k) the Banks shall have
delivered to the Trustee an opinion of counsel acceptable to the Trustee that
for federal and South Dakota income and franchise tax purposes (i) following
the Additional Issuance the Trust will not be an association (or publicly
traded partnership) taxable as a corporation, (ii) the Additional Investor
Certificates will be properly characterized as debt and (iii) the Additional
Issuance will not adversely affect the characterization of the outstanding
Investor Certificates or the investor certificates of any other Series as debt
and will not cause a taxable event to holders of any such investor
certificates.
There are no restrictions on the timing or amount of any Additional
Issuance, provided that the conditions described above are met. As of the date
of any Additional Issuance, the Class A Invested Amount and the Class B
Invested Amount will be increased to reflect the initial principal balance of
the Additional Investor Certificates of the respective classes.
POSTPONEMENT OF ACCUMULATION PERIOD
Upon written notice to the Trustee, the Sellers, the Rating Agency and the
Cash Collateral Depositor, the Servicer may elect to shorten the length of the
Accumulation Period, and extend by an equivalent period 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 the
Determination Date immediately preceding the August 1999 Distribution Date and
thereafter on each Determination Date until the date the Accumulation Period
begins, the Servicer will determine the "Accumulation Period Length" based on
the amount of principal available to the investor certificates of all Series
determined based on the lowest monthly principal payment rate on the
Receivables for the prior 12 months and the amount of principal distributable
to the Certificateholders of all outstanding Series (excluding certain
specified Series) which are not in their revolving 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, which, if continued, would result in a shorter
Accumulation Period. The length of the Accumulation Period will not be less
than one month and will not be shorter than the period determined as of the
first date of determination unless the Trust has issued another Series of
investor certificates subsequent to that date and such Series is in its
revolving period. If the Accumulation Period is postponed in accordance with
the foregoing, and if an Early Amortization Event occurs after the date
originally scheduled as the commencement of the Accumulation Period, it is
probable that holders of Investor Certificates would receive some of their
principal later than if the Accumulation Period had not been so postponed.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
relating to the Class A Certificates (the "Underwriting Agreement"), the Banks
have agreed to cause the Trust to sell to each of the underwriters named below
(the "Underwriters"), and each of the Underwriters has severally agreed to
purchase, the principal amount of Class A Certificates set forth opposite its
name:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT
------------ ------------
<S> <C>
Salomon Brothers Inc........................................... $187,500,000
Citibank, N.A.................................................. 187,500,000
Credit Suisse First Boston Corporation......................... 187,500,000
Lehman Brothers Inc. .......................................... 187,500,000
------------
Total..................................................... $750,000,000
============
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all $750,000,000
aggregate principal amount of the Class A Certificates offered hereby if any
Class A Certificates are purchased. In the event of default by any
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated. The Banks have been
advised by the Underwriters that the several Underwriters propose initially to
offer the Class A Certificates to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers
at such price less a concession not in excess of .15% of the principal amount
of the Class A Certificates. The Underwriters may allow and such dealers may
reallow to other dealers a concession not in excess of .10% of such principal
amount. After the initial public offering, the public offering price and such
concessions may be changed.
Each Underwriter that is a foreign broker or dealer not eligible for
membership in the National Association of Securities Dealers, Inc. (the
"NASD") has agreed not to make any sales within the United States, its
territories or possessions or to persons who are citizens thereof or residents
therein (other than certain sales made by the Underwriters as a group) except
that each such Underwriter shall be permitted to make sales to the other
Underwriters or to their United States affiliates provided that such sales are
made in compliance with applicable rules under the Exchange Act and in
conformity with the Rules of Fair Practice of the NASD.
Each Underwriter will represent and agree that:
(a) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation
to the Class A Certificates in, from or otherwise involving the United
Kingdom;
(b) it has only issued, distributed or passed on and will only issue,
distribute or pass on in the United Kingdom any document received by it in
connection with the issue of the Class A 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 or is a person to whom
such document may otherwise lawfully be issued, distributed or passed on;
(c) if it is an authorized person under Chapter III of Part I of the
Financial Services Act 1986, it has only promoted and will only promote (as
that term is defined in Regulation 1.02(2) of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991) to any person in the
United Kingdom the scheme described in this Prospectus Supplement and the
Prospectus if that person is a kind described either in section 76(2) of
the Financial Services Act 1986 or in Regulation 1.04 of the Financial
Services (Promotion of Unregulated Schemes) Regulations 1991; and
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<PAGE>
(d) it is a person of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934, as amended. Over-allotment
involves sales in excess of the offering size, which creates a short position
for the Underwriters. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a specified
maximum. Covering transactions involve purchases of the Class A Certificates
in the open market after the distribution has been completed in order to cover
short positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a dealer when the Class A Certificates originally sold by such
dealer are purchased in a covering transaction to cover short positions. Such
stabilizing transactions, covering transactions and penalty bids may cause the
price of the securities to be higher than it would otherwise be in the absence
of such transactions.
Neither the Banks nor the Underwriters make any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the Class A Certificates. In addition, neither
the Banks nor the Underwriters make any representations that the Underwriters
will engage in such transactions or that such transactions, once commenced,
will not be discontinued without notice.
The Underwriting Agreement provides that the Banks will indemnify the
Underwriters against certain liabilities, including liabilities under
applicable securities laws, or contribute to payments the Underwriters may be
required to make in respect thereof.
The closing of the sale of each class of Investor Certificates is
conditioned upon the closing of the sale of the other class.
Citibank, N.A. is an affiliate of the Banks.
LEGAL MATTERS
Certain legal matters relating to the Class A Certificates will be passed
upon for the Banks and the Trust by Stephen E. Dietz, an Associate General
Counsel of Citibank, N.A., and for the Underwriters by Cravath, Swaine &
Moore, New York, New York. Mr. Dietz owns or has the right to acquire a number
of shares of common stock of Citicorp equal to less than .01% of the
outstanding common stock of Citicorp. Certain federal income tax and ERISA
matters will be passed upon for the Banks and the Trust by Cravath, Swaine &
Moore, New York, New York and certain South Dakota tax matters will be passed
upon for the Banks and the Trust by Davenport, Evans, Hurwitz & Smith, L.L.P.,
Sioux Falls, South Dakota.
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<PAGE>
GLOSSARY SUPPLEMENT
<TABLE>
<S> <C>
Accumulation Period........................................................ S-7
Accumulation Period Length................................................. S-21
Additional Investor Certificates........................................... S-6
Additional Issuance........................................................ S-19
Banks...................................................................... S-1
Cash Collateral Account.................................................... S-5
Citibank (Nevada).......................................................... S-1
Citibank (South Dakota).................................................... S-1
Cedel...................................................................... S-1
Class A Certificate Rate................................................... S-3
Class A Certificates....................................................... S-1
Class A Controlled Amortization Amount..................................... S-3
Class A Enhancement........................................................ S-3
Class A Expected Final Payment Date........................................ S-3
Class A Interest Payment Dates............................................. S-3
Class A Investment Fee..................................................... S-3
Class A Monthly Interest................................................... S-19
Class B Certificate Rate................................................... S-4
Class B Certificates....................................................... S-1
Class B Expected Final Payment Date........................................ S-4
Class B Interest Payment Dates............................................. S-4
Class B Monthly Interest................................................... S-19
Designated Maturity........................................................ S-20
Distribution Date.......................................................... S-5
DTC........................................................................ S-1
Euroclear.................................................................. S-1
Group One.................................................................. S-7
Initial Cash Collateral Amount............................................. S-5
Initial Class B Enhancement Amount......................................... S-4
Initial Shared Enhancement Amount.......................................... S-4
Interchange................................................................ S-15
Investor Certificates...................................................... S-1
LIBOR...................................................................... S-19
LIBOR Determination Date................................................... S-19
NASD....................................................................... S-22
Net Servicing Fee Rate..................................................... S-8
Portfolio.................................................................. S-9
Receivables................................................................ S-1
Reference Banks............................................................ S-20
Revolving Period........................................................... S-7
Series Cut-Off Date........................................................ S-7
Series Issuance Date....................................................... S-7
Series Supplement.......................................................... S-6
Series Termination Date.................................................... S-8
Servicer Interchange Rate.................................................. S-7
Summary of Terms........................................................... S-3
Telerate Page 3750......................................................... S-20
Trust...................................................................... S-1
Trust Cut-Off Date......................................................... S-12
Underwriters............................................................... S-22
Underwriting Agreement..................................................... S-22
</TABLE>
S-24
<PAGE>
ANNEX I
PRIOR ISSUANCES OF INVESTOR CERTIFICATES
The tables below set forth the principal characteristics of the Credit Card
Participation Certificates, Series 1991-3, 1991-6, 1992-3, 1993-2, 1993-3,
1994-2, 1994-3, 1994-A, 1994-4, 1995-1, 1995-3, 1995-4, 1995-5, 1995-6, 1995-
A, 1995-J1, 1995-7, 1995-8, 1995-9, 1995-10, 1995-11, 1996-1, 1996-2, 1996-3,
1996-4, 1996-5, 1996-6, 1997-1, 1997-2, 1997-3, 1997-4, 1997-5, 1997-6 and
1997-7, the only other Series heretofore issued by the Trust and still
outstanding. For more specific information with respect to any Series, any
prospective investor should contact the Servicer at (718) 248-5163. The
Servicer will provide, without charge, to any prospective purchaser of
Investor Certificates, a copy of the Disclosure Documents for any previous or
concurrent publicly issued Series.
1. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1991-3
Group...................................................................... One
Class A Invested Amount........................................... $875,000,000
Class B Invested Amount........................................... $109,000,000
Class A Certificate Rate...................................... 8 7/8% per annum
Class B Certificate Rate...................................... 9 1/4% per annum
Class A Expected Final Payment Date................ July 1998 Distribution Date
Class B Expected Final Payment Date........... September 1998 Distribution Date
Initial Cash Collateral Amount..................................... $68,880,000
Series Servicing Fee Rate*..................................... 1.87% per annum
Series Termination Date....................... September 1999 Distribution Date
Series Issuance Date............................................. June 27, 1991
2. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1991-6
Group...................................................................... One
Class A Invested Amount........................................... $850,000,000
Class B Invested Amount........................................... $105,500,000
Class A Certificate Rate...................................... 7.875% per annum
Class B Certificate Rate...................................... 8.350% per annum
Class A Expected Final Payment Date............ November 1998 Distribution Date
Class B Expected Final Payment Date............. January 1999 Distribution Date
Initial Cash Collateral Amount..................................... $47,775,000
Stated L/C Amount.................................................. $19,110,000
Series Servicing Fee Rate*..................................... 1.87% per annum
Series Termination Date......................... January 2000 Distribution Date
Series Issuance Date......................................... November 20, 1991
- --------
* With respect to Series 1991-3 through Series 1992-3, the Series Servicing
Fee did not include any Servicer Interchange or similar amount. As a result,
the term "Portfolio Yield", when used with respect to any such Series, would
not be reduced by the amount of any Servicer Interchange or similar amount
with respect to any Series. See "Special Considerations--Master Trust
Considerations--The Ability of Citibank (South Dakota) to Change Terms of
the Accounts" in the Prospectus.
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<PAGE>
3. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1992-3
Group....................................................................... One
Class A Invested Amount.......................................... $1,250,000,000
Class B Invested Amount............................................. $80,000,000
Class A Certificate Rate.......................................... Floating Rate
Class B Certificate Rate.......................................... Floating Rate
Class A Expected Final Payment Date................. September 1997 Payment Date
Class B Expected Final Payment Date................... October 1997 Payment Date
Initial Shared Enhancement Amount................................... $66,500,000
Initial Class B Enhancement Amount.................................. $26,600,000
Series Servicing Fee Rate*...................................... 1.87% per annum
Series Termination Date............................... October 1998 Payment Date
Series Issuance Date......................................... September 30, 1992
4. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1993-2
Group....................................................................... One
Class A Invested Amount............................................ $750,000,000
Class B Invested Amount............................................. $48,000,000
Class A Certificate Rate........................................ 5.95% per annum
Class B Certificate Rate........................................ 6.15% per annum
Class A Expected Final Payment Date............ September 2003 Distribution Date
Class B Expected Final Payment Date.............. October 2003 Distribution Date
Initial Shared Enhancement Amount................................... $39,900,000
Initial Class B Enhancement Amount.................................. $15,960,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date.......................... October 2004 Distribution Date
Series Issuance Date.......................................... September 2, 1993
5. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1993-3
Group....................................................................... One
Class A Invested Amount............................................ $750,000,000
Class B Invested Amount............................................. $48,000,000
Class A Certificate Rate........................................ 5.50% per annum
Class B Certificate Rate........................................ 5.70% per annum
Class A Expected Final Payment Date.............. January 1999 Distribution Date
Class B Expected Final Payment Date............. February 1999 Distribution Date
Initial Shared Enhancement Amount................................... $39,900,000
Initial Class B Enhancement Amount.................................. $15,960,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date......................... February 2000 Distribution Date
Series Issuance Date.......................................... December 21, 1993
6. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1994-2
Group....................................................................... One
Class A Invested Amount............................................ $940,000,000
Class B Invested Amount............................................. $60,000,000
Class A Certificate Rate........................................ 7.25% per annum
Class B Certificate Rate........................................ 7.50% per annum
Class A Expected Final Payment Date................ April 2006 Distribution Date
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<PAGE>
Class B Expected Final Payment Date................ April 2006 Distribution Date
Initial Shared Enhancement Amount................................... $50,000,000
Initial Class B Enhancement Amount.................................. $20,000,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date............................ April 2008 Distribution Date
Series Issuance Date............................................. March 30, 1994
7. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1994-3
Group....................................................................... One
Class A Invested Amount............................................ $500,000,000
Class B Invested Amount............................................. $32,000,000
Class A Certificate Rate........................................ 6.80% per annum
Class B Certificate Rate........................................ 7.00% per annum
Class A Expected Final Payment Date................ April 1999 Distribution Date
Class B Expected Final Payment Date................ April 1999 Distribution Date
Initial Shared Enhancement Amount................................... $26,600,000
Initial Class B Enhancement Amount.................................. $10,640,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date............................ April 2001 Distribution Date
Series Issuance Date............................................. April 14, 1994
8. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1994-A
Group....................................................................... One
Class A Invested Amount............................................ $350,000,000
Class B Invested Amount............................................. $22,400,000
Class A Certificate Rate....................................... 7.875% per annum
Class B Certificate Rate.......................................... Floating Rate
Class A Expected Final Payment Date............. December 1997 Distribution Date
Class B Expected Final Payment Date............. December 1997 Distribution Date
Initial Shared Enhancement Amount................................... $18,620,000
Initial Class B Enhancement Amount................................... $7,448,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date......................... December 1999 Distribution Date
Series Issuance Date........................................... December 7, 1994
9. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1994-4
Group....................................................................... One
Class A Invested Amount............................................ $750,000,000
Class B Invested Amount............................................. $48,000,000
Class A Certificate Rate........................................ 8.25% per annum
Class B Certificate Rate.......................................... Floating Rate
Class A Expected Final Payment Date............. November 2001 Distribution Date
Class B Expected Final Payment Date............. November 2001 Distribution Date
Initial Shared Enhancement Amount................................... $39,900,000
Initial Class B Enhancement Amount.................................. $15,960,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date......................... November 2003 Distribution Date
Series Issuance Date.......................................... December 14, 1994
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<PAGE>
10. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-1
Group....................................................................... One
Class A Invested Amount............................................ $625,000,000
Class B Invested Amount............................................. $40,000,000
Class A Certificate Rate........................................ 8.25% per annum
Class B Certificate Rate........................................ 8.45% per annum
Class A Expected Final Payment Date.............. January 2005 Distribution Date
Class B Expected Final Payment Date.............. January 2005 Distribution Date
Initial Shared Enhancement Amount................................... $33,250,000
Initial Class B Enhancement Amount.................................. $13,300,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date.......................... January 2007 Distribution Date
Series Issuance Date........................................... January 20, 1995
11. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-3
Group....................................................................... One
Class A Invested Amount............................................ $625,000,000
Class B Invested Amount............................................. $40,000,000
Class A Certificate Rate........................................ 7.85% per annum
Class B Certificate Rate.......................................... Floating Rate
Class A Expected Final Payment Date............. February 2000 Distribution Date
Class B Expected Final Payment Date............. February 2000 Distribution Date
Initial Shared Enhancement Amount................................... $33,250,000
Initial Class B Enhancement Amount.................................. $13,300,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date......................... February 2002 Distribution Date
Series Issuance Date.......................................... February 16, 1995
12. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-4
Group....................................................................... One
Class A Invested Amount.......................................... $1,000,000,000
Class B Invested Amount............................................. $64,000,000
Class A Certificate Rate.......................................... Floating Rate
Class B Certificate Rate........................................ 7.65% per annum
Class A Expected Final Payment Date.................. February 1998 Payment Date
Class B Expected Final Payment Date.................. February 1998 Payment Date
Initial Shared Enhancement Amount................................... $53,200,000
Initial Class B Enhancement Amount.................................. $21,280,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date.............................. February 2000 Payment Date
Series Issuance Date.......................................... February 23, 1995
I-4
<PAGE>
13. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-5
Group....................................................................... One
Class A Invested Amount.......................................... $1,000,000,000
Class B Invested Amount............................................. $64,000,000
Class A Certificate Rate.......................................... Floating Rate
Class B Certificate Rate.......................................... Floating Rate
Class A Expected Final Payment Date.................. May 1998 Distribution Date
Class B Expected Final Payment Date.................. May 1998 Distribution Date
Initial Shared Enhancement Amount................................... $53,200,000
Initial Class B Enhancement Amount.................................. $21,280,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date.............................. May 2000 Distribution Date
Series Issuance Date................................................ May 9, 1995
14. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-6
Group....................................................................... One
Class A Invested Amount............................................ $750,000,000
Class B Invested Amount............................................. $48,000,000
Class A Certificate Rate........................................ 6.75% per annum
Class B Certificate Rate........................................ 6.90% per annum
Class A Expected Final Payment Date................. June 1998 Distribution Date
Class B Expected Final Payment Date................. June 1998 Distribution Date
Initial Shared Enhancement Amount................................... $39,900,000
Initial Class B Enhancement Amount.................................. $15,960,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date............................. June 2000 Distribution Date
Series Issuance Date............................................... May 11, 1995
15. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-A
Group....................................................................... One
Class A Invested Amount............................................ $300,000,000
Class B Invested Amount............................................. $19,150,000
Class A Certificate Rate.......................................... Floating Rate
Class B Certificate Rate.......................................... Floating Rate
Class A Expected Final Payment Date................. September 1998 Payment Date
Class B Expected Final Payment Date................. September 1998 Payment Date
Initial Shared Enhancement Amount................................... $15,957,500
Initial Class B Enhancement Amount................................... $6,383,000
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date............................. September 2000 Payment Date
Series Issuance Date............................................. August 2, 1995
I-5
<PAGE>
16. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-J1
Group....................................................................... One
Class A Invested Amount............................................ $340,715,503
Class B Invested Amount............................................. $21,750,000
Class A Certificate Rate....................................... 6.483% per annum
Class B Certificate Rate.......................................... Floating Rate
Class A Expected Final Payment Date............... August 2000 Distribution Date
Class B Expected Final Payment Date............... August 2000 Distribution Date
Initial Shared Enhancement Amount................................... $18,123,276
Initial Class B Enhancement Amount................................... $7,249,310
Series Servicing Fee Rate....................................... 0.37% per annum
Series Termination Date........................... August 2002 Distribution Date
Series Issuance Date............................................. August 7, 1995
17. CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-7
Group........................................................................One
Maximum Allocable Invested Amount.................................$3,000,000,000
Certificate Rate...................................................Floating Rate
Required Available Cash Collateral Amount........7.75% of the Allocable Invested
Amount
Series Servicing Fee Rate........................................0.37% per annum
Earliest Possible Series Termination Date..........August 2001 Distribution Date
Series Issuance Date.............................................August 17, 1995
18. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-8
Group........................................................................One
Class A Invested Amount.............................................$400,000,000
Class B Invested Amount..............................................$25,540,000
Class A Certificate Rate.........................................6.70% per annum
Class B Certificate Rate.........................................6.85% per annum
Class A Expected Final Payment Date.............September 2000 Distribution Date
Class B Expected Final Payment Date.............September 2000 Distribution Date
Earliest Possible Initial Principal Payment Date.....September 1998 Distribution
Date
Initial Shared Enhancement Amount....................................$21,277,000
Initial Class B Enhancement Amount....................................$8,510,800
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date.........................September 2002 Distribution Date
Series Issuance Date...........................................September 7, 1995
I-6
<PAGE>
19. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-9
Group........................................................................One
Class A Invested Amount.............................................$500,000,000
Class B Invested Amount..............................................$32,000,000
Class A Certificate Rate.........................................6.55% per annum
Class B Certificate Rate.........................................6.65% per annum
Class A Expected Final Payment Date...............October 2005 Distribution Date
Class B Expected Final Payment Date...............October 2005 Distribution Date
Initial Shared Enhancement Amount....................................$26,600,000
Initial Class B Enhancement Amount...................................$10,640,000
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date...........................October 2007 Distribution Date
Series Issuance Date............................................October 13, 1995
20. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-10
Group........................................................................One
Class A Invested Amount.............................................$750,000,000
Class B Invested Amount..............................................$48,000,000
Class A Certificate Rate.........................................5.90% per annum
Class B Certificate Rate.........................................6.05% per annum
Class A Expected Final Payment Date..............February 1999 Distribution Date
Class B Expected Final Payment Date..............February 1999 Distribution Date
Initial Shared Enhancement Amount....................................$39,900,000
Initial Class B Enhancement Amount...................................$15,960,000
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date..........................February 2001 Distribution Date
Series Issuance Date...........................................November 16, 1995
21. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1995-11
Group........................................................................One
Class A Invested Amount.............................................$625,000,000
Class B Invested Amount..............................................$40,000,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Class A Expected Final Payment Date...................November 1998 Payment Date
Class B Expected Final Payment Date...................November 1998 Payment Date
Initial Shared Enhancement Amount....................................$33,250,000
Initial Class B Enhancement Amount...................................$13,300,000
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date...............................November 2000 Payment Date
Series Issuance Date...........................................November 29, 1995
I-7
<PAGE>
22. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1996-1
Group.......................................................................One
Class A Face Amount(1)...........................................$1,000,000,000
Class B Face Amount(1)..............................................$64,000,000
Class A Initial Invested Amount....................................$748,172,375
Class B Initial Invested Amount.....................................$47,532,597
Class A Invested Amount as of the September 1997 Distribution
Date...............................................................$820,884,600
Class B Invested Amount as of the September 1997 Distribution
Date................................................................$52,274,733
Class A Certificate Rate............................................Zero Coupon
Class B Certificate Rate............................................Zero Coupon
Class A Accretion Rate.......................................5.79069% per annum
Class B Accretion Rate......................................5.937664% per annum
Class A Expected Final Payment Date.............February 2001 Distribution Date
Class B Expected Final Payment Date.............February 2001 Distribution Date
Initial Shared Enhancement Amount...................................$53,200,000
Initial Class B Enhancement Amount..................................$21,280,000
Series Servicing Fee Rate.......................................0.37% per annum
Series Termination Date.........................February 2003 Distribution Date
Series Issuance Date...........................................January 29, 1996
23. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1996-2
Group.......................................................................One
Class A Invested Amount............................................$500,000,000
Class B Invested Amount.............................................$32,000,000
Class A Certificate Rate.......................................5.625% per annum
Class B Certificate Rate..........................................Floating Rate
Class A Expected Final Payment Date.....................March 2001 Payment Date
Class B Expected Final Payment Date.....................March 2001 Payment Date
Initial Shared Enhancement Amount...................................$26,600,000
Initial Class B Enhancement Amount..................................$10,640,000
Series Servicing Fee Rate.......................................0.37% per annum
Series Termination Date.................................March 2003 Payment Date
Series Issuance Date...............................................March 7,1996
24. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1996-3
Group.......................................................................One
Class A Invested Amount............................................$664,761,018
Class B Invested Amount.............................................$42,440,000
Class A Certificate Rate..........................................Floating Rate
Class B Certificate Rate..........................................Floating Rate
Class A Expected Final Payment Date.......................May 1999 Payment Date
Class B Expected Final Payment Date..................May 1999 Distribution Date
Initial Shared Enhancement Amount...................................$35,360,051
Initial Class B Enhancement Amount..................................$14,144,020
Series Servicing Fee Rate.......................................0.37% per annum
Series Termination Date...................................May 2001 Payment Date
Series Issuance Date...............................................May 15, 1996
- --------
(1) Indicates amount payable to the Certificateholders at maturity assuming,
among other things, that (a) neither an Early Amortization Event nor an
Accretion Termination Event occurs and (b) the monthly accretion amount
with respect to each Class of Investor Certificates is fully funded each
month prior to the Expected Final Payment Date for such Class.
I-8
<PAGE>
25. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1996-4
Group........................................................................One
Class A Invested Amount.............................................$675,082,698
Class B Invested Amount..............................................$43,200,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Class A Expected Final Payment Date.....................August 2001 Payment Date
Class B Expected Final Payment Date................August 2001 Distribution Date
Initial Shared Enhancement Amount....................................$35,914,135
Initial Class B Enhancement Amount...................................$14,365,654
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date.................................August 2003 Payment Date
Series Issuance Date.............................................August 22, 1996
26. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1996-5
Group........................................................................One
Class A Invested Amount.............................................$750,000,000
Class B Invested Amount..............................................$48,000,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Class A Expected Final Payment Date..................September 2003 Payment Date
Class B Expected Final Payment Date..................September 2003 Payment Date
Initial Shared Enhancement Amount....................................$39,900,000
Initial Class B Enhancement Amount...................................$15,960,000
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date..............................September 2005 Payment Date
Series Issuance Date.............................................August 29, 1996
27. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1996-6
Group........................................................................One
Class A Invested Amount.............................................$940,000,000
Class B Invested Amount..............................................$60,000,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Class A Expected Final Payment Date...................December 2006 Payment Date
Class B Expected Final Payment Date...................December 2006 Payment Date
Initial Shared Enhancement Amount....................................$50,000,000
Initial Class B Enhancement Amount...................................$20,000,000
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date...............................December 2008 Payment Date
Series Issuance Date............................................December 3, 1996
I-9
<PAGE>
28. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1997-1
Group........................................................................One
Class A Invested Amount.............................................$250,000,000
Class B Invested Amount..............................................$16,000,000
Class A Certificate Rate.........................................6.25% per annum
Class B Certificate Rate...........................................Floating Rate
Class A Expected Final Payment Date..............February 2000 Distribution Date
Class B Expected Final Payment Date..............February 2000 Distribution Date
Initial Shared Enhancement Amount....................................$13,300,000
Initial Class B Enhancement Amount....................................$5,320,000
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date..........................February 2002 Distribution Date
Series Issuance Date...........................................February 10, 1997
29. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1997-2
Group........................................................................One
Class A Invested Amount.............................................$750,000,000
Class B Invested Amount..............................................$48,000,000
Class A Certificate Rate.........................................6.55% per annum
Class B Certificate Rate.........................................6.70% per annum
Class A Expected Final Payment Date..............February 2002 Distribution Date
Class B Expected Final Payment Date..............February 2002 Distribution Date
Initial Shared Enhancement Amount....................................$39,900,000
Initial Class B Enhancement Amount...................................$15,960,000
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date..........................February 2004 Distribution Date
Series Issuance Date............................................January 28, 1997
30. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1997-3
Group........................................................................One
Class A Invested Amount.............................................$400,000,000
Class B Invested Amount..............................................$25,540,000
Class A Certificate Rate........................................6.839% per annum
Class B Certificate Rate....................................... 6.989% per annum
Class A Expected Final Payment Date......February 2002 Distribution Date Class B
Expected Final Payment Date......................February 2002 Distribution Date
Earliest Possible Initial Principal Payment Date......February 2000 Distribution
Date
Initial Shared Enhancement Amount....................................$21,277,000
Initial Class B Enhancement Amount....................................$8,510,800
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date..........................February 2004 Distribution Date
Series Issuance Date...........................................February 10, 1997
I-10
<PAGE>
31. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1997-4
Group...................................................................... One
Class A Invested Amount........................................... $750,000,000
Class B Invested Amount............................................ $48,000,000
Class A Certificate Rate......................................... Floating Rate
Class B Certificate Rate......................................... Floating Rate
Class A Expected Final Payment Date............... March 2009 Distribution Date
Class B Expected Final Payment Date............... March 2009 Distribution Date
Initial Shared Enhancement Amount.................................. $39,900,000
Initial Class B Enhancement Amount................................. $15,960,000
Series Servicing Fee Rate...................................... 0.37% per annum
Series Termination Date........................... March 2011 Distribution Date
Series Issuance Date......................................... February 20, 1997
32. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1997-5
Group...................................................................... One
Class A Invested Amount........................................... $567,375,887
Class B Invested Amount............................................ $36,342,987
Class A Certificate Rate..................................... 6.6175% per annum
Class B Certificate Rate......................................... Floating Rate
Class A Expected Final Payment Date..................... July 2007 Payment Date
Class B Expected Final Payment Date..................... July 2007 Payment Date
Initial Shared Enhancement Amount.................................. $30,185,944
Initial Class B Enhancement Amount................................. $12,074,377
Series Servicing Fee Rate...................................... 0.37% per annum
Series Termination Date................................. July 2009 Payment Date
Series Issuance Date............................................. July 24, 1997
33. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1997-6
Group.......................................................................One
Class A Face Amount(1)...........................................$1,000,000,000
Class B Face Amount(1)..............................................$64,000,000
Class A Initial Invested Amount....................................$642,086,168
Class B Initial Invested Amount.....................................$40,676,219
Class A Certificate Rate............................................Zero Coupon
Class B Certificate Rate............................................Zero Coupon
Class A Accretion Rate....................................6.32311704% per annum
Class B Accretion Rate....................................6.46918258% per annum
Class A Expected Final Payment Date...............August 2004 Distribution Date
Class B Expected Final Payment Date...............August 2004 Distribution Date
Initial Shared Enhancement Amount...................................$53,200,000
Initial Class B Enhancement Amount..................................$21,280,000
Series Servicing Fee Rate.......................................0.37% per annum
Series Termination Date...........................August 2006 Distribution Date
Series Issuance Date.............................................August 7, 1997
- --------
(1) Indicates amount payable to the Certificateholders at maturity assuming,
among other things, that (a) neither an Early Amortization Event nor an
Accretion Termination Event occurs and (b) the monthly accretion amount
with respect to each Class of Investor Certificates is fully funded each
month prior to the Expected Final Payment Date for such Class.
I-11
<PAGE>
34. CLASS A AND CLASS B CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1997-7
Group........................................................................One
Class A Invested Amount.............................................$625,000,000
Class B Invested Amount..............................................$40,000,000
Class A Certificate Rate.........................................6.35% per annum
Class B Certificate Rate.........................................6.45% per annum
Class A Expected Final Payment Date................August 2000 Distribution Date
Class B Expected Final Payment Date................August 2000 Distribution Date
Initial Shared Enhancement Amount....................................$33,250,000
Initial Class B Enhancement Amount...................................$13,300,000
Series Servicing Fee Rate........................................0.37% per annum
Series Termination Date............................August 2002 Distribution Date
Series Issuance Date.............................................August 18, 1997
I-12
<PAGE>
PROSPECTUS
CITIBANK CREDIT CARD MASTER TRUST I
CREDIT CARD PARTICIPATION CERTIFICATES
CITIBANK (SOUTH DAKOTA), N.A.
SELLER AND SERVICER
CITIBANK (NEVADA), NATIONAL ASSOCIATION
SELLER
Citibank (South Dakota), N.A. and Citibank (Nevada), National Association, as
sellers (collectively, the "Banks"), may sell from time to time one or more
series (each a "Series") of credit card participation certificates consisting
of Class A Credit Card Participation Certificates (the "Class A Certificates")
and Class B Credit Card Participation Certificates (the "Class B
Certificates"; the Class A Certificates and the Class B Certificates of a
particular Series are collectively referred to herein as the "Investor
Certificates") evidencing undivided interests in certain assets of Citibank
Credit Card Master Trust I (the "Trust"), created by the Banks. The Investor
Certificates of a Series will be offered on terms determined at the time of
sale. Investor Certificates may be sold for U.S. dollars or for one or more
foreign or composite currencies and the principal of and any interest on
Investor Certificates may be payable in U.S. dollars or in one or more foreign
or composite currencies.
The Trust assets include receivables (the "Receivables") generated from time
to time in a portfolio of revolving credit card accounts and collections
thereon. The fractional undivided interest in the Trust represented by the
Class B Certificates of a Series will be subordinated to the Class A
Certificates of such Series to the extent described herein and in an
accompanying prospectus supplement (a "Prospectus Supplement") relating to
such Series. The Trust previously has issued other Series of investor
certificates which evidence undivided interests in the Trust and additional
Series of investor certificates are expected to be issued from time to time by
the Trust.
While the specific terms of any Series in respect of which this Prospectus is
being delivered will be described in the related Prospectus Supplement, the
terms of such Series will not be subject to prior review by, or consent of
holders of, the investor certificates of any previously issued Series.
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE DISCUSSION UNDER
"SPECIAL CONSIDERATIONS" THAT BEGINS ON PAGE 13.
THE INVESTOR CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE BANKS OR CITICORP OR ANY
AFFILIATE THEREOF. NEITHER THE INVESTOR CERTIFICATES NOR THE UNDERLYING
ACCOUNTS OR RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Investor Certificates may be sold by the Banks directly to purchasers,
through agents designated from time to time, through underwriting syndicates
led by one or more managing underwriters or through one or more underwriters
acting alone. If underwriters or agents are involved in the offering of the
Investor Certificates, the name of the managing underwriter or underwriters or
agents will be set forth in the related Prospectus Supplement. If an
underwriter, agent or dealer is involved in the offering of the Investor
Certificates, the underwriter's discount, agent's commission or dealer's
purchase price will be set forth in, or may be calculated from, the related
Prospectus Supplement, and the net proceeds to the Banks from such offering
will be the public offering price of the Investor Certificates less such
discount in the case of an underwriter, the purchase price of the Investor
Certificates less such commission in the case of an agent or the purchase
price of the Investor Certificates in the case of a dealer, and less, in each
case, the other expenses of the Banks associated with the issuance and
distribution of the Investor Certificates. Affiliates of the Banks may from
time to time act as agents or underwriters in connection with the sale of the
Investor Certificates. Also, affiliates of the Banks may from time to time act
as principals or agents in connection with market-making transactions in the
Investor Certificates. See "Plan of Distribution".
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF INVESTOR CERTIFICATES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is September 8, 1997
<PAGE>
AVAILABLE INFORMATION
Citibank (South Dakota), N.A. and Citibank (Nevada), National Association, as
originators of the Trust, have filed a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with the Securities
and Exchange Commission (the "Commission") with respect to the Investor
Certificates offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement (including any amendments
thereof and exhibits thereto) and the reports and other documents incorporated
herein by reference as described below under "Incorporation of Certain
Documents by Reference", which are available for inspection without charge at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; 7 World Trade Center, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, any such reports or other documents
filed with the Commission through its Electronic Data Gathering, Analysis and
Retrieval system are publicly available through the Commission's Web site
(http://www.sec.gov).
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, Monthly Reports, which
contain unaudited information concerning the Trust and are prepared by the
Servicer or the Paying Agent, will be sent on behalf of the Trust to Cede & Co.
("Cede"), as nominee of The Depository Trust Company ("DTC") and registered
holder of the Investor Certificates offered hereby, pursuant to the Pooling
Agreement and the Series Supplement. See "Series Provisions--Reports" and "The
Pooling Agreement Generally--Book-Entry Registration" and "--Evidence as to
Compliance". Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Pooling Agreement
and the Series Supplement do not require the sending of, and the Banks do not
intend to send, any of their financial reports to holders of interests in Class
A Certificates (the "Class A Certificateholders") or holders of interests in
Class B Certificates (the "Class B Certificateholders"; the Class A
Certificateholders and the Class B Certificateholders are collectively referred
to herein as the "Investor Certificateholders"). Copies of the Monthly Reports
may be obtained free of charge upon request by calling (718) 248-5163. The
Servicer will file with the Commission such periodic reports with respect to
the Trust as are required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations of the Commission
thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Servicer, on behalf
of the Trust, are incorporated in this Prospectus by reference: the Trust's
Annual Report on Form 10-K for the year ended December 31, 1996, the Trust's
Current Reports on Form 8-K filed since December 31, 1996 that include the
information contained in the Servicer's monthly reports concerning the Trust
and the Trust's other Current Reports on Form 8-K dated January 17, 1997, April
17, 1997 and July 16, 1997. See "Series Provisions--Reports".
All reports and other documents filed by the Servicer, on behalf of the
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Investor Certificates offered hereby shall be deemed to be
incorporated by reference into this Prospectus and to be part hereof. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Servicer will provide without charge to each person, including any
beneficial owner of Investor Certificates, to whom a copy of this Prospectus is
delivered, on the written or oral request of any such person, a copy of any of
or all the documents incorporated herein by reference (other than exhibits to
such documents). Written requests for such copies should be directed to Mr.
Hugh F. Van Deventer, IV at Citicorp Credit Services, Inc., One Court Square,
Long Island City, New York 11120. Telephone requests for such copies should be
directed to the Servicer at (718) 248-5163.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and in any
accompanying Prospectus Supplement. Reference is made to the Glossary for the
location herein of the definitions of certain capitalized terms used herein.
Unless the context requires otherwise, capitalized terms used in this
Prospectus and in any accompanying Prospectus Supplement refer only to the
particular Series being offered by such Prospectus Supplement.
Issuer..................... Citibank Credit Card Master Trust I (the "Trust").
The Trust, as a master trust, previously has
issued other Series of investor certificates, the
terms of which are summarized in "Annex I: Prior
Issuances of Investor Certificates" in the
related Prospectus Supplement, and is expected to
issue additional Series from time to time and to
continue as a trust after the Series Termination
Date with respect to the Investor Certificates.
The assets of the Trust are expected to change
over the life of the Trust as receivables in
revolving credit card accounts and related assets
are included in the Trust and as receivables in
accounts subject to the Trust are charged-off or
removed. See "The Trust" and "Master Trust
Provisions--Addition of Trust Assets", "--Removal
of Accounts" and "--New Issuances".
Banks...................... Citibank (South Dakota), N.A. ("Citibank (South
Dakota)") and Citibank (Nevada), National
Association ("Citibank (Nevada)" and, together
with Citibank (South Dakota), the "Banks"), each
a national banking association and an indirect
wholly owned subsidiary of Citicorp, a Delaware
corporation, are the sellers of the Receivables
and originators of the Trust.
Trustee.................... Yasuda Bank and Trust Company (U.S.A.), a New York
trust company (the "Trustee").
Trust Assets............... The assets of the Trust (the "Trust Assets")
include a portfolio of receivables (the
"Receivables") arising under the Accounts
included in the Trust from time to time, funds
collected or to be collected from cardholders in
respect of the Receivables, the right to receive
certain Interchange fees attributed to cardholder
charges for merchandise and services in the
Accounts, monies on deposit in certain accounts
of the Trust, funds collected or to be collected
from Participations, if any, and any Series
Enhancement issued with respect to a particular
Series (the drawing on or payment of any Series
Enhancement for the benefit of a Series or class
of investor certificates will not be available to
the investor certificateholders of any other
Series or class). The term "Series Enhancement"
means, with respect to any Series or class of
investor certificates, any letter of credit,
surety bond, cash collateral account, spread
account, guaranteed rate agreement, maturity
liquidity facility, tax protection agreement,
interest rate cap agreement, interest rate swap
agreement or other similar arrangement for the
benefit of investor certificateholders of such
Series or class.
3
<PAGE>
The Trust Assets will be allocated among the
Certificateholders' Interest, the interests of
the investor certificateholders of other Series
and the Banks' Interest.
The Accounts............... The Accounts will consist of the Initial Accounts
and any Additional Accounts but will not include
any Removed Accounts. The Banks have conveyed to
the Trust all Receivables existing on January 11,
1991 (the "Trust Cut-Off Date") in certain
revolving credit card accounts (the "Initial
Accounts") and all Receivables arising in the
Initial Accounts from time to time thereafter
until the termination of the Trust. Since the
Trust Cut-Off Date, the Banks have conveyed to
the Trust the Receivables in certain New Accounts
and the Receivables in certain other Accounts
included in certain Lump Sum Additions, in each
case in accordance with the provisions of the
Pooling Agreement. In addition, pursuant to the
Pooling Agreement, the Banks may (subject to
certain limitations and conditions), and in some
circumstances will be obligated to, designate
Additional Accounts the Receivables in which will
be included in the Trust or, in lieu thereof or
in addition thereto, to include Participations in
the Trust. Additional Accounts will consist of
New Accounts and accounts relating to any Lump
Sum Additions. The Banks will convey to the Trust
all Receivables in Additional Accounts, whether
such Receivables are then existing or thereafter
created. The addition to the Trust of Receivables
in Additional Accounts or Participations will be
subject to certain conditions, among others, that
(a) such addition will not result in a Ratings
Effect and (b) the Banks shall have delivered to
the Trustee and any provider of Series
Enhancement a certificate of an authorized
officer to the effect that, in the reasonable
belief of the Banks, such addition will not at
the time of its occurrence or at a future date
cause an Adverse Effect. See "Master Trust
Provisions--Addition of Trust Assets".
Pursuant to the Pooling Agreement, the Banks have
the right (subject to certain limitations and
conditions), but not the obligation, to remove
the Receivables in certain Accounts from the
Trust ("Removed Accounts"). See "Master Trust
Provisions--Removal of Accounts".
The Receivables............ The Receivables consist of all periodic finance
charges, annual membership fees, cash advance
fees and late charges on amounts charged for
merchandise and services and certain other fees
designated by the Banks ("Finance Charge
Receivables") and all amounts charged by
cardholders for merchandise and services, amounts
advanced to cardholders as cash advances and all
other fees billed to cardholders on the Accounts
("Principal Receivables"). In addition, certain
Interchange attributed to cardholder charges for
merchandise and services in the Accounts will be
treated as Finance Charge Receivables. Recoveries
of charged-off Finance Charge Receivables will be
treated as
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collections of Finance Charge Receivables and
recoveries of charged-off Principal Receivables
will be applied against charge-offs of Principal
Receivables. From time to time, subject to
certain conditions, certain of the amounts
described above which are included in Principal
Receivables may be treated as Finance Charge
Receivables. The amount of Receivables will
fluctuate from day to day as new Receivables are
generated or added to the Trust and as existing
Receivables are collected, charged-off as
uncollectible or otherwise adjusted.
"Interchange" consists of certain fees received
by Citibank (South Dakota), as a credit card-
issuing bank, from the VISA U.S.A., Inc. ("VISA")
and MasterCard International Incorporated
("MasterCard International") associations as
partial compensation for taking credit risk,
absorbing fraud losses and funding receivables
for a limited period prior to initial billing.
The Investor Certificates.. Unless otherwise specified in the related
Prospectus Supplement, the Investor Certificates
will be available for purchase in minimum
denominations of $1,000 and integral multiples of
$1,000 in excess thereof, and will only be
available in book-entry form except in certain
limited circumstances as described herein under
"The Pooling Agreement Generally-- Definitive
Certificates". A portion of the Trust Assets will
be allocated among the Class A Certificateholders
of a particular Series (the "Class A Interest"),
the Class B Certificateholders of a particular
Series (the "Class B Interest"; the Class A
Interest and the Class B Interest of a particular
Series are collectively referred to herein as the
"Certificateholders' Interest"), the investor
certificateholders of other Series and the
interest of the Banks (the "Banks' Interest"), as
described below. The aggregate principal amount
of the Certificateholders' Interest will, except
as otherwise provided herein, remain fixed at the
aggregate initial principal amount of the
Investor Certificates. The Certificateholders'
Interest will include the right to receive (but
only to the extent needed to make required
payments under the Pooling Agreement and the
related Supplement and subject to any
reallocation of such amounts if the related
Supplement so provides) varying percentages of
collections of Finance Charge Receivables and
Principal Receivables and will be allocated a
portion of Defaulted Receivables in the Trust
during each Due Period. If the Investor
Certificates include more than one class of
Investor Certificates, the Trust Assets allocable
to the Certificateholders' Interest will be
further allocated among the Investor
Certificateholders of each class. Following the
occurrence of an Economic Early Amortization
Event and a draw under the Credit Enhancement to
pay principal of the Investor Certificates, a
portion of the Certificateholders' Interest
(corresponding to the aggregate amount of such
draw) will be allocated to the Credit Enhancer.
See "Master Trust Provisions--Allocations among
Series" and "Series Provisions--Allocations,
Reallocations and Subordination".
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The Investor Certificates will evidence undivided
interests in the Trust Assets allocated to the
Certificateholders' Interest. The Investor
Certificates represent beneficial interests in
the Trust only and do not represent interests in
or obligations of Citibank, N.A., the Banks or
Citicorp or any affiliate thereof. Neither the
Investor Certificates nor the Accounts or
Receivables are insured or guaranteed by the
Federal Deposit Insurance Corporation (the
"FDIC") or any other governmental agency or
instrumentality.
The Banks' Interest........ The Banks' Interest represents the right to the
Trust Assets not allocated to either the
Certificateholders' Interest or the interests of
the investor certificateholders of any other
Series. The principal amount of the Banks'
Interest will fluctuate as the amount of the
Receivables held by the Trust changes from time
to time. The Banks intend to cause the issuance
of additional Series from time to time and any
such issuance will have the effect of decreasing
the Banks' Interest. See "Master Trust
Provisions--New Issuances". In addition, a
portion of the Banks' Interest may be sold
separately in one or more public or private
transactions. See "The Pooling Agreement
Generally--The Banks' Certificate".
Issuance of Additional The Pooling Agreement authorizes the Trustee to
Series.................... issue three types of certificates: (i) one or
more series of investor certificates (each, a
"Series"), (ii) a certificate evidencing the
Banks' Interest in the Trust, which is to be held
by the Banks and (iii) Supplemental Certificates
to be held by transferees of a portion of the
certificate evidencing the Banks' Interest in the
Trust. The certificate evidencing the Banks'
Interest in the Trust and any Supplemental
Certificates are collectively referred to herein
as the "Banks' Certificate". The Pooling
Agreement provides that, pursuant to any one or
more supplements to the Pooling Agreement (each a
"Supplement"), the Banks may cause the Trustee to
issue one or more new Series and accordingly
cause a reduction in the Banks' Interest
represented by the Banks' Certificate. Under the
Pooling Agreement, the Banks may define, with
respect to any Series, the Principal Terms of
such Series. See "Master Trust Provisions--New
Issuances". The Banks may offer any Series to the
public or other investors under a disclosure
document (a "Disclosure Document"), which may
consist of a Prospectus Supplement, in
transactions either registered under the
Securities Act or exempt from registration
thereunder, directly or through one or more
underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or
otherwise. See "Plan of Distribution". The Banks
expect to offer, from time to time, additional
Series issued by the Trust.
It is anticipated that the investor certificates
of each Series will have expected final payment
dates and revolving periods and periods during
which the principal amount of such investor
certificates is accumulated in a principal
funding account or paid to holders of such
investor certificates as set forth in the related
Prospectus Supplement or other Disclosure
Document for such Series and which differ from
those for other Series, although it is expected
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<PAGE>
that Series in a Group will have substantially
similar amortization events. Accordingly, it is
anticipated that some Series will be in their
revolving periods while others are in
accumulation periods or in amortization periods.
In addition, Series not included in Group One may
have entirely different methods for calculating
the amount and timing of principal distributions
to investor certificateholders and may utilize
other methods for determining the portion of
collections of Receivables allocable to investor
certificateholders. See "Master Trust
Provisions--New Issuances" for a discussion of
the possible terms for other Series.
A new Series may only be issued upon satisfaction
of the conditions described herein under "Master
Trust Provisions--New Issuances" including, among
others, that (a) such issuance will not result in
a Ratings Effect and (b) the Banks shall have
delivered to the Trustee and any provider of
Series Enhancement a certificate of an authorized
officer to the effect that, in the reasonable
belief of the Banks, such issuance will not at
the time of its occurrence or at a future date
cause an Adverse Effect.
Allocations Among Series... Pursuant to the Pooling Agreement, during each Due
Period, the Servicer is required to allocate to
each Series collections of Principal Receivables
and Finance Charge Receivables and the amount of
Defaulted Receivables with respect to such Due
Period pro rata based on the initial principal
amount of the investor certificates of such
Series (or, if applicable with respect to a
particular Series, the highest invested amount
during a Due Period or, during any accumulation
period, scheduled amortization period, early
amortization period or class A amortization
period, the highest invested amount during the
Due Period preceding the first Due Period with
respect to such accumulation period, scheduled
amortization period, early amortization period,
or class A amortization period) less unreimbursed
investor charge-offs. See "Master Trust
Provisions--Allocations among Series". Such
amounts allocated to each Series are then further
allocated within each Series among the investor
certificates of such Series and the Banks
pursuant to the terms of the related Supplement.
Reallocations Among Series
in a Group................
If specified in the related Prospectus Supplement,
the investor certificates of a Series may be
included in Group One ("Group One") or a group of
Series similar to Group One (each, a "Group").
Series included in any Group issued by the Trust
may be subject to reallocations of collections of
Receivables and other amounts or obligations
among the Series in the Group in the manner and
to the extent described in the Supplements
relating to the Series in the Group. See the
"Summary of Series Terms" in the related
Prospectus Supplement and "Series Provisions--
Allocations, Reallocations and Subordination--
Reallocations Among Investor Certificates of
Different Series" to determine
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<PAGE>
whether the Series of Investor Certificates
offered hereby is part of a Group and the manner
and extent of any reallocation among Series
included in such Group. See also "Special
Considerations--Master Trust Considerations--
Issuance of Additional Series".
Interest................... Interest will accrue on the unpaid principal
amount of the Investor Certificates at the per
annum rate either specified in or determined in
the manner specified in the related Prospectus
Supplement. Except as otherwise provided herein
or in the related Prospectus Supplement,
collections of Finance Charge Receivables and
certain other amounts allocable to the
Certificateholders' Interest will be used to make
interest payments to Investor Certificateholders
on each Interest Payment Date, provided that if
an Early Amortization Period commences,
thereafter interest will be distributed to
Investor Certificateholders monthly on each
Special Payment Date. If the Interest Payment
Dates for a Series or class occur less frequently
than monthly, such collections or other amounts
(or the portion thereof allocable to such class)
will be deposited in one or more trust accounts
(each, an "Interest Funding Account") and used to
make interest payments to Investor
Certificateholders on the following Interest
Payment Date. If a Series has more than one class
of investor certificates, each such class may
have a separate Interest Funding Account.
Interest for any Interest Payment Date will
accrue from and including the preceding Interest
Payment Date (or, in the case of the first
Interest Payment Date, from and including the
Series Issuance Date) to but excluding such
Interest Payment Date and will be calculated on
the basis set forth in the related Prospectus
Supplement. Interest for any Payment Date due but
not paid on such Payment Date will be due on the
next succeeding Distribution Date together with
additional interest on such amount at the
applicable certificate rate. See "Series
Provisions--Interest" and "--Distributions".
Principal.................. It is expected that the final principal payment
with respect to each Investor Certificate will be
made on the applicable Expected Final Payment
Date, unless otherwise specified in the related
Prospectus Supplement. If a Series has more than
one class of investor certificates, a different
expected final payment date may be assigned to
each class. The final principal payment with
respect to the Investor Certificates may be paid
earlier than the applicable Expected Final
Payment Date if an Early Amortization Event
occurs or if the terms of the Series so provide,
or later under certain circumstances described
herein. See "Special Considerations--Series
Considerations--Payments" for a description of
factors that may affect the timing of principal
payments on the Investor Certificates.
Revolving Period........... The Investor Certificates will have a revolving
period (the "Revolving Period"), which will
commence at the close of
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<PAGE>
business on the Series Cut-Off Date specified in
the related Prospectus Supplement ("Series Cut-
Off Date") and continue until the earlier of (a)
the commencement of an Early Amortization Period
and (b) the date specified in the related
Prospectus Supplement as the end of the Revolving
Period or, subject to certain conditions, such
other date as the Servicer may elect. During the
Revolving Period, collections of Principal
Receivables and certain other amounts otherwise
allocable to the Certificateholders' Interest
will generally be reinvested in the Trust or
otherwise used to maintain the
Certificateholders' Interest, but may be used to
amortize other Series of Certificates, as
specified in the related Prospectus Supplement.
See "Series Provisions--Principal" and "--
Allocations, Reallocations and Subordination" and
see also "Series Provisions--Early Amortization
Events" for a discussion of the events which
might lead to the termination of the Revolving
Period prior to its scheduled ending date.
Accumulation Period........ Unless the related Prospectus Supplement specifies
otherwise or unless an Early Amortization Period
commences, the Investor Certificates will have an
accumulation period (the "Accumulation Period"),
which will commence at the close of business on
the date specified in the related Prospectus
Supplement or, subject to certain conditions,
such other date as the Servicer may elect and
continue until the earliest of (a) the
commencement of an Early Amortization Period, (b)
payment in full of the Invested Amount of the
Investor Certificates and (c) the Series
Termination Date specified in the related
Prospectus Supplement. During the Accumulation
Period, until the Invested Amount of the Class A
Certificates has been paid in full, collections
of Principal Receivables and certain other
amounts allocable to the Certificateholders'
Interest will be deposited on each Distribution
Date in a trust account (the "Class A Principal
Funding Account") and used to make principal
distributions to the Class A Certificateholders
when due. The amount to be deposited in the Class
A Principal Funding Account on any Distribution
Date may be limited to an amount (the "Controlled
Distribution Amount") equal to the Controlled
Amortization Amount specified in the related
Prospectus Supplement plus any existing deficit
controlled amortization amount arising from prior
Distribution Dates. On the Class B Expected Final
Payment Date, provided that the Class A Invested
Amount is paid in full on the Class A Expected
Final Payment Date and an Early Amortization
Period has not commenced, such collections of
Principal Receivables and other amounts allocable
to the Certificateholders' Interest will be used
to pay the Class B Invested Amount as described
under "Series Provisions--Allocations,
Reallocations and Subordination--Reallocations
Among Investor Certificates of Different Series--
Investor Principal Collections for all Series".
Unless otherwise specified in
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<PAGE>
the related Prospectus Supplement, it is not
expected that the Class B Certificates will have
a separate principal funding account. See "Series
Provisions--Principal", "--Principal Funding
Account" and "--Distributions" for a more
complete description of the conditions under
which amounts will be accumulated in and
distributed from the Class A Principal Funding
Account.
Early Amortization Period.. During the period from the day on which an Early
Amortization Event has occurred to the date on
which the Invested Amount of the Investor
Certificates and the Enhancement Invested Amount,
if any, have been paid in full or the Series
Termination Date specified in the related
Prospectus Supplement has occurred (the "Early
Amortization Period"), amounts allocable to the
Certificateholders' Interest and, if the Early
Amortization Event applies to other Series, to
the investor certificateholders of such other
Series that would otherwise be reinvested in the
Trust or otherwise used to maintain the
certificateholders' interest with respect to any
Series or accumulated in a principal funding
account, will instead be distributed as principal
payments to the applicable investor
certificateholders monthly on each Distribution
Date beginning with the first Special Payment
Date. During an Early Amortization Period,
distributions of principal to Investor
Certificateholders will not be subject to any
Controlled Distribution Amount. In addition, upon
the commencement of the Early Amortization
Period, any funds on deposit in the Class A
Principal Funding Account or the Class A Interest
Funding Account will be paid to the Class A
Certificateholders, and any funds on deposit in
the Class B Interest Funding Account will be paid
to the Class B Certificateholders, in each case
on the first Special Payment Date. Moreover, on
the first Special Payment Date following an
Economic Early Amortization Event, principal
payments will be made to the Class A
Certificateholders and the Class B
Certificateholders from a draw under the Credit
Enhancement as described under "Series
Provisions--Series Enhancements--Credit
Enhancement Generally". See "Series Provisions--
Early Amortization Events" and the related
Prospectus Supplement for a discussion of the
events which might lead to the commencement of
the Early Amortization Period.
Reallocations of Principal
and Subordination.........
Unless otherwise specified in the related
Prospectus Supplement, no Series will be
subordinated to any other Series, although a
Series may be part of a Group as described above
under "Reallocations Among Series in a Group". To
the extent that collections of Principal
Receivables and other amounts that are allocated
to the Certificateholders' Interest for the
Series offered hereby are available to be
reinvested in the Trust, they may be applied to
cover principal payments due to or for the
benefit of investor certificateholders of another
Series. Any such reallocation will
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<PAGE>
not result in a reduction in the
Certificateholders' Interest. In addition,
collections of Principal Receivables and certain
other amounts otherwise allocable to other
Series, to the extent such collections are
available to be reinvested in the Trust, may be
applied to cover principal payments due to or for
the benefit of the Investor Certificateholders.
See "Series Provisions--Allocations,
Reallocations and Subordination--Reallocations
Among Investor Certificates of Different Series--
Investor Principal Collections for all Series".
If a Series has more than one class of investor
certificates, the related Prospectus Supplement
may specify that one class will be subordinated
to another class within such Series. The extent
and manner of any such subordination will be
specified in the related Supplement and described
in the related Prospectus Supplement. See "Series
Provisions--Allocations, Reallocations and
Subordination--Allocations, Reallocations and
Subordination Within a Series--Subordination".
Servicing.................. The Servicer (initially, Citibank (South Dakota))
will be responsible for servicing, managing and
making collections on the Receivables. Subject to
certain limitations, the Servicer will use for
its own benefit and not segregate collections of
Receivables received by it during the monthly
period beginning at the close of business on the
fourth-to-last business day of each month and
ending at the close of business on the fourth-to-
last business day of the immediately following
month (each, a "Due Period") until not later than
12:00 noon, New York City time, on the seventh
day of the following month (or such other day as
is specified in the Prospectus Supplement) or, if
such day is not a business day, the next
succeeding business day (each, a "Distribution
Date"). On or about the earlier of the fifth
business day and the eighth calendar day
preceding the seventh day of the following month
(each, a "Determination Date"), the Servicer will
calculate the amounts to be allocated to the
Investor Certificateholders, holders of investor
certificates of any other Series and the Banks as
described herein in respect of collections of
Receivables received with respect to the related
Due Period. On each Distribution Date with
respect to a Series, the Servicer will deposit
all collections with respect to such Series into
the Collection Account, net of any amounts
permitted to be deducted by the Servicer as
described under "Master Trust Provisions--
Deposits in Collection Account". See "Special
Considerations--Master Trust Considerations--
Certain Legal Aspects". In certain limited
circumstances Citibank (South Dakota) may resign
or be removed as Servicer, in which event either
the Trustee or, so long as it meets certain
eligibility standards set forth in the Pooling
Agreement, a third-party servicer may be
appointed as successor servicer. (Citibank (South
Dakota) or any such successor servicer is
referred to herein as the "Servicer".)
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Citibank (South Dakota) is permitted to delegate
any of its duties as Servicer to any of its
affiliates, but any such delegation will not
relieve the Servicer of its obligations under the
Pooling Agreement or any Supplement. The Servicer
will receive the Series Servicing Fee, any
servicing fees payable with respect to any other
Series and certain other amounts as described
herein as servicing compensation from the Trust.
See "Series Provisions--Servicing Compensation
and Payment of Expenses".
Mandatory Reassignment and
Transfer of Certain
Receivables...............
As of the Series Issuance Date, the Banks will
jointly and severally make certain
representations and warranties in the Pooling
Agreement with respect to the Accounts and the
Receivables in their capacity as sellers and
Citibank (South Dakota) will make certain
representations and warranties in the Pooling
Agreement in its capacity as Servicer. If the
Banks breach certain of their representations and
warranties with respect to any Receivable and
such breach remains uncured for a specified
period after the Banks become aware or receive
notice thereof from the Trustee and such breach
has a materially adverse effect on the
certificateholders' interest of all Series
therein, the certificateholders' interest of all
Series in all Receivables with respect to the
affected Account will be reassigned to the Banks.
If the Servicer fails to comply in all material
respects with certain covenants or warranties
with respect to any Receivable and such
noncompliance is not cured within a specified
period after the Servicer becomes aware or
receives notice thereof from the Trustee and such
noncompliance has a materially adverse effect on
the certificateholders' interest of all Series
therein, the certificateholders' interest of all
Series in all Receivables with respect to the
affected Account will be assigned to the
Servicer. In the event of a transfer of servicing
obligations to a successor servicer, such
successor servicer, rather than Citibank (South
Dakota), would be responsible for any failure to
comply with the Servicer's covenants and
warranties arising thereafter.
Tax Status................. In the opinion of special tax counsel for the
Banks and the Trust, the Investor Certificates
are properly characterized as debt for federal
income tax purposes and for South Dakota tax
purposes. Each Investor Certificateholder, by the
acceptance of an Investor Certificate, will agree
to treat the Investor Certificates as
indebtedness of the Banks for federal, state and
local income and franchise tax purposes. See "Tax
Matters" for additional information concerning
the application of federal and South Dakota tax
laws.
Income Tax Withholding..... Interest and original issue discount ("OID") on
the Investor Certificates held by non-U.S.
persons will be subject to United States
withholding tax unless the holder complies with
applicable IRS identification requirements.
Interest on the Investor Certificates held by
U.S. persons will be subject to backup
withholding unless the holder complies with
applicable IRS identification requirements.
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SPECIAL CONSIDERATIONS
SERIES CONSIDERATIONS
Secondary Market Trading. Certain financial institutions currently make a
market in credit card participation certificates similar to the Investor
Certificates previously issued by the Trust and by other trusts originated by
the Banks. It is anticipated that, to the extent permitted, the underwriters of
the Investor Certificates offered hereby will make a market in such
certificates in Europe, Japan and the United States, but in no event will any
such underwriter be under an obligation to do so. There can be no assurance
that a secondary market will develop or, if a secondary market does develop,
that it will provide Investor Certificateholders with liquidity of investment
or that it will continue for the life of the Investor Certificates.
Payments. The Receivables may be paid at any time and there is no assurance
that there will be new Receivables created in the Accounts, that Receivables
will be added to the Trust or that any particular pattern of cardholder
repayments will occur. The full payment of the Invested Amount of a class of
Investor Certificates on the expected date specified in the related Prospectus
Supplement (the "Expected Final Payment Date") is primarily dependent on the
rate of cardholder repayments and will not be made if such repayment amounts
are insufficient to pay such Invested Amount in full. No assurance can be given
as to the cardholder monthly payment rates which will actually occur in any
future period. The actual rate of accumulation of principal in a Principal
Funding Account and the amount of Available Investor Principal Collections on
any Distribution Date will depend on, among other factors, the rate of
repayment, the timing of the receipt of repayments and the rate of default by
cardholders and, as a result, no assurance can be given that the Invested
Amount of a class of Investor Certificates will be paid on its respective
Expected Final Payment Date.
In addition, while Subordinated Principal Collections are available to fund
the Required Amount, the Class B Invested Amount is, and therefore such
Subordinated Principal Collections are, limited and, under certain
circumstances, the Class B Invested Amount will be decreased as described
herein. If the Class B Invested Amount suffers such a reduction, the portion of
collections of Finance Charge Receivables allocated to the Class B Certificates
in future Due Periods will be reduced and principal and interest payments on
the Class B Certificates may be delayed or reduced.
The Pooling Agreement provides that the Banks will be required to make a Lump
Sum Addition to the Trust in the event that the amount of Principal Receivables
is not maintained at a minimum level equal to the greater of (a) 107% of the
sum of the invested amounts of all outstanding investor certificates of all
Series and (b) 102% of the sum of the initial invested amounts of all
outstanding investor certificates of all Series (or, if applicable with respect
to a particular Series, the highest invested amount during a Due Period, or,
during any accumulation period, scheduled amortization period, early
amortization period or class A amortization period, the highest invested amount
during the Due Period preceding the first Due Period with respect to such
accumulation period, scheduled amortization period, early amortization period
or class A amortization period) (the "Required Minimum Principal Balance"). The
Required Minimum Principal Balance may be reduced under certain circumstances
described herein under "Master Trust Provisions--Addition of Trust Assets". In
the event that the Banks fail to make a Lump Sum Addition within five business
days of the day on which they are required to make such Lump Sum Addition
pursuant to the Pooling Agreement, unless the Required Minimum Principal
Balance has been reduced, an Early Amortization Event will occur. In addition,
an early amortization event would also occur with respect to all other Series.
A decrease in the effective yield on the Receivables due to, among other
things, a change in the periodic finance charges applicable to the Accounts, an
increase in the level of delinquencies or increased convenience use, when
cardholders pay their Receivables early and thus avoid all finance charges on
purchases, could cause an Early Amortization Event to occur as well as result
in decreased protection to Investor Certificateholders against defaults under
the Accounts. If the amount of Surplus Finance Charge Collections averaged over
a period of three consecutive Due Periods is less than or equal to a specified
amount (the "Required Surplus Finance Charge Amount") for the last of such
three consecutive Due Periods, an Early
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Amortization Event will occur. The Required Surplus Finance Charge Amount will
initially be, and cannot be less than, zero, although pursuant to the Series
Supplement the Banks will be permitted to change the Required Surplus Finance
Charge Amount; provided, however, that in the case of an increase in such
amount, such increase will not, in the reasonable belief of the Banks, at the
time of such increase or at a future date cause an Adverse Effect. Although a
change in the Required Surplus Finance Charge Amount would not cause an Early
Amortization Event at the time of such change, any increase in such amount
would make the occurrence of an Early Amortization Event more likely. "Surplus
Finance Charge Collections" means, with respect to any Due Period, the amount
of (a) Reallocated Investor Finance Charges for such Due Period, plus (b) the
amount of any payment received by the Trustee pursuant to any interest rate cap
agreement or interest rate swap agreement for such Due Period (but excluding
from such payments the amount of any Class A Funding Account Receipt received
by the Trust), minus (c) without duplication, the amount of distributions
required to be made with respect to such Due Period as described under "Series
Provisions--Allocations, Reallocations and Subordination-- Allocations,
Reallocations and Subordination Within a Series--Class A and Class B Investor
Finance Charges" and "--Excess Finance Charge Collections" (excluding any Class
A Funding Account Shortfall, Class A Funding Account Payment and the amounts
described in clauses (i) and (j) of "Excess Finance Charge Collections"). See
"Series Provisions--Early Amortization Events" for a discussion of other events
which might lead to the commencement of an Early Amortization Period. If an
Insolvency Event relating to either of the Banks occurs, unless each other
holder of the Banks' Certificate and investor certificateholders holding
investor certificates of each Series or each class of each Series evidencing
more than 50% of the aggregate unpaid principal amount of each such Series or
class (and, in the case of certain Series, any credit enhancer with respect
thereto) thereafter instruct the Trustee not to sell the Receivables, the
Receivables will be promptly sold or otherwise liquidated (subject to any
restrictions imposed by the FDIC described below under "--Master Trust
Considerations--Certain Legal Aspects"). The proceeds from the sale of the
Receivables will be treated as collections on the Receivables and allocated
accordingly among holders of investor certificates of all Series and the Banks.
The portion of such proceeds allocable to pay principal to the
Certificateholders' Interest will be applied first to pay the Class A Invested
Amount in full. If such portion is insufficient to pay the entire Class A
Invested Amount, the amount of principal returned to the Class A
Certificateholders will be reduced and the Class A Certificateholders will
incur a loss and no principal will be available to pay the Class B
Certificateholders who will also incur a loss. Upon the occurrence of an
Insolvency Event, if no Early Amortization Event other than such Insolvency
Event exists, the FDIC may have the power to continue to require the Banks to
transfer new Principal Receivables to the Trust and prevent the early sale,
liquidation or disposition of the Receivables and the commencement of an Early
Amortization Period. See "--Master Trust Considerations--Certain Legal Aspects"
below.
Effect of Subordination. Except as described in the following sentence, the
Class B Certificates are subordinated in right of payment of principal to the
Class A Certificates. Payments of principal in respect of the Class B
Certificates will not commence until after the final payment with respect to
the Class A Invested Amount has been made as described herein and in the
related Prospectus Supplement, except that following the occurrence of an
Economic Early Amortization Event principal of the Class B Certificates will be
payable from amounts available to be drawn under the Credit Enhancement as
described in the related Prospectus Supplement and under "Series Provisions--
Series Enhancements--Credit Enhancement Generally" herein. Moreover, the Class
B Invested Amount is subject to reduction if the Required Amount for any Due
Period is greater than zero and is not funded either from Excess Finance Charge
Collections or from a draw under the Credit Enhancement (except that if the
Enhancement Invested Amount at such time is greater than zero, the Enhancement
Invested Amount will be reduced prior to any reduction in the Class B Invested
Amount). If the Class B Invested Amount suffers such a reduction, the portion
of collections of Finance Charge Receivables allocable to the Class B
Certificateholders in future Due Periods will be reduced and principal and
interest payments on the Class B Certificates may be delayed or reduced. See
"Series Provisions--Allocations, Reallocations and Subordination--Allocations,
Reallocations and Subordination Within a Series--Subordination". In addition,
in the event of a sale of the Receivables due to an Insolvency Event or a sale
or repurchase of the Certificateholders' Interest in the event of a Servicer
Default, the portion of the net
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proceeds of such sale allocable to pay principal of the Certificateholders'
Interest will first be used to pay amounts due to the Class A
Certificateholders and any remainder will be used to pay amounts due to Class B
Certificateholders, thereby causing a loss to Class B Certificateholders if
such portion plus any amount available to be drawn under the Credit Enhancement
are insufficient to pay the Class B Certificateholders in full. See "Series
Provisions--Early Amortization Events", "--Series Enhancements--Credit
Enhancement Generally", "The Pooling Agreement Generally--Servicer Default" and
"Certain Legal Aspects of the Receivables--Certain Matters Relating to
Receivership". If the Class B Invested Amount is reduced to zero, the Class A
Certificateholders will bear directly the credit and other risks associated
with their undivided interest in the Trust.
Control. Subject to certain limited exceptions, Investor Certificateholders
holding a specified percentage of the aggregate outstanding principal amount of
the Investor Certificates may take certain actions, or direct certain actions
to be taken, under the Pooling Agreement or the Series Supplement, including
directing the Trustee to take certain actions, amending the Series Supplement
and declaring certain Early Amortization Events and Servicer Defaults. In such
cases (subject to certain exceptions), when determining whether the required
percentage of Investor Certificateholders have given their approval or consent,
the Class A Certificateholders and the Class B Certificateholders will be
treated as a single class. Accordingly, the Class A Certificateholders will
have the power to determine whether any such action is taken without regard to
the position or the interests of the Class B Certificateholders relating to
such action. The Class B Certificateholders will not have similar power. In
order to make such determinations, the Class B Certificateholders will need the
approval or consent of Class A Certificateholders owning a substantial portion
of the Class A Interest. See also "--Master Trust Considerations--Control".
Basis Risk. A substantial portion of the Receivables bear interest at the
prime rate plus a margin, while the Investor Certificates will bear interest at
one or more fixed or floating rates specified in the related Prospectus
Supplement. If there is a decline in the prime rate, the amount of Reallocated
Investor Finance Charges may be reduced and, even if there is a similar
reduction in any floating rate or rates applicable to the Investor
Certificates, there will not be a similar reduction in the other amounts
required to be funded out of such Reallocated Investor Finance Charges
(including any fixed interest rate applicable to the Investor Certificates) as
described under "Series Provisions--Allocations, Reallocations and
Subordination--Allocations, Reallocations and Subordination Within a Series--
Class A and Class B Investor Finance Charges".
Ratings of the Investor Certificates. Unless otherwise specified in the
related Prospectus Supplement, it is a condition to issuance of the Class A
Certificates that they be rated in the highest rating category by at least one
nationally recognized rating agency (the rating agency or rating agencies
designated by the Banks in the Series Supplement in respect of the Investor
Certificates and in the related Supplement in respect of any other outstanding
Series of investor certificates are referred to hereinafter as the "Rating
Agency"). Unless otherwise specified in the related Prospectus Supplement, it
is a condition to issuance of the Class B Certificates that they be rated at
least "A" or its equivalent by at least one Rating Agency. The rating of the
Class A Certificates is based primarily on the value of the Receivables, the
extent of the Initial Shared Enhancement Amount, the circumstances in which
funds may be drawn under the Credit Enhancement for the benefit of the Investor
Certificateholders, the terms of the Class B Certificates, the terms of any
other applicable Series Enhancement described in the related Prospectus
Supplement and, in certain cases, the credit rating of the provider of the
Credit Enhancement or such other Series Enhancement. The rating of the Class B
Certificates is based primarily on the value of the Receivables, the extent of
the Initial Enhancement Amount, the circumstances in which funds may be drawn
under the Credit Enhancement for the benefit of the Investor
Certificateholders, the terms of any other applicable Series Enhancement
described in the related Prospectus Supplement, the credit ratings of the
Servicer and the Banks and, in certain cases, the credit rating of the provider
of the Credit Enhancement or such other Series Enhancement.
The ratings of the Investor Certificates are not a recommendation to
purchase, hold or sell the Investor Certificates, inasmuch as such ratings do
not comment as to market price or suitability for a particular
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investor. There is no assurance that the ratings of the Investor Certificates
will remain for any given period of time or that such ratings will not be
lowered or withdrawn entirely by the Rating Agency if in its judgment
circumstances in the future so warrant. The ratings of the Investor
Certificates do not address the possibility of the imposition of United States
withholding tax with respect to non-U.S. persons. Although the ratings of the
Class A Certificates and the Class B Certificates address the respective
likelihood of the ultimate payment of principal and interest on the Class A
Certificates and the Class B Certificates, the Rating Agency does not evaluate,
and such ratings do not address, the likelihood that the outstanding principal
amount of a class of Investor Certificates will be paid by its respective
Expected Final Payment Date. The ratings also do not address the possibility of
the occurrence of an Early Amortization Event, which could result in the
payment of the outstanding principal amount of a class of Investor Certificates
prior to its respective Expected Final Payment Date.
Book-Entry Registration. The Investor Certificates offered hereby will be
initially represented by one or more Class A Certificates and, if offered by
this Prospectus and the accompanying Prospectus Supplement, one or more Class B
Certificates registered in the name of Cede, the nominee for DTC, and will not
be registered in the names of the Class A Certificateholders, the Class B
Certificateholders (if Class B Certificates are offered hereby) or their
nominees. Consequently, unless and until Definitive Certificates are issued,
Class A Certificateholders and Class B Certificateholders (if Class B
Certificates are offered hereby) will not be recognized by the Trustee as
"Class A Certificateholders" or "Class B Certificateholders," respectively (as
such terms are used in the Pooling Agreement and the Series Supplement). Hence,
until such time, such Investor Certificateholders will only be able to exercise
the rights of Investor Certificateholders indirectly through DTC, Cedel or
Euroclear and their respective participating organizations. See "The Pooling
Agreement Generally--Book-Entry Registration" and "--Definitive Certificates".
MASTER TRUST CONSIDERATIONS
Issuance of Additional Series. The Trust, as a master trust, previously has
issued other Series of investor certificates and is expected to issue
additional Series from time to time. While the terms of any Series will be
specified in a Supplement, the provisions of a Supplement and, therefore, the
terms of any additional Series, will not be subject to the prior review by, or
consent of, holders of the investor certificates of any previously issued
Series. Such terms may include methods for determining applicable investor
percentages and allocating collections, provisions creating different or
additional security or other Series Enhancements, provisions subordinating such
Series to another Series or other Series (if the Supplement relating to such
Series so permits) to such Series, and any other amendment or supplement to the
Pooling Agreement which is made applicable only to such Series. The obligation
of the Trustee to issue any new Series is subject to the following conditions,
among others: (a) such issuance will not result in any Rating Agency reducing
or withdrawing its rating of the investor certificates of any outstanding
Series (any such reduction or withdrawal is referred to herein as a "Ratings
Effect") and (b) the Banks shall have delivered to the Trustee and any provider
of Series Enhancement a certificate of an authorized officer to the effect
that, in the reasonable belief of the Banks, such issuance will not (i) at the
time of its occurrence or at a future date, cause the occurrence of an early
amortization event with respect to any Series or, in the case of Group One, a
reduction of the amount of surplus finance charge collections with respect to
such Series averaged over any three consecutive Due Periods to be less than the
sum of (A) the required surplus finance charge amount with respect to such
Series for the last of such Due Periods and (B) an amount equal to one-twelfth
of 1% of the invested amount with respect to such Series as of the last day of
the last of such Due Periods or (ii) adversely affect in any manner the timing
or amount of payments to investor certificateholders of any Series or with
respect to the Enhancement Invested Amount, if any (any of the conditions
referred to in the preceding clauses (i) and (ii) are referred to herein as an
"Adverse Effect"). There can be no assurance, however, that the terms of any
other Series, including any Series issued from time to time hereafter, might
not have an impact on the timing or amount of payments received by an Investor
Certificateholder. In addition, the Supplements relating to Series which are
part of a Group as described herein may provide that collections of Receivables
allocable to such Series will be reallocated among all Series in the Group.
Consequently, the issuance of new Series in a Group may
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<PAGE>
have the effect of reducing the amount of collections of Receivables which are
reallocated to the investor certificates of existing Series in such Group. For
example, in Group One, which provides for the reallocation of collections of
Finance Charge Receivables allocable to a Series among all Series in such
Group, an additional Series which is issued with a larger claim with respect to
monthly interest than that of previously issued Series in Group One (due to a
higher certificate rate) will receive a proportionately larger reallocation of
Group One Investor Finance Charges. Such issuance will reduce the amount of
Group One Investor Finance Charges which are reallocated to the existing Series
in Group One. See "Master Trust Provisions--New Issuances".
Addition of Trust Assets. The Banks may, and in some cases will be obligated
to, designate Additional Accounts, the Receivables in which will be conveyed to
the Trust. Additional Accounts will be subject to different eligibility
criteria than the Initial Accounts. See "The Pooling Agreement Generally--
Representations and Warranties". Such Additional Accounts may include accounts
originated using criteria different from those which were applied to the
Initial Accounts because such accounts were originated at a later date or were
part of a portfolio of credit card accounts which were not part of the
portfolio of VISA* and MasterCard* credit card accounts owned by Citibank
(South Dakota) (the "Portfolio") or which were acquired from another credit
card issuer. Moreover, Additional Accounts may not be accounts of the same type
previously included in the Trust. Consequently, there can be no assurance that
such Additional Accounts will be of the same credit quality as the Initial
Accounts or the Additional Accounts currently included in the Trust. In
addition, such Additional Accounts may consist of credit card accounts which
have different terms than the Initial Accounts and the Additional Accounts
currently included in the Trust, including lower periodic finance charges,
which may have the effect of reducing the average yield on the portfolio of
Accounts. The designation of Additional Accounts will be subject to the
satisfaction of certain conditions described herein under "Master Trust
Provisions--Addition of Trust Assets", including that (a) such addition will
not result in a Ratings Effect and (b) the Banks shall have delivered to the
Trustee and any provider of Series Enhancement a certificate of an authorized
officer to the effect that, in the reasonable belief of the Banks, such
addition will not at the time of such addition or at a future date cause an
Adverse Effect. See "Master Trust Provisions--Addition of Trust Assets".
Certain Legal Aspects. While the Banks have sold and will sell Receivables to
the Trust, a court could treat such a transaction as an assignment of
collateral as security for the benefit of the investor certificateholders of
the outstanding Series. The Banks warrant in the Pooling Agreement that the
transfer of the Receivables to the Trust is either a sale of the Receivables to
the Trust or the grant to the Trust of a security interest in the Receivables.
The Banks will take all actions that are required under applicable state law to
perfect the Trust's interest in the Receivables and, in the Pooling Agreement,
the Banks have warranted that, if the transfer by the Banks to the Trust is a
grant to the Trust of a security interest in the Receivables, the Trust will at
all times have a first priority perfected security interest therein and, with
certain exceptions, in proceeds thereof. Nevertheless, if the transfer of the
Receivables to the Trust is deemed to create a security interest therein under
the South Dakota or Nevada Uniform Commercial Code (the "UCC"), a tax or
government lien on property of the Banks arising before Receivables come into
existence may have priority over the Trust's interest in such Receivables and,
if the FDIC were appointed receiver of either of the Banks, the receiver's
administrative expenses may also have priority over the Trust's interest in
such Receivables. In addition, while Citibank (South Dakota) is the Servicer,
cash collections held by Citibank (South Dakota) may, subject to certain
conditions, be commingled and used for the benefit of Citibank (South Dakota)
prior to each Distribution Date and, in the event of the insolvency or
receivership of Citibank (South Dakota) or, in certain circumstances, the lapse
of certain time periods, the Trust may not have a perfected interest in such
collections. Unless otherwise agreed to by the applicable Rating Agency, if the
certificate of deposit rating of Citibank (South Dakota) is reduced below A-1
or P-1 by the applicable Rating Agency, Citibank (South Dakota) will, within
five business days, commence the deposit of collections directly into the
Collection Account within two business days of the day of processing, and the
Collection Account will be moved from Citibank (South Dakota).
- --------
* VISA and MasterCard are registered trademarks of VISA U.S.A., Inc. and
MasterCard International Incorporated, respectively.
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If the FDIC were appointed receiver of either of the Banks or if certain
other events relating to the bankruptcy, insolvency or receivership of either
of the Banks were to occur (an "Insolvency Event"), then an Early Amortization
Event would occur and, pursuant to the terms of the Pooling Agreement, new
Principal Receivables would not be transferred to the Trust and the Trustee
would sell the Receivables (unless each other holder of the Banks' Certificate
and investor certificateholders holding investor certificates of each Series or
each class of each Series evidencing more than 50% of the aggregate unpaid
principal amount of each such Series or class (and in the case of certain
Series, any credit enhancer with respect thereto) instruct otherwise), thereby
causing early termination of the Trust and a loss to investor
certificateholders if the net proceeds of such sale allocable to the investor
certificateholders of all Series were insufficient to pay such investor
certificateholders in full. To the extent the Banks grant a security interest
in the Receivables to the Trust, and such security interest is validly
perfected before the occurrence of an Insolvency Event and was not taken in
contemplation of insolvency or with the intent to hinder, delay or defraud the
relevant Bank or its creditors, based upon opinions issued by the general
counsel of the FDIC addressing the enforceability against the FDIC, as
conservator or receiver for a depository institution, of a security interest in
collateral granted by such depository institution, such security interest
should not be subject to avoidance, and payments to the Trust with respect to
the Receivables should not be subject to recovery, by the FDIC. If, however,
the FDIC were to assert a contrary position, certain provisions of the FDIA
which, at the request of the FDIC, have been applied in lawsuits to avoid
security interests in collateral granted by depository institutions, would
permit the FDIC to avoid such security interest, thereby resulting in possible
delays and reductions in payments to the investor certificateholders of all
outstanding Series. In addition, federal law governing receiverships of
federally-insured depository institutions could be interpreted to require
compliance with certain claims procedures if a receiver were appointed for
either of the Banks before the Trustee could collect, sell, dispose of or
otherwise liquidate the Receivables, which could delay or possibly reduce
payments on the investor certificates of all outstanding Series. Upon the
occurrence of an Insolvency Event, if no Early Amortization Event other than
such Insolvency Event exists, the FDIC may have the power to continue to
require the Banks to transfer new Principal Receivables to the Trust and to
prevent the early sale, liquidation or disposition of the Receivables and the
commencement of an Early Amortization Period. In the event of a Servicer
Default, if a conservator, receiver or liquidator is appointed for the
Servicer, and no Servicer Default other than such conservatorship,
receivership, liquidation or insolvency of the Servicer exists, the
conservator, receiver or liquidator may have the power to prevent either the
Trustee or the investor certificateholders from appointing a successor
Servicer. See "Certain Legal Aspects of the Receivables--Transfer of
Receivables" and "--Certain Matters Relating to Receivership".
The Accounts and Receivables are subject to numerous federal and state
consumer protection laws which impose requirements on the making, enforcement
and collection of consumer loans. The United States Congress and the states may
enact laws and amendments to existing laws to regulate further the credit card
industry or to reduce finance charges or other fees or charges applicable to
credit card accounts. Such laws, as well as any new laws or rulings which may
be adopted, may adversely affect the Servicer's ability to collect on the
Receivables or maintain the required level of periodic finance charges, annual
membership fees and other fees. In addition, failure by the Servicer to comply
with such requirements could adversely affect the Servicer's ability to enforce
the Receivables. In October 1987 and November 1991, members of Congress
attempted unsuccessfully to limit the maximum annual percentage rate that may
be assessed on credit card accounts. On May 5, 1992, two members of the House
Banking Committee asked the United States General Accounting Office to
undertake a study of competition in the credit card industry and particularly
to address how a government-imposed limit on credit card interest rates could
affect credit availability. In Spring 1994 the General Accounting Office
released its study on competitive pricing and disclosure in the credit card
industry. The GAO did not recommend that Congress enact legislation capping
interest rates on credit cards, but did recommend continued monitoring of the
industry. The Banks cannot predict what action, if any, will be taken by
Congress as a result thereof. In addition, in late March 1994, a member of
Congress introduced a rate cap bill which would cap credit card rates at 9%
over the three-month treasury bill rate but it failed to receive attention in
the Congress. If federal legislation were enacted which contained an interest
rate cap substantially lower than the annual percentage rates currently
assessed on the Accounts, it is likely that the
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amount of Surplus Finance Charge Collections (averaged over a period of three
consecutive Due Periods) would be reduced to a rate below the Required Surplus
Finance Charge Amount for the last of such Due Periods and therefore an
Economic Early Amortization Event would occur with respect to the Investor
Certificates. See "Series Provisions--Early Amortization Events". In addition,
during recent years, there has been increased consumer awareness with respect
to the level of finance charges and fees and other practices of credit card
issuers. As a result of these developments and other factors, there can be no
assurance as to whether any federal or state legislation will be promulgated
which would impose additional limitations on the monthly periodic finance
charges or fees relating to the Accounts.
Since October 1991, a number of lawsuits have been filed in several states
against Citibank (South Dakota) and other out-of-state credit card issuing
banks (both federally-insured state-chartered banks and federally-insured
national banks) which challenge various fees and charges (such as late fees,
over-the-limit fees, returned check charges and annual membership fees)
assessed against residents of the states in which such suits were filed, based
on restrictions or prohibitions under such states' laws alleged to be
applicable to the out-of-state credit card issuers. On June 3, 1996 in Smiley
v. Citibank (South Dakota), N.A., the Supreme Court of the United States, in a
unanimous opinion in favor of Citibank (South Dakota), ruled that the
interpretation by the Comptroller of the Currency of the term "interest" for
purposes of the National Bank Act was entitled to judicial deference. The
Comptroller had ruled that late fees and other compensation for the extension
of credit are "interest" for purposes of the National Bank Act. As a result of
this decision, all such pending cases against Citibank (South Dakota) have been
ordered dismissed.
Pursuant to the Pooling Agreement, if the interest of the investor
certificateholders of all Series in a Receivable is materially adversely
affected by the failure of the Receivable to comply in all material respects
with applicable requirements of law, the interest of such investor
certificateholders in all Receivables in the affected Account will be
reassigned to the Banks or, in some circumstances, to the Servicer. On the
Series Issuance Date, the Banks will make certain other representations and
warranties relating to the validity and enforceability of the Accounts and the
Receivables. The sole remedy if any such representation or warranty is breached
and such breach has a material adverse effect on the interest of investor
certificateholders of all Series in any Receivable and continues beyond the
applicable cure period, is that the interest of investor certificateholders of
all Series in the Receivables affected thereby will be reassigned to the Banks
or assigned to the Servicer, as the case may be. In addition, in the event of
the breach of certain representations and warranties, the Banks may be
obligated to accept the reassignment of the entire Trust portfolio. See "The
Pooling Agreement Generally--Representations and Warranties" and "--Servicer
Covenants" and "Certain Legal Aspects of the Receivables--Consumer Protection
Laws".
Social, Legal, Economic and Other Factors. Changes in card use and payment
patterns by cardholders result from a variety of economic, legal and social
factors. Economic factors include the rate of inflation, unemployment levels
and relative interest rates. The use of incentive programs (e.g., gift awards
for card usage) may affect card use. The Banks are unable to determine and have
no basis to predict whether or to what extent changes in applicable laws or
other economic or social factors will affect card use or repayment patterns.
Competition in the Bank Credit Card Industry. The credit card industry is
highly competitive and operates in a legal and regulatory environment
increasingly focused on the cost of services charged for credit cards. There is
increased use of advertising, target marketing, pricing competition and
incentive programs. New credit card issuers seek to expand or enter the market.
In addition, certain credit card issuers assess periodic finance charges or
other fees or charges at rates lower than the rate currently being assessed on
most of the Accounts. Citibank (South Dakota) may also solicit existing
cardholders to open other revolving credit card accounts which offer certain
benefits not available under the Accounts, including lower periodic finance
charges or reduced late charges and other fees or charges. If cardholders
choose to utilize competing sources of credit, the rate at which new
Receivables are generated in the Accounts may be reduced and certain purchase
and payment patterns with respect to Receivables may be affected. The Trust
will be dependent upon the Banks' continued ability to generate new
Receivables. If the rate at which new Receivables are
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generated declines significantly and the Banks do not add Additional Accounts
to the Trust, an Early Amortization Event could occur.
The Ability of Citibank (South Dakota) to Change Terms of the
Accounts. Pursuant to the Pooling Agreement, the Banks do not transfer to the
Trust the Accounts but only the Receivables arising in the Accounts. As owner
of the Accounts, Citibank (South Dakota) will have the right to determine the
periodic finance charge, the fees and other charges which will be applicable
from time to time to the Accounts, to alter the minimum monthly payment
required under the Accounts and to change various other terms with respect to
the Accounts. A decrease in the periodic finance charge or other fees or
charges applicable to the Accounts would decrease the effective yield on the
Accounts and could result in the occurrence of an Early Amortization Event.
Under the Pooling Agreement, Citibank (South Dakota) has agreed that, unless
required by law or unless, in its good faith judgment, it deems it necessary to
maintain on a competitive basis its credit card business, it will not take
actions which would reduce the Portfolio Yield to less than the sum of (a) the
weighted average certificate rate of each class of investor certificates of
each Series (provided that, if the certificate rate of a class is a floating
rate, such calculation shall be determined after giving effect to the benefit
of any related interest rate cap agreement or interest rate swap agreement) and
(b) the weighted average of the Net Servicing Fee Rate applicable to each
Series. The term "Portfolio Yield" means, with respect to any Due Period, the
annualized percentage equivalent of a fraction the numerator of which is the
amount of Finance Charge Receivables collected during the immediately preceding
Due Period calculated on a cash basis, after subtracting therefrom the sum of
(a) the excess, if any, of the amount of Principal Receivables which were
charged off as uncollectible in such immediately preceding Due Period over the
aggregate amount of recoveries on charged-off Principal Receivables for such
immediately preceding Due Period and (b) the aggregate amount of Servicer
Interchange with respect to the Investor Certificates and any similar amount
with respect to all other outstanding Series for such immediately preceding Due
Period, and the denominator of which is the total amount of Principal
Receivables as of the last day of such immediately preceding Due Period;
provided, however, that with respect to any Due Period in which a Lump Sum
Addition or removal of Accounts occurs, the denominator will be a weighted
average amount of Principal Receivables for such Due Period. In addition,
Citibank (South Dakota) has also agreed that, unless required by law, it will
not take any action which would reduce the Portfolio Yield to less than the
highest certificate rate for any outstanding Series or class (provided that, if
the certificate rate of a class is a floating rate, such calculation shall be
determined after giving effect to the benefit of any related interest rate cap
agreement or interest rate swap agreement). Citibank (South Dakota) has also
agreed not to change the terms of the Accounts unless the change is also made
applicable to the comparable segment of its portfolio of accounts with
characteristics similar to the Accounts which are the subject of such change.
In addition, Citibank (South Dakota) has agreed that, upon the occurrence of
the Early Amortization Event described in clause (f) of "Series Provisions--
Early Amortization Events" (relating to the amount of Surplus Finance Charge
Collections being less than the Required Surplus Finance Charge Amount),
Citibank (South Dakota) will not, unless required by law, reduce the periodic
finance charges on the Accounts to a rate that would result in the weighted
average periodic finance charge on the Accounts being less than the weighted
average certificate rate of each class of investor certificates of each Series
(provided that, if the certificate rate of a class is a floating rate, such
calculation shall be determined after giving effect to the benefit of any
related interest rate cap agreement or interest rate swap agreement) plus 6%
per annum. Except as specified above, there are no restrictions on the ability
of Citibank (South Dakota) to change the terms of the Accounts. There can be no
assurances that changes in applicable law, changes in the marketplace or
prudent business practice might not result in a determination by Citibank
(South Dakota) to decrease customer finance charges or otherwise to take
actions which would change other Account terms. In servicing the Accounts, the
Servicer is required to exercise the same care and apply the same policies that
it exercises in handling similar matters for its own or other comparable
accounts.
Control. Subject to certain exceptions, the investor certificateholders of
each Series may take certain actions, or direct certain actions to be taken,
under the Pooling Agreement or the related Supplement. However, under certain
circumstances, the consent or approval of a specified percentage of the
aggregate unpaid principal amount of the investor certificates of all
outstanding Series will be required to direct certain
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actions, including requiring the appointment of a successor Servicer following
a Servicer Default, amending the Pooling Agreement under certain circumstances
and directing a reassignment of the entire portfolio of Accounts. In addition,
following the occurrence of an Insolvency Event, the Trust Assets will be
liquidated unless the holders of investor certificates evidencing more than 50%
of the aggregate unpaid principal amount of each Series or each class of each
Series (along with each other holder of the Banks' Certificate and, in the case
of certain Series, any credit enhancer with respect thereto) direct the Trustee
not to sell or otherwise liquidate the Receivables.
THE BANKS
Citibank (South Dakota), a national banking association and an indirect
wholly owned subsidiary of Citicorp located in Sioux Falls, South Dakota, was
formed in 1981 and conducts nationwide consumer lending programs primarily
comprised of credit card-related activities. Citibank (South Dakota) is the
nation's largest bank credit card issuer. The principal executive office of
Citibank (South Dakota) is located at 701 East 60th Street, North, Sioux Falls,
South Dakota 57117 (telephone (605) 331-2626).
Citibank (Nevada), a national banking association and an indirect wholly
owned subsidiary of Citicorp located in Las Vegas, Nevada, was formed in 1985
and conducts a retail banking business in the Las Vegas, Nevada area and
services credit card accounts for certain of its affiliates. The principal
executive office of Citibank (Nevada) is located at 8725 West Sahara Avenue,
Las Vegas, Nevada 89163 (telephone (702) 797-4444).
USE OF PROCEEDS
The net proceeds from the sale of the Investor Certificates will be paid to
the Banks. The Banks will use such proceeds for general corporate purposes.
THE TRUST
The Trust, as a master trust, has issued other series of investor
certificates and is expected to issue additional Series from time to time and
to continue as a trust after the Series Termination Date with respect to the
Investor Certificates. The Trust has not engaged and will not engage in any
business activity other than acquiring and holding Trust Assets and proceeds
therefrom, issuing investor certificates and the Banks' Certificate and making
payments thereon and related activities. See "Special Considerations--Master
Trust Considerations". As a consequence, the Trust does not and is not expected
to have any source of capital resources other than the Trust Assets. The Trust
will be administered in accordance with the laws of the State of New York.
The Banks have conveyed to the Trust, without recourse, their respective
interests in all Receivables arising under the Accounts. The Trust Assets
consist of the Receivables, all monies due or to become due thereunder, the
proceeds of the Receivables, the right to receive certain Interchange
attributed to cardholder charges for merchandise and services in the Accounts,
all monies on deposit in the Collection Account and in certain accounts
maintained for the benefit of the investor certificateholders of any Series,
funds collected or to be collected from Participations, if any, and any Series
Enhancements. The Trust Assets are expected to change over the life of the
Trust as revolving credit card accounts and related assets become subject to
the Trust and as Accounts are closed, charged-off or removed and are no longer
subject to the Trust. The investor certificateholders of a particular Series
will not have any interest in any Series Enhancement issued with respect to any
other Series. Pursuant to the Pooling Agreement, the Banks will have the right
(subject to certain limitations and conditions), and in some circumstances will
be obligated, to designate as Trust Assets Receivables arising in Additional
Accounts or, in lieu thereof or in addition thereto, Participations. See
"Master Trust Provisions--Addition of Trust Assets". In addition, the Banks
will have the right to remove
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from the Trust Receivables arising in designated Accounts as described herein
under "Master Trust Provisions--Removal of Accounts".
MASTER TRUST PROVISIONS
ADDITION OF TRUST ASSETS
If the total amount of Principal Receivables is less than the Required
Minimum Principal Balance as of the close of business on the last business day
of any calendar week, the Banks shall on or prior to the close of business on
the earlier of (a) the fortieth calendar day following the last business day of
such calendar week or (b) if any Series is in its accumulation period,
amortization period or early amortization period, the tenth business day
following the last business day of the Due Period in which such calendar week
occurs, make a Lump Sum Addition to the Trust such that, after giving effect to
such addition, the total amount of Principal Receivables is at least equal to
the Required Minimum Principal Balance. A "Lump Sum Addition" will consist of
(i) receivables arising in additional Eligible Accounts from the Portfolio,
(ii) receivables arising in portfolios of revolving credit card accounts
acquired by the Banks from other credit card issuers, (iii) receivables arising
from certain nonpremium and premium MasterCard and VISA credit card accounts
previously transferred by the Banks to certain trusts in transactions similar
to that described in this Prospectus which have reached their maturity dates,
(iv) receivables arising in any other revolving credit card accounts of a type
which has previously not been included in the Accounts and (v) participations
representing undivided interests in a pool of assets primarily consisting of
revolving credit card accounts and collections thereon ("Participations"). Lump
Sum Additions will generally consist of existing accounts while additions of
New Accounts will consist of newly originated accounts. The addition of
Participations in the Trust pursuant to this paragraph shall be effected by an
amendment to the Pooling Agreement which would not require the consent of
investor certificateholders. The Banks may, upon 30 days prior notice to the
Trustee, the Rating Agency and any provider of Series Enhancement, reduce the
Required Minimum Principal Balance, provided that such reduction will not
result in a Ratings Effect or an Adverse Effect and provided further the
Required Minimum Principal Balance shall never be less than 102% of the sum of
the initial invested amounts of all outstanding investor certificates of all
Series (or, if applicable with respect to a particular Series, the highest
invested amount during a Due Period, or, during any accumulation period,
scheduled amortization period, early amortization period or class A
amortization period, the highest invested amount during the Due Period
preceding the first Due Period with respect to such accumulation period,
scheduled amortization period, early amortization period or class A
amortization period). In addition, the Banks may from time to time, at their
sole discretion, subject to the conditions specified in the second succeeding
paragraph, voluntarily make a Lump Sum Addition to the Trust.
The Banks have designated, and may from time to time in the future, at their
sole discretion, designate, newly originated Eligible Accounts to be included
as Accounts ("New Accounts"), subject to the limitations specified in this
paragraph and the conditions specified in the next succeeding paragraph. Unless
the Rating Agency otherwise consents, the number of New Accounts designated
with respect to any of the three consecutive Due Periods beginning in January,
April, July and October of each calendar year shall not exceed 15% of the
number of Accounts as of the first day of the calendar year during which such
Due Periods commence and the number of New Accounts designated during any such
calendar year shall not exceed 20% of the number of Accounts as of the first
day of such calendar year. On or before the first business day of each Due
Period beginning in January, April, July and October of each calendar year, the
Banks shall have requested and obtained notification from the Rating Agency of
any limitations to the right of the Banks to designate newly originated
Eligible Accounts as New Accounts during any period which includes such Due
Period. On or before January 31, April 30, July 31 and October 31 of each
calendar year, the Trustee shall have received confirmation from the Rating
Agency that the addition of all New Accounts included as Accounts during the
three consecutive Due Periods ending in the calendar month prior to such date
shall not have resulted in a Ratings Effect. On or before January 31 and July
31 of each calendar year (or on or before the last day of each month in certain
circumstances), the Banks shall have delivered to the Trustee,
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the Rating Agency and any provider of Series Enhancement an opinion of counsel
with respect to the New Accounts included as Accounts during the preceding
calendar year confirming the validity and perfection of each transfer of such
New Accounts. If such Rating Agency confirmation or opinion of counsel with
respect to any New Accounts is not so received, such New Accounts will be
removed from the Trust. New Accounts and Accounts relating to any Lump Sum
Addition are collectively referred to herein as "Additional Accounts".
The Banks will convey to the Trust the Receivables arising in Additional
Accounts subject to the following conditions, among others: (a) in the case of
Lump Sum Additions, on or before the fifth business day immediately preceding
such addition the Banks shall have given the Trustee, the Servicer, the Rating
Agency and any provider of Series Enhancement written notice that the
Receivables arising in the Additional Accounts or Participations will be
included as Trust Assets; (b) the Additional Accounts shall all be Eligible
Accounts; (c) in the case of Lump Sum Additions, within five business days of
the date on which the Receivables arising in the related Accounts are added to
the Trust, and in the case of New Accounts, less than 90 days following their
addition to the Trust, the Banks shall have delivered to the Trustee a written
assignment and a computer file or microfiche list containing a true and
complete list of the Additional Accounts specifying for each such Account its
account number and, in the case of Lump Sum Additions, the aggregate amount
outstanding in such Account and the aggregate amount of Principal Receivables
outstanding in such Account; (d) in the case of Additional Accounts, the list
of Additional Accounts delivered pursuant to clause (c) above, is true and
complete in all material respects; (e) in the case of Lump Sum Additions, the
Trustee shall have received confirmation from the Rating Agency that such
addition will not result in a Ratings Effect; (f) in the case of Lump Sum
Additions, the Banks shall have delivered to the Trustee, the Rating Agency and
any provider of Series Enhancement an opinion of counsel to the effect that
addition of the Receivables arising in the Lump Sum Additions or of the
Participations to the Trust will not result in the Trust being considered an
"investment company" for purposes of the Investment Company Act of 1940, as
amended (the "Investment Company Act"); (g) in the case of Lump Sum Additions,
prior to or on the date the related Receivables are added to the Trust, and in
the case of New Accounts, on the Distribution Date following the Due Period in
which such New Accounts are originated, the Banks shall have delivered to the
Trustee and any provider of Series Enhancement a certificate of an authorized
officer stating that the Banks reasonably believe that such addition will not
(i) at the time of its occurrence or at a future date cause an Adverse Effect
and (ii) in the case of Participations, be any less favorable in any material
respect to the interests of any certificateholder of any Series or any provider
of Series Enhancement than would be the addition of Lump Sum Additions; (h)
such conveyance of Receivables in Additional Accounts will not at the time of
such conveyance cause an Early Amortization Event to occur; and (i) in the case
of Lump Sum Additions (other than, with certain exceptions, in the case of
required additions), the Banks shall have delivered to the Trustee, the Rating
Agency and any provider of Series Enhancement an opinion of counsel acceptable
to the Trustee that for federal and South Dakota income and franchise tax
purposes (x) following such addition the Trust will not be an association (or
publicly traded partnership) taxable as a corporation and (y) such addition
will not adversely affect the characterization of the investor certificates of
any Series as debt and will not cause a taxable event to holders of any such
investor certificates. In addition, the addition of New Accounts will be
subject to the further condition that credit card accounts of a type not
included in the Accounts at the time of their addition may only be designated
as New Accounts upon compliance with the conditions described above applicable
to Lump Sum Additions.
Affiliates of the Banks currently own or may acquire portfolios of revolving
credit card accounts the receivables in which in the future may be participated
to the Banks and sold to the Trust. Such a sale of receivables to the Trust
will be subject to the conditions described above relating to Lump Sum
Additions.
Additional Accounts will be subject to different eligibility criteria than
the Initial Accounts. See "The Pooling Agreement Generally--Representations and
Warranties". Such Additional Accounts may include accounts originated using
criteria different from those which were applied to the Initial Accounts
because such accounts were originated at a later date or were part of a
portfolio of credit card accounts which were
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not part of the Portfolio or which were acquired from another credit card
issuer. Moreover, Additional Accounts may not be accounts of the same type
previously included in the Trust. Consequently, there can be no assurance that
such Additional Accounts will be of the same credit quality as the Initial
Accounts or the Additional Accounts included in the Trust since the Trust Cut-
Off Date.
Additional Accounts of a type different than the Initial Accounts may contain
Receivables which consist of fees, charges and amounts which are different from
the fees, charges and amounts which have been designated as Finance Charge
Receivables and Principal Receivables herein and Participations may be added to
the Trust as Lump Sum Additions. In either case, the Servicer will designate
the portions of funds collected or to be collected in respect of such
Receivables or Participations to be treated for purposes of the Pooling
Agreement as Principal Receivables and Finance Charge Receivables. Furthermore,
in the event that Receivables are purchased from the Banks at a discount, a
portion of the Principal Receivables so purchased, in an amount equal to the
amount of such discount, may be treated for purposes of the Pooling Agreement
and any Supplement as a collection of Finance Charge Receivables. See "Special
Considerations--Master Trust Considerations--Addition of Trust Assets".
REMOVAL OF ACCOUNTS
On any day of any Due Period the Banks shall have the right to require the
reassignment to them or their designee of all the Trust's right, title and
interest in, to and under the Receivables then existing and thereafter created,
all monies due or to become due and all amounts received with respect thereto
and all proceeds thereof in or with respect to the Removed Accounts designated
by the Banks, upon satisfaction of the following conditions: (a) on or before
the fifth business day immediately preceding the date upon which such Accounts
are to be removed, the Banks shall have given the Trustee, the Servicer, the
Rating Agency and any provider of Series Enhancement written notice of such
removal specifying the date for removal of the Removed Accounts (the "Removal
Date"); (b) on or prior to the date that is five business days after the
Removal Date, the Banks shall have delivered to the Trustee a computer file or
microfiche list containing a true and complete list of the Removed Accounts
specifying for each such Account, as of the removal notice date, its account
number, the aggregate amount outstanding in such Account and the aggregate
amount of Principal Receivables outstanding in such Account; (c) the Banks
shall have represented and warranted as of each Removal Date that the list of
Removed Accounts delivered pursuant to clause (b) above, as of the Removal
Date, is true and complete in all material respects; (d) the Trustee shall have
received confirmation from the Rating Agency that such removal will not result
in a Ratings Effect; (e) the Banks shall have delivered to the Trustee and any
provider of Series Enhancement a certificate of an authorized officer, dated
the Removal Date, to the effect that the Banks reasonably believe that such
removal will not at the time of its occurrence or at a future date cause an
Adverse Effect; and (f) the Banks shall have delivered to the Trustee, the
Rating Agency and any provider of Series Enhancement an opinion of counsel
acceptable to the Trustee that for federal and South Dakota income and
franchise tax purposes (i) following such removal the Trust will not be an
association (or publicly traded partnership) taxable as a corporation and (ii)
such removal will not adversely affect the characterization of the investor
certificates of any Series as debt and will not cause a taxable event to
holders of any such investor certificates.
Upon satisfaction of the above conditions, the Trustee shall execute and
deliver to the Banks a written reassignment and shall be deemed to sell,
transfer, assign, set over and otherwise convey to Citibank (South Dakota) or
its designee, without recourse, representation or warranty, all the right,
title and interest of the Trust in and to the Receivables arising in the
Removed Accounts, all monies due and to become due and all amounts received
with respect thereto and all proceeds thereof.
NEW ISSUANCES
The Pooling Agreement provides that, pursuant to any one or more Supplements,
the Banks may direct the Trustee to issue from time to time new Series subject
to the conditions described below (each such issuance a "New Issuance"). Each
New Issuance will have the effect of decreasing the Banks' Interest to the
extent of
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the invested amount of such new Series. Under the Pooling Agreement, the Banks
may designate, with respect to any newly issued Series: (i) its name or
designation; (ii) its initial principal amount (or method for calculating such
amount); (iii) its certificate rate (or formula for the determination thereof);
(iv) the interest payment date or dates and the date or dates from which
interest shall accrue; (v) the method for allocating collections to investor
certificateholders; (vi) any bank accounts to be used by such Series and the
terms governing the operation of any such bank accounts; (vii) the percentage
used to calculate monthly servicing fees; (viii) the minimum amount of
Principal Receivables required to be maintained through the designation of
Additional Accounts; (ix) the issuer and terms of any form of Series
Enhancement with respect thereto; (x) the terms on which the investor
certificates of such Series may be repurchased or remarketed to other
investors; (xi) the Series issuance date (the "Series Issuance Date") and
Series termination date (the "Series Termination Date"); (xii) the number of
classes of investor certificates of such Series, and if more than one class,
the rights and priorities of each such class; (xiii) the extent to which the
investor certificates of such Series will be issuable in temporary or permanent
global form (and, in such case, the depositary for such global certificate or
certificates, the terms and conditions, if any, upon which such global
certificate may be exchanged, in whole or in part, for definitive certificates,
and the manner in which any interest payable on a global certificate will be
paid); (xiv) whether the investor certificates of such Series may be issued in
bearer form and any limitations imposed thereon; (xv) the priority of any
Series with respect to any other Series; (xvi) whether such Series will be part
of a Group; and (xvii) any other relevant terms (all such terms, the "Principal
Terms" of such Series). None of the Banks, the Servicer, the Trustee or the
Trust is required or intends to obtain the consent of any investor
certificateholder of any outstanding Series to issue any additional Series. The
Banks may offer any Series to the public under a Prospectus Supplement or other
Disclosure Document in transactions either registered under the Securities Act
or exempt from registration thereunder directly, through one or more
underwriters or placement agents, in fixed-price offerings or in negotiated
transactions or otherwise. See "Plan of Distribution". Any such Series may be
issued in fully registered, bearer or book-entry form in minimum denominations
determined by the Banks. The Banks intend to offer, from time to time,
additional Series.
The Supplement for a newly issued Series will specify whether such Series
will be included in Group One or any other Group. The Supplement for a Series
included in a Group may provide for the reallocation of collections on
Receivables and other amounts or obligations among all Series in such Group in
the manner and to the extent described in the Supplements relating to each
Series in the Group. Consequently, the issuance of a new Series in a Group may
have the effect of reducing the amount of collections of Finance Charge
Receivables which are reallocated to the investor certificates of existing
Series in the Group. For example, in Group One, which provides for the
reallocation of collections of Finance Charges Receivables allocable to a
Series among all Series in such Group, an additional Series which is issued
with a larger claim with respect to monthly interest than that of previously
issued Series in Group One (due to a higher certificate rate) will receive a
proportionately larger reallocation of Group One Investor Finance Charges. Such
issuance will reduce the amount of Group One Investor Finance Charges which are
reallocated to the existing Series in Group One. Conversely, the issuance of an
additional Series with a smaller claim with respect to monthly interest (due to
a lower certificate rate) will have the effect of increasing the amount of
collections of Group One Investor Finance Charges reallocated to existing
Series in Group One. The Banks are under no obligation to cause the issuance of
additional Series in Group One or in any other Group. The Trust may also issue
Series from time to time which are not part of a Group and which do not share
in the reallocation of collections of Finance Charge Receivables allocable to
other Series.
A Series may also be issued to provide credit enhancement for one or more
other Series. The certificates of such Series would provide for the
reallocation of collections of Principal Receivables otherwise allocable to
such Series to avoid charge-offs against the investor certificates of the
Series to which such new Series is subordinated. With respect to any Series,
except to the extent expressly provided in such Series' Supplement, no other
Series will have a claim to collections on the Receivables allocated to such
Series.
The Pooling Agreement provides that the Banks may designate Principal Terms
such that each Series has a period during which accumulation of the principal
amount thereof in a principal funding account or
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amortization of the principal amount thereof is intended to occur which may
have a different length and begin on a different date than such periods for any
other Series. Further, one or more Series may be in their accumulation or
amortization periods while other Series are not. Collections of Principal
Receivables otherwise allocable to a Series may be reallocated to a Series
which is amortizing or accumulating principal. Moreover, each Series may have
the benefits of Series Enhancements issued by enhancement providers different
from the providers of Series Enhancement with respect to any other Series.
Under the Pooling Agreement, the Trustee shall hold any such Series Enhancement
only on behalf of the Series to which such Series Enhancement relates. With
respect to each such Series Enhancement, the Banks may deliver a different form
of Series Enhancement agreement. The Banks also have the option under the
Pooling Agreement to vary among Series the terms upon which a Series may be
repurchased by the Banks or remarketed to other investors. There is no limit to
the number of New Issuances that the Banks may cause under the Pooling
Agreement. The Trust will terminate only as provided in the Pooling Agreement.
There can be no assurance that the terms of any Series might not have an impact
on the timing and amount of payments received by an investor certificateholder
of another Series.
Under the Pooling Agreement and pursuant to a Supplement, a New Issuance may
only occur upon the satisfaction of certain conditions provided in the Pooling
Agreement. The obligation of the Trustee to issue the investor certificates of
such new Series and to execute and deliver the related Supplement is subject to
the satisfaction of the following conditions: (a) on or before the fifth
business day immediately preceding the date upon which the New Issuance is to
occur, the Banks shall have given the Trustee, the Servicer, the Rating Agency
and any provider of Series Enhancement written notice of such New Issuance and
the date upon which the New Issuance is to occur; (b) the Banks shall have
delivered to the Trustee the related Supplement, in form satisfactory to the
Trustee, executed by each party to the Pooling Agreement other than the
Trustee; (c) the Banks shall have delivered to the Trustee any related Series
Enhancement agreement executed by each of the parties to such agreement; (d)
the Trustee shall have received confirmation from the Rating Agency that such
New Issuance will not result in a Ratings Effect; (e) the Banks shall have
delivered to the Trustee and any provider of Series Enhancement a certificate
of an authorized officer, dated the date upon which the New Issuance is to
occur, to the effect that the Banks reasonably believe that such issuance will
not at the time of its occurrence or at a future date cause an Adverse Effect;
(f) the Banks shall have delivered to the Trustee, the Rating Agency and any
provider of Series Enhancement an opinion of counsel acceptable to the Trustee
that for federal and South Dakota income and franchise tax purposes (i)
following the New Issuance the Trust will not be an association (or publicly
traded partnership) taxable as a corporation, (ii) the new investor
certificates will be properly characterized as debt, and (iii) the New Issuance
will not adversely affect the characterization of the investor certificates of
any other Series as debt and will not cause a taxable event to holders of any
such investor certificates; (g) the Banks' remaining interest in Principal
Receivables shall not be less than 2% of the total amount of Principal
Receivables, in each case as of the date upon which the New Issuance is to
occur after giving effect to such issuance; and (h) any other conditions
specified in any Supplement. Upon satisfaction of the above conditions, the
Trustee shall execute the Supplement and issue to the Banks the investor
certificates of such new Series for execution and redelivery to the Trustee for
authentication.
COLLECTION ACCOUNT
The Servicer has established and maintains for the benefit of the Investor
Certificateholders and the holders of investor certificates of any other
Series, in the name of the Trustee, on behalf of the Trust, an Eligible Deposit
Account bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Investor Certificateholders and the
investor certificateholders of any other Series (the "Collection Account").
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States or any one of the states thereof, including the District of Columbia (or
any domestic branch of a foreign bank), and acting as a trustee for funds
deposited in such account, so long as any of the securities of such depository
institution shall have a credit rating from the
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Rating Agency in one of its generic credit rating categories which signifies
investment grade. "Eligible Institution" means a depository institution
organized under the laws of the United States or any one of the states thereof,
including the District of Columbia (or any domestic branch of a foreign bank)
which at all times (a) has either (i) a long-term unsecured debt rating of A2
or better by Moody's Investors Service, Inc. ("Moody's") or (ii) a certificate
of deposit rating of P-1 by Moody's, and (b) has (i) in the case of the
Collection Account, if such depository institution is an affiliate of Citicorp,
a certificate of deposit rating of A-1 or better by Standard & Poor's
Corporation ("Standard & Poor's") or (ii) for any other depository institution,
either (x) a long-term unsecured debt rating of AAA by Standard & Poor's or (y)
a certificate of deposit rating of A-1+ by Standard & Poor's. The Collection
Account will initially be maintained with Citibank (South Dakota). If at any
time the Collection Account ceases to be an Eligible Deposit Account, the
Collection Account shall be moved so that it will again be qualified as an
Eligible Deposit Account. Funds in the Collection Account generally will be
invested 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 commercial paper, if any, of which has the
highest rating from the Rating Agency, (iii) commercial paper having, at the
time of the Trust's investment therein, a rating in the highest rating category
from the Rating Agency, (iv) demand deposits, time deposits and certificates of
deposit which are fully insured by the FDIC, (v) notes or bankers' acceptances
issued by any depository institution or trust company described in (ii) above,
(vi) money market funds which have the highest rating from, or have otherwise
been approved in writing by, the Rating Agency, (vii) time deposits (having
maturities of not more than 30 days) with an entity, the commercial paper of
which has the highest rating from the Rating Agency or demand notes of Citicorp
for so long as Citicorp's commercial paper has the highest rating from the
Rating Agency and (viii) any other investments approved in writing by the
Rating Agency (collectively, "Eligible Investments"). Eligible Investments may
be purchased from affiliates of the Banks. It is expected that such funds will
be invested in debt obligations of Citicorp or its affiliates as long as such
obligations qualify as Eligible Investments. Any earnings (net of losses and
investment expenses) on funds in the Collection Account will be paid to the
Banks except as otherwise specified in any Supplement. The Servicer will have
the revocable power to withdraw funds from the Collection Account and to
instruct the Trustee to make withdrawals and payments from the Collection
Account for the purpose of carrying out its duties under the Pooling Agreement,
the Series Supplement and any other Supplement.
DEPOSITS IN COLLECTION ACCOUNT
For as long as (i) Citibank (South Dakota) remains the Servicer under the
Pooling Agreement and (ii) Citibank (South Dakota) maintains a certificate of
deposit rating of at least A-1 and P-1 (or their equivalent) by the Rating
Agency, Citibank (South Dakota) may use for its own benefit all collections
received with respect to the Receivables in each Due Period until the related
Distribution Date, at which time Citibank (South Dakota) will deposit all such
collections, to the extent described below, into the Collection Account, and
the Servicer will make the deposits and payments to the accounts and parties
described herein on the date of such deposit, provided that if any class of
Investor Certificates has the benefit of an interest rate swap agreement and a
net swap payment is required to be made to the swap counterparty on a swap
payment date, such amount will be deposited in the Collection Account no later
than the business day preceding the related Distribution Date for payment to
the swap counterparty on such swap payment date. See "Series Provisions--
Distributions". However, if Citibank (South Dakota) is no longer the Servicer
or fails to maintain the required certificate of deposit rating, the Servicer
will make such deposits, as described below, not later than two business days
after the date on which the related Receivables are processed. Whether the
Servicer is required to make deposits of collections pursuant to the first or
the second preceding sentence, (i) the Servicer will only be required to
deposit collections into the Collection Account up to the aggregate amount of
collections required to be deposited into an account established for any Series
or, without duplication, distributed on the related Distribution Date or
Payment Date to investor certificateholders of any Series or to the issuer of
any Series Enhancement pursuant to the terms of any Supplement or Series
Enhancement agreement and (ii) if at any time prior to such Distribution Date
or Payment Date the amount of collections deposited in the Collection Account
exceeds the amount required to be deposited pursuant to clause (i) above, the
Servicer
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will be permitted to withdraw such excess from the Collection Account. Unless
otherwise agreed by the Rating Agency, if at any time Citibank (South Dakota)
or another eligible affiliate of Citicorp is not the Servicer, the Collection
Account will be moved from Citibank (South Dakota), if then maintained there.
On the day any such deposit is made into the Collection Account, the Servicer
will withdraw from the Collection Account and pay to the Banks (i) the Banks'
allocable portion of Series Allocable Principal Collections, provided that the
Banks' Interest in Principal Receivables on such day (after giving effect to
any new Receivables transferred to the Trust on such day) is greater than zero;
(ii) the Banks' allocable portion of Series Allocable Finance Charge
Collections and (iii) any similar amounts payable to the Banks with respect to
other Series.
ALLOCATIONS AMONG SERIES
Pursuant to the Pooling Agreement, during each Due Period the Servicer will
allocate to each outstanding Series its Series Allocable Finance Charge
Collections, Series Allocable Principal Collections, Series Allocable Defaulted
Receivables and Series Allocable Miscellaneous Payments.
"Series Allocable Finance Charge Collections", "Series Allocable
Principal Collections" and "Series Allocable Defaulted Receivables" mean,
with respect to any Series and for any Due Period, the product of (a) the
Series Allocation Percentage and (b) the amount of collections of Finance
Charge Receivables and Principal Receivables and the amount of all
Defaulted Receivables with respect to such Due Period, respectively.
"Series Allocation Percentage" means, with respect to any Series and for
any Due Period, the percentage equivalent of a fraction, the numerator of
which is the Series Adjusted Invested Amount as of the last day of the
immediately preceding Due Period and the denominator of which is the Trust
Adjusted Invested Amount as of such last day.
"Series Allocable Miscellaneous Payments" means, with respect to any
Series and for any Due Period, the product of (a) the Series Allocation
Percentage and (b) the sum of (i) Adjustment Payments and Transfer Deposit
Amounts received with respect to such Due Period and (ii) any Unallocated
Principal Collections available to be treated as such as described herein
under "Series Provisions--Allocations, Reallocations and Subordination--
Reallocations Among Investor Certificates of Different Series--Investor
Principal Collections for all Series".
"Series Adjusted Invested Amount" means, with respect to any Series and
as of any date, the initial principal amount of the investor certificates
of such Series (or, if applicable with respect to a particular Series, the
highest invested amount during the related Due Period or, during any
accumulation period, scheduled amortization period, early amortization
period or class A amortization period, the highest invested amount during
the Due Period preceding the first Due Period with respect to such
accumulation period, scheduled amortization period, early amortization
period, or class A amortization period) less the excess, if any, of the
cumulative amount of investor charge-offs for such Series over the
aggregate reimbursement of such investor charge-offs.
"Trust Adjusted Invested Amount" means, with respect to any Due Period,
the sum of the Series Adjusted Invested Amounts for all outstanding Series.
SERIES PROVISIONS
GENERAL
The Investor Certificates will be issued pursuant to the Pooling and
Servicing Agreement dated as of May 29, 1991 (as amended, the "Pooling
Agreement"), and a series supplement thereto relating to the Investor
Certificates (the "Series Supplement"), among the Banks, as sellers of their
respective interests in the Receivables, Citibank (South Dakota), as servicer
of the Accounts, and the Trustee and each substantially in the form filed as
exhibits to the Registration Statement of which this Prospectus is a part.
Pursuant to the
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<PAGE>
Pooling Agreement, the Banks may enter into further Supplements with the
Trustee in order to issue additional Series. See "Master Trust Provisions--New
Issuances". The Trustee will provide a copy of the Pooling Agreement (without
exhibits or schedules), including any Supplements, to Investor
Certificateholders upon written request. The following summary describes
certain terms of the Investor Certificates and is qualified in its entirety by
reference to the Pooling Agreement and the Series Supplement.
The Investor Certificates offered hereby will initially be represented by one
or more Class A Certificates and, if offered by this Prospectus and the
accompanying Prospectus Supplement, one or more Class B Certificates registered
in the name of the nominee of DTC (together with any successor depository
selected by Citibank (South Dakota), the "Depository"), except as set forth
below. Unless otherwise specified in the related Prospectus Supplement, the
Investor Certificates offered hereby will be available for purchase in minimum
denominations of $1,000 and in integral multiples thereof in book-entry form.
The Banks have been informed by DTC that DTC's nominee will be Cede. See "The
Pooling Agreement Generally--Book-Entry Registration" and "--Definitive
Certificates".
The Class A Certificates will evidence undivided beneficial interests in the
Trust Assets allocated to the Class A Interest, representing the right to
receive from such Trust Assets funds up to (but not in excess of) the amounts
required to make payments of interest on the Class A Certificates and the
payment of the Class A Invested Amount on the Class A Expected Final Payment
Date, or earlier or later under certain circumstances. The Class B Certificates
will evidence undivided beneficial interests in the Trust Assets allocated to
the Class B Interest, representing the right to receive from such Trust Assets
funds up to (but not in excess of) the amounts required to make payments of
interest on the Class B Certificates and the payment of the Class B Invested
Amount on the Class B Expected Final Payment Date, or earlier or later under
certain circumstances.
INTEREST
Interest will accrue on the unpaid principal amount of the Class A
Certificates at the per annum rate specified in the related Prospectus
Supplement (the "Class A Certificate Rate") and, except as otherwise provided
herein, be distributed to the Class A Certificateholders on each Interest
Payment Date. On each Distribution Date, Class A Monthly Interest and Class A
Monthly Interest previously due but not deposited into the Class A Interest
Funding Account on a prior Distribution Date (and, with respect to the
Accumulation Period, the Class A Investment Proceeds, up to an amount equal to
the Class A Covered Amount, plus an amount equal to any Class A Funding Account
Shortfall) will be deposited in an Eligible Deposit Account in the name of the
Trustee (the "Class A Interest Funding Account"), which will initially be
maintained with Citibank, N.A.
Interest will accrue on the unpaid principal amount of the Class B
Certificates at the per annum rate specified in the related Prospectus
Supplement (the "Class B Certificate Rate") and, except as otherwise provided
herein, be distributed to the Class B Certificateholders on each Interest
Payment Date. On each Distribution Date, Class B Monthly Interest and Class B
Monthly Interest previously due but not deposited into the Class B Interest
Funding Account on a prior Distribution Date will be deposited in an Eligible
Deposit Account in the name of the Trustee (the "Class B Interest Funding
Account"), which will initially be maintained with Citibank, N.A.
Funds on deposit in the Class A Interest Funding Account and the Class B
Interest Funding Account generally will be invested in certain Eligible
Investments described under "Master Trust Provisions-- Collection Account",
which are expected to be debt obligations of Citicorp or its affiliates so long
as such obligations qualify as Eligible Investments. For purposes of
investments of funds in the Class B Interest Funding Account, the term "highest
rating" as used in the definition of "Eligible Investments" shall include A-1
as well as A-1+, in the case of a short-term rating by Standard & Poor's. Any
earnings (net of losses and investment expenses) on funds in the Class A
Interest Funding Account and the Class B Interest Funding Account will be paid
to the Banks. If an Early Amortization Period commences, then thereafter Class
A
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<PAGE>
Monthly Interest will be distributed to the Class A Certificateholders monthly
on each Special Payment Date and Class B Monthly Interest will be distributed
to the Class B Certificateholders monthly on each Special Payment Date and any
amounts on deposit in the Class A Interest Funding Account and the Class B
Interest Funding Account will be distributed to the Class A Certificateholders
and Class B Certificateholders, respectively, on the first Special Payment
Date. Unless otherwise specified in the related Prospectus Supplement, interest
due with respect to the Class A Certificates and the Class B Certificates for
any Interest Payment Date will accrue from and including the preceding Interest
Payment Date or, in the case of the first Interest Payment Date, from and
including the Series Issuance Date, to but excluding such Interest Payment
Date, and will be calculated on the basis of the actual number of days in the
year divided by a 360-day year. Interest with respect to the Investor
Certificates due but not paid on any Payment Date will be due on the next
succeeding Payment Date with additional interest on such amount at the related
Class A Certificate Rate or Class B Certificate Rate, as applicable.
Reallocated Investor Finance Charges for each Due Period will be allocated to
the Class B Interest based on the Class B Invested Amount. If the unpaid
principal balance of the Class B Certificates for any Due Period exceeds the
Class B Invested Amount for such Due Period as a result of the reduction of the
Class B Invested Amount (after giving effect to any increase or decrease in
such amount for such Due Period), the amount deposited in the Class B Interest
Funding Account out of the Reallocated Investor Finance Charges may be less
than the amount of accrued interest on the Class B Certificates. See "--
Allocations, Reallocations and Subordination--Allocations, Reallocations and
Subordination Within a Series--Subordination". As described under "--
Allocations, Reallocations and Subordination--Allocations, Reallocations and
Subordination Within a Series--Excess Finance Charge Collections", Excess
Finance Charge Collections, if any, remaining after certain other payments have
been made with respect to the Class A Certificates will be deposited in the
Class B Interest Funding Account on each Distribution Date to the extent of any
such interest shortfall. To the extent that the accrued and unpaid interest on
the outstanding principal balance of the Class B Certificates and any interest
owed on such unpaid interest exceeds the amount to be deposited in the Class B
Interest Funding Account on any Distribution Date, a draw will be made under
the Credit Enhancement in an amount equal to the lesser of (a) the Available
Shared Enhancement Amount on such date (after giving effect to any draw under
the Credit Enhancement on such Distribution Date to fund the Required Amount,
if any) and (b) such excess, and the proceeds thereof will be deposited in the
Class B Interest Funding Account on such Distribution Date. See "--Series
Enhancements--Credit Enhancement Generally".
PRINCIPAL
Unless otherwise provided with respect to a particular Series, no principal
payments will be made to the Class A Certificateholders until the Class A
Expected Final Payment Date or, upon the occurrence of an Early Amortization
Event as described herein, until the first Special Payment Date. Payments of
principal in respect of the Class B Certificates will not commence until after
the final principal payment with respect to the Class A Certificates has been
made, except that following the occurrence of an Economic Early Amortization
Event principal of the Class B Certificates will be payable from a draw under
the Credit Enhancement as described under "--Series Enhancements--Credit
Enhancement Generally". On each Distribution Date with respect to the Revolving
Period, collections of Principal Receivables allocable to the
Certificateholders' Interest (other than Subordinated Principal Collections
that are used to fund any amounts other than the Class A Investor Default
Amount), subject to certain limitations, will either be (a) allocated to one or
more Series which are in amortization, early amortization or accumulation
periods to cover principal payments due to the investor certificateholders of
any such Series or (b) if no such Series is then amortizing or accumulating
principal, paid to the Banks to maintain the Certificateholders' Interest or
held as Unallocated Principal Collections. See "--Allocations, Reallocations
and Subordination--Reallocations Among Investor Certificates of Different
Series--Investor Principal Collections for all Series".
Unless and until an Early Amortization Event shall have occurred and until
the Class A Invested Amount is paid in full, on each Distribution Date with
respect to the Accumulation Period, collections of
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<PAGE>
Principal Receivables allocable to the Certificateholders' Interest plus
certain other amounts comprising Class A Monthly Principal will no longer be
paid for the benefit of another Series or to the Banks as described above but
instead an amount thereof up to the Class A Controlled Distribution Amount for
each such date will be deposited in the Class A Principal Funding Account. See
"--Principal Funding Account". Any such amounts in excess of the Class A
Controlled Distribution Amount will be allocated as described under "--
Allocations, Reallocations and Subordination--Reallocations Among Investor
Certificates of Different Series--Investor Principal Collections for all
Series". The funds deposited in the Class A Principal Funding Account will be
used to pay the Class A Invested Amount on the Class A Expected Final Payment
Date. If on such date the Class A Principal Funding Account Balance is less
than the Class A Invested Amount, the Early Amortization Period will commence
and on each Special Payment Date the Class A Certificateholders will receive
distributions of Class A Monthly Principal and Class A Monthly Interest until
the Class A Invested Amount has been paid in full or the Series Termination
Date has occurred. Even if the Class A Principal Funding Account Balance on the
Class A Expected Final Payment Date is insufficient to pay the Class A Invested
Amount in full, such balance will be distributed to the Class A
Certificateholders at such time.
Unless otherwise provided with respect to a particular Series, it is expected
that the final principal payment with respect to the Class A Certificates will
be made on the Class A Expected Final Payment Date, but the principal of the
Class A Certificates may be paid earlier or, depending on the actual payment
rate on the Receivables and the amount of available Excess Principal
Collections during the Accumulation Period, later, as described under "Special
Considerations--Series Considerations--Payments". If the Class A Invested
Amount is paid in full on the Class A Expected Final Payment Date, it is
expected that the final principal payment with respect to the Class B
Certificates will be made on the Class B Expected Final Payment Date, but the
principal of the Class B Certificates may be paid earlier or, depending on the
actual payment rate on the Receivables and the amount of available Excess
Principal Collections on the Class B Expected Final Payment Date, later, as
described under "Special Considerations--Series Considerations--Payments". If
an Early Amortization Event occurs, principal payments to the Class B
Certificateholders will be made, to the extent of remaining collections
allocated and available therefor, on the Special Payment Date on which the
final principal payment is made to the Class A Certificateholders. In addition,
on the first Special Payment Date following an Economic Early Amortization
Event, principal payments will be made to the Class A Certificateholders and
the Class B Certificateholders from draws under the Credit Enhancement as
described under "--Series Enhancements--Credit Enhancement Generally". If the
Receivables are sold or repurchased as described below, principal payments on
the Investor Certificates will be made on the Distribution Date following such
sale or repurchase, subject, in the case of the Class B Certificates, to the
prior payment in full of the Class A Invested Amount.
Unless otherwise provided with respect to a particular Series, on the Class B
Expected Final Payment Date, provided that the Class A Invested Amount is paid
in full on the Class A Expected Final Payment Date and the Early Amortization
Period has not commenced, Available Investor Principal Collections will be used
to pay the Class B Invested Amount as described herein under "--Allocations,
Reallocations and Subordination--Reallocations Among Investor Certificates of
Different Series--Investor Principal Collections for all Series". If on the
Class B Expected Final Payment Date the Available Investor Principal
Collections are less than the Class B Invested Amount, the Early Amortization
Period will commence and on each Distribution Date thereafter the Class B
Certificateholders will receive distributions of Class B Monthly Principal and
Class B Monthly Interest until the Class B Invested Amount has been paid in
full or the Series Termination Date has occurred. Even if the Available
Investor Principal Collections on the Class B Expected Final Payment Date are
insufficient to pay the Class B Invested Amount in full, all such funds will be
distributed to the Class B Certificateholders at such time.
On each Distribution Date commencing with the Class B Principal Commencement
Date, a draw will be made under the Credit Enhancement to pay principal with
respect to the Class B Certificates to the extent that the unpaid principal
amount of the Class B Certificates exceeds the Class B Invested Amount on such
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<PAGE>
Distribution Date, in an amount equal to the lesser of (a) the Available
Enhancement Amount on such Distribution Date (after giving effect to all other
draws under the Credit Enhancement on such Distribution Date) and (b) such
excess.
In the event of a sale of the Receivables and an early termination of the
Trust due to an Insolvency Event, an optional repurchase of the
Certificateholders' Interest by the Banks, a repurchase or sale of the
Certificateholders' Interest and the certificateholders' interest for all other
Series in connection with a Servicer Default, a sale of a portion of the
Receivables in connection with the Series Termination Date or a reassignment of
the Certificateholders' Interest and the certificateholders' interest for all
other Series in connection with a breach by the Banks of certain
representations and warranties (each as described under "--Early Amortization
Events", "--Optional Termination; Final Payment of Principal" or "The Pooling
Agreement Generally--Termination of Trust", "--Representations and Warranties"
and "--Servicer Default"), distributions of principal will be made to the
Investor Certificateholders upon surrender of their Investor Certificates.
Following any such sale or repurchase, any Available Enhancement Amount on the
related Distribution Date (after giving effect to all other draws under the
Credit Enhancement on such Distribution Date) will be drawn under the Credit
Enhancement and the proceeds thereof will be distributed to Class B
Certificateholders to the extent that, after giving effect to the distribution
to the Class B Certificateholders of the proceeds from such sale or repurchase
allocated to the Class B Certificateholders (after the Class A Certificates
have been fully paid), the unpaid principal amount of the Class B Certificates
exceeds the Class B Invested Amount. See "--Series Enhancements".
ALLOCATIONS, REALLOCATIONS AND SUBORDINATION
ALLOCATION BETWEEN INVESTOR CERTIFICATEHOLDERS AND THE BANKS
The Servicer will allocate to each Series for each Due Period a portion of
the Trust Assets, including all collections of Receivables and all Defaulted
Receivables based on the Series Allocation Percentage as described under
"Master Trust Provisions--Allocations among Series". The Servicer will then
allocate amounts initially allocated to a particular Series between the
Certificateholders' Interest and the Banks' Interest for such Due Period as
follows:
(i) during the Revolving Period and any Early Amortization Period, Series
Allocable Finance Charge Collections will be allocated to Investor
Certificateholders based on the Floating Allocation Percentage;
(ii) during the Accumulation Period, the Gross Amount will be allocated
to Investor Certificateholders in an amount generally equal to the sum of
(a) the Floating Allocation Percentage of Series Allocable Finance Charge
Collections and (b) the amount of any Class A Funding Account Shortfall
(the amounts so allocated pursuant to clauses (i) above and (ii)(a) above,
minus the aggregate amount of Servicer Interchange for the related Due
Period, are referred to herein as "Investor Finance Charges");
(iii) Series Allocable Defaulted Receivables will at all times be
allocated to Investor Certificateholders based on the Floating Allocation
Percentage;
(iv) during the Revolving Period, Series Allocable Principal Collections
will be allocated to Investor Certificateholders based on the Floating
Allocation Percentage;
(v) during the Accumulation Period and any Early Amortization Period,
Series Allocable Principal Collections will be allocated to Investor
Certificateholders based on the Principal Allocation Percentage; and
(vi) Series Allocable Miscellaneous Payments will at all times be
allocated to Investor Certificateholders (the amounts allocated under
clauses (iv), (v) and (vi) for any Due Period are referred to herein as
"Investor Principal Collections").
Amounts not allocated to Investor Certificateholders as described above
will be allocated to the Banks.
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<PAGE>
"Floating Allocation Percentage" for each Due Period is the percentage
equivalent (which shall not be in excess of 100%) of the ratio which the
sum of the Invested Amount and the Enhancement Invested Amount, if any,
bears to the product of (a) the Series Allocation Percentage and (b) the
total amount of Principal Receivables, in each case determined as of the
date provided in the related Series Supplement; provided, however, that,
with respect to any Due Period in which a Lump Sum Addition or removal of
Accounts occurs, the amount referred to in clause (b) for such Due Period
shall be a weighted average amount of Principal Receivables in the Trust
for such Due Period. During the initial Due Period with respect to the
Investor Certificates, the Floating Allocation Percentage will equal the
percentage equivalent of the ratio which the amount of the initial Invested
Amount bears to the product of (x) the Series Allocation Percentage and (y)
the total amount of Principal Receivables on the Series Cut-Off Date.
"Invested Amount" means the sum of the Class A Invested Amount and the
Class B Invested Amount.
"Class A Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class A Certificates (increased by the
initial principal balance of any Class A Certificates issued after the
Series Issuance Date), minus (b) the amount of principal payments made to
Class A Certificateholders prior to such date, minus (c) the Class A
Principal Funding Account Balance as of such date, and minus (d) the
excess, if any, of the aggregate amount of Class A Investor Charge-Offs for
all Distribution Dates preceding such date over the aggregate amount of
Class A Investor Charge-Offs reimbursed prior to such date.
"Class B Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class B Certificates (increased by the
initial principal balance of any Class B Certificates issued after the
Series Issuance Date), minus (b) the amount of principal payments made to
Class B Certificateholders prior to such date (other than principal
payments made from the proceeds of a draw under the Credit Enhancement for
the purpose of reimbursing previous reductions in the Class B Invested
Amount), minus (c) the aggregate amount of Class B Investor Charge-Offs for
all prior Distribution Dates, minus (d) the portion of the aggregate amount
of Subordinated Principal Collections for all prior Distribution Dates
which has been used to fund the Required Amount with respect to such
Distribution Dates and which is allocable to the Class B Certificates as
described under "--Allocations, Reallocations and Subordination Within a
Series--Subordination", minus (e) an amount equal to 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 under
"--Investor Charge-Offs", and plus (f) the aggregate amount of Excess
Finance Charge Collections and certain other amounts applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (c), (d) and (e).
"Enhancement Invested Amount" for any date means an amount equal to (a)
the aggregate amount drawn under the Credit Enhancement and applied to the
payment of principal of the Investor Certificates on the first Special
Payment Date following an Economic Early Amortization Event, minus (b) an
amount equal to the aggregate amount by which the Enhancement Invested
Amount has been reduced as a result of Subordinated Principal Collections
for prior Distribution Dates having been used to fund the Required Amount
with respect to such Distribution Dates as described under "--Allocations,
Reallocations and Subordination Within a Series--Subordination", minus (c)
an amount equal to the aggregate amount by which the Enhancement Invested
Amount has been reduced to fund the Class A Investor Default Amount and the
Class B Investor Default Amount on all prior Distribution Dates as
described under "--Investor Charge-Offs", and plus (d) the aggregate amount
of Excess Finance Charge Collections and certain other amounts applied on
all prior Distribution Dates for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (b) and (c). In the absence of
the occurrence of an Economic Early Amortization Event and a related draw
under the Credit Enhancement to pay principal of the Investor Certificates,
the Enhancement Invested Amount will be zero.
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<PAGE>
"Principal Allocation Percentage" means, for each Due Period with respect
to the Accumulation Period or any Early Amortization Period, the percentage
equivalent (which shall not be in excess of 100%) of the ratio which the
Invested Amount on the last day of the Revolving Period (which last day, in
the case of an Early Amortization Period which commences prior to the
scheduled end of the Revolving Period, will be the day preceding the day on
which an Early Amortization Event occurs) bears to the product of (a) the
Series Allocation Percentage and (b) the total amount of Principal
Receivables on the last day of the immediately preceding Due Period;
provided, however, that, if a Lump Sum Addition or removal of Accounts
occurs during such Due Period, the amount referred to in clause (b) for
such Due Period shall be a weighted average amount of Principal Receivables
in the Trust for such Due Period.
"Gross Amount" means, for any Distribution Date with respect to the
Accumulation Period, the sum of (a) Series Allocable Finance Charge
Collections and (b) Class A Excess Investment Proceeds for such
Distribution Date.
"Series Cut-Off Date" has the meaning specified in the related Prospectus
Supplement.
Reallocations Among Investor Certificates of Different Series
Group One Investor Finance Charges
The Series offered hereby may be included in Group One or in another Group.
See "Annex I--Prior Issuances of Investor Certificates" in the related
Prospectus Supplement for a summary of other outstanding Series included in
Group One. Other Series issued in the future may also be included in Group One.
The following description of reallocations applies to those Series in Group
One. Reallocations with respect to Series in other Groups will be done in the
same manner or in any other manner set forth in the Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the Servicer
will calculate for each Due Period Group One Investor Finance Charges and on
the following Distribution Date shall allocate such amount among the
Certificateholders' Interest and the certificateholders' interest for all other
Series in Group One in the following priority:
(i) Group One Investor Monthly Interest;
(ii) Group One Investor Default Amounts;
(iii) Group One Investor Monthly Fees;
(iv) Group One Investor Additional Amounts; and
(v) the balance pro rata among each Series in Group One based on the
current invested amount of each such Series (which will include any
enhancement invested amount with respect to a Series).
In the case of clauses (i), (ii), (iii) and (iv), if the amount of Group One
Investor Finance Charges is not sufficient to cover each such amount in full,
the amount available will be allocated among the Series in Group One pro rata
based on the claim that each Series has under the applicable clause. This
means, for example, that if the amount of Group One Investor Finance Charges is
not sufficient to cover Group One Investor Monthly Interest, each Series in
Group One will share such amount pro rata and any Series with a claim with
respect to monthly interest, overdue monthly interest and interest on such
overdue monthly interest, if applicable, which is larger than the claim for
such amounts for the Series offered hereby (due to a higher certificate rate)
will receive a proportionately larger allocation.
The amount of Group One Investor Finance Charges allocated to the
Certificateholders' Interest for the Series offered hereby as described above
is referred to herein as "Reallocated Investor Finance Charges".
"Group One Investor Additional Amounts" means for any Distribution Date
the sum of (a) with respect to the Investor Certificates, generally the
amounts set forth in clauses (b), (c), (f) and (h) under
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<PAGE>
"--Allocations, Reallocations and Subordination Within a Series--Excess
Finance Charge Collections" below and (b) with respect to any other Series
in Group One, (i) an amount equal to the amount by which the invested
amount of any class of investor certificates has been reduced as a result
of investor charge-offs, subordination of principal collections and funding
the investor default amount for any other class of investor certificates of
such Series and (ii) if the related Supplement so provides, the amount of
interest at the applicable certificate rate that has accrued on the amount
described in the preceding clause (i).
"Group One Investor Default Amount" means for any Distribution Date the
sum of (a) with respect to the Investor Certificates, the product of Series
Allocable Defaulted Receivables for such Distribution Date and the Floating
Allocation Percentage for such Distribution Date and (b) with respect to
any other Series in Group One, the product of (i) series allocable
defaulted receivables for each such Series for such Distribution Date and
(ii) the floating allocation percentage of each such Series for such
Distribution Date.
"Group One Investor Finance Charges" means for any Distribution Date the
sum of (a) the aggregate amount of Investor Finance Charges for such
Distribution Date and (b) the aggregate amount of investor finance charges
for such Distribution Date for all other Series in Group One.
"Group One Investor Monthly Fees" means for any Distribution Date the sum
of (a) the Class A Monthly Servicing Fee, the Class B Monthly Servicing
Fee, the Monthly Credit Enhancement Fee and, as applicable, the Class A
Investment Fee and (b) the portion of the servicing fee allocable to the
investor certificates of each other Series in Group One, any investment
fees for such Series, any Series Enhancement fees and any other similar
fees which are paid out of reallocated investor finance charges for such
Series pursuant to the applicable Supplement.
"Group One Investor Monthly Interest" means for any Distribution Date the
sum of (a) Class A Monthly Interest for such Distribution Date, plus the
amount of any Class A Monthly Interest previously due but not deposited
into the Class A Interest Funding Account on a prior Distribution Date,
plus any additional interest with respect to interest amounts that were due
but not paid on a prior Payment Date, plus Class B Monthly Interest for
such Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not deposited into the Class B Interest Funding Account
on a prior Distribution Date, plus any additional interest with respect to
interest amounts that were due but not paid on a prior Payment Date, plus
the amount, if any, of interest accrued on the Enhancement Invested Amount
(at a rate for any period equal to the weighted average for such period of
the Class A Certificate Rate and the Class B Certificate Rate), and (b) the
aggregate amount of monthly interest, including overdue monthly interest
and interest on such overdue monthly interest, if applicable, for all other
Series in Group One for such Distribution Date.
The chart below demonstrates the manner in which collections of Finance
Charge Receivables are allocated and reallocated among Series in Group One. The
chart assumes that the Trust has issued three Series (Series 97-1, 97-2 and 97-
3) and that each such Series is in its Revolving Period. However, the Trust
previously has issued other Series in Group One and there is no limit to the
number of Series which may be included in Group One or in any other Group.
In Step 1, total collections of Finance Charge Receivables are allocated
among the three Series based on the Series Allocation Percentage for each
Series. The amount allocated to each Series pursuant to Step 1 is referred to
as "Series Allocable Finance Charge Collections". See "Master Trust
Provisions--Allocations among Series".
In Step 2, the amount of Finance Charge Collections allocable to the investor
certificates of a Series (or Investor Finance Charges) is determined by (a)
multiplying Series Allocable Finance Charge Collections for each Series by the
Floating Allocation Percentage and (b) subtracting any Servicer Interchange.
See "Allocation Between Investor Certificateholders and the Banks" and see also
"--Group One Investor Finance Charges".
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<PAGE>
Investor Finance Charges for all Series in the Group (or Group One Investor
Finance Charges) are pooled as shown in Step 3 for reallocation to each such
Series as shown in Step 4. In Step 4, Group One Investor Finance Charges are
reallocated to each Series in Group One as described above based on the Series'
respective claim with respect to interest payable on the investor certificates
of such Series, the investor default amounts and the servicing fee and certain
other amounts in respect of such Series. The excess is allocated pro rata among
the Series based on their respective invested amounts.
36
<PAGE>
Citibank Credit Card Master Trust I
Finance Charge Collections
-------------------------------------------------------
Series 1997-1 Series 1997-2 Series 1997-3
Series Series Series
Allocable Allocable Allocable
Finance Charge Finance Charge Finance Charge
Collections Collections Collections
(based upon the (based upon the (based upon the
Series Series Series
Allocation Allocation Allocation
Percentage) Percentage) Percentage)
-------------- -------------- --------------
Investor Investor Investor
Finance Finance Finance
Banks' Charges Banks' Charges Banks' Charges
Finance (based upon Finance (based upon Finance (based upon
Charges the Charges the Charges the
Floating Floating Floating
Allocation Allocation Allocation
Percentage) Percentage) Percentage)
-------------------------------------------------------
Group One Investor Finance Charges
---------------------------
Series 97-1 Investor Monthly Interest
Series 97-2 Investor Monthly Interest
Series 97-3 Investor Monthly Interest
---------------------------
Series 97-1 Investor Default Amount
Series 97-2 Investor Default Amount
Series 97-3 Investor Default Amount
---------------------------
Series 97-1 Investor Monthly Fees
Series 97-2 Investor Monthly Fees
Series 97-3 Investor Monthly Fees
---------------------------
Series 97-1 Investor Additional Amounts
Series 97-2 Investor Additional Amounts
Series 97-3 Investor Additional Amounts
--------------------------
Series 97-1 Balance based upon Invested Amount
Series 97-2 Balance based upon Invested Amount
Series 97-3 Balance based upon Invested Amount
- -------------------------------------------------------------------------------
[Chart showing manner in which collections of Finance Charge Receivables are
allocated and reallocated among Series in Group One as described on pages 35 and
36.]
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<PAGE>
Investor Principal Collections for all Series
Investor Principal Collections for any Due Period will first be allocated to
cover Subordinated Principal Collections to the extent necessary to fund the
Required Amount, if any, for such Due Period and, with respect to the
Accumulation Period, required deposits to the Class A Principal Funding Account
or payments to the Class B Certificateholders or, with respect to any Early
Amortization Period, payments to the Investor Certificateholders and, following
the payment in full of the Investor Certificates, to the Credit Enhancer to the
extent of the Enhancement Invested Amount, if any. See "--Allocations,
Reallocations and Subordination Within a Series--Subordination" and "--Class A
and Class B Investor Principal Collections". The Servicer will determine the
amount of Investor Principal Collections for any Due Period (plus certain other
amounts described under "--Allocations, Reallocations and Subordination Within
a Series--Class A and Class B Investor Principal Collections") remaining after
such required payments and deposits and the amount of any similar excess for
any other Series ("Excess Principal Collections"). The Servicer will allocate
the Excess Principal Collections to cover any principal distributions to
investor certificateholders and deposits to principal funding accounts for any
Series which are either scheduled or permitted and which have not been covered
out of the investor principal collections and certain other amounts for such
Series ("Principal Shortfalls"). Excess Principal Collections will generally
not be used to cover investor charge-offs for any Series. If Principal
Shortfalls exceed Excess Principal Collections for any Due Period, Excess
Principal Collections will be allocated pro rata among the applicable Series
based on the relative amounts of Principal Shortfalls; provided that in such
allocation all other Series will have priority over any Series whose terms
permit the Servicer to extend the initial principal payment date, and then only
to the extent that the principal shortfall for such Series is greater than such
principal shortfall would otherwise have been due to the election by the
Servicer not to extend the initial principal payment date. To the extent that
Excess Principal Collections exceed Principal Shortfalls, the balance will be
allocated to the Banks, unless the Banks' Interest in Principal Receivables at
such time (after giving effect to any new Receivables transferred to the Trust)
is zero. Any amount not allocated to the Banks because their interest in
Principal Receivables is zero will be held unallocated ("Unallocated Principal
Collections") until the Banks' Interest in Principal Receivables is greater
than zero (at which time such amount will be allocated to the Banks) or until
an early amortization event occurs or an accumulation period (or amortization
period, if applicable) commences for any Series (after which such amount will
be treated as a Series Allocable Miscellaneous Payment).
Allocations, Reallocations and Subordination Within a Series
Class A and Class B Investor Finance Charges
The Servicer will allocate all Reallocated Investor Finance Charges for each
Distribution Date to the Class A Interest and the Class B Interest pro rata
based on their relative Invested Amounts as of the end of the second preceding
Due Period. In addition, (i) any payment received by the Trustee with respect
to any interest rate cap agreement or interest rate swap agreement established
for the benefit of the Class A Certificates or the Class B Certificates will be
allocated to the Class A Interest or the Class B Interest, as applicable, and
(ii) for each Distribution Date with respect to the Accumulation Period, the
Servicer will allocate that portion of the Gross Amount equal to any Class A
Funding Account Shortfall to the Class A Interest.
(a) The amounts allocated to the Class A Interest as described above will be
further allocated in the following priority; provided, however, that if the
funds available therefor are less than the sum of the amounts specified in
clauses (i), (ii) and (iii) below, such funds will be allocated among such
clauses in proportion to the respective amounts specified in each such clause
and, provided, further, that funds allocated to the Class A Certificateholders
pursuant to clauses (a)(i) and (ii) below will be applied first to the amount
specified under clause (a)(i) below and second to the amount specified under
clause (a)(ii) below:
(i)(A) an amount equal to Class A Monthly Interest for such Distribution
Date, plus the amount of any Class A Monthly Interest previously due but
not deposited into the Class A Interest Funding Account on a prior
Distribution Date, plus any additional interest with respect to interest
amounts that
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were due but not paid on a prior Interest Payment Date or Special Payment
Date at the applicable certificate rate, plus an amount equal to any Class
A Funding Account Shortfall for such Distribution Date, plus the amount of
any Class A Funding Account Shortfall previously due but not deposited into
the Class A Interest Funding Account on a prior Distribution Date, will be
allocated to the Class A Interest Funding Account, and (B) if the Class A
Certificates have the benefit of one or more interest rate swap agreements,
the Class A Net Swap Payment, if any, with respect to such Distribution
Date, plus any Class A Net Swap Payments previously due but not paid will
be allocated to the related swap counterparty or counterparties, as
applicable; provided, however, if the funds available therefor are less
than the sum of the amounts specified in subclauses (i)(A) and (i)(B), such
funds will be allocated between such subclauses in proportion to the
respective amounts in each such subclause;
(ii) an amount equal to the aggregate Class A Investor Default Amount for
such Distribution Date will be allocated in the same manner as Investor
Principal Collections for such Distribution Date;
(iii) an amount equal to the Class A Monthly Servicing Fee for such
Distribution Date will be allocated to the Servicer;
(iv) during the originally scheduled Accumulation Period, an amount equal
to any Class A Investment Fee for such Distribution Date will be allocated
to the Banks; and
(v) the balance, if any, will constitute a portion of Excess Finance
Charge Collections for such Distribution Date and will be allocated as
described under "--Excess Finance Charge Collections" below.
(b) The amounts allocated to the Class B Interest as described above will be
further allocated in the following priority; provided, however, that if the
funds available therefor are less than the sum of the amounts specified in
clauses (i) and (ii) below, such funds will be allocated between such clauses
in proportion to the respective amounts specified in each such clause:
(i) (A) an amount equal to Class B Monthly Interest for such Distribution
Date, plus the amount of any Class B Monthly Interest previously due but
not deposited into the Class B Interest Funding Account on a prior
Distribution Date, plus any additional interest with respect to interest
amounts that were due but not paid on a prior Interest Payment Date or
Special Payment Date at the applicable certificate rate, will be allocated
to the Class B Interest Funding Account, and (B) if the Class B
Certificateholders have the benefit of one or more interest rate swap
agreements, the Class B Net Swap Payment, if any, with respect to such
Distribution Date, plus any Class B Net Swap Payments previously due but
not paid will be allocated to the related swap counterparty or
counterparties, as applicable; provided, however, if the funds available
therefor are less than the sum of the amounts specified in subclauses (i)
(A) and (i) (B), such funds will be allocated between such subclauses in
proportion to the respective amounts in each such subclause;
(ii) an amount equal to the Class B Monthly Servicing Fee for such
Distribution Date will be allocated to the Servicer; and
(iii) the balance, if any, will constitute a portion of Excess Finance
Charge Collections for such Distribution Date and will be allocated as
described under "--Excess Finance Charge Collections" below.
"Class A Funding Account Payment" means, with respect to any Distribution
Date, the product of the Class A Net Swap Payment for such Distribution Date
and a fraction, the numerator of which is the Class A Principal Funding Account
Balance as of the close of business on the preceding Distribution Date and the
denominator of which is the outstanding principal amount of the Class A
Certificates as of the close of business on the preceding Distribution Date.
"Class A Funding Account Receipt" means, with respect to any Distribution
Date, the product of the Class A Net Swap Receipt or the Class A Net Cap
Receipt for such Distribution Date, as applicable, and a fraction, the
numerator of which is the Class A Principal Funding Account Balance as of the
close of business on the preceding Distribution Date and the denominator of
which is the outstanding principal amount of the Class A Certificates as of the
close of business on the preceding Distribution Date.
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"Class A Investment Fee" means a fee payable to the Banks on each
Distribution Date with respect to the originally scheduled Accumulation Period,
commencing on the second such Distribution Date, initially equal to the amount
specified in the related Prospectus Supplement and declining for each
Distribution Date thereafter.
"Class A Investor Default Amount" means, with respect to any Distribution
Date, the product of (a) the Floating Allocation Percentage of Series Allocable
Defaulted Receivables for such Distribution Date and (b) a fraction, the
numerator of which is equal to the Class A Invested Amount as of the last day
of the second preceding Due Period and the denominator of which is equal to the
Invested Amount as of such last day.
"Class A Monthly Interest" has the meaning specified in the related
Prospectus Supplement.
"Class A Net Cap Receipt", if applicable, has the meaning specified in the
related Prospectus Supplement.
"Class A Net Swap Payment", if applicable, has the meaning specified in the
related Prospectus Supplement.
"Class A Net Swap Receipt", if applicable, has the meaning specified in the
related Prospectus Supplement.
"Class B Investor Default Amount" means, with respect to any Distribution
Date, the product of (a) the Floating Allocation Percentage of the Series
Allocable Defaulted Receivables for such Distribution Date and (b) a fraction,
the numerator of which is equal to the Class B Invested Amount as of the last
day of the second preceding Due Period and the denominator of which is equal to
the Invested Amount as of such last day.
"Class B Monthly Interest" has the meaning specified in the related
Prospectus Supplement.
"Class B Net Swap Payment", if applicable, has the meaning specified in the
related Prospectus Supplement.
"Interest Calculation Date" means each Distribution Date (or, if Interest
Payment Dates are not Distribution Dates, the fifteenth day of the relevant
calendar month or, if such day is not a business day, the next succeeding
business day).
"Interest Payment Date", with respect to a class of Investor Certificates,
has the meaning specified in the related Prospectus Supplement.
"Interest Period" means, with respect to a Payment Date for a class of
Investor Certificates, a period from and including the preceding Payment Date
with respect to such class to but excluding such Payment Date; provided,
however, that the first Interest Period with respect to a class of Investor
Certificates will commence on the related Series Issuance Date.
"Payment Date" means, with respect to a class of Investor Certificates, each
Interest Payment Date with respect to such class and each Special Payment Date.
"Special Payment Date" means each Distribution Date with respect to any Early
Amortization Period (or, if Interest Payment Dates are not Distribution Dates,
the fifteenth day of each calendar month (or, if such day is not a Business
Day, the next succeeding Business Day) with respect to any Early Amortization
Period, provided that in such case the first Special Payment Date shall occur
in the Due Period following the Due Period in which the related Early
Amortization Event is deemed to have occurred).
"Excess Finance Charge Collections" means, with respect to any Distribution
Date, an amount equal to the sum of the amounts described in clauses (a)(v) and
(b)(iii) above.
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Excess Finance Charge Collections
For each Distribution Date, the Servicer will allocate Excess Finance Charge
Collections with respect to the Due Period immediately preceding such
Distribution Date, in the following priority:
(a) an amount equal to the Required Amount, if any, with respect to such
Due Period will be used to fund the 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 on such Distribution Date of Series Allocable Miscellaneous
Payments with respect to such Distribution Date) will be allocated in the
same manner as Investor Principal Collections for such Distribution Date;
(c) (i) an amount equal to interest which has accrued with respect to the
outstanding aggregate principal amount of the Class B Certificates at the
Class B Certificate Rate but has not been deposited into the Class B
Interest Funding Account either on such Distribution Date or on a prior
Distribution Date will be allocated to the Class B Interest Funding
Account, and (ii) if the Class B Certificateholders have the benefit of one
or more interest rate swap agreements, an amount equal to the Class B Net
Swap Payments due, but which has not paid, with respect to such
Distribution Date and prior Distribution Dates will be allocated to the
related swap counterparty or swap counterparties, as applicable; provided,
however, if the funds available therefor are less than the sum of the
amounts specified in the subclauses (c) (i) and (c) (ii), such funds will
be allocated between such subclauses in proportion to the respective
amounts in each such subclause;
(d) an amount equal to the interest which has accrued at the Class B
Certificate Rate on any interest due but not paid to Class B
Certificateholders on any previous Interest Payment Date or Special Payment
Date will be allocated to the Class B Interest Funding Account;
(e) an amount equal to the aggregate Class B Investor Default Amount for
such Distribution Date will be allocated in the same manner as Investor
Principal Collections for such Distribution Date;
(f) an amount equal to the aggregate amount by which the Class B Invested
Amount has been reduced pursuant to clauses (c), (d) and (e) of the
definition of "Class B Invested Amount" (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed) will
be allocated in the same manner as Investor Principal Collections for such
Distribution Date;
(g) an amount equal to the monthly credit enhancement fee (the "Monthly
Credit Enhancement Fee") for such Distribution Date (as defined in the
agreement (the "Credit Enhancement Agreement") among the Banks, the
providers of Credit Enhancement and the Trustee) will be allocated to the
Credit Enhancer;
(h) an amount equal to the aggregate amount by which the Enhancement
Invested Amount has been reduced pursuant to clauses (b) and (c) of the
definition of "Enhancement Invested Amount" (but not in excess of the
aggregate amount of such reductions which have not been previously
reimbursed) will be allocated in the same manner as Investor Principal
Collections for such Distribution Date;
(i) prior to the date on which the Credit Enhancement terminates (as
described under "--Series Enhancements--Credit Enhancement Generally"), an
amount up to the excess of the Initial Enhancement Amount over the
Available Enhancement Amount will be used to increase the Available
Enhancement Amount (up to the Initial Enhancement Amount); and
(j) the balance, if any, will be allocated to the providers of Credit
Enhancement for application in accordance with the provisions of the Credit
Enhancement Agreement.
Subordination
The fractional undivided interest in the Trust represented by the Class B
Certificates will be subordinated to the extent described herein to fund
payments with respect to the Class A Certificates. The Class B Invested Amount
represents the Class B Certificateholders' allocable interest in the Trust
Assets and represents the subordinated amount which, in addition to the
Available Shared Enhancement Amount, is available to fund payments with respect
to the Class A Certificates. See "--Series Enhancements".
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On each Determination Date (or, if the Class A Certificates have the benefit
of one or more interest rate cap agreements or interest rate swap agreements,
on such later date as is necessary to enable the Servicer to take account of
any payment to be made by a cap provider or a swap counterparty, as the case
may be, pursuant to such agreement), the Servicer will determine the amount of
any deficiency between (A) the sum of (a) the amount of Reallocated Investor
Finance Charges allocated to the Class A Interest, plus (b) if applicable, the
amount of any payment made by any such provider or counterparty to the Trust
for the benefit of the Class A Certificateholders pursuant to any such interest
rate cap agreement or interest rate swap agreement with respect to the
following Distribution Date (but excluding from such payments the amount of any
Class A Funding Account Receipt received by the Trust), minus (c) if Citibank
(South Dakota) or an affiliate thereof is the Servicer, the amount paid
pursuant to clause (a)(iii) of the first paragraph under the preceding caption
"Class A and Class B Investor Finance Charges" and (B) the amount needed to
cover the sum of (a) amounts described in clauses (a) (i) and (ii) of the first
paragraph under the preceding caption "Class A and Class B Investor Finance
Charges" (but not including any Class A Funding Account Shortfall or any
applicable Class A Funding Account Payment), plus (b) if Citibank (South
Dakota) or an affiliate thereof is no longer the Servicer, the Class A Monthly
Servicing Fee (the amount of such deficiency being herein referred to as the
"Required Amount"). If the Required Amount is greater than zero, Excess Finance
Charge Collections for the related Distribution Date will be allocated to the
Required Amount with respect to such Distribution Date. If Excess Finance
Charge Collections with respect to such Distribution Date are less than the
Required Amount, a draw will be made under the Credit Enhancement in an amount
up to the lesser of (a) the Available Shared Enhancement Amount on such
Distribution Date and (b) such shortfall. If the Available Shared Enhancement
Amount on such Distribution Date is not sufficient to fund such shortfall, an
amount up to the product of (a) the Floating Allocation Percentage, with
respect to the Revolving Period, or the Principal Allocation Percentage, with
respect to the Accumulation Period or any Early Amortization Period, of Series
Allocable Principal Collections for such Due Period and (b) a fraction, the
numerator of which is equal to the Class B Invested Amount as of the close of
business on the last day of the second preceding Due Period and the denominator
of which is equal to the Invested Amount at the close of business on such day,
will then be allocated to fund the remaining Required Amount. The portion of
Series Allocable Principal Collections determined in accordance with the
preceding sentence is herein referred to as "Subordinated Principal
Collections". The Enhancement Invested Amount, if any, will be reduced by the
amount of Subordinated Principal Collections allocated to fund the Required
Amount. In the event that such reduction would cause the Enhancement Invested
Amount to be a negative number, the Enhancement Invested Amount will be reduced
to zero, and the Class B Invested Amount will be reduced by the amount by which
the Enhancement Invested Amount would have been reduced below zero. However, in
the absence of the occurrence of an Economic Early Amortization Event and a
related draw under the Credit Enhancement to pay principal of the Investor
Certificates, the Enhancement Invested Amount will be zero.
If Subordinated Principal Collections with respect to any Due Period are
insufficient to fund the remaining Required Amount for such Due Period, then a
portion of the Enhancement Invested Amount, if any, equal to such insufficiency
(but not in excess of the Class A Investor Default Amount for such Due Period)
will be allocated to the Class A Certificates and the Enhancement Invested
Amount will be reduced by the amount so allocated. In the event that such
allocation would cause the Enhancement Invested Amount to be a negative number,
the Enhancement Invested Amount will be reduced to zero, and the Class B
Invested Amount will be reduced by the amount by which the Enhancement Invested
Amount would have been reduced below zero (but not by more than the excess, if
any, of the Class A Investor Default Amount for such Due Period over the amount
of such reduction, if any, of the Enhancement Invested Amount with respect to
such Due Period).
Such reductions of the Class B Invested Amount shall thereafter be reimbursed
and the Class B Invested Amount increased (but not by an amount in excess of
the aggregate reductions of the Class B Invested Amount) on each Distribution
Date by the sum of (a) Series Allocable Miscellaneous Payments with respect to
such Distribution Date (but only to the extent such amount is not required to
reimburse Class A Investor Charge-Offs with respect to such Distribution Date)
and (b) Excess Finance Charge Collections for such
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Distribution Date allocated and available for that purpose. See "--Investor
Charge-Offs". In addition, any such reductions of the Enhancement Invested
Amount shall thereafter be reimbursed and the Enhancement Invested Amount
increased (but not by an amount in excess of the aggregate reductions of the
Enhancement Invested Amount) on each Distribution Date by the sum of (a) Series
Allocable Miscellaneous Payments (but only to the extent such amounts are not
required to reimburse Class A Investor Charge-Offs or Class B Investor Charge-
Offs) and (b) Excess Finance Charge Collections for such Distribution Date
allocated and available for that purpose.
To the extent the Class B Invested Amount is decreased, the portion of
Reallocated Investor Finance Charges allocated to the Class B
Certificateholders in subsequent Due Periods will be reduced. Moreover, to the
extent the amount of such decrease in the Class B Invested Amount is not
reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced. If the Class B Invested Amount is reduced
to zero, the Class A Invested Amount will be reduced if the Required Amount for
any Due Period exceeds the sum of Excess Finance Charge Collections, the
Available Shared Enhancement Amount and Subordinated Principal Collections for
such Due Period, but not in excess of the Class A Investor Default Amount for
such Due Period, and the Class A Certificateholders will bear directly the
credit and other risks associated with their undivided interest in the Trust.
Class A Investor Charge-Offs will thereafter be reimbursed and the Class A
Invested Amount increased (but not by an amount in excess of the aggregate
Class A Investor Charge-Offs) on any Distribution Date by the sum of (a) Series
Allocable Miscellaneous Payments with respect to such Distribution Date and (b)
the amount of Excess Finance Charge Collections allocated and available for
that purpose. See "--Investor Charge-Offs".
Class A and Class B Investor Principal Collections
On each Distribution Date, the Servicer will allocate the sum of Investor
Principal Collections (other than Subordinated Principal Collections used to
fund any amounts other than the Class A Investor Default Amount), Excess
Principal Collections, if any, from other Series allocated to the Investor
Certificates and any reallocated amounts described in the preceding paragraphs
which are to be allocated as Investor Principal Collections, in each case for
the preceding Due Period (collectively, the "Available Investor Principal
Collections" for such Distribution Date), and will allocate such amounts as
follows:
(a) For each Distribution Date with respect to the Revolving Period, all
Available Investor Principal Collections will be allocated to Excess
Principal Collections (see "--Reallocations Among Investor Certificates of
Different Series--Investor Principal Collections for all Series");
(b) For each Distribution Date with respect to the Accumulation Period or
any Early Amortization Period, all Available Investor Principal Collections
will be allocated in the following priority:
(i) an amount equal to Class A Monthly Principal for such
Distribution Date will be allocated to the Class A Principal Funding
Account;
(ii) an amount equal to Class B Monthly Principal for such
Distribution Date will be distributed to the Class B
Certificateholders;
(iii) an amount up to the Enhancement Invested Amount, if any, will
be distributed to the Credit Enhancer for application in accordance
with the provisions of the Credit Enhancement Agreement; and
(iv) the balance, if any, will be allocated to Excess Principal
Collections.
Principal will not be payable to the Credit Enhancer with respect to the
Enhancement Invested Amount, if any, until the Class A Certificates and the
Class B Certificates have been paid in full.
"Class A Controlled Distribution Amount" for any Distribution Date with
respect to the Accumulation Period means an amount equal to the sum of the
Class A Controlled Amortization Amount and any then-existing Class A Deficit
Controlled Amortization Amount.
"Class A Controlled Amortization Amount" means the amount specified as such
in the related Prospectus Supplement.
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"Class A Deficit Controlled Amortization Amount" means, on the first
Distribution Date with respect to the Accumulation Period, the excess, if any,
of the Class A Controlled Amortization Amount over the amount distributed as
Class A Monthly Principal for such Distribution Date and, on each subsequent
Distribution Date with respect to the Accumulation Period, the excess, if any,
of the Class A Controlled Amortization Amount and any then existing Class A
Deficit Controlled Amortization Amount over the Class A Monthly Principal
distributed on such Distribution Date.
"Class A Monthly Principal" with respect to any Distribution Date relating to
the Accumulation Period or any Early Amortization Period will equal the
Available Investor Principal Collections for such Distribution Date; provided,
however, that for each Distribution Date with respect to the Accumulation
Period, Class A Monthly Principal may not exceed the Class A Controlled
Distribution Amount for such Distribution Date; and provided further that Class
A Monthly Principal may not exceed the Class A Invested Amount.
"Class B Monthly Principal" with respect to any Distribution Date relating to
the Accumulation Period or any Early Amortization Period, commencing with the
Class B Principal Commencement Date, will equal the Available Investor
Principal Collections for such Distribution Date (minus the portion of such
Available Investor Principal Collections applied to Class A Monthly Principal
on such Distribution Date); provided, however, that the Class B Monthly
Principal may not exceed the Class B Invested Amount.
"Class B Principal Commencement Date" means the Distribution Date on which
the Class A Invested Amount is paid in full or, if the Class A Invested Amount
is paid in full on the Class A Expected Final Payment Date and an Early
Amortization Period has not commenced, the Class B Expected Final Payment Date
(or, if Interest Payment Dates are not Distribution Dates, the Distribution
Date immediately preceding the Payment Date on which the Class A Invested
Amount is paid in full or, if the Class A Invested Amount is paid in full on
the Class A Expected Final Payment Date and an Early Amortization Period has
not commenced, the Distribution Date following the Class A Expected Final
Payment Date).
PRINCIPAL FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account for the benefit of the Class A
Certificateholders (the "Class A Principal Funding Account"). Class A Monthly
Principal will be deposited in the Class A Principal Funding Account as
described above under "--Principal".
Provided that an Early Amortization Event has not occurred, all amounts on
deposit in the Class A Principal Funding Account (the "Class A Principal
Funding Account Balance") on any Distribution Date (after giving effect to
distributions to be made on such Distribution Date) will be invested from the
date of deposit to the Class A Expected Final Payment Date by the Trustee at
the direction of the Servicer in Eligible Investments. On each Distribution
Date with respect to the Accumulation Period and on the first Special Payment
Date, if any, thereafter, the interest and other investment income (net of
investment expenses) earned on such investments (the "Class A Investment
Proceeds") up to an amount (the "Class A Covered Amount") equal to the product
of (a) the Class A Certificate Rate (or, if the Class A Certificates have the
benefit of an interest rate cap agreement or interest rate swap agreement and
provided that the cap provider or swap counterparty, as the case may be, has
not defaulted in the performance of its obligations under its agreement on or
prior to such Distribution Date (and, with respect to any interest rate cap
agreement, in the event the Class A Certificate Rate exceeds the cap rate), the
cap rate or swap rate, as the case may be), (b) the Class A Principal Funding
Account Balance and (c) a fraction the numerator of which is the number of days
from and including the prior Interest Calculation Date to but excluding the
succeeding Interest Calculation Date (calculated on the same basis as the Class
A Certificate Rate) and the denominator of which is 360, will be withdrawn from
the Class A Principal Funding Account and deposited into the Class A Interest
Funding Account. The excess, if any, of the Class A Investment Proceeds over
the Class A Covered Amount (the "Class A Excess Investment Proceeds") will be
withdrawn from the Class A Principal Funding Account
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on each such Distribution Date and will be included in the Gross Amount and
allocated as described above under "--Allocations, Reallocations and
Subordination--Allocation Between Investor Certificateholders and the Banks".
For each Distribution Date with respect to the Accumulation Period, a portion
of the Gross Amount generally equal to the sum of (a) the Floating Allocation
Percentage of Series Allocable Finance Charge Collections and (b) the excess of
the Class A Covered Amount over the related Class A Investment Proceeds (the
"Class A Funding Account Shortfall") will be allocated to the Investor
Certificateholders (provided that, solely for the purpose of determining Class
A Funding Account Shortfall, as such term is used in clause (a)(i)(A) in "--
Allocations, Reallocations and Subordination--Allocations, Reallocations and
Subordination within a Series--Class A and Class B Investor Finance Charges",
Class A Covered Amount will always be determined with reference to the Class A
Certificate Rate). See "--Allocations, Reallocations and Subordination--
Allocation Between Investor Certificateholders and the Banks".
DISTRIBUTIONS
Payments to Class A Certificateholders will be made from the Class A Interest
Funding Account and from the Class A Principal Funding Account (the "Class A
Funding Accounts") and payments to Class B Certificateholders will be made from
the Class B Interest Funding Account and from the Collection Account. The
Servicer shall instruct the Trustee to apply the funds on deposit in such
accounts to make the following distributions:
(a) On each Interest Payment Date with respect to a class of Investor
Certificates and on each Special Payment Date, all amounts on deposit in
the Interest Funding Account with respect to such class will be distributed
to Certificateholders of such class;
(b) On each Special Payment Date, on the Class A Expected Final Payment
Date and on any other principal payment date provided with respect to a
particular Series, the Class A Principal Funding Account Balance (and, on
the first Special Payment Date following an Economic Early Amortization
Event, the amount, if any, drawn under the Credit Enhancement to pay
principal of the Class A Certificates) shall be distributed to Class A
Certificateholders up to a maximum amount on any such date equal to the
Class A Invested Amount on such date (unless there has been an optional
repurchase of the Class A Interest due to the failure to find a successor
Servicer upon a Servicer Default, in which event the foregoing limitation
shall not apply); and
(c) On each Special Payment Date following the payment in full of the
Class A Certificates, on the Class B Expected Final Payment Date and on any
other principal payment date provided with respect to a particular Series,
the amount to be distributed to Class B Certificateholders as described
under "--Allocations, Reallocations and Subordination--Allocations,
Reallocations and Subordination Within a Series--Class A and Class B
Investor Principal Collections" (and, on the first Special Payment Date
following an Economic Early Amortization Event, the amount, if any, drawn
under the Credit Enhancement to pay principal of the Class B Certificates)
shall be distributed to Class B Certificateholders up to a maximum amount
on any such date equal to the unpaid principal amount of the Class B
Certificates on such date (unless there has been an optional repurchase of
the Class B Interest due to the failure to find a successor Servicer upon a
Servicer Default, in which event the foregoing limitation shall not apply).
The paying agent (the "Paying Agent") shall initially be Citibank, N.A. The
Paying Agent shall have the revocable power to withdraw funds from such
accounts for the purpose of making distributions to Investor
Certificateholders.
DEFAULTED RECEIVABLES; RECOVERIES; REBATES AND FRAUDULENT CHARGES
"Defaulted Receivables" for any Due Period are Principal Receivables which
were charged-off as uncollectible in such Due Period. The amount of Defaulted
Receivables for any Due Period will be an amount
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(not less than zero) equal to (a) the amount of the Principal Receivables that
were charged-off in such Due Period less (b) the sum of (i) the amount of any
Defaulted Receivables of which the Banks or the Servicer becomes obligated to
accept reassignment or assignment during such Due Period unless certain events
of bankruptcy, insolvency or receivership have occurred with respect to the
Banks or the Servicer, in which event the amount of such Defaulted Receivables
will not be added to the sum so subtracted, (ii) the aggregate amount of
recoveries received in such Due Period with respect to Principal Receivables
previously charged-off as uncollectible and (iii) the excess, if any, for the
immediately preceding Due Period of the sum computed pursuant to this clause
(b) for such Due Period over the amount of Principal Receivables which became
Defaulted Receivables in such Due 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. The current policy of the Servicer is to charge off the receivables
in an account when that account becomes 185 days delinquent or, in general, if
the Servicer receives notice that a cardholder has filed for bankruptcy or has
had a bankruptcy petition filed against it, the Servicer will charge off the
receivables in such account not later than 60 days after the Servicer receives
such notice.
If the Servicer adjusts downward the amount of any Receivable because of a
rebate, refund, unauthorized charge, billing error or certain other noncash
items to a cardholder, or because such Receivable was created in respect of
merchandise which was refused or returned by a cardholder, or if the Servicer
charges off as uncollectible certain small balances, the principal amount of
the Banks' Interest in Principal Receivables will be reduced by the amount of
such adjustment or charge-off. In addition, the principal amount of the Banks'
Interest in Principal Receivables will be reduced by the amount of any
Receivable which was discovered as having been created through a fraudulent or
counterfeit charge or which was subject to certain liens specified in the
Pooling Agreement. After any such reduction in the amount of the Banks'
Interest in Principal Receivables occurs, the amount of such Receivables
described above will be deducted from Principal Receivables used in the
calculation of the principal allocation percentage and the floating allocation
percentage applicable to any Series. Furthermore, to the extent that the
reduction in the amount of the Banks' Interest in Principal Receivables would
reduce such interest below zero, the Banks will deposit into the Collection
Account in immediately available funds an amount equal to the amount by which
the Banks' Interest in Principal Receivables would be reduced below zero (an
"Adjustment Payment") on the Distribution Date following such Due Period.
INVESTOR CHARGE-OFFS
On each Distribution Date, if the Required Amount for such Distribution Date
exceeds the sum of Excess Finance Charge Collections, the Available Shared
Enhancement Amount and Subordinated Principal Collections with respect to such
Distribution Date, the Enhancement Invested Amount, if any, will be reduced by
the amount of such excess, but not by more than the Class A Investor Default
Amount for such Distribution Date. In the event that such reduction would cause
the Enhancement Invested Amount to be a negative number, the Enhancement
Invested Amount will be reduced to zero, and the Class B Invested Amount will
be reduced by the amount by which the Enhancement Invested Amount would have
been reduced below zero, but not by more than the excess, if any, of the Class
A Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Enhancement Invested Amount with respect to such
Distribution Date. In the event that such reduction would cause the Class B
Invested Amount to be a negative number, the Class B Invested Amount will be
reduced to zero, and the Class A Invested Amount will be reduced by the amount
by which the Class B Invested Amount would have been reduced below zero, but
not by more than the excess, if any, of the Class A Investor Default Amount for
such Distribution Date over the aggregate amount of the reductions, if any, of
the Enhancement Invested Amount and the Class B Invested Amount with respect to
such Distribution Date as described above (a "Class A Investor Charge-Off"),
which will have the effect of slowing or reducing the return of principal to
the Class A Certificateholders. If the Class A Invested Amount has been reduced
by the amount of any Class A Investor Charge-Offs, it will thereafter be
increased on any Distribution Date (but not by an amount in excess of the
aggregate Class A Investor Charge-Offs) by the sum of (a) Series Allocable
Miscellaneous
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Payments and (b) the amount of Excess Finance Charge Collections allocated and
available for such purpose as described under "--Allocations, Reallocations and
Subordination--Allocations, Reallocations and Subordination Within a Series--
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 which
are allocated and available for such Distribution Date to fund such amount as
described under "--Excess Finance Charge Collections" and the amount, if any,
drawn under the Credit Enhancement to fund such Class B Investor Default
Amount, the Enhancement Invested Amount, if any, will be reduced by the amount
of such excess. In the event that any such reduction would cause the
Enhancement Invested Amount to be a negative number, the Enhancement Invested
Amount will be reduced to zero, and the Class B Invested Amount will be reduced
by the amount by which the Enhancement Invested Amount would have been reduced
below zero (a "Class B Investor Charge-Off"). The Class B Invested Amount will
thereafter be increased (but not by an amount in excess of the aggregate Class
B Investor Charge-Offs) on any Distribution Date by the sum of (a) Series
Allocable Miscellaneous Payments (but only to the extent such amounts are not
required to reimburse Class A Investor Charge-Offs as described above) and (b)
the amount of Excess Finance Charge Collections allocated and available for
such purpose as described under "--Allocations, Reallocations and
Subordination--Allocations, Reallocations and Subordination Within a Series--
Excess Finance Charge Collections".
Any such reductions of the Enhancement Invested Amount shall thereafter be
reimbursed and the Enhancement Invested Amount increased (but not by an amount
in excess of the aggregate reductions of the Enhancement Invested Amount) on
any Distribution Date by the sum of (a) Series Allocable Miscellaneous Payments
(but only to the extent such amounts are not required to reimburse Class A
Investor Charge-Offs or Class B Investor Charge-Offs as described above) and
(b) the amount of Excess Finance Charge Collections allocated and available for
such purpose as described under "--Allocations, Reallocations and
Subordination--Allocations, Reallocations and Subordination Within a Series--
Excess Finance Charge Collections".
SERIES ENHANCEMENTS
Credit Enhancement Generally
The credit enhancement with respect to the Investor Certificates (the "Credit
Enhancement") may consist of a cash collateral account (a "Cash Collateral
Account") and/or a letter of credit (an "L/C"), in each case in the name of the
Trustee for the benefit of the Investor Certificateholders, and/or any other
form of credit enhancement described in the related Prospectus Supplement.
The "Initial Shared Enhancement Amount" (which will be equal to the sum of
the Initial Shared Collateral Amount, if any, and the Initial Shared L/C
Amount, if any, or will otherwise be specified in the related Prospectus
Supplement) will be for the benefit of both the Class A Certificates and the
Class B Certificates, while the "Initial Class B Enhancement Amount" (which
will be equal to the sum of the Initial Class B Collateral Amount, if any, and
the Initial Class B L/C Amount, if any, or will otherwise be specified in the
related Prospectus Supplement) will be for the exclusive benefit of the Class B
Certificates. On each Distribution Date, the "Available Enhancement Amount"
will equal the sum of the Available Cash Collateral Amount, if any, and the
Available L/C Amount, if any, and the "Available Shared Enhancement Amount"
will equal the lesser of (a) the "Initial Shared Enhancement Amount" (which
will be specified in the related Prospectus Supplement) and (b) the excess, if
any, of the Available Enhancement Amount on such Distribution Date over the
Initial Class B Enhancement Amount.
For each Distribution Date, one or more draws will be made under the Credit
Enhancement in an aggregate amount up to the Available Shared Enhancement
Amount on such Distribution Date, to fund the following amounts in the
following priority:
(a) the excess, if any, of the Required Amount with respect to such
Distribution Date over the amount of Excess Finance Charge Collections
allocated and available to fund such Required Amount
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(i) will be deposited in the Class A Interest Funding Account up to the
portion of the Required Amount attributable to interest on the Class A
Certificates and (ii) if the Class A Certificates have the benefit of one
or more interest rate swap agreements, payments due the related swap
counterparty or counterparties, as applicable, will be paid to such swap
counterparty or counterparties up to the portion of the Required Amount
attributable to payments due such swap counterparty or counterparties, and
the remainder will be allocated in the same manner as Investor Principal
Collections for such Distribution Date;
(b) (i) the excess, if any, of the accrued and unpaid interest on the
outstanding principal balance of the Class B Certificates (plus any
interest payable on such unpaid interest) over the amount otherwise to be
deposited in the Class B Interest Funding Account on such Distribution
Date, and (ii) if the Class B Certificateholders have the benefit of one or
more interest rate swap agreements, the excess, if any, of the payments due
the related swap counterparty or counterparties, as applicable, over the
amount otherwise to be paid to such swap counterparty or counterparties,
will be used to fund any such excess as described in clauses (i) and (ii)
above; and
(c) the excess, if any, of the Class B Investor Default Amount for such
Distribution Date over the amount of Excess Finance Charge Collections
allocated and available to fund such Class B Investor Default Amount will
be allocated in the same manner as Investor Principal Collections for such
Distribution Date.
On the first Special Payment Date following an Early Amortization Event
described below in clause (f) or (j) under "--Early Amortization Events" (each,
an "Economic Early Amortization Event"), (a) an amount equal to the lesser of
(i) the Available Shared Enhancement Amount (after giving effect to any draws
under the Credit Enhancement on such date as described above) and (ii) the
unpaid Class A Invested Amount, will be drawn under the Credit Enhancement and
distributed to the Class A Certificateholders as a payment of principal of the
Class A Certificates and (b) an amount equal to the lesser of (i) the remainder
of the Available Enhancement Amount and (ii) the unpaid principal amount of the
Class B Certificates, will be drawn under the Credit Enhancement and
distributed to the Class B Certificateholders as a payment of principal of the
Class B Certificates. Unless otherwise specified in the Prospectus Supplement,
following such draws under the Credit Enhancement on such Special Payment Date,
the Credit Enhancement will be terminated, no further deposits will be made to
the Cash Collateral Account, if any, and, on subsequent Distribution Dates, any
Surplus Finance Charge Collections that would otherwise have been applied to
increase the Available Enhancement Amount up to the Initial Enhancement Amount
(as described under "--Allocations, Reallocations and Subordination--
Allocations, Reallocations and Subordination Within a Series--Excess Finance
Charge Collections"), will instead be applied in accordance with the terms of
any applicable Credit Enhancement Agreement.
On each Distribution Date commencing with the Class B Principal Commencement
Date, a draw will be made under the Credit Enhancement to pay principal with
respect to the Class B Certificates to the extent that the unpaid principal
amount of the Class B Certificates exceeds the Class B Invested Amount on such
Distribution Date, in an amount equal to the lesser of (a) the Available
Enhancement Amount on such Distribution Date (after giving effect to all other
draws under the Credit Enhancement on such Distribution Date as described
above) and (b) such excess.
In the event of a sale of the Receivables and an early termination of the
Trust due to an Insolvency Event, an optional repurchase of the
Certificateholders' Interest by the Banks, a sale of a portion of the
Receivables in connection with the Series Termination Date, a repurchase or
sale of the Certificateholders' Interest and the certificateholders' interest
for all other Series in connection with a Servicer Default or a reassignment of
the Certificateholders' Interest and the certificateholders' interest for all
other Series in connection with a breach by the Bank of certain representations
and warranties (each as described under "--Early Amortization Events", "--
Optional Termination; Final Payment of Principal" or "The Pooling Agreement
Generally--Termination of Trust", "--Representations and Warranties" and "--
Servicer Default"), any Available Enhancement Amount on the related
Distribution Date (after giving effect to all
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other draws under the Credit Enhancement on such Distribution Date as described
above) will be drawn under the Credit Enhancement and the proceeds thereof will
be distributed to Class B Certificateholders to the extent that, after giving
effect to the distribution to the Class B Certificateholders of the proceeds
from such sale or repurchase allocated to the Class B Certificateholders (after
the Class A Invested Amount has been fully paid), the unpaid principal amount
of the Class B Certificates exceeds the Class B Invested Amount.
On each Distribution Date, the Servicer, or the Trustee, acting pursuant to
the Servicer's instructions, will apply Surplus Finance Charge Collections (to
the extent described above under "--Allocations, Reallocations and
Subordination--Allocations, Reallocations and Subordination Within a Series--
Excess Finance Charge Collections") to increase the Available Enhancement
Amount (to the extent such amount is less than the Initial Enhancement Amount).
The Cash Collateral Account
If the Credit Enhancement with respect to any Series includes a Cash
Collateral Account, the Trustee will hold the Cash Collateral Account for the
benefit of the Investor Certificateholders and the provider of Credit
Enhancement, as their interests appear in the Series Supplement, and in the
case of the provider of Credit Enhancement, the applicable Credit Enhancement
Agreement. The Cash Collateral Account will be one or more Eligible Deposit
Accounts; provided, however, that an "Eligible Institution", as such term is
used in the definition of "Eligible Deposit Account" (to the extent of funds in
the Cash Collateral Account that exceed the Available Shared Enhancement
Amount) shall, with respect to Standard & Poor's, have a long-term unsecured
debt rating of at least A, instead of AAA, or a certificate of deposit rating
of at least A-1, instead of A-1+. Funds on deposit in the Cash Collateral
Account will be invested in certain Eligible Investments, although for purposes
of investments of funds in the Cash Collateral Account (to the extent such
funds exceed the Available Shared Enhancement Amount on any date) the term
"highest rating" as used in the definition of "Eligible Investments" shall
include A-1 as well as A-1+, in the case of a short-term rating by Standard &
Poor's.
Unless otherwise specified in the Prospectus Supplement, the Cash Collateral
Account will be funded on the Series Issuance Date in an amount specified in
the related Prospectus Supplement (the "Initial Cash Collateral Amount") from
the proceeds of an advance to be made by one or more financial institutions to
be selected by the Banks (such financial institution or institutions, the "Cash
Collateral Depositor"). Such advance will be repaid pursuant to the applicable
Credit Enhancement Agreement. The Cash Collateral Account will be terminated
following the earliest to occur of (a) the date on which the Investor
Certificates are paid in full, (b) the date on which the entire Available
Enhancement Amount is distributed to the Investor Certificateholders as a
result of the occurrence of an Economic Early Amortization Event and (c) the
Series Termination Date. If the Cash Collateral Account is the sole source of
Credit Enhancement, a portion of the Initial Cash Collateral Amount specified
in the related Prospectus Supplement (the "Initial Shared Collateral Amount")
will be for the benefit of both the Class A Certificates and the Class B
Certificates, and the remainder of the Initial Cash Collateral Amount (the
"Initial Class B Collateral Amount") will be for the exclusive benefit of the
Class B Certificates.
Unless otherwise specified in the Prospectus Supplement, on each Distribution
Date, the amount available to be withdrawn from the Cash Collateral Account
(the "Available Cash Collateral Amount") will be equal to the lesser of the
amount on deposit in the Cash Collateral Account (before giving effect to any
deposit to be made to the Cash Collateral Account on such Distribution Date)
and the Initial Cash Collateral Amount.
The L/C
If the Credit Enhancement with respect to any Series includes a letter of
credit (the "L/C"), the Trustee will hold the L/C for the benefit of the
Investor Certificateholders. The L/C, if any, will have a stated maximum amount
(the "Stated L/C Amount") specified in the related Prospectus Supplement. If
the L/C is the sole source of Credit Enhancement, a portion of the Stated L/C
Amount specified in the related
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Prospectus Supplement, (the "Initial Shared L/C Amount") will be for the
benefit of both the Class A Certificates and the Class B Certificates, and the
remainder of the Stated L/C Amount (the "Initial Class B L/C Amount") will be
for the exclusive benefit of the Class B Certificates. Unless otherwise
specified in the Prospectus Supplement, on each Distribution Date, the amount
available under the L/C (the "Available L/C Amount") will equal the lesser of
(x) the Stated L/C Amount and (y) the Available L/C Amount for the previous
Distribution Date minus all drawings under the L/C with respect to such
previous Distribution Date plus the amount of all distributions made to the L/C
Issuer from the Collection Account out of available Excess Finance Charge
Collections on such previous Distribution Date (less the amount of any such
distributions in respect of interest or fees paid to the L/C Issuer). The L/C
will be terminated following the earliest to occur of (a) the date on which the
Investor Certificates are paid in full, (b) the date on which the entire
Available Enhancement Amount is distributed to the Investor Certificateholders
as a result of the occurrence of an Economic Early Amortization Event and (c)
the Series Termination Date. Information with respect to the issuer of the L/C
(the "L/C Issuer") will be provided in the related Prospectus Supplement.
In the event at any time the debt obligations of the L/C Issuer are
downgraded or withdrawn (such event being referred to as an "L/C Issuer
Downgrade") and, as a result of such L/C Issuer Downgrade, the Rating Agency
reduces (or indicates that it may reduce) the then-current rating of the Class
A Certificates or the Class B Certificates, then the Servicer will, within the
time period specified by the applicable Rating Agency, either (i) replace the
L/C with (x) an irrevocable letter of credit with a stated amount not less than
the Stated L/C Amount and issued by a successor L/C Issuer satisfactory to the
Rating Agency or (y) any other arrangement satisfactory to the Rating Agency;
provided that in either case there is no Ratings Effect; or (ii) cause a draw
to be made under the L/C in an amount equal to the Available L/C Amount and
deposit such amount into an Eligible Deposit Account established by the
Servicer for the benefit of the Investor Certificateholders and the L/C Issuer
(the "L/C Funding Account").
After the establishment and funding of the L/C Funding Account, any amount
which would formerly have been drawn under the L/C will be withdrawn from such
account and any distribution that would formerly have been made to the L/C
Issuer pursuant to clause (i) under "--Allocations, Reallocations and
Subordination--Allocations, Reallocations and Subordination Within a Series--
Excess Finance Charge Collections" will be deposited in the L/C Funding
Account.
Other Series Enhancements
Any other Series Enhancement with respect to a Series, including, but not
limited to, interest rate swap agreements, interest rate cap agreements or
other similar arrangements will be described in the related Prospectus
Supplement.
EARLY AMORTIZATION EVENTS
As described above, the Revolving Period will continue until the commencement
of the Accumulation Period, which will continue until the Class A Invested
Amount and the Class B Invested Amount have been paid in full, unless an Early
Amortization Event occurs prior to any of such dates. An "Early Amortization
Event" refers to any of the following events and any other events specified as
such in the related Prospectus Supplement:
(a) failure on the part of either of the Banks (i) to make any payment or
deposit required under the Pooling Agreement or any Supplement within five
business days after the date such payment or deposit is required to be
made; or (ii) to observe or perform any other covenants or agreements of
the Banks set forth in the Pooling Agreement or any Supplement, which
failure has a material adverse effect on the investor certificateholders of
any Series and which continues unremedied for a period of 60 days after
written notice;
(b) any representation or warranty made by the Banks in the Pooling
Agreement or any Supplement or any information required to be given by the
Banks to the Trustee to identify the Accounts proves to have been incorrect
in any material respect when made and continues to be incorrect in any
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material respect for a period of 60 days after written notice and as a
result of which the interests of the investor certificateholders of any
Series are materially and adversely affected; provided, however, that an
Early Amortization Event shall not be deemed to occur thereunder if the
Banks have repurchased the related Receivables or all such Receivables, if
applicable, during such period in accordance with the provisions of the
Pooling Agreement;
(c) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to either of the Banks;
(d) a failure by the Banks to make a Lump Sum Addition to the Trust
within five business days after the day on which they are required to make
such Lump Sum Addition pursuant to the Pooling Agreement;
(e) the Trust becomes an investment company within the meaning of the
Investment Company Act;
(f) the amount of Surplus Finance Charge Collections averaged over a
period of three consecutive Due Periods is less than or equal to the
Required Surplus Finance Charge Amount for the last of such three
consecutive Due Periods;
(g) the occurrence of any Servicer Default;
(h) on any Determination Date, the Class B Invested Amount on the next
Distribution Date will be less than 1% of the initial aggregate principal
amount of the Investor Certificates (or, if applicable with respect to a
particular Series, the highest invested amount during the related Due
Period, or, during any accumulation period, scheduled amortization period,
early amortization period or class A amortization period, the highest
invested amount during the Due Period preceding the first Due Period with
respect to such accumulation period, scheduled amortization period, early
amortization period or class A amortization period);
(i) on the last day of any Due Period during the Accumulation Period, the
product of (i) the total amount of Principal Receivables as of such last
day, (ii) the Series Allocation Percentage with respect to the Investor
Certificates for such Due Period and (iii) the excess of 100% over the
Floating Allocation Percentage for such Due Period, fails to equal at least
100% of the Class A Principal Funding Account Balance as of such last day;
(j) any reduction of the Portfolio Yield for any Due Period during the
Accumulation Period to a rate below the weighted average certificate rate
for all Series in the Group (provided that, if the certificate rate for a
class or Series is a floating rate, such calculation shall be determined
after giving effect to the benefit of any related interest rate cap
agreement or interest rate swap agreement);
(k) the failure to pay in full the Class A Invested Amount on the Class A
Expected Final Payment Date or the Class B Invested Amount on the Class B
Expected Final Payment Date;
(l) either of the Banks is unable for any reason to transfer Receivables
to the Trust in accordance with the Pooling Agreement;
(m) in the event that any Series Enhancement includes one or more
interest rate cap agreements or interest rate swap agreements, the failure
of any interest rate cap provider or any swap counterparty, as the case may
be, to make a payment under such agreement within five days of the date
such payment was due; or
(n) in the event that any Series Enhancement includes one or more
interest rate cap agreements or interest rate swap agreements, the failure
of the Servicer, within 30 days of the date on which the debt ratings of
any interest rate cap provider or any swap counterparty, as the case may
be, fall below the required ratings of any of the Ratings Agencies as
specified in the related Series Supplement, to (i) obtain a replacement
interest rate cap agreement or interest rate swap agreement, as the case
may be, with terms substantially the same as such downgraded interest rate
cap agreement or interest rate swap agreement or (ii) establish any other
arrangement satisfactory to the applicable Rating Agency, in any case such
that the Rating Agency will not reduce or withdraw its ratings of the
Investor Certificates.
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In the case of any event described in (a), (b) or (g), an Early Amortization
Event with respect to any Series will be deemed to have occurred only if, after
the applicable grace period described in such clauses, if any, either the
Trustee or investor certificateholders holding investor certificates evidencing
more than 50% of the aggregate unpaid principal amount of the investor
certificates of any Series to which such event relates by written notice to the
Banks and the Servicer (and to the Trustee, if given by the investor
certificateholders) declare that an Early Amortization Event has occurred as of
the date of such notice. See "Special Considerations--Series Considerations--
Control". In the case of any event described in clause (c), (d), (e) or (l), an
Early Amortization Event with respect to all Series will be deemed to have
occurred without any notice or other action on the part of the Trustee or the
investor certificateholders of any Series immediately upon the occurrence of
such event. In the case of any event described in clause (f), (h), (i), (j),
(k), (m) or (n), an Early Amortization Event with respect to the Series offered
hereby will be deemed to have occurred without any notice or other action on
the part of the Trustee or the Investor Certificateholders immediately upon the
occurrence of such event. The Early Amortization Period will commence on the
day on which the Early Amortization Event occurs. Monthly distributions of
principal to the Class A Certificateholders will begin on the first Special
Payment Date. Any amounts on deposit in the Class A Principal Funding Account
or the Class A Interest Funding Account at such time will be distributed on
such first Special Payment Date to the Class A Certificateholders and any
amounts on deposit in the Class B Interest Funding Account at such time will be
distributed on such first Special Payment Date to Class B Certificateholders;
provided, however, that, except as described in the following sentence,
principal payments with respect to the Class B Certificates will not be made
until the final principal payment has been made with respect to the Class A
Certificates. In addition, on the first Special Payment Date following an
Economic Early Amortization Event, funds will be drawn under the Credit
Enhancement and used to make principal payments with respect to the Investor
Certificates as described under "--Series Enhancements".
In addition to the consequences of an Early Amortization Event discussed
above, if an Insolvency Event occurs, pursuant to the Pooling Agreement, on the
day of such Insolvency Event, the Banks will immediately cease to transfer
Principal Receivables to the Trust and promptly give notice to the Trustee of
such Insolvency Event. Under the terms of the Pooling Agreement, within 15 days
the Trustee will publish a notice of the occurrence of the Insolvency Event
stating that the Trustee intends to sell, dispose of or otherwise liquidate the
Receivables in a commercially reasonable manner and on commercially reasonable
terms unless within 90 days from the date such notice is published each other
holder of the Banks' Certificate and the holders of investor certificates of
each Series or each class of each Series evidencing more than 50% of the
aggregate unpaid principal amount of each such Series or class (and, in the
case of certain Series, any credit enhancer with respect thereto) instruct the
Trustee not to dispose of or liquidate the Receivables and to continue
transferring Principal Receivables as before such Insolvency Event. The
proceeds from any such sale, disposition or liquidation of the Receivables will
be deposited in the Collection Account and allocated as described in the
Pooling Agreement and each Series Supplement. If the portion of such proceeds
allocated to the Class A Interest and the proceeds of any collections on the
Receivables in the Collection Account allocated to the Class A Interest are not
sufficient to pay the Class A Invested Amount in full, the amount of principal
returned to Class A Certificateholders will be reduced and Class A
Certificateholders will incur a loss and no principal will be available to the
Class B Certificateholders, who will also incur a loss. Following any such sale
of the Receivables, however, any Available Enhancement Amount on the related
Distribution Date (after giving effect to certain other draws under the Credit
Enhancement on such Distribution Date as described under "--Series
Enhancements") will be drawn under the Credit Enhancement and distributed to
Class B Certificateholders to the extent that, after giving effect to the
distribution to Class B Certificateholders of the proceeds of the sale
allocated to the Class B Certificateholders, the unpaid principal amount of the
Class B Certificates exceeds the Class B Invested Amount.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses is a monthly servicing fee (the "Trust Servicing Fee") in an
amount equal to the sum of the series servicing fees with respect
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to all Series. The series servicing fee with respect to the Investor
Certificates (the "Series Servicing Fee") shall accrue from the Series Issuance
Date and shall be payable to the Servicer, in arrears, on each Distribution
Date in respect of any Due Period (or portion thereof) occurring prior to the
earlier of the first Distribution Date following the Series Termination Date
and the first Distribution Date on which the Invested Amount and the
Enhancement Invested Amount, if any, are zero, in the aggregate amount
specified below.
On each Distribution Date, Servicer Interchange with respect to the related
Due Period that is on deposit in the Collection Account will be withdrawn from
the Collection Account and paid to the Servicer as a portion of the Series
Servicing Fee with respect to such Due Period. The "Servicer Interchange" for
any Due Period will be equal to the product of (a) the Floating Allocation
Percentage for such Due Period and (b) the portion of Series Allocable Finance
Charge Collections deposited in the Collection Account for such Due Period that
is attributable to Interchange; provided, however, that Servicer Interchange
for a Due Period shall not exceed one-twelfth of the product of (i) the sum of
the Invested Amount and the Enhancement Invested Amount, if any, as of the last
day of the preceding Due Period and (ii) the percentage (the "Servicer
Interchange Rate") specified in the related Prospectus Supplement.
The share of the Series Servicing Fee allocable to the Class A
Certificateholders (after giving effect to the distribution of Servicer
Interchange, if any) with respect to any Distribution Date (the "Class A
Monthly Servicing Fee") shall be equal to one-twelfth of the product of (a) the
percentage (the "Net Servicing Fee Rate") specified in the related Prospectus
Supplement, (b) the sum of the Invested Amount and the Enhancement Invested
Amount, if any, as of the last day of the Due Period second preceding such
Distribution Date and (c) a fraction, the numerator of which is the Class A
Invested Amount as of the last day of the Due Period second preceding such
Distribution Date and the denominator of which is the Invested Amount as of
such last day. The share of the Series Servicing Fee allocable to the Class B
Certificateholders (after giving effect to the distribution of Servicer
Interchange, if any) with respect to any Distribution Date (the "Class B
Monthly Servicing Fee") shall be equal to one-twelfth of the product of (a) the
Net Servicing Fee Rate, (b) the sum of the Invested Amount and the Enhancement
Invested Amount, if any, as of the last day of the Due Period second preceding
such Distribution Date and (c) a fraction, the numerator of which is the Class
B Invested Amount as of the last day of the Due Period second preceding such
Distribution Date and the denominator of which is the Invested Amount as of
such last day. The remaining portion of the Series Servicing Fee will be
allocable to the Banks' Interest (the "Seller Servicing Fee"). The Class A
Monthly Servicing Fee and the Class B Monthly Servicing Fee will be paid on
each Distribution Date with respect to each Due Period from the Collection
Account (unless such amounts have been netted against deposits to the
Collection Account) as described under "--Allocations, Reallocations and
Subordination--Reallocations Among Investor Certificates of Different Series--
Group One Investor Finance Charges".
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Accounts and the Receivables
including, without limitation, expenses related to enforcement of the
Receivables, payment of fees and disbursements of the Trustee and independent
accountants and all other fees and expenses which are not expressly stated in
the Pooling Agreement, the Series Supplement and any other Supplement to be
payable by the Trust or the Banks (other than federal, state, local and foreign
income and franchise taxes, if any, or any interest or penalties with respect
thereto, of the Trust).
RECORD DATE
Payments on the Class A Certificates and the Class B Certificates will be
made as described herein to the Investor Certificateholders in whose names the
Investor Certificates were registered (expected to be Cede, as nominee of DTC,
in the case of any publicly issued class of investor certificates) at the close
of business on the last day of the calendar month preceding the date of such
payment (each a "Record Date"). However, the final payment on the Investor
Certificates will be made only upon presentation and surrender of the Investor
Certificates. Distributions made to DTC will be made in immediately available
funds. See "The Pooling Agreement Generally--Book-Entry Registration".
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OPTIONAL TERMINATION; FINAL PAYMENT OF PRINCIPAL
On the Distribution Date occurring on or after the date that the sum of the
Invested Amount and the Enhancement Invested Amount, if any, is reduced to 5%
or less of the initial outstanding aggregate principal amount of the Investor
Certificates, the Banks will have the option to repurchase the
Certificateholders' Interest. The purchase price will be equal to the sum of
the Invested Amount and the Enhancement Invested Amount, if any, plus accrued
and unpaid interest on the unpaid principal amount of the Class A Certificates
and the Class B Certificates at the applicable certificate rate (and accrued
and unpaid interest with respect to interest amounts that were due but not paid
on a prior Interest Payment Date or Special Payment Date at the applicable
certificate rate) through the day preceding such Distribution Date. Following
any such repurchase, the Class A Certificateholders and Class B
Certificateholders will have no further rights with respect to the Receivables.
In the event that the Banks fail for any reason to deposit the aggregate
purchase price for the Certificateholders' Interest, payments would continue to
be made to the Investor Certificateholders as described under "--
Distributions".
In any event, the last payment of principal and interest on the Investor
Certificates will be due and payable not later than the date (the "Series
Termination Date") specified in the related Prospectus Supplement. In the event
that the Class A Invested Amount or the Class B Invested Amount is greater than
zero on the Series Termination Date, the Trustee will sell or cause to be sold
interests in the Principal Receivables or certain Principal Receivables,
together in each case with related Finance Charge Receivables, as specified in
the Pooling Agreement and the Series Supplement, in an amount, subject to
certain limitations, of up to 110% of the Invested Amount at the close of
business on the Series Termination Date. The net proceeds of such sale will be
deposited in the Collection Account and allocated to the Investor
Certificateholders, as provided in the Pooling Agreement and the Series
Supplement.
REPORTS
No later than the fourth business day prior to each Distribution Date (or
such later date as is specified in the related Prospectus Supplement), the
Servicer will forward to the Trustee, the Paying Agent, the Rating Agency and
each provider of Series Enhancement a statement (the "Monthly Report") prepared
by the Servicer setting forth certain information with respect to the Trust and
the Investor Certificates (unless otherwise indicated), including: (a) with
respect to the Accounts: (i) the Portfolio Yield, (ii) the rate at which new
purchases of merchandise and services are made in the Accounts, (iii) the total
payment rate on the Accounts, (iv) the rate of principal payment on the
Accounts, (v) the aggregate principal balance of the Accounts and (vi) the
aggregate outstanding balance of the Accounts which were delinquent as of the
close of business at the end of the calendar month immediately preceding such
Distribution Date as a percentage of Receivables; (b) with respect to Group
One: (i) the weighted average certificate rate for all Series issued with
respect to Group One and the weighted average series servicing fee rates and
the rate of other fees allocable to the investor certificateholders of all such
Series, (ii) the amount of surplus finance charge collections, the required
surplus finance charge amount and the excess of surplus finance charge
collections over required surplus finance charge amount for each such Series
(in each case expressed as a percentage of the invested amount of such Series
and on a dollar amount basis), (iii) the aggregate amount of collections in
respect of Principal Receivables, the aggregate amount of collections in
respect of Finance Charge Receivables and the total amount of collections in
respect of the Receivables, (iv) the total monthly interest expense, (v) the
total servicing fee and other similar fees paid and (vi) the Group One Investor
Default Amount; and (c) with respect to the Investor Certificates: (i) the
Class A Invested Amount and Class B Invested Amount for such Distribution Date,
(ii) the amount of the Class A Monthly Interest and Class B Monthly Interest
for such Distribution Date and, during the Accumulation Period or any Early
Amortization Period, the amount of Class A Monthly Principal and Class B
Monthly Principal for such Distribution Date, (iii) the amount on deposit in
each of the Class A Funding Accounts and the Class B Interest Funding Account
on such Distribution Date, (iv) the Available Enhancement Amount for such
Distribution Date and (v) the amount, if any, of Class A Investor Charge-Offs
and Class B Investor Charge-Offs for such Distribution Date.
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With respect to each Interest Payment Date (including the Class A Expected
Final Payment Date and the Class B Expected Final Payment Date) or Special
Payment Date, as the case may be, the Monthly Report will include the following
additional information with respect to the Investor Certificates: (a) the total
amount distributed; (b) the amount of such distribution allocable to principal
on the Class A Certificates and the Class B Certificates; (c) the amount of
such distribution allocable to interest on the Class A Certificates and the
Class B Certificates; (d) in the event that any Series Enhancement includes an
interest rate cap agreement or interest rate swap agreement, the amount of
payments, if any, under such interest rate cap agreement or interest rate swap
agreement made with respect to such date; (e) the amount, if any, by which the
unpaid principal balance of the Class A Certificates exceeds the Class A
Invested Amount and the amount, if any, by which the unpaid principal balance
of the Class B Certificates exceeds the Class B Invested Amount, in each case
as of the Record Date with respect to such Interest Payment Date or Special
Payment Date, as the case may be; (f) the amount and date of issuance of any
Additional Investor Certificates; and (g) if the commencement of the
Accumulation Period has been postponed, the date on which the Accumulation
Period will begin. On each Distribution Date, the Paying Agent, on behalf of
the Trustee, will forward to each Investor Certificateholder of record a copy
of the Monthly Report.
On or before January 31 of each calendar year, the Paying Agent, on behalf of
the Trustee, will furnish (or cause to be furnished) to each person who at any
time during the preceding calendar year was an Investor Certificateholder of
record a statement containing the information required to be provided by an
issuer of indebtedness under the Code for such preceding calendar year or the
applicable portion thereof during which such person was an Investor
Certificateholder, together with such other customary information as is
necessary to enable the Investor Certificateholders to prepare their tax
returns. See "Tax Matters".
LIST OF INVESTOR CERTIFICATEHOLDERS
At such time, if any, as Definitive Certificates have been issued, upon
written request of any Investor Certificateholder or group of Investor
Certificateholders of record holding Investor Certificates evidencing not less
than 10% of the aggregate unpaid principal amount of the Investor Certificates,
the Trustee will afford such Investor Certificateholders access during normal
business hours to the current list of Investor Certificateholders of the Trust
for purposes of communicating with other Investor Certificateholders with
respect to their rights under the Pooling Agreement or the Series Supplement or
under the Investor Certificates. See "The Pooling Agreement Generally--Book-
Entry Registration" and "--Definitive Certificates".
The Pooling Agreement does not provide for any annual or other meetings of
Investor Certificateholders.
THE POOLING AGREEMENT GENERALLY
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the Summary of Terms, Investor
Certificateholders may hold their Investor Certificates through DTC (in the
United States) or Cedel or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations which are participants in
such systems.
Cede, as nominee for DTC, will be the registered holder of the global
Investor Certificates. No Investor Certificateholder will be entitled to
receive a certificate representing such person's interest in the Investor
Certificates. Unless and until Definitive Certificates are issued under the
limited circumstances described below, all references herein to actions by
Class A Certificateholders and Class B Certificateholders shall refer to
actions taken by DTC upon instructions from its Participants, and all
references herein to distributions, notices, reports and statements to Class A
Certificateholders and Class B Certificateholders shall refer to distributions,
notices, reports and statements to Cede, as the registered holder of the Class
A Certificates and the Class B Certificates, for distribution to Class A
Certificateholders or Class B Certificateholders, as the case may be, in
accordance with DTC procedures.
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Cedel and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Cedel's and Euroclear's
names on the books of their respective Depositaries which in turn will hold
such positions in customers' securities accounts in the Depositaries' names on
the books of DTC. Citibank, N.A. ("Citibank") will act as depositary for Cedel
and Morgan Guaranty Trust Company of New York ("Morgan") will act as depositary
for Euroclear (in such capacities, the "Depositaries").
Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules. Transfers between Cedel Participants and Euroclear
Participants will occur in the ordinary way in accordance with their applicable
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly through
DTC, on the one hand, and directly or indirectly through Cedel or Euroclear
participants, on the other, will be effected in DTC in accordance with DTC
rules on behalf of the relevant European international clearing system by its
Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC,
and making or receiving payment in accordance with normal procedures for same-
day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in Cedel or
Euroclear as a result of a transaction with a DTC participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel participant on such business day. Cash received in Cedel or
Euroclear as a result of sales of securities by or through a Cedel Participant
or a Euroclear Participant to a DTC participant will be received with value on
the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
For additional information regarding clearance and settlement procedures for
the Investor Certificates, see Annex I hereto and for information with respect
to tax documentation procedures relating to the Investor Certificates, see
Annex I hereto and "Tax Matters--Federal Income Tax Consequences--Non-United
States Investors".
DTC is a limited-purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the UCC and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations ("Participants") and facilitate
the clearance and settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants
include the Underwriters, securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Investor Certificateholders that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of,
or other interests in, Investor Certificates may do so only through
Participants and Indirect Participants. In addition, Investor
Certificateholders will receive all distributions of principal of and interest
on the Investor Certificates from the Paying Agent, initially Citibank, or the
Trustee through DTC and its Participants. Under a book-entry format, Investor
Certificateholders will receive payments after the related Interest Payment
Date, Class A Expected Final Payment Date, Class B Expected Final Payment Date
or Special Payment Date, as the case may be, because, while payments are
required to be forwarded to Cede, as nominee for DTC, on each such date, DTC
will forward such payments to its Participants which thereafter will be
required to forward them to Indirect Participants or Investor
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Certificateholders. It is anticipated that the only "Class A Certificateholder"
and "Class B Certificateholder" (as such terms are used in the Pooling
Agreement and the Series Supplement) will be Cede, as nominee of DTC, and that
Investor Certificateholders will not be recognized by the Trustee as "Investor
Certificateholders" under the Pooling Agreement and the Series Supplement.
Investor Certificateholders will only be permitted to exercise the rights of
Investor Certificateholders under the Pooling Agreement and the Series
Supplement indirectly through DTC and its Participants which in turn will
exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Investor Certificates and is
required to receive and transmit distributions of principal of and interest on
the Investor Certificates. Participants and Indirect Participants with which
Investor Certificateholders have accounts with respect to the Investor
Certificates similarly are required to make book-entry transfers and receive
and transmit such payments on behalf of their respective Investor
Certificateholders.
Because DTC can only act on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of an Investor
Certificateholder to pledge Investor Certificates to persons or entities that
do not participate in the DTC system, or otherwise take actions in respect of
such Investor Certificates, may be limited due to the lack of a physical
certificate for such Investor Certificates.
DTC has advised the Banks that it will take any action permitted to be taken
by an Investor Certificateholder under the Pooling Agreement or the Series
Supplement only at the direction of one or more Participants to whose account
with DTC the Investor Certificates are credited. Additionally, DTC has advised
the Banks that it will take such actions with respect to specified percentages
of the Class A Interest, Class B Interest or Certificateholders' Interest only
at the direction of and on behalf of Participants whose holdings include
undivided interests that satisfy such specified percentages. DTC may take
conflicting actions with respect to other undivided interests to the extent
that such actions are taken on behalf of Participants whose holdings include
such undivided interests.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants,
thereby eliminating the need for physical movement of certificates.
Transactions may be settled in Cedel in any of 32 currencies, including United
States dollars. Cedel provides to its Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
interfaces with domestic markets in several countries. As a professional
depository, Cedel is subject to regulation by the Luxembourg Monetary
Institute. Cedel Participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations and may
include the Underwriters. Indirect access to Cedel is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Cedel Participant, either directly or
indirectly.
The Euroclear System was created in 1968 to hold securities for participants
of the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 32 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing, and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office
(the "Euroclear Operator" or "Euroclear"), under contract with Euroclear
Clearance System S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear
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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 any underwriters, agents or dealers involved in the
distribution of the Investor 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, withdrawals of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear Operator
acts under the Terms and Conditions only on behalf of Euroclear Participants,
and has no record of or relationship with persons holding through Euroclear
Participants.
Distributions with respect to Investor Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. See "Tax Matters". The Cedel or the Euroclear Operator, as the
case may be, will take any other action permitted to be taken by an Investor
Certificateholder under the Pooling Agreement or the Series Supplement on
behalf of a Cedel Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to its Depositary's ability to
effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Certificates among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
The Investor Certificates will be issued to Investor Certificateholders in
certificated registered and/or bearer form, or in book-entry form, as described
in the Prospectus Supplement.
If any Investor Certificates are originally issued in book-entry form through
DTC, thereafter such Investor Certificates will be issued in fully registered,
certificated form to Class A Certificateholders or Class B Certificateholders
or their respective nominees ("Definitive Certificates"), rather than to DTC or
its nominee, only if (i) the Banks advise the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as Depository
with respect to the Investor Certificates, and the Trustee or the Banks are
unable to locate a qualified successor, (ii) the Banks, at their option, elect
to terminate the book-entry system through DTC or (iii) after the occurrence of
a Servicer Default, Investor Certificateholders evidencing not less than 50% of
the aggregate unpaid principal amount of the Class A Certificates or 50% of the
aggregate unpaid principal amount of the Class B Certificates, as the case may
be, 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 interests of the Investor Certificateholders.
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Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the Class A Certificates or the Class
B Certificates, as applicable, and instructions for re-registration, the
Trustee will issue such Investor Certificates in the form of Definitive
Certificates, and thereafter the Trustee will recognize the holders of such
Definitive Certificates as "Class A Certificateholders" or "Class B
Certificateholders", as applicable, under the Pooling Agreement and the Series
Supplement ("Holders").
If Definitive Certificates are issued, distribution of principal and interest
on the Definitive Certificates will be made by the Paying Agent or the Trustee
directly to the Holders in whose names the Definitive Certificates were
registered on the related Record Date in accordance with the procedures set
forth herein and in the Pooling Agreement and the Series Supplement.
Distributions will be made by check mailed to the address of each Holder as it
appears on the register maintained by the Trustee, except that the final
payment on any Definitive Certificate will be made only upon presentation and
surrender of such Definitive Certificate on the date for such final payment at
such office or agency as is specified in the notice of final distribution to
Holders. The Trustee will provide such notice to Holders not later than the
fifth day of the month of the final distribution.
Definitive Certificates will be transferable and exchangeable at the offices
of the Transfer Agent and Registrar, which shall initially be Citibank. No
service charge will be imposed for any registration of transfer or exchange,
but the Transfer Agent and Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.
THE BANKS' CERTIFICATE
The Pooling Agreement provides that the Banks may exchange a portion of the
certificate evidencing the Banks' interest in the Trust for another certificate
(a "Supplemental Certificate") for transfer or assignment to a person
designated by the Banks upon the execution and delivery of a supplement to the
Pooling Agreement (which supplement shall be subject to the amendment section
of the Pooling Agreement to the extent that it amends any of the terms of the
Pooling Agreement; see "--Amendments"); provided that (a) such transfer will
not result in a Ratings Effect, (b) the Banks' remaining interest in Principal
Receivables shall not be less than 2% of the total amount of Principal
Receivables, in each case as of the date of, and after giving effect to, such
exchange and (c) prior to such exchange, the Banks shall have delivered an
opinion of counsel acceptable to the Trustee that for federal and South Dakota
income and franchise tax purposes, (i) following such exchange the Trust will
not be treated as an association (or publicly traded partnership) taxable as a
corporation and (ii) such exchange will not adversely affect the
characterization of any investor certificates of any Series as debt and will
not cause a taxable event to holders of any such investor certificates. Any
transfer or assignment of a Supplemental Certificate is subject to the
conditions set forth in clauses (a) and (c) of the preceding sentence.
TERMINATION OF TRUST
Unless the Banks instruct the Trustee otherwise, the Trust will only
terminate on the earlier to occur of (a) the day following the day on which the
aggregate invested amounts of all Series is zero, (b) the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of St. James,
living on February 25, 1994 or (c) if the Receivables are sold, disposed of or
liquidated following the occurrence of an Insolvency Event as described under
"Series Provisions--Early Amortization Events", immediately following such
sale, disposition or liquidation (the "Trust Termination Date"). Upon
termination of the Trust, all right, title and interest in the Receivables and
other funds of the Trust (other than amounts in the accounts maintained by the
Trust for the final payment of principal and interest to holders of investor
certificates) will be conveyed and transferred to the Banks.
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CONVEYANCE OF RECEIVABLES
Pursuant to the Pooling Agreement, the Banks have sold and assigned to the
Trust their respective interests in all Receivables in the Initial Accounts
outstanding as of the Trust Cut-Off Date, all Receivables in the Additional
Accounts as of the applicable additional cut-off date, all Receivables
thereafter created under the Accounts and the proceeds of all of the foregoing.
The Receivables conveyed to the Trust by Citibank (Nevada) have been previously
participated to Citibank (Nevada) by Citibank (South Dakota).
In connection with the transfer of any Receivables to the Trust, the Banks
are required to indicate in their computer records that the Receivables have
been conveyed to the Trust. In addition, the Banks have provided or will
provide to the Trustee a computer file or a microfiche list containing a true
and complete list showing for each Initial Account, as of the Trust Cut-Off
Date, and for each Additional Account, as of the applicable additional cut-off
date (i) its account number and (ii) except in the case of New Accounts, the
aggregate amount outstanding and the aggregate amount of Principal Receivables
in such Account. Citibank (South Dakota), as initial Servicer, will retain and
will not deliver to the Trustee any other records or agreements relating to the
Accounts or the Receivables. Except as set forth above, the records and
agreements relating to the Accounts and the Receivables will not be segregated
from those relating to other credit card accounts and receivables, and the
physical documentation relating to the Accounts or Receivables will not be
stamped or marked to reflect the transfer of Receivables to the Trust. The
Banks have filed and are required to file UCC financing statements with respect
to the sale of the Receivables to the Trust meeting the requirements of
applicable state law. See "Special Considerations" and "Certain Legal Aspects
of the Receivables".
REPRESENTATIONS AND WARRANTIES
As of the issuance date for a Series (the "Series Issuance Date") specified
in the related Prospectus Supplement, the Banks will jointly and severally make
representations and warranties to the Trust relating to the Accounts and the
Receivables to the effect, among other things, that (a) as of the Trust Cut-Off
Date (or as of the additional cut-off date) each Account or each Additional
Account was an Eligible Account, (b) as of the Trust Cut-Off Date (or as of the
additional cut-off date), each of the Receivables then existing in the Accounts
or in the Additional Accounts is an Eligible Receivable and (c) thereafter, as
of the date of creation of any new Receivable, such Receivable is an Eligible
Receivable. If the Banks breach any representation and warranty described in
this paragraph and such breach remains uncured for 60 days, or such longer
period as may be agreed to by the Trustee, after the earlier to occur of the
discovery of such breach by the Banks or receipt of written notice of such
breach by the Banks, and such breach has a material adverse effect on the
certificateholders' interest of all Series in any Receivable (which
determination shall be made without regard to whether funds are then available
to any certificateholders of any Series pursuant to any Series Enhancement),
such certificateholders' interest in all Receivables with respect to the
affected Account ("Ineligible Receivables") will be reassigned to the Banks on
the terms and conditions set forth below and such Account shall no longer be
included as an Account.
An Ineligible Receivable shall be reassigned to the Banks on or before the
end of the Due Period in which such reassignment obligation arises by the Banks
directing the Servicer to deduct the portion of such Ineligible Receivable
which is a Principal Receivable from the aggregate amount of the Principal
Receivables used to calculate the Banks' Interest. In the event that the
exclusion of an Ineligible Receivable from the calculation of the Banks'
Interest would cause the Banks' Interest to be a negative number, on the
Distribution Date following the Due Period in which such reassignment
obligation arises, the Banks will make a deposit into the Collection Account in
immediately available funds in an amount equal to the amount by which the
Banks' Interest would be reduced below zero. In addition, if at the time of the
reassignment of any Ineligible Receivable to the Banks the invested amount of
any Series is less than the unpaid principal amount of the investor
certificates of such Series, on the Distribution Date following the Due Period
in which such reassignment obligation arises, the Banks will make a deposit
into the Collection Account in immediately available funds in an amount equal
to the lesser of (i) the excess of the portion of such Ineligible Receivable
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which is a Principal Receivable over the amount to be deposited into the
Collection Account pursuant to the immediately preceding sentence and (ii) the
excess of the aggregate unpaid principal amount of the investor certificates
for all Series over the aggregate invested amounts of such Series. Any deposit
into the Collection Account in connection with the reassignment of an
Ineligible Receivable (the amount of any such deposit being referred to herein
as a "Transfer Deposit Amount") shall be considered a payment in full of the
Ineligible Receivable. The reassignment of any Ineligible Receivable to the
Banks is the sole remedy respecting any breach of the representations and
warranties described in the preceding paragraph with respect to such Receivable
available to investor certificateholders of any Series (or the Trustee on
behalf of such investor certificateholders) or any provider of Series
Enhancement.
Each Bank will also make representations and warranties to the Trust to the
effect, among other things, that as of the Series Issuance Date (a) it is a
national banking association validly existing under the laws of the United
States, it has the authority to consummate the transactions contemplated by the
Pooling Agreement and the Series Supplement and each of the Pooling Agreement
and the Series Supplement constitutes a valid, binding and enforceable
agreement of such Bank and (b) the Pooling Agreement and the Series Supplement
constitutes a valid sale, transfer and assignment to the Trust of all right,
title and interest of such Bank in the Receivables, whether then existing or
thereafter created and the proceeds thereof (including proceeds in any of the
accounts established for the benefit of the Investor Certificateholders) or the
grant of a first priority perfected security interest under the UCC as in
effect in South Dakota and Nevada in such Receivables and the proceeds thereof
(including proceeds in any of the accounts established for the benefit of the
Investor Certificateholders), which is effective as to each Receivable then
existing on the Series Issuance Date (or as of the addition date of any
Receivable then existing in Additional Accounts) or, as to each Receivable
arising thereafter, upon the creation thereof and until termination of the
Trust. In the event that the breach of any of the representations and
warranties described in this paragraph has a material adverse effect on the
Certificateholders' Interest or the interests of holders of certificates of any
other Series in the Receivables or the availability of the proceeds thereof to
the Trust, either the Trustee or the holders of investor certificates
evidencing not less than 50% of the aggregate unpaid principal amount of the
investor certificates of all Series, by written notice to the Banks and the
Servicer (and to the Trustee if given by the holders of the requisite
percentage of investor certificates of all Series), may direct the Banks to
accept the reassignment of the Receivables in the Trust within 60 days of such
notice, or within such longer period specified in such notice. The Banks will
be obligated to accept the reassignment of such Receivables on the Distribution
Date following the Due Period in which such reassignment obligation arises.
Such reassignment will not be required to be made, however, if, at the end of
such applicable period, the representations and warranties shall then be true
and correct in all material respects and any material adverse effect caused by
such breach shall have been cured. The price for such reassignment will
generally be equal to the aggregate invested amounts of all Series on the
Distribution Date on which the purchase is scheduled to be made plus accrued
and unpaid interest on the unpaid principal amount of all Series at the
applicable certificate rates, and any interest amounts that were due but not
paid on a prior date and interest on such overdue interest amounts (if the
applicable Supplement so provides) at the applicable certificate rates, through
the last day of the calendar month preceding such Distribution Date. The
payment of such reassignment price, in immediately available funds, will be
considered a payment in full of all Receivables and such funds will be treated
as collections and distributed to investor certificateholders of all Series
upon presentation and surrender of their certificates. If the Trustee or the
requisite percentage of holders of investor certificates of all Series gives a
notice as provided above, the obligation of the Banks to make any such deposit
will constitute the sole remedy respecting a breach of the representations and
warranties available to investor certificateholders of all Series (or the
Trustee on behalf of such investor certificateholders) or any provider of
Series Enhancement.
An "Eligible Account" is defined to mean a credit card account owned by
Citibank (South Dakota) which, as of the Trust Cut-Off Date with respect to an
Initial Account or as of the additional cut-off date with respect to an
Additional Account: (a) is in existence and maintained by Citibank (South
Dakota); (b) is payable in United States dollars; (c) in the case of the
Initial Accounts, has a cardholder who has provided,
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as his most recent billing address, an address located in the United States or
its territories or possessions or a military address; (d) has a cardholder who
has not been identified by Citibank (South Dakota) in its computer files as
being involved in a voluntary or involuntary bankruptcy proceeding; (e) has not
been identified as an Account with respect to which the related card has been
lost or stolen; (f) has not been sold or pledged to any other party; (g) does
not have receivables which have been sold or pledged to any other party; and
(h) in the case of the Initial Accounts, is a VISA or MasterCard revolving
credit card account.
An "Eligible Receivable" is defined to mean 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 and pursuant to a credit card
agreement which complies in all material respects with all requirements of law;
(c) with respect to which all material consents, licenses, approvals or
authorizations of, or registrations with, any governmental authority required
to be obtained or given in connection with the creation of such Receivable or
the execution, delivery, creation and performance by Citibank (South Dakota) or
by the original credit card issuer, if not Citibank (South Dakota), of the
related credit card agreement have been duly obtained or given and are in full
force and effect; (d) as to which at the time of its transfer to the Trust, the
Banks or the Trust will have good and marketable title, free and clear of all
liens, encumbrances, charges and security interests; (e) which has been the
subject of either a valid transfer and assignment from the Banks to the Trust
of all the Banks' right, title and interest therein or the grant of a first
priority perfected security interest therein (and in the proceeds thereof),
effective until the termination of the Trust; (f) which will at all times be
the legal, valid and binding payment obligation of the cardholder thereof
enforceable against such cardholder in accordance with its terms, subject to
certain bankruptcy-related exceptions; (g) which at the time of its transfer to
the Trust, has not been waived or modified except as permitted under the
Pooling Agreement; (h) which is not at the time of its transfer to the Trust
subject to any right of rescission, setoff, counterclaim or defense (including
the defense of usury), other than certain bankruptcy-related defenses; (i) as
to which the Banks have satisfied all obligations to be fulfilled at the time
it is transferred to the Trust; (j) as to which the Banks have done nothing, at
the time of its transfer to the Trust, to impair the rights of the Trust or
investor certificateholders of all Series therein; and (k) which constitutes
either an "account" or a "general intangible" under the UCC as then in effect
under South Dakota or Nevada state law.
It is not required or anticipated that the Trustee will make any initial or
periodic general examination of any documents or records related to the
Receivables or the Accounts for the purpose of establishing the presence or
absence of defects, compliance with the Banks' representations and warranties
or for any other purpose. In addition, it is not anticipated or required that
the Trustee will make any initial or periodic general examination of the
Servicer for the purpose of establishing the compliance by the Servicer with
its representations or warranties or the performance by the Servicer of its
obligations under the Pooling Agreement or for any other purpose. The Servicer,
however, will deliver to the Trustee on or before March 31 of each calendar
year an opinion of counsel with respect to the validity of the interest of the
Trust in and to the Receivables and certain other components of the Trust.
INDEMNIFICATION
The Pooling Agreement provides that the Servicer will indemnify the Trust and
the Trustee from and against any loss, liability, expense, damage or injury
suffered or sustained arising out of the Servicer's actions or omissions with
respect to the Trust pursuant to the Pooling Agreement.
Under the Pooling Agreement, the Banks have agreed to be liable directly to
an injured party for the entire amount of any losses, claims, damages or
liabilities (other than those incurred by an investor certificateholder in the
capacity of an investor in the investor certificates of any Series) arising out
of or based on the arrangement created by the Pooling Agreement as though such
agreement created a partnership under the New York Uniform Partnership Act in
which the Banks were general partners. The Banks have agreed to pay, indemnify
and hold harmless each holder of investor certificates of any Series against
and from any such losses, claims, damages or liabilities except to the extent
that they arise from any action by such holder. In the event of a Service
Transfer, the successor Servicer will indemnify and hold harmless the Banks for
any
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losses, claims, damages and liabilities of the Banks as described in this
paragraph arising from the actions or omissions of such successor Servicer.
Except as provided in the preceding paragraph, the Pooling Agreement provides
that none of the Banks, the Servicer or any of their directors, officers,
employees or agents will be under any other liability to the Trust, the
Trustee, the holders of investor certificates of any Series, any provider of
Series Enhancement or any other person for any action taken, or for refraining
from taking any action, in good faith pursuant to the Pooling Agreement.
However, none of the Banks, the Servicer or any of their directors, officers,
employees or agents will be protected against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence of any such person in the performance of their duties or by reason
of reckless disregard of their obligations and duties thereunder.
In addition, the Pooling 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 Agreement. The
Servicer may, in its sole discretion, undertake any such legal action which it
may deem necessary or desirable for the benefit of holders of investor
certificates of any Series with respect to the Pooling Agreement and the rights
and duties of the parties thereto and the interest of such investor
certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling Agreement, the Servicer is responsible for servicing,
collecting, enforcing and administering the Receivables in accordance with
customary and usual procedures for servicing credit card receivables, but in
any event at least comparable with the policies and procedures and the degree
of skill and care applied or exercised with respect to its own credit card
receivables.
Citibank (South Dakota) has covenanted that, except as otherwise required by
any requirement of law or as is deemed by Citibank (South Dakota) to be
necessary in order for it to maintain its credit card business on a competitive
basis based on a good faith assessment by it of the nature of the competition
in the credit card business, it will not take actions which would reduce the
Portfolio Yield to less than the sum of (a) the weighted average certificate
rate of each class of investor certificates of each Series (provided that, if
the certificate rate of a class is a floating rate, such calculation shall be
determined after giving effect to the benefit of any related interest rate cap
agreements or interest rate swap agreements) and (b) the weighted average of
the net servicing fee rate allocable to each class of investor certificates of
each Series. In addition, Citibank (South Dakota) has agreed that, unless
required by law, it will not reduce the Portfolio Yield to less than the
highest certificate rate for any outstanding Series or class (provided that, if
the certificate rate of a Series or class is a floating rate, such calculation
shall be determined after giving effect to the benefit of any related interest
rate cap agreements or interest rate swap agreements). Citibank (South Dakota)
also will covenant that it may change the terms relating to the Accounts only
if the change is made applicable to the comparable segment of the portfolio of
accounts with similar characteristics owned or serviced by Citibank (South
Dakota) and not only to the Accounts.
Servicing activities to be performed by the Servicer include collecting and
recording payments, communicating with cardholders, investigating payment
delinquencies, evaluating the increase of credit limits and the issuance of
credit cards, providing billing and tax records to cardholders and maintaining
internal records with respect to each Account. Managerial and custodial
services performed by the Servicer on behalf of the Trust include providing
assistance in any inspections of the documents and records relating to the
Accounts and Receivables by the Trustee pursuant to the Pooling Agreement,
maintaining the agreements, documents and files relating to the Accounts and
Receivables as custodian for the Trust and providing related data processing
and reporting services for investor certificateholders of any Series and on
behalf of the Trustee.
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Pursuant to the Pooling Agreement, Citibank (South Dakota), as Servicer, has
the right to delegate any of its responsibilities and obligations as Servicer
to any of its affiliates that agrees to conduct such duties in accordance with
the Pooling Agreement and Citibank (South Dakota)'s credit card guidelines.
Citibank (South Dakota) currently contracts and intends to continue to contract
with Citibank (Nevada) and Citicorp Credit Services, Inc., indirect wholly
owned subsidiaries of Citicorp, to perform certain of its servicing activities.
Notwithstanding any such delegation to any entity, the Servicer will continue
to be liable for all of its obligations under the Pooling Agreement.
SERVICER COVENANTS
In the Pooling Agreement, the Servicer has covenanted as to each Receivable
and related Account that: (a) it will duly fulfill all obligations on its part
to be fulfilled under or in connection with the Receivable or Account, and will
maintain in effect all qualifications required in order to service the
Receivable or Account the failure to comply with which would have a material
adverse effect on the investor certificateholders or any provider of Series
Enhancement; (b) it will not permit any rescission or cancellation of the
Receivable except as ordered by a court of competent jurisdiction or other
governmental authority; (c) it will do nothing to impair the rights of the
investor certificateholders in the Receivable or Account or the rights of any
provider of Series Enhancement; (d) it will not reschedule, revise or defer
payments due on the Receivable except in accordance with its guidelines for
servicing receivables; and (e) except in connection with its enforcement or
collection of an Account, it will take no action to cause any Receivables to be
evidenced by any instruments (as defined in the UCC) and if any Receivable is
so evidenced, it shall be reassigned or assigned to the Servicer as provided
below.
Under the terms of the Pooling Agreement in the event (x) any of the
representations, warranties or covenants of the Servicer contained in clauses
(a) through (d) above with respect to any Receivable or the related Account is
breached, and such breach has a material adverse effect on the
certificateholders' interest of all Series in such Receivable (which
determination shall be made without regard to whether funds are then available
to any certificateholders of any Series pursuant to any Series Enhancement) and
is not cured within 60 days (or such longer period, not in excess of 150 days,
as may be agreed to by the Trustee) of the earlier to occur of the discovery of
such event by the Servicer, or receipt by the Servicer of written notice of
such event given by the Trustee, or (y) as provided in clause (e) above with
respect to any Receivable, all Receivables in the Account or Accounts to which
such event relates shall be reassigned or assigned to the Servicer on the terms
and conditions set forth below. If Citibank (South Dakota) is the Servicer,
such reassignment will be made on or before the Distribution Date following the
Due Period in which such reassignment obligation arises by the Servicer
deducting the portion of any such Receivable which is a Principal Receivable
from the aggregate amount of Principal Receivables used to calculate the Banks'
Interest, the floating allocation percentage and the principal allocation
percentage applicable to any Series. In addition, if the deduction of such
Principal Receivable would reduce the Banks' Interest below zero or if the
invested amount of any Series is then less than the unpaid principal amount of
the investor certificates of such Series, Citibank (South Dakota) as the
Servicer will deposit into the Collection Account the applicable Transfer
Deposit Amount described above under "--Representations and Warranties". If
Citibank (South Dakota) is not the Servicer, such assignment and transfer will
be made when the Servicer deposits an amount equal to the amount of such
Receivable in the Collection Account on the business day preceding the
Distribution Date following the Due Period during which such obligation arises.
The amount of such deposit shall be deemed a Transfer Deposit Amount hereunder.
This reassignment or transfer and assignment to the Servicer constitutes the
sole remedy available to the investor certificateholders of any Series if such
covenant or warranty of the Servicer is not satisfied and the Trust's interest
in any such reassigned Receivables shall be automatically assigned to the
Servicer.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the Pooling
Agreement, except upon determination that such duties are no longer permissible
under applicable law. No such resignation will
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become effective until the Trustee or a successor to the Servicer has assumed
the Servicer's responsibilities and obligations under the Pooling Agreement.
Notwithstanding the foregoing, Citibank (South Dakota) may transfer its
servicing obligations to any other wholly owned subsidiary of Citicorp (which
meets certain eligibility standards set forth in the Pooling Agreement) and be
relieved of its obligations and duties under the Pooling Agreement.
Any person into which, in accordance with the Pooling Agreement, Citibank
(South Dakota) or the Servicer may be merged or consolidated or any person
resulting from any merger or consolidation to which Citibank (South Dakota) or
the Servicer is a party, or any person succeeding to the business of Citibank
(South Dakota) or the Servicer, will be the successor to Citibank (South
Dakota), as servicer, or the Servicer, as the case may be, under the Pooling
Agreement.
SERVICER DEFAULT
In the event of any Servicer Default (as defined below), either the Trustee
or investor certificateholders holding investor certificates evidencing more
than 50% of the aggregate unpaid principal amount of all outstanding Series, by
written notice to the Servicer (and to the Trustee and any provider of Series
Enhancement, if given by the investor certificateholders) (a "Termination
Notice"), may terminate all of the rights and obligations of the Servicer, as
servicer, under the Pooling Agreement. If the Trustee within 60 days of receipt
of a Termination Notice is unable to obtain any bids from eligible Servicers
and the Banks deliver an officer's certificate to the effect that the Servicer
cannot in good faith cure the Servicer Default which gave rise to the
Termination Notice, then the Trustee shall offer the Banks a right of first
refusal to purchase the Certificateholders' Interest and the
certificateholders' interest for all other Series. The purchase price for such
a purchase shall be paid on a Distribution Date and shall generally be equal
to, with respect to each Series, the higher of (a) the invested amount of such
Series on such Distribution Date plus accrued and unpaid interest at the
applicable certificate rate (together with, if applicable, interest on interest
amounts that were due and not paid on a prior date at the applicable
certificate rate), through the last day of the calendar month preceding such
Distribution Date (plus the Enhancement Invested Amount, if any) and (b) the
average bid price quoted by two recognized dealers for similar securities rated
in the same rating category as the initial rating of the investor certificates
of such Series with a remaining maturity approximately equal to the remaining
maturity of the investor certificates of such Series (and, in either case with
respect to the Class A Certificates, certain additional amounts specified in
the Series Supplement).
The Trustee shall, as promptly as possible after giving a Termination Notice,
appoint a successor Servicer (a "Service Transfer"), and if no successor
Servicer has been appointed by the Trustee and has accepted such appointment by
the time the Servicer ceases to act as Servicer, all rights, authority, power
and obligations of the Servicer under the Pooling Agreement shall pass to and
be vested in the Trustee. Prior to any Service Transfer, the Trustee will seek
to obtain bids from potential Servicers meeting certain eligibility
requirements set forth in the Pooling Agreement to serve as a successor
Servicer for servicing compensation not in excess of the Trust Servicing Fee
plus any amounts payable to the Banks or Citibank (South Dakota), as Servicer,
pursuant to the terms of any Series Enhancement agreement. The rights and
interest of the Banks under the Pooling Agreement and any Supplement in the
Banks' Interest will not be affected by any Termination Notice or Service
Transfer.
A "Servicer Default" refers to any of the following events:
(a) failure by the Servicer to make such payment, transfer or deposit, or
to give instructions or to give notice to the Trustee to make such payment,
transfer or deposit, on the date the Servicer is required to do so under
the Pooling Agreement or any Supplement, which is not cured within a five
business day grace period;
(b) failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer in the
Pooling Agreement or any Supplement which has a material adverse effect on
the investor certificateholders of any Series or class (which determination
shall
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be made without regard to whether funds are then available pursuant to any
Series Enhancement) and which continues unremedied for a period of 60 days
after written notice, or the Servicer assigns or delegates its duties under
the Pooling Agreement, except as specifically permitted thereunder;
(c) any representation, warranty or certification made by the Servicer in
the Pooling Agreement or any Supplement or in any certificate delivered
pursuant to the Pooling Agreement or any Supplement proves to have been
incorrect when made, which has a material adverse effect on the rights of
the investor certificateholders of any Series or class (which determination
shall be made without regard to whether funds are then available pursuant
to any Series Enhancement), and which material adverse effect continues for
a period of 60 days after written notice; or
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred
to under clause (a) above for a period of ten 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 Agreement and any Supplement and the Servicer shall provide the
Trustee, the Banks, any provider of Series Enhancement and the investor
certificateholders of each Series prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations. The
Servicer shall immediately notify the Trustee in writing of any Servicer
Default.
EVIDENCE AS TO COMPLIANCE
The Pooling Agreement provides that on or before March 31 of each calendar
year the Servicer will cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer or the Banks)
to furnish a report to the effect that such firm has examined certain documents
and records relating to the servicing of the Accounts, compared the information
contained in the Servicer's certificates delivered during the period covered by
the report with such documents and records and that, on the basis of such
examination, such firm is of the opinion that such servicing was conducted in
compliance with the Pooling Agreement and the applicable provisions of each
Supplement except for such exceptions or errors as such firm shall believe to
be immaterial and such other exceptions as shall be set forth in such
statement.
The Pooling Agreement provides for delivery to the Trustee, the Rating Agency
and each provider of Series Enhancement on or before March 31 of each calendar
year of a statement signed by an officer of the Servicer to the effect that the
Servicer has, or has caused to be, fully performed its obligations in all
material respects under the Pooling Agreement throughout the preceding year or,
if there has been a default in the performance of any such obligation,
specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by a request in writing delivered to the Trustee.
AMENDMENTS
The Pooling Agreement and any Supplement may be amended from time to time
(including in connection with the issuance of a Supplemental Certificate) by
agreement of the Trustee and the Banks without the consent of the investor
certificateholders of any Series or the consent of the provider of any Series
Enhancement (a) to modify the dates from and to which a Due Period runs
provided that such amendment does not cause an Adverse Effect or a Ratings
Effect or (b) for any other purpose, provided that (i) the Banks deliver an
opinion of counsel acceptable to the Trustee to the effect that such amendment
will not adversely
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affect in any material respect the interests of any such investor
certificateholder and (ii) such amendment will not result in a Ratings Effect.
The Pooling Agreement and any Supplement may be modified from time to time by
agreement of the Trustee, the Banks and the Servicer, without the consent of
the investor certificateholders of any Series, to provide for additional Series
Enhancement for the benefit of the Class A Certificateholders and/or the Class
B Certificateholders; provided that (a) each Bank delivers to the Trustee and
each Series Enhancer a certificate of an authorized officer to the effect that,
in the reasonable belief of the Bank, such amendment will not as of the date of
such amendment or at a future date cause an Adverse Effect and (b) such
amendment will not result in a Ratings Effect.
The Pooling Agreement and any Supplement may also be amended from time to
time (including in connection with the issuance of a Supplemental Certificate)
by the Banks, the Servicer and the Trustee with the consent of the holders of
investor certificates evidencing not less than 66 2/3% of the aggregate unpaid
principal amount of the investor certificates of all adversely affected Series
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Pooling Agreement or any Supplement or
of modifying in any manner the rights of such investor certificateholders. No
such amendment, however, may (a) reduce in any manner the amount of or delay
the timing of any distributions to be made to investor certificateholders or
deposits of amounts to be so distributed or the amount available under any
Series Enhancement without the consent of each investor certificateholder
affected; (b) change the definition or the manner of calculating the interest
of any investor certificateholder without the consent of each affected investor
certificateholder; (c) reduce the aforesaid percentage required to consent to
any such amendment, without the consent of each investor certificateholder; or
(d) adversely affect the rating of any Series or class by the Rating Agency
without the consent of the holders of investor certificates of such Series or
class evidencing not less than 66 2/3% of the aggregate unpaid principal amount
of the investor certificates of such Series or class. Promptly following the
execution of any such amendment (other than an amendment described in the two
preceding paragraphs), the Trustee will furnish written notice of the substance
of such amendment to each investor certificateholder. Notwithstanding the
foregoing, no amendment may be made to the Pooling Agreement or any Supplement
which would adversely affect in any material respect the interests of the
provider of any Series Enhancement without the consent of the provider of such
Series Enhancement.
THE TRUSTEE
Yasuda Bank and Trust Company (U.S.A.) is the Trustee under the Pooling
Agreement. The Corporate Trust Department of Yasuda Bank and Trust Company
(U.S.A.) is located at 666 Fifth Avenue, Suite 802, New York, New York 10103.
The Banks, 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 Banks, the Servicer and any of their respective
affiliates may hold investor certificates of any Series in their own names;
however, any investor certificates so held shall not be entitled to participate
in any decisions made or instructions given to the Trustee by such investor
certificateholders as a group. 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
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 Banks will be
obligated to appoint a successor Trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling Agreement or if the Trustee becomes insolvent. In such circumstances,
the Servicer will be obligated to appoint a successor Trustee. Any resignation
or removal of the Trustee and appointment of a successor Trustee does not
become effective until acceptance of the appointment by the successor Trustee.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The Banks have sold the Receivables to the Trust. The Banks have represented
and warranted that such sale constitutes a valid transfer and assignment to the
Trust of all right, title and interest of the Banks in and to the Receivables,
except for the interest of the Banks as holder of the Banks' Certificate, and
that if such assignment does not constitute a sale of the Receivables, it
constitutes a grant of a security interest to the Trust in and to the
Receivables. The Banks have also represented and warranted to the Trust in the
Pooling Agreement that, in the event the transfer of Receivables by the Banks
to the Trust is deemed to create a security interest under the UCC, there will
exist a valid, subsisting and enforceable first priority perfected security
interest in the Receivables, in existence at the time of the formation of the
Trust or at the date of addition of any Additional Accounts, in favor of the
Trust and a valid, subsisting and enforceable first priority perfected security
interest in the Receivables created thereafter in favor of the Trust on and
after their creation, in each case until termination of the Trust. For a
discussion of the Trust's rights arising from these representations and
warranties not being satisfied, see "The Pooling Agreement Generally--
Representations and Warranties".
The Banks have represented that the Receivables are "accounts" or "general
intangibles" for purposes of the UCC. Both the sale of accounts and the
transfer of accounts as security for an obligation are treated under the UCC as
creating a security interest therein and are subject to its provisions, and the
filing of an appropriate financing statement or statements is required to
perfect the interest of the Trust in the Receivables. If a transfer of general
intangibles is deemed to create a security interest, the UCC applies and filing
an appropriate financing statement or statements is also required in order to
perfect the Trust's security interest. Financing statements covering the
Receivables have been filed under the UCC to protect the Trust in the event the
transfer by the Banks is deemed to be subject to the UCC. If a transfer of
general intangibles is deemed to be a sale, then the UCC is not applicable and
no further action under the UCC is required to protect the Trust's interest
from third parties.
There are certain limited circumstances under the UCC in which prior or
subsequent transferees of Receivables coming into existence after the date of
the Pooling Agreement could have an interest in such Receivables with priority
over the Trust's interest. A tax or other government lien on property of the
Bank arising prior to the time a Receivable comes into existence may also have
priority over the interest of the Trust in such Receivable. Furthermore, if the
FDIC were appointed as a receiver of either of the Banks, the receiver's
administrative expenses may also have priority over the interest of the Trust
in such Receivables. Under the Pooling Agreement, however, the Banks warrant
that they have transferred the Receivables to the Trust free and clear of the
lien of any third party. In addition, the Banks covenant that they will not
sell, pledge, assign, transfer or grant any lien on any Receivable (or any
interest therein) other than to the Trust.
CERTAIN MATTERS RELATING TO RECEIVERSHIP
The Federal Deposit Insurance Act ("FDIA"), as amended by the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), which
became effective August 9, 1989, sets forth certain powers that the FDIC could
exercise if it were appointed as receiver or conservator of either of the
Banks.
Subject to clarification by FDIC regulations or interpretations, it would
appear from the positions taken by the FDIC that the FDIC, in its capacity as
receiver or conservator for either of the Banks, would not interfere with the
timely transfer to the Trust of payments collected on the Receivables or
interfere with the timely liquidation of Receivables as described below. To the
extent that the Banks have granted a security interest in the Receivables to
the Trust, and such security interest is validly perfected before an Insolvency
Event and is not taken in contemplation of insolvency or with the intent to
hinder, delay or defraud the relevant Bank or its creditors, based upon
opinions issued by the general counsel of the FDIC addressing the
enforceability against the FDIC, as conservator or receiver for a depository
institution, of a security interest
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in collateral granted by such depository institution, such security interest
should not be subject to avoidance, and payments to the Trust with respect to
the Receivables should not be subject to recovery, by the FDIC. If, however,
the FDIC were to assert a contrary position, certain provisions of the FDIA
which, at the request of the FDIC, have been applied in recent lawsuits to
avoid security interests in collateral granted by depository institutions,
would permit the FDIC to avoid such security interest, thereby resulting in
possible delays and reductions in payments to the investor certificateholders
of all outstanding Series. In addition, if the FDIC were to require the Trustee
to establish its right to such payments by submitting to and completing the
administrative claims procedure under the FDIA, as amended by FIRREA, delays in
payments on the investor certificates of all Series and possible reductions in
the amount of those payments could occur.
The Pooling Agreement provides that, upon the occurrence of an Insolvency
Event, the Banks will promptly give notice thereof to the Trustee, and an Early
Amortization Event will occur. Under the Pooling Agreement, no new Principal
Receivables will be transferred to the Trust and, unless otherwise instructed
within a specified period by each other holder of the Banks' Certificate and
the investor certificateholders holding investor certificates of each Series or
each class of each Series evidencing more than 50% of the aggregate unpaid
principal amount of each such Series or class (and, in the case of certain
Series, any credit enhancer with respect thereto), or unless otherwise
prohibited by law, the Trustee will proceed to sell, dispose of or otherwise
liquidate the Receivables in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from the sale of the Receivables
would then be treated by the Trustee as collections on the Receivables. This
procedure, however, could be delayed as described above. Upon the occurrence of
an Insolvency Event, if no Early Amortization Event other than such Insolvency
Event exists, the FDIC may have the power to continue to require the Banks to
transfer new Principal Receivables to the Trust and to prevent the early sale,
liquidation or disposition of the Receivables and the commencement of the Early
Amortization Period. See "Series Provisions--Early Amortization Events".
In the event of a Servicer Default, if a conservator, receiver or liquidator
is appointed for the Servicer, and no Servicer Default other than such
conservatorship, receivership, liquidation or insolvency of the Servicer
exists, the conservator, receiver or liquidator may have the power to prevent
either the Trustee or the requisite percentage of holders of investor
certificates of all Series from appointing a successor Servicer. See "The
Pooling Agreement Generally--Servicer Default".
CONSUMER PROTECTION LAWS
The relationship between the cardholder and credit card issuer is extensively
regulated by federal, state and local consumer protection laws. With respect to
credit cards issued by Citibank (South Dakota), the most significant federal
laws include the Federal Truth-in-Lending, Equal Credit Opportunity, Fair
Credit Reporting and Fair Debt Collection Practices Acts. These statutes impose
disclosure requirements before and when an Account is opened, at the end of
monthly billing cycles, and at year-end and, in addition, limit cardholder
liability for unauthorized use, prohibit certain discriminatory practices in
extending credit, impose certain limitations on the type of account-related
charges that may be issued and regulate collection practices. In addition,
cardholders are entitled under these laws to have payments and credits applied
to the credit card account promptly and to require billing errors to be
resolved promptly. The Trust may be liable for certain violations of consumer
protection laws that apply to the Receivables, either as assignee from the
Banks with respect to obligations arising before transfer of the Receivables to
the Trust or as the party directly responsible for obligations arising after
the transfer. In addition, a cardholder may be entitled to assert such
violations by way of set-off against the obligation to pay the amount of
Receivables owing. See "Special Considerations--Master Trust Considerations--
Certain Legal Aspects" and "--The Ability of Citibank (South Dakota) to Change
Terms of the Accounts". All Receivables that were not created in compliance in
all material respects with the requirements of such laws, if such noncompliance
has a material adverse effect on the interest of investor certificateholders of
any Series therein, will be reassigned to the Banks. The Servicer has also
agreed in the Pooling Agreement to indemnify the Trust, among other things, for
any liability arising from such violations. For discussion of the Trust's
rights if the Receivables were not created in compliance in all material
respects with applicable laws, see "The Pooling Agreement Generally--
Representations and Warranties".
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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 at 6%. 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 a stay.
Application of federal and state bankruptcy and debtor relief laws would
affect the interests of the investor certificateholders of all Series if such
laws result in any Receivables being charged off as uncollectible. See "Series
Provisions--Investor Charge-Offs" and "--Defaulted Receivables; Recoveries;
Rebates and Fraudulent Charges".
TAX MATTERS
FEDERAL INCOME TAX CONSEQUENCES--GENERAL
Unless a superseding discussion is set forth in the applicable Prospectus
Supplement, set forth below is a discussion of the federal income tax
consequences to holders of the Investor Certificates. This discussion does not
deal with all aspects of federal income taxation that may be relevant to
holders of the Investor Certificates in light of their personal investment
circumstances, nor to certain types of holders subject to special treatment
under the federal income tax laws (for example, banks, life insurance companies
and tax-exempt organizations). Prospective investors are advised to consult
their own tax advisors with regard to the federal income tax consequences of
holding and disposing of Investor Certificates, as well as the tax consequences
arising under the laws of any state, foreign country or other jurisdiction.
This discussion is based upon present provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the regulations promulgated thereunder, and
judicial or ruling authority, all of which are subject to change, which change
may be retroactive. No ruling on any of the issues discussed below will be
sought from the Internal Revenue Service (the "IRS").
The discussion assumes that an Investor Certificate is issued in registered
form, has all payments denominated in U.S. dollars and has a term that exceeds
one year. Moreover, the discussion assumes that the interest formula for the
Investor Certificate meets the requirements for "qualified stated interest"
under Treasury regulations (the "OID regulations") relating to OID, and that
any OID on the Investor Certificate arising from any excess of the principal
amount of the Investor Certificate over its issue price is de minimis (i.e., is
less than 1/4% of its principal amount multiplied by the number of full years
until its maturity date), all within the meaning of the OID regulations. If
those conditions are not satisfied, additional tax considerations will be
disclosed in the applicable Prospectus Supplement.
Treatment of the Investor Certificates as Indebtedness
The Banks and Investor Certificateholders will express in the Pooling
Agreement the intent that for federal, state and local income and franchise tax
purposes, the Investor Certificates will be indebtedness of the Banks secured
by the Receivables. The Banks, by entering into the Pooling Agreement, and each
investor, by the acceptance of an Investor Certificate, will agree to treat the
Investor Certificates as indebtedness of the Banks for federal, state and local
income and franchise tax purposes. However, the Pooling Agreement generally
refers to the transfer of Receivables as a "sale", and because different
criteria are used in determining the nontax accounting treatment of the
transaction, the Banks will treat the Pooling Agreement, for certain nontax
accounting purposes, as a transfer of an ownership interest in the Receivables
and not as creating a debt obligation of the Banks.
A basic premise of federal income tax law is that the economic substance of a
transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its
economic substance. In appropriate circumstances, the courts have allowed
taxpayers, as well as the IRS, to treat a transaction in accordance with its
economic substance, as determined under federal income tax law, even though the
participants in the transaction have characterized it differently for nontax
purposes.
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The determination of whether the economic substance of a purchase of an
interest in property is instead a loan secured by the transferred property has
been made by the IRS and the courts on the basis of numerous factors designed
to determine whether the seller has relinquished (and the purchaser has
obtained) substantial incidents of ownership in the property. Among those
factors, the primary factors examined are whether the purchaser has the
opportunity to gain if the property increases in value, and has the risk of
loss if the property decreases in value. Based upon its analysis of such
factors, Cravath, Swaine & Moore, special federal tax counsel to the Banks and
the Trust ("Tax Counsel"), has concluded that the Banks and any other owners of
the Banks' Certificate (through their ownership of the Banks' Certificate)
rather than the holders of Investor Certificates (through their ownership of
the Investor Certificates) are the owners of the Receivables for federal income
tax purposes. As a result, in the opinion of Tax Counsel, the Investor
Certificates will properly be characterized for federal income tax purposes as
indebtedness.
Treatment of the Trust
The Trust could be viewed for federal income tax purposes either as (i) a
collateral arrangement for debt issued directly by the Banks and other holders
of the Banks' Certificate or (ii) as a separate entity issuing its own debt and
owned by the Banks and all other holders of the Banks' Certificate. However, in
the opinion of Tax Counsel, in the former event the Trust will be disregarded
for federal income tax purposes and in the latter event the Trust would be a
partnership, rather than an association (or publicly traded partnership)
taxable as a corporation. Therefore, in the opinion of Tax Counsel, the Trust
will not be subject to federal income tax.
In addition, tax legislation recently enacted into law will permit the Trust,
on or after September 1, 1997, to make an election to be a Financial Asset
Securitization Investment Trust. The Trust is permitted to make such an
election if, prior to making such election, the Banks deliver an opinion of
counsel acceptable to the Trustee that (1) following such election the Trust
will not be an association (or publicly traded partnership) taxable as a
corporation, and (2) the election will not have a significant adverse effect on
the federal income tax treatment of holders of any then-outstanding investor
certificates.
FEDERAL INCOME TAX CONSEQUENCES--UNITED STATES INVESTORS
Interest Income to Investor Certificateholders
Assuming the Investor Certificates are debt obligations for federal income
tax purposes, it is believed that they should not be considered issued with OID
(except as discussed in the following paragraph or the Prospectus Supplement).
Under this interpretation, interest thereon will be taxable as ordinary
interest income when received or accrued by holders utilizing the cash or
accrual methods of accounting, respectively. Moreover, a holder of an Investor
Certificate issued with a de minimis amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the Investor
Certificate. A purchaser who buys an Investor Certificate for more or less than
its principal amount will generally be subject, respectively, to the premium
amortization or market discount rules of the Code.
However, if any interest payable on a Series or Class of Investor
Certificates is not paid in full on its scheduled payment date, the Investor
Certificates of that Series or Class will thereafter be considered to be issued
with OID. Moreover, even before that time, the Investor Certificates of a
Series or Class would be considered to have OID unless, at the time of
issuance, the likelihood of a late payment or nonpayment of interest on such
Series or Class was considered a "remote contingency" under applicable Treasury
regulations. The Sellers intend to take the position, based on the exception
for remote contingencies, that OID does not arise on a Series or Class of
Investor Certificates unless and until a late payment or nonpayment of interest
in fact occurs.
If the Investor Certificates of a Series or Class were considered to have OID
(either initially or following a late payment or nonpayment of interest), there
would not be a significant effect on holders of Investor
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Certificates. However, cash basis holders would in effect be required to report
interest income as it accrues rather than when it is paid. Moreover, all
holders would be required to accrue any de minimis discount into income over
the life of the Investor Certificates rather than when principal is paid.
The Paying Agent will be required to report annually to the IRS, and to each
Investor Certificateholder of record, the amount of interest paid (or OID
accrued) on Investor Certificates (and the amount of interest withheld for
federal income taxes, if any) for each calendar year, except as to exempt
holders (generally, holders that are corporations, tax-exempt organizations,
qualified pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status as
nonresidents). As long as the only "Certificateholder" of record is Cede, as
nominee for DTC, Investor Certificateholders and the IRS will receive tax and
other information only from Participants and Indirect Participants rather than
the Paying Agent. Accordingly, each nonexempt Investor Certificateholder will
be required to provide, under penalties of perjury, a certificate on IRS Form
W-9 containing the holder's name, address, correct federal taxpayer
identification number and a statement that such holder is not subject to backup
withholding. If a nonexempt Investor Certificateholder fails to provide the
required certification, the Paying Agent (or the Participants or Indirect
Participants) will be required to withhold (or cause to be withheld) 31% of the
interest (and principal) otherwise payable to the holder, and remit the
withheld amount to the IRS as a credit against the holder's federal income tax
liability.
Possible Classification of the Investor Certificates as Interests in a
Partnership or Association
Although, as described above, it is the opinion of Tax Counsel that all
Investor Certificates will properly be characterized as debt for federal income
tax purposes, such opinion is not binding on the IRS and thus no assurance can
be given that such a characterization will prevail. If the IRS were to contend
successfully that some or all of the Investor Certificates were not debt
obligations for federal income tax purposes, the arrangement among the Banks,
any other holders of the Banks' Certificate, the holders of such Investor
Certificates and any other holders of other Investor Certificates might be
classified as a partnership for federal income tax purposes, as an association
taxable as a corporation or as a "publicly traded partnership" taxable as a
corporation.
If some or all of the Investor Certificates are treated as equity interests
in a partnership, the partnership would in all likelihood be treated as a
"publicly traded partnership". A publicly traded partnership is, in general,
taxable as a corporation. If the partnership were nevertheless not taxable as a
corporation (because of an exception for an entity whose income is interest
income that is not derived in the conduct of a financial business) it would not
be subject to federal income tax. Rather, each item of income, gain, loss,
deduction and credit generated through the ownership of the Receivables by the
partnership would be passed through to the partners in such a partnership
(including holders of Investor Certificates that are treated as equity
interests in the partnership) according to their respective interests therein.
The income reportable by Investor Certificateholders as partners in such a
partnership could differ from the income reportable by Investor
Certificateholders as holders of debt. However, except as provided below, it is
not expected that such differences would be material. A cash basis Investor
Certificateholder treated as a partner might be required to report income when
it accrues to the partnership rather than when it is received by the Investor
Certificateholder. Moreover, an individual Investor Certificateholder's share
of expenses of the partnership would be miscellaneous itemized deductions that
might not be deductible in whole or in part, meaning that the holder might be
taxed on a greater amount of income than the stated interest on the Investor
Certificates. Finally, if any Investor Certificates are treated as equity
interests in a partnership in which other Investor Certificates are debt, all
or part of a tax-exempt investor's share of income from the Investor
Certificates that are treated as equity would be treated as unrelated debt-
financed income under the Code taxable to the investor.
If, alternatively, some or all of the Investor Certificates were treated as
equity interests in an association taxable as a corporation or a "publicly
traded partnership" taxable as a corporation, the resulting entity would be
subject to federal income taxes at corporate tax rates on its taxable income
generated by ownership of the
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Receivables. Moreover, distributions by the entity on such Investor
Certificates and the Banks' Certificate would probably not be deductible in
computing the entity's taxable income and distributions to such Investor
Certificateholders would probably be treated as dividend income to such
holders. Such an entity-level tax could result in reduced distributions to all
Investor Certificateholders, and the holders of Investor Certificates that are
treated as equity could also be liable for a share of such a tax.
Since the Banks will treat the Investor Certificates as indebtedness for
federal income tax purposes, the Paying Agent (and Participants and Indirect
Participants) will not comply with the tax reporting requirements that would
apply under those alternative characterizations of the Investor Certificates.
FEDERAL INCOME TAX CONSEQUENCES--NON-UNITED STATES INVESTORS
Tax Counsel has given its opinion that the Investor Certificates will
properly be classified as debt for federal income tax purposes. If the Investor
Certificates are treated as debt:
(a) interest or OID paid to a nonresident alien or foreign corporation or
partnership would be exempt from U.S. withholding taxes (including backup
withholding taxes), provided the holder complies with applicable
identification requirements (and does not actually or constructively own
10% or more of the voting stock of Citicorp, is not a controlled foreign
corporation with respect to Citicorp, and does not bear certain
relationships to holders of the Banks' Certificate other than the Banks).
Applicable identification requirements will be satisfied if there is
delivered to a securities clearing organization (or bank or other financial
institution that holds Investor Certificates on behalf of the customer in
the ordinary course of its trade or business) (i) IRS Form W-8 signed under
penalties of perjury by the beneficial owner of the Investor Certificates
stating that the holder is not a U.S. person and providing such holder's
name and address, (ii) IRS Form 1001 signed by the beneficial owner of the
Investor Certificates or such owner's agent claiming exemption from
withholding under an applicable tax treaty, or (iii) IRS Form 4224 signed
by the beneficial owner of the Investor Certificates or such owner's agent
claiming exemption from withholding of tax on income 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 holder is a U.S. person or that any
certification on the form is false;
(b) a holder of an Investor Certificate who is a nonresident alien or
foreign corporation will not be subject to United States federal income tax
on gain realized on the sale, exchange or redemption of such Investor
Certificate, provided that (i) such gain is not effectively connected to a
trade or business carried on by the holder in the United States, (ii) in
the case of a holder that is an individual, such holder 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 or OID, the conditions described in clause
(a) are satisfied; and
(c) an Investor Certificate held by an individual who at the time of
death is a nonresident alien will not be subject to United States federal
estate tax as a result of such individual's death if, immediately before
his death, (i) the individual did not actually or constructively own 10% or
more of the voting stock of Citicorp, and does not bear certain
relationships to holders of the Banks' Certificate other than the Banks and
(ii) the holding of such Investor Certificate was not effectively connected
with the conduct by the decedent of a trade or business in the United
States.
If the IRS were to contend successfully that some or all of the Investor
Certificates are equity interests in a partnership (not taxable as a
corporation), a holder of such an Investor Certificate that is a nonresident
alien or foreign corporation might be required to file a U.S. individual or
corporate income tax return and pay tax on its share of partnership income at
regular U.S. rates, including in the case of a corporation the branch profits
tax (and would be subject to withholding tax on its share of partnership
income). If some or all of the Investor Certificates are recharacterized as
equity interests in an association taxable as a corporation or a "publicly
traded partnership" taxable as a corporation, to the extent distributions on
such Investor Certificates were treated as dividends, a nonresident alien
individual or foreign corporation would generally
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be taxed on the gross amount of such dividends (and subject to withholding) at
the rate of 30% unless such rate were reduced by an applicable treaty.
STATE AND LOCAL TAX CONSEQUENCES
This discussion is based upon present provisions of the South Dakota statutes
and the regulations promulgated thereunder, and applicable judicial or ruling
authority, all of which are subject to change, which change may be retroactive.
No ruling on any of the issues discussed below will be sought from the South
Dakota Department of Revenue. The activities to be undertaken by Citibank
(South Dakota) in servicing and collecting the Receivables will take place in
South Dakota. The State of South Dakota has no state individual income tax and
no state general corporate income tax. However, South Dakota does have a
financial institution franchise tax which is based upon the net income of
financial institutions doing business in the State of South Dakota. Financial
institutions are defined under South Dakota law to include persons or entities
in the business of buying loans, notes or other evidences of debt.
If the Investor Certificates are treated as debt of the Banks for federal
income tax purposes, in the opinion of Davenport, Evans, Hurwitz & Smith,
L.L.P., South Dakota tax counsel to the Banks and the Trust ("South Dakota Tax
Counsel"), this treatment will also apply for South Dakota tax purposes, and
the Trust, as an entity, will not be subject to taxation in South Dakota as a
financial institution. Moreover, pursuant to this treatment, Investor
Certificateholders not otherwise subject to South Dakota Tax would not become
subject to such tax solely because of their ownership of Investor Certificates.
Investor Certificateholders already subject to taxation in South Dakota as
financial institutions, however, could be required to pay tax on the income
generated from ownership of Investor Certificates.
In the alternative, if the Trust is treated for federal income tax purposes
either (i) as a partnership (not taxable as a corporation) between the Banks
and any other owners of the Banks' Certificate (of which all of the Investor
Certificateholders are treated as creditors), or (ii) as a partnership (not
taxable as a corporation) among the Banks, any other owners of the Banks'
Certificate and some or all of the Investor Certificateholders (in which other
Investor Certificateholders are treated as creditors), in the opinion of South
Dakota Tax Counsel, the same treatment should also apply for South Dakota tax
purposes. In such case, South Dakota would likely view the partnership as doing
business in South Dakota. As a result, the entity would likely be subject to
the South Dakota financial institution franchise tax. Such taxes could result
in reduced distributions to Investor Certificateholders. However,
classification of the Trust as a partnership or of some or all of the Investor
Certificates as equity interests in a partnership would not cause an Investor
Certificateholder not otherwise subject to taxation in South Dakota as a
financial institution to become subject to South Dakota taxes as a result of
its mere ownership of Investor Certificates.
If the Trust were instead treated as an association taxable as a corporation
or a "publicly traded partnership" taxable as a corporation, then the entity
would likely be subject to the South Dakota financial institution franchise
tax. Such taxes could result in reduced distributions to Investor
Certificateholders. An Investor Certificateholder not otherwise subject to tax
in South Dakota would not become subject to South Dakota taxes as a result of
its mere ownership of such an interest.
Because each state's income tax laws vary, it is impossible to predict the
income tax consequences to the Investor Certificateholders in all of the state
taxing jurisdictions in which they are already subject to tax. Investor
Certificateholders are urged to consult their own tax advisors with respect to
state income and franchise taxes.
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. A violation
of these "prohibited transaction" rules may generate excise tax and other
liabilities under ERISA and the Code for such persons. For example, a
prohibited transaction would arise, unless an exemption were available, if an
Investor Certificate were
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viewed as debt of either of the Banks and such Bank were a disqualified person
or a party in interest with respect to a plan that acquired the Investor
Certificate.
Moreover, additional prohibited transactions could arise if the Trust Assets
were deemed to constitute assets of any plan that owned Investor Certificates.
The Department of Labor ("DOL") has issued a final regulation (the "Final
Regulation") concerning the definition of what constitutes "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"). Under the Final
Regulation, the assets and properties of corporations, partnerships and certain
other entities in which a Benefit Plan makes an investment in "an equity
interest" could be deemed to be assets of the Benefit Plan in certain
circumstances. Accordingly, if Benefit Plans (or other entities whose assets
include plan assets) purchase Investor Certificates, the Trust could be deemed
to hold plan assets unless one of the exceptions under the Final Regulation is
applicable to the Trust.
The Final Regulation only applies to the purchase by a Benefit Plan of an
"equity interest" in an entity. Assuming that an Investor Certificate is an
equity interest, the Final Regulation contains an exception that provides that
if a Benefit Plan (or an entity whose assets include plan assets) acquires a
"publicly-offered security", the issuer of the security is not deemed to hold
plan assets. A publicly-offered security is a security that is (i) freely
transferable, (ii) part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another at the conclusion of the
initial offering 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
Benefit 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 Commission)
after the end of the fiscal year of the issuer during which the offering of
such securities to the public occurred.
The Class A Certificates of each Series and the Class B Certificates of each
Series must be separately tested under, and may each meet, the criteria of
publicly-offered securities as described above. There are no restrictions
imposed on the transfer of the Investor Certificates offered hereby, and the
Investor Certificates offered hereby 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. Based on information
provided by any underwriter, agent or dealer involved in the distribution of
the Investor Certificates offered hereby, the Banks will notify the Trustee as
to whether or not the Class A Certificates of any Series will be expected to be
held by at least 100 separately named persons at the conclusion of the offering
and whether or not the Class B Certificates of any Series (if the Class B
Certificates are being offered by this Prospectus and an accompanying
Prospectus Supplement) will be expected to be held by at least 100 separately
named persons at the conclusion of the offering. The Banks will not, however,
determine whether there will, in fact, be at least 100 separately named persons
or whether the 100-investor requirement of the exception for publicly offered
securities is satisfied as to either the Class A Certificates or the Class B
Certificates of such Series. Prospective purchasers may obtain a copy of the
notification described in the second preceding sentence from the Trustee at its
Corporate Trust Department.
If the Class A Certificates or the Class B Certificates of a Series fail to
meet the criteria of publicly-offered securities and the Trust Assets are
deemed to include plan assets, transactions involving the Trust and "parties in
interest" or "disqualified persons" with respect to such plans might be
prohibited under Section 406 of ERISA and Section 4975 of the Code unless an
exemption is applicable. Thus, for example, if a participant in any Benefit
Plan holding Investor Certificates is a cardholder of one of the Accounts,
under a DOL interpretation the purchase of such Investor Certificates by such
plan could constitute a prohibited transaction. There are a number of class
exemptions issued by the DOL that could apply in such event. However, there is
no assurance that any such exemption will apply to all transactions involving
the Trust Assets.
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Moreover, as discussed above, while Tax Counsel has given its opinion that
the Investor Certificates will properly be treated as debt for federal income
tax purposes, if any Investor Certificates are treated as equity interests in a
partnership in which other Investor Certificates are debt, all or part of a
tax-exempt investor's share of income from the Investor Certificates that are
treated as equity would be treated as unrelated debt-financed income under the
Code taxable to the investor.
In light of the foregoing, fiduciaries of Benefit Plans (or other entities
whose assets include plan assets) considering the purchase of Investor
Certificates should consult their own counsel as to whether the acquisition of
such Investor Certificates would be a prohibited transaction, whether Trust
Assets which are represented by such Investor Certificates would be considered
plan assets, the consequences that would apply if the Trust Assets were
considered plan assets, the applicability of exemptive relief from the
prohibited transaction rules and the applicability of the tax on unrelated
business income and unrelated debt-financed income.
In addition, based on the reasoning of the United States Supreme Court's
recent decision in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank,
144 S.Ct. 517 (1993), under certain circumstances assets in the general account
of an insurance company may be deemed to be plan assets for certain purposes,
and under such reasoning a purchase of Investor Certificates with assets of an
insurance company's general account might be subject to the prohibited
transaction rules described above.
Unless otherwise provided in the applicable Prospectus Supplement, if the
Banks do not notify the Trustee, as described above, that the Class A
Certificates (or the Class B Certificates, as the case may be) of any
particular Series will be expected to be held by at least 100 persons, the
Class A Certificates (or the Class B Certificates, as the case may be) of such
Series may not be acquired by any Benefit Plan or by any entity investing
assets that are treated as assets of a Benefit Plan. Furthermore, in that case,
the Pooling Agreement, the Series Supplement and each such Investor Certificate
will provide that each holder of such Investor Certificate shall be deemed to
have represented and warranted that it is not a Benefit Plan and is not
purchasing such Investor Certificate on behalf of a Benefit Plan or with assets
that are treated as assets of a Benefit Plan.
PLAN OF DISTRIBUTION
The Banks may sell Investor Certificates in any of three ways: (i) through
underwriters or dealers; (ii) directly to one or more purchasers; or (iii)
through agents. The related Prospectus Supplement will set forth the terms of
the offering of any Investor Certificates, including, without limitation, the
names of any underwriters, the purchase price of such Investor Certificates and
the proceeds to the Banks from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in a sale of any Investor Certificates, such
Investor Certificates will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of
commitment therefor. Such Investor Certificates may be offered to the public
either through underwriting syndicates represented by managing underwriters or
by underwriters without a syndicate. Unless otherwise set forth in the related
Prospectus Supplement, the obligations of the underwriters to purchase such
Investor Certificates will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all of such Investor Certificates if
any of such Investor Certificates are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
Investor Certificates may also be offered and sold, if so indicated in the
related Prospectus Supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment
76
<PAGE>
pursuant to their terms, by one or more firms ("remarketing firms") acting as
principals for their own accounts or as agents for the Banks. Any remarketing
firm will be identified and the terms of its agreement, if any, with the Banks
and its compensation will be described in the related Prospectus Supplement.
Remarketing firms may be deemed to be underwriters in connection with the
Investor Certificates remarketed thereby.
Investor Certificates may also be sold directly by the Banks or through
agents designated by the Banks from time to time. Any agent involved in the
offer or sale of Investor Certificates will be named, and any commissions
payable by the Banks to such agent will be set forth, in the related Prospectus
Supplement. Unless otherwise indicated in the related Prospectus Supplement,
any such agent will act on a best efforts basis for the period of its
appointment.
Any underwriters, dealers or agents participating in the distribution of
Investor Certificates may be deemed to be underwriters and any discounts or
commissions received by them on the sale or resale of Investor Certificates may
be deemed to be underwriting discounts and commissions under the Securities
Act. Agents and underwriters may be entitled under agreements entered into with
the Banks to indemnification by the Banks against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, the Banks or their affiliates in the ordinary
course of business.
Affiliates of the Banks may act as agents or underwriters in connection with
the sale of the Investor Certificates. Any affiliate of the Banks so acting
will be named, and its affiliation with the Banks described, in the related
Prospectus Supplement. Also, affiliates of the Banks may act as principals or
agents in connection with market-making transactions relating to the Investor
Certificates. This Prospectus and the related Prospectus Supplement may be used
by such affiliates in connection with offers and sales related to market-making
transactions in the Investor Certificates. Such sales will be made at prices
related to prevailing market prices at the time of sale.
LEGAL MATTERS
Certain legal matters relating to the Investor Certificates will be passed
upon for the Banks and the Trust by Stephen E. Dietz, as an Associate General
Counsel of Citibank, N.A., and for any agents or underwriters by Cravath,
Swaine & Moore, New York, New York. Mr. Dietz owns or has the right to acquire
a number of shares of common stock of Citicorp equal to less than .01% of the
outstanding common stock of Citicorp. Certain federal income tax and ERISA
matters will be passed upon for the Banks and the Trust by Cravath, Swaine &
Moore, New York, New York and certain South Dakota tax matters will be passed
upon for the Banks and the Trust by Davenport, Evans, Hurwitz & Smith, L.L.P.,
Sioux Falls, South Dakota.
77
<PAGE>
GLOSSARY
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Accounts.................................................................. 4
Accumulation Period....................................................... 9
Additional Accounts....................................................... 23
Adjustment Payment........................................................ 46
Adverse Effect............................................................ 16
Available Cash Collateral Amount.......................................... 49
Available Enhancement Amount.............................................. 47
Available Investor Principal Collections.................................. 43
Available L/C Amount...................................................... 50
Available Shared Enhancement Amount....................................... 47
Banks..................................................................... 1
Banks' Certificate........................................................ 6
Banks' Interest........................................................... 5
Benefit Plans............................................................. 75
Cash Collateral Account................................................... 47
Cash Collateral Depositor................................................. 49
Cede...................................................................... 2
Cedel..................................................................... 57
Cedel Participants........................................................ 57
Certificateholders' Interest.............................................. 5
Citibank.................................................................. 56
Citibank (Nevada)......................................................... 3
Citibank (South Dakota)................................................... 3
Class A Certificate Rate.................................................. 29
Class A Certificateholders................................................ 2
Class A Certificates...................................................... 1
Class A Controlled Amortization Amount.................................... 43
Class A Controlled Distribution Amount.................................... 43
Class A Covered Amount.................................................... 44
Class A Deficit Controlled Amortization Amount............................ 44
Class A Excess Investment Proceeds........................................ 44
Class A Funding Account Payment........................................... 39
Class A Funding Account Receipt........................................... 39
Class A Funding Account Shortfall......................................... 45
Class A Funding Accounts.................................................. 45
Class A Interest.......................................................... 5
Class A Interest Funding Account.......................................... 29
Class A Invested Amount................................................... 33
Class A Investment Fee.................................................... 40
Class A Investment Proceeds............................................... 44
Class A Investor Charge-Off............................................... 46
Class A Investor Default Amount........................................... 40
Class A Monthly Interest.................................................. 40
Class A Monthly Principal................................................. 44
Class A Monthly Servicing Fee............................................. 53
Class A Net Cap Receipt................................................... 40
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Class A Net Swap Payment.................................................. 40
Class A Net Swap Receipt.................................................. 40
Class A Principal Funding Account......................................... 9
Class A Principal Funding Account Balance................................. 44
Class B Certificate Rate.................................................. 29
Class B Certificateholders................................................ 2
Class B Certificates...................................................... 1
Class B Interest.......................................................... 5
Class B Interest Funding Account.......................................... 29
Class B Invested Amount................................................... 33
Class B Investor Charge-Off............................................... 47
Class B Investor Default Amount........................................... 40
Class B Monthly Interest.................................................. 40
Class B Monthly Principal................................................. 44
Class B Monthly Servicing Fee............................................. 53
Class B Net Swap Payment.................................................. 40
Class B Principal Commencement Date....................................... 44
Code...................................................................... 70
Collection Account........................................................ 26
Commission................................................................ 2
Controlled Distribution Amount............................................ 9
Cooperative............................................................... 57
Credit Enhancement........................................................ 47
Credit Enhancement Agreement.............................................. 41
Defaulted Receivables..................................................... 45
Definitive Certificates................................................... 58
Depositaries.............................................................. 56
Depository................................................................ 29
Determination Date........................................................ 11
Disclosure Document....................................................... 6
Distribution Date......................................................... 11
DOL....................................................................... 75
DTC....................................................................... 2
Due Period................................................................ 11
Early Amortization Event.................................................. 50
Early Amortization Period................................................. 10
Economic Early Amortization Event......................................... 48
Eligible Account.......................................................... 61
Eligible Deposit Account.................................................. 26
Eligible Institution...................................................... 27
Eligible Investments...................................................... 27
Eligible Receivable....................................................... 62
Enhancement Invested Amount............................................... 33
ERISA..................................................................... 74
Euroclear................................................................. 57
Euroclear Operator........................................................ 57
Euroclear Participants.................................................... 57
Euroclear System.......................................................... 57
</TABLE>
78
<PAGE>
<TABLE>
<S> <C>
Excess Finance Charge Collections........................................... 40
Excess Principal Collections................................................ 38
Exchange Act................................................................ 2
Expected Final Payment Date................................................. 13
FDIA........................................................................ 68
FDIC........................................................................ 6
Final Regulation............................................................ 75
Finance Charge Receivables.................................................. 4
FIRREA...................................................................... 68
Floating Allocation Percentage.............................................. 33
Gross Amount................................................................ 34
Group....................................................................... 7
Group One................................................................... 7
Group One Investor Additional Amounts....................................... 34
Group One Investor Default Amount........................................... 35
Group One Investor Finance Charges.......................................... 35
Group One Investor Monthly Fees............................................. 35
Group One Investor Monthly Interest......................................... 35
Holders..................................................................... 59
Income Tax Withholding...................................................... 12
Indirect Participants....................................................... 56
Ineligible Receivables...................................................... 60
Initial Accounts............................................................ 4
Initial Cash Collateral Amount.............................................. 49
Initial Class B Collateral Amount........................................... 49
Initial Class B Enhancement Amount.......................................... 47
Initial Class B L/C Amount.................................................. 50
Initial Shared Collateral Amount............................................ 49
Initial Shared Enhancement Amount........................................... 47
Initial Shared L/C Amount................................................... 50
Insolvency Event............................................................ 18
Interchange................................................................. 5
Interest.................................................................... 8
Interest Calculation Date................................................... 40
Interest Funding Account.................................................... 8
Interest Payment Date....................................................... 40
Interest Period............................................................. 40
Invested Amount............................................................. 33
Investment Company Act...................................................... 23
Investor Certificateholders................................................. 2
Investor Certificates....................................................... 1
Investor Finance Charges.................................................... 32
Investor Principal Collections.............................................. 32
IRA......................................................................... 75
IRS......................................................................... 70
Issuer...................................................................... 3
L/C......................................................................... 47
L/C Funding Account......................................................... 50
L/C Issuer.................................................................. 50
L/C Issuer Downgrade........................................................ 50
Lump Sum Addition........................................................... 22
MasterCard International.................................................... 5
</TABLE>
<TABLE>
<S> <C>
Monthly Credit Enhancement Fee.............................................. 41
Monthly Report.............................................................. 54
Moody's..................................................................... 27
Morgan...................................................................... 56
Net Servicing Fee Rate...................................................... 53
New Accounts................................................................ 22
New Issuance................................................................ 24
OID......................................................................... 12
OID regulations............................................................. 70
Participants................................................................ 56
Participations.............................................................. 22
Paying Agent................................................................ 45
Payment Date................................................................ 40
Pooling Agreement........................................................... 28
Portfolio................................................................... 17
Portfolio Yield............................................................. 20
Principal................................................................... 8
Principal Allocation Percentage............................................. 34
Principal Receivables....................................................... 4
Principal Shortfalls........................................................ 38
Principal Terms............................................................. 25
Prospectus Supplement....................................................... 1
Rating Agency............................................................... 15
Ratings Effect.............................................................. 16
Reallocated Investor Finance Charges........................................ 34
Receivables................................................................. 1
Record Date................................................................. 53
Removal Date................................................................ 24
Removed Accounts............................................................ 4
Required Amount............................................................. 42
Required Minimum Principal Balance.......................................... 13
Required Surplus Finance Charge Amount...................................... 13
Revolving Period............................................................ 8
Securities Act.............................................................. 2
Seller Servicing Fee........................................................ 53
Series...................................................................... 1
Series Adjusted Invested Amount............................................. 28
Series Allocable Defaulted Receivables...................................... 28
Series Allocable Finance Charge Collections................................. 28
Series Allocable Miscellaneous Payments..................................... 28
Series Allocable Principal Collections...................................... 28
Series Allocation Percentage................................................ 28
Series Cut-Off Date......................................................... 9
Series Enhancement.......................................................... 3
Series Issuance Date........................................................ 25
Series Servicing Fee........................................................ 53
Series Supplement........................................................... 28
Series Termination Date..................................................... 25
Service Transfer............................................................ 65
Servicer.................................................................... 11
Servicer Default............................................................ 65
Servicer Interchange........................................................ 53
</TABLE>
79
<PAGE>
<TABLE>
<S> <C>
Servicer Interchange Rate................................................... 53
South Dakota Tax Counsel.................................................... 74
Special Payment Date........................................................ 40
Standard & Poor's........................................................... 27
Stated L/C Amount........................................................... 49
Subordinated Principal Collections.......................................... 42
Supplement.................................................................. 6
Supplemental Certificate.................................................... 59
Surplus Finance Charge Collections.......................................... 14
Tax Counsel................................................................. 71
Tax Status.................................................................. 12
Termination Notice.......................................................... 65
</TABLE>
<TABLE>
<S> <C>
Terms and Conditions........................................................ 58
Transfer Deposit Amount..................................................... 61
Trust....................................................................... 1
Trust Adjusted Invested Amount.............................................. 28
Trust Assets................................................................ 3
Trust Cut-Off Date.......................................................... 4
Trust Servicing Fee......................................................... 52
Trust Termination Date...................................................... 59
Trustee..................................................................... 3
UCC......................................................................... 17
Unallocated Principal Collections........................................... 38
VISA........................................................................ 5
</TABLE>
80
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A
Certificates and Class B Certificates (if the Class B Certificates are being
offered by this Prospectus and an accompanying Prospectus Supplement) (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"), Cedel or Euroclear. The Global Securities
will be tradeable as home market instruments in both the European and U.S.
domestic markets. Initial settlement and all secondary trades will settle in
same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
participants holding Global Securities will be effected on a delivery-against-
payment basis through Citibank, N.A. ("Citibank") and Morgan Guaranty Trust
Company of New York ("Morgan") as the respective depositaries of Cedel and
Euroclear and as participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S. withholding
taxes, provided that such holders meet certain requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or
their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
depositaries, Citibank and Morgan, which in turn will hold such positions in
accounts as participants of DTC.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to securities previously issued by
Standard Credit Card Trusts established by the Banks. Investor securities
custody accounts will be credited with their holdings against payment in same-
day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC participants. Secondary market trading between DTC
participants will be settled using the procedures applicable to securities
previously issued by Standard Credit Card Trusts established by the Banks in
same-day funds.
I-1
<PAGE>
Trading between Cedel and/or Euroclear participants. Secondary market
trading between Cedel participants and/or Euroclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC participant to the
account of a Cedel participant or a Euroclear participant, the purchaser will
send instructions to Cedel or Euroclear through a participant at least one
business day prior to settlement. Cedel or Euroclear will instruct Citibank or
Morgan, respectively, as the case may be, to receive the Global Securities
against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding
the settlement date. For transactions settling on the 31st day of the month,
payment will include interest accrued to and excluding the first day of the
following month. Payment will then be made by Citibank or Morgan to the DTC
participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel participant's or Euroclear participant's
account. The Global Securities credit will appear the next day (European time)
and the cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debit
will be valued instead as of the actual settlement date.
Cedel participants and Euroclear participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they
would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, participants can elect not to preposition funds and allow that credit
line to be drawn upon to finance settlement. Under this procedure, Cedel
participants or Euroclear participants purchasing Global Securities would
incur overdraft charges for one day, assuming they cleared the overdraft when
the Global Securities were credited to their accounts. However, interest on
the Global Securities would accrue from the value date. Therefore, in many
cases the investment income on the Global Securities earned during that one-
day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each participant's particular
cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Global Securities
to Citibank or Morgan for the benefit of Cedel participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently than a trade between two DTC participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel and Euroclear participants may employ
their customary procedures for transactions in which Global Securities are to
be transferred by the respective clearing system, through Citibank or Morgan,
to a DTC participant. The seller will send instructions to Cedel or Euroclear
through a participant at least one business day prior to settlement. In these
cases, Cedel or Euroclear will instruct Citibank or Morgan, as appropriate, to
deliver the 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. For
transactions settling on the 31st day of the month, payment will include
interest accrued to and excluding the first day of the following month. The
payment will then be reflected in the account of the Cedel participant or
Euroclear participant the following day, and receipt of the cash proceeds in
the Cedel or Euroclear participant's account would be back-valued to the value
date (which would be the preceding day, when settlement occurred in New York).
Should the Cedel or Euroclear participant have a line of credit with its
respective clearing system and elect to be in debit in anticipation of receipt
of the sale proceeds in its account, the back-valuation will extinguish
I-2
<PAGE>
any overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Cedel or Euroclear participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC participants for delivery to Cedel participants or
Euroclear participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(1) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(2) borrowing the Global Securities in the U.S. from a DTC participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(3) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC participant is at least
one day prior to the value date for the sale to the Cedel participant or
Euroclear participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A holder of Global Securities holding securities through Cedel or Euroclear
(or through DTC if the holder has an address outside the U.S.) will be subject
to the 30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. persons,
unless such holder takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for non-U.S. persons (Form W-8). Non-U.S. persons that are
beneficial owners can obtain a complete exemption from the withholding tax by
filing a signed Form W-8 (Certificate of Foreign Status).
Exemption for non-U.S. persons with effectively connected income (Form
4224). A non-U.S. person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
Exemption or reduced rate for non-U.S. persons resident in treaty countries
(Form 1001). Non-U.S. persons that are beneficial owners residing in a country
that has a tax treaty with the United States can obtain an exemption or
reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless
the filer alternatively files Form W-8. Form 1001 may be filed by the
beneficial owner or his agent.
Exemption for U.S. persons (Form W-9). U.S. persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Request for Taxpayer
Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Global Security holder, or
in the case of a Form 1001 or a Form 4224 filer, his agent, files by
submitting the appropriate form to the person through whom he holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
This summary does not deal with all aspects of federal income tax
withholding that may be relevant to foreign holders of these Global
Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of these Global
Securities.
I-3
<PAGE>
No dealer, salesman or any other person has been authorized to give any infor-
mation or to make any representations not contained or incorporated by refer-
ence in this Prospectus Supplement or the accompanying Prospectus in connection
with the offer made by this Prospectus Supplement and the accompanying Prospec-
tus and, if given or made, such information or representations must not be re-
lied upon. Neither the delivery of this Prospectus Supplement nor the accompa-
nying Prospectus nor any sale made hereunder and thereunder shall under any
circumstances create any implication that there has been no change in the af-
fairs of Citibank (South Dakota), N.A. or Citibank (Nevada), National Associa-
tion or in the Receivables or the Accounts since the date hereof. This Prospec-
tus Supplement and the accompanying Prospectus do not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Series Terms................................................... S-3
The Credit Card Business of Citibank
(South Dakota)........................................................... S-9
The Accounts.............................................................. S-12
The Banks................................................................. S-19
Supplemental Series Provisions............................................ S-19
Underwriting.............................................................. S-22
Legal Matters............................................................. S-23
Glossary Supplement....................................................... S-24
Annex I: Prior Issuances of Investor Certificates......................... I-1
PROSPECTUS
Available Information..................................................... 2
Reports to Certificateholders............................................. 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Special Considerations.................................................... 13
The Banks................................................................. 21
Use of Proceeds........................................................... 21
The Trust................................................................. 21
Master Trust Provisions................................................... 22
Series Provisions......................................................... 28
The Pooling Agreement Generally........................................... 55
Certain Legal Aspects of the Receivables.................................. 68
Tax Matters............................................................... 70
ERISA Considerations...................................................... 74
Plan of Distribution...................................................... 76
Legal Matters............................................................. 77
Glossary.................................................................. 78
Annex I: Global Clearance, Settlement and Tax Documentation Procedures.... I-1
</TABLE>
CITIBANK CREDIT CARD MASTER TRUST I
$750,000,000
FLOATING RATE CLASS A CREDIT CARD PARTICIPATION CERTIFICATES, SERIES 1997-8
CITIBANK (SOUTH DAKOTA), N.A.
SELLER AND SERVICER
CITIBANK (NEVADA), NATIONAL ASSOCIATION
SELLER
SALOMON BROTHERS INC
CITIBANK
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
PROSPECTUS SUPPLEMENT
DATED SEPTEMBER 8, 1997
