As filed with the Securities and Exchange Commission on June 15, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CITIBANK (SOUTH DAKOTA), N.A. CITIBANK (NEVADA), NATIONAL ASSOCIATION
(Originators of the Trust described herein)
(Exact Name of Registrants as Specified in Their Charters)
United States United States
of America 46-0358360 of America 88-0202961
(State or Other (I.R.S. Employer (State or Other (I.R.S. Employer
Jurisdiction Identification Jurisdiction Identification
of Organization) Number) of Organization) Number)
701 East 60th Street, North 8725 West Sahara Avenue
Sioux Falls, South Dakota 57117 Las Vegas, Nevada 89163
(605) 331-2626 (702) 797-4444
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Each
Registrant's Principal Executive Offices)
STEPHANIE B. MUDICK, ESQ.
General Counsel - Corporate Law
CITIGROUP INC.
153 East 53rd Street
New York, New York 10043
(212) 559-1000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Copies To:
DAVID L. ZIMBECK, ESQ. WILFRIED JACKSON
General Counsel President
Citibank (South Dakota), N.A. Citibank (Nevada), National Association
701 East 60th Street, North 8725 West Sahara Avenue
Sioux Falls, South Dakota 57117 Las Vegas, Nevada 89163
(605) 331-2626 (702) 797-4444
GREGORY M. SHAW, ESQ.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
Approximate date of commencement of proposed sale to the public: As soon
as practicable on or after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [_] If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [_]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- --------------------------------------- -------------------- ---------------------- ---------------------- ------------------------
Amount to be Proposed Proposed
Title of securities to be registered registered maximum aggregate Maximum aggregate Amount of registration
(a)(b)(c) price per Note (d) offering price (d) fee
- --------------------------------------- -------------------- ---------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
Notes............................... $1,000,000 100% $1,000,000 $278
- --------------------------------------- -------------------- ---------------------- ---------------------- ------------------------
<FN>
(a) With respect to any Notes issued with original issue discount, the amount
to be registered is calculated based on the initial public offering price
thereof.
(b) With respect to any Notes denominated in any foreign currency, the amount
to be registered shall be the U.S. dollar equivalent thereof based on the
prevailing exchange rate at the time such Note is first offered.
(c) Includes an indeterminate amount of securities that are to be offered or
sold in connection with market-making activities by affiliates of the
Registrants, including Salomon Smith Barney Inc.
(d) Estimated solely for the purpose of calculating the registration fee.
</FN>
</TABLE>
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
INTRODUCTORY NOTE
This Registration Statement includes:
o a form of base prospectus relating to asset-backed notes of Citibank
Credit Card Issuance Trust;
o a form of prospectus supplement to the base prospectus relating to the
offering by Citibank Credit Card Issuance Trust of a subclass of
asset-backed notes; and
o a form of prospectus supplement to the base prospectus relating to the
offering by Citibank Credit Card Issuance Trust of a series of asset-
backed notes.
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[FLAG]
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
Subject to Completion, dated June 15, 1999
Prospectus
Dated __________, 1999
CITIBANK CREDIT CARD ISSUANCE TRUST
Class A Notes
Class B Notes
Class C Notes
We will provide the specific terms of these Notes in supplements to this
prospectus. You should read this prospectus and the applicable supplements to
this prospectus carefully before you invest.
Principal payments on the Class B Notes are subordinated to payments on the
Class A Notes. Principal payments on the Class C Notes are subordinated to
payments on the Class A and Class B Notes.
You should review and consider the discussion under "Risk Factors" beginning on
page 10 of this prospectus before you purchase any Notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved the Notes or determined that this prospectus or any
applicable supplement to this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The Notes are obligations of Citibank Credit Card Issuance Trust only and are
not obligations of any other person. Each class of Notes is secured by only some
of the assets of Citibank Credit Card Issuance Trust. Noteholders will have no
recourse to any other assets of the Issuer for the payment of the Notes. The
Notes are not insured or guaranteed by the Federal Deposit Insurance Corporation
or any other governmental agency or instrumentality.
<PAGE>
TABLE OF CONTENTS
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Prospectus Summary..........................................3
Risk Factors
Timing of payments on the Notes is not certain........10
Effect of subordination on Class B Notes and
Class C Notes......................................11
Reinvestment risk in the event of an early
redemption.........................................11
Addition of Master Trust assets may affect
credit Quality.....................................12
Control of certain actions under the Indenture
may be limited.....................................12
Ability of resell Notes may be limited................12
Ratings of Notes do not guarantee timely
payment of principal...............................12
Issuance of additional Notes..........................12
Changes in card use and payment patterns..............13
Citibank (South Dakota)'s ability to change
terms of the credit card accounts could alter
payment patterns...................................13
Certain Legal Aspects.................................13
Competition in credit card industry...................16
Remedies upon default may be limited..................16
Where You Can Find Additional
Information...........................................17
The Issuer.................................................17
Owners................................................18
Use of Proceeds............................................18
The Notes..................................................19
Interest..............................................20
Principal.............................................21
Subordination of Principal............................21
Redemption and Early Redemption of Notes..............22
New Issuances of Notes................................22
Payments on Notes; Paying Agent.......................24
Denominations.........................................25
Record Date...........................................25
Governing Law.........................................25
Form, Exchange, and Registration and Transfer
of Notes...........................................25
Replacement of Notes..................................26
Acquisition and Cancellation of Notes.................26
Book-Entry Notes......................................26
Sources of Funds to Pay the Notes..........................32
The Collateral Interest...............................32
Derivative Agreements.................................34
The Trust Accounts....................................35
Security for the Notes; Limited recourse
to the Issuer......................................36
Deposit of Funds into the Trust Accounts...................36
Allocation of finance charge collections to
accounts..............................................37
Allocation of principal collections to accounts.......37
Required deposits to the interest funding
account............................................38
Required deposits to the principal funding account....39
Required deposits to the Class C reserve account......41
Required reinvestment in the Collateral Interest......41
Treatment of zero-coupon/foreign currency Notes.......41
Allocation to interest funding subaccounts............42
Allocation to principal funding subaccounts...........43
Derivative agreement payments and receipts............43
Application of Funds in the Trust Accounts
to Payments on the Notes...........................44
Covenants, Events of Default, Early Redemption Events
and Indenture Amendments...........................47
Issuer Covenants......................................47
Events of Default.....................................49
Early Redemption Events...............................52
Amendment of Indenture................................53
Notices, Reports, Noteholders' Meetings
and the Trustee....................................54
Notices...............................................54
Issuer's Annual Compliance Statement..................54
Indenture Trustee's Annual Report.....................55
List of Noteholders...................................55
Reports...............................................55
Meetings..............................................55
The Indenture Trustee.................................56
The Master Trust ........................................56
Master Trust Assets...................................57
The Servicer..........................................61
Master Trust Issuances................................62
Allocation of Collections, Losses and Fees............62
Early Amortization Events.............................63
Optional Termination; Final Payment of Principal......64
Amendments to Pooling Agreement.......................64
Tax Matters..............................................65
Tax Characterization of the Notes.....................66
Tax Characterization of the Issuer....................66
U.S. and Non-U.S. Noteholders.........................66
Tax Consequences to U.S. Noteholders..................67
Tax Consequences to Non-U.S. Noteholders..............69
Benefit Plan Investors...................................71
Prohibited Transactions...............................71
Potential Prohibited Transactions from Investment
in Notes...........................................72
Investment by Benefit Plan Investors..................73
Tax Consequences to Benefit Plans.....................73
Plan of Distribution.....................................74
Legal Matters............................................75
Glossary.................................................76
Annex I: The Credit Card Business
of Citibank (South Dakota).........................I-1
2
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PROSPECTUS SUMMARY
------------------
This summary does not contain all the information you may need to make an
informed investment decision. You should read the entire prospectus and any
supplement to this prospectus before you purchase any Notes.
If the terms of the Notes differ between this prospectus and any supplement to
this prospectus, you should rely on the information in the supplement.
There is a glossary on page 76 where you will find a listing of the capitalized
terms used in this prospectus.
SECURITIES OFFERED The Issuer is offering Class A Notes, Class
B Notes and Class C Notes. The Notes will be
issued pursuant to an indenture between the
Issuer and ___________, as trustee.
The Notes will be issued in series. Each
series of Notes will consist of three
classes: Class A, Class B and Class C. Each
class may have subclasses, if we so specify
in a supplement to this prospectus. The
classes of a series may be issued at the
same time or at different times, but no
Class A or Class B Notes of a series may be
issued unless sufficient subordinated Class
B Notes and/or Class C Notes of that series
are outstanding. See "The Notes--New
Issuances of Notes."
ISSUER Citibank Credit Card Issuance Trust, a
Delaware statutory business trust. The
Issuer's principal place of business is
located at __________. Its phone number is
____________.
INDENTURE TRUSTEE [name]
INTEREST PAYMENTS Each class of Notes, other than zero-coupon
Notes, will bear interest from the date and
at the rate set forth or determined in a
supplement to this prospectus. Interest on
the Notes will be paid on the dates
specified in a supplement to this
prospectus.
Each payment of interest on a class of Notes
will include all interest accrued from the
preceding interest payment date (or from the
issuance date, for the first interest
period) through the day preceding the
current interest payment date, or such other
period as may be specified in a supplement
to this prospectus.
If finance charge collections allocable to
the Collateral Interest are less than
expected, principal collections allocable to
a series of Notes under the Collateral
Interest may be used to pay interest on that
series of Notes. However, this reallocation
of principal would reduce the invested
amount of the Collateral Interest and thus
reduce later principal collections and
finance charge collections allocable to the
Collateral Interest unless the
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principal reduction is reimbursed from
excess finance charge collections.
PRINCIPAL PAYMENTS The timing of payment of principal on a Note
will be specified in a supplement to this
prospectus.
SUBORDINATION OF PRINCIPAL In general, principal payments will not be
made on Class C Notes of a series until all
principal then due and payable on Class A
Notes and Class B Notes of that series has
been paid in full, and principal payments
will not be made on Class B Notes of a
series until all principal then due and
payable on Class A Notes of that series has
been paid in full.
EXPECTED PRINCIPAL PAYMENT DATE The Issuer expects to pay the principal of
each Note in one payment on its Expected
Principal Payment Date, and is obligated to
do so if funds are available for that
purpose. However, if principal of a Note is
not paid in full on its Expected Principal
Payment Date, the holders of that Note will
not have any remedies against the Issuer
until the Legal Maturity Date of the Note.
In general, the Expected Principal Payment
Date of a Note is [two years] before its
Legal Maturity Date.
LEGAL MATURITY DATE If a Note is not paid in full on its Legal
Maturity Date, the holders of that Note will
have the remedies against the Issuer
described under "Covenants, Events of
Default, Early Redemption Events and
Indenture Amendments--Events of Default."
The Legal Maturity Date for a Note is the
date on which the Note is legally required
to be fully paid.
REDEMPTION AND EARLY Redemption of Notes If we specify in a
supplement to this prospectus, the Issuer or
a Noteholder may, at its option, redeem the
Notes of any series or class before its
Expected Principal Payment Date. The
supplement will indicate who will have that
right of redemption, at what times that
redemption may be exercised, if that
redemption may be made in whole or in part
and any other terms of the redemption.
In addition, the Issuer is required to
redeem any Note upon the occurrence of an
Early Redemption Event with respect to that
Note but only to the extent the Issuer has
funds available. It is not an Event of
Default if the Issuer fails to redeem a Note
because it does not have sufficient funds
available.
Early Redemption Events include the
following:
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o the occurrence of the Expected
Principal Payment Date of that Note;
o all the early amortization events
applicable to the Collateral
Interest as described under
"The Master Trust--Early
Amortization Events";
o certain events relating to the
performance of the credit card
receivables owned by the Master
Trust as described under
"Covenants, Events of Default,
Early Redemption Events and
Indenture Amendments--Early
Redemption Events"; and
o any additional early redemption
events specified in a supplement
to this prospectus.
The list above summarizes only some of the
Early Redemption Events. See "Covenants,
Events of Default, Early Redemption Events
and Indenture Amendments--Early Redemption
Events" for a description of the Early
Redemption Events and their consequences to
holders of Notes.
SOURCES OF FUNDS TO PAY
THE NOTES The following sources of funds will be
available to pay principal and interest on
the Notes:
A. The Collateral Interest issued by
Citibank Credit Card Master Trust I. The
Collateral Interest is an investor
certificate issued by the Master Trust.
It represents an undivided interest in
the assets of the Master Trust. The
Master Trust owns primarily credit card
receivables arising in selected
MasterCard and VISA revolving credit
card accounts. Citibank (South Dakota)
and Citibank (Nevada) have transferred
the credit card receivables to the
Master Trust in accordance with the
terms of a pooling and servicing
agreement among Citibank (South Dakota),
Citibank (Nevada) and Bankers Trust
Company, as trustee. Both principal
collections and finance charge
collections on the receivables will, in
general, be allocated pro rata among
holders of interests in the Master Trust
based on the investment in credit card
receivables of each interest in the
Master Trust (including the interest of
the Issuer in the Master Trust
represented by the Seller's Interest),
subject to the exception described under
"Sources of Funds to Pay the Notes--The
Collateral Interest." If collections of
receivables allocable to the Collateral
Interest are less than expected,
payments of principal of
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and interest on the Notes could be
delayed or remain unpaid.
B. Derivative Agreements. Some Notes may
have the benefit of one or more
derivative agreements, including
interest rate or currency swaps, caps,
collars, guaranteed investment contracts
or other similar agreements with various
counterparties (which may include
Citibank (South Dakota) or Citibank
(Nevada)) to manage interest rate or
currency risk relating to the Notes. The
specific terms of each derivative
agreement and a description of each
counterparty will be included in the
applicable supplement to this
prospectus.
C. The Trust Accounts. The Issuer has
established a collection account for the
purpose of receiving payments of finance
charge collections and principal
collections from the Master Trust
payable under the Collateral Interest
and payments under any derivative
agreements.
The Issuer has also established a
principal funding account and interest
funding account, which will have
subaccounts for each class and subclass
of Notes of a series, and a Class C
reserve account, which will have
subaccounts for each class and subclass
of Class C Notes of a series. If
specified in a supplement to this
prospectus, the Issuer may establish
supplemental accounts for any series,
class or subclass of Notes.
Each month, all distributions on the
Collateral Interest and payments under
any derivative agreements will be
deposited into the collection account,
and then reallocated to the principal
funding account, the interest funding
account, the Class C reserve account,
any supplemental account, and to the
other purposes as specified in "Deposit
of Funds into the Trust Accounts" or in
a supplement to this prospectus.
Funds on deposit in the principal
funding account and the interest
funding account will be used to make
payments of principal of and interest
on the Notes.
Amounts in the Class C reserve account
will be available to holders of Class C
Notes to cover shortfalls of interest
payable on interest payment dates and
principal payable on the applicable
Legal Maturity Date. Only the holders of
Class C Notes will have the benefit of
the Class C reserve account.
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The Issuer will be required to fund the
Class C reserve account if the finance
charge collections generated by the
Master Trust after payment of expenses
and interest payments fall below a
specified level. The Class C reserve
account would be funded from monthly
finance charge collections from the
Collateral Interest after payment of
expenses of the Indenture Trustee,
required interest deposits and other
payments described under "Deposit of
Funds into the Trust Accounts." A
supplement to this prospectus relating
to Class C Notes will include provisions
for funding the Class C reserve account.
SECURITY FOR THE NOTES The Notes will be secured by collateral
consisting of the Collateral Interest and by
the funds on deposit in the collection
account. In addition, each Note will be
secured by the funds on deposit in the
applicable subaccount of the principal
funding account, the interest funding
account, the Class C reserve account (for
holders of Class C Notes only), and, if
specified in a supplement to this
prospectus, any applicable supplemental
account and any derivative agreement.
LIMITED RECOURSE
TO THE ISSUER Only the Collateral Interest, the applicable
trust accounts and any applicable derivative
agreement secure any class of Notes, and
Noteholders will have no recourse to any
other assets of the Issuer or any other
person or entity for the payment of
principal of or interest on the Notes.
EVENTS OF DEFAULT The documents that govern the terms and
conditions of the Notes include a list of
adverse events known as "Events of Default."
Some Events of Default result in an
automatic acceleration of the affected
Notes, and others result in the right of the
holders of affected Notes to demand
acceleration after an affirmative vote by
holders of 25% of the affected Notes.
Events of Default include the following:
o the Issuer fails to pay interest on
any Note within five business days
of its due date;
o the Issuer fails to pay in full
principal on any Note on its Legal
Maturity Date;
o the Issuer defaults on any covenant
or breaches any agreement under the
Indenture, and the default or
breach is materially adverse to
Noteholders;
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o the occurrence of certain events of
bankruptcy, insolvency or
reorganization relating to the
Issuer; or
o any additional events of default
specified in a supplement to this
prospectus.
The list above summarizes only some of the
Events of Default. See "Covenants, Events of
Default, Early Redemption Events and
Indenture Amendments--Events of Default" for
a description of the Events of Default and
their consequences to holders of the Notes.
It is not an Event of Default if the
principal of a Note is not paid on its
Expected Principal Payment Date.
EVENT OF DEFAULT REMEDIES After an Event of Default and the
acceleration of a series or class of Notes,
funds on deposit in the principal funding
account and the interest funding account
with respect to that series or class will be
applied to pay principal of and interest on
those Notes. After an Event of Default,
until the affected Notes are paid in full,
principal collections and finance charge
collections allocated to those Notes will be
applied to make monthly principal and
interest payments on those Notes until the
earlier of the date those Notes are paid in
full or the Legal Maturity Date of those
Notes.
After an Event of Default, the Indenture
Trustee (acting on its own or at the
direction of holders of accelerated Notes)
will have a limited right to foreclose on
the portion of the Collateral Interest
allocable to the accelerated Notes by
causing the Master Trust to issue a special
investor certificate that is structured to
have terms and priorities equivalent to
those of the accelerated Notes. See
"Covenants, Events of Default, Early
Redemption Events and Indenture
Amendments--Events of Default."
REGISTRATION, CLEARANCE
AND SETTLEMENT The Notes will be registered in the name of
The Depository Trust Company or its nominee,
and no purchaser of Notes will be entitled
to receive a definitive certificate except
under limited circumstances. Owners of Notes
may elect to hold their Notes through The
Depository Trust Company (in the United
States) or through Cedelbank, societe
anonyme or the Euroclear System (in Europe).
Transfers will be made in accordance with
the rules and operating procedures of those
clearing systems. See "The Notes--Book-Entry
Notes."
ERISA ELIGIBILITY The Indenture permits benefit plans to
purchase Notes of every class. A fiduciary
of a benefit plan should consult its counsel
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concerning whether such a purchase is
permitted by ERISA and the Internal Revenue
Code.
TAX STATUS In the opinion of Cravath, Swaine & Moore,
special tax counsel to the Issuer, for
United States federal income tax purposes
(1) the Notes will be treated as
indebtedness and (2) the Issuer will not be
an association or a publicly traded
partnership taxable as a corporation. In
addition, Noteholders will agree, by
acquiring Notes, to treat the Notes as debt
of the Banks for federal, state and local
income and franchise tax purposes.
DENOMINATIONS The Notes will be issued in denominations of
$1,000 and multiples of $1,000 in excess of
that amount.
RECORD DATE The record date for payment of the Notes
will be the last day of the month before the
related payment date.
RATINGS It is a condition to the issuance of the
Notes that they are rated no lower than the
following rating categories by at least one
nationally recognized rating agency:
Note Rating
------- ------
Class A AAA
Class B A
Class C BBB
If a class of Notes has subclasses, each
subclass will have the same rating
requirement as the class of Notes of which
it is a part.
See "Risk Factors--Ratings of Notes do not
guarantee timely payment of principal."
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RISK FACTORS
------------
TIMING OF PAYMENTS ON THE NOTES IS NOT CERTAIN
The Issuer owns an interest in the credit card receivables held through
Citibank Credit Card Master Trust I. This interest is evidenced by the Seller's
Interest (which is not available to Noteholders) and the Collateral Interest.
Distributions on the Collateral Interest will be used to make payments on the
Notes.
We do not guarantee that new credit card receivables will be created,
that any credit card receivables will be added to the Master Trust or that
credit card receivables will be repaid at a particular time or with a particular
pattern. The Issuer's ability to make payments on the Notes would be impaired if
sufficient new credit card receivables are not generated by the Banks.
The full payment of the principal of a class of Notes on its Expected
Principal Payment Date depends largely on the rate of cardholder repayments. We
cannot guarantee that cardholder payments will be made at any particular rate in
any future period, and customers of the Banks may pay the credit card
receivables at any time either earlier or later than expected. The amount of
principal collections available to pay Noteholders on any principal payment date
or to make deposits into the principal funding account will depend on many
factors, including:
o The rate of repayment; and
o The rate of default by cardholders.
There is no assurance that the principal amount of a class of Notes
will be paid on its Expected Principal Payment Date. If the amount of cardholder
repayments is not sufficient, the principal amount of those Notes may not be
paid until its Legal Maturity Date or may be partially paid or not paid at all.
A significant decrease in the amount of credit card receivables in the
Master Trust for any reason could result in an early amortization event with
respect to the Collateral Interest. This would constitute an Early Redemption
Event and could result in early payment of the Notes.
If the principal amount of the Collateral Interest is reduced because
of losses allocated to it in the Master Trust or because of an allocation of a
portion of principal of the Collateral Interest to pay interest on a Note,
payments on the Notes may be delayed or remain unpaid.
The Master Trust pooling and servicing agreement provides that the
Banks must add additional credit card receivables to the Master Trust if the
total amount of principal receivables falls below specified percentages of the
total invested amounts of investor certificates in the Master Trust. There is no
guarantee that the Banks will have enough receivables to add. If the Banks do
not make an addition of receivables within five business days after the date
they are required to do so, an early amortization event will occur with respect
to the Collateral Interest. This would constitute an Early Redemption Event and
could result in an early payment of the Notes. See "The Master Trust--Master
Trust Issuances--Early Amortization Events" and "Covenants, Events of Default,
Early Redemption Events and Indenture Amendments--Early Redemption Events."
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If the effective yield on the credit card receivables (calculated using
a three-month moving average) decreases below a specified level, an early
amortization event will occur with respect to the Collateral Interest. This
would constitute an Early Redemption Event and could result in an early payment
of the Notes. See "The Master Trust--Master Trust Issuances--Early Amortization
Events" and "Covenants, Events of Default, Early Redemption Events and Indenture
Amendments--Early Redemption Events."
A large part of the credit card receivables bear interest at the prime
rate plus a margin. The Notes generally bear interest at a fixed or floating
rate. A decline in the prime rate would result in lower collections of finance
charge receivables, which would decrease the amount available to the Issuer to
make interest payments on the Notes.
EFFECT OF SUBORDINATION ON CLASS B NOTES AND CLASS C NOTES
Class B Notes are subordinated in right of payment of principal to
Class A Notes, and Class C Notes are similarly subordinated to Class A Notes and
Class B Notes.
In general, no payment of principal on Class B Notes of a series will
be made until all principal then due and payable on Class A Notes of that series
has been paid in full, and no payment of principal on Class C Notes of a series
will be made until all principal then due and payable on Class A Notes and Class
B Notes of that series has been paid in full.
However, if a series of Notes allows for the issuance of additional
classes or subclasses of Notes in the future, payment of principal may be made
on Class B Notes or on Class C Notes of that series before payment in full of
each senior class of Notes of that series if the principal payment on those
subordinated classes would not result in a failure to have a required minimum
principal amount of subordinated Notes to support the outstanding senior Notes
of that series. See "Application of Funds in the Trust Accounts to Payments on
the Notes--From principal funding subaccounts."
If there is sale of the credit card receivables owned by the Master
Trust due to an Insolvency Event or a sale or repurchase of the interest
represented by the Collateral Interest after a default by the servicer of the
Master Trust, the net proceeds of the sale allocable to principal payments will
be used first to pay amounts due to Class A Noteholders of a series, next to pay
amounts due to Class B Noteholders of that series, and lastly, for amounts due
to Class C Noteholders of that series. This could cause a loss to Class C
Noteholders, if the amount available to them plus the amount, if any, available
under their credit enhancement is not enough to pay the Class C Notes in full.
It could also cause a loss to Class B Noteholders if the amount available to
them plus the amount, if any, available under their credit enhancement is not
enough to pay the Class B Notes in full.
REINVESTMENT RISK IN THE EVENT OF AN EARLY REDEMPTION
If the Notes are redeemable at the Issuer's option or are otherwise
subject to mandatory redemption, the Issuer may (in the case of an optional
redemption) or must (in the case of a mandatory redemption) redeem the Notes at
times when prevailing interest rates may be relatively low. Accordingly, if this
occurs you generally will not be able to reinvest the redemption proceeds in a
comparable security with an effective interest rate as high as that of the
Notes.
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ADDITION OF MASTER TRUST ASSETS MAY AFFECT CREDIT QUALITY
The assets of the Master Trust, and therefore the assets allocable to
the Collateral Interest held by the Issuer, change every day. The Banks may
choose to, or may be required to, add credit card receivables to the Master
Trust. The credit card accounts from which these receivables arise may have
different terms and conditions from the credit card accounts already designated
for the Master Trust. For example, the new credit card accounts may have higher
or lower fees or interest rates, or different payment terms. We cannot guarantee
that new credit card accounts will have the same credit quality as the credit
card accounts currently designated for the Master Trust. If the credit quality
of the assets in the Master Trust were to deteriorate, the Issuer's ability to
make payments to Noteholders could be adversely affected.
CONTROL OF CERTAIN ACTIONS UNDER THE INDENTURE MAY BE LIMITED
Under the Indenture, Noteholders holding a specified percentage of the
aggregate outstanding principal amount of Notes of a series, class or subclass
or all the Notes may take certain actions, or may direct the Indenture Trustee
to take certain actions, including accelerating the payment of principal of the
Notes or consenting to amendments relating to the Collateral Interest. In the
case of votes by series or votes by holders of all of the Notes, the Class A
principal amount will generally be substantially greater than the Class B or
Class C principal amounts. The Class A Noteholders will therefore generally have
the ability to determine whether and what actions should be taken. The Class B
and Class C Noteholders will generally need the concurrence of the Class A
Noteholders to cause actions to be taken.
ABILITY TO RESELL NOTES MAY BE LIMITED
We expect that the underwriters and agents of the Notes will make a
market in the Notes, but no underwriter or agent is required to do so. Even if a
secondary market does develop, it may not provide Noteholders with liquidity for
the Notes, and it may not continue until the maturity of the Notes. Therefore,
it may be difficult for Noteholders to sell their Notes.
RATINGS OF NOTES DO NOT GUARANTEE TIMELY PAYMENT OF PRINCIPAL
The initial rating of a Note addresses the likelihood of the payment of
interest on that Note when due and the ultimate payment of principal of that
Note by its Legal Maturity Date. The ratings do not address the possibility of
an early payment or acceleration of a Note, which could be caused by an Early
Redemption Event or an Event of Default. See "Covenants, Events of Default,
Early Redemption Events and Indenture Amendments--Early Redemption Events" and
"--Events of Default."
The ratings of the Notes are not a recommendation to buy, hold or sell
the Notes. The ratings of the Notes may be lowered or withdrawn entirely at any
time by the applicable rating agency. The market value of the Notes could
decrease if the ratings are lowered or withdrawn. See "Prospectus
Summary--Ratings."
ISSUANCE OF ADDITIONAL NOTES
The Issuer expects to issue Notes from time to time. New Notes will be
issued without notice to existing Noteholders, and without their consent, and
may have different terms from outstanding Notes. For a description of the
conditions that must be met before we can issue new
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Notes, see "The Notes--New Issuances of Notes." The issuance of new Notes could
adversely affect the timing and amount of payments on outstanding Notes. Also,
when new Notes are issued, the voting rights of your Notes may be diluted. See
"Risk Factors - Control of certain actions under the Indenture may be limited."
CHANGES IN CARD USE AND PAYMENT PATTERNS
Changes in card use and payment patterns by cardholders result from a
variety of economic, social and legal factors. Economic factors include the rate
of inflation, unemployment levels and relative interest rates. Social factors
include consumer confidence levels and the public's attitude about incurring
debt and the stigma of personal bankruptcy. For some of the legal factors, see
"--Certain Legal Aspects" below. The availability of incentive or other award
programs may also affect cardholders' actions. We cannot predict how these or
other factors will affect card use or repayment patterns and, consequently, the
timing and amount of payments on the Notes.
CITIBANK (SOUTH DAKOTA)'S ABILITY TO CHANGE TERMS OF THE CREDIT CARD ACCOUNTS
COULD ALTER PAYMENT PATTERNS
The Master Trust owns the credit card receivables generated in
designated credit card accounts, but Citibank (South Dakota) continues to own
the accounts themselves. Citibank (South Dakota) thus has the right to determine
the periodic finance charges, fees and other charges that will apply to the
credit card accounts. Citibank (South Dakota) may also change the minimum
monthly payment or other terms of the accounts. A decrease in the effective
yield on the credit card receivables could cause an Early Redemption Event,
resulting in an early payment of the Notes. Also, changes in account terms could
affect payment patterns on the credit card receivables, which could cause
principal on the Notes to be paid more slowly than anticipated.
Citibank (South Dakota) has agreed generally to avoid taking actions
that would
o reduce the portfolio yield below specified levels;
o change the terms of the credit card accounts designated to the
Master Trust, unless it is changing the terms of all similar
accounts in its portfolio; or
o decrease the finance charges on the credit card accounts
designated to the Master Trust below a specified level after an
early amortization event under the Master Trust pooling and
servicing agreement has occurred.
There are no other restrictions on Citibank (South Dakota)'s ability to
change the terms of the credit card accounts designated to the Master Trust, and
we cannot guarantee that finance charges or other fees will not be reduced.
CERTAIN LEGAL ASPECTS
Transfer of credit card receivables could be a security interest
- ----------------------------------------------------------------
Although the Banks sell credit card receivables to the Master Trust, it
is possible that a court could treat those sales as an assignment of collateral
as security for the benefit of the holders of the investor certificates in the
Master Trust, including the Collateral Interest. If the
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transfer of credit card receivables to the Master Trust were deemed to create a
security interest under the South Dakota or Nevada Uniform Commercial Code:
o A tax or government lien on property of the Banks arising before
the credit card receivables came into existence may have priority
over the Master Trust's interest, and therefore over the Issuer's
interest, in the receivables.
o If the FDIC were appointed receiver of one of the Banks, its
administrative expenses may also have priority over the Master
Trust's interest, and therefore the Issuer's interest, in the
receivables.
Insolvency or bankruptcy of the Banks could adversely affect Noteholders
- ------------------------------------------------------------------------
If the FDIC were appointed a conservator or receiver for either of the
Banks, then an early amortization event would occur under the Master Trust
pooling and servicing agreement thus causing an Early Redemption Event for the
Notes. Under the terms of the Master Trust pooling and servicing agreement, no
new principal receivables would be transferred to the Master Trust and the
Master Trust Trustee would sell the credit card receivables (unless holders of
more than 50% of the unpaid principal amount of investor certificates of each
class of each series, including the Collateral Interest, the Banks (other than
the insolvent Bank), and each other holder, if any, of an interest in the Master
Trust, give the Master Trust Trustee other instructions). In that event
o the Master Trust would terminate;
o an early amortization event would occur with respect to the
Collateral Interest thus causing an early payment of the Notes;
and
o Noteholders would have a loss if proceeds from the sale of the
credit card receivables allocable to the Collateral Interest are
insufficient to pay the Noteholders in full.
However, the Federal Deposit Insurance Act, as amended by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, gives the FDIC powers
when it is acting as receiver or conservator for a bank, including the power
o to prevent the start of an early amortization period under the
Master Trust pooling and servicing agreement, thereby preventing
the termination of the Master Trust and a possible early payment
of the Notes;
o to continue to require the Banks to transfer new principal
receivables to the Master Trust; and
o to prevent the early sale, liquidation or disposition of the
credit card receivables in the Master Trust.
In addition, if Citibank (South Dakota) defaults on its obligations as servicer
under the Master Trust pooling and servicing agreement solely because a
conservator or receiver is appointed for it, the conservator or receiver might
have the power to prevent either the Master Trust Trustee or the Master Trust
certificate holders from appointing a new servicer under the pooling and
servicing agreement.
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We believe that the FDIC, acting as a receiver or conservator of one of
the Banks, would not interfere with the continued transfer and liquidation of
credit card receivables between that Bank and the Master Trust, as long as
o the Bank's transfer of the receivables to the Master Trust is the
grant of a valid security interest in the receivables to the
Master Trust;
o the security interest is validly perfected before the Bank's
insolvency and was neither taken in contemplation of the Bank's
insolvency nor with the intent to hinder, delay or defraud the
Bank or its creditors; and
o the Master Trust pooling and servicing agreement is continuously
an official record of the Bank and represents a bona fide and
arm's length transaction undertaken for adequate consideration in
the ordinary course of business.
The FDIC could, however, assert a contrary position, and
o avoid the Master Trust's security interest in the credit card
receivables;
o require the Master Trust Trustee to go through an administrative
claims procedure to establish its right to payments collected on
the credit card receivables in the Master Trust;
o request a stay of proceedings with respect to the insolvent Bank;
or
o repudiate the Master Trust pooling and servicing agreement and
limit the Master Trust's resulting claim to "actual direct
compensatory damages" measured as of the date of receivership.
If the FDIC were to take any of those actions, payments of outstanding principal
and interest on the Notes could be delayed and possibly reduced.
Consumer protection laws
- ------------------------
The credit card industry is extensively regulated by federal, state and
local consumer protection laws. The most significant federal laws are
o the Federal Truth-in-Lending Act;
o the Equal Credit Opportunity Act;
o the Fair Credit Reporting Act; and
o the Fair Debt Collection Practices Act.
These laws affect how loans are made, enforced and collected. The United States
Congress and the states may pass new laws, or may amend existing laws, to
regulate further the credit card industry or to reduce finance charges or other
fees applicable to credit card accounts. This could make collection of credit
card receivables more difficult, and could decrease the amount of finance charge
receivables collected by the Master Trust and thus available for interest
payments on the Notes.
In recent years, interest rates charged by credit card issuers have
come under increased scrutiny by consumer groups and lawmakers. Changes in
applicable laws could add limitations on the finance charges and other fees
related to the credit card accounts. For example, if an
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interest rate cap were imposed by law at a level substantially lower than the
annual percentage rates currently charged on the credit card accounts, the
decrease in finance charge collections could result in an early amortization
event with respect to the Collateral Interest and a possible early payment of
the Notes.
The Banks make representations and warranties about their compliance
with applicable laws and regulations, and about the validity and enforceability
of the credit card receivables and the accounts. These representations and
warranties are not made to the Noteholders. If the credit card receivables do
not comply with applicable law in all material respects, the Issuer's interest
in the receivables will be reassigned to the Banks, and the Noteholders will
have no other remedy. A breach of the representations and warranties by the
Banks relating to the credit card receivables and accounts generally results in
the Seller's Interest being reduced by the amount of the reassigned receivables.
However, a breach of some representations and warranties results in the Banks
paying a reassignment price for the receivables generally equal to the aggregate
invested amount of all series of investor certificates, including the Collateral
Interest, issued by the Master Trust, plus accrued and unpaid interest on those
certificates. See "The Master Trust--Master Trust Assets." A breach of these
representations and warranties could result in a possible early payment of the
Notes.
Competition in credit card industry
- -----------------------------------
The credit card industry is very competitive and operates in a legal
and regulatory environment increasingly focused on the cost of services charged
to consumers for credit cards. Through advertising, target marketing, pricing
competition and incentive programs, credit card issuers compete to attract and
retain customers. The Banks and other credit card issuers may offer cards with
lower fees and/or finance charges than the credit card accounts that have been
designated as part of the Master Trust. Also, the Banks may solicit existing
cardholders to open other accounts with benefits not available under the
designated accounts. If cardholders choose to use competing sources of credit,
the rate at which new credit card receivables are generated may be reduced and
the pattern of payments may be affected. If the credit card receivables decline
significantly, the Banks may be required to add additional accounts to the
Master Trust, or an early amortization event with respect to the Collateral
Interest could occur and the Notes could be paid early.
In October 1998, the U.S. Justice Department sued MasterCard
International Incorporated, VISA U.S.A., Inc. and VISA International, Inc. in
the U.S. District Court for the Southern District of New York. The suit asserts
that joint control of both the MasterCard and VISA associations by the same
group of banks lessens competition and therefore violates the antitrust laws.
The government contends that banks should not be permitted to participate in the
governance of both associations. The government is also challenging the rules of
the associations that restrict banks from issuing American Express or Discover
cards. MasterCard and VISA have both stated that they believe the suit to be
without merit, and have denied the allegations. However, we cannot predict the
outcome of the litigation, or its effect on the competitive environment in the
credit card industry.
Remedies upon default may be limited
- ------------------------------------
If an Event of Default under the Notes occurs, under certain limited
circumstances a Noteholder will have the right to foreclose upon the portion of
the Collateral Interest that secures his Note and effectively exchange the Note
for an investor certificate representing a direct
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<PAGE>
interest in the share of the assets of the Master Trust allocable to that Note.
There is no public market for that certificate, and no public market is likely
to develop. Also, that certificate will be entitled only to payments of
principal and finance charge collections to the same extent and priority as
those Noteholders would have had under the Note. Therefore, if a Noteholder
obtains such an investor certificate through a foreclosure, that Noteholder will
not receive payments of principal or interest earlier than it would have under
its Note. See "Covenants, Events of Default, Early Redemption Events and
Indenture Amendments--Events of Default."
WHERE YOU CAN FIND ADDITIONAL INFORMATION
-----------------------------------------
As required by the Securities Act of 1933 we filed a registration
statement relating to the securities described in this prospectus with the
Securities and Exchange Commission. This prospectus is a part of that
registration statement, but the registration statement includes additional
information.
We will file all required annual, monthly and special reports and other
information with the SEC that you may read and copy at the SEC's Public
Reference Room in Washington, D.C. You can also request copies of these
documents, upon payment of a duplicating fee, by writing to the Public Reference
Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the SEC's Public Reference Rooms. These filings
are also available to the public on the SEC's Internet website
(http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus. Information that we file later with
the SEC will automatically update the information in this prospectus. In all
cases, you should rely on the later information over different information
included in this prospectus or any supplement to this prospectus. We incorporate
by reference in this prospectus any future annual, monthly and special reports
or proxy materials that we file with the SEC before the termination of the
offering of the securities described in this prospectus.
You may request a copy of these SEC filings, at no cost, by writing or
telephoning the Issuer at the following address:
Citibank Credit Card Issuance Trust
----------
----------
You should rely only on the information in this prospectus and any
supplement to this prospectus. We have not authorized anyone to provide you with
any other information.
The information in this prospectus and any supplement to this
prospectus is correct only as of the date of each document.
THE ISSUER
----------
Citibank Credit Card Issuance Trust is a statutory business trust
formed in the State of Delaware on _______, 1999. It is operated pursuant to a
trust agreement among Citibank (South
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Dakota), Citibank (Nevada) and ________________, as trustee. We refer to
Citibank Credit Card Issuance Trust as the "Issuer" and ____________________ in
its capacity as trustee of the Issuer as the "Issuer Trustee."
The Issuer exists for the exclusive purposes of acquiring and holding
trust assets and the proceeds of those assets, issuing and making payments on
the Notes, and related activities.
The Issuer does not have any officers or directors. Its manager is
Citibank (South Dakota). As manager of the Issuer, Citibank (South Dakota) will
generally direct the actions to be taken by the Issuer.
The assets of the Issuer consist primarily of the Collateral Interest,
derivative agreements, the trust accounts and the Seller's Interest. Only the
Collateral Interest, the derivative agreements and the trust accounts provide
funds for the payment of the Notes and are pledged as security for the Notes.
See "Sources of Funds to Pay the Notes--Security for the Notes; Limited recourse
to the Issuer."
The principal place of business of the Issuer is located at
________________, Wilmington, Delaware 19801. Its phone number is
__________________.
The principal executive office of the Issuer Trustee is located at
________________, Wilmington, Delaware 19801. Its phone number is
__________________.
OWNERS
Citibank (South Dakota), N.A. and Citibank (Nevada), National
Association are the sole owners of the beneficial interests in the Issuer. We
refer to Citibank (South Dakota) and Citibank (Nevada) as the "Banks."
Citibank (South Dakota) is a national banking association and an
indirect wholly owned subsidiary of Citigroup Inc. It was formed in 1981 and
conducts nationwide consumer lending programs, primarily 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. Its telephone
number is (605) 331-2626.
Citibank (Nevada) is a national banking association and an indirect
wholly owned subsidiary of Citigroup Inc. It was formed in 1985 and conducts a
retail banking business in the Las Vegas, Nevada area and services credit card
accounts for some of its affiliates. The principal executive office of Citibank
(Nevada) is located at 8725 West Sahara Avenue, Las Vegas, Nevada 89163. Its
telephone number is (702) 797-4444.
USE OF PROCEEDS
---------------
The Issuer will use the net proceeds from the sale of a class of Notes
to make a distribution to the Banks.
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THE NOTES
---------
We will use this prospectus to offer our secured debt securities. We
refer to the secured debt securities offered by this prospectus as the "Class A
Notes," the "Class B Notes" or the "Class C Notes" and together, unless the
context otherwise requires, as the "Notes."
The Notes will be issued pursuant to an indenture dated as of
____________ __, 1999 between the Issuer and ________________________, as
trustee. We refer to this indenture, as supplemented or amended from time to
time, as the "Indenture" and _____________ in its capacity as trustee under the
Indenture as the "Indenture Trustee." The Indenture does not limit the aggregate
principal amount of Notes that we may issue.
The Notes will be issued in series. Each series of Notes will consist
of Class A Notes, Class B Notes and Class C Notes. Each class of Notes may have
subclasses, if we so specify in a supplement to this prospectus. Whenever we
refer to a "class" of Notes it also includes all subclasses of that Note, unless
the context otherwise requires.
We may issue Class A Notes, Class B Notes and Class C Notes of a series
at the same time or at different times, but no Class A Notes or Class B Notes of
a series may be issued unless sufficient subordinated Class B Notes and/or Class
C Notes of that series have previously been issued and are outstanding. If and
to the extent specified in a supplement to this prospectus, the Notes of a
series may be included in a group of series for purposes of reallocations of
principal and/or interest payments.
We may offer securities denominated in any foreign currency. We will
provide the specific terms of any security denominated in a foreign currency at
the time of its offering in a supplement to this prospectus.
If we specify in a supplement to this prospectus, the Noteholders of a
particular class will have the benefit of a derivative agreement, including an
interest rate or currency swap, cap, collar, guaranteed investment contract or
other similar agreement for the exclusive benefit of that class. Any such
derivative agreement and the financial institution that provides it will be
described in the applicable supplement.
We will pay principal of and interest on a class of Notes solely from
the portion of finance charge collections and principal collections under the
Collateral Interest which are allocated to that class of Notes, amounts in any
trust account relating to that class of Notes, and amounts received under any
derivative agreement relating to that class of Notes. If those sources are not
sufficient to pay the Notes, the Noteholders will have no recourse to any other
assets of the Issuer or any other person or entity for the payment of principal
of or interest on the Notes.
We will include the following terms of the Notes in a supplement to
this prospectus:
o the series designation and, if the series will be part of a group
of series for purposes of reallocations of principal and/or
interest payments, the manner and extent to which each series in
the group will be subject to reallocations;
o the principal amount of the Notes and whether they are Class A
Notes, Class B Notes or Class C Notes or a subclass of any of
those classes;
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o if applicable, the maximum aggregate amount of principal of
subordinated Notes in the series that may be applied to payments
on the Notes being issued in the applicable supplement to this
prospectus;
o the currency of payment of principal of and interest on the
Notes, if other than U.S. dollars;
o the price at which the Notes will be issued;
o the Expected Principal Payment Date and Legal Maturity Date of
the Notes;
o the times at which the Notes may, pursuant to any optional or
mandatory redemption provisions, be redeemed, and the other terms
and provisions of any such redemption provisions;
o the rate per annum at which the Notes will bear interest, if any,
or the formula or index on which such rate will be determined,
including all relevant definitions, and the date from which
interest will accrue;
o the interest payment dates for the Notes;
o whether or not the Notes will be listed on any stock exchange;
o any additional Events of Default or Early Redemption Events for
the Notes; and
o any other terms of the Notes consistent with the provisions of
the Indenture.
The terms of Notes to be issued will not be subject to prior review by,
or consent of, holders of Notes of any outstanding class or series.
INTEREST
Each Note, except a zero-coupon Note, will bear interest at either a
fixed rate or a variable rate. For each issuance of fixed rate Notes, we will
designate in a supplement to this prospectus the fixed rate of interest at which
interest will accrue on that Note. Variable interest rates will be based on the
interest rate index or other formula specified in a supplement to this
prospectus. We refer to a Note that bears interest at a fixed rate as a "fixed
rate Note" and a Note that bears interest at a variable rate as a "floating rate
Note." Zero-coupon Notes will be issued at a price lower than the principal
amount payable on that Note's Expected Principal Payment Date. Until the
Expected Principal Payment Date for a zero-coupon Note, accreted interest will
be capitalized as part of the principal of the Note and reinvested in the
Collateral Interest.
Each payment of interest on a Note will include all interest accrued
from the preceding interest payment date (or from the issuance date, for the
first interest period) through the day preceding the current interest payment
date, or such other period as may be specified in a supplement to this
prospectus. We refer to each period during which interest accrues as an
"interest period." Interest on a Note will be due and payable on each interest
payment date.
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If interest on a Note is not paid within five business days after it is
due an Event of Default will occur with respect to that Note. See "Covenants,
Events of Default, Early Redemption Events and Indenture Amendments--Events of
Default."
PRINCIPAL
The timing of payment of principal on a Note will be specified in a
supplement to this prospectus.
The Issuer expects to pay the principal of each Note in one payment on
its Expected Principal Payment Date, and is obligated to do so if funds are
available for that purpose.
Principal of a Note may be paid earlier than its Expected Principal
Payment Date if an Early Redemption Event occurs. See "Covenants, Events of
Default, Early Redemption Events and Indenture Amendments--Early Redemption
Events."
If the principal of a Note is not paid in full on its Legal Maturity
Date an Event of Default will occur with respect to that Note. See "Covenants,
Events of Default, Early Redemption Events and Indenture Amendments--Events of
Default."
See "Risk Factors--Timing of payments on the Notes is not certain" for
a discussion of factors that may affect the timing of principal payments on the
Notes.
SUBORDINATION OF PRINCIPAL
Principal payments on Class B Notes and Class C Notes of a series are
subordinated to payments on Class A Notes of that series. Subordination of Class
B Notes and Class C Notes provides credit enhancement for Class A Notes. In
general, no principal payments will be made on Class B Notes or Class C Notes of
a series until all principal then due and payable on the Class A Notes of that
series has been paid in full.
Principal payments on Class C Notes of a series are subordinated to
payments on Class A Notes and Class B Notes of that series. Subordination of
Class C Notes provides credit enhancement for the Class A Notes and Class B
Notes. In general, no principal payments will be made on Class C Notes of a
series until all principal then due and payable on the Class A Notes and Class B
Notes of that series has been paid in full.
However, if a series of Notes allows for the issuance of additional
classes or subclasses of Notes in the future, payment of principal may be made
on Class B Notes or on Class C Notes of that series before payment in full of
each senior class of Notes of that series if the principal payment on those
subordinated classes would not result in a failure to have a required minimum
principal amount of subordinated Notes to support the outstanding senior Notes
of that series. See "Application of Funds in the Trust Accounts to Payments on
the Notes--From principal funding subaccounts."
The payment of accrued interest on a class of Notes of a series is not
senior to or subordinated to payment of interest on any other class of Notes of
that series. However, in the case of a zero-coupon Note, the accreted principal
of that Note corresponding to capitalized interest will be subordinated to the
same extent that principal is subordinated.
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REDEMPTION AND EARLY REDEMPTION OF NOTES
If we so specify in a supplement to this prospectus we may, at our
option, redeem the Notes of any class before its Expected Principal Payment
Date. The supplement will indicate at what times we may exercise that right of
redemption and if such redemption may be made in whole or in part as well as any
other terms of the redemption. We will give notice to holders of the affected
Notes before any optional redemption date.
If we so specify in a supplement to this prospectus a Noteholder may,
at its option, require the Issuer to redeem Notes before the Expected Principal
Payment Date. The supplement will indicate at what times a Noteholder may
exercise that right of redemption and if such redemption may be made in whole or
in part as well as any other terms of the redemption.
Each class of Notes will be subject to mandatory redemption on its
Expected Principal Payment Date which, in general, is [two years] before its
Legal Maturity Date.
In addition, if an Early Redemption Event occurs, we will be required
to redeem each class of affected Notes before its Expected Principal Payment
Date, to the extent that funds are available. We will give notice to holders of
the affected Notes before an early redemption date. See "Covenants, Events of
Default, Early Redemption Events and Indenture Amendments--Early Redemption
Events" for a description of the Early Redemption Events and their consequences
to holders of Notes.
Whenever the Issuer is required to redeem Notes, it will do so only if
funds are available under the Collateral Interest, in the applicable principal
funding account or under any applicable derivative agreement. A Noteholder will
have no claim against the Issuer if the Issuer fails to make a required
redemption of Notes because no funds are available for that purpose, and such
failure to redeem will not be an Event of Default.
NEW ISSUANCES OF NOTES
The Issuer may issue new series of Notes, so long as the conditions of
issuance are met. These conditions include:
o on or before the third business day before a new issuance of
Notes, the Issuer gives the Indenture Trustee and the rating
agencies written notice of the issuance;
o the Issuer has delivered to the Indenture Trustee a certificate
that the Issuer reasonably believes that the new issuance will
not at the time of its occurrence or at a future date (1) cause
an Early Redemption Event or (2) adversely affect the amount or
timing of payments to holders of Notes of any series;
o the Issuer has delivered to the Indenture Trustee and the rating
agencies an opinion of counsel that for federal and Delaware
income and franchise tax purposes (1) following the new issuance
the Issuer will not be an association (or publicly traded
partnership) taxable as a corporation, (2) the new Notes will be
properly characterized as debt and (3) the new issuance will not
adversely affect the
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characterization of the Notes of any other series or class as
debt and will not cause a taxable event to holders of any such
Notes;
o in the case of an issuance of floating rate Notes, the spread
over the interest rate determined by the interest rate index for
those Notes will not be greater than ___% per annum;
o at the time of the new issuance, the ratings condition described
in the "Prospectus Summary" is satisfied;
o no early amortization event with respect to the Collateral
Interest has occurred and is continuing as of the date of the new
issuance;
o the invested amount of the Collateral Interest is increased by an
amount equal to the principal amount of the Notes issued in the
new issuance, or in the case of zero-coupon Notes, an amount
generally equal to its issue price; and
o any other conditions specified in any supplement to this
prospectus are satisfied.
The Issuer may also issue additional classes or subclasses of Notes of
currently outstanding series, so long as the conditions of issuance are met.
These conditions include:
o on or before the third business day before a new issuance of
Notes, the Issuer gives the Indenture Trustee and the rating
agencies notice of the new issuance;
o the Issuer delivers to the Indenture Trustee and the rating
agencies a certificate that the new issuance is in compliance
with the issuance parameters agreed to by the rating agencies and
that the new issuance will not at the time of its occurrence or
at a future date (1) cause an Early Redemption Event or (2)
adversely affect the amount or timing of payments to holders of
Notes of any series;
o in the case of an issuance of a subclass of Class A Notes, after
giving effect to this issuance the aggregate principal amount of
the Class B Notes and Class C Notes available to support the
newly-issued subclass of Class A Notes will not be less than ___%
of the initial principal amount of the newly-issued subclass of
Class A Notes (or such other percentage as may be permitted by
the rating agencies);
o in the case of an issuance of a subclass of Class B Notes, after
giving effect to this issuance the aggregate principal amount of
the Class C Notes available to support the newly-issued subclass
of Class B Notes will not be less than ___% of the initial
principal amount of the newly-issued subclass of Class B Notes
(or such other percentage as may be permitted by the rating
agencies);
o in the case of an issuance of a subclass of floating rate Notes,
the spread over the interest rate determined by the interest rate
index for those Notes will not be greater than ___% per annum;
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o if the initial principal amount (or face amount, in the case of
zero-coupon Notes) of the newly-issued Notes equals or exceeds
$250 million, the Issuer delivers to the Indenture Trustee and
the rating agencies an opinion of counsel that for federal and
Delaware income and franchise tax purposes (1) following the new
issuance the Issuer will not be an association (or publicly
traded partnership) taxable as a corporation, (2) the new Notes
will be properly characterized as debt and (3) the new issuance
will not adversely affect the characterization of the Notes of
any other series or class as debt and will not cause a taxable
event to holders of any such Notes;
o at the time of the new issuance, the ratings condition described
in the "Prospectus Summary" is satisfied;
o no early amortization event with respect to the Collateral
Interest has occurred and is continuing as of the date of the new
issuance;
o the invested amount of Collateral Interest is increased by an
amount equal to the principal amount of the Notes issued in the
new issuance, or in the case of zero-coupon Notes, an amount
generally equal to its issue price; and
o any other conditions specified in any supplement to this
prospectus are satisfied.
The Issuer and the Indenture Trustee are not required to obtain the
consent of any Noteholder of any outstanding series or class to issue any
additional Notes.
PAYMENTS ON NOTES; PAYING AGENT
The Notes will be issued in book-entry form and payments of principal
and interest on the Notes will be made in U.S. dollars as described below under
"--Book-Entry Notes" unless the Notes are denominated in a foreign currency.
The Issuer and the Indenture Trustee, and any agent of the Issuer or
the Indenture Trustee, will treat the registered holder of any Note as the
absolute owner of such Note (whether or not such Note is overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all other purposes.
The Issuer will make payments on a Note to the registered holder of the
Note at the close of business on the record date established for the related
payment date.
The Issuer has designated the corporate trust office of Citibank, N.A.,
in New York City as its paying agent for the Notes of each series. The Issuer
will identify any other agents appointed to serve as paying agents on Notes of a
series or class in a supplement to this prospectus. The Issuer may at any time
designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts.
However, the Issuer will be required to maintain a paying agent in each place of
payment for a series or class of Notes.
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After notice by publication, all funds paid by the Issuer to a paying
agent for the payment of the principal of or interest on any Note of any series
which remain unclaimed at the end of two years after such principal or interest
becomes due and payable will be repaid to the Issuer. After funds are repaid to
the Issuer, the holder of that Note may look only to the Issuer for payment of
such principal or interest.
DENOMINATIONS
We will issue the Notes in denominations of $1,000 and multiples of
$1,000 in excess of that amount.
RECORD DATE
The record date for payment of the Notes will be the last day of the
month before the related payment date.
GOVERNING LAW
The laws of the State of New York will govern the Notes, the Indenture
and any supplemental indenture.
FORM, EXCHANGE, AND REGISTRATION AND TRANSFER OF NOTES
We will issue Notes in registered form. The Notes will be represented
by one or more global notes registered in the name of The Depository Trust
Company, as depositary, or its nominee. We refer to each beneficial interest in
a global note as a "book-entry note." For a description of the special
provisions that apply to book-entry notes, see "Book-Entry Notes" below.
A holder of Notes may exchange those Notes for other Notes of the same
class of any authorized denominations and of the same aggregate principal amount
and tenor.
Any holder of a Note may present that Note for registration of transfer
(with the form of transfer properly executed), at the office of the security
registrar or at the office of any transfer agent that the Issuer designates.
Holders of Notes will not be charged any service charge for the exchange or
transfer of their Notes. Holders of Notes that are to be transferred or
exchanged will be liable for the payment of any taxes and other governmental
charges described in the Indenture before the transfer or exchange will be
completed. The security registrar or transfer agent, as the case may be, will
effect a transfer or exchange when it is satisfied with the documents of title
and identity of the person making the request.
The Issuer has appointed Citibank, N.A. as the security registrar. The
Issuer may at any time rescind the designation of any transfer agent or approve
a change in the location through which any transfer agent acts. However, the
Issuer will be required to maintain a transfer agent in each place of payment
for a class of Notes. The Issuer may at any time designate additional transfer
agents for any series or class of Notes.
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<PAGE>
REPLACEMENT OF NOTES
The Issuer will replace at the expense of the holder any mutilated
Note, upon surrender of that Note to the Indenture Trustee. The Issuer will
replace at the expense of the holder any Notes that are destroyed, lost or
stolen upon delivery to the Indenture Trustee of evidence of the destruction,
loss or theft of those Notes satisfactory to the Issuer and the Indenture
Trustee. In the case of a destroyed, lost or stolen Note, the Issuer and the
Indenture Trustee may require the holder of the Note to provide an indemnity
satisfactory to the Indenture Trustee and the Issuer before a replacement Note
will be issued.
ACQUISITION AND CANCELLATION OF NOTES
The Issuer, the Banks and their affiliates may acquire Notes in the
open market or otherwise.
The Issuer, the Banks and their affiliates may cause the Notes acquired
by them to be cancelled and Notes so cancelled will no longer be outstanding.
However, the cancellation of Notes is subject to the following limitations:
o if a series of Notes allows for the issuance of additional
classes or subclasses of Notes in the future, no Class B Notes or
Class C Notes of that series may be cancelled if, after giving
effect to such cancellation, the minimum required subordinated
amount for the Class A Notes and/or Class B Notes of that series
will not be satisfied.
o for all other series of Notes, no Class B Notes or Class C Notes
of that series may be cancelled so long as any senior class of
Notes of that series is still outstanding.
BOOK-ENTRY NOTES
The Notes will be in book-entry form. This means that, except under the
limited circumstances described below, purchasers of the Notes will not be
entitled to have the Notes registered in their names and will not be entitled to
receive physical delivery of the Notes in definitive (paper) form. Instead, upon
issuance, all the Notes of a class will be represented by one or more fully
registered permanent global notes, without interest coupons.
Each global note will be deposited with a securities depositary named
The Depository Trust Company ("DTC") and will be registered in the name of DTC's
nominee, Cede & Co. No global note representing book-entry notes may be
transferred except as a whole by DTC to a nominee of DTC, or by a nominee of DTC
to another nominee of DTC. Thus, DTC or its nominee will be the only registered
holder of the Notes and will be considered the sole representative of the
beneficial owners of Notes for purposes of the Indenture.
The registration of the global notes in the name of Cede & Co. will not
affect beneficial ownership and is performed merely to facilitate subsequent
transfers. The book-entry system (which is also the system through which most
publicly traded common stock is held) is used because it eliminates the need for
physical movement of securities. The laws of some jurisdictions, however, may
require some purchasers to take physical delivery of their Notes in definitive
form. These laws may impair the ability to transfer book-entry notes.
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Purchasers of Notes in the United States can hold interests in the
global notes only through DTC, if they are participants in such system.
Purchasers may also hold interests indirectly through a securities intermediary
- - such as banks, brokerage houses and other institutions that maintain
securities accounts for customers -- that have an account with DTC or its
nominee ("participants"). Purchasers of Notes in Europe can hold interests in
the global notes only through Cedelbank, societe anonyme, or through Morgan
Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear system, if they are participants in such systems or indirectly through
organizations that are participants in such systems.
Because DTC will be the only registered owner of the global notes,
Cedelbank and Euroclear will hold positions through their respective U.S.
depositaries, which in turn will hold positions on the books of DTC. Citibank,
N.A. will act as U.S. depositary for Cedelbank, and The Chase Manhattan Bank
will act as U.S. depositary for Euroclear.
As long as the Notes are in book-entry form, they will be evidenced
solely by entries on the books of DTC, its participants and any indirect
participants. DTC will maintain records showing
o the ownership interests of its participants (including the U.S.
depositaries); and
o all transfers of ownership interests between its participants.
The participants and indirect participants, in turn, will maintain records
showing
o the ownership interests of their customers (including indirect
participants) that hold the Notes through such participants; and
o all transfers between such persons.
Thus, each beneficial owner of a book-entry note will hold its Note indirectly
through a hierarchy of intermediaries, with DTC at the "top" and the beneficial
owner's own securities intermediary at the "bottom."
The Issuer, the Indenture Trustee and their agents will not be liable
for the accuracy of, and are not responsible for maintaining, supervising or
reviewing DTC's records or any participant's records relating to book-entry
notes. The Issuer, the Indenture Trustee and their agents also will not be
responsible or liable for payments made on account of the book-entry notes.
Until definitive (paper) notes are issued to the beneficial owners as
described below, all references to "holders" of Notes shall mean DTC. The
Issuer, the Indenture Trustee and any paying agent, transfer agent or securities
registrar may treat DTC as the absolute owner of the Notes for all purposes.
Beneficial owners of book-entry notes should realize that the Issuer
will make all distributions of principal and interest on their Notes to DTC and
will send all required reports and notices solely to DTC as long as DTC is the
registered holder of the Notes. DTC and the participants are generally required
by law to receive and transmit all distributions, notices and directions from
the Indenture Trustee to the beneficial owners through the chain of
intermediaries.
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Similarly, the Indenture Trustee will accept notices and directions
solely from DTC. Therefore, in order to exercise any rights of a holder of Notes
under the Indenture, each person owning a beneficial interest in the Notes must
rely on the procedures of DTC and, in some cases, Cedelbank or Euroclear. If the
beneficial owner is not a participant in such system, then it must rely on the
procedures of the participant through which that person owns its interest. DTC
has advised the Issuer that it will take actions under the Indenture only at the
direction of its participants, which in turn will act only at the direction of
the beneficial owners. Some of these actions, however, may conflict with actions
it takes at the direction of other participants and beneficial owners.
Notices and other communications by DTC to participants, by
participants to indirect participants, and by participants and indirect
participants to beneficial owners will be governed by arrangements among them.
Beneficial owners of book-entry notes should also realize that
book-entry notes may be more difficult to pledge because of the lack of a
physical note. Beneficial owners may also experience delays in receiving
distributions on their Notes since distributions will initially be made to DTC
and must be transferred through the chain of intermediaries to the beneficial
owner's account.
The Depository Trust Company
- ----------------------------
DTC is a limited-purpose trust company organized under the New York
Banking Law and is a "banking institution" within the meaning of the New York
Banking Law. DTC is also a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered under Section 17A of the Securities Exchange Act of
1934. DTC was created to hold securities deposited by its participants and to
facilitate the clearance and settlement of securities transactions among its
participants through electronic book-entry changes in accounts of the
participants, thus eliminating the need for physical movement of securities. DTC
is owned by a number of its participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. The rules applicable to DTC and its participants are on
file with the Securities and Exchange Commission.
DTC's management is aware that some computer applications, systems, and
the like for processing dates that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its systems, as they
relate to the timely payment of distributions (including principal and interest
payments) to securityholders, book-entry deliveries, and settlement of trades
within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform its services is also dependent upon
other parties, including issuers and their agents, as well as third party
vendors from whom DTC licenses software and hardware and third party vendors on
whom DTC relies for information or the provision of services, including
telecommunication and electrical utility service providers. DTC has informed the
industry that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to:
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o impress upon them the importance of such services being Year 2000
compliant; and
o determine the extent of their efforts for Year 2000 remediation
(and, as appropriate, testing) of their services.
In addition, DTC is in the process of developing such contingency plans as it
deems appropriate.
Cedelbank
- ---------
Cedelbank is registered as a bank in Luxembourg and is subject to
regulation by the Banque Centrale du Luxembourg, the Luxembourg Central Bank,
which supervises Luxembourg banks. Cedelbank holds securities for its customers
and facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Cedelbank provides
various services, including safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedelbank also deals with domestic securities markets in over 30
countries through established depository and custodial relationships. Cedelbank
has established an electronic bridge with Euroclear in Brussels to facilitate
settlement of trades between Cedelbank and Euroclear. Cedelbank currently
accepts over 110,000 securities issues on its books.
Cedelbank's customers are worldwide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedelbank's U.S. customers are limited to securities
brokers and dealers, and banks. Currently, Cedelbank has approximately 2,000
customers located in over 80 countries, including all major European countries,
Canada, and the United States. Indirect access to Cedelbank is available to
other institutions that clear through or maintain a custodial relationship with
an account holder of Cedelbank.
Euroclear System
- ----------------
Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment. This system
eliminates the need for physical movement of securities and any risk from lack
of simultaneous transfers of securities and cash. Euroclear includes various
other services, including securities lending and borrowing and interfaces with
domestic markets in several countries. The Euroclear Operator is the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York, under contract with
Euro-clear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). The Euroclear Operator conducts all operations. All Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
Euroclear on behalf of Euroclear participants. Euroclear participants include
banks, including central banks, securities brokers and dealers and other
professional financial intermediaries and may include the underwriters. Indirect
access to Euroclear 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
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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. These Terms and Conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific Notes 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.
The foregoing information about DTC, Cedelbank and Euroclear has been
provided by each of them for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
Distributions on Book-Entry Notes
- ---------------------------------
The Issuer will make distributions of principal of and interest on
book-entry notes to DTC. These payments will be made in immediately available
funds by the Issuer's paying agent, Citibank, N.A., at the office of the paying
agent in New York City that the Issuer designates for that purpose.
In the case of principal payments, the global notes must be presented
to the paying agent in time for the paying agent to make those payments in
immediately available funds in accordance with its normal payment procedures.
Upon receipt of any payment of principal of or interest on a global
note, DTC will immediately credit the accounts of its participants on its
book-entry registration and transfer system. DTC will credit those accounts with
payments in amounts proportionate to the participants' respective beneficial
interests in the principal amount of the global note as shown on the records of
DTC. Payments by participants to beneficial owners of book-entry notes will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of those participants.
Distributions on book-entry notes held beneficially through Cedelbank
will be credited to cash accounts of Cedelbank participants in accordance with
its rules and procedures, to the extent received by its U.S. depositary.
Distributions on book-entry notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear participants in accordance
with the Terms and Conditions, to the extent received by its U.S. depositary.
In the event definitive Notes are issued, distributions of principal
and interest on definitive Notes will be made by the Issuer directly to the
holders of the definitive Notes in whose names the definitive Notes were
registered at the close of business on the related record date.
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Global Clearance and Settlement Procedures.
- -------------------------------------------
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC's rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Cedelbank participants and/or Euroclear participants will occur
in the ordinary way in accordance with the applicable rules and operating
procedures of Cedelbank and Euroclear and will be settled using the procedures
applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC's rules on behalf of the relevant European international clearing system by
the U.S. depositaries. 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 U.S. depository to take action to
effect final settlement on its behalf by delivering or receiving Notes in DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedelbank participants and
Euroclear participants may not deliver instructions directly to DTC.
Because of time-zone differences, credits of Notes received in
Cedelbank or Euroclear as a result of a transaction with a DTC participant will
be made during subsequent securities settlement processing and will be credited
the business day following a DTC settlement date. Such credits or any
transactions in such Notes settled during such processing will be reported to
the relevant Euroclear or Cedelbank participants on such business day. Cash
received in Cedelbank or Euroclear as a result of sales of Notes by or through a
Cedelbank 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 Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of DTC,
Cedelbank 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 Notes
- ----------------
Beneficial owners of book-entry notes may exchange those notes for
definitive (paper) notes registered in their name only if:
o DTC it is unwilling or unable to continue as depository for such
global note and the Issuer or the Indenture Trustee is unable to
find a qualified replacement for DTC;
o the Issuer, in its sole discretion, elects to terminate the
book-entry system through DTC; or
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o any Event of Default has occurred with respect to those
book-entry notes, and beneficial owners evidencing not less than
50% of the unpaid principal amount of the Notes of that class
advise the Indenture Trustee and DTC that the continuation of a
book entry system is no longer in the best interests of those
beneficial owners.
If any of these three events occurs, DTC is required to notify the
beneficial owners through the chain of intermediaries that the definitive notes
are available. The appropriate global note will then be exchangeable in whole
for definitive notes in registered form of like tenor and of an equal aggregate
principal amount, in specified denominations. Definitive notes will be
registered in the name or names of the person or persons specified by DTC in a
written instruction to the registrar of the Notes. DTC may base its written
instruction upon directions it receives from its participants. Thereafter, the
holders of the definitive notes will be recognized as the "holders" of the Notes
under the Indenture.
SOURCES OF FUNDS TO PAY THE NOTES
---------------------------------
THE COLLATERAL INTEREST
The primary source of funds for the payment of principal of and
interest on the Notes is the Collateral Interest issued to the Issuer by the
Master Trust. For a description of the Master Trust and its assets, see "The
Master Trust."
In connection with the formation of the Issuer, the Banks transferred
their undivided interest in the Master Trust (referred to as the "Seller's
Interest") in exchange for all of the beneficial interests in the Issuer. The
Issuer, as owner of the Seller's Interest in the Master Trust, then caused the
Master Trust to issue the Collateral Interest to the Issuer, which reduced the
amount of the Seller's Interest. The Seller's Interest held by the Issuer
represents the economic interest in the Master Trust remaining after subtracting
from the aggregate economic interests in the Master Trust the interests
represented by the Collateral Interest and all other investor certificates
issued by the Master Trust. Distributions allocated to the Seller's Interest are
not available to pay principal of or interest on the Notes.
The Collateral Interest represents an undivided interest in the assets
of the Master Trust. The assets of the Master Trust consist primarily of credit
card receivables arising in selected MasterCard and VISA(1) revolving credit
card accounts, which have been transferred by the Banks. The amount of credit
card receivables in the Master Trust will fluctuate from day to day as new
receivables are generated or added to or removed from the Master Trust and as
other receivables are collected, charged off as uncollectible, or otherwise
adjusted.
The Collateral Interest has a fluctuating invested amount, representing
the investment of that interest in credit card receivables, equal to
o the aggregate principal amount of the Notes outstanding, minus
o unreimbursed losses on the credit card receivables allocated to
the Collateral Interest, minus
- --------
(1) MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA U.S.A., Inc., respectively.
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o the amount of principal collections on the Collateral Interest
that are applied to pay interest on the Notes, minus
o the aggregate amount on deposit in the principal funding account
for the outstanding Notes.
Unlike most series of certificates issued by the Master Trust, the
series represented by the Collateral Interest has not been structured as a
security -- it has no specified interest rate or maturity. However, the Issuer,
as holder of the Collateral Interest, is entitled to receive its allocable share
of cash collections from two kinds of credit card receivables payable to the
Master Trust: finance charge receivables and principal receivables.
Finance charge receivables are all periodic finance charges, annual
membership fees, cash advance fees and late charges on amounts charged for
merchandise and services, Interchange (which is described below) and some other
fees designated by the Banks. Principal receivables are 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 credit card
accounts. Recoveries of charged-off receivables are credited to the category
from which they were charged off. "Interchange" consists of fees received by
Citibank (South Dakota), as a credit card-issuing bank, from MasterCard
International and VISA as partial compensation for taking credit risk, absorbing
fraud losses and funding receivables for a limited period before initial
billing. Interchange varies from approximately 1% to 2% of the transaction
amount, but these amounts may be changed by MasterCard International or VISA.
In general, the allocable share of collections of finance charge
receivables and principal receivables available to the Collateral Interest, to
other series of investor certificates issued by the Master Trust and to the
Seller's Interest is determined as follows:
o first, collections of finance charge receivables and collections
of principal receivables are allocated among the different series
of certificates issued by the Master Trust, including the
Collateral Interest, pro rata, based on the invested amount of
each series; and
o second, following such allocation to each series, collections of
finance charge receivables and principal receivables are further
allocated between the investors in the series and the Sellers'
Interest on a similar basis.
In general, the invested amount of each other series of certificates
issued by the Master Trust will equal the stated dollar amount of participation
certificates issued to investors in that series less unreimbursed losses
allocated to those investors, principal payments made to those investors and
deposits made to any principal funding account for the series. The Seller's
Interest represents the interest in the Master Trust not represented by any
series of investor certificates.
There is an exception to the pro rata allocations described above. In
the Master Trust, when an investor's investment in principal receivables begins
to amortize, a special allocation procedure is followed. In this case,
collections of principal receivables continue to be allocated between investors
in the series and the Seller's Interest as if the invested amount of the series
had not been reduced by principal receivable collections deposited to a
principal funding account or paid to investors. Allocations of principal
receivables collections between the investors in a
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series and the Seller's Interest is based on the invested amount of the series
"fixed" at the time immediately prior to the first deposit of principal
receivable collections into a principal funding account or the time immediately
prior to the first payment of principal receivable collections to investors.
Distributions of ongoing collections of finance charge receivables, however, are
not allocated on such a fixed basis.
Servicing fees and losses on principal receivables in the Master Trust
(arising from failure of cardholders to pay, charge-offs or otherwise) are
allocated among series and between investors in each series and the Seller's
Interest generally in the same manner as finance charge collections.
Each month, the Master Trust will allocate the servicing fee and losses
as well as collections of finance charge receivables and principal receivables
to the investor certificates outstanding under the Master Trust, including the
Collateral Interest. The Master Trust deducts the Collateral Interest's share of
the servicing fee from its share of the collections of finance charge
receivables, and deducts the Collateral Interest's share of losses from its
share of collections of finance charge receivables and/or principal receivables.
The servicing fee is described under "The Master Trust--The Servicer."
Allocations of losses, servicing fees and collections of finance charge
receivables and principal receivables are made pro rata based on the invested
amount of each investor certificate under the Master Trust, including the
Collateral Interest. For example, if the invested amount of the Collateral
Interest is 100, the invested amounts of the other investor certificates are 200
and the Seller's Interest is 200, the Collateral Interest is entitled, in
general, to 1/5 (100/500) of the cash received each month.
If collections of principal receivables allocated to the Collateral
Interest are needed to pay the Notes or to make a deposit into the trust
accounts within a month, they will be deposited into the Issuer's collection
account. Otherwise, collections of principal receivables allocated to the
Collateral Interest will be reallocated to other series of investor certificates
which have principal collection shortfalls, or reinvested in the Master Trust to
maintain the invested amount of the Collateral Interest. If the Collateral
Interest has a principal collection shortfall, but other series of investor
certificates have excess principal collections, a portion of the other excess
principal collections allocated to other series of investor certificates will be
reallocated to the Collateral Interest and deposited into the collection
account.
All collections of finance charge receivables allocated to the
Collateral Interest are deposited every month into the Issuer's collection
account. Finance charge receivables allocated to the Collateral Interest are not
shared with or reallocated to any other series of investor certificates issued
by the Master Trust.
DERIVATIVE AGREEMENTS
Some Notes may have the benefit of one or more derivative agreements,
including interest rate or currency swaps, caps, collars, guaranteed investment
contracts or other similar agreements with various counterparties (which may
include Citibank (South Dakota) or Citibank (Nevada)) to manage interest rate or
currency risk relating to the Notes. In general, the Issuer will receive
payments from counterparties to the derivative agreements in exchange for the
Issuer's payments to them, to the extent required under the derivative
agreements. The specific terms of each derivative agreement and a description of
each counterparty will be included in the
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applicable supplement to the prospectus for those Notes. We refer to the
agreements described in this paragraph as the "Derivative Agreements."
THE TRUST ACCOUNTS
The Issuer has established a collection account for the purpose of
receiving payments of finance charge collections and principal collections from
the Master Trust payable under the Collateral Interest and payments under any
Derivative Agreements.
The Issuer has also established a principal funding account and
interest funding account, which will have subaccounts for each class and
subclass of Notes of a series, and a Class C reserve account, which will have
subaccounts for each class and subclass of Class C Notes of a series. If
specified in a supplement to this prospectus, the Issuer may establish
supplemental accounts for any series, class or subclass of Notes.
Each month, all distributions on the Collateral Interest and payments
under any Derivative Agreements will be deposited into the collection account,
and then reallocated to the principal funding account, the interest funding
account, the Class C reserve account, any supplemental account, and to the other
purposes as specified in "Deposit of Funds into the Trust Accounts" or in a
supplement to this prospectus. However, for so long as Citibank (South Dakota)
is the manager of the Issuer and Citibank (South Dakota) maintains a certificate
of deposit rating of at least A-1 and P-1 (or their equivalent) by the rating
agencies, Citibank (South Dakota) may comingle funds received from the
Collateral Interest until the business day before the payment date of a class of
Notes, instead of immediately depositing those funds into the accounts.
Funds on deposit in the principal funding account and the interest
funding account will be used to make payments of principal of and interest on
the Notes. Payments of principal of and interest on the Notes will be made from
funds on deposit in the accounts when the payments are due, either in the month
when the funds are deposited into the accounts, or in later months (for example,
if principal must be accumulated for payment at a later date, or if interest is
payable quarterly, semiannually or at another interval less frequently than
monthly). Amounts remaining in the principal funding account and the interest
funding account established for a particular Note after making a scheduled
payment of principal of or interest on that Note will, in general, be paid to
the Issuer for distribution to the Banks.
If the Issuer anticipates that the amount of principal collections that
will be deposited into the collection account in a particular month will not be
enough to pay all of the principal of a Note that has an Expected Principal
Payment Date in that month, the Issuer may begin to withdraw funds from the
collection account in months before the Expected Principal Payment Date and
deposit those funds into the principal funding subaccount established for that
Note to be held until the Expected Principal Payment Date of that Note. To the
extent reinvestment earnings on the amount deposited in the principal funding
subaccount are not sufficient to pay Noteholders the amount of interest they are
entitled to, additional cash will be deposited in the interest funding
subaccount (or earlier in a separate account if required) from distributions on
the Collateral Interest to the extent of the shortfall.
If interest on a Note is not scheduled to be paid every month (for
example, if interest on that Note is payable quarterly, semiannually or at
another interval less frequently than monthly), the Issuer will withdraw a
portion of funds from the collection account in months in which no
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interest payment is due and deposit those funds into the interest funding
subaccount established for that Note to be held until the interest is due.
Amounts in the Class C reserve account will be available to holders of
Class C Notes to cover shortfalls of interest payable on interest payment dates
and principal payable on the applicable Legal Maturity Date. Only the holders of
Class C Notes will have the benefit of the Class C reserve account.
The Issuer will be required to fund the Class C reserve account if the
finance charge collections generated by the Master Trust after payment of
expenses and interest payments fall below a specified level. The Class C reserve
account would be funded from monthly finance charge collections from the
Collateral Interest after payment of expenses of the Indenture Trustee, required
interest deposits and other payments described under "Deposit of Funds into the
Trust Accounts." A supplement to this prospectus relating to Class C Notes will
include provisions for funding the Class C reserve account.
The accounts described above are referred to as "trust accounts." Trust
accounts may only be maintained in a segregated trust account with the corporate
trust department of a United States bank (or any domestic branch of a foreign
bank) or at a United States bank (or any domestic branch of a foreign bank)
which has the highest long-term or short-term rating by the rating agencies that
rate the Notes. Amounts maintained in trust accounts may only be invested in
investments the obligor on which has the highest rating by those rating
agencies. Investment earnings on funds in the principal funding subaccount for a
Note will be applied to make interest payments on that Note. Investment earnings
on funds in the other trust accounts will be allocated as described under
"Deposit of Funds into the Trust Accounts--Allocation of finance charge
collections to accounts." Any loss resulting from the investment of funds in the
trust accounts will be charged to such trust accounts.
SECURITY FOR THE NOTES; LIMITED RECOURSE TO THE ISSUER
The Notes will be secured by collateral consisting of the Collateral
Interest and by the funds on deposit in the collection account. In addition,
each Note will be secured by the funds on deposit in the applicable subaccounts
of the principal funding account, the interest funding account, the Class C
reserve account (for holders of Class C Notes only), and, if specified in a
supplement to this prospectus, any applicable supplemental account and any
Derivative Agreement. Noteholders will have no recourse to any other assets of
the Issuer or any other person or entity for the payment of principal of or
interest on the Notes.
DEPOSIT OF FUNDS INTO THE TRUST ACCOUNTS
----------------------------------------
The Indenture specifies how collections on the Collateral Interest and
payments received from counterparties on Derivative Agreements which have been
deposited into the collection account will be deposited into the other trust
accounts established for each class or subclass of Notes to provide for the
payment of principal and interest on those Notes as the payments become due.
These provisions are summarized below.
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ALLOCATION OF FINANCE CHARGE COLLECTIONS TO ACCOUNTS
Each month the Indenture Trustee will allocate finance charge
collections received that month from the Collateral Interest and investment
earnings on funds in the trust accounts (other than the principal funding
account) as follows:
First, to pay the fees and expenses of the Indenture Trustee.
Second, to make the required deposit to the interest funding account.
Third, to make the required deposit to the Class C reserve account,
if any.
Fourth, to the Issuer, to make the required reinvestment in the
Collateral Interest, if any.
Fifth, to the Issuer.
ALLOCATION OF PRINCIPAL COLLECTIONS TO ACCOUNTS
Each month the Indenture Trustee will allocate principal collections
received that month from the Collateral Interest as follows:
First, if there is a shortfall in finance charge collections
available to make the required deposit to the interest funding
account, except that no principal collections will be used to
make any portion of a deposit to the interest funding account
needed (1) to pay interest on a Class C Note, (2) to make a
derivative payment on a Derivative Agreement entered into to
make payments on a Class C Note or (3) to fund a reinvestment
in the Collateral Interest required by accretion on a
zero-coupon Class C Note. The amount of principal collections
to be deposited in the interest funding account is also
subject to the limitations described below under "--Allocation
to interest funding subaccounts." The invested amount of the
Collateral Interest will be reduced by the amount of principal
collections used to make deposits into the interest funding
account.
Second, to make a required deposit to the principal funding account.
The invested amount of the Collateral Interest will be reduced
by the amount of principal collections used to make deposits
into the principal funding account.
Third, to the Issuer, to maintain the invested amount of the
Collateral Interest.
If the invested amount of the Collateral Interest is reduced because
principal collections have been used to make deposits into the interest funding
account as described in clause First above, the amount of finance charge
receivables allocated to the Collateral Interest will be reduced in later months
unless the principal reduction is reimbursed from excess finance charge
collections.
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REQUIRED DEPOSITS TO THE INTEREST FUNDING ACCOUNT
The aggregate deposit required to be made to the interest funding
account in each month will be equal to the sum of interest funding account
deposits required to be made for each class or subclass of Notes. These
requirements are set forth below:
(1) Monthly Interest Payments. If a Note provides for monthly
interest payments, the deposit required for that Note for any month will be the
total amount of interest payable on that Note on the next interest payment date,
including past due interest, if any.
(2) Periodic Interest Payments. If a Note provides for
quarterly, semi-annual, annual or other periodic payments of interest (but less
frequently than monthly), the deposit required for that Note for any month will
be determined as follows:
o If the Note is a fixed rate Note, the amount of the deposit for
that month will be equal to the amount of interest accrued on the
Note for that period calculated on the basis of a 360-day year of
twelve 30-day months, plus any past due interest.
o If the Note is a floating rate Note, the amount of the deposit
for that month will be equal to the amount of interest accrued on
the Note for that period calculated on the basis of the actual
number of days in the year divided by a 360-day year, plus any
past due interest.
o If an initial deposit (or deposits) to its interest funding
subaccount is specified at the time a Note is first issued, the
deposit required for that Note in the first month following its
date of issuance (and on each later date for which a deposit is
specified) will be the amount of the specified deposit (or
deposits) in lieu of the deposit described above.
(3) Zero-coupon Notes. If a Note is a zero-coupon Note, the
deposit required for that Note in any month is computed by following the rules
for current pay Notes, but assuming that the Note instead provides for monthly
interest payments due on the same calendar day of the month that the Expected
Principal Payment Date for that zero-coupon Note occurs. The principal amount
used in the calculation each month is the accreted amount of that Note as of
that same calendar day in the prior month. The interest rate used in the
calculation is the accretion rate on that Note.
The result of this calculation is to derive a required deposit
amount for each zero-coupon Note equivalent to the accretion on the Note in a
specified monthly period. The required deposit, to the extent received, will be
used each month to make a reinvestment in the Collateral Interest equivalent to
the amount of the accretion in that specified monthly period.
(4) Derivative Agreements. If a Derivative Agreement is
entered into in connection with the issuance of any Note and that Derivative
Agreement is not in default, the deposit required for that Note is computed
following the above rules for current pay Notes but using the interest rate
payable by the Issuer to the counterparty, and the amount and frequency of the
payments required to be made by the Issuer to the counterparty on the notional
amount specified in the Derivative Agreement, instead of the actual interest
rate, amount and frequency of payment for that Note.
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If a Note is denominated in United States dollars and the
Derivative Agreement is in default, then the calculation of the deposit required
will be made with reference to the actual interest rate, amount of interest and
frequency of interest payments required on that Note.
If a Note is denominated in a currency other than United
States dollars and the Derivative Agreement is in default, then the calculation
of the deposit required is made with reference to the amount of United States
dollars that would have been payable to the counterparty under the Derivative
Agreement during that period in the absence of a default. The deposit amount
will then be converted into the applicable foreign currency at the then
prevailing spot exchange rate in New York for that foreign currency. If the
amount of the deposit is less than the amount of the United States dollar
equivalent of interest payable on a Note in the foreign currency, then the Note
will receive the lesser amount as a deposit to its interest funding subaccount.
If the amount of the deposit is greater than the amount of the United States
dollar equivalent of interest payable on a Note in the foreign currency, then
the Note will receive the amount of interest payable on it, and any excess
amount of the deposit will be held in its interest funding subaccount and be
applied towards interest payments on that Note on future interest payment dates.
(5) Negative Spread Allowance. If the Issuer projects that a
deposit or series of deposits will be required to be made to the principal
funding subaccount for any Note, the Issuer will estimate the amount of earnings
on such deposit(s) between the date(s) of deposit and the date of application of
the deposit(s) to pay principal on the Note. The interest rate used for the
projection of earnings will be consistent with rates then available for eligible
investments permitted under the Indenture. To the extent the interest rate
payable on a Note exceeds the amount projected to be earned on the deposit(s),
an additional deposit will be required to be made to the interest funding
subaccount for that Note. If a Note bears interest at a floating rate, the
Issuer also will estimate that rate. The amount of the additional deposit will
equal ___ % of the excess of the amount of interest that would have been earned
on the deposit(s) at the interest rate payable (or estimated to be payable) on
that Note over the actual amount of interest projected to be earned by the
investment of the deposit(s) in eligible investments.
REQUIRED DEPOSITS TO THE PRINCIPAL FUNDING ACCOUNT
The aggregate deposit required to be made to the principal funding
account in any month will be the sum of principal funding account deposits
required to be made for each class or subclass of Notes. These requirements are
set forth below:
(1) Acceleration/Early Redemption Event. If the maturity of
any Note has been accelerated or if any Note is required to be redeemed
following an Early Redemption Event, the deposit required for that Note will be
the aggregate outstanding principal amount of that Note (less amounts on deposit
in that Note's principal funding subaccount).
(2) Expected Principal Payment Date. If the Expected Principal
Payment Date for a Note occurs after the deposit date, but before next month's
deposit date, the deposit required for that Note will be the aggregate
outstanding principal amount of that Note (less amounts on deposit in that
Note's principal funding subaccount).
(3) Budgeted Deposits. Each Class A Note will specify a
controlled amortization amount. That amount is the amount of the deposit
required to be made for that Note in each month, beginning in the twelfth month
before the Expected Principal Payment Date for that Note.
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The Issuer, however, may postpone the requirement to make these required
deposits under the following circumstances:
Immediately before the twelfth month before the Expected
Principal Payment Date set for a Class A Note, Citibank (South Dakota), on
behalf of the Issuer, will calculate the minimum monthly principal expected to
be paid to all investor certificates issued by the Master Trust. This
calculation will be made by multiplying the lowest of the monthly principal
payment rates for the Master Trust during the twelve months preceding the date
of calculation by the initial invested amounts of all investor certificates
(other than investor certificates representing certain excluded Master Trust
series that are not amortizing).
Using the minimum monthly principal expected to be paid,
Citibank (South Dakota), on behalf of the Issuer, next will compare that amount
to the invested amounts of all Master Trust investor certificates (other than
the Collateral Interest) with their expected final payment dates and the
principal amount of all Notes with Expected Principal Payment Dates in the
twelve-month period before the Expected Principal Payment Date of the Class A
Note for which the calculation is being performed. If the comparison reveals
that the date of the required deposits can be postponed for that Class A Note
(with a corresponding increase in the amount of each deposit required) and the
Issuer expects to receive principal collections adequate to repay that Note in
full on its Expected Principal Payment Date, then Citibank (South Dakota), on
behalf of the Issuer, may designate a later month (and correspondingly increased
controlled amortization amount) on which deposits to the principal funding
subaccount for that Note will be required. The comparison made will assume that
the dates required for collection of principal collections is postponed to the
maximum extent permitted by all Master Trust investor certificates and Notes.
(4) Prefunding of the Principal Funding Account. If any
Class C Notes of a series reach their Expected Principal Payment Date or an
Early Redemption Event occurs with respect to that class at a time when
repayment of those Notes would result in a deficiency in the available
subordinated amount of the Class C Notes of that series for the benefit of the
Class A Notes and Class B Notes, the principal funding account for the Class A
Notes and the Class B Notes will be prefunded with an amount equal to the
principal amount of the affected Class A Notes and Class B Notes. If any Class B
Notes of a series reach their Expected Principal Payment Date or an Early
Redemption Event occurs with respect to that class at a time when repayment of
those Notes would result in a deficiency in the available subordinated amount of
the Class B Notes of that series for the benefit of the Class A Notes, the
principal funding account for the Class A Notes will be prefunded with an amount
equal to the principal amount of the affected Class A Notes.
(5) Derivative Agreements. If a Derivative Agreement is
entered into in connection with the issuance of a Note denominated in a currency
other than United States dollars and that Derivative Agreement is not in
default, the deposit required for that Note will not be the United States dollar
equivalent of the principal amount of that Note. Instead, the deposit required
for that Note will be a specified United States dollar amount equal to the
United States dollar amount payable by the Issuer to the counterparty under the
Derivative Agreement (in the absence of a default). This amount corresponds to
the amount payable by the Issuer pursuant to the Derivative Agreement to
purchase the foreign currency necessary to pay principal on the Note. If the
required amount of the deposit when it is made is less than the amount of the
United States dollar equivalent of the principal payable on that Note in the
foreign currency, then that Note will receive the lesser amount as a deposit to
its principal funding subaccount.
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If a Note is denominated in a currency other than United
States dollars and the Derivative Agreement is in default, then the calculation
of the deposit required is made with reference to the amount of United States
dollars that would have been payable at that time to the counterparty under the
Derivative Agreement in the absence of a default. The deposit amount will then
be converted into the applicable foreign currency at the then prevailing spot
exchange rate in New York for that foreign currency. If the amount of the
deposit is less than the amount of the United States dollar equivalent of
principal payable on a Note in the foreign currency, then the Note will receive
the lesser amount as a deposit to its principal funding subaccount.
REQUIRED DEPOSITS TO THE CLASS C RESERVE ACCOUNT
The aggregate deposit required to be made to the Class C reserve
account in each month will be the sum of Class C reserve account deposits
required to be made for each class or subclass of Class C Notes.
If the aggregate deposit to the Class C reserve account is less than
the sum of the deposits required by each Class C Note, then the aggregate
deposit will be allocated to each series that requires a deposit, pro rata,
based on the outstanding principal amount of Class C Notes in each such series.
Amounts allocated to each series will be deposited into the applicable
subaccount of the Class C reserve account for each Class C Note of that series,
pro rata based on the principal amount of the Class C Notes, and reallocated on
the same basis, if necessary, until all required deposits have been made to the
Class C reserve subaccounts in that series. Any excess allocations made to a
series will be reallocated to Class C Notes of other series, pro rata, based on
outstanding principal amounts of the Class C Notes in those series, and
allocated in accordance with the above rule.
REQUIRED REINVESTMENT IN THE COLLATERAL INTEREST
If the aggregate principal amount of Notes outstanding in any month
exceeds the invested amount of the Collateral Interest (plus the aggregate
amount on deposit in the principal funding account) on that date, the amount of
finance charge collections required to be reinvested in the Collateral Interest
under the Fourth item under "--Allocation of finance charge collections to
accounts" is equal to the amount of that excess. In addition, an amount equal to
accretions on a zero-coupon Note is required to be reinvested in the Collateral
Interest. These reinvestments are made from withdrawals from interest funding
subaccounts established for zero-coupon Notes and, if applicable, from
withdrawals from Class C reserve subaccounts established for Class C zero-coupon
Notes.
TREATMENT OF ZERO-COUPON/FOREIGN CURRENCY NOTES
In the case of a zero-coupon Note, the principal amount of that Note
will be a specified accreted amount. In the case of a Note denominated in a
currency other than United States dollars, the principal amount of the Note will
be a specified amount of United States dollars (and not its stated amount in a
foreign currency). In each case, these specified amounts will be used to make
calculations of the required deposits to the interest funding subaccounts and
principal funding subaccounts.
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ALLOCATION TO INTEREST FUNDING SUBACCOUNTS
The aggregate deposit made to the interest funding account in each
month will be divided, and a portion deposited in the interest funding
subaccount established for each class or subclass of Notes, based on the
following rules:
(1) Deposits Equal Requirements. If the aggregate amount
available for deposit to the interest funding account is equal to the sum of the
deposits required by each class or subclass of Notes, then that required amount
is deposited in the interest funding subaccount established for each class or
subclass.
(2) Deposits Are Less Than Requirements. If the aggregate
amount available for deposit to the interest funding account is less than the
sum of the deposits required by each class or subclass of Notes, then the
finance charge collections deposited in the interest funding account are
allocated to each series of Notes, pro rata, based on the principal amount of
outstanding Notes in that series.
For all series of Notes identified as "Group 1" series, the
allocation of finance charge collections is aggregated in a single pool, and
reallocated to each class or subclass of Notes in Group 1, pro rata, based on
the amount of the deposit required by that class or subclass (and not based on
the principal amount of Notes outstanding in that class or subclass).
For all series of Notes identified as in another group, the
allocation of finance charge collections will be based on a rule for that group
set forth in a supplement to this prospectus.
The principal collections deposited in the interest funding
account are allocated to each class or subclass of Class A Notes and Class B
Notes based on the amount of the deposit required by that class or subclass, but
subject to the limitations described below:
(3) Limit on principal collections used to pay interest. The
aggregate amount of principal collections used to make deposits to interest
funding subaccounts for Class A Notes of any series may not exceed the aggregate
principal amount of Class B Notes and Class C Notes of that series minus
unreimbursed losses on the portion of the Collateral Interest allocated to those
subordinated classes.
The aggregate amount of principal collections used to make
deposits to interest funding subaccounts for Class B Notes of any series may not
exceed the aggregate principal amount of Class C Notes (not already used to
reduce losses with respect to Class A Notes) of that series minus unreimbursed
losses on the portion of the Collateral Interest allocated to those Class C
Notes.
For purposes of the above limitations, the amount of principal
collections deposited in the interest funding subaccount of a series will not be
counted to the extent of the reinvestment made in the Collateral Interest
pursuant to the Fourth item under "--Allocation of finance charge collections to
accounts" relating to that series.
Principal collections may not be used to make a deposit to an
interest funding subaccount established for any class or subclass of Class C
Notes.
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Any principal collections not allocated to an interest funding
subaccount based on these limitations will be returned for allocation pursuant
to the Third item under "--Allocation of principal collections to accounts"
relating to that series.
ALLOCATION TO PRINCIPAL FUNDING SUBACCOUNTS
The aggregate deposit made to the principal funding account in each
month will be divided, and a portion deposited in the principal funding
subaccount established for each class or subclass of Notes, based on the
following rules:
(1) Deposits Equal Requirements. If the aggregate amount
available for deposit to the principal funding account is equal to the sum of
the deposits required by each class or subclass of Notes, then that required
amount is deposited in the principal funding subaccount established for each
class or subclass.
(2) Deposits Are Less Than Requirements. If the aggregate
amount available for deposit to the principal funding account is less than the
sum of the deposits required by each class or subclass of Notes, then the
principal collections deposited in the principal funding account are allocated
to each series of Notes, pro rata, based on the principal amount of outstanding
Notes in that series.
Within each series, principal collections are allocated as follows:
First, to each class or subclass of Class A Notes in that series (pro
rata based on the outstanding principal amount of each class
or subclass) until the required amount is on deposit in the
principal funding subaccount for each such class or subclass;
Second, to each class or subclass of Class B Notes in that series (pro
rata based on the outstanding principal amount of each class
or subclass) until the required amount is on deposit in the
principal funding subaccount for each such class or subclass;
and
Third, to each class or subclass of Class C Notes in that series (pro
rata based on the outstanding principal amount of each class
or subclass) until the required amount is on deposit in the
principal funding subaccount for each such class or subclass.
DERIVATIVE AGREEMENT PAYMENTS AND RECEIPTS
A Derivative Agreement may be entered into for the benefit of a
particular class or subclass of Notes. Any such Derivative Agreement will be
identified with that particular class or subclass. United States dollar payments
received from the counterparty to a Derivative Agreement will be deposited in
the interest funding subaccount for that particular class or subclass of Notes.
Foreign currency payments received from the counterparty to a Derivative
Agreement will be deposited in the interest funding subaccount if received to
make payments of interest on a class or subclass of Notes and otherwise will be
deposited in the principal funding subaccount for that class or subclass.
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APPLICATION OF FUNDS IN THE TRUST ACCOUNTS
------------------------------------------
TO PAYMENTS ON THE NOTES
------------------------
The Indenture specifies the sources available to make payments of
principal of and interest on each class or subclass of Notes. It also sets forth
the sources available to make payments to a counterparty on a Derivative
Agreement.
(1) From interest funding subaccounts. Payments of interest on
each Note will be made from the interest funding subaccount established for that
Note. Payments to a counterparty on a Derivative Agreement related to interest
payments on a Note will be made from the interest funding subaccount established
for that Note. If a Derivative Agreement which requires the derivative
counterparty to pay United States dollars is in default, then the interest
payment on the applicable Note shall be the amount on deposit in the applicable
interest funding subaccount, but not greater than the amount of interest stated
in the applicable Note. If the Derivative Agreement requires the derivative
counterparty to pay a currency other than United States dollars, and is in
default, then the interest payment shall be the amount on deposit in the
applicable interest funding subaccount converted at the spot currency exchange
rate, but not greater than the foreign currency interest amount stated in the
applicable Note. Any excess amount will be retained on deposit in the applicable
interest funding subaccount to be applied to make interest payments on that Note
on later interest payment dates, or paid to the Issuer when the principal amount
of the applicable Note is paid in full.
In the case of a zero-coupon Note, the amount of accretion on
that Note (during each monthly period or portion thereof specified in that Note)
will be paid to the Issuer to be reinvested in the Collateral Interest from the
interest funding subaccount established for that Note.
(2) From principal funding subaccounts. Payments of principal
on each Note will be made from the principal funding subaccount established for
that Note. Payments to a counterparty on a Derivative Agreement related to
principal payments on a Note will be made from the principal funding subaccount
established for that Note. If the Derivative Agreement which requires the
derivative counterparty to pay a currency other than United States dollars is in
default, then the principal payment shall be the amount in the applicable
principal funding subaccount converted at the spot currency exchange rate, but
not more than the foreign currency principal amount stated in the applicable
Note.
The following nine paragraphs apply solely to series of Notes that
allow for the issuance of additional classes or subclasses of Notes of that
series in the future.
Each subclass of Class A Notes will specify a minimum required
subordinated amount, and each subclass of Class B Notes will specify a minimum
required subordinated amount.
The minimum required subordinated amount for a subclass of Class A
Notes on its issuance date will be expressed as a percentage of the initial
principal amount of that subclass, and will be allocated between the Class B
Notes and Class C Notes of that series as of the date of issuance of that
subclass of Class A Notes. On the issuance date of a subclass of Class A Notes,
the available subordinated amount of Class B Notes and Class C Notes must be at
least equal to the minimum required subordinated amount. For this purpose, the
available subordinated amount of Class B Notes and Class C Notes as of any date
means
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o the aggregate principal amount of all outstanding Class B Notes
and Class C Notes on that date, minus
o the sum of the minimum required subordinated amounts for all
other Class A Notes which are outstanding on that date (after
deducting all amounts on deposit in the principal funding
subaccounts for the Class A Notes), minus
o a portion, determined by formula, of the amount of principal of
Class B Notes and Class C Notes which have been applied to pay
the principal of or interest on the Class A Notes or Class B
Notes of the series.
Similarly, the minimum required subordinated amount for a subclass of
Class B Notes on its issuance date will be expressed as a percentage of the
initial principal amount of that subclass, and will be allocated to the Class C
Notes of that series as of the date of issuance of that subclass of Class B
Notes. On the issuance date of a subclass of Class B Notes, the available
subordinated amount of Class C Notes must be at least equal to the minimum
required subordinated amount. For this purpose, the available subordinated
amount of Class C Notes as of any date means
o the aggregate principal amount of all outstanding Class C Notes
on that date, minus
o the sum of the minimum required subordinated amounts for all
other Class B Notes which are outstanding on that date (after
deducting all amounts on deposit in the principal funding
subaccounts for the Class B Notes), minus
o a portion, determined by formula, of the amount of principal of
Class C Notes which have been applied to pay the principal of or
interest on the Class A Notes or Class B Notes of the series.
The minimum required subordinated amount for a subclass of Class A
Notes on its issuance date will be an amount equal to __% of the initial
principal amount of that subclass of Class A Notes, and the minimum required
subordinated amount for a subclass of Class B Notes on its issuance date will
bean amount equal to __% of the initial principal amount of that subclass of
Class B Notes. The Issuer may change these subordination levels at any time
without the consent of any Noteholders so long as the Issuer has received
confirmation from the rating agencies that have rated any outstanding Notes of
that series that the change in the subordination levels will not result in the
rating assigned to any outstanding Notes in that series to be withdrawn or
reduced.
If a payment of principal of any subclass of Class A Notes (whether on
its Expected Principal Payment Date, Legal Maturity Date, acceleration,
redemption, the occurrence of an Early Redemption Event or otherwise) is due,
and if that payment cannot be made in full with the amounts on deposit in the
principal funding subaccount for that Note, then amounts on deposit in principal
funding subaccounts established for Class B Notes and Class C Notes will be
applied to make the payment. Amounts will be withdrawn for that purpose first
from Class C principal funding subaccounts in that series and second from Class
B principal funding subaccounts in that series. However, the maximum aggregate
amount of principal of Class B Notes and Class C Notes that may be applied to
the payment on a subclass of Class A Notes is equal to the required subordinated
amount for that subclass of Class A Notes, and is subject to the
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initial allocation between Class B Notes and Class C Notes. If more than one
subclass of Class A Notes needs to use amounts on deposit in the principal
funding subaccounts of the Class B Notes and the Class C Notes, then withdrawals
will be allocated pro rata based on the outstanding principal amounts of the
subclasses of Class A Notes that require funding.
Similarly, if a payment of principal of any subclass of Class B Notes
(whether on its Expected Principal Payment Date, Legal Maturity Date,
acceleration, redemption, the occurrence of an Early Redemption Event or
otherwise) is due, and if that payment cannot be made in full with the amounts
on deposit in the principal funding subaccount for that Note, then amounts on
deposit in principal funding subaccounts established for Class C Notes will be
applied to make the payment. The maximum aggregate amount of principal of Class
C Notes that may be applied to the payment on a subclass of Class B Notes is
equal to the required subordinated amount for that subclass of Class B Notes. If
more than one subclass of Class B Notes needs to use amounts on deposit in the
principal funding subaccounts of the Class C Notes, then withdrawals will be
allocated pro rata based on the outstanding principal amounts of the subclasses
of Class B Notes that require funding.
No payment of principal will be made on any Class B Note unless,
following such payment, the available subordinated amount of Class B Notes and
Class C Notes is at least equal to the minimum required subordinated amount for
the outstanding Class A Notes. For this purpose, the minimum required
subordinated amount is equal to the product of the Class A minimum required
subordinated amount percentage multiplied by the aggregate outstanding principal
amount of all Class A Notes (after deducting all amounts on deposit in the
principal funding account for Class A Notes), minus the amount of principal of
Class B Notes and Class C Notes that have already been applied to pay principal
of or interest on outstanding Class A Notes and Class B Notes of the series. For
this purpose, the available subordinated amount of Class B Notes and Class C
Notes means the aggregate outstanding principal amount of all Class B Notes and
Class C Notes on that date, minus the amount of principal of outstanding Class B
Notes and Class C Notes that have already been applied to pay principal of or
interest on Class A Notes and Class B Notes of the series.
No payment of principal will be made on any Class C Note unless,
following such payment, the available subordinated amount of Class C Notes is at
least equal to the minimum required subordinated amount for the outstanding
Class B Notes. For this purpose, the minimum required subordinated amount is
equal to the product of the Class B minimum required subordinated amount
percentage multiplied by the aggregate outstanding principal amount of all Class
B Notes (after deducting all amounts on deposit in the principal funding account
for Class B Notes), minus the amount of principal of Class C Notes that have
already been applied to pay principal of or interest on outstanding Class A
Notes and Class B Notes of the series. For this purpose, the available
subordinated amount of Class C Notes means the aggregate outstanding principal
amount of all Class C Notes on that date, minus the amount of principal of
outstanding Class C Notes that have already been applied to pay principal of or
interest on Class A Notes and Class B Notes of the series.
If a later issuance of a subclass of Class B Notes or Class C Notes
restores the minimum required subordinated amount, prefunding deposits in the
principal funding account of senior classes may be withdrawn from the principal
funding account and reinvested in the Collateral Interest. See "Deposit of Funds
into the Trust Accounts--Required deposits to the principal funding account."
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The following two paragraphs apply to all other series of Notes.
If a principal payment is due on any Class A Note in a series (whether
on an Expected Principal Payment Date, Legal Maturity Date, acceleration,
redemption, the occurrence of an Early Redemption Event or otherwise) and if
that payment cannot be made in full with amounts on deposit in the principal
funding subaccount for that Note, then amounts on deposit in principal funding
subaccounts established for Class B and Class C Notes in that series will be
used to make the payment. Amounts will be withdrawn for that purpose first from
the Class C principal funding subaccount in that series and second from the
Class B principal funding subaccount in that series.
If a principal payment is due on any Class B Note in a series (whether
on an Expected Principal Payment Date, Legal Maturity Date, acceleration,
redemption, the occurrence of an Early Redemption Event or otherwise) and if
that payment cannot be made in full with amounts on deposit in the principal
funding subaccount for that Note, then amounts on deposit in principal funding
subaccount established for Class C Notes in that series will be used to make the
payment.
(3) From Class C reserve subaccounts. Payments of interest on
a Class C Note that cannot be paid from amounts on deposit in the interest
funding subaccount for that Note will be paid from the Class C reserve
subaccount established for that Note. If the amount of accretion on a
zero-coupon Class C Note cannot be fully reinvested in the Collateral Interest
from amounts on deposit in the interest funding subaccount for that Note, then
the shortfall will be withdrawn from the Class C reserve subaccount for that
Note and applied for that purpose. If an amount due to a counterparty on a
Derivative Agreement for a Class C Note cannot be fully paid from amounts on
deposit in the interest funding subaccount for that Note, then the shortfall
will be withdrawn from the Class C reserve subaccount for that Note and applied
for that purpose. At the Legal Maturity Date of a Class C Note, if that Note has
not received payment in full of its principal amount, that remaining principal
amount will be paid from the Class C reserve subaccount established for that
Note.
COVENANTS, EVENTS OF DEFAULT, EARLY REDEMPTION
----------------------------------------------
EVENTS AND INDENTURE AMENDMENTS
-------------------------------
ISSUER COVENANTS
The Issuer may not consolidate with or merge into any other entity,
unless
o the entity formed by or surviving the consolidation or merger is
organized under the laws of the United States, any state thereof
or the District of Columbia,
o the entity is not an "investment company" as defined in the
Investment Company Act of 1940,
o the entity expressly assumes the Issuer's obligation to make due
and punctual payments upon the Notes and the performance or
observance of every agreement and covenant of the Issuer under
the Indenture,
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o no Event of Default shall have occurred and be continuing
immediately after the merger or consolidation,
o each rating agency which has rated any outstanding Notes shall
have confirmed in writing that the ratings on those Notes will
not be withdrawn or reduced as a result of the consolidation or
merger,
o the Issuer has received an opinion of counsel that the
consolidation or merger would have no material adverse tax
consequence to any Noteholder,
o any action as is necessary to maintain the lien and security
interest created by the Indenture shall have been taken, and
o the Issuer has delivered to the Indenture Trustee a
certificate of the Issuer and an opinion of counsel, each
stating that the consolidation or merger satisfies all
requirements under the Indenture.
The Issuer will not, among other things
o except as expressly permitted by the Indenture or related
documents, sell, transfer, exchange or otherwise dispose of
any of the assets of the Issuer that constitutes collateral
for the Notes, unless directed to do so by the Indenture
Trustee,
o claim any credit on or make any deduction from the principal
and interest payable on the Notes (other than amounts withheld
under the Internal Revenue Code or other applicable tax law)
or assert any claim against any present or former holder of
Notes because of the payment of taxes levied or assessed upon
the Issuer or any part of it,
o voluntarily dissolve or liquidate, or
o permit (A) the validity or effectiveness of the Indenture to be
impaired or permit any person to be released from any covenants
or obligations with respect to the Notes under the Indenture
except as may be expressly permitted by the Indenture, (B) any
lien, charge, excise, claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon
or burden the assets of the Issuer, except as may be created by
the terms of the Indenture or (C) the lien of the Indenture not
to constitute a valid first priority perfected security interest
in the assets of the Issuer that secure the Notes.
The Issuer may not engage in any activity other than the activities
specified under "The Issuer." The Issuer will not incur, assume or guarantee any
indebtedness other than indebtedness incurred on the Notes and under the
Indenture.
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EVENTS OF DEFAULt
Each of the following events is an "Event of Default" for any series or
class of Notes:
o the Issuer's failure, uncured after five business days, to pay
interest on any Note when due;
o the Issuer's failure to pay the principal amount of any Note on
its Legal Maturity Date;
o the Issuer's default in the performance, or breach, uncured 90
days after written notice by the Indenture Trustee or by the
holders of 25% of the outstanding Notes of such series or class,
of any other of its covenants or warranties in the Indenture
(other than a covenant or warranty included in the Indenture
solely for the benefit of series or classes of Notes other than
that particular series or class) and such default or breach is
materially adverse to those Noteholders;
o the Issuer becomes an "investment company" within the meaning of
the Investment Company Act of 1940;
o the occurrence of certain events of bankruptcy, insolvency or
reorganization of the Issuer; or
o any additional events of default specified in a supplement to
this prospectus.
Failure to pay the full principal amount of a Note on its Expected
Principal Payment Date will not constitute an Event of Default.
An Event of Default with respect to one series or class of Notes will
not necessarily be an Event of Default with respect to any other series or class
of Notes.
The occurrence of some Events of Default involving the bankruptcy or
insolvency of the Issuer results in an automatic acceleration of the affected
Notes. If other Events of Default occur and are continuing, either the Indenture
Trustee or the holders of at least 25% in aggregate principal amount of the
outstanding Notes of that series or class may declare the principal of all those
outstanding Notes to be immediately due and payable. This declaration of
acceleration may generally be rescinded by the holders of a majority in
aggregate principal amount of outstanding Notes of that series or class.
Generally, if an Event of Default occurs and any Notes are accelerated,
the Indenture Trustee is not obligated to exercise any of its rights or powers
under the Indenture unless the holders of affected Notes offer the Indenture
Trustee reasonable indemnity. The holders of a majority in aggregate principal
amount of the outstanding Notes of any affected series or class have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee. This right may only be exercised if the direction
provided by the holders does not conflict with applicable law or the Indenture
or have a substantial likelihood of involving the Indenture Trustee in personal
liability.
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After acceleration of a series or class of Notes, principal collections
and finance charge collections allocated to those Notes will be applied to make
monthly principal and interest payments on the Notes until the earlier of the
date the Notes are paid in full or the Legal Maturity Date of the Notes. Funds
in the principal funding account and principal funding account for an
accelerated series or class of Notes are applied immediately as set forth in
"Application of Funds in the Trust Accounts to Payment on the Notes."
Upon acceleration of the maturity of a series or class of Notes
following an Event of Default, the Indenture Trustee will have a lien on the
collateral for those Notes ranking senior to the lien of those Notes for its
unpaid fees and expenses.
In general, the Indenture Trustee will enforce the rights and remedies
of the holders of accelerated Notes. However, holders of Notes will have the
right to institute any proceeding with respect to the Indenture if the following
conditions are met:
o The holder gives to the Indenture Trustee written notice of a
continuing Event of Default;
o The holders of at least 25% in aggregate principal amount of the
outstanding Notes of the affected series or class make a written
request of the Indenture Trustee to institute a proceeding as
Indenture Trustee;
o The holders offer reasonable indemnification to the Indenture
Trustee against the costs, liabilities and expenses of
instituting a proceeding;
o The Indenture Trustee has not received from the holders of a
majority in aggregate principal amount of the outstanding Notes
of that series or class a direction inconsistent with such
request; and
o The Indenture Trustee has not instituted a proceeding within 60
days after receipt of the request and offer of indemnification.
If any Note has been accelerated following an Event of Default, and the
Indenture Trustee has not received any valid directions from the holders of the
Note, the Indenture Trustee may elect to continue to hold the portion of the
Collateral Interest which secures the Note and apply distributions on the
Collateral Interest to make payments on the Note to the extent funds are
available under the Collateral Interest.
In addition, the following remedies are available if the Indenture
Trustee has obtained an opinion of counsel that foreclosure on that portion of
the undivided interest in the Master Trust and issuance of the Foreclosure
Certificate will not cause the Master Trust or any part of it to be classified
as an association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes. The Indenture Trustee
o may, at its own election, foreclose on the portion of the
Collateral Interest which secures a class of accelerated Notes by
causing the Master Trust to issue a Foreclosure Certificate to
the holders of those Notes;
o may, at its own election, foreclose on the portion of the
Collateral Interest which
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secures a class of accelerated Notes by causing the Master Trust
to issue a Foreclosure Certificate to a third party selected by
the Indenture Trustee, but only if it determines that the
proceeds of the issuance of the Foreclosure Certificate to such
third party will be sufficient to pay principal of and interest
on the accelerated class of Notes in full; and
o shall, at the direction of the holders of a majority of the
principal amount of a class of accelerated Notes, foreclose on
the portion of the Collateral Interest which secures that class
of Notes by causing the Master Trust to issue a Foreclosure
Certificate to the holders of that class of Notes or to a third
party selected by the holders of a majority of the principal
amount of that class of Notes.
A "Foreclosure Certificate" is an investor certificate issued by the
Master Trust as a result of a foreclosure on a portion of the Collateral
Interest that corresponds to the portion of the Collateral Interest that secured
the accelerated Notes. Like the Collateral Interest, a Foreclosure Certificate
represents an undivided interest in the assets of the Master Trust. The
principal amount of the Foreclosure Certificate would be equal to the principal
amount of the accelerated Notes, and the invested amount of the Foreclosure
Certificate would be equal to the portion of the invested amount of the
Collateral Interest that would be allocated to the accelerated Notes if all
series of Notes were payable on the date of issuance of the Foreclosure
Certificate, after giving effect to the priorities of the classes of Notes.
Unlike the Collateral Interest, a Foreclosure Certificate would have interest
rate provisions that would be the same as the interest rate provisions of the
applicable accelerated Notes. If the accelerated Notes are of a subordinated
class, the applicable Foreclosure Certificates would be similarly subordinated.
If the invested amount of the Foreclosure Certificate is less than its principal
amount, excess finance charge collections and principal collections allocated to
the Foreclosure Certificate will be applied to reimburse the deficiency.
When Foreclosure Certificates are issued with respect to accelerated
Notes, those Notes will be deemed to have been paid in full by the Issuer and
not outstanding, and the holders of the accelerated Notes will no longer have
any claim against the Issuer. Accordingly, the invested amount of the Collateral
Interest will be reduced by the principal amount of the Foreclosure Certificate.
A Foreclosure Certificate held by a Noteholder or a third party will be
subject to restrictions on transfer, including:
o restrictions required to prevent the Master Trust from becoming a
publicly traded partnership taxable as a corporation for federal
income tax purposes, including a limitation on the number of
holders of interests in Foreclosure Certificates and restrictions
on transfers to holders that are partnerships, Subchapter S
corporations or grantor trusts for United States federal income
tax purposes;
o restrictions on transfers of interest in Foreclosure Certificates
to non-U.S. persons;
o restrictions on transfers to employee benefit plans, or any
entity whose underlying assets include "plan assets"; and
o other restrictions that counsel to the Issuer may require to
avoid adverse tax and
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other consequences to the Issuer, the holders of the Notes, the
Master Trust, holders of interests in the Master Trust or others.
The Indenture Trustee and the Noteholders will agree that they will not
at any time institute against the Issuer, the Banks or the Master Trust any
bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law.
EARLY REDEMPTION EVENTS
The Issuer is required to redeem any class of Notes of a
series upon the occurrence of an Early Redemption Event with respect to that
class. Early Redemption Events include the following:
o the occurrence of a Note's Expected Principal Payment Date;
o all of the early amortization events applicable to the Collateral
Interest as described under "The Master Trust--Early Amortization
Events";
o mandatory prepayment of the entire Collateral Interest resulting
from a breach of a representation or warranty by the Banks under
the Pooling Agreement;
o the amount of surplus finance charge collections averaged over
any three consecutive months is less than the required surplus
finance charge amount for the most recent month ("surplus finance
charge collections" means, for any monthly period, the amount of
finance charge collections received by the Issuer in respect of
the Collateral Interest minus the amount required to pay the fees
and expenses of the Indenture Trustee and to make the required
deposit to the interest funding account for the Notes for that
period; "required surplus finance charge amount" means, for any
monthly period, means an amount equal to one twelfth of (1) the
invested amount of the Collateral Interest as of the last day of
the preceding monthly period, times (2) a decimal number, which
will initially equal zero, but may be changed by the Issuer so
long as the Issuer reasonably believes that such change will not
adversely affect the amount of funds available for distribution
to Noteholders or the timing of such distributions or result in
an Early Redemption Event);
o the Banks fail to maintain the weighted average interest rate
applicable to the credit card accounts in the Master Trust at a
level at least 6% higher than the weighted average interest rate
applicable to all of the investor certificates issued by the
Master Trust (other than the Collateral Interest) and the Notes;
o the aggregate outstanding principal amount of [a class of] the
Notes is reduced to ___ % of _________ or $__________ or less;
o if the Notes have the benefit of a Derivative Agreement, any
derivative counterparty shall default on any of its payment
obligations under that agreement and the default continues for
the period established in that agreement; or
o any additional early redemption event specified in a supplement
to this prospectus.
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The redemption price of a Note so redeemed will equal 100% of the
outstanding principal amount of that Note, plus accrued but unpaid interest on
that Note to but excluding the date of redemption. If the amount of collections
of credit card receivables is insufficient to pay the redemption price in full
on the redemption date (after giving effect to subordination and allocations to
any other Notes ranking equally with that Note), monthly payments on the Notes
so redeemed will thereafter be made until the principal amount of the Notes
(plus all accrued and unpaid interest) is paid in full or the Legal Maturity
Date of the Notes occurs, whichever is earlier. Any funds in the principal
funding account and interest funding account for a redeemed Note will be applied
immediately as set forth in "Application of Funds in the Trust Accounts to
Payment on the Notes." Payments on redeemed Notes will be made in the same
priority as described in "The Notes--Subordination of Principal." We will give
notice to holders of the affected Notes before an early redemption date.
AMENDMENT OF INDENTURE
The Issuer and the Indenture Trustee may modify and amend the
Indenture or any supplemental indenture with the consent of the holders of not
less than a majority in aggregate principal amount of the outstanding Notes of
each series affected by that modification or amendment. However, if the
modification or amendment would result in any of the following events occurring,
it may be made only with the consent of the holders of each outstanding Note
affected by the modification or amendment:
o a change in the maturity of the principal of, or any installment
of principal of or interest on, any Note or any change in a
mandatory redemption or Expected Principal Payment Date;
o a reduction of the principal amount of, or interest rate on, any
Note;
o the obligation of the Issuer to pay additional amounts is
reduced;
o an impairment of the right to institute suit for the enforcement
of any payment on any Note;
o a reduction of the percentage in principal amount of outstanding
Notes of any series or class, the consent of whose holders is
required for modification or amendment of the Indenture or any
supplemental indenture or for waiver of compliance with
provisions of the Indenture or supplemental indenture or for
waiver of defaults;
o permission to create any lien ranking prior to the lien of the
Indenture or terminate the lien of the Indenture;
o a change in any obligation of the Issuer to maintain an office or
agency in the places and for the purposes required by the
Indenture; or
o a change in the method of computing the amount of principal of,
or interest on, any Note on any date.
The Issuer and the Indenture Trustee may also modify and amend the
Indenture or enter into supplemental indentures without the consent of any
holders of outstanding Notes to cure
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ambiguities or to make minor corrections, to provide for the issuance of Notes
and to do any other things that would not adversely affect, in any material
effect, the interests of the holders of outstanding Notes. In addition, without
the consent of any holders of outstanding Notes, the Issuer may change the
amount of subordination available for any class of Notes so long as the Issuer
has received confirmation from the rating agencies that the change in
subordination will not result in the rating assigned to any outstanding Notes to
be withdrawn or reduced.
The holders of not less than a majority in aggregate principal amount
of the outstanding Notes of a series may waive, on behalf of the holders of all
the Notes of that series, compliance by the Issuer with specified restrictive
provisions of the Indenture.
The holders of not less than a majority in aggregate principal amount
of the outstanding Notes of an affected series or class may, on behalf of all
holders of Notes of that series or class, waive any past default under the
Indenture with respect to Notes of that series or class. However, the consent of
the holders of all outstanding Notes of a class is required to waive any past
default in the payment of principal of, or interest on, any Note of that class
or in respect of a covenant or provision of the Indenture which cannot be
modified or amended without the consent of the holders of each outstanding Note
of that class.
The Indenture provides that the following principles will be used in
determining whether the holders of the requisite principal amount of the
outstanding Notes or any series or class have given any request, demand,
authorization, direction, notice, consent or waiver or are present at a meeting
of holders of Notes for quorum purposes:
o the principal amount of a zero-coupon Note that will be deemed to
be outstanding will be the amount of the principal that would be
due and payable as of the date of determination upon acceleration
of its maturity; and
o the principal amount of a Note denominated in a foreign currency
will be a U.S. dollar amount specified at a time shortly before
the issuance of the Note, or in the case of a zero-coupon Note
denominated in a foreign currency, the amount of the principal
that would be due and payable as of the date of determination
upon acceleration of its maturity converted into U.S. dollars at
an exchange rate specified at a time shortly before the issuance
of the Note.
NOTICES, REPORTS, NOTEHOLDERS' MEETINGS AND THE TRUSTEE
-------------------------------------------------------
NOTICES
Notices to holders of Notes will be given by mail sent to the addresses
of such holders as they appear in the security register.
ISSUER'S ANNUAL COMPLIANCE STATEMENT
The Issuer is required to furnish annually to the Indenture Trustee a
statement concerning its performance or fulfillment of covenants, agreements or
conditions in the Indenture as well as the presence or absence of defaults under
the Indenture.
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INDENTURE TRUSTEE'S ANNUAL REPORT
The Indenture Trustee is required to mail each year to all registered
Noteholders a report concerning
o its eligibility and qualifications to continue as trustee under
the Indenture,
o any amounts advanced by it under the Indenture,
o the amount, interest rate and maturity date or indebtedness owing
by the Issuer to it in the Indenture Trustee's individual
capacity,
o the property and funds physically held by it as Indenture
Trustee,
o any release or release and substitution of collateral subject to
the lien of the Indenture which has not previously been reported,
and
o any action taken by it that materially affects the Notes and that
has not previously been reported.
LIST OF NOTEHOLDERS
Three or more holders of Notes of any series (each of whom who has
owned a Note for at least six months) may, upon written request to the Indenture
Trustee, obtain access to the current list of Noteholders of the Issuer for
purposes of communicating with other Noteholders concerning their rights under
the Indenture or the Notes. The Indenture Trustee may elect not to give the
requesting Noteholders access to the list if it agrees to mail the desired
communication or proxy to all applicable Noteholders.
REPORTS
Each month, the Issuer will file with the Securities and Exchange
Commission a report containing information on the Notes and the collateral
securing the Notes. This report will not be sent to Noteholders. See "Where You
Can Find Additional Information" for information as to how these reports may be
accessed.
On or before January 31 of each calendar year, the paying agent,
on behalf of the Indenture Trustee, will furnish to each person who at any time
during the prior calendar year was a Noteholder of record a statement containing
the information required to be provided by an issuer of indebtedness under the
Internal Revenue Code. See "Tax Matters."
MEETINGS
The Indenture Trustee may call a meeting of the holders of Notes of a
series or class at any time. The Indenture Trustee will call a meeting upon
request of the Issuer or the holders of at least 10% in aggregate principal
amount of the outstanding Notes of such series or class. In any case, a meeting
will be called after notice is given to the holders of the Notes in accordance
with "--Notices" above.
Except for any consent that must be given by the holders of each
outstanding Note affected, as described under "Covenants, Events of Default,
Early Redemption Events and Indenture Amendments--Amendment of Indenture" or any
action to be taken by the Issuer as holder of the Collateral Interest, any
resolution presented at any meeting at which a quorum is present may be adopted
by the affirmative vote of the holders of a majority in aggregate principal
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amount of the outstanding Notes of that series or class, as the case may be. For
any vote, request, demand, authorization, direction, notice, consent, waiver or
other action provided for in the Collateral Interest to be given or taken by
holder of the Collateral Interest, any resolution presented at any meeting at
which a majority of the holders of a majority in aggregate principal amount of
all outstanding Notes is present may be adopted by the affirmative vote of the
holders of a majority in aggregate principal amount of all outstanding Notes.
However, any resolution with respect to any consent, waiver, request, demand,
notice, authorization, direction or other action which may be given by the
holders of not less than a specified percentage in aggregate principal amount of
outstanding Notes of a series or class or of all of the Notes may be adopted at
any meeting which a quorum is present only by the affirmative vote of the
holders of not less than the specified percentage in aggregate principal amount
of the outstanding Notes of that series or class or of all of the Notes, as the
case may be. Any resolution passed or decision taken at any meeting of holders
of Notes duly held in accordance with the Indenture will be binding on all
holders of Notes of the affected series or class.
The quorum at any meeting will be persons holding or representing a
majority in aggregate principal amount of the outstanding Notes of a series or
class or all Notes, as the case may be. However, if any action is to be taken at
that meeting concerning a consent, waiver, request, demand, notice,
authorization, direction or other action that may be given by the holders of not
less than a specified percentage in aggregate principal amount of the
outstanding Notes of a series or class or all Notes, as applicable, the persons
holding or representing such specified percentage in aggregate principal amount
of the outstanding Notes of such series or class or all Notes will constitute a
quorum.
Notes held by the Issuer, either Bank or their affiliates will not be
deemed outstanding for purposes of voting or calculating quorum at any meeting
of Noteholders.
THE INDENTURE TRUSTEE
___________________________ is the trustee under the Indenture. Its
principal corporate trust office is located at _______________, New York, New
York _______.
The Indenture Trustee may resign at any time. The Issuer may also
remove the Indenture Trustee if the Indenture Trustee is no longer eligible to
act as trustee under the Indenture or if the Indenture Trustee becomes
insolvent. In all circumstances, the Issuer must appoint a successor trustee for
the Notes. Any resignation or removal of the Indenture Trustee and appointment
of a successor trustee will not become effective until the successor trustee
accepts the appointment.
The Issuer or its affiliates may maintain accounts and other banking or
trustee relationships with the Indenture Trustee and its affiliates.
THE MASTER TRUST
----------------
Citibank Credit Card Master Trust I is a New York common law trust
formed by Citibank (South Dakota) and Citibank (Nevada) in May 1991 to
securitize a portion of their portfolios of credit card receivables.
Citibank Credit Card Master Trust I is operated pursuant to a pooling
and servicing agreement (the "Pooling Agreement") among Citibank (South Dakota),
as seller and servicer,
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Citibank (Nevada), as seller, and Bankers Trust Company, as trustee. We refer to
Citibank Credit Card Master Trust I as the "Master Trust" and Bankers Trust
Company in its capacity as trustee of the Master Trust as the "Master Trust
Trustee."
The Master Trust does not engage in any activity other than acquiring
and holding trust assets and the proceeds of those assets, issuing series of
investor certificates, making distributions and related activities.
The Master Trust has no employees and does not conduct unrelated
business activities.
MASTER TRUST ASSETS
The Master Trust assets consist primarily of credit card receivables
arising in a portfolio of revolving credit card accounts that meet the
eligibility requirements specified in the Pooling Agreement, and collections on
the accounts. The Banks sell and assign the credit card receivables to the
Master Trust. The receivables arise in accounts that are generated under
MasterCard International or VISA programs. The accounts are originated by
Citibank (South Dakota) or purchased by it from other credit card issuers.
The credit card accounts are owned by Citibank (South Dakota) but a
participation in the credit card receivables in some of the accounts have been
sold to Citibank (Nevada) before their conveyance to the Master Trust. The
accounts have been selected from substantially all of the eligible accounts in
Citibank (South Dakota)'s credit card portfolio. Citibank (South Dakota)
believes that the accounts are representative of the eligible accounts in its
portfolio and that the inclusion of the accounts, as a whole, does not represent
an adverse selection by it from among the eligible accounts. See "The Master
Trust Receivables and Accounts" attached as Annex I to the supplement to this
prospectus for financial information on the receivables and the accounts.
The Banks are compensated for the transfer of the credit card
receivables to the Master Trust from two sources: (1) the net cash proceeds
received by the Banks (as owners of the Issuer) from the sale to third party
investors of certificates representing beneficial ownership interests in
receivables held through the Master Trust and (2) the increase in the amount of
the Seller's Interest, which represents the beneficial interest in the pool of
receivables retained by the Banks (as owners of the Issuer) and not sold to
third party investors.
The Banks may, at their option, designate additional credit card
accounts to the Master Trust (a "lump addition"), the receivables in which will
be sold and assigned to the Master Trust. Since the creation of the Master
Trust, the Banks have made lump additions that, in the aggregate, included
approximately $34.99 billion of principal receivables and may make lump
additions in the future.
In addition, the Banks are required to make a lump addition if as of
the end of any calendar week the total amount of principal receivables in the
Master Trust is less than the amount (the "required minimum principal balance")
required by the rating agencies that rate the certificates purchased by the
investors. After a required lump addition, the total amount of principal
receivables in the Master Trust will be at least equal to the required minimum
principal balance. A lump addition consists of
o credit card receivables arising in eligible accounts in Citibank
(South Dakota)'s credit card portfolio,
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o credit card receivables arising in portfolios of revolving credit
card accounts acquired by the Banks from other credit card
issuers,
o credit card receivables arising from nonpremium and premium
MasterCard and VISA credit card accounts previously transferred
by the Banks to other trusts formed by the Banks which have
reached their maturity dates,
o credit card receivables arising in any other revolving credit
card accounts of a type that has previously not been included in
the accounts, and
o participations representing undivided interests in a pool of
assets primarily consisting of revolving credit card accounts and
collections on those accounts.
The Banks may also designate newly originated credit card accounts to
be included as accounts ("new accounts"), if they meet the conditions in the
Pooling Agreement. The number of new accounts designated for any quarterly
period may not exceed 15% of the number of accounts as of the first day of that
period, and the number of new accounts designated during any calendar year may
not exceed 20% of the number of accounts as of the first day of that calendar
year, unless the rating agencies otherwise consent. Since the creation of the
Master Trust, the Banks have designated new accounts and the Banks may continue
to do so in the future.
Credit card accounts designated to the Master Trust in the future 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 Master Trust. Therefore, we can not provide any assurance that additional
accounts will be of the same credit quality as the accounts currently designated
to the Master Trust. These additional accounts may contain receivables that
consist of fees, charges and amounts which are different from the fees, charges
and amounts applicable to the accounts previously designated to the Master
Trust. These additional accounts may also be subject to different credit limits,
balances and ages. In addition, the inclusion in the Master Trust of additional
accounts with lower periodic finance charges may reduce the portfolio yield of
the Master Trust receivables. The Banks intend to file with the Securities and
Exchange Commission, on behalf of the Master Trust, a Current Report on Form 8-K
with respect to any addition of accounts that would have a material effect on
the composition of the accounts.
The Banks may remove the receivables in some of the credit card
accounts, if they meet the conditions in the Pooling Agreement. These conditions
include:
o the rating agencies confirm that the removal will not cause the
rating assigned to any outstanding series or class of investor
certificates to be withdrawn or reduced, and
o the Banks deliver an officers' certificate that the removal will
not (1) cause an early amortization event or a reduction of the
amount of surplus finance charge collections for any series of
investor certificates below the level required by the rating
agencies that have rated the certificates issued by the Master
Trust or (2) adversely affect the amount or timing of payments to
investor certificateholders of any series.
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Each cardholder is subject to an agreement governing the terms and
conditions of the credit card accounts. Pursuant to this agreement, Citibank
(South Dakota), as owner of the accounts, has the right to change or terminate
any terms, conditions, services or features of the accounts (including
increasing or decreasing periodic finance charges or minimum payments).
Citibank (South Dakota) has agreed in the Pooling Agreement that,
except as otherwise required by law or it deems necessary to maintain its credit
card business on a competitive basis, it will not take actions that reduce the
net portfolio yield on the receivables (after subtracting the amount of
principal receivables that were written off as uncollectible) to be less than
the sum of
o the weighted average certificate rate of each class of investor
certificates of each series, and
o 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 net portfolio yield to less than the highest
certificate rate for any outstanding series or class of investor certificates.
Citibank (South Dakota) has also agreed that it will change the terms relating
to the credit card accounts designated to the Master Trust only if that change
is made applicable to a comparable segment of the portfolio of accounts with
similar characteristics owned or serviced by Citibank (South Dakota), and not
only to the accounts designated to the Master Trust.
On the issuance date for a series of investor certificates the Banks
make representations and warranties to the Master Trust relating to the credit
card receivables and accounts, including the following:
o each account was an eligible account generally as of the date the
receivables arising in that account were initially conveyed to
the Master Trust,
o each of the receivables then existing in the accounts is an
eligible receivable, and
o as of the date of creation of any new receivable, such receivable
is an eligible receivable.
If the Banks breach any of these representations or warranties and the breach
has a material adverse effect on the investor certificateholders' interest, the
receivables in the affected account will be reassigned to the Banks if the
breach remains uncured after a specified cure period. In general, the Seller's
Interest will be reduced by the amount of the reassigned receivables.
Each Bank also represents and warrants to the Master Trust that as of
the issuance date for a series of investor certificates the Pooling Agreement
and related series supplement create a valid sale, transfer and assignment to
the Master Trust of all right, title and interest of that Bank in the
receivables or the grant of a first priority perfected security interest in
those receivables under the Uniform Commercial Code. If the Banks breach this
representation and warranty and the breach has a material adverse effect on the
investor certificateholders' interest, the Master Trust Trustee or the holders
of the investor certificates may direct the Banks to accept the reassignment of
the receivables in the Master Trust. The reassignment price will generally be
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equal to the aggregate invested amount of all series of investor certificates,
including the Collateral Interest, issued by the Master Trust, plus accrued and
unpaid interest on those certificates.
An "eligible account" is a credit card account owned by Citibank (South
Dakota) that
o is in existence and maintained by Citibank (South Dakota),
o is payable in U.S. dollars,
o in the case of initial accounts, has a cardholder with a billing
address located in the United States or its territories or
possessions or a military address,
o has a cardholder who has not been identified as being involved in
a voluntary or involuntary bankruptcy proceeding,
o has not been identified as an account with respect to which the
related card has been lost or stolen,
o has not been sold or pledged to any other party,
o does not have receivables that have been sold or pledged to any
other party, and
o in the case of the initial accounts, is a MasterCard or VISA
revolving credit card account.
An "eligible receivable" is a credit card receivable
o that has arisen under an eligible account,
o that was created in compliance in all material respects with all
requirements of law and pursuant to a credit card agreement that
complies in all material respects with all requirements of law,
o 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 that 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,
o as to which at the time of its transfer to the Master Trust, the
Banks or the Master Trust have good and marketable title, free
and clear of all liens, encumbrances, charges and security
interests,
o that has been the subject of a valid sale and assignment from the
Banks to the Master Trust of all the Banks' right, title and
interest in the receivable or the grant of a first priority
perfected security interest (and in the proceeds of the
receivable),
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o that will at all times be a legal, valid and binding payment
obligation of the cardholder enforceable against the cardholder
in accordance with its terms, subject to certain
bankruptcy-related exceptions,
o that at the time of its transfer to the Master Trust, has not
been waived or modified except as permitted under the Pooling
Agreement,
o that is not at the time of its transfer to the Master Trust
subject to any right of rescission, set off, counterclaim or
defense (including the defense of usury), other than certain
bankruptcy-related defenses,
o as to which the Banks have satisfied all obligations to be
fulfilled at the time it is transferred to the Master Trust,
o as to which the Banks have done nothing, at the time of its
transfer to the Master Trust, to impair the rights of the Master
Trust or investor certificateholders, and
o that constitutes either an "account" or a "general intangible"
under the Uniform Commercial Code in effect in the states of
Nevada and South Dakota.
We can not assure that all of the credit card accounts designated to
the Master Trust will continue to meet the eligibility requirements throughout
the life of the Master Trust.
THE SERVICER
The Pooling Agreement designates Citibank (South Dakota) to service the
credit card accounts on behalf of the Master Trust. The servicer is required to
service the accounts in accordance with customary and usual procedures for
servicing credit card receivables. Its duties include billing, collecting and
recording payments on the receivables, communicating with cardholders,
investigating payment delinquencies on accounts, maintaining records for each
cardholder account and other managerial and custodial functions.
The servicer also deposits collections on the receivables into a
collection account maintained for the Master Trust, calculates amounts from such
collections to be allocated to each series of investor certificates issued by
the Master Trust and prepares monthly reports.
If the servicer defaults in the performance of its duties then the
servicer may be terminated and the Master Trust Trustee or a third party meeting
the eligibility requirements specified in the Pooling Agreement will replace the
servicer.
The servicer receives a monthly fee as compensation for its servicing
activities. For each series of investor certificates, including the Collateral
Interest, the servicer receives monthly compensation generally equal to
o 0.37% per annum of the invested amount of the investor
certificates of that series so long as Citibank (South Dakota) or
an affiliate is the servicer, or 0.77% per annum if there is a
different servicer, plus
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o the investor certificateholders portion of finance charge
collections that is attributable to Interchange up to a maximum
amount equal to 1.50% per annum of the invested amount of the
investor certificates of that series.
The servicer's fee is paid from the finance charge collections
allocated to each series. The servicer is responsible to pay from its servicing
compensation expenses of the Master Trust, including the fees and expenses of
the Master Trust Trustee and independent accountants.
For a description of the credit card business conducted by the
servicer, see "The Credit Card Business of Citibank (South Dakota)" attached as
Annex I to this prospectus.
MASTER TRUST ISSUANCES
The Pooling Agreement permits the Master Trust to issue multiple series
of investor certificates. Each series represents an undivided ownership interest
in the assets of the Master Trust. The terms of each series are determined at
the time of issuance and are contained in a supplement to the Pooling Agreement.
The Collateral Interest, which secures the Issuer's payments on the
Notes, is a series of investor certificates.
The ability of the Banks to issue a new series is subject to some
conditions, including the condition that the issuance not cause the rating
assigned to any outstanding series or class of investor certificates by the
rating agencies to be withdrawn or reduced.
The residual economic interest in the Master Trust not represented by
the investor certificates is called the Seller's Interest. The Issuer has
acquired the Seller's Interest from the Banks.
ALLOCATION OF COLLECTIONS, LOSSES AND FEES
Cardholder payments received each month are separated into principal
collections and finance charge collections.
In general, finance charge collections, principal collections, losses
and expenses are allocated to the investor certificates (including the
Collateral Interest) and to the Seller's Interest as follows:
o first, collections of finance charge receivables and collections
of principal receivables are allocated among the different series
of certificates issued by the Master Trust, including the
Collateral Interest, pro rata, based on the invested amount of
each series; and
o second, following such allocation to each series, collections of
finance charge receivables and principal receivables are further
allocated between the investors in the series and the Sellers'
Interest on a similar basis.
There is an exception to the pro rata allocations described above. In
the Master Trust, when an investor's investment in principal receivables begins
to amortize, a special allocation
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procedure is followed. In this case, collections of principal receivables
continue to be allocated between investors in the series and the Seller's
Interest as if the invested amount of the series had not been reduced by
principal receivable collections deposited to a principal funding account or
paid to investors. Allocations of principal receivables collections between the
investors in a series and the Seller's Interest is based on the invested amount
of the series "fixed" at the time immediately prior to the first deposit of
principal receivable collections into a principal funding account or the time
immediately before the first payment of principal receivable collections to
investors. Distributions of ongoing collections of finance charge receivables,
as well as losses and expenses, however, are not allocated on such a fixed
basis.
Principal collections that are allocated to any series of investor
certificates other than the Collateral Interest are first used to pay any
principal of those investor certificates, if due, and any excess is then
reallocated to pay principal of any other series of investor certificates that
has a shortfall of principal collections, including the Collateral Interest.
Principal collections that are not needed to pay investor certificates are
generally reinvested in newly generated credit card receivables.
For the application of finance charge collections and principal
collections which are allocated to the Collateral Interest, see "Deposit of
Funds into the Trust Accounts" and "Application of Funds in the Trust Accounts
to Payments on the Notes."
EARLY AMORTIZATION EVENTS
An early payout of principal to investor certificateholders of a
series, including the Collateral Interest, will occur under the circumstances
specified in the Pooling Agreement (each condition is described as an "early
amortization event"). Early amortization events include:
o the failure of either Bank to (1) make any payment or deposit
required under the Pooling Agreement or the related series
supplement within five business days after the payment or deposit
was required to be made or (2) observe or perform any of its
other covenants or agreements in the Pooling Agreement or series
supplement, which failure has a material adverse affect on
investors and continues unremedied for 60 days;
o a breach of any representation or warranty made by the Banks in
the Pooling Agreement or related series supplement which
continues to be incorrect in any material respect for 60 days;
o the occurrence of certain bankruptcy events relating to either
Bank (an "Insolvency Event");
o the failure by the Banks to make a lump addition within five
business days after the date it was required to be made;
o the Master Trust becomes an "investment company" within the
meaning of the Investment Company Act of 1940;
o the occurrence of a servicer default by Citibank (South Dakota);
and
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o either of the Banks is unable to transfer credit card receivables
to the Master Trust.
A series of investor certificates may have additional early
amortization events applicable to that series.
After an early amortization event occurs, principal collections will be
used to make monthly payments of principal to the investor certificateholders of
that series until the earlier of payment of the outstanding principal amount of
the certificates of that series and its legal maturity date. See "--Optional
Termination; Final Payment of Principal " below. An early amortization event for
the Collateral Interest is also an Early Redemption Event for the Notes. See
"Covenants, Events of Default, Early Redemption Events and Indenture
Amendments--Early Redemption Events."
In addition to the consequences of an early amortization event
described in the preceding paragraph, if an Insolvency Event occurs the Banks
will immediately cease to transfer credit card receivables to the Master Trust.
After that time, unless the requisite number of investor certificateholders
instruct otherwise, the Master Trust Trustee will sell or otherwise liquidate
the credit card receivables in the Master Trust in a commercially reasonable
manner and on commercially reasonable terms. The proceeds of that sale or
liquidation will be applied to payments on the investor certificates.
OPTIONAL TERMINATION; FINAL PAYMENT OF PRINCIPAL
The Banks may repurchase the investor certificates of a series if the
invested amount of the certificates of that series is five percent or less of
the initial aggregate principal amount of the investor certificates. The
purchase price will be equal to the invested amount, plus accrued interest.
If the invested amount of the investor certificates of a series is
greater than zero on the legal maturity date, the Master Trust Trustee will sell
credit cards receivables in an amount, subject to certain limitations, of up to
110% of the invested amount. The net proceeds of the sale will be paid to the
holders of the investor certificates.
AMENDMENTS TO POOLING AGREEMENT
The Banks and the Master Trust Trustee may amend the Pooling Agreement
and any supplement thereto without the consent of the investor
certificateholders so long as the Master Trust Trustee receives an opinion of
counsel that the amendment will not materially adversely affect the interests of
the investor certificateholders and the rating agencies confirm that the
amendment will not cause the rating assigned to any outstanding series or class
to be withdrawn or reduced.
The Pooling Agreement and any supplement thereto may also be amended
with the consent of investor certificateholders holding 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, changing or eliminating any
provisions of the Pooling Agreement or any supplement or of modifying the rights
of such investor certificateholders. However, no amendment may
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o reduce the amount of, or delay the timing of, any distribution to
be made to investor certificateholders or the amount available
under any series enhancement without the consent of each affected
investor certificateholder,
o change the definition or the manner of calculating the interest
of any investor certificate without the consent of each affected
investor certificateholder,
o reduce the percentage of investor certificateholders required to
consent to any amendment without the consent of each investor
certificateholder, or
o adversely affect the rating of any series or class of investor
certificates without the consent of investor certificateholders
holding not less than 66 2/3% of the aggregate unpaid principal
amount of that series or class.
TAX MATTERS
-----------
This section summarizes the material U.S. federal income tax
consequences to Noteholders. However, the discussion is limited in the
following ways:
o The discussion only covers you if you buy your Notes in the
initial offering.
o The discussion only covers you if you hold your Notes as a
capital asset (that is, for investment purposes), and if you do
not have a special tax status.
o The discussion does not cover tax consequences that depend upon
your particular tax circumstances. You should consult your tax
advisor about the consequences of holding Notes in your
particular situation.
o The discussion is based on current law. Changes in the law may
change the tax treatment of the Notes.
o The discussion does not cover state, local or foreign law.
o The discussion does not cover every type of Note that we might
issue. For example, it does not cover Notes with an Expected
Principal Payment Date within one year of issuance, Notes
denominated in a foreign currency, or Notes whose tax
characterization is different than that described below. If your
Notes are of a type not described in this summary, additional tax
information will be provided in the applicable supplement to this
prospectus.
o The discussion does not apply to Notes issued at more than a
small discount from their principal amount. More precisely, the
discussion applies only if any such discount is less than 1/4%
times the number of full years from the issue date to the
Expected Principal Payment Date of the Notes. This discount is
referred to as "de minimis OID." If the discount on your Notes
exceeds this de minimis amount, the original issue discount
("OID") rules of the Internal Revenue Code will apply and
additional information will be provided in a supplement to this
prospectus.
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o The discussion does not apply to you if you are a Non-U.S.
Noteholder and if you (a) own 10% or more of the voting stock of
Citigroup Inc. (b) are a "controlled foreign corporation" with
respect to Citigroup, (c) are related to holders of any equity
interest in the Issuer other than the Banks, (d) are related to
any holder of any equity interest in the Master Trust other than
the Issuer or (e) are a bank making a loan in the ordinary course
of its business.
o There is no authority concerning many of the tax issues
concerning the Issuer and the Notes. We have not requested a
ruling from the Internal Revenue Service on the tax consequences
of owning the Notes. As a result, the IRS could disagree with
portions of this discussion.
Because of these limitations, and because of the uncertainties
described below, we strongly encourage you to consult your tax advisor before
purchasing Notes.
TAX CHARACTERIZATION OF THE NOTES
Cravath, Swaine & Moore, special federal tax counsel to the Banks and
the Issuer ("Tax Counsel"), will provide an opinion to the Issuer that the Notes
are properly characterized as indebtedness for federal income tax purposes. In
addition, Noteholders will agree, by acquiring Notes, to treat the Notes as debt
of the Banks for federal, state and local income and franchise tax purposes. The
Banks agree to treat the Notes in the same manner for these purposes, although
they will treat the Notes as equity for certain nontax purposes.
TAX CHARACTERIZATION OF THE ISSUER
Tax Counsel will provide an opinion that the Issuer will not be an
association or publicly traded partnership taxable as a corporation for federal
income tax purposes. As a result, the Issuer will not be subject to federal
income tax.
The precise tax characterization of the Issuer for federal income tax
purposes is not certain. It might be viewed as merely holding assets on behalf
of the Banks as collateral for notes issued by the Banks. On the other hand, the
Issuer could be viewed as a separate entity for tax purposes, probably a
partnership, issuing its own notes. This distinction, however, should not have a
significant tax effect on Noteholders except as stated below.
U.S. AND NON-U.S. NOTEHOLDERS
Many of the tax consequences of your owning Notes depend upon whether
you are a "U.S. Noteholder" or a "Non-U.S. Noteholder."
A "U.S. Noteholder" is (a) an individual U.S. citizen or resident
alien; (b) a corporation, or entity taxable as a corporation, that was created
under U.S. law (federal or state); or (c) an estate or trust whose worldwide
income is subject to U.S. federal income tax.
A "Non-U.S. Noteholder" is (a) an individual that is a nonresident
alien; (b) a corporation organized or created under non-U.S. law; or (c) an
estate or trust that is not taxable in the U.S. on its worldwide income.
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If a partnership holds Notes, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. Partners of partnerships holding Notes should consult their tax
advisors.
TAX CONSEQUENCES TO U.S. NOTEHOLDERS
Interest
- --------
Unless the OID rules apply as described below:
o If you are a cash method taxpayer (which includes most individual
Noteholders), you must report interest on the Notes in your
income when you receive it.
o If you are an accrual method taxpayer, you must report interest
on the Notes in your income as it accrues.
Possible OID on the Notes
- -------------------------
Your Notes might be treated as having OID, even though they satisfy the
requirement for de minimis OID described above. This result could arise in two
ways:
o Interest on your Notes is not paid in full on a scheduled payment
date. Your Notes (or a Foreclosure Certificate, if one is issued)
might be then treated as having OID from that date until their
principal is fully paid.
o When your Notes are issued, there is more than a "remote" risk of
a late payment or nonpayment of interest. Your Notes would then
have OID from their date of issuance. However, the Banks intend
to take the position that OID does not arise under this rule,
because the risks in question are "remote."
If your Note has OID, all interest on the Note would be subject to the
tax rules for accruing OID. In general, there would not be a significant
adverse effect on you. However:
o You would have to report interest income on the Note as it
accrues rather than when it is paid, even if you are on the cash
method of accounting.
o If the Note was issued at a small discount from its face amount
(that is, with de minimis OID) you would have to accrue that
discount into income over the life of the Note.
Premium and Discount
- --------------------
Additional special rules apply in the following situations:
o If you buy a Note in the initial offering for more than its
principal amount, the excess amount you pay will be "bond
premium." You can use bond premium to reduce your taxable
interest income over the life of your Note.
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o If you buy a Note in the initial offering for less than its
initial offering price to the public, special rules concerning
"market discount" may apply.
Appropriate adjustments to tax basis are made in these situations.
Noteholders in these situations should consult their tax advisors.
Sale or Retirement of Notes
- ---------------------------
On your sale or retirement of your Note:
o You will have taxable gain or loss equal to the difference
between the amount received by you and your tax basis in the
Note.
o Your tax basis in your Note is your cost, subject to certain
adjustments for OID, premium and discount.
o Your gain or loss will generally be capital gain or loss, and
will be long-term capital gain or loss if you held your Note for
more than one year.
o If your Note was issued at a de minimis OID, you must report that
discount in your income as taxable gain on a proportionate basis
as you receive principal on the Note.
o If you sell a Note between interest payment dates, a portion of
the amount you receive reflects interest that has accrued on the
Note but has not yet been paid by the sale date. That amount is
treated as ordinary interest income and not as sale proceeds.
Information Reporting and Backup Withholding
- --------------------------------------------
Under the tax rules concerning information reporting to the IRS:
o Assuming you hold your Notes through a broker or other securities
intermediary, the intermediary must provide information to the
IRS concerning interest, OID and retirement proceeds on your
Notes, unless an exemption applies.
o Similarly, unless an exemption applies, you must provide the
intermediary with your Taxpayer Identification Number for its use
in reporting information to the IRS. If your are an individual,
this is your social security number. You are also required to
comply with other IRS requirements concerning information
reporting.
o If you are subject to these requirements but do not comply, the
intermediary must withhold 31% of all amounts payable to you on
the Notes (including principal payments). This is called "backup
withholding." If the intermediary withholds payments, you may use
the withheld amount as a credit against your federal income tax
liability.
o All individual U.S. Noteholders are subject to these
requirements. Some U.S. Noteholders, including all corporations,
tax-exempt organizations and individual retirement accounts, are
exempt from these requirements.
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Other Possible Tax Characterizations
- ------------------------------------
Since we are not obtaining a ruling from the IRS on the tax
consequences of the Notes, the IRS could disagree with the intended tax
consequences or with the opinions of Tax Counsel described above. As a result:
o The Notes might be treated as equity interests in a partnership
rather than debt for tax purposes. Noteholders would then be
treated as partners in a partnership, with possible adverse tax
results. In particular, individual Noteholders would be required
to include income of the Issuer or the Master Trust in their own
income as it accrues rather than when it is paid, and might not
be allowed as a deduction for certain expenses of the Issuer or
the Master Trust (resulting in a greater amount of taxable income
than cash received).
o The Issuer (and possibly the Master Trust) might initially or in
the future be treated as a taxable corporation, with the Notes
treated as debt or equity in the corporation. Tax imposed on the
Issuer (or the Master Trust) could significantly reduce the
amount of cash otherwise available for payment to Noteholders.
TAX CONSEQUENCES TO NON-U.S. NOTEHOLDERS
Withholding Taxes
- -----------------
Generally, assuming the Notes are debt for federal income tax purposes
(as provided in the opinion of Tax Counsel), payments of principal and interest
on the Notes will not be subject to U.S. withholding taxes.
However, for the exemption from withholding taxes to apply to you, you
must meet one of the following requirements:
o You provide your name, address and a signed statement that you
are the beneficial owner of the Notes and that you are not as a
U.S. Noteholder. This statement is generally made on IRS Form W-8
or Form W-8BEN.
o You or your agent claim an exemption from withholding tax under
an applicable tax treaty. This claim is generally made on Form
1001 or Form W-8BEN.
o You or your agent claim an exemption from withholding tax on the
ground that the income is effectively connected with the conduct
of a trade or business in the U.S. This claim is generally made
on Form 4224 or Form W-8ECI.
You should consult your tax advisor about the specific procedures for
satisfying these requirements. These procedures will change on January 1, 2001.
In addition, a claim for exemption will not be valid if the person receiving the
applicable form has actual knowledge that the statements on the form are false.
Sale or Retirement of Notes
- ---------------------------
If you sell a Note or it is redeemed, you will not be subject to
federal income tax on any
69
<PAGE>
gain unless one of the following applies:
o The gain is connected with a trade or business that you conduct
in the U.S.
o You are an individual, you are present in the U.S. for at least
183 days during the year in which you dispose of the Note, and
certain other conditions are satisfied.
o The gain represents accrued interest or OID, in which case the
rules for interest would apply.
U.S. Trade or Business
- ----------------------
If you hold your Note in connection with a trade or business that you
are conducting in the U.S.:
o Any interest on the Note, and any gain from disposing of the
Note, generally will be subject to income tax as if you were a
U.S. Noteholder.
o If you are a corporation, you may be subject to the "branch
profits tax" on your earnings that are connected with your U.S.
trade or business, including earnings from the Note. This tax is
30%, but may be reduced or eliminated by an applicable income tax
treaty.
Estate Taxes
- ------------
If you are an individual, your Note will not be subject to U.S. estate
tax when you die. However, this rule only applies if, at your death, payments on
the Note were not connected to a trade or business that you were conducting in
the U.S.
Information Reporting and Backup Withholding
- --------------------------------------------
U.S. rules concerning information reporting and backup withholding are
described above. Under these rules:
o Principal and interest payments you receive will be automatically
exempt from the usual rules if you provide the tax certifications
needed to avoid withholding tax on interest, as described above
(unless the recipient of the applicable form knows that the form
is false). However, interest payments made to you will be
reported to the IRS on Form 1042-S.
o Sale proceeds you receive on a sale of your Notes through a
broker may be subject to these rules if you are not eligible for
an exemption. In particular, information reporting and backup
reporting may apply if you use the U.S. office of a broker, and
information reporting (but not backup withholding) may apply if
you use the foreign office of a broker that has certain
connections to the U.S. You should consult your tax advisor
concerning information reporting and backup withholding on a
sale.
70
<PAGE>
Other Possible Tax Characterizations
- ------------------------------------
If the Issuer or the Master Trust is treated as a taxable corporation,
as discussed above, the tax liability of the Issuer or the Master Trust could
reduce the amount of cash available to Noteholders. In addition, if your Notes
are characterized as equity rather than debt for federal income tax purposes,
there could be material adverse tax consequences to you. For example:
o If your Notes were equity interests in a partnership, (a) 30%
U.S. withholding tax might apply to the gross amount of income of
the Issuer allocable to you, or (b) you might have to file a tax
return in the U.S. and pay tax on your share of net income of the
Issuer as if such income were your U.S. business income. A
corporate Noteholder might also be subject to the "branch profits
tax."
o If your Notes are equity interests in a corporation, all interest
payable to you might be treated as a dividend subject to 30%
withholding tax (or a lower rate provided for dividends by a tax
treaty).
Non-U.S. Noteholders should consult their tax advisors concerning these risks.
BENEFIT PLAN INVESTORS
----------------------
Benefit plans are subject to restrictions under the Internal Revenue
Code and the Employee Retirement Income Security Act of 1974 ("ERISA"). These
restrictions include rules concerning prudence and diversification of the
investment of assets of a benefit plan ("Plan Assets"). A benefit plan fiduciary
should consider whether an investment by the benefit plan in Notes complies with
these requirements.
In general, a benefit plan for these purposes includes:
o an employee benefit plan that is tax-qualified under the Internal
Revenue Code and provides deferred compensation to employees
(such as a pension, profit-sharing, section 401(k) or Keogh
plan);
o an individual retirement account; and
o a collective investment fund or other entity, if (a) the fund or
entity has one or more benefit plan investors and (b) certain
"look-through" rules apply and treat the assets of the fund or
entity as constituting plan assets of such benefit plan investor.
However, a plan maintained by a government is not a benefit plan unless
it is tax-qualified under the Internal Revenue Code. A fund or other entity
(including an insurance company general account) considering an investment in
Notes should consult its tax advisors concerning whether its assets might be
considered plan assets under these rules.
PROHIBITED TRANSACTIONS
ERISA and the Internal Revenue Code also prohibit transactions of a
specified type between a benefit plan and a party in interest who is related in
a specified manner to the benefit
71
<PAGE>
plan. Violation of these prohibited transaction rules may result in significant
penalties. There are statutory exemptions from the prohibited transaction rules,
and the U.S. Department of Labor has granted administrative exemptions of
specified transactions.
POTENTIAL PROHIBITED TRANSACTIONS FROM INVESTMENT IN NOTES
There are two categories of prohibited transactions that might arise
from a benefit plan's investment in Notes. Fiduciaries of benefit plans
contemplating an investment in Notes should carefully consider whether the
investment would violate these rules.
1: Prohibited transactions between the benefit plan and a party in interest
- ---------------------------------------------------------------------------
The first category of prohibited transaction could arise on the grounds
that the benefit plan, by purchasing Notes, was engaged in a prohibited
transaction with a party in interest. A prohibited transaction could arise, for
example, if the Notes were viewed as debt of the Banks and a Bank was a party in
interest as to the benefit plan. A prohibited transaction could also arise if a
Bank, the Master Trust Trustee, the Indenture Trustee, the servicer or another
party with an economic relationship to the Issuer or the Master Trust either
o is involved in the investment decision for the benefit plan to
purchase Notes or
o is otherwise a party in interest as to the benefit plan.
If a prohibited transactions might result from the benefit plan's
purchase of Notes, an administrative exemption from the prohibited transaction
rules might be available to permit an investment in Notes. The exemptions that
are potentially available include the following Prohibited Transaction Class
Exemptions ("PTCE"):
o 96-23 (available to "in-house asset managers");
o 95-60 (available to insurance company general accounts);
o 91-38 (available to bank collective investment funds);
o 90-1 (available to insurance company pooled separate accounts);
and
o 84-14 (available to "qualified professional asset managers").
However, even if the benefit plan is eligible for one of these
exemptions, the exemption may not cover every aspect of the investment by the
benefit plan that might be a prohibited transaction.
2: Prohibited transactions between the Issuer or Master Trust and a party in
- -----------------------------------------------------------------------------
interest
- --------
The second category of prohibited transactions could arise if
o a benefit plan acquires Notes, and
72
<PAGE>
o under a Department of Labor plan asset regulation, assets of the
Issuer or the Master Trust are treated as if they were plan
assets of the benefit plan.
In this case, every transaction by the Issuer or the Master Trust would
be treated as a transaction by the benefit plan using plan assets.
If assets of the Issuer or the Master Trust are treated plan assets, a
prohibited transaction could result if the Issuer or the Master Trust itself
engages in a transaction with a party in interest as to the benefit plan. For
example, if the Master Trust assets are treated as plan assets and the Master
Trust holds a credit card receivable that is an obligation of a benefit plan
participant, then there would be a prohibited extension of credit between the
benefit plan and a party in interest (the participant).
As a result, if assets of the Issuer or the Master Trust are treated as
plan assets, there would be a significant risk of a prohibited transaction.
Moreover, the PTCEs referred to above could not be relied on to exempt all the
transactions of the Issuer or the Master Trust from the prohibited transaction
rules. In addition, because all the assets of the Issuer or the Master Trust
would be treated as plan assets, managers of those assets might become subject
to the fiduciary responsibility rules of ERISA.
Under an exemption in the plan asset regulations, assets of the Issuer
or Master Trust would not be considered Plan Assets, and so this risk of
prohibited transactions would not arise, if a benefit plan purchased a Note that
o was treated as indebtedness under local law, and
o had no "substantial equity features."
We expect that all Notes offered by this prospectus will be
indebtedness under local law. Likewise, although there is no authority directly
on point, we believe that the Notes should not be considered to have substantial
equity features. As a result, the plan asset regulations should not apply to
cause assets of the Issuer or the Master Trust to be treated as Plan Assets.
INVESTMENT BY BENEFIT PLAN INVESTORS
For the reasons described in the preceding sections, benefit plans can
purchase Notes. However, the fiduciary of the benefit plan must ultimately
determine whether the requirements of the plan asset regulation are satisfied.
More generally, the fiduciary must determine whether the benefit plan's
investment in Notes will result in one or more nonexempt prohibited transactions
or otherwise violate the provisions of ERISA or the Internal Revenue Code.
TAX CONSEQUENCES TO BENEFIT PLANS
In general, assuming the Notes are debt for federal income tax
purposes, interest income on Notes would not be taxable to benefit plans that
were tax-exempt under the Internal Revenue Code, unless the Notes were
"debt-financed property." However, if (contrary to the opinion of Tax Counsel),
for federal income tax purposes, the Notes were equity interests in a
partnership and the partnership or the Master Trust were viewed as having other
outstanding debt, then all or part of the interest income on the Notes would be
taxable to the benefit plan as "debt-financed
73
<PAGE>
income." Benefit plans should consult their tax advisors concerning the tax
consequences of purchasing Notes.
PLAN OF DISTRIBUTION
--------------------
The Issuer may offer and sell the Notes in any of three ways:
(1) directly to one or more purchasers,
(2) through agents, or
(3) through underwriters.
Any underwriter or agent that offers the Notes may be an affiliate of
the Issuer, and offers and sales of Notes may include secondary market
transactions by affiliates of the Issuer. These affiliates may act as principal
or agent in secondary market transactions. Secondary market transactions will be
made at prices related to prevailing market prices at the time of sale.
The Issuer will specify in a supplement to this prospectus the terms of
each offering, including
o the name or names of any underwriters or agents,
o the managing underwriters of any underwriting syndicate,
o the public offering or purchase price,
o the net proceeds to the Issuer from the sale,
o any underwriting discounts and other items constituting
underwriters' compensation,
o any discounts and commissions allowed or paid to dealers,
o any commissions allowed or paid to agents, and
o the securities exchanges, if any, on which the Notes will be
listed.
Dealer trading may take place in certain of the Notes, including Notes
not listed on any securities exchange. Direct sales may be made on a national
securities exchange or otherwise. If the Issuer, directly or through agents,
solicits offers to purchase Notes, the Issuer reserves the sole right to accept
and, together with its agents, to reject in whole or in part any proposed
purchase of Notes.
The Issuer may change any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers. If indicated
in a supplement to this prospectus, the Issuer will authorize underwriters or
agents to solicit offers by certain institutions to purchase securities from the
Issuer pursuant to delayed delivery contracts providing for payment and delivery
at a future date.
Any underwriter or agent participating in the distribution of
securities, including Notes offered by this prospectus, may be deemed to be an
underwriter of those securities under the Securities Act of 1933 and any
discounts or commissions received by them and any profit realized by them on the
sale or resale of the securities may be deemed to be underwriting discounts and
commissions.
The Issuer may agree to indemnify underwriters, agents and their
controlling persons against certain civil liabilities, including liabilities
under the Securities Act of 1933 in connection with their participation in the
distribution of Issuer's Notes.
74
<PAGE>
Underwriters and agents participating in the distribution of the
securities, and their controlling persons, may engage in transactions with and
perform services for the Issuer or its affiliates in the ordinary course of
business.
LEGAL MATTERS
-------------
Stephanie B. Mudick, Esq., as General Counsel--Corporate Law of
Citigroup Inc., will pass upon the validity of the Notes for the Issuer.
Cravath, Swaine & Moore, New York, New York will pass upon the validity of the
Notes for any agents or underwriters. Cravath, Swaine & Moore, New York, New
York will also pass upon certain federal income tax matters for the Issuer. Ms.
Mudick beneficially owns, or has the right to acquire under Citigroup's employee
benefit plans, a aggregate of less than 0.01% of Citigroup's outstanding common
stock.
75
<PAGE>
GLOSSARY
--------
Available subordinated amount------------------------------------------------46
Banks------------------------------------------------------------------------18
Book-entry note--------------------------------------------------------------25
Cedelbank--------------------------------------------------------------------29
Class------------------------------------------------------------------------19
Class A Notes----------------------------------------------------------------19
Class B Notes----------------------------------------------------------------19
Class C Notes----------------------------------------------------------------19
Collateral Interest----------------------------------------------------------32
Derivative Agreements--------------------------------------------------------25
DTC--------------------------------------------------------------------------26
Early amortization event-----------------------------------------------------63
Events of Default------------------------------------------------------------49
Early Redemption Events------------------------------------------------------52
Eligible account-------------------------------------------------------------60
Eligible receivable----------------------------------------------------------60
ERISA------------------------------------------------------------------------71
Euroclear--------------------------------------------------------------------29
Expected Principal Payment Date-----------------------------------------------4
Finance charge receivables---------------------------------------------------33
Fixed rate Note--------------------------------------------------------------20
Floating rate Note-----------------------------------------------------------20
Foreclosure Certificate------------------------------------------------------51
Global notes-----------------------------------------------------------------26
Indenture--------------------------------------------------------------------19
Indenture Trustee------------------------------------------------------------19
Insolvency Event-------------------------------------------------------------63
Interchange------------------------------------------------------------------33
Interest Period--------------------------------------------------------------20
Issuer-----------------------------------------------------------------------18
Issuer Trustee---------------------------------------------------------------18
Legal Maturity Date-----------------------------------------------------------4
Lump addition----------------------------------------------------------------57
Master Trust-----------------------------------------------------------------57
Master Trust Trustee---------------------------------------------------------57
Minimum required subordinated amount---------------------------------------- 46
New accounts-----------------------------------------------------------------58
Notes------------------------------------------------------------------------19
OID--------------------------------------------------------------------------65
Participants-----------------------------------------------------------------27
Plan Assets------------------------------------------------------------------71
Pooling Agreement------------------------------------------------------------56
Principal receivables--------------------------------------------------------33
PTCE-------------------------------------------------------------------------72
Record Date------------------------------------------------------------------25
Required minimum principal balance-------------------------------------------57
Required surplus finance charge amount---------------------------------------52
Seller's Interest------------------------------------------------------------32
Surplus finance charge collections-------------------------------------------52
Trust accounts---------------------------------------------------------------36
76
<PAGE>
ANNEX I
THE CREDIT CARD BUSINESS OF CITIBANK (SOUTH DAKOTA)
---------------------------------------------------
GENERAL
Citibank (South Dakota) services the credit card accounts at its
facilities in Sioux Falls, South Dakota, and through affiliated credit card
processors pursuant to service contracts.
Citibank (South Dakota) is a member of MasterCard International and
VISA. MasterCard and VISA credit cards are issued as part of the worldwide
MasterCard International and VISA systems, and transactions creating the
receivables through the use of those credit cards are processed through the
MasterCard International and VISA authorization and settlement systems. If
either system were to materially curtail its activities, or if Citibank (South
Dakota) were to cease being a member of MasterCard International or VISA, for
any reason, an early amortization event with respect to the Collateral Interest
could occur, and delays in payments on the receivables and possible reductions
in the amounts of receivables could also occur.
The MasterCard and VISA credit card accounts owned by Citibank (South
Dakota) were principally generated through:
o applications mailed directly to prospective cardholders;
o applications made available to prospective cardholders at the
banking facilities of Citibank (South Dakota), at other financial
institutions and at retail outlets;
o applications generated by advertising on television, on radio and
in magazines;
o direct mail and telemarketing solicitation for accounts on a
pre-approved credit basis;
o solicitation of cardholders of existing nonpremium accounts for
premium accounts;
o applications through affinity and co-brand marketing programs;
and
o purchases of accounts from other credit card issuers.
On February 26, 1999 the Banks and some of their affiliates entered
into an agreement with MasterCard International. As a result of this agreement,
the portfolio of credit card accounts owned by Citibank (South Dakota) is
expected to have a larger proportion of MasterCard accounts in the future. This
shift could be accompanied by some attrition of accounts. Based on current
analyses, the Banks do not expect their performance of this agreement or any
such attrition of accounts to have a material adverse effect on investors in the
Master Trust or the Notes.
ACQUISITION AND USE OF CREDIT CARDS
Citibank (South Dakota) reviews each application for a new credit card
account for completeness and creditworthiness. Citibank (South Dakota) generally
obtains a credit report on the applicant issued by an independent credit
reporting agency. In the event there are discrepancies between the application
and the credit report Citibank (South Dakota) may verify the information on the
applicant.
I-1
<PAGE>
Citibank (South Dakota) generally evaluates the ability of an applicant
for a 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. From time to time Citibank (South Dakota) reviews its credit scoring
models and, if necessary, updates them 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 credit card 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 those criteria and forwards the
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 solicitation of organized membership
groups with the written endorsement of the group's leadership, and 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 some cases, pre-approved solicitations will be used in the same manner as
described in the second preceding paragraph.
Citibank (South Dakota) purchases credit card accounts that were
originally opened using criteria established by the institution from which the
accounts were purchased or by the institution from which the selling institution
originally purchased the accounts. Citibank (South
I-2
<PAGE>
Dakota) screens purchased accounts against criteria established 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 purchased accounts remain
open. The credit limits on these accounts are based initially on the limits
established or maintained by the selling institution.
Each cardholder is subject to an agreement governing the terms and
conditions of the account. Each agreement provides that Citibank (South Dakota)
may 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 MasterCard or VISA
credit card account delinquent if it does not receive the minimum payment due by
the due date indicated on the cardholder's statement. 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), attempt to collect delinquent credit card receivables.
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 are as few as five days delinquent, based on credit
scoring criteria, generally 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, if an account is 15 days delinquent or if a
cardholder exceeds that 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, the account 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 that account not
later than 60 days after the servicer receives 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.
YEAR 2000
Many computer applications have been written using two digits rather
than four to define the applicable year, and therefore may not recognize a date
using "00" as the Year 2000. This could result in the inability of the
application to properly process transactions with dates in the Year 2000 or
thereafter. Citibank (South Dakota) and Citibank (Nevada) have assessed and,
where necessary, are updating their computer applications and business processes
to provide for their continued functionality and expect to complete
implementation of the necessary changes in a timely manner. Neither Citibank
(South Dakota) nor Citibank (Nevada) anticipates that the
I-3
<PAGE>
costs related to implementation will be material to any single year or quarter.
In addition, an assessment of the readiness of third parties with which Citibank
(South Dakota) and Citibank (Nevada) interface in achieving Year 2000 compliance
is ongoing. Lack of readiness by these third parties could expose Citibank
(South Dakota) and/or Citibank (Nevada) to impairment of business processes and
activities. Citibank (South Dakota) and Citibank (Nevada) are assessing these
risks and are creating contingency plans intended to address perceived risks.
Neither Citibank (South Dakota) nor Citibank (Nevada) can predict what effect
the failure of such a third party to address, in a timely manner, the Year 2000
problem would have on the Banks.
I-4
<PAGE>
[FLAG]
The information in this prospectus supplement is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus
supplement is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to Completion, dated June 15, 1999
FORM OF PROSPECTUS SUPPLEMENT FOR A SUBCLASS OF NOTES
PROSPECTUS SUPPLEMENT DATED __________ __, 1999
(to Prospectus dated __________ __, 1999)
CITIBANK CREDIT CARD ISSUANCE TRUST
CITISERIES
Class __ 1999/_ Notes
The Issuer will issue and sell
Class [ ] Notes
Principal amount................... $ ____________
Interest rate...................... ____% per annum
Interest payment dates............. __ day of each _________,
beginning ________ __, 1999
Expected principal payment date.... _________ __, 20__
Legal maturity date................ _________ __, 20__
Price to public.................... $[...] (or [...]%)
Underwriting discount............. $[...] (or [...]%)
Proceeds to the Issuer............. $[...] (or [...]%)
The Class __ 1999/_ Notes are a part of a series of Notes called the
Citiseries. The Citiseries consists of Class A Notes, Class B Notes and Class C
Notes. The Class __ 1999/ _ Notes are a subclass of Class __ Notes.
Principal payments on Class B Notes are subordinated to payments on the
Class A Notes. Principal payments on Class C Notes are subordinated to payments
on the Class A and Class B Notes.
The Class __ 1999/_ Notes are expected to be issued on or about
___________ __, 1999. These Notes will be delivered in book-entry form and you
will not receive a physical certificate.
You should review and consider the discussion under "Risk Factors" beginning on
page 10 of the accompanying prospectus before you purchase any Notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved the Notes or determined that this prospectus supplement
or the prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The Notes are obligations of Citibank Credit Card Issuance Trust only and are
not obligations of any other person. Each class of Notes is secured by only some
of the assets of Citibank Credit Card Issuance Trust. Noteholders will have no
recourse to any other assets of the Issuer for the payment of the Notes. The
Notes are not insured or guaranteed by the Federal Deposit Insurance Corporation
or any other governmental agency or instrumentality.
This prospectus supplement may be used to offer and sell the Class __ 1999/_
Notes only if accompanied by the prospectus.
Underwriters of the Class __ 1999/_ Notes
[ ]
<PAGE>
TABLE OF CONTENTS
-----------------
PROSPECTUS SUPPLEMENT
Summary of Terms........................................................ S-3
Underwriting............................................................ S-8
Annex I: The Master Trust Receivables and Accounts...................... I-1
The table of contents for the prospectus appears on page 2 of that
document.
There is a glossary of defined terms on page 76 of the prospectus.
----------------
We provide information to you about the Class __ 1999/_ Notes in two
separate documents: a prospectus and a prospectus supplement. The prospectus
provides general information about the each series of Notes issued by Citibank
Credit Card Issuance Trust, some of which may not apply to the Citiseries. The
prospectus supplement provides the specific terms of the Class __ 1999/_ Notes.
You should carefully read both the prospectus and the prospectus supplement
before you purchase any Class __ 1999/_ Notes.
This prospectus supplement may update or modify information in the
accompanying prospectus. Whenever information in this prospectus supplement
differs from the information in the prospectus, you should rely on the
information in this prospectus supplement.
In deciding whether to purchase the Class __ 1999/_ Notes, you should
rely solely on the information in this prospectus supplement and the
accompanying prospectus. We have not authorized anyone to give you different
information about the Class __ 1999/_ Notes.
----------------
The Class __ 1999/_ Notes 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.
S-2
<PAGE>
SUMMARY OF TERMS
----------------
Because this is a summary it does not contain all the information you
may need to make an informed investment decision. You should read the entire
prospectus supplement and prospectus before you purchase any Class __ 1999/_
Notes.
SECURITIES OFFERED $___________ ____% Class __ 1999/_ Notes
The Class __ 1999/_ Notes are issued by, and
are obligations of, Citibank Credit Card
Issuance Trust. The Issuer has issued and
expects to issue other classes and
subclasses of Notes of the Citiseries with
different interest rates, payment dates,
legal maturity dates and other
characteristics. See "The Notes--New
Issuances of Notes" in the prospectus.
INTEREST The Class __ 1999/_ Notes will accrue
interest at the rate of ____% per annum.
Interest on the Class __ 1999/_ Notes will
begin to accrue on __________ __, 1999 and
will be calculated on the basis of a 360-day
year of twelve 30-day months.
The Issuer will make interest payments on
the Class __ 1999/_ Notes on the ____ day of
each __________ (or if the __ day is not a
business day in New York, Delaware or South
Dakota, the following business day),
beginning _________ __, 1999.
The payment of accrued interest on a class
of Notes of the Citiseries is not senior to
or subordinated to payment of interest on
any other class of Notes of this series.
PRINCIPAL The Issuer expects to pay the principal of
the Class __ 1999/_ Notes in one payment on
____________ __, 20__, which is the Expected
Principal Payment Date, and is obligated to
do so if funds are available for that
purpose. However, if principal of the Class
__ 1999/_ Notes is not paid in full on its
Expected Principal Payment Date, the
Noteholders will not have any remedies
against the Issuer until ____________ __,
20__, the Legal Maturity Date of the Class
__ 1999/_ Notes.
If principal of the Class __ 1999/_ Notes is
not paid in full on the Expected Principal
Payment Date, then [, subject to the
principal payment rules described below
under "Subordination; Credit Enhancement",]
principal payments on those Notes will be
made on a monthly basis until they are paid
in full or the Legal Maturity Date occurs,
whichever is earlier.
S-3
<PAGE>
Principal of the Class __ 1999/_ Notes may
be paid earlier than its Expected Principal
Payment Date if an Early Redemption Event
occurs with respect to those Notes. See
"Covenants, Events of Default, Early
Redemption Events and Indenture
Amendments--Early Redemption Events" in the
prospectus.
SUBORDINATION[; CREDIT
ENHANCEMENT] No payment of principal will be made on any
Class B Note in the Citiseries unless,
following such payment, the available
subordinated amount of Class B Notes and
Class C Notes in this series is at least
equal to the minimum required subordinated
amount for the outstanding Class A Notes in
this series. Similarly, no payment of
principal will be made on any Class C Note
in the Citiseries unless, following such
payment, the available subordinated amount
of Class C Notes in this series is at least
equal to the minimum required subordinated
amount for the outstanding Class B Notes in
this series.
[The maximum aggregate amount of principal
of Class B Notes and Class C Notes in the
Citiseries that may be applied to payments
on the Class A 1999/_ Notes is
$_____________.] [This language is only for
issuances of Class A subclasses]
[The maximum aggregate amount of principal
of Class C Notes in the Citiseries that may
be applied to payments on the Class B 1999/_
Notes is $_____________.] [This language is
only for issuances of Class B subclasses]
[However, the Issuer may at any time change
the amount of credit enhancement available
to the Class _ 1999/__ Notes without the
consent of any Noteholders so long as the
Issuer has received confirmation from the
rating agencies that have rated any
outstanding Notes of the Citiseries that the
change in the amount of available credit
enhancement will not result in the rating
assigned to any outstanding Notes in the
Citiseries to be withdrawn or reduced.]
See "Application of Funds in the Trust
Accounts to Payments on the Notes--From
principal funding subaccounts" in the
prospectus.
[THE FOLLOWING HEADING WILL BE INCLUDED ONLY IN
PROSPECTUS SUPPLEMENTS FOR CLASS C SUBCLASSES]
[CLASS C RESERVE ACCOUNT The Issuer will establish a Class C reserve
account to provide credit enhancement solely
for the holders of the Class C 1999/ _
Notes. Amounts in the Class C reserve
account will be available to holders of
Class C 1999/ _ Notes to cover shortfalls of
interest payable on interest payment dates
and principal payable on the Legal Maturity
Date.
The Issuer will be required to fund the
Class C reserve account to the level
specified below if the finance charge
collections generated by the
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<PAGE>
Master Trust after payment of expenses and
interest payments fall below the level
specified below.
The Class C reserve account will be funded
from monthly finance charge collections from
the Collateral Interest after payment of
expenses of the Indenture Trustee, required
interest deposits and other payments
described under "Deposit of Funds into the
Trust Accounts" in the prospectus.
The Class C reserve account will be funded
as follows:
Percentage of excess Percentage of principal
finance charge collections amount of Class C 1999/_
(averaged over three most Notes required to be in
recent months) reserve account
------------- ---------------
The amount required to be in the Class C
reserve account will be adjusted to the
percentages specified above as the excess
finance charge collections rise or fall. If
an Early Redemption Event occurs with
respect to the Class C 1999/ _ Notes, the
required Class C reserve account amount will
be ___% of the principal amount of the Class
C 1999/_ Notes.]
OPTIONAL REDEMPTION
BY THE ISSUER The Issuer has the right, but not the
obligation, to redeem the Class __ 1999/_
Notes in whole but not in part on any day on
or after the day on which the outstanding
principal amount of the Class __ 1999/_
Notes is reduced to less than 5% of its
initial principal amount. This repurchase
option is usually referred to as a clean-up
call.
If the Issuer elects to redeem the Class __
1999/_ Notes, it will notify the registered
holders of such redemption at least 30 days
prior to the redemption date. The redemption
price of a Note so redeemed will equal 100%
of the outstanding principal amount of that
Note, plus accrued but unpaid interest on
the Note to but excluding the date of
redemption.
If the Issuer is unable to pay the
redemption price in full on the redemption
date, monthly payments on the Class __
1999/_ Notes will thereafter be made [,
subject to the principal payment rules
described above under "Subordination; Credit
Enhancement",] until the principal amount of
those Notes (plus all accrued and unpaid
interest) is paid in full or the Legal
Maturity Date occurs, whichever is earlier.
Any funds in the principal funding account
and interest funding account for the Class
__ 1999/_ Notes will be applied to make the
principal and interest payments on those
Notes on the redemption date.
S-5
<PAGE>
SECURITY FOR THE NOTES The Class __ 1999/_ Notes will be secured by
collateral consisting of the Collateral
Interest and by the funds on deposit in the
collection account and the applicable
subaccount of the principal funding account,
the interest funding account [and the Class
C reserve account]. See "Sources of Funds to
Pay the Notes--The Collateral Interest" and
"--The Trust Accounts" in the prospectus.
LIMITED RECOURSE
TO THE ISSUER Only the Collateral Interest and the
applicable trust accounts secure the Class
__ 1999/ _ Notes, and Noteholders will have
no recourse to any other assets of the
Issuer or any other person or entity for the
payment of principal of or interest on the
Class __ 1999/_ Notes.
S-5
<PAGE>
MASTER TRUST ASSETS
AND RECEIVABLES The Collateral Interest, which is the
primary source of funds for the payment of
principal of and interest on the Class __
1999/_ Notes, is an investor certificate
issued by the Master Trust. The Collateral
Interest represents an undivided interest in
the assets of the Master Trust. The Master
Trust assets include credit card receivables
from selected MasterCard and VISA revolving
credit card accounts that meet the
eligibility criteria for inclusion in the
Master Trust. These eligibility criteria are
discussed in the prospectus under "The
Master Trust--Master Trust Assets."
The credit card receivables in the Master
Trust consist of principal receivables and
finance charge receivables. Principal
receivables include amounts charged by
cardholders for merchandise and services and
amounts advanced to cardholders as cash
advances. Finance charge receivables include
periodic finance charges, annual membership
fees, cash advance fees, late charges and
certain other fees billed to cardholders.
The aggregate amount of credit card
receivables in the Master Trust as of
__________ __, 1999 was $______________, of
which $__________ were principal receivables
and $_____________ were finance charge
receivables. See "The Master Trust
Receivables and Accounts" in Annex I of this
prospectus supplement for more detailed
financial information on the receivables and
the accounts.
THE CITISERIES The Class __ 1999/_ Notes will be the __
subclass of Notes issued by the Issuer and
still outstanding in the Citiseries.
As of ____________ __, 1999 the aggregate
outstanding principal amount of Notes in the
Citiseries was approximately $_____________,
consisting of:
Class A Notes $________________
Class B Notes $________________
S-6
<PAGE>
Class C Notes $________________
As of ____________ __, 1999, the weighted
average interest rate payable by the Issuer
on the __ outstanding subclasses of Notes in
the Citiseries was approximately ______% per
annum, consisting of:
Class A Notes ______% per annum
Class B Notes ______% per annum
Class C Notes ______% per annum
PARTICIPATION WITH
OTHER SERIES In addition to the Citiseries the Issuer has
issued __ other series of Notes that are
still outstanding. The Citiseries and the
other __ outstanding series of Notes
together comprise "Group 1."
Collections of finance charge receivables
allocable to each series in Group 1 will be
aggregated and made available for required
interest payments for all series in Group 1.
Consequently, the future issuance of a new
series in Group 1 may have the effect of
reducing or increasing the amount of finance
charge receivables represented by the
Collateral Interest allocable to your Notes.
As of ____________ __, 1999, the weighted
average interest rate payable by the Issuer
on the __ outstanding series of Notes in
Group 1 was approximately ______% per annum.
As of that date, the aggregate outstanding
principal amount of those Notes was
approximately $__________________.
See "Deposit of Funds into the Trust
Accounts--Allocation to interest funding
subaccounts" in the prospectus.
[STOCK EXCHANGE
LISTING The Issuer will apply to list the Class __
1999/_ Notes on the Luxembourg Stock
Exchange. The Issuer cannot guarantee that
the application for the listing will be
accepted. You should consult with Banque
Internationale a Luxembourg, the Luxembourg
listing agent for the Class __ 1999/_ Notes,
69, route d'Esch, L- 2953 Luxembourg, phone
number (352) 4590-1, to determine whether
the Class __ 1999/_ Notes have been listed
on the Luxembourg Stock Exchange.]
[NO LISTING The Class __ 1999/_ Notes will not be listed
on any stock exchange.]
RATINGS The Issuer will issue the Class __ 1999/_
Notes only if they are rated [in the highest
rating category] [at least "A" or its
equivalent] [at least "BBB" or its
equivalent] by at least one nationally
recognized rating agency. See "Risk
Factors--Ratings of Notes do not guarantee
timely payment of principal" in the
prospectus.
S-7
<PAGE>
UNDERWRITING
------------
Subject to the terms and conditions of the underwriting agreement for
the Class __ 1999/_ Notes, the Issuer has agreed to sell to each of the
underwriters named below, and each of those underwriters has severally agreed to
purchase, the principal amount of Class __ 1999/_ Notes set forth opposite its
name:
Principal
Underwriters Amount
------------ ------
Total........................................ $
The several underwriters have agreed, subject to the terms and
conditions of the underwriting agreement, to purchase all $__________________
aggregate principal amount of Class __ 1999/_ Notes if any Class __ 1999/_ Notes
are purchased.
The underwriters have advised the Issuer that the several underwriters
propose initially to offer the Class __ 1999/_ Notes to the public at the public
offering price set forth on the cover page of this prospectus supplement, and to
certain dealers at that public offering price less a concession not in excess of
_____% of the principal amount of those Notes. The underwriters may allow, and
those dealers may reallow to other dealers, a concession not in excess of _____%
of such principal amount.
After the public offering, the public offering price and other selling
terms may be changed by the underwriters.
Each underwriter of the Class __ 1999/_ Notes has agreed that:
o 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
__ 1999/_ Notes in, from or otherwise involving the
United Kingdom;
o 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 __ 1999/_ Notes 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;
o 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
S-8
<PAGE>
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
o it is a person of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996.
In connection with the sale of the Class __ 1999/_ Notes, the
underwriters may engage in:
o over-allotments, in which members of the syndicate
selling the Class __ 1999/_ Notes sell more Notes than
the Issuer actually sold to the syndicate, creating a
syndicate short position;
o stabilizing transactions, in which purchases and sales
of the Class __ 1999/_ Notes may be made by the members
of the selling syndicate at prices that do not exceed a
specified maximum;
o syndicate covering transactions, in which members of
the selling syndicate purchase Class __ 1999/_ Notes in
the open market after the distribution has been
completed in order to cover syndicate short positions;
and
o penalty bids, by which underwriters reclaim a selling
concession from a syndicate member when the Class __
1999/_ Notes originally sold by that syndicate member
are purchased in a syndicate covering transaction to
cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Class __ 1999/_ Notes to be higher than
it would otherwise be. These transactions, if commenced, may be discontinued at
any time.
The Issuer 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 of those
liabilities.
Salomon Smith Barney Inc. is an affiliate of the Issuer.
This prospectus supplement and the accompanying prospectus may be used
by Salomon Smith Barney Inc. and/or other affiliates of the Issuer in connection
with offers and sales related to market-making transactions in the Class __
1999/_ Notes. The Issuer affiliates 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.
The Issuer will receive proceeds of approximately $_____________from
the sale of the Class __ 1999/__ Notes (which represents ____% of the principal
amount of those Notes) after paying the underwriting discount of $__________
(which represents _____% of the principal amount of those Notes). Additional
offering expenses are estimated to be $_______________.
S-9
<PAGE>
ANNEX I
THE MASTER TRUST RECEIVABLES AND ACCOUNTS
-----------------------------------------
The following information relates to the credit card receivables owned
by Citibank Credit Card Master Trust I and the related credit card accounts.
LOSS AND DELINQUENCY EXPERIENCE
The following tables set forth the loss and delinquency experience for
cardholder payments on the credit card accounts for each of the periods shown.
For the Loss Experience table below, loss experience is shown on a cash basis
for principal receivables. If accrued finance charge receivables that have been
written off were included in losses in that 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. We can not provide
any assurance that the loss and delinquency experience for the receivables in
the future will be similar to the historical experience set forth below.
Loss Experience for the Accounts(1)
(Dollars in Thousands)
_____ Months
Ended Year Ended December 31,
199 199 199
------------- ---- ---- ----
Average Principal Receivables
Outstanding(2).................
Net Losses(3).....................
Net Losses as a Percentage of
Average Principal
Receivables Outstanding(4).....
(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 ____ months
of 199_ were ____% and for each of the years ended December 31, 199_, 199_
and 199_ were ____%, ____% and ____%, 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 ____ months ended _______ __, 199_ is an annualized
number.
<TABLE>
Delinquencies as a Percentage of the Accounts(1)(2)
(Dollars in Thousands)
<CAPTION>
As of December 31,
As of -----------------------------------------------------------------------------
, 199 199 199 199
------------------------ ------------------------ ------------------------ ------------------------
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......
65-94 days......
95 days or more.
Total.........
<FN>
(1) The Delinquent Amount includes both 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.
</FN>
</TABLE>
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<PAGE>
REVENUE EXPERIENCE
The revenues for the credit card accounts from finance charges, fees
paid by cardholders and interchange for the ____ months ended _________ __, 199_
and for each year of the three-year period ended December 31, 199_ are set forth
in the following table.
The revenue experience in this 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 credit card 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 credit card accounts bearing finance charges at
promotional rates and changes in the level of delinquencies on the receivables.
Revenue Experience for the Accounts
(Dollars in Thousands)
_____ Months
Ended Year Ended December 31,
, 199 199 199 199
------------- ---- ---- ----
Finance Charges and Fees Paid...
Average Revenue Yield(1)(2).....
(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 ____ months ended _____________ __, 199_ is an
annualized number.
The revenues from 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 cardholders pay off their entire balance each month, thereby avoiding
periodic finance charges on their purchases)--and upon other card-related
services for which the cardholder pays a fee. Fees for these other services will
be treated for purposes of the Pooling Agreement as principal receivables rather
than finance charge receivables; however, the Banks may specify that they will
treat these fees as finance charge receivables. Revenues from periodic finance
charges and fees also depend on the types of charges and fees assessed on the
credit card 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. These revenues could be adversely
affected by future changes in fees and charges assessed by Citibank (South
Dakota) and other factors.
CARDHOLDER MONTHLY PAYMENT RATES
Monthly payment rates on the credit card receivables may vary because,
among other things, a cardholder may fail to make a required payment, may only
make the minimum required payment or may pay 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 credit card 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 include amounts that would
I-2
<PAGE>
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
Citibank (South Dakota) may change).
Cardholder Monthly Payment Rates for the Accounts
_____ Months
Ended Year Ended December 31,
199 199 199
------------- ---- ---- ----
Lowest Month..............
Highest Month.............
Average of the Months in
the Period..............
INTERCHANGE
Creditors participating in the MasterCard International and VISA
associations receive Interchange as partial compensation for taking credit risk,
absorbing fraud losses and funding receivables for a limited period before
initial billing. Under the MasterCard International and VISA systems, a portion
of this Interchange in connection with cardholder charges for merchandise and
services is passed from banks which clear the transactions for merchants to
credit card-issuing banks. Interchange ranges from approximately 1% to 2% of the
transaction amount. Citibank (South Dakota) is required to transfer to the
Master Trust Interchange attributed to cardholder charges for merchandise and
services in the accounts. Interchange is allocated to the Master Trust on the
basis of the ratio that 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 of credit card accounts owned by
Citibank (South Dakota). MasterCard International and VISA may change the amount
of Interchange reimbursed to banks issuing their credit cards.
THE CREDIT CARD RECEIVABLES
The receivables in the credit card accounts as of ___________ __, 199_
included $______________ of finance charge receivables and $____________ of
principal receivables (which amounts include overdue finance charge receivables
and overdue principal receivables). As of _____________ __, 1999 there were
______________ accounts. Included within the accounts are inactive accounts that
have no balance. The accounts had an average principal receivable balance of
$_____ and an average credit limit of $_____. The average total receivable
balance in the accounts as a percentage of the average credit limit with respect
to the accounts was __%. Approximately __% of the accounts were opened before
___________ 199_. Of the accounts, approximately ______% related to cardholders
with billing addresses in California, _____% in New York, _____% in Texas and
_____% in Florida. Not more than 5% of the accounts related to cardholders
having billing addresses in any other single state.
The credit card accounts include receivables which, in accordance with
the servicer's normal servicing policies, were charged-off as uncollectible
before they were added to the Master Trust. However, for purposes of calculation
of the amount of principal receivables and finance charge receivables in the
Master Trust for any date, the balance of the charged-off receivables is
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<PAGE>
zero and the Master Trust owns only the right to receive recoveries on these
receivables.
The following tables summarize the credit card accounts by various
criteria as of __________ __, 199_. References to "Receivables Outstanding" in
these 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
Percentage Percentage
of Total Of Total
Number of Number of Receivables Receivables
Account Balance Accounts Accounts Outstanding Outstanding
- --------------- --------- --------- ----------- -----------
Credit Balance(1)..............
No Balance(2)..................
Less than or equal to $500.00..
$500.01 to $1,000.00...........
$1,000.01 to $2,000.00.........
$2,000.01 to $3,000.00.........
$3,000.01 to $4,000.00.........
$4,000.01 to $5,000.00.........
$5,000.01 to $6,000.00.........
$6,000.01 to $7,000.00.........
$7,000.01 to $8,000.00.........
$8,000.01 to $9,000.00.........
$9,000.01 to $10,000.00........
Over $10,000.00................
Total.....................
(1) Credit balances are a result of cardholder payments and credit adjustments
applied in excess of a credit card account's unpaid balance. Credit card
accounts which have a credit balance are included because receivables may
be generated in these accounts in the future.
(2) Credit card accounts which have no balance are included because receivables
may be generated in these accounts in the future.
Composition of Accounts by Credit Limit
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Credit Limit Accounts Accounts Outstanding Outstanding
- ------------ --------- --------- ----------- -----------
Less than or equal to $500.00..
$500.01 to $1,000.00...........
$1,000.01 to $2,000.00.........
$2,000.01 to $3,000.00.........
$3,000.01 to $4,000.00.........
$4,000.01 to $5,000.00.........
Over $5,000.00.................
Total.....................
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<PAGE>
Composition of Accounts by Payment Status
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Payment Status Accounts Accounts Outstanding Outstanding
- -------------- --------- --------- ----------- -----------
Current(1).................
Up to 34 days delinquent...
35 to 64 days delinquent...
65 to 94 days delinquent...
95 to 124 days delinquent..
125 to 154 days delinquent.
155 to 184 days delinquent.
Total.................
(1) Includes accounts on which the minimum payment has not been received before
the next billing date following the issuance of the related bill.
Composition of Accounts by Age
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Age Accounts Accounts Outstanding Outstanding
- --- --------- --------- ----------- -----------
Less than or equal to 6 months..
Over 6 months to 12 months......
Over 12 months to 24 months.....
Over 24 months to 36 months.....
Over 36 months to 48 months.....
Over 48 months..................
Total......................
BILLING AND PAYMENTS
The credit card accounts have different billing and payment structures,
including different periodic finance charges and fees. The following information
reflects the current billing and payment characteristics of the accounts.
Citibank (South Dakota) sends monthly billing statements to cardholders
with balances at the end of each billing period. Each month a MasterCard or VISA
cardholder must make a minimum payment equal to the sum of
(1) the greater of $20 (or, if the then current balance is less than
$20, that balance) and 1/48 of the then current balance,
(2) any amount which is past due and
(3) any amount which is in excess of the credit limit.
The required minimum payment, however, cannot be less than the finance
charges billed.
A periodic finance charge is assessed on the credit card accounts. The
periodic finance charge assessed on balances for purchases and cash advances for
a majority of the accounts is calculated by multiplying (1) the daily balances
for each day during the billing cycle by (2) the
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<PAGE>
applicable daily periodic finance charge rate, and summing the results for each
day in the billing period. The daily balance is calculated by taking the
previous day's balance, adding any new purchases or cash advances and fees,
adding the daily finance charge on the previous day's balance, and subtracting
any payments or credits. Cash advances are included in the daily balance from
the date such advances are made. Purchases are included in the daily balance
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 credit card
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
12.9%. As of the most recent quarterly reset date, the periodic finance charge
on balances in most accounts ranged from 13.15% to 20.65%. Citibank (South
Dakota) may change the periodic finance charge on accounts at any time by
written notice to the cardholders. Any increase in such finance charge 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
the periodic finance charge on a limited number of accounts may be greater or
less than those assessed by Citibank (South Dakota) generally.
Before 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 some
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 some other accounts, including some of its affinity and co-branded
card products.
Some of the accounts may be subject to additional fees, including:
o a late fee of $29 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;
o a cash advance fee which is generally equal to 3.0% of the amount
of the cash advance (subject to a minimum fee of $5);
o a returned payment fee of $29;
o a returned check fee of $29;
o a stop payment fee of $29; and
o a fee of $29 for each billing period with respect to each account
with an outstanding balance over the credit limit established for
such account.
Payments by cardholders on the accounts are processed and applied to
all minimum
I-6
<PAGE>
amounts due, from the oldest to the most current, with respect to the following
items in the following order:
(1) periodic finance charges on cash advances,
(2) periodic finance charges on purchases,
(3) cash advance amounts and
(4) purchase amounts.
When all minimum amounts due are paid, payments are generally allocated
first to cash advance balances and then to purchase balances. We cannot provide
any assurance that periodic finance charges, fees and other charges will remain
at current levels in the future.
I-7
<PAGE>
CITIBANK CREDIT CARD ISSUANCE TRUST
Citiseries
$_____________ ___% Class __ 1999/_ Notes
----------------------
Prospectus Supplement
Dated ____________ __, 1999
Underwriters of the Class __ 1999/_ Notes
[ ]
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. No one
has been authorized to provide you with different information.
The Notes are not being offered in any state where the offer is not
permitted.
The Issuer does not claim the accuracy of the information in this
prospectus supplement and the accompanying prospectus as of any date other than
the dates stated on their respective covers.
Until the date which is 90 days after the date of this prospectus
supplement, all dealers effecting transactions in the Notes, whether or not
participating in this distribution, may be required to deliver a prospectus
supplement and prospectus. This is in addition to the obligation of dealers to
deliver a prospectus supplement and prospectus when acting as underwriters of
the Notes and with respect to their unsold allotments or subscriptions.
<PAGE>
[FLAG]
The information in this prospectus supplement is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus
supplement is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to Completion, dated June 15, 1999
FORM OF PROSPECTUS SUPPLEMENT FOR A SERIES OF NOTES
PROSPECTUS SUPPLEMENT DATED __________ __, 1999
(to Prospectus dated __________ __, 1999)
CITIBANK CREDIT CARD ISSUANCE TRUST
SERIES 1999-_ NOTES
<TABLE>
The Issuer will issue and sell
<CAPTION>
Class A Notes Class B Notes Class C Notes
<S> <C> <C> <C>
Principal amount................... $ ____________ $ ____________ $ ____________
Interest rate...................... ____% per annum ____% per annum ____% per annum
Interest payment dates............. __ day of each _________, __ day of each _________, __ day of each _________,
beginning ________ __, 1999 beginning _____ __, 1999 beginning ________ __, 1999
Expected principal payment date.... _________ __, 20__ _________ __, 20__ _________ __, 20__
Legal maturity date................ _________ __, 20__ _________ __, 20__ _________ __, 20__
Price to public.................... $[...] (or [...]%) $[...] (or [...]%) $[...] (or [...]%)
Underwriting discount.............. $[...] (or [...]%) $[...] (or [...]%) $[...] (or [...]%)
Proceeds to the Issuer............. $[...] (or [...]%) $[...] (or [...]%) $[...] (or [...]%)
</TABLE>
Principal payments on the Class B Notes are subordinated to payments on
the Class A Notes. Principal payments on the Class C Notes are subordinated to
payments on the Class A and Class B Notes. No principal will be paid on the
Class B Notes until all principal has been paid on the Class A Notes, and no
principal will be paid on the Class C Notes until all principal has been paid on
the Class A and Class B Notes.
The Series 1999-_ Notes are expected to be issued on or about
___________ __, 1999. The Series 1999-_ Notes will be delivered in book-entry
form and you will not receive a physical certificate.
You should review and consider the discussion under "Risk Factors" beginning on
page 10 of the accompanying prospectus before you purchase any Notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved the Notes or determined that this prospectus supplement
or the prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The Notes are obligations of Citibank Credit Card Issuance Trust only and are
not obligations of any other person. Each class of Notes is secured by only some
of the assets of Citibank Credit Card Issuance Trust. Noteholders will have no
recourse to any other assets of the Issuer for the payment of the Notes. The
Notes are not insured or guaranteed by the Federal Deposit Insurance Corporation
or any other governmental agency or instrumentality.
This prospectus supplement may be used to offer and sell the Series 1999-_ Notes
only if accompanied by the prospectus.
Underwriters of the Class A Notes
[ ]
Underwriters of the Class B Notes
[ ]
Underwriters of the Class C Notes
[ ]
<PAGE>
TABLE OF CONTENTS
-----------------
PROSPECTUS SUPPLEMENT
Summary of Terms.................................................. S-3
Underwriting...................................................... S-7
Annex I: The Master Trust Receivables and Accounts................ I-1
The table of contents for the prospectus appears on page 2 of that
document.
There is a glossary of defined terms on page 76 of the prospectus.
------------
We provide information to you about the Series 1999-_ Notes in two
separate documents: a prospectus and a prospectus supplement. The prospectus
provides general information about the each series of Notes issued by Citibank
Credit Card Issuance Trust, some of which may not apply to the Series 1999-_
Notes. The prospectus supplement provides the specific terms of the Series
1999-_ Notes. You should carefully read both the prospectus and the prospectus
supplement before you purchase any Series 1999-_ Notes.
This prospectus supplement may update or modify information in the
accompanying prospectus. Whenever information in this prospectus supplement
differs from the information in the prospectus, you should rely on the
information in this prospectus supplement.
In deciding whether to purchase the Series 1999-_ Notes, you should
rely solely on the information in this prospectus supplement and the
accompanying prospectus. We have not authorized anyone to give you different
information about the Series 1999-_ Notes.
------------
The Class A Notes, the Class B Notes and the Class C Notes 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.
S-2
<PAGE>
SUMMARY OF TERMS
----------------
Because this is a summary it does not contain all the information you
may need to make an informed investment decision. You should read the entire
prospectus supplement and prospectus before you purchase any Series 1999-_
Notes.
SECURITIES OFFERED $___________ ____% Class A Notes, Series
1999-_.
$___________ ____% Class B Notes, Series
1999-_.
$___________ ____% Class C Notes, Series
1999-_.
The Series 1999-_ Notes are issued by, and are
obligations of, Citibank Credit Card Issuance
Trust. The Issuer will not issue any other
class or subclass of Notes of this series.
INTEREST The Class A Notes will accrue interest at the
rate of ____% per annum.
The Class B Notes will accrue interest at the
rate of ____% per annum.
The Class C Notes will accrue interest at the
rate of ____% per annum.
Interest on the Series 1999-_ Notes will begin
to accrue on __________ __, 1999 and will be
calculated on the basis of a 360-day year of
twelve 30-day months.
The Issuer will make interest payments on the
Series 1999-_ Notes on the ____ day of each
__________ (or if the __ day is not a business
day in New York, Delaware or South Dakota, the
following business day), beginning _________
__, 1999.
The payment of accrued interest on a class of
Series 1999-_ Notes is not senior to or
subordinated to payment of interest on any
other class of Series 1999-_ Notes.
PRINCIPAL The Issuer expects to pay the principal of the
Class A, Class B and Class C Notes in one
payment on ____________ __, 20__, which is the
Expected Principal Payment Date, and is
obligated to do so if funds are available for
that purpose. However, if principal of any
class of Series 1999-_ Notes is not paid in
full on its Expected Principal Payment Date,
the holders of that class will not have any
remedies against the Issuer until ___________,
20__, the Legal Maturity Date of the Notes.
If principal of the Class A, Class B or Class
C Notes is not paid in full on the Expected
Principal Payment Date, then principal
payments on the Series 1999-_ Notes will be
made on a monthly basis until they are paid in
full or the Legal Maturity Date occurs,
whichever is earlier.
S-3
<PAGE>
Principal of the Class A Notes will be paid in
full before any principal of the Class B Notes
will be paid, and principal of the Class B
Notes will be paid in full before any
principal of the Class C Notes will be paid.
Principal of a Series 1999-_ Note may be paid
earlier than its Expected Principal Payment
Date if an Early Redemption Event occurs with
respect to that Note. See "Covenants, Events
of Default, Early Redemption Events and
Indenture Amendments--Early Redemption Events"
in the prospectus.
CLASS C RESERVE ACCOUNT The Issuer will establish a Class C reserve
account to provide credit enhancement solely
for the holders of the Class C Notes. Amounts
in the Class C reserve account will be
available to holders of Class C Notes to cover
shortfalls of interest payable on interest
payment dates and principal payable on the
Legal Maturity Date.
The Issuer will be required to fund the Class
C reserve account to the level specified below
if the finance charge collections generated by
the Master Trust after payment of expenses and
interest payments fall below the level
specified below.
The Class C reserve account will be funded
from monthly finance charge collections from
the Collateral Interest after payment of
expenses of the Indenture Trustee, required
interest deposits and other payments described
under "Deposit of Funds into the Trust
Accounts" in the prospectus.
The Class C reserve account will be funded as
follows:
Percentage of excess Percentage of principal
finance charge collections amount of Series
(averaged over three 1999-_ Notes required
most recent to be in
months) reserve account
-------------- ---------------
The amount required to be in the Class C
reserve account will be adjusted to the
percentages specified above as the excess
finance charge collections rise or fall. If an
Early Redemption Event occurs with respect to
the Class C Notes, the required Class C
reserve account amount will be ___% of the
principal amount of the Series 1999-_ Notes.
OPTIONAL REDEMPTION
BY THE ISSUER The Issuer has the right, but not the
obligation, to redeem the Series 1999-_ Notes
in whole but not in part on any day on or
after the day on which the
S-4
<PAGE>
outstanding principal amount of the Series
1999-_ Notes is reduced to less than 5% of its
initial principal amount. This repurchase
option is usually referred to as a clean-up
call.
If the Issuer elects to redeem the Series
1999-_ Notes, it will notify the registered
holders of such redemption at least 30 days
prior to the redemption date. The redemption
price of a Series 1999-_ Note so redeemed will
equal 100% of the outstanding principal amount
of that Note, plus accrued but unpaid interest
on the Note to but excluding the date of
redemption.
If the Issuer is unable to pay the redemption
price in full on the redemption date, monthly
payments on the Series 1999-_ Notes will
thereafter be made until the principal amount
of the Series 1999-_ Notes (plus all accrued
and unpaid interest) is paid in full or the
Legal Maturity Date occurs, whichever is
earlier. Any funds in the principal funding
account and interest funding account for a
redeemed Series 1999-_ Note will be applied to
make the principal and interest payments on
that Note on the redemption date. Principal
payments on redeemed Series 1999-_ Notes will
be made first to the Class A Notes until paid
in full, then to the Class B Notes until paid
in full and finally to the Class C Notes until
paid in full.
SECURITY FOR THE NOTES The Series 1999-_ Notes will be secured by
collateral consisting of the Collateral
Interest and by the funds on deposit in the
collection account. In addition, each class of
Series 1999-_ Notes will be secured by the
funds on deposit in the applicable subaccount
of the principal funding account, the interest
funding account and, for holders of Class C
Notes only, the Class C reserve account. See
"Sources of Funds to Pay the Notes--The
Collateral Interest" and "--The Trust
Accounts" in the prospectus.
LIMITED RECOURSE
TO THE ISSUER Only the Collateral Interest and the
applicable trust accounts secure the Series
1999-_ Notes, and Noteholders will have no
recourse to any other assets of the Issuer or
any other person or entity for the payment of
principal of or interest on the Series 1999-_
Notes.
MASTER TRUST ASSETS
AND RECEIVABLES The Collateral Interest, which is the primary
source of funds for the payment of principal
of and interest on the Notes, is an investor
certificate issued by Citibank Credit Card
Master Trust I. The Collateral Interest
represents an undivided interest in the assets
of the Master Trust. The Master Trust assets
include credit card receivables from selected
MasterCard and VISA revolving credit card
accounts that meet the eligibility criteria
for inclusion in the Master Trust. These
eligibility criteria are discussed in the
prospectus under "The Master Trust--Master
Trust Assets."
The credit card receivables in the Master
Trust consist of principal receivables and
finance charge receivables. Principal
receivables include amounts charged by
cardholders for merchandise and services and
amounts advanced to cardholders as cash
advances. Finance charge receivables
S-5
<PAGE>
include periodic finance charges, annual
membership fees, cash advance fees, late
charges and certain other fees billed to
cardholders.
The aggregate amount of credit card
receivables in the Master Trust as of
__________ __, 1999 was $______________, of
which $__________ were principal receivables
and $_____________ were finance charge
receivables. See "The Master Trust Receivables
and Accounts" in Annex I of this prospectus
supplement for more detailed financial
information on the receivables and the
accounts.
PARTICIPATION WITH
OTHER SERIES The Series 1999-1 Notes will be the __ series
of Notes issued by the Issuer and still
outstanding. The Series 1999-_ Notes and the
other __ outstanding series of Notes together
comprise "Group 1."
Collections of finance charge receivables
allocable to each series in Group 1 will be
aggregated and made available for required
interest payments for all series in Group 1.
Consequently, the future issuance of a new
series in Group 1 may have the effect of
reducing or increasing the amount of finance
charge receivables represented by the
Collateral Interest allocable to your Notes.
As of ____________ __, 1999, the weighted
average interest rate payable by the Issuer on
the __ outstanding series of Notes in Group 1
was approximately ______% per annum. As of
that date, the aggregate outstanding principal
amount of those Notes was approximately
$__________________.
See "Deposit of Funds into the Trust
Accounts--Allocation to interest funding
subaccounts" in the prospectus.
STOCK EXCHANGE
LISTING The Issuer will apply to list the Series
1999-_ Notes on the Luxembourg Stock Exchange.
The Issuer cannot guarantee that the
application for the listing will be accepted.
You should consult with Banque Internationale
a Luxembourg, the Luxembourg listing agent for
the Notes, 69, route d'Esch, L- 2953
Luxembourg, phone number (352) 4590-1, to
determine whether the Series 1999-_ Notes have
been listed on the Luxembourg Stock Exchange.
S-6
<PAGE>
UNDERWRITING
------------
Subject to the terms and conditions of the underwriting agreement for
the Class A Notes, the Issuer has agreed to sell to each of the underwriters
named below, and each of those underwriters has severally agreed to purchase,
the principal amount of Class A Notes set forth opposite its name:
CLASS A NOTES
Principal
Class A Underwriters Amount
-------------------- ------
Total........................................ $
The several Class A Underwriters have agreed, subject to the terms and
conditions of the underwriting agreement, to purchase all $__________________
aggregate principal amount of Class A Notes if any Class A Notes are purchased.
The Class A Underwriters have advised the Issuer that the several Class
A Underwriters propose initially to offer the Class A Notes to the public at the
public offering price set forth on the cover page of this prospectus supplement,
and to certain dealers at that public offering price less a concession not in
excess of _____% of the principal amount of the Class A Notes. The Class A
Underwriters may allow, and those dealers may reallow to other dealers, a
concession not in excess of _____% of such principal amount.
Subject to the terms and conditions of the underwriting agreement for
the Class B Notes, the Issuer has agreed to sell to each of the underwriters
named below, and each of those underwriters has severally agreed to purchase,
the principal amount of Class B Notes set forth opposite its name:
CLASS B NOTES
Principal
Class B Underwriters Amount
-------------------- ------
Total........................................ $
The several Class B Underwriters have agreed, subject to the terms and
conditions of the underwriting agreement, to purchase all $__________________
aggregate principal amount of Class B Notes if any Class B Notes are purchased.
The Class B Underwriters have advised the Issuer that the several Class
B Underwriters propose initially to offer the Class B Notes to the public at the
public offering price set forth on the cover page of this prospectus supplement,
and to certain dealers at that public offering price less a concession not in
excess of _____% of the principal amount of
S-7
<PAGE>
the Class B Notes. The Class B Underwriters may allow, and those dealers may
reallow to other dealers, a concession not in excess of _____% of such principal
amount.
Subject to the terms and conditions of the underwriting agreement for
the Class C Notes, the Issuer has agreed to sell to each of the underwriters
named below, and each of those underwriters has severally agreed to purchase,
the principal amount of Class C Notes set forth opposite its name:
CLASS C NOTES
Principal
Class C Underwriters Amount
-------------------- ------
Total........................................ $
The several Class C Underwriters have agreed, subject to the terms and
conditions of the underwriting agreement, to purchase all $__________________
aggregate principal amount of Class C Notes if any Class C Notes are purchased.
The Class C Underwriters have advised the Issuer that the several Class
C Underwriters propose initially to offer the Class C Notes to the public at the
public offering price set forth on the cover page of this prospectus supplement,
and to certain dealers at that public offering price less a concession not in
excess of _____% of the principal amount of the Class C Notes. The Class C
Underwriters may allow, and those dealers may reallow to other dealers, a
concession not in excess of _____% of such principal amount.
After the public offering, the public offering price and other selling
terms may be changed by the Class A Underwriters, Class B Underwriters and Class
C Underwriters.
Each underwriter of the Series 1999- _ Notes has agreed that:
o 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
Series 1999- __ Notes in, from or otherwise involving
the United Kingdom;
o 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 Series 1999- __ Notes 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;
o 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
S-8
<PAGE>
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
o it is a person of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996.
In connection with the sale of the Series 1999- _ Notes, the
underwriters may engage in:
o over-allotments, in which members of the syndicate
selling the Series 1999- _ Notes sell more Notes than
the Issuer actually sold to the syndicate, creating a
syndicate short position;
o stabilizing transactions, in which purchases and sales
of the Series 1999- _ Notes may be made by the members
of the selling syndicate at prices that do not exceed a
specified maximum;
o syndicate covering transactions, in which members of
the selling syndicate purchase Series 1999- _ Notes in
the open market after the distribution has been
completed in order to cover syndicate short positions;
and
o penalty bids, by which underwriters reclaim a selling
concession from a syndicate member when the Series
1999- _ Notes originally sold by that syndicate member
are purchased in a syndicate covering transaction to
cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Series 1999- _ Notes to be higher than
it would otherwise be. These transactions, if commenced, may be discontinued at
any time.
The Issuer 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 of those
liabilities.
The closing of the sale of each class of Series 1999-_ Notes is a
condition to the closing of the sale of the other classes.
Salomon Smith Barney Inc. is an affiliate of the Issuer.
This prospectus supplement and the accompanying prospectus may be used
by Salomon Smith Barney Inc. and/or other affiliates of the Issuer in connection
with offers and sales related to market-making transactions in the Series 1999-_
Notes. The Issuer affiliates 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.
S-9
<PAGE>
The Issuer will receive proceeds of approximately $_____________from
the sale of the Series 1999-_ Notes (which represents ____% of the principal
amount of the Class A Notes, _____% of the principal amount of the Class B
Notes, and _____% of the principal amount of the Class C Notes) after paying the
underwriting discount of $__________ (which represents _____% of the principal
amount of the Class A Notes, _____% of the principal amount of the Class B Notes
and _____% of the principal amount of the Class C Notes). Additional offering
expenses are estimated to be $_______________.
S-10
<PAGE>
ANNEX I
THE MASTER TRUST RECEIVABLES AND ACCOUNTS
-----------------------------------------
The following information relates to the credit card receivables owned
by Citibank Credit Card Master Trust I and the related credit card accounts.
LOSS AND DELINQUENCY EXPERIENCE
The following tables set forth the loss and delinquency experience for
cardholder payments on the credit card accounts for each of the periods shown.
For the Loss Experience table below, loss experience is shown on a cash basis
for principal receivables. If accrued finance charge receivables that have been
written off were included in losses in that 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. We can not provide
any assurance that the loss and delinquency experience for the receivables in
the future will be similar to the historical experience set forth below.
Loss Experience for the Accounts(1)
(Dollars in Thousands)
_____ Months
Ended Year Ended December 31,
199 199 199
------------- ---- ---- ----
Average Principal Receivables
Outstanding(2).................
Net Losses(3).....................
Net Losses as a Percentage of
Average Principal
Receivables Outstanding(4).....
(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 ____ months
of 199_ were ____% and for each of the years ended December 31, 199_, 199_
and 199_ were ____%, ____% and ____%, 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 ____ months ended _______ __, 199_ is an annualized
number.
<TABLE>
Delinquencies as a Percentage of the Accounts(1)(2)
(Dollars in Thousands)
<CAPTION>
As of December 31,
As of -----------------------------------------------------------------------------
, 199 199 199 199
------------------------ ------------------------ ------------------------ ------------------------
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......
65-94 days......
95 days or more.
Total.........
<FN>
(1) The Delinquent Amount includes both 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.
</FN>
</TABLE>
I-1
<PAGE>
REVENUE EXPERIENCE
The revenues for the credit card accounts from finance charges, fees
paid by cardholders and interchange for the ____ months ended _________ __, 199_
and for each year of the three-year period ended December 31, 199_ are set forth
in the following table.
The revenue experience in this 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 credit card 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 credit card accounts bearing finance charges at
promotional rates and changes in the level of delinquencies on the receivables.
Revenue Experience for the Accounts
(Dollars in Thousands)
_____ Months
Ended Year Ended December 31,
, 199 199 199 199
------------- ---- ---- ----
Finance Charges and Fees Paid...
Average Revenue Yield(1)(2).....
(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 ____ months ended _____________ __, 199_ is an
annualized number.
The revenues from 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 cardholders pay off their entire balance each month, thereby avoiding
periodic finance charges on their purchases)--and upon other card-related
services for which the cardholder pays a fee. Fees for these other services will
be treated for purposes of the Pooling Agreement as principal receivables rather
than finance charge receivables; however, the Banks may specify that they will
treat these fees as finance charge receivables. Revenues from periodic finance
charges and fees also depend on the types of charges and fees assessed on the
credit card 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. These revenues could be adversely
affected by future changes in fees and charges assessed by Citibank (South
Dakota) and other factors.
CARDHOLDER MONTHLY PAYMENT RATES
Monthly payment rates on the credit card receivables may vary because,
among other things, a cardholder may fail to make a required payment, may only
make the minimum required payment or may pay 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 credit card 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
I-2
<PAGE>
beginning account balances for such month. Monthly payment rates include amounts
that 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 Citibank (South Dakota) may change).
Cardholder Monthly Payment Rates for the Accounts
_____ Months
Ended Year Ended December 31,
199 199 199
------------- ---- ---- ----
Lowest Month..............
Highest Month.............
Average of the Months in
the Period..............
INTERCHANGE
Creditors participating in the MasterCard International and VISA
associations receive Interchange as partial compensation for taking credit risk,
absorbing fraud losses and funding receivables for a limited period before
initial billing. Under the MasterCard International and VISA systems, a portion
of this Interchange in connection with cardholder charges for merchandise and
services is passed from banks which clear the transactions for merchants to
credit card-issuing banks. Interchange ranges from approximately 1% to 2% of the
transaction amount. Citibank (South Dakota) is required to transfer to the
Master Trust Interchange attributed to cardholder charges for merchandise and
services in the accounts. Interchange is allocated to the Master Trust on the
basis of the ratio that 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 of credit card accounts owned by
Citibank (South Dakota). MasterCard International and VISA may change the amount
of Interchange reimbursed to banks issuing their credit cards.
THE CREDIT CARD RECEIVABLES
The receivables in the credit card accounts as of ___________ __, 199_
included $______________ of finance charge receivables and $____________ of
principal receivables (which amounts include overdue finance charge receivables
and overdue principal receivables). As of _____________ __, 1999 there were
______________ accounts. Included within the accounts are inactive accounts that
have no balance. The accounts had an average principal receivable balance of
$_____ and an average credit limit of $_____. The average total receivable
balance in the accounts as a percentage of the average credit limit with respect
to the accounts was __%. Approximately __% of the accounts were opened before
___________ 199_. Of the accounts, approximately ______% related to cardholders
with billing addresses in California, _____% in New York, _____% in Texas and
_____% in Florida. Not more than 5% of the accounts related to cardholders
having billing addresses in any other single state.
The credit card accounts include receivables which, in accordance with
the servicer's normal servicing policies, were charged-off as uncollectible
before they were added to the Master Trust. However, for purposes of calculation
of the amount of principal receivables and finance
I-3
<PAGE>
charge receivables in the Master Trust for any date, the balance of the
charged-off receivables is zero and the Master Trust owns only the right to
receive recoveries on these receivables.
The following tables summarize the credit card accounts by various
criteria as of __________ __, 199_. References to "Receivables Outstanding" in
these 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
Percentage Percentage
of Total Of Total
Number of Number of Receivables Receivables
Account Balance Accounts Accounts Outstanding Outstanding
- --------------- --------- --------- ----------- -----------
Credit Balance(1)..............
No Balance(2)..................
Less than or equal to $500.00..
$500.01 to $1,000.00...........
$1,000.01 to $2,000.00.........
$2,000.01 to $3,000.00.........
$3,000.01 to $4,000.00.........
$4,000.01 to $5,000.00.........
$5,000.01 to $6,000.00.........
$6,000.01 to $7,000.00.........
$7,000.01 to $8,000.00.........
$8,000.01 to $9,000.00.........
$9,000.01 to $10,000.00........
Over $10,000.00................
Total.....................
(1) Credit balances are a result of cardholder payments and credit adjustments
applied in excess of a credit card account's unpaid balance. Credit card
accounts which have a credit balance are included because receivables may
be generated in these accounts in the future.
(2) Credit card accounts which have no balance are included because receivables
may be generated in these accounts in the future.
Composition of Accounts by Credit Limit
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Credit Limit Accounts Accounts Outstanding Outstanding
- ------------ --------- --------- ----------- -----------
Less than or equal to $500.00..
$500.01 to $1,000.00...........
$1,000.01 to $2,000.00.........
$2,000.01 to $3,000.00.........
$3,000.01 to $4,000.00.........
$4,000.01 to $5,000.00.........
Over $5,000.00.................
Total.....................
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<PAGE>
Composition of Accounts by Payment Status
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Payment Status Accounts Accounts Outstanding Outstanding
- -------------- --------- --------- ----------- -----------
Current(1).................
Up to 34 days delinquent...
35 to 64 days delinquent...
65 to 94 days delinquent...
95 to 124 days delinquent..
125 to 154 days delinquent.
155 to 184 days delinquent.
Total.................
(1) Includes accounts on which the minimum payment has not been received before
the next billing date following the issuance of the related bill.
Composition of Accounts by Age
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Age Accounts Accounts Outstanding Outstanding
- --- --------- --------- ----------- -----------
Less than or equal to 6 months..
Over 6 months to 12 months......
Over 12 months to 24 months.....
Over 24 months to 36 months.....
Over 36 months to 48 months.....
Over 48 months..................
Total......................
BILLING AND PAYMENTS
The credit card accounts have different billing and payment structures,
including different periodic finance charges and fees. The following information
reflects the current billing and payment characteristics of the accounts.
Citibank (South Dakota) sends monthly billing statements to cardholders
with balances at the end of each billing period. Each month a MasterCard or VISA
cardholder must make a minimum payment equal to the sum of
(1) the greater of $20 (or, if the then current balance is less than
$20, that balance) and 1/48 of the then current balance,
(2) any amount which is past due and
(3) any amount which is in excess of the credit limit.
The required minimum payment, however, cannot be less than the finance
charges billed.
A periodic finance charge is assessed on the credit card accounts. The
periodic finance charge assessed on balances for purchases and cash advances for
a majority of the accounts is calculated by multiplying (1) the daily balances
for each day during the billing cycle by (2) the
I-5
<PAGE>
applicable daily periodic finance charge rate, and summing the results for each
day in the billing period. The daily balance is calculated by taking the
previous day's balance, adding any new purchases or cash advances and fees,
adding the daily finance charge on the previous day's balance, and subtracting
any payments or credits. Cash advances are included in the daily balance from
the date such advances are made. Purchases are included in the daily balance
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 credit card
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
12.9%. As of the most recent quarterly reset date, the periodic finance charge
on balances in most accounts ranged from 13.15% to 20.65%. Citibank (South
Dakota) may change the periodic finance charge on accounts at any time by
written notice to the cardholders. Any increase in such finance charge 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
the periodic finance charge on a limited number of accounts may be greater or
less than those assessed by Citibank (South Dakota) generally.
Before 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 some
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 some other accounts, including some of its affinity and co-branded
card products.
Some of the accounts may be subject to additional fees, including:
o a late fee of $29 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;
o a cash advance fee which is generally equal to 3.0% of the amount
of the cash advance (subject to a minimum fee of $5);
o a returned payment fee of $29;
o a returned check fee of $29;
o a stop payment fee of $29; and
o a fee of $29 for each billing period with respect to each account
with an outstanding balance over the credit limit established for
such account.
Payments by cardholders on the accounts are processed and applied to
all minimum
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<PAGE>
amounts due, from the oldest to the most current, with respect to the following
items in the following order:
(1) periodic finance charges on cash advances,
(2) periodic finance charges on purchases,
(3) cash advance amounts and
(4) purchase amounts.
When all minimum amounts due are paid, payments are generally allocated
first to cash advance balances and then to purchase balances. We cannot provide
any assurance that periodic finance charges, fees and other charges will remain
at current levels in the future.
I-7
<PAGE>
CITIBANK CREDIT CARD ISSUANCE TRUST
$_____________ ___% Class A Notes, Series 1999-_
$_____________ ___% Class B Notes, Series 1999-_
$_____________ ___% Class C Notes, Series 1999-_
----------------------
Prospectus Supplement
Dated ____________ __, 1999
Underwriters of the Class A Notes
[ ]
Underwriters of the Class B Notes
[ ]
Underwriters of the Class C Notes
[ ]
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. No one
has been authorized to provide you with different information.
The Notes are not being offered in any state where the offer is not
permitted.
The Issuer does not claim the accuracy of the information in this
prospectus supplement and the accompanying prospectus as of any date other than
the dates stated on their respective covers.
Until the date which is 90 days after the date of this prospectus
supplement, all dealers effecting transactions in the Notes, whether or not
participating in this distribution, may be required to deliver a prospectus
supplement and prospectus. This is in addition to the obligation of dealers to
deliver a prospectus supplement and prospectus when acting as underwriters of
the Notes and with respect to their unsold allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder, other
than underwriting discounts and commissions.
Registration Fee.................................. $ 278
Printing and Engraving Expenses................... *
Trustee's Fees and Expenses....................... *
Legal Fees and Expenses........................... *
Accountants' Fees and Expenses.................... *
Blue Sky Fees and Expenses........................ *
Rating Agency Fees................................ *
Miscellaneous Expenses............................ *
Total........................................ $ *
=====
------------------------
* To be provided by amendment
ITEM 15. Indemnification of Directors and Officers.
Article TENTH of the Articles of Association of Citibank (South
Dakota), N.A. and Citibank (Nevada), National Association (collectively, the
"Banks") provides that any person, his heirs, executors or administrators, may
be indemnified or reimbursed by such Bank for reasonable expenses actually
incurred in connection with any action, suit or proceeding, civil or criminal,
to which he or they shall be made a party by reason of his being or having been
a director, officer or employee of such Bank or of any firm, corporation or
organization which he served in any such capacity at the request of such Bank;
provided, however, that no person shall be so indemnified or reimbursed in
relation to any matter in such action, suit or proceeding as to which he shall
finally be adjudged to have been guilty of or liable for gross negligence,
willful misconduct or criminal acts in the performance of his duties to such
Bank; and provided further, that no person shall be so indemnified or reimbursed
in relation to any matter in such action, suit or proceeding which has been made
the subject of a compromise settlement except with the approval of a court of
competent jurisdiction or the holders of record of a majority of the outstanding
shares of such Bank, or the Board of Directors, acting by vote of directors not
parties to the same or substantially the same action, suit or proceeding,
constituting a majority of the whole number of directors. Such Article also
provides that the foregoing right of indemnification or reimbursement shall not
be exclusive of other rights to which such persons, their heirs, executors or
administrators, may be entitled as a matter of law.
There are directors' and officers' liability insurance policies
presently outstanding which insure directors and officers of Citigroup and
certain of its subsidiaries, including the Banks. The policies cover losses for
which Citigroup or any of those subsidiaries shall be required or permitted by
law to indemnify directors and officers and which result from claims made
against such directors or officers based upon the commission of wrongful acts in
the performance of their duties. The policies also cover losses which the
directors or officers must pay as the result of claims brought against them
based upon the commission of wrongful acts in the performance of their duties
and for which they are not indemnified by Citigroup or any of those
subsidiaries. The losses covered by the policies are subject to certain
exclusions and do not include fines or penalties imposed by law or other matters
deemed uninsurable under the law. The policies contain certain self-insured
retention provisions.
There are also certain additional indemnification provisions contained
in the Underwriting Agreement to be filed as Exhibit 1.1
II-1
<PAGE>
ITEM 16. Exhibits.
(a) Exhibits.
1.1 Form of Underwriting Agreement for the Notes.*
3.1 Articles of Association of Citibank (South Dakota), incorporated by
reference from Exhibit 3.1 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-1 (File No. 33-24657).
3.2 Articles of Association of Citibank (Nevada), incorporated by reference
from Exhibit 3.2 of Citibank (South Dakota) and Citibank (Nevada)'s
Registration Statement on Form S-3 (File No. 33-77802).
3.3 By-laws of Citibank (South Dakota), incorporated by reference from
Exhibit 3.3 of Citibank (South Dakota) and Citibank (Nevada)'s
Registration Statement on Form S-3 (File No. 33-97664).
3.4 By-laws of Citibank (Nevada), incorporated by reference from Exhibit 3.4
of Citibank (South Dakota) and Citibank (Nevada)'s Registration Statement
on Form S-3 (File No. 33-97664).
4.1 Form of Indenture, including form of Notes.*
4.2 Form of Series Supplement to the Pooling and Servicing Agreement relating
to the Collateral Interest.*
4.3 Pooling and Servicing Agreement for Citibank Credit Card Master Trust I,
incorporated by reference from Exhibit 4.2 of Citibank (South Dakota) and
Citibank (Nevada)'s Registration Statement on Form S-1 (File No.
33-41054).
4.4 Amendment No. 1 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4.2 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-1 (File No. 33-48148).
4.5 Amendment No. 2 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4.4 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-3 (File No. 33-77802).
4.6 Amendment No. 3 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4.5 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-3 (File No. 33-77802).
4.7 Amendment No. 4 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4.6 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-3 (File No. 33-77802).
4.8 Amendment No. 5 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4 of Citibank (South Dakota) and Citibank
(Nevada)'s Current Report on Form 8-K dated January 8, 1996.
4.9 Certificate of Trust of Citibank Credit Card Issuance Trust*
4.10 Form of Trust Agreement of Citibank Credit Card Issuance Trust.*
5.1 Opinion of Stephanie B. Mudick, Esq., General Counsel - Corporate Law,
Citigroup Inc., with respect to legality.*
8.1 Opinion of Cravath, Swaine & Moore with respect to tax matters.*
23.1 Consent of Stephanie B. Mudick, Esq., General Counsel - Corporate Law,
Citigroup Inc. (included in Exhibit 5.1).*
23.2 Consent of Cravath, Swaine & Moore (included in Exhibit 8.1).*
24.1 Powers of Attorney (included on pages II-5 and II-6).*
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of ____________, as trustee under the
Indenture.*
- -----------------------
* To be filed by amendment.
(b) Financial Statements
All financial statements, schedules and historical information have
been omitted as they are not applicable.
II-2
<PAGE>
ITEM 17. Undertakings.
Each of the undersigned Registrants on behalf of Citibank Credit Card
Issuance Trust (the "Trust") hereby undertakes as follows:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that (a)(i) and (a)(ii) will not apply if the
information required to be included in a post-effective amendment
thereby is contained in periodic reports filed pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering hereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Trust's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of each issue.
(d)(1) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this Registration Statement as of the time it was declared effective.
II-3
<PAGE>
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Citibank (South Dakota), N.A. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3, reasonably
believes that the security rating requirement contained in Transaction
Requirement B.5 of Form S-3 will be met by the time of sale of the securities
registered hereunder, and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in Sioux
Falls, South Dakota, on June 15, 1999.
CITIBANK (SOUTH DAKOTA), N.A.
As originator of the Trust
By: /s/ Eugene D. Rowenhorst
------------------------------------------------
Eugene D. Rowenhorst, Senior Vice President
POWERS OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints EUGENE ROWENHORST, DAVID ZIMBECK, CHARLES
WAINHOUSE, HUGH VAN DEVENTER and LINDA MOSES, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for and in his own name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement and any or all other documents in connection
therewith, and to file the same, with all exhibits thereto, with the Securities
and Exchange Commission, granting unto said persons authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all said attorneys-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on June 15, 1999 by the following persons
in the capacities indicated.
Signature Title
--------- -----
/s/ Thomas W. Jones Director and President
--------------------------- (Principal Executive Officer)
Thomas W. Jones
/s/ Eugene D. Rowenhorst Director, Senior Vice President
-------------------------- and Chief Financial Officer
Eugene D. Rowenhorst (Principal Financial Officer and
Principal Accounting Officer)
Director
--------------------------
James R. Stojak
/s/ James W. Hutchinson Director
---------------------------
James W. Hutchinson
/s/ Joachim M. Paladino Director
---------------------------
Joachim M. Paladino
/s/ Russell R. Greenfield Director
---------------------------
Russell R. Greenfield
Director
---------------------------
Jerry W. Johnson
Director
---------------------------
Donald Bender
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Citibank (Nevada), National Association certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-3,
reasonably believes that the security rating requirement contained in
Transaction Requirement B.5 of Form S-3 will be met by the time of sale of the
securities registered hereunder, and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in Las
Vegas, Nevada, on June 15, 1999.
CITIBANK (NEVADA), NATIONAL ASSOCIATION
As originator of the Trust
By: /s/ Wilfried Jackson
--------------------------------
Wilfried Jackson, President
POWERS OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints WILFRIED JACKSON, ROBERT D. CLARK, STEVEN
J. GAROFALO, CHARLES WAINHOUSE, HUGH VAN DEVENTER and LINDA MOSES, and each of
them, his or her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for and in his or her own name, place and
stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this Registration Statement and any or all other
documents in connection therewith, and to file the same, with all exhibits
thereto, with the Securities and Exchange Commission, granting unto said persons
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
might or could be done in person, hereby ratifying and confirming all said
attorneys-in-fact and agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on June 15, 1999 by the following persons
in the capacities indicated.
Signature Title
--------- -----
/s/ Wilfried Jackson Director and President
--------------------------- (Principal Executive Officer)
Wilfried Jackson
/s/ Robert D. Clark Chief Financial Officer
--------------------------- and Controller
Robert D. Clark (Principal Financial Officer and
Principal Accounting Officer)
Chairman of the Board
--------------------------- and a Director
G. Daniel Clark
/s/ Eugene D. Rowenhorst Director
---------------------------
Eugene D. Rowenhorst
Director
---------------------------
Joseph N. Crowley
/s/ Francine A. Pulliam Director
---------------------------
Francine A. Pulliam
/s/ Russell W. Dorn Director
---------------------------
Russell W. Dorn
Director
---------------------------
James R. Stojak
/s/ Steven J. Garofalo Director
---------------------------
Steven J. Garofalo
II-6
<PAGE>
EXHIBIT INDEX
1.1 Form of Underwriting Agreement for the Notes.*
3.1 Articles of Association of Citibank (South Dakota), incorporated by
reference from Exhibit 3.1 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-1 (File No. 33-24657).
3.2 Articles of Association of Citibank (Nevada), incorporated by reference
from Exhibit 3.2 of Citibank (South Dakota) and Citibank (Nevada)'s
Registration Statement on Form S-3 (File No. 33-77802).
3.3 By-laws of Citibank (South Dakota), incorporated by reference from
Exhibit 3.3 of Citibank (South Dakota) and Citibank (Nevada)'s
Registration Statement on Form S-3 (File No. 33-97664).
3.4 By-laws of Citibank (Nevada), incorporated by reference from Exhibit 3.4
of Citibank (South Dakota) and Citibank (Nevada)'s Registration Statement
on Form S-3 (File No. 33-97664).
4.1 Form of Indenture, including form of Notes.*
4.2 Form of Series Supplement to the Pooling and Servicing Agreement relating
to the Collateral Interest.*
4.3 Pooling and Servicing Agreement for Citibank Credit Card Master Trust I,
incorporated by reference from Exhibit 4.2 of Citibank (South Dakota) and
Citibank (Nevada)'s Registration Statement on Form S-1 (File No.
33-41054).
4.4 Amendment No. 1 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4.2 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-1 (File No. 33-48148).
4.5 Amendment No. 2 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4.4 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-3 (File No. 33-77802).
4.6 Amendment No. 3 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4.5 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-3 (File No. 33-77802).
4.7 Amendment No. 4 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4.6 of Citibank (South Dakota) and Citibank
(Nevada)'s Registration Statement on Form S-3 (File No. 33-77802).
4.8 Amendment No. 5 to Pooling and Servicing Agreement, incorporated by
reference from Exhibit 4 of Citibank (South Dakota) and Citibank
(Nevada)'s Current Report on Form 8-K dated January 8, 1996.
4.9 Certificate of Trust of Citibank Credit Card Issuance Trust*
4.10 Form of Trust Agreement of Citibank Credit Card Issuance Trust.*
5.1 Opinion of Stephanie B. Mudick, Esq., General Counsel - Corporate Law,
Citigroup Inc., with respect to legality.*
8.1 Opinion of Cravath, Swaine & Moore with respect to tax matters.*
23.1 Consent of Stephanie B. Mudick, Esq., General Counsel - Corporate Law,
Citigroup Inc. (included in Exhibit 5.1).*
23.2 Consent of Cravath, Swaine & Moore (included in Exhibit 8.1).*
24.1 Powers of Attorney (included on pages II-5 and II-6).*
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of ____________, as trustee under the
Indenture.*
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* To be filed by amendment.
